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EXHIBIT 10.01
EXCLUSIVE LICENSE AGREEMENT
BY AND BETWEEN
ATHEROGENICS, INC.
AND
SCHERING-PLOUGH LTD.
[*] Certain confidential information contained in this document, marked by an
asterisk within brackets, has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406 of the Securities Act of 1933, as amended.
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TABLE OF CONTENTS
EXCLUSIVE LICENSE AGREEMENT
PAGE
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ARTICLE I - DEFINITIONS..................................................................................1
1.1 AFFILIATE.....................................................................................1
1.2 CALENDAR QUARTER..............................................................................1
1.3 CALENDAR YEAR.................................................................................2
1.4 COMBINATION PRODUCT...........................................................................2
1.5 COMPOUND LIBRARY..............................................................................2
1.6 COST OF GOODS.................................................................................2
1.7 EFFECTIVE DATE................................................................................2
1.9 FIRST COMMERCIAL SALE.........................................................................2
1.9 HRD...........................................................................................2
1.10 HSR ACT.......................................................................................2
1.11 "IMPROVEMENT".................................................................................2
1.13 LICENSED COMPOUND.............................................................................3
1.14 LICENSED PRODUCT(S)...........................................................................3
1.15 LICENSOR KNOW-HOW.............................................................................3
1.16 NDA...........................................................................................4
1.17 NET SALES.....................................................................................4
1.18 PATENT RIGHTS.................................................................................5
1.19 PRIMARY INDICATION............................................................................5
1.20 PROPRIETARY INFORMATION.......................................................................5
1.21 REGULATORY APPROVAL...........................................................................5
1.22 "SECONDARY INDICATION"........................................................................5
1.23 "SUBLICENSEE".................................................................................5
1.24 "TERRITORY"...................................................................................6
1.25 "TERM"........................................................................................6
1.26 US AGREEMENT..................................................................................6
1.27 VALID CLAIM...................................................................................6
ARTICLE II - LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION.......................6
2.1 EXCLUSIVE LICENSE GRANT.......................................................................6
(a) License.......................................................................................6
(a) Co-Exclusive License to Other Indications.....................................................6
(c) Right to Sublicense...........................................................................7
(d) Retained Rights...............................................................................7
(e) Third Party Agreements........................................................................7
2.2 NON-EXCLUSIVE LICENSE GRANT...................................................................7
2.3 DISCLOSURE OF INFORMATION.....................................................................8
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2.4 HSR FILING AND APPROVALS......................................................................8
(a) HSR Filing....................................................................................8
(b) Licensor's Obligations........................................................................8
(c) Additional Approvals..........................................................................9
2.5 JOINT MANAGEMENT COMMITTEE....................................................................9
(a) Composition of the JMC........................................................................9
(b) JMC Meetings..................................................................................9
(c) JMC Responsibilities.........................................................................10
(d) Deadlock.....................................................................................10
2.6 SPL'S DEVELOPMENT OBLIGATIONS................................................................10
(a) SPL Diligence................................................................................10
(b) Opportunity to Cure..........................................................................10
(c) Research and Development Activities..........................................................11
(d) Licensed Product Registrations; Pricing Reimbursement Approvals..............................11
(e) Data.........................................................................................11
(f) Assistance by Licensor.......................................................................11
(g) Reimbursement of Costs by SPL................................................................12
(h) Licensor's Additional Development Obligations................................................12
(i) Adverse Event Reporting......................................................................13
2.7 INDEPENDENT DISCOVERIES BY SPL...............................................................13
2.8 EXCUSED PERFORMANCE..........................................................................13
2.9 SUPPLY OF LICENSED COMPOUND/LICENSED PRODUCT.................................................14
2.10 REPORTS......................................................................................14
2.11 NON-COMPETE PROVISION........................................................................14
ARTICLE III - PAYMENTS; ROYALTIES AND REPORTS...........................................................15
3.0 COORDINATION OF PAYMENTS UNDER THE US AGREEMENT..............................................15
3.1 LICENSE FEE..................................................................................15
(a) Development Milestones.......................................................................15
(b) Sales Milestones.............................................................................16
(c) Limitations..................................................................................16
3.3 ROYALTIES....................................................................................17
(a) Cap on Royalties Plus Cost of Goods..........................................................17
(b) Licensor's Option to Manufacture.............................................................18
(c) Royalty Reduction............................................................................18
3.4 THIRD PARTY LICENSES.........................................................................18
3.5 COMPULSORY LICENSES..........................................................................19
3.6 REPORTS AND PAYMENT OF ROYALTY; PAYMENT
EXCHANGE RATE AND CURRENCY CONVERSIONS.......................................................19
(a) Royalties Paid Quarterly.....................................................................19
(b) Method of Payment............................................................................19
3.7 MAINTENANCE OF RECORDS; AUDITS...............................................................20
(a) Record Keeping by SPL........................................................................20
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(b) Underpayments/Overpayments...................................................................20
(c) Record Keeping by Sublicensee................................................................20
(d) Confidentiality..............................................................................20
(e) Binding Records..............................................................................21
3.8 INCOME TAX WITHHOLDING.......................................................................21
3.9 DIRECT AFFILIATE LICENSES....................................................................21
ARTICLE IV - PATENTS....................................................................................21
4.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS...............................................21
4.2 OPTION OF SPL TO PROSECUTE AND MAINTAIN PATENTS..............................................22
4.3 ENFORCEMENT..................................................................................22
(a) Notice and Discontinuance of Infringement....................................................22
(b) Continuance of Infringement..................................................................23
4.4 THIRD PARTY INFRINGEMENT SUIT................................................................23
(a) Defense......................................................................................23
(b) Licensing....................................................................................23
4.5 CERTIFICATION UNDER DRUG PRICE COMPETITION
AND PATENT RESTORATION ACT...................................................................24
4.6 ABANDONMENT..................................................................................24
4.7 PATENT TERM RESTORATION......................................................................24
4.8 NOTICES REGARDING PATENTS....................................................................24
ARTICLE V - CONFIDENTIALITY AND PUBLICATION.............................................................25
5.1 CONFIDENTIALITY..............................................................................25
(a) Nondisclosure Obligation.....................................................................25
(b) Disclosure to Agents.........................................................................26
(c) Disclosure to a Third Party..................................................................26
5.2 PUBLICITY....................................................................................26
5.3 PUBLICATION..................................................................................27
ARTICLE VI - REPRESENTATIONS AND WARRANTIES.............................................................27
6.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY.................................................27
6.2 LICENSOR'S REPRESENTATIONS...................................................................28
6.3 CONTINUING REPRESENTATIONS...................................................................30
6.4 NO INCONSISTENT AGREEMENTS...................................................................30
6.5 REPRESENTATION BY LEGAL COUNSEL..............................................................30
6.6 ADDITIONAL OBLIGATIONS OF LICENSOR...........................................................30
ARTICLE VII - INDEMNIFICATION AND LIMITATION ON LIABILITY...............................................31
7.1 INDEMNIFICATION BY SPL.......................................................................32
7.2 INDEMNIFICATION BY LICENSOR..................................................................32
7.3 CONDITIONS TO INDEMNIFICATION................................................................32
7.4 SETTLEMENTS..................................................................................33
7.5 LIMITATION OF LIABILITY......................................................................33
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7.6 INSURANCE....................................................................................33
ARTICLE VIII - TERM AND TERMINATION.....................................................................33
8.1 TERM AND EXPIRATION..........................................................................33
8.2 TERMINATION BY SPL WITHOUT CAUSE.............................................................33
8.3 TERMINATION UPON CESSATION OF DEVELOPMENT....................................................33
(a) Termination by Either Party..................................................................34
(b) Termination by Licensor......................................................................34
8.4 TERMINATION..................................................................................34
(a) Termination for Cause........................................................................34
(b) Effect of Termination for Cause on License...................................................35
(i) Termination by SPL.......................................................................35
(ii)Termination by Licensor..................................................................35
(iii)Effect of Bankruptcy....................................................................35
8.5 EFFECT OF TERMINATION........................................................................35
8.6 REMEDIES FOR BREACH..........................................................................36
8.7 LICENSOR'S RIGHTS ON TERMINATION.............................................................36
8.8 CONCURRENT TERMINATION WITH THE US AGREEMENT.................................................37
ARTICLE IX - MISCELLANEOUS..............................................................................37
9.1 ASSIGNMENT/CHANGE OF CONTROL.................................................................37
(a) Assignment...................................................................................37
(a) Change of Control............................................................................37
9.2 GOVERNING LAW................................................................................38
9.3 WAIVER.......................................................................................38
9.4 INDEPENDENT RELATIONSHIP.....................................................................38
9.5 EXPORT CONTROL...............................................................................38
9.6 COMPLETE AGREEMENT...........................................................................38
(a) Entire Agreement; Amendment..................................................................39
(b) Relationship to US Agreement; Controlling Provisions.........................................39
9.7 NOTICES......................................................................................39
9.8 PROVISIONS FOR INSOLVENCY....................................................................40
(a) Effect on Licenses...........................................................................40
(b) Rights to Intellectual Property..............................................................41
(c) SPL's Rights.................................................................................41
(d) Deemed Grant of Rights.......................................................................41
(e) Security Interests...........................................................................42
9.9 FORCE MAJEURE................................................................................42
9.10 SEVERABILITY.................................................................................42
9.11 COUNTERPARTS.................................................................................42
9.12 CAPTIONS.....................................................................................43
9.13 RECORDING....................................................................................43
9.14 FURTHER ACTIONS..............................................................................43
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SCHEDULES
SCHEDULE 1.6 COST OF GOODS
SCHEDULE 1.18 PATENT RIGHTS
SCHEDULE 2.1(E) THIRD PARTY AGREEMENTS
SCHEDULE 2.6(H) DEVELOPMENT WORK TO BE PERFORMED BY LICENSOR
SCHEDULE 2.6(I) ADVERSE EVENT REPORTING PROCEDURES
SCHEDULE 3.2 DEFINITION OF SUCCESSFUL COMPLETION
SCHEDULE 6.2(D) GOVERNMENT RIGHTS
SCHEDULE 6.2(K) OTHER VCAM-1 INHIBITORS
SCHEDULE 9.2 ARBITRATION PROVISIONS
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EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement") is made as of
October 22, 1999 by and between ATHEROGENICS, INC., a Georgia corporation having
its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter referred to as "Licensor") and SCHERING-PLOUGH LTD., a
corporation organized and existing under the laws of Switzerland and having its
principal place of business at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
(hereinafter referred to as "SPL"). Licensor and SPL are sometimes referred to
herein individually as a Party and collectively as the Parties. References to
"SPL" and "Licensor" shall include their respective Affiliates (as hereinafter
defined).
WHEREAS, Licensor has developed certain Licensor Know-How and has
rights to Patent Rights relating to soluble analogs of probucol, including
without limitation the Licensed Compound (each as hereinafter defined); and
WHEREAS, SPL, together with its Affiliates (as hereinafter defined)
possesses extensive capabilities in the development and commercialization of
pharmaceutical products on a worldwide basis; and
WHEREAS, SPL desires to obtain and Licensor is willing to grant to SPL,
an exclusive license under the Patent Rights and to use the Licensor Know-How,
upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, SPL and Licensor hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following initially capitalized terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:
1.1 "Affiliate" shall mean any individual or entity directly or
indirectly controlling, controlled by or under common control with, a Party to
this Agreement. For purposes of this Agreement, the direct or indirect ownership
of [*] or more of the outstanding voting securities of an entity, or the right
to receive [*] or more of the profits or earnings of an entity shall be deemed
to constitute control. Such other relationship as in fact results in actual
control over the management, business and affairs of an entity shall also be
deemed to constitute control.
1.2 "Calendar Quarter" shall mean the respective periods of three
(3) consecutive calendar months ending on March 31, June 30, September 30 or
December 31, for so long as this Agreement is in effect.
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1.3 "Calendar Year" shall mean each successive period of twelve
(12) months commencing on January 1 and ending on December 31, for so long as
this Agreement is in effect.
1.4 "Combination Product" shall mean any form or dosage of
pharmaceutical composition or preparation in final form for sale by
prescription, over-the-counter or any other method and which comprises two (2)
or more active ingredients within the same pharmaceutical formulation, at least
one (1) of which is Licensed Compound and/or any other compound from the
Compound Library.
1.5 "Compound Library" shall mean the collection of compounds
(including, without limitation, the Licensed Compound) which as of the Execution
Date is specifically and/or generically covered by one or more claims in U.S.
Patent No. 5,262,439, entitled "Soluble Monoesters of Probucol", or any
corresponding foreign patents or patent applications. The Compound Library shall
include such compounds in any form, including any salt, hydrate or crystalline
structure thereof.
1.6 "Cost of Goods" shall mean SPL's fully allocated manufacturing
cost of goods as determined in accordance with Schedule 1.6.
1.7 "Effective Date" shall mean the next business day following
the last to occur of (i) expiration or earlier termination of any notice and
waiting period under the HSR Act; or (ii) the date of delivery of fully executed
counterparts of this Agreement (the "Execution Date").
1.8 "First Commercial Sale" shall mean, with respect to any
Licensed Product, the first sale by SPL to any third party, not an Affiliate or
Sublicensee, of such Licensed Product for an indication for which SPL has
obtained Regulatory Approval.
1.9 "HRD" shall mean a health registration dossier or its
equivalent, submitted to a national government or a supranational governmental
authority, consisting of the chemical, pharmaceutical and biological
documentation; the toxicological and pharmacological documentation; and the
clinical documentation respectively, and covering a Licensed Product which is
filed in any country outside the United States and which is analogous to a new
drug application, product license application or its equivalent filed with the
United States Food and Drug Administration seeking approval to market and sell a
Licensed Product in the Territory and including, where applicable, applications
for pricing, pricing reimbursement approval, labeling and Regulatory Approval.
1.10 "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
1.11 "Improvement" shall mean any enhancement in the formulation,
preparation, presentation, means of delivery, dosage, packaging of, manufacture,
or any new or expanded
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therapeutic indications(s) for, Licensed Product or Licensed Compound, in each
case which is developed prior to or during the Term of this Agreement by or on
behalf of Licensor.
1.12 [Section Reserved]
1.13 "Licensed Compound" shall mean the soluble analog of probucol
AGI-1067, having the chemical name butanedioic acid, mono[4-[[1-[3,5-bis(1,1-
dimethyethyl)-4-hydroxyphenyl]thio]-1-[methylethylthio]-2,6-bis(1,1-
dimethylethyl)-phenyl]ester, and any stereoisomers, salts, hydrates and/or
crystalline forms thereof.
1.14 "Licensed Product(s)" shall mean any form or dosage of
pharmaceutical composition or preparation in final form for sale by
prescription, over-the-counter or any other method, which contains as an active
ingredient the Licensed Compound and/or any other compound from the Compound
Library, including, without limitation, Combination Products; provided, however,
that Licensed Product shall not include topical dermatological products as
described in Section 2.11(c).
1.15 "Licensor Know-How" shall mean any of Licensor's information
and materials specifically relating to the research, development, registration,
manufacture, marketing, use or sale of Licensed Compound and/or Licensed Product
and/or the Compound Library, and which prior to or during the Term of this
Agreement are developed by or at the request of Licensor, or those of its
Affiliates involved in the performance of development of Licensed Product under
Article 2, or are in Licensor's or such Affiliates' possession or control
through license or otherwise (provided that Licensor is permitted to make
disclosure thereof to SPL without violating the terms of any third party
agreement), and which are not generally known. Licensor Know-How shall include,
without limitation, discoveries, practices, methods, knowledge, Improvements,
processes, formulas, data, ideas, skill, experience, inventions, know-how,
technology, trade secrets, manufacturing procedures, purification and isolation
techniques, instructions, test data and other intellectual property, patentable
or otherwise, relating to Licensed Compound, Licensed Product or any
Improvements. Licensor Know-How shall also include, without limitation:
(i) all biological, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, clinical, safety,
manufacturing and quality control data and information related
thereto;
(ii) compositions of matter, assays and biological materials
specifically relating to development, manufacture, use or sale
of any Licensed Compound, Licensed Product or Improvement; and
(iii) all applications, registrations, licenses, authorizations,
approvals and correspondence submitted to or received from any
regulatory authorities with jurisdiction in the Territory over
an investigational drug containing Licensed
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Compound and/or Licensed Product (including, without
limitation, minutes and meeting notes relating to any
communications with any regulatory authority with jurisdiction
in the Territory over an investigational drug containing
Licensed Compound and/or Licensed Product).
1.16 "NDA" shall mean a New Drug Application or its equivalent
filed with the United States Food and Drug Administration seeking approval to
market and sell a Licensed Product in the United States.
1.17 "Net Sales" shall mean the amounts actually received on all
sales of Licensed Product by SPL, its Affiliates or Sublicensees to an
unaffiliated third party, and exclusive of intercompany transfers or
inter-company sales, less the following reasonable and customary deductions from
such gross amounts (to the extent actually taken):
(i) normal and customary trade, cash and quantity discounts,
allowances and credits;
(ii) credits or allowances actually granted for damaged goods,
returns or rejections of Licensed Product and retroactive
price reductions;
(iii) sales taxes, duties or other taxes with respect to such sales
(including duties or other governmental charges levied on,
absorbed or otherwise imposed on the sale of Licensed Product
including, without limitation, value added taxes or other
governmental charges otherwise measured by the billing amount,
when included in billing);
(iv) insurance, postage, customs duties and transportation costs,
when included in billing;
(v) charge back payments and rebates granted to managed health
care organizations or to federal, state and local governments,
their agencies, and purchasers and reimbursers or to trade
customers, including but not limited to, wholesalers and chain
and pharmacy buying groups; and
(vi) rebates (or equivalents thereof) granted to or charged by
national, state or local governmental authorities in countries
other than the United States.
In determining Net Sales of a Licensed Product any of the above discounts shall
be accounted for and apportioned based on the list price of each such Licensed
Product.
In the event that Licensed Product is sold in the form of a Combination
Product containing Licensed Compound and one or more other active ingredients
then Net Sales for such Combination Product will be calculated by multiplying
actual Net Sales of such Combination Product by the fraction A/(A+B) where: A is
the invoice price of the Licensed Compound
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contained in the Combination Product if sold separately by SPL, an Affiliate or
Sublicensee and B is the invoice price of any other active component or
components in the Combination Product if sold separately by SPL, an Affiliate or
Sublicensee. In the event that the Licensed Product is sold in the form of a
Combination Product containing one or more active ingredients other than
Licensed Compound and one or more such active ingredients of the Combination
Product are not sold separately, then the above formula shall be modified such
that A shall be the total cost to SPL, its Affiliate or Sublicensee(s) of the
Licensed Compound and B shall be the total cost to SPL, its Affiliate or
Sublicensee of any other active component or components in the combination.
1.18 "Patent Rights" shall mean all patents and patent applications
in the Territory which during the Term of this Agreement are owned or controlled
(with the right to grant sublicenses) by Licensor and which contain one or more
claims covering Licensed Compound(s), Licensed Product(s), one or more compounds
contained in Compound Library, or any uses, formulations, processes or methods
of preparing any of the foregoing, or any Improvements, including, but not
limited to, those set forth in Schedule 1.18, any and all substitutions,
divisions, continuations, continuations-in-part, reissues, renewals,
registrations, confirmations, re-examinations, extensions, supplementary
protection certificates or any like filing thereof, and provisional applications
of any such patents and patent applications and any international equivalent of
any of the foregoing.
1.19 "Primary Indication" shall mean the treatment and prevention
of [ * ].
1.20 "Proprietary Information" shall mean all other scientific,
clinical, regulatory, marketing, financial and commercial information or data,
whether communicated in writing, verbally or electronically, which is provided
by one Party to the other Party in connection with this Agreement including,
without limitation, Licensor Know-How. When Propriety Information is disclosed
in a manner other than in writing, it shall be reduced to written form, marked
"Confidential" and transmitted to the receiving Party within twenty (20)
business days of disclosure to the receiving Party.
1.21 "Regulatory Approval" shall mean any approvals, including any
NDA's, HRD's, supplements, amendments, pre- and post-approvals, marketing
authorizations based upon such approvals (including any prerequisite
manufacturing approvals or authorizations related thereto) and labeling
approval(s), technical, medical and scientific licenses, registrations or
authorizations of any national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity, necessary
for the development, manufacture, distribution, marketing, promotion, offer for
sale, use, import, export or sale of Licensed Product(s) and/or Licensed
Compound(s) in the Territory.
1.22 "Secondary Indication" shall mean [ * ]
1.23 "Sublicensee" shall mean any party not an Affiliate of SPL,
which party is
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authorized by SPL or its Affiliates through express or implied license or
consent to import, export, use, distribute, market, promote, offer for sale and
sell Licensed Product(s) under Section 2.1(b).
1.24 "Territory" shall mean the entire world, except for the United
States and its territories, possessions and commonwealths.
1.25 "Term" shall mean the period described in Section 8.1 of the
Agreement.
1.26 "US Agreement" shall mean that certain exclusive license
agreement by and between Licensor and Schering Corporation entered into
concurrently herewith.
1.27 "Valid Claim" shall mean a composition of matter claim, or
method of use claim (or its equivalent) for the Primary Indication and/or the
Secondary Indication, of an issued and unexpired patent in a country in the
Territory which covers the Licensed Compound and/or any other compound from the
Compound Library, which is included within the Patent Rights, and which (i) has
not been revoked or held unenforceable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed for appeal; or (ii) has not been abandoned, disclaimed,
or admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.
ARTICLE II
LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND
COMMERCIALIZATION
2.1 Exclusive License Grant.
(a) License. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to SPL, as of the Effective Date, an
exclusive license (exclusive even as to Licensor) under the Patent
Rights and Licensor Know-How in the Territory to develop, make, have
made, import, export, use, distribute, market, promote, offer for sale
and sell: (i) Licensed Compound(s) and/or Licensed Product(s)
containing Licensed Compound; and (ii) compound(s) in the Compound
Library other than Licensed Compound, and/or Licensed Product(s)
containing such compound(s) for the Primary Indication and the
Secondary Indication.
(b) Co-Exclusive License to Other Indications Subject to the
terms and conditions of this Agreement, Licensor hereby grants to SPL,
as of the Effective Date, a co-exclusive license under the Patent
Rights and Licensor Know-How in the Territory to develop, make, have
made, import, export, use, distribute, market, promote, offer for sale
and sell compound(s) in the Compound Library other than Licensed
Compound, and/or Licensed Product(s) containing such compound(s), for
any and all indications other than
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the Primary Indication and Secondary Indication. The term "co-exclusive
license" shall mean that with respect to the rights granted to SPL
under this Section 2.1(b), Licensor retains the same rights as are
granted to SPL. With respect to a given compound, indication or
territory, each of Licensor and SPL may either directly exercise and
exploit its co-exclusive rights or grant a co-exclusive license under
such rights, either in whole or in part, to one (1) third party or
Affiliate.
(c) Right to Sublicense. The licenses granted to SPL
under Sections 2.1(a) and 2.1(b) shall include the right to grant
sublicenses to Affiliates and/or any third party (to the extent
provided therein), provided that SPL remains responsible to Licensor
under this Agreement for the performance of its Sublicensees.
(d) Retained Rights Subject to the restrictions set forth
in Section 2.11, Licensor retains all rights under the Patent Rights
not expressly granted to SPL by this Section 2.1, and the right to use
Licensor Know-How pursuant to Sections 2.6(h) and 5.1(c) below.
(e) Third Party Agreements. As of the Execution Date,
Licensor is a party to certain agreements (as listed in Schedule
2.1(e), redacted copies of which have been provided to SPL) with third
parties pursuant to which Licensor has acquired rights to certain
patent applications, patents and technology, which agreements are
relevant to the Patent Rights and/or Licensor Know-How. The parties
acknowledge that the licenses granted to SPL under this Agreement are,
or may be, subject to the specific rights retained by or granted to the
U.S. Government, and/or the rights for research use retained by such
third parties, under those agreements. In the event that on or after
the Execution Date and during the Term of this Agreement, Licensor
acquires any additional Patent Rights or Licensor Know-How from any
third parties, by assignment, license or otherwise, Licensor shall
promptly notify SPL in writing to that effect, and provide SPL with a
copy (which may be redacted) of the agreement(s) with such third party.
To the extent that the copies of the agreements listed in Schedule
2.1(e) which were provided to SPL, or any other agreements provided to
SPL under this Section 2.1(e), have been redacted, Licensor represents
and warrants that the redacted portions of such agreements have no
material effect on the scope of the licenses or other rights granted to
SPL under this Agreement. Nothing herein shall be construed as granting
to SPL any greater rights under the Patent Rights and/or Licensor
Know-How than those held by Licensor
2.2 Non-Exclusive License Grant. In the event that the
development, making, having made, importing, exporting, use, distribution,
marketing, promotion, offering for sale or sale by SPL, its Affiliates and/or
Sublicensees of Licensed Product in the Territory would infringe during the Term
of this Agreement a claim of an issued letters patent, and/or any patent rights
which Licensor owns or has the rights to license and which patents are not
covered by the grant in Section 2.1, Licensor hereby grants to SPL and its
Affiliates, to the extent Licensor is legally able to do so, a non-exclusive,
royalty-free license in the Territory under such issued letters patent
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solely for SPL, its Affiliates and/or Sublicensees to discover, develop, make,
have made, use, distribute, market, promote, offer for sale and sell Licensed
Compound and/or Licensed Product(s) in the Territory.
2.3 Disclosure of Information. Promptly after the Effective Date,
Licensor shall, at its own cost, disclose to SPL in writing, or via mutually
acceptable electronic media, copies or reproductions of all existing Licensor
Know-How not previously disclosed to SPL in order to enable SPL to exploit its
rights granted under Section 2.1 and, if applicable, Section 2.2 of this
Agreement. In addition, during the Term of this Agreement, Licensor shall
promptly disclose to SPL in writing, or via mutually acceptable electronic
media, on an ongoing basis copies or reproductions of all new Licensor Know-How
that is reasonably necessary for research, development, registration,
manufacture, marketing, use or sale of Licensed Compound and/or Licensed
Product. Such Licensor Know-How and other information shall be automatically
deemed to be within the scope of the licenses granted herein without payment of
any additional compensation. Upon SPL's request but reasonably subject to
Licensor's other business requirements, Licensor shall provide reasonable
technical assistance to enable SPL to utilize such additional Licensor Know-How,
provided, that SPL shall promptly reimburse Licensor for reasonable
out-of-pocket costs and expenses incurred by Licensor in providing such
technical assistance. Licensor shall invoice SPL for such costs and expenses,
and shall provide documentation for the invoice. The invoice shall be payable to
Licensor or its designee(s) [ * ] after receipt by SPL of the invoice provided,
however, that such cost and out-of-pocket expenses must be identified prior to
being committed to by Licensor and provided to SPL to determine whether SPL
agrees to have the technical assistance provided at such cost and the final
amount sought to be reimbursed shall not exceed [ * ] of the estimated cost
without SPL's prior written consent. SPL shall be under no obligation to
reimburse Licensor for out-of-pocket costs and expenses incurred by Licensor
without SPL's agreement. SPL shall have the right to use for all purposes in
connection with obtaining any Regulatory Approval for the Licensed Product(s)
all Licensor Know-How and other information, disclosed pursuant to this Section
and under this Agreement.
2.4 HSR Filing and Approvals.
(a) HSR Filing. To the extent necessary, each of Licensor
and SPL shall file, within ten (10) days after the date of this
Agreement, with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the
"Antitrust Division") any notification and report form (the "Report")
required of it in the reasonable opinion of either or both Parties
under the HSR Act with respect to the transactions as contemplated
hereby and shall cooperate with the other Party to the extent necessary
to assist the other Party in the preparation of its Report and to
proceed to obtain necessary approvals under the HSR Act, including but
not limited to the expiration or earlier termination of any and all
applicable waiting periods required by the HSR Act.
(b) Licensor's Obligations. Licensor shall use good faith
reasonable efforts to
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assist SPL in eliminating any concern on the part of any court or
government authority regarding the legality of the proposed
transaction, including, if required by federal or state antitrust
authorities, SPL's promptly taking all reasonable steps to secure
government antitrust clearance. Licensor shall cooperate in good faith
at its own cost with any government investigation and promptly produce
documents and information demanded by a second request for documents
and of witnesses if requested.
(c) Additional Approvals. Each of Licensor and SPL will
cooperate and use all reasonable efforts to make all other
registrations, filings and applications, to give all notices and to
obtain as soon as practicable all governmental or other consents,
transfers, approvals, orders, qualifications authorizations, permits
and waivers, if any, and to do all other things reasonably necessary or
desirable in SPL's opinion for the consummation of the transactions as
contemplated hereby (including, without limitation, those acts required
to obtain necessary approvals under any foreign equivalent antitrust
statute to the HSR Act or regulation from any government or regulatory
authority having the requisite jurisdiction; provided, however, that
SPL shall promptly reimburse Licensor for reasonable out-of-pocket
costs and expenses incurred by Licensor in providing such cooperation.
Licensor shall invoice SPL for such costs and expenses, and shall
provide supporting documentation for the invoice. The invoice shall be
payable to Licensor or its designee(s) [ * ] days after receipt by SPL
of the invoice.
2.5 Joint Management Committee. The Parties shall establish a
Joint Management Committee (the "JMC") to oversee the development and
commercialization program for Licensed Product for the Primary Indication and
the Secondary Indication, and to facilitate the exchange of information between
the Parties. The JMC will generally serve in an advisory capacity with respect
to the development and commercialization activities to be performed by SPL under
this Agreement, with SPL retaining final decision making authority with respect
to all such matters.
(a) Composition of the JMC. The JMC shall be composed of
up to three (3) representatives from each of SPL and Licensor, and a
quorum shall consist of at least one (1) JMC representative from each
Party. In any matter before the JMC, each Party shall have one (1)
vote, with decisions being made by unanimous decision. SPL shall
seriously consider the recommendations and decisions of the JMC. A
Party's representatives to the JMC shall serve at the discretion of
such Party and may be substituted for or replaced at any time by such
Party. The JMC shall be chaired by a representative of SPL. The
Chairperson shall be responsible for calling meetings, preparing
agendas and preparing and issuing minutes of each meeting within
[ * ] thereafter.
(b) JMC Meetings. The JMC shall meet at least once each
Calendar Quarter during the Term of this Agreement, until such time as
the Parties agree to a more or less frequent meeting schedule. The site
of such meetings shall alternate between the offices of SPL and
Licensor (or any other site mutually agreed upon by the Parties) and
each
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Party shall bear its own costs of attending such meetings. All meetings
of the JMC shall be summarized in writing and sent to both Parties and
countersigned by both Parties.
(c) JMC Responsibilities. The JMC will be generally
responsible for monitoring the status of SPL's development and
commercialization activities with respect to Licensed Product and for
preparing recommendations for implementation by SPL with regard to: (i)
selection of Licensed Compounds for development by SPL as Licensed
Products for the Primary Indication; (ii) preclinical and clinical
development plans; (iii) development timelines and scheduling; (iv)
strategies for obtaining and maintaining Regulatory Approvals; (v)
marketing and sales strategies for Licensed Product.
(d) Deadlock. In the event that the JMC is unable to
reach a decision by unanimous vote with respect to any matter, then SPL
shall have final decision making authority with respect thereto.
2.6 SPL's Development Obligations.
(a) SPL Diligence. SPL shall, at SPL's expense, and
subject to Licensor's compliance with its obligations under Sections
2.3 and 2.4, use good faith reasonable efforts to develop, obtain
Regulatory Approval for, and commercialize the Licensed Product(s) in
the Territory for the Primary Indication. SPL shall have the option, in
its sole discretion, to seek Regulatory Approval for the Licensed
Product for any additional indications it determines are desirable, but
shall have no diligence obligations to Licensor with respect thereto
with the exception of those expressly set forth in Section 2.11(d). The
Parties acknowledge and agree that all business decisions including,
without limitation, decisions relating to SPL's research, development,
registration, manufacture, sale, commercialization, design, price,
distribution, marketing and promotion of Licensed Products covered
under this Agreement, shall be within the sole discretion of SPL.
Licensor acknowledges that SPL is in the business of developing,
manufacturing and selling pharmaceutical products and, subject to the
provisions of this Section, nothing in this Agreement shall be
construed as restricting such business or imposing on SPL the duty to
market and/or sell and exploit Licensed Compound or Licensed Product
for which royalties are payable hereunder to the exclusion of, or in
preference to, any other product, or in any way other than in
accordance with its normal commercial practices.
(b) Opportunity to Cure. If, in Licensor's reasonable
opinion, SPL fails to comply with any of its diligence obligations
under Sections 2.6(a) and (c), then Licensor shall have the right to
give SPL written notice thereof stating in reasonable detail the
particular failure(s). SPL shall have a period [ * ] days from the
receipt of such notice to correct the failure or, in the event that the
failure cannot be reasonably cured within a [ * ] day period, then SPL
shall initiate actions reasonably expected to cure the failure within
[ * ] days of receiving notice and shall thereafter diligently pursue
such actions to cure
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the failure (even if requiring longer than the [ * ] days specified in
Section 8.4(a)(i)). In the event of a dispute as to whether or not SPL
has failed to exercise due diligence under Sections 2.6(a) and 2.6(c),
or whether SPL is diligently pursuing actions reasonably expected to
cure such failure under this Section 2.6(b), such dispute shall be
resolved through binding arbitration in accordance with Section 9.2.
(c) Research and Development Activities. As of the
Effective Date, SPL shall be responsible, at its cost and expense, and
in its sole judgment, for all research and development activities which
are necessary to obtain Regulatory Approval for a Licensed Product in
the Territory for the Primary Indication and any post-approval studies
required as a condition of obtaining any Regulatory Approval for a
Licensed Product for the Primary Indication. The parties acknowledge
and agree that SPL's obligations under this Section 2.6(c) shall
include all of the costs of conducting the CART Study (whether incurred
before or after the Effective Date) which are estimated at [ * ]. In
addition, SPL shall be responsible for any other studies (or portions
of studies) necessary or desirable, in its sole judgment, for
maintaining any Regulatory Approval (for the Primary Indication or any
other indication for which SPL, in its sole discretion, may decide to
seek Regulatory Approval) in the Territory, as well as any
pre-marketing studies prior to such Regulatory Approval and
post-marketing studies conducted following a Regulatory Approval.
(d) Licensed Product Registrations; Pricing Reimbursement
Approvals. Subject to its diligence obligations set forth in Section
2.6(a), SPL shall be responsible, at its cost and expense, and in its
sole judgment, for determining the appropriate regulatory strategy, for
obtaining and maintaining all Regulatory Approvals and for obtaining
and maintaining any pricing and reimbursement approvals required for
the sale of Licensed Product in the Territory. Each Regulatory Approval
and each pricing and reimbursement approval shall be placed in SPL's
name or the name of a SPL Affiliate unless applicable law requires, or
Licensor and SPL otherwise agree, that an approval be solely or jointly
in the name of Licensor or a designated Licensor Affiliate. Licensor
agrees that notwithstanding such Regulatory Approval or pricing and
reimbursement approval in its name, SPL retains the exclusive rights to
make, have made, import, export, use, distribute, promote, offer for
sale and sell Licensed Compound and/or Licensed Product(s) as granted
SPL in Section 2.1.
(e) Data. SPL shall own all data arising out of studies
performed by or on behalf of SPL under this Article II.
(f) Assistance by Licensor. In connection with any NDA,
HRD or other application for Regulatory Approval relating to Licensed
Product, Licensor shall, at SPL's request, provide to SPL in a prompt
manner responses to questions which have been raised by any regulatory
authority in connection with such application for Regulatory Approval
and further provide to SPL estimates of Licensor's [ * ] costs for
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rendering such assistance. Licensor shall assist SPL from time to time,
at SPL's request, in the design and implementation of clinical studies.
Subject to Licensor's rights under Section 3.3(b), Licensor shall
assist SPL to enable SPL to self-source bulk material for the
manufacture of Licensed Compound and/or Licensed Product; provided,
however, that SPL shall have no obligation whatsoever to purchase any
bulk material or Licensed Compound from Licensor.
(g) Reimbursement of Costs by SPL
(i) SPL shall reimburse Licensor for its reasonable
[ * ] costs and expenses incurred in rendering assistance under Section
2.6(f) (but no more than [ * ] of those costs which Licensor estimated,
as provided above, that the work would cost unless SPL provides written
approval). Licensor shall invoice SPL for such costs and expenses, and
shall provide documentation for the invoice. The invoice shall be
payable to Licensor or its designee(s) [ * ] days after receipt by SPL
of the invoice, provided, however, that SPL shall be under no
obligation to reimburse Licensor for [ * ] costs and expenses incurred
by Licensor without SPL's agreement.
(ii) SPL shall reimburse Licensor for its reasonable
[ * ] costs and expenses incurred in performing research and
development activities under Section 2.6 (h) (but no more than [ * ] of
those costs which Licensor estimated, as provided below, that the work
would cost unless the JMC provides written approval). Licensor shall
invoice SPL for such costs and expenses, and shall provide
documentation for the invoice. The invoice shall be payable to Licensor
or its designee(s) [ * ] days after receipt by SPL of the invoice,
provided, however, that SPL shall be under no obligation to reimburse
Licensor for research and development costs and expenses incurred by
Licensor without the prior approval of the JMC.
(h) Licensor's Additional Development Obligations. In
addition to Licensor's obligations under Section 2.6(f), the JMC will
assign to Licensor the responsibility to conduct, on SPL's behalf and
at SPL's expense, certain of the research and development activities,
including clinical studies involving Licensed Product, for which SPL is
responsible under Section 2.6(c). The nature and extent of the research
and development activities to be conducted by Licensor is generally set
forth in Schedule 2.6(h). The JMC shall determine the specific aspects
of such activities, including the timing and costs of the work to be
performed by Licensor. Licensor agrees to use good faith reasonable
efforts to complete such activities in the manner determined by the
JMC, and shall have the right to utilize contract research
organizations and other third party contractors in the performance of
such activities, provided that Licensor shall remain responsible for
the performance of all such contractors. To the extent that Licensor
utilizes third party contractors to perform such activities, Licensor
shall enter into suitable agreements with
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such contractors, which agreements shall incorporate provisions
consistent with the terms and conditions of this Agreement, including,
without limitation, provisions governing confidentiality, ownership of
data, inventions and other intellectual property arising from such
activities, financial obligations and termination rights. Licensor
shall keep the JMC informed with regard to such third party contracts
and shall provide SPL with a copy of all such agreements. Any research
and development activities conducted by Licensor or its contractors
pursuant to this Section 2.6(h) shall be performed in accordance with
good laboratory practices and good clinical practices, and in
compliance with all applicable laws, rules and regulations in the U.S.
and the EU, and shall meet current regulatory standards. SPL shall
promptly notify Licensor in the event that SPL reasonably determines
that all or any part of the work performed by Licensor and/or its
contractors under this Section 2.6(h) fails to meet such standards. If
Licensor reasonably disagrees with such determination, the parties
shall refer the matter to an independent expert (selected by mutual
agreement of the parties) to determine whether or not the study must be
repeated to support Regulatory Approval for Licensed Product. In the
event that Licensor and/or the independent expert agrees with SPL's
determination and such studies are repeated, then SPL shall have the
right to deduct the [ * ] costs of repeating such work from [ * ]
payments due Licensor under this Agreement.
(i) Adverse Event Reporting Licensor shall promptly
report to SPL any information regarding adverse events related to the
use of the Licensed Product in accordance with the Adverse Event
Reporting Procedures (as may be amended from time to time upon mutual
agreement) set forth in Schedule 2.6(i) and incorporated herein by
reference. To the extent that Licensor holds any INDs or otherwise has
any adverse event reporting obligations with respect to Licensed
Product, SPL shall promptly report to Licensor any information
regarding adverse events related to the use of Licensed Product in
accordance with such Adverse Event Reporting Procedures.
2.7 Independent Discoveries by SPL. Licensor acknowledges that SPL
and/or its Affiliates have ongoing research programs which may now or in the
future independently discover, develop and/or acquire technologies and/or
products relating to treatment and prevention of any disease, disorder or
condition in humans or animals. Licensor agrees that such technologies and
products, to the extent discovered without use of Licensor Know-How, will not be
deemed to be Licensor Know-How and are outside the scope of this Agreement.
2.8 Excused Performance. In addition to the provisions of Article
VIII and Section 9.9, the obligations of SPL with respect to a Licensed Product
under Sections 2.6(a), 2.6(c), 2.6(d) and 2.11(d) are expressly conditioned upon
the continuing absence of any adverse condition or event which warrants a delay
in commercialization of a Licensed Product including, but not limited to, an
adverse condition or event relating to the safety or efficacy of a Licensed
Product or unfavorable labeling, pricing or pricing reimbursement approvals, or
lack of Regulatory Approval, and the obligation of SPL to develop or market any
such Licensed Product shall be delayed or suspended so long as in SPL's
reasonable opinion any such condition or event exists.
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2.9 Supply of Licensed Compound/Licensed Product. Licensor shall
be responsible, at Licensor's expense, for supplying SPL with Licensed Compound
(in the form of bulk active), from Licensor's existing inventory of Licensed
Compound, to enable SPL to perform [ * ]. In addition, Licensor has the limited
option to supply all of SPL's requirements of Licensed Products as set forth in
Section 3.3(b). All Licensed Compound to be supplied by Licensor hereunder shall
be delivered FCA (Kenilworth, New Jersey) (Incoterms 1990) via a carrier to be
specified by SPL. Licensor warrants and represents that all supplies of Licensed
Compound provided to SPL by Licensor shall conform to the applicable
specifications for such Licensed Compound and were prepared in accordance with
current Good Manufacturing Practices ("cGMPs") and other applicable federal,
national, state and local laws and regulations in effect at the time of
manufacture. SPL shall be responsible for the formulation and packaging of the
Licensed Compound provided by Licensor hereunder, and for manufacture and supply
of all Licensed Compound and/or Licensed Product necessary for the performance
of [ * ] and for supplying all commercial quantities of Licensed Compound and
Licensed Products. Licensor shall transfer to SPL all Licensor Know-How relating
to the manufacture of Licensed Compound, and at SPL's request and expense shall
provide reasonable technical support to facilitate the implementation of such
manufacturing technology at SPL.
2.10 Reports. SPL shall provide Licensor with quarterly reports of
the status of the research and development activities and progress of any
application for Regulatory Approval, as applicable, in connection with Licensed
Product in the Territory. Further, SPL shall inform Licensor of commencement,
completion, and results of the major phases of clinical development of Licensed
Product, including but not limited to Phase II and Phase III clinical trials,
NDA and HRD submissions, NDA and HRD filings, approvable and approval letters,
and launch.
2.11 Non-Compete Provision. Subject to the terms of Section 9.1(b),
Licensor and its Affiliates shall be subject to the non-compete obligations set
forth in this Section 2.11.
(a) During the Term of this Agreement, Licensor shall not
undertake a development program for, or commercialize, either on its
own or in collaboration with any third party:
[ * ]
(b) For the period extending from the Effective Date
until the earlier of [ * ] after the First Commercial Sale of Licensed
Product in the Territory or [ * ], Licensor shall not, either on its
own or in collaboration with any third party:
[ * ]
(c) The foregoing notwithstanding, Licensor shall at all
times retain the right to develop and commercialize topical products
containing any compound other than the
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Licensed Compound for the treatment or prevention of dermatological
conditions, diseases or disorders. In addition, Licensor shall have the
right at all times to enter into agreements with third parties relating
to the performance by Licensor of pre-clinical research activities with
respect to compounds owned or controlled by such third parties,
provided that such compounds do not compete through the same mechanism
of action with the Licensed Compound (as determined using the same
criteria as set forth in Section 6.2(k)) with respect to the Primary
Indication and/or the Secondary Indication.
(d) Licensor's non-compete obligations under Section
2.11(b)(ii) are expressly conditioned upon SPL's initiating a
development program for Licensed Product for the Secondary indication
within [ * ] years after the Effective Date, and thereafter using good
faith reasonable efforts to develop and commercialize one or more
Licensed Products for the Secondary Indication.
ARTICLE III
PAYMENTS; ROYALTIES AND REPORTS
3.0 Coordination of Payments under the US Agreement. The license
fee, milestone payments and royalties payable by SPL under this Article III are
in consideration for the rights and licenses granted to SPL under this Agreement
and are in addition to any amounts payable to Licensor under the US Agreement.
It is understood and agreed that, with respect to the development milestone
payable under Section 3.2(a)(i) and the sales milestones payable under Section
3.2(b) the occurrence of one or more of such milestone events will result in
milestone payment obligations under both this Agreement and the corresponding
provisions of the US Agreement. It is further understood that SPL's financial
obligations with respect to development costs under Article II shall be [ * ]
apportioned between SPL and the corresponding obligations of Schering
Corporation under the US Agreement.
3.1 License Fee. In partial consideration for the licenses and
other rights granted to SPL hereunder, SPL shall pay to Licensor a license fee
("License Fee") [ * ], which payment shall be due within [ * ] business days
following the Effective Date.
3.2 Milestone Payments. In partial consideration for the licenses
and other rights granted to SPL hereunder, SPL shall promptly notify Licensor in
writing upon the occurrence of an event triggering one of the milestone payments
set forth in this Section 3.2, and within [ * ] days after the occurrence of
such event pay to Licensor the applicable milestone payment.
(a) Development Milestones:
(i) [ * ]
(ii) [ * ]
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(iii) [ * ]
(iv) [ * ]
(v) [ * ]
(b) Sales Milestones:
(i) [ * ]
(ii) [ * ]
(iii) [ * ]
(iv) [ * ]
The foregoing sales milestone payments are in addition to any royalty
payments due Licensor under Section 3.3 with respect to sales of
Licensed Product. For purposes of clarity, the parties acknowledge that
(1) the first achievement of more than one of the above sales
milestones in the same Calendar Year shall not affect SPL's obligation
to make the relevant sales milestone payments to Licensor, and (2)
annual worldwide sales of the Licensed Product shall be determined
based upon the aggregate total of sales in the Territory under this
Agreement and sales in countries outside the Territory under the
International Agreement.
(c) Limitations. Except as expressly set forth below,
each development milestone payment under Section 3.2(a) and each sales
milestone payment under Section 3.2(b) shall be payable one (1) time
only on the first occurrence of the indicated event regardless of the
number of times the event triggering the payment of such milestone
occurs. If the triggering event for a given milestone payment does not
occur prior to the effective date of termination, or the expiration, of
this Agreement, SPL shall have no obligation to pay such milestone
payment to Licensor. The Parties acknowledge and agree that nothing
herein shall be construed as representing an estimate or projection of
anticipated sales or the actual value of Licensed Compounds or Licensed
Products, and the figures set forth in Section 3.2(b) are merely
intended to define SPL's obligations to Licensor in the event such
sales performance is achieved.
3.3 Royalties. In further consideration for the licenses granted
to SPL hereunder, for so long as the Licensed Product is covered by a Valid
Claim in the Territory at the time of sale by SPL, and subject to the provisions
of Section 3.3 (a)-(c), SPL shall pay to Licensor royalties on a
country-by-country basis of [ * ] of SPL's, its Affiliates' or its Sublicensees'
Net Sales of Licensed Product in the Territory. With respect to countries in the
Territory where no such Valid Claim exists, the royalty rate shall be [ * ], and
such royalties shall be paid for [ * ] years from
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the first commercial sale of Licensed Product in such country. No royalties
shall be due upon the sale or other transfer among SPL, its Affiliates or
Sublicensees, but in such cases the royalty shall be due and calculated upon
SPL's or its Affiliates' or its Sublicensees' Net Sales to the first independent
third party. No royalties shall accrue on the disposition of Licensed Product by
SPL, its Affiliates or Sublicensees as samples (promotion or otherwise) or as
donations (for example, to non-profit institutions or government agencies for a
non-commercial purpose) or for clinical studies. Such dispositions by SPL shall
not be included in the determination of Net Sales during the period of time in
which such third party sales are occurring.
(a) Cap on Royalties Plus Cost of Goods. The parties
acknowledge and agree that the total of (i) royalties payable by SPL to
Licensor under this Agreement, and (ii) the Cost of Goods of Licensed
Product manufactured by SPL and/or paid by SPL to third parties for the
manufacture of Licensed Product, shall not exceed [ * ] of Net Sales of
Licensed Product. SPL shall use good faith reasonable efforts to keep
the Cost of Goods of Licensed Product from exceeding [ * ] of Net
Sales. SPL shall determine the Cost of Goods for the Licensed Product
in a timely manner, and in no event later than the date of filing of
the first NDA for the Licensed Product in the United States. In the
event that notwithstanding such efforts by SPL the Cost of Goods for
Licensed Product does exceed [ * ] of Net Sales, then SPL shall notify
Licensor in writing to that effect. Following receipt of such notice,
Licensor shall have the right to have an independent auditor review
SPL's relevant records and make an independent determination of the
Cost of Goods for the Licensed Product. Any such audit shall be
conducted under terms and conditions essentially the same as those set
forth in Section 3.7.
(b) Licensor's Option to Manufacture. In the event that
SPL's Cost of Goods for the Licensed Product is correctly determined to
exceed [ * ] of Net Sales, Licensor shall have the right to manufacture
and supply, or to seek a third party supplier able to manufacture and
supply, SPL's requirements of Licensed Product at a Cost of Goods equal
to or less than [ * ] of Net Sales for Licensed Product. If Licensor is
able, or locates a third supplier able, to manufacture and supply
Licensed Product at a Cost of Goods equal to or less than [ * ] of Net
Sales, SPL shall in good faith negotiate and enter into a suitable
supply agreement with Licensor or such third party, as appropriate, for
the manufacture and supply of Licensed Product. Any such agreement
shall include terms obligating SPL to purchase, and Licensor or the
third party to manufacture and supply, all of SPL's requirements of
Licensed Product at a Cost of Goods to be agreed upon, not to exceed [
* ] of Net Sales of Licensed Product. All supplies of Licensed Product
to be provided to SPL by Licensor or such third party manufacturer
pursuant to this Section 3.3(b) shall be manufactured at a qualified
manufacturing site, shall conform to the applicable specifications for
Licensed Product and shall be prepared in accordance with cGMPs and all
applicable federal, national, state and local laws and regulations in
effect at the time of manufacture.
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(c) Royalty Reduction. In the event that SPL's Cost of
Goods for Licensed Product are correctly determined to exceed [ * ] of
Net Sales of Licensed Product and Licensor is unable to identify a
third party capable of supplying SPL's requirements of Licensed Product
at a price equal to or less than [ * ] of Net Sales of Licensed
Product, then SPL shall remain responsible for the manufacture and
supply of Licensed Product and the royalty rate to be paid by SPL under
this Section 3.3 shall be reduced so that the total of (i) royalties
payable by SPL to Licensor under this Agreement, and (ii) the Cost of
Goods of Licensed Product manufactured by SPL and/or paid by SPL to
third parties for the manufacture of Licensed Product, is equal to [ *
] of Net Sales of Licensed Product. Notwithstanding the foregoing, the
royalty payable to Licensor under this Agreement shall not be reduced
pursuant to this Section 3.3(c) to less then [ * ] where a Valid Claim
exists, or [ * ] where no Valid Claim exists.
3.4 Third Party Licenses. In the event that SPL's outside patent
counsel determines that patent licenses from third parties are required by SPL,
its Affiliates or its Sublicensees in order to discover, develop, make, have
made, import, export, use, distribute, promote, market, offer for sale or sell
Licensed Compound and/or Licensed Product (hereinafter "Third Party Licenses"),
SPL shall provide Licensor with written notice to that effect and shall be
solely responsible for acquiring such licenses at SPL's sole discretion. SPL may
reduce any royalty otherwise due Licensor hereunder to reimburse it for
royalties and or license fees actually paid to such third parties under any
Third Party Licenses of patent claims which would be infringed by the
manufacture, use, import, export or sale of Licensed Compound and/or Licensed
Product in the Territory. SPL shall have no right to reduce any royalty due
Licensor hereunder for any amounts paid to a third party under any Third Party
License to the extent it is a license to technology (other than Licensor
Know-How) or materials (other than Licensed Compound) selected by SPL for use in
connection with the Licensed Product. The amount of reduction of royalties due
Licensor and the amount of reimbursement to SPL shall be equal to [ * ] of the
royalties or license fees paid to such third parties in consideration for the
Third Party License but in no event shall the royalty due Licensor for any
Licensed Product in any country be thereby reduced to less than [ * ] of the
royalty rate otherwise due Licensor hereunder for such Licensed Product in such
country.
3.5 Compulsory Licenses. If a compulsory license is granted under
the Patent Rights to a third party with respect to Licensed Compound and/or
Licensed Product in any country in the Territory with a royalty rate lower than
the royalty rate provided for under Section 3.3, then the royalty rate to be
paid by SPL on Net Sales in that country under Section 3.3 shall be reduced to
the rate paid by the compulsory licensee for so long as such compulsory license
is in effect.
3.6 Reports; Payment of Royalty; Payment Exchange Rate and
Currency Conversions.
(a) Royalties Paid Quarterly. Within [ * ] calendar days
following the close of each Calendar Quarter, following the First
Commercial Sale of a Licensed Product, SPL shall furnish to Licensor a
written report for the Calendar Quarter showing the Net
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Sales of Licensed Product(s) sold by SPL, its Affiliates and its
Sublicensees in the Territory during such Calendar Quarter and the
royalties payable under this Agreement for such Calendar Quarter.
Simultaneously with the submission of the written report, SPL shall pay
to Licensor, for the account of SPL or the applicable Affiliate or
Sublicensee, as the case may be, a sum equal to the aggregate royalty
due for such Calendar Quarter calculated in accordance with this
Agreement (reconciled for any previous overpayments or underpayments).
(b) Method of Payment. Payments to be made by SPL to
Licensor under this Agreement shall be paid by bank wire transfer in
immediately available funds to such bank account as is designated in
writing by Licensor from time to time. Royalties shall be deemed
payable by the entity making the Net Sales from the country in which
earned in local currency and subject to foreign exchange regulations
then prevailing. Royalty payments shall be made in United States
dollars to the extent that free conversions to United States dollars is
permitted. The rate of exchange to be used in any such conversion from
the currency in the country where such Net Sales are made shall be the
rate of exchange used by Schering Corporation for reporting such sales
for United States financial statement purposes. If, due to restrictions
or prohibitions imposed by national or international authority,
payments cannot be made as aforesaid, the Parties shall consult with a
view to finding a prompt and acceptable solution, and SPL will deal
with such monies as Licensor may lawfully direct at no additional
out-of-pocket expense to SPL. Notwithstanding the foregoing, if
royalties in any country cannot be remitted to Licensor for any reason
within [ * ] after the end of the Calendar Quarter during which they
are earned, then SPL shall be obligated to deposit the royalties in a
bank account in such country in the name of Licensor.
3.7 Maintenance of Records; Audits.
(a) Record Keeping by SPL. SPL and its Affiliates shall
keep complete and accurate records in sufficient detail to enable the
royalties payable hereunder to be determined. Upon [ * ] days prior
written notice from Licensor, SPL shall permit an independent certified
public accounting firm of nationally recognized standing selected by
Licensor, at Licensor's expense, to have access during normal business
hours to examine pertinent books and records of SPL and/or its
Affiliates as may be reasonably necessary to verify the accuracy of the
royalty reports hereunder. The examination shall be limited to
pertinent books and records for any year ending not more than [ * ]
months prior to the date of such request. An examination under this
Section 3.7(a) shall not occur more than once in any Calendar Year. SPL
may designate competitively sensitive information, which such auditor
may not disclose to Licensor; provided, however, that such designation
shall not encompass the auditor's conclusions. The accounting firm
shall disclose to Licensor only whether the royalty reports are correct
or incorrect and the specific details concerning any discrepancies. No
other information shall be provided to Licensor. All such accounting
firms shall sign a confidentiality agreement (in form and
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substance reasonably acceptable to SPL) as to any of SPL's or its
Affiliate's confidential information which they are provided, or to
which they have access, while conducting any audit pursuant to this
Section 3.7(a).
(b) Underpayments/Overpayments. If such accounting firm
correctly concludes that additional royalties were owed during such
period, SPL shall pay the additional royalties within [ * ] days of the
date Licensor delivers to SPL such accounting firm's written report so
correctly concluding. If such underpayment exceeds [ * ] of the royalty
correctly due Licensor then the fees charged by such accounting firm
for the work associated with the underpayment audit shall be paid by
SPL. Any overpayments by SPL will be credited against future royalty
obligations. In the event that SPL disagrees with the audit report and
the chief financial officers of SPL and Licensor (or their designees)
fail to resolve such disagreement, the dispute will be resolved through
the dispute resolution mechanism set forth in Section 9.2.
(c) Record Keeping by Sublicensee. SPL shall include in
each sublicense granted by it pursuant to this Agreement a provision
requiring the Sublicensee to make reports to SPL, to keep and maintain
records of sales made pursuant to such sublicense and to grant access
to such records by Licensor's independent accountant to the same extent
required of SPL under this Agreement.
(d) Confidentiality. Licensor shall treat all financial
information subject to review under this Section 3.7, or under any
sublicense agreement, in accordance with the confidentiality provisions
of this Agreement, and shall cause its accounting firm to enter into an
acceptable confidentiality agreement with SPL obligating it to retain
all such financial information in confidence pursuant to such
confidentiality agreement.
(e) Binding Records. Upon the expiration of [ * ] months
following the end of any Calendar Year, the calculation of royalties
payable under this Agreement with respect to such year shall be binding
and conclusive upon the Parties, and SPL, its Affiliates and its
Sublicensees shall be released from any liability or accountability
with respect to royalties for such Calendar Year.
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3.8 Income Tax Withholding. If at any time, any jurisdiction
within the Territory requires the withholding of income taxes or other taxes
imposed upon payments set forth in this Article III, SPL shall make such
withholding payments as required and subtract such withholding payments from the
payments set forth in this Article III, or if applicable, Licensor will promptly
reimburse SPL or its designee(s) of the amount of such payments, it being
understood that such withholding taxes are the obligation of Licensor. SPL shall
provide Licensor with documentation of such withholding and payment in a manner
that is satisfactory for purposes of the U.S. Internal Revenue Service. Any
withholdings paid when due hereunder shall be for the account of Licensor and
shall not be included in the calculation of Net Sales. Payments of withholding
taxes made by SPL pursuant to this Section 3.8 will be made based upon financial
information to be provided to SPL by Licensor and, to the extent that such
information is incorrect or incomplete, Licensor shall be liable for any fine,
assessment or penalty, or any deficiency, imposed by any taxing authority in the
Territory for any deficiency in the amount of any such withholding or the
failure to make such withholding payment. If SPL is required to pay any such
deficiency, or any such fine, assessment or penalty for any such deficiency,
Licensor shall promptly reimburse SPL for such payments, which shall not be
included in the calculation of Net Sales.
3.9 Direct Affiliate Licenses. Whenever SPL shall reasonably
demonstrate to Licensor that, in order to facilitate direct royalty payments by
an Affiliate, it is desirable that a separate license agreement be entered into
between Licensor and such Affiliate, Licensor will grant such licenses directly
to such Affiliate by means of an agreement which shall be consistent with all of
the provisions hereof, provided that SPL guarantees the Affiliate's obligations
thereunder.
ARTICLE IV
PATENTS
4.1 Filing, Prosecution and Maintenance of Patents. Licensor
agrees to diligently file, prosecute and maintain in the Territory, at
Licensor's expense, all Patent Rights owned in whole or in part by Licensor and
licensed to SPL under this Agreement, including without limitation, any Patent
Rights covering any Improvement(s). SPL shall determine the country(ies) in the
Territory with respect to which SPL desires Licensor to perform such activities
and will promptly notify Licensor to that effect. All such determinations shall
be made by SPL in accordance with its standard practices with respect to the
filing, prosecution and maintenance of patents, and Licensor's obligation to
file, prosecute and maintain each patent application or patent within the Patent
Rights under this Section 4.1 shall be limited to those countries selected by
SPL for such patent application or patent. Licensor shall supply SPL with a copy
of the applications as filed, together with notice of its filing date and serial
number. Licensor shall keep SPL regularly advised of the status of pending
patent applications (including, without limitation, the grant of any Patent
Rights), and upon the written request of SPL shall provide copies of any
substantive papers provided to or received from government patent authorities
related to the filing, prosecution and maintenance of such patent filings. SPL
shall treat all information, papers, and
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other materials provided by Licensor pursuant to this Section 4.1 in accordance
with the confidentiality provisions of this Agreement.
4.2 Option of SPL to Prosecute and Maintain Patents. Licensor
shall give [ * ] days prior written notice to SPL of any desire to cease
prosecution and/or maintenance of a particular Patent Right and, in such case,
shall permit SPL, at its sole discretion, to continue prosecution or maintenance
at its own expense. If SPL elects to continue prosecution or maintenance,
Licensor shall execute such documents and perform such acts, at SPL's expense,
as may be reasonably necessary to effect an assignment of such Patent Rights to
SPL. Any such assignment shall be completed in a timely manner to allow SPL to
continue such prosecution or maintenance. Any patents or patent applications so
assigned shall not be considered Patent Rights.
4.3 Enforcement.
(a) Notice and Discontinuance of Infringement. In the
event that either SPL or Licensor becomes aware of any third party
infringement within the Territory of any Valid Claim, it will notify
the other Party in writing to that effect. Any such notice shall
include evidence to support an allegation of infringement by such third
party. Licensor shall have a period of [ * ] months from the date of
said notice to obtain a discontinuance of such infringement or bring
suit against the third party infringer. Licensor shall bear all the
expenses of any suit brought by it. SPL shall have the right, prior to
commencement of the trial, suit or action brought by Licensor, to join
any such suit or action, and in such event shall pay one-half of all
costs of such suit or action. In the event that SPL has joined in the
action and shared in the costs thereof as set forth above, no
settlement, consent judgment or other voluntary final disposition of
the suit may be entered into without the consent of SPL. In the event
that SPL has not joined the suit or action, SPL will reasonably
cooperate with Licensor in any such suit or action and shall have the
right to consult with Licensor and be represented by its own counsel,
provided that Licensor shall periodically reimburse SPL for its
out-of-pocket costs (excluding the costs of retaining its own outside
counsel) incurred in cooperating with Licensor. Any recovery or damages
derived from any suit under this Section 4.3(a) where SPL has joined
and shared costs shall be used first to reimburse each of Licensor and
SPL for its documented out-of-pocket legal expenses relating to the
suit, shall be used second to reimburse Licensor for royalties lost as
a result of reduced sales of Licensed Product, shall be used third to
reimburse SPL for amounts attributed to SPL's lost profits, with any
remaining amounts, including but not limited to punitive, exemplary, or
other enhanced damages, to be shared [ * ] by the Parties. Any recovery
or damages derived from a suit which SPL has not joined shall be
retained by Licensor.
(b) Continuance of Infringement. If Licensor has neither
obtained a discontinuance of such infringement nor brought suit against
such infringer after the expiration of the [ * ] period specified in
Subsection 4.3(a), SPL shall have the right, but not the obligation, to
bring suit against such infringer under the Patent Rights and join
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Licensor as a party plaintiff, provided that SPL shall bear all the
expenses of such suit. Licensor shall cooperate with SPL in any such
suit for infringement of a Patent Right brought by SPL against a third
party, and shall have the right to consult with SPL and to participate
in and be represented by independent counsel in such litigation at its
own expense. SPL shall periodically reimburse Licensor for its out of
pocket costs (excluding Licensor's costs of retaining independent
counsel) incurred in cooperating with SPL. SPL shall incur no liability
to Licensor as a consequence of such litigation or any unfavorable
decision resulting therefrom, including any decision holding any of the
Patent Rights invalid or unenforceable, except that SPL shall indemnify
and hold Licensor harmless for any monetary judgment or award against
or penalty levied upon either Licensor or SPL arising out of SPL's acts
in the enforcement of such Patent Rights. In the event that SPL
recovers any sums through litigation under this Section 4.3(b) by way
of damages or in settlement thereof, SPL shall retain all such sums.
4.4 Third Party Infringement Suit.
(a) Defense. In the event that a third party sues SPL
alleging that SPL's, its Affiliates' or its Sublicensees' making,
having made, importing, exporting, using, distributing, marketing,
promoting, offering for sale or selling Licensed Compound and/or
Licensed Product in one or more countries in the Territory infringes or
will infringe said third party's patent, then SPL may elect to defend
such suit at its sole expense and discretion. To the extent that the
alleged infringement is based upon the use of Licensed Compound,
another compound from the Compound Library or the Licensor Know-How,
SPL shall have no obligation to pay royalties to Licensor under Section
3.3 with respect to sales of Licensed Product in such country(ies)
during the pendency of any such suit. Upon SPL's request and in
connection with SPL's defense of any such third party infringement
suit, Licensor shall cooperate with SPL for such defense provided, that
SPL shall promptly reimburse Licensor for reasonable out-of-pocket
costs and expenses incurred by Licensor in providing such cooperation
(excluding Licensor's costs of retaining independent counsel). Licensor
shall invoice SPL for such costs and expenses, and shall provide
documentation for the invoice. The invoice shall be payable to Licensor
or its designee(s) [ * ] days after receipt by SPL of the invoice.
(b) Licensing. SPL shall have the right to negotiate with
said third party for a suitable license or assignment of rights under
the relevant patents. In the event that such negotiation results in a
consummated agreement, then any lump sum payment and/or royalty
payments to be made thereunder shall be paid by SPL and shall be offset
against any royalties due Licensor in accordance with the terms of
Article 3.4.
4.5 Certification Under Drug Price Competition and Patent
Restoration Act. Licensor and SPL each shall immediately give written notice to
the other of any certification of which they become aware filed pursuant to 21
U.S.C. ss.355(b)(2)(A)(iv) and 355(j)(2)(A)(vii), or any amendment or successor
statute thereto, claiming that Patent Rights covering Licensed
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Compound and/or Licensed Product(s) are invalid or that infringement will not
arise from the manufacture, use or sale of a product containing Licensed
Compound or otherwise equivalent to Licensed Product by a third party.
Notwithstanding any provision to the contrary, in the event that the Patent
Rights at issue are owned and/or controlled by Licensor and Licensor has failed
to bring an infringement action against such third party at least [ * ] business
days prior to expiration of the forty five (45) day period set forth in 21
U.S.C. ss.355(c)(3)(C) (or any amendment or successor statute thereto), SPL
shall have the right to bring such an infringement action, in its sole
discretion and at its own expense, in its own name and/or in the name of
Licensor. At SPL's request, Licensor shall, at its own expense, provide SPL
reasonable assistance to conduct such infringement action, including, without
limitation, causing the execution of such legal documents as SPL may deem
necessary for the prosecution of such action. SPL shall periodically reimburse
Licensor for its out-of-pocket costs (excluding any of Licensor's costs of
retaining independent counsel) incurred in assisting SPL. SPL shall incur no
liability to Licensor as a consequence of such litigation or any unfavorable
decision resulting therefrom, including any decision holding any of the Patent
Rights invalid or unenforceable, except that SPL shall indemnify and hold
Licensor harmless for any monetary judgment or award against or penalty levied
upon either Licensor or SPL arising out of SPL's acts in the enforcement of such
Patent Rights. In the event that SPL recovers any sums in such litigation by way
of damages or in settlement thereof, SPL shall have the right to retain all such
sums to offset its costs, losses and expenses.
4.6 Abandonment. Subject to SPL's rights pursuant to Section 4.2,
Licensor shall at the earliest known date give notice to SPL of the grant,
lapse, revocation, surrender, invalidation or abandonment of any Patent Rights
licensed to SPL for which Licensor is responsible for the filing, prosecution
and maintenance under this Agreement.
4.7 Patent Term Restoration. The Parties hereto shall cooperate
with each other in obtaining patent term restoration or its equivalent in the
Territory where applicable to Patent Rights. In the event that elections with
respect to obtaining such patent term restoration are to be made, SPL shall have
the right to make the election and Licensor agrees to abide by such election.
4.8 Notices Regarding Patents. All notices, inquiries and
communications in connection with this Article IV shall be sent in the manner
set forth in Section 9.7 to the Parties at the addresses and facsimile numbers
indicated below.
If to Licensor: AtheroGenics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Vice President, Business Development
(with a copy to: President)
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to SPL: Schering Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Staff Vice President - Patents and Trademarks
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE V
CONFIDENTIALITY AND PUBLICATION
5.1 Confidentiality.
(a) Nondisclosure Obligation. Each of Licensor and SPL
shall use only in accordance with this Agreement, and shall not
disclose to any third party, any of the other Party's Proprietary
Information received by it pursuant to this Agreement without the prior
written consent of the other Party. The foregoing obligations shall
survive the expiration or termination of this Agreement for a period of
[ * ] years. These obligations shall not apply when and to the extent
Proprietary Information :
(i) is known by the receiving Party at the time
of its receipt, and not through a prior disclosure by the
disclosing Party, as documented by business records;
(ii) is at the time of disclosure or thereafter
becomes published or otherwise part of the public domain
without breach of this Agreement by the receiving Party;
(iii) is subsequently disclosed to the receiving
Party by a third party that has the right to make such
disclosure;
(iv) is developed by the receiving Party
independently of Proprietary Information or other information
received from the disclosing Party and such independent
development can be documented by the receiving Party;
(v) is disclosed to any institutional review
board of any entity conducting clinical trials, or any
governmental or other regulatory agencies in order to obtain
patents, to gain approval to conduct clinical trials or to
market Licensed Compound and/or Licensed Product, but such
disclosure may be made only to the extent reasonably necessary
to obtain such patents or authorizations; or
(vi) is required by law, regulation, rule, act or
order of any governmental authority or agency to be disclosed
by a Party, provided that notice is promptly delivered to the
other Party in order to provide an opportunity to seek
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a protective order or other similar order with respect to such
Proprietary Information and thereafter the disclosing Party
discloses to the requesting entity only the minimum
Proprietary Information required to be disclosed in order to
comply with the request, whether or not a protective order or
other similar order is obtained by the other Party.
(b) Disclosure to Agents. Notwithstanding the provisions
of Section 5.1(a), SPL shall have the right to disclose Licensor's
Proprietary Information to its Sublicensees, agents, consultants,
Affiliates or other third parties (collectively "Agents") in accordance
with this Section 5.1(b). Such disclosure shall be limited only to
those Agents directly involved in the research, development,
manufacture, marketing or promotion of Licensed Compound or Licensed
Product (or for such Agents to determine their interest in performing
such activities) in accordance with this Agreement. Any such Agents
must agree in writing to be bound by confidentiality and non-use
obligations essentially the same as those contained in this Agreement.
The term of confidentiality and non-use obligations for such Agents
shall be no less than [ * ] years. SPL shall be jointly and severally
liable for any disclosure of Licensor Proprietary Information by
Agents.
(c) Disclosure to a Third Party. Licensor shall have the
right to use and disclose any Licensor Know-How at its sole option and
discretion for the limited purpose of filing, prosecuting, and
supporting Patent Rights. Subject to the terms of Section 5.2, either
Party may publish Licensor Know-How under the terms of Section 5.3
below. Licensor shall not otherwise disclose, provide or transfer any
Licensor Know-How to any third party without the prior written approval
of SPL.
5.2 Publicity. Except as provided in Section 5.1 and this Section
5.2, a Party may not use the name of the other Party in any publicity,
advertising or in any other public way and, may not issue press releases or
otherwise publicize or disclose any information related to the existence of this
Agreement, the terms or conditions of this Agreement, or any information
relating to the subject matter hereof, without the prior written consent of the
other Party. The Parties shall agree upon an initial press release to announce
the execution of this Agreement, together with a corresponding Q&A outline for
use in responding to inquiries about the Agreement. Following such initial press
release, Licensor may use the specific information contained therein, or in any
subsequent public announcements or publications made by SPL or by mutual
agreement of the Parties, in Licensor's investor relations and public relations
activities. Licensor shall make no public announcement, either written, oral or
in any medium relating to the safety of Licensed Compound and/or Licensed
Product, except for statements in official correspondence with government patent
authorities in support of Patent Rights as provided for in Section 5.1(c). [ * ]
5.4 Publication. SPL and Licensor each acknowledge the potential
benefit in
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publishing results of certain studies to obtain recognition within the
scientific community and to advance the state of scientific knowledge. Each
Party also recognizes the mutual interest in obtaining valid patent protection
and in protecting business interests and trade secret information. No
publication of Licensor Know-How or Patent Rights may be made without the prior
written consent of Licensor. The Parties agree that SPL, its Affiliates,
employees or consultants shall be free to make any publication which does not
disclose Licensor Know-How or Patent Rights. In the event that any proposed
publication (as defined below) discloses Licensor Know-How or Patent Rights, the
following procedure shall apply: Either Party, its Affiliates, employees or
consultants wishing to make a publication shall deliver to the other Party a
copy of the proposed written publication or an outline of an oral disclosure at
least [ * ] days prior to submission for publication or presentation. For
purposes of this Agreement, the term "publication" shall include, without
limitation, abstracts and manuscripts for publication, slides and texts of oral
or other public presentations, and texts of any transmission through any
electronic media, e.g. any computer access system such as the Internet,
including the World Wide Web. The reviewing Party shall have the right (i) to
propose modifications to the publication for patent reasons, trade secret
reasons or business reasons or (ii) to request delay of the publication or
presentation in order to protect patentable information. If the reviewing Party
requests a delay, the publishing Party shall delay submission or presentation
for a period of up to [ * ] from the filing date of the first patent application
in the Territory covering the information contained in the proposed publication
or presentation. If the reviewing Party requests modifications to the
publication, the publishing Party may edit such publication to prevent
disclosure of trade secret or proprietary business information prior to
submission of the publication or presentation.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Each Party. Each of Licensor
and SPL hereby represents, warrants and covenants to the other Party hereto that
as of the Execution date it has complied, and during the period extending from
the Execution Date until the expiration or termination of this Agreement it
shall comply, with all applicable material laws and regulations relating to its
activities under this Agreement. Each of Licensor and SPL further represents,
warrants and covenants to the other Party hereto that as of the Execution Date:
(a) it is a corporation or entity duly organized and
validly existing under the laws of the state or other jurisdiction of
its incorporation or formation;
(b) the execution, delivery and performance of this
Agreement by such Party has been duly authorized by all requisite
corporate action, subject only to receipt of requisite approval of its
board of directors;
(c) it has the power and authority to execute and deliver
this Agreement and to perform its obligations hereunder;
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(d) the execution, delivery and performance by such Party
of this Agreement and its compliance with the terms and provisions
hereof does not and will not conflict with or result in a breach of any
of the terms and provisions of or constitute a default under (i) a loan
agreement, guaranty, financing agreement, agreement affecting a product
or other agreement or instrument binding or affecting it or its
property; (ii) the provisions of its charter or operative documents or
bylaws; or (iii) any order, writ, injunction or decree of any court or
governmental authority entered against it or by which any of its
property is bound;
(e) except for the governmental and Regulatory Approvals
required to market Licensed Product in the Territory and any filings or
approvals referred to in Section 2.4, the execution, delivery and
performance of this Agreement by such Party does not require the
consent, approval or authorization of, or notice, declaration, filing
or registration with, any governmental or regulatory authority and the
execution, delivery or performance of this Agreement will not violate
any law, rule or regulation applicable to such Party;
(f) this Agreement has been duly authorized, executed and
delivered and constitutes such Party's legal, valid and binding
obligation enforceable against it in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to the availability of particular remedies under general
equity principles;
(g) to the best of its knowledge there are no third party
pending patent applications (excluding the Patent Rights) which, if
issued, may cover the development, manufacture, use or sale of any
Licensed Compound or Licensed Product.
6.2 Licensor's Representations. Licensor hereby represents,
warrants and covenants to SPL that as of the Execution Date:
(a) to the best of its knowledge, the Patent Rights and
Licensor Know-How are subsisting and are not invalid or unenforceable,
in whole or in part;
(b) it has the full right, power and authority to grant
all of the right, title and interest in the licenses granted to SPL
under Article II hereof;
(c) to the best of its knowledge, it has not previously
assigned, transferred, conveyed or otherwise encumbered its right,
title and interest in the Licensed Compound, Licensed Product, the
Patent Rights, or Licensor Know-How ;
(d) except as specifically set forth in Schedule 6.2(d),
it is the sole and exclusive owner and/or licensee of the Patent Rights
and Licensor Know-How, all of which are free and clear of any liens,
charges and encumbrances, and to the best of its knowledge no other
person, corporation or other private entity, or governmental entity or
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subdivision thereof, has or shall have any claim of ownership with
respect to the Patent Rights or Licensor Know-How, whatsoever;
(e) to the best of its knowledge, the Patent Rights and
Licensor Know-How, and the development, manufacture, use, distribution,
marketing, promotion and sale of Licensed Products do not interfere or
infringe (as applicable) on any intellectual property rights owned or
possessed by any third party;
(f) there are no claims, judgments or settlements against
or amounts with respect thereto owed by Licensor, and to the best of
its knowledge no pending or threatened claims or litigation against
Licensor relating to Licensed Compound, the Patent Rights and Licensor
Know-How;
(g) to the best of its knowledge, there are no
circumstances that would adversely affect the commercial utility or the
use of the Licensed Product;
(h) it has provided to Schering Corporation a summary of
all material adverse events known to it relating to the Licensed
Compound;
(i) there are no collaborative, licensing, material
transfer, supply, distributorship or marketing agreements or
arrangements or other similar agreements to which it or any of its
Affiliates are a party relating to Licensed Compound, Licensed Product
or Patent Rights which would materially limit the rights granted to SPL
under this Agreement with respect to the Licensed Compound, Licensed
Product or Patent Rights;
(j) there are no trademark(s) chosen, owned or controlled
by Licensor or its Affiliates specifically in connection with the
Licensed Compound and/or the Licensed Product in the Territory; and
(k) except as set forth in Schedule 6.2(k), it has not
identified any compounds outside of the Compound Library which exhibit
both (1) similar or better VCAM-1 inhibition than the Licensed Compound
as determined using Licensor's currently available in vitro screens for
VCAM-1 inhibitory activity (i.e., the human aortic endothelial cell
based screen) and (2) histologically or morphologically demonstrated
anti-atherosclerotic properties similar or better than Licensed
Compound in the Licensor's animal models (i.e., the
hypercholesterolemic rabbit).
Licensor further represents, warrants and covenants to SPL that:
(l) during the period extending from the Execution Date
until the expiration or termination of this Agreement it will use
reasonable efforts not to diminish the rights under the Patent Rights
and Licensor Know-How granted to SPL hereunder, including
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without limitation, by not committing or permitting any actions or
omissions which would cause the breach of any license or other
agreements between itself and third parties which provide for licenses,
assignments or other rights to any Patent Rights or Licensor Know-How,
that it will provide SPL promptly with notice of any such alleged
breach, and that as of the Execution Date, it is in compliance in all
material respects with any such licenses or other agreements with third
parties;
(m) as of the Execution Date, and to the best of its
knowledge, all data summaries provided in writing to SPL by Licensor
prior to the Execution Date relating to pre-clinical and clinical
studies of the Licensed Compound accurately represent the raw data
underlying such summaries; and
(n) Licensor shall not seek or file for any trademark for
use in connection with the Licensed Compound and/or the Licensed
Product in the Territory during the period extending from the Execution
Date until the expiration or termination of this Agreement.
6.3 Continuing Representations. The representations and warranties
of each Party contained in Sections 6.1 and 6.2 shall survive the execution of
this Agreement.
6.4 No Inconsistent Agreements. Neither Party has in effect and
after the Effective Date neither Party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its obligations under
this Agreement.
6.5 Representation by Legal Counsel. Each Party hereto represents
that it has been represented by legal counsel in connection with this Agreement
and acknowledges that it has participated in the drafting hereof. In
interpreting and applying the terms and provisions of this Agreement, the
Parties agree that no presumption shall exist or be implied against the Party
which drafted such terms and provisions.
6.6 Additional Obligations of Licensor The Parties acknowledge and
agree that all data and information provided by Licensor to SPL arising out of
or relating to any preclinical and/or clinical studies involving the Licensed
Compound and/or Licensed Product conducted by or on behalf of Licensor (the
"Studies"), or relating to any patent applications or patents having claims
covering the Licensed Compound and/or Licensed Product, are of material
importance to the development and commercialization of the Licensed Compound
and/or Licensed Product and to SPL's decision to enter into this Agreement.
(a) Licensor represents and warrants that, to the best of
its knowledge and based upon Licensor's diligence in the performance of
the relevant activities, as of the Execution Date it (and its
subcontractors and/or collaborators, if any):
(i) has fully complied with all applicable laws, rules and
regulations, in the preparation, filing and prosecution of
patent applications or patents;
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(ii) has fully complied with all applicable laws, rules and
regulations, in the conduct and evaluation of the Studies and
with regard to all applications or submissions for Regulatory
Approval in the Territory, if any;
(iii) knows of no irregularities or information suggesting any
irregularities in connection with the preparation, filing or
prosecution of patent applications or patents which may have a
material adverse effect with respect thereto; and
(iv) knows of no irregularities or information suggesting any
irregularities in connection with the conduct and evaluation
of the Studies which may have a material adverse effect with
respect thereto.
(b) To the extent of Licensor's obligations under this
Agreement, Licensor shall undertake to perform the following in
accordance with all applicable laws, rules and regulations:
(i) to prepare, file, prosecute and maintain, or ensure that its
subcontractors, collaborators and/or agents prepare, file,
prosecute and maintain, any patent applications or patents
relating to the Licensed Compound and/or Licensed Product; and
(ii) to conduct, or ensure that its subcontractors and/or
collaborators, if any, shall conduct, any Studies.
(c) In the event Licensor becomes aware of any known or
suspected impropriety or misconduct relating to the preparation,
filing, prosecution or maintenance of patent applications or patents,
and/or the performance, analysis or reporting of any Studies, or any
application or submission for Regulatory Approval, Licensor shall,
within [ * ] hours notify SPL of such event in writing.
ARTICLE VII
INDEMNIFICATION AND LIMITATION ON LIABILITY
7.1 Indemnification by SPL. SPL shall indemnify, defend and hold
harmless Licensor and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a "Licensor Indemnified Party")
from and against any and all third party claims, demands, lawsuits, proceedings,
settlement amounts, liability, loss, damage, cost, and expense (including
reasonable attorneys' fees), (collectively, a "Liability") which may be asserted
against the Licensor Indemnified Party or which the Licensor Indemnified Party
may incur, suffer or be required to pay resulting from or arising out of (i) the
discovery, development, manufacture, promotion, distribution, use, testing,
marketing, sale or other disposition of Licensed Compound
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and/or Licensed Product(s) by SPL, its Affiliates or Sublicensees (including
without limitation any personal injury, death, or other injuries suffered by
users of Licensed Compound or Licensed Product), or (ii) the breach by SPL of
any covenant, representation or warranty contained in this Agreement; or (iii)
the successful enforcement by a Licensor Indemnified Party of its rights under
this Section 7.1. Notwithstanding the foregoing, SPL shall have no obligation
under this Agreement to indemnify, defend or hold harmless any Licensor
Indemnified Party with respect to any Liability which results from the willful
misconduct or negligent acts or omissions of Licensor, its Affiliates, or any of
their respective employees, officers, directors or agents.
7.2 Indemnification by Licensor. Licensor shall indemnify, defend
and hold harmless SPL and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a "SPL Indemnified Party") from
and against any Liability which the SPL Indemnified Party may incur, suffer or
be required to pay resulting from or arising out of (i) the breach by Licensor
of any covenant, representation or warranty contained in this Agreement; or (ii)
the successful enforcement by a SPL Indemnified Party of its rights under this
Section 7.2. Notwithstanding the foregoing, Licensor shall have no obligation
under this Agreement to indemnify, defend or hold harmless any SPL Indemnified
Party with respect to any Liability which results from willful misconduct or
negligent acts or omissions of SPL, its Affiliates, or any of their respective
employees, officers, directors or agents.
7.3 Conditions to Indemnification. Each Party agrees to promptly
give the other Party notice of any claim for which indemnification may be
sought. Failure of an indemnified Party to provide notice of a claim to the
indemnifying Party shall affect the indemnified Party's right to indemnification
only to the extent that such failure has a material adverse effect on the
indemnifying Party's ability to defend or the nature or the amount of the
Liability. Subject to the provisions of Article IV, the indemnifying Party shall
have the right to assume the defense of any suit or claim related to the
Liability if it has assumed responsibility for the suit or claim in writing;
provided, however, that if in the reasonable judgment of the indemnified Party,
such suit or claim involves an issue or matter which could have a materially
adverse effect on the business operations or assets of the indemnified Party,
the indemnified Party may waive its rights to indemnity under this Agreement and
control the defense or settlement thereof, but in no event shall any such waiver
be construed as a waiver of any indemnification rights such Party may have at
law or in equity. If the indemnifying Party defends the suit or claim, the
indemnified Party may participate in (but not control) the defense thereof at
its sole cost and expense.
7.4 Settlements. Subject to the provisions of Article IV, neither
Party may settle a claim or action related to a Liability without the consent of
the other Party if such settlement would impose any monetary obligation on the
other Party or require the other Party to submit to an injunction or otherwise
limit the other Party's rights under this Agreement, provided that such consent
shall not be unreasonably withheld or delayed. Any payment made by a Party to
settle any such claim or action shall be at its own cost and expense.
7.5 Limitation of Liability. With respect to any claim by one
Party against the other
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arising out of the performance or failure of performance of the other Party
under this Agreement, the Parties expressly agree that the liability of such
Party to the other Party for such breach shall be limited under this Agreement
or otherwise at law or equity to direct damages only and in no event shall a
Party be liable for, punitive, exemplary or consequential damages suffered or
incurred by the other Party.
7.6 Insurance. Each Party acknowledges and agrees that during the
Term of this Agreement it shall maintain adequate insurance and/or a
self-insurance program for contractual liability insurance to cover such Party's
obligations under this Agreement. Each Party shall provide the other Party with
evidence of such insurance and/or self-insurance program, upon request.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term and Expiration. This Agreement shall be effective as of
the Effective Date and unless terminated earlier by mutual written agreement of
the Parties or pursuant to Sections 8.2, 8.3 or 8.4 below, the Term of this
Agreement shall continue in effect on a product-by-product and
country-by-country basis until the expiration of the last to expire Patent Right
incorporating a Valid Claim covering the Licensed Product, or in countries where
no such Patent Rights exist until the tenth anniversary of the First Commercial
Sales of Licensed Product in such country. Upon expiration of this Agreement,
SPL's licenses pursuant to Section 2.1 and 2.2 shall become fully paid-up,
perpetual licenses.
8.2 Termination by SPL Without Cause. SPL shall have the
unilateral right to terminate this Agreement on a product-by-product basis
(without cause) at any time by giving [ * ] days advance written notice to
Licensor. In the event of the exercise of such termination rights, the rights
and licenses granted to SPL under Sections 2.1 and 2.2 shall terminate and all
rights to Licensor Know-How, Licensed Compounds and Licensed Products with
respect to the applicable product which are granted pursuant to this Agreement
shall revert to Licensor.
8.3 Termination Upon Cessation of Development.
(a) Termination by Either Party Either Party shall have
the unilateral right to terminate this Agreement on a
product-by-product basis at any time by giving [ * ] advance written
notice to the other Party if SPL ceases development or
commercialization of Licensed Compound or Licensed Product pursuant to
Sections 2.6(a) and (c), subject to Section 2.6(b). In the event of the
exercise of such termination rights, the rights and licenses granted to
SPL under Sections 2.1 and 2.2 shall terminate and all rights to
Licensor Know-How, Licensed Compounds and Licensed Products with
respect to the applicable product which are granted pursuant to this
Agreement shall revert to Licensor.
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(b) Termination by Licensor Licensor shall have the
unilateral right to terminate this Agreement by giving [ * ] days
written notice to SPL in the event that:
(i) [ * ]
(ii) [ * ]
In the event of the exercise of such termination rights, the rights and
licenses granted to SPL under Sections 2.1 and 2.2 shall terminate and
all rights to Licensor Know-How, Licensed Compounds and Licensed
Products with respect to the applicable product which are granted
pursuant to this Agreement shall revert to Licensor.
8.4 Termination.
(a) Termination for Cause. This Agreement may be
terminated by written notice at any time during the Term of this
Agreement:
(i) by either Party, subject to Section 9.2, if
the other Party is in breach of its material obligations with
respect to such product hereunder and has not cured such
breach within [ * ] days ([ * ] days with respect to payment
obligations under Article III) after written notice requesting
cure of the breach with reasonable detail of the particulars
of the alleged breach, or within [ * ] days of receiving
notice initiated actions reasonably expected to cure the cited
failure and thereafter diligently pursued such actions to cure
the failure (even if requiring longer than the [ * ] days set
forth in this subsection); or
(ii) by either Party upon the filing or
institution of bankruptcy, reorganization (in connection with
any insolvency), liquidation or receivership proceedings, or
upon an assignment of a substantial portion of the assets for
the benefit of creditors by the other Party, or in the event a
receiver or custodian is appointed for such other Party's
business, or if a substantial portion of such other Party's
business is subject to attachment or similar process;
provided, however, that in the case of any involuntary
bankruptcy proceeding such right to terminate shall only
become effective if the proceeding is not dismissed within
[ * ] days after the filing thereof.
(b) Effect of Termination for Cause on License.
(i) Termination by SPL. In the event SPL
terminates this Agreement under Section 8.4(a)(i), due to a
breach by Licensor of its material obligations under Section
2.1(a), 2.1(b) or 2.11(a) of this Agreement, then SPL's
licenses pursuant to Sections 2.1 and 2.2 shall become fully
paid-up, perpetual licenses.
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(ii) Termination by Licensor. In the event that
Licensor terminates this Agreement under Section 8.4(a)(i),
then the rights and licenses granted to SPL under Sections 2.1
and 2.2 shall terminate and all rights to Licensor Know-How,
Licensed Compounds and Licensed Products granted pursuant to
this Agreement shall revert to Licensor.
(iii) Effect of Bankruptcy. In the event SPL
terminates this Agreement under Section 8.4(a)(ii) or this
Agreement is otherwise terminated under Section 8.4(a)(ii),
the Parties agree that SPL, as a licensee of rights to
intellectual property under this Agreement, shall retain and
may fully exercise all of its rights and elections under the
Insolvency Statute including as set forth in Section 9.8
hereof.
8.5 Effect of Termination. Expiration or termination of the
Agreement shall not relieve the Parties of any obligation accruing prior to such
expiration or termination, and the provisions of Articles V and VII shall
survive the expiration of the Agreement. With regard to reimbursement for
development costs incurred by Licensor, including, without limitation, the costs
of clinical studies, SPL's obligations under Section 2.6 shall upon termination
be limited to the costs for actual work performed in accordance with the
relevant research plans or protocols up to the effective date of such
termination, or any irrevocable financial commitments made by Licensor prior to
the date of notice of termination. Any expiration or early termination of this
Agreement shall be without prejudice to the rights of either Party against the
other accrued or accruing under this Agreement prior to termination, including
the obligation to pay royalties for Licensed Product(s) or Licensed Compound
sold prior to such termination. In the event of termination of this Agreement,
SPL shall have the right to continue to sell its existing inventory of Licensed
Product during the [ * ] month period immediately following such termination,
provided that SPL shall continue to make royalty payments with respect to such
sales.
8.6 Remedies for Breach. In addition to any and all other
remedies that SPL may have under this Agreement, or otherwise under law and/or
equity, in the event that Licensor materially breaches its obligations under
Sections 6.6(a) or (b) of this Agreement and/or materially breaches its
representation, warranties and covenants under Section 6.2(m), then SPL shall
have the right, at SPL's sole discretion, upon written notice to Licensor to
either: (i) deduct [ * ] of the remaining unpaid milestone(s) in Section 3.2;
(ii) permanently reduce by [ * ] the royalty rates provided for in Section 3.3;
or (iii) immediately terminate the Agreement.
8.7 Licensor's Rights on Termination. In the event that Licensor
terminates this Agreement under Section 8.3 or 8.4(a)(i), or SPL terminates this
Agreement under Section 8.2 or 8.3, SPL shall provide to Licensor the following:
(i) all existing Regulatory Approvals and/or applications for
Regulatory Approval for the applicable Licensed Product(s) in
the Territory;
(ii) access, including the right to make copies, of all
preclinical, clinical,
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pharmacokinetic, toxicology or other data owned or controlled
by SPL which is necessary to support any of the Regulatory
Approvals provided to Licensor under Section 8.7(i);
(iii) subject to the terms of Section 8.7 (iv), all preclinical and
clinical supplies of the applicable Licensed Product(s),
and/or Licensed Compound or other Compound Library compounds,
in SPL's possession or control;
(iv) access to all manufacturing information relating to the
Licensed Product, including assigning, sublicensing or
otherwise making available, as appropriate, any third party
manufacturing agreements relied upon by SPL for the
manufacture of Licensed Product, in each case to the extent
reasonably necessary for Licensor to manufacture the Licensed
Product following such termination;
(v) to the extent that termination occurs after the First
Commercial Sale of the applicable Licensed Product(s) and
subject to the terms of Section 8.5, Licensor shall have the
right to purchase SPL's remaining inventory of the applicable
Licensed Product(s) and/or Licensed Compound or other Compound
Library compounds for sale in the Territory at [ * ] of SPL's
fully absorbed manufacturing costs.
In addition, in the event of such termination, SPL shall grant to Licensor a
paid-up, non-exclusive, non-transferable license in the Territory under any
issued patents, or pending patent applications, owned or controlled by SPL which
would otherwise be infringed by the manufacture, use or sale of the applicable
Licensed Product(s) in the Territory, which license shall be restricted to the
sole purpose of making, having made, importing, exporting, using, distributing,
marketing, promoting, offering for sale and selling such Licensed Product(s).
8.8 Concurrent Termination with the US Agreement. In the event of
any termination of the US Agreement by either Licensor or Schering Corporation
under the provisions of Sections 8.2, 8.3 or 8.4 of the US Agreement, this
Agreement shall automatically terminate concurrently under the corresponding
Section 8.2, 8.3 or 8.4 of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Assignment/Change of Control.
(a) Assignment. Neither this Agreement nor any or all of
the rights and obligations of a Party hereunder shall be assigned,
delegated, sold, transferred, sublicensed (except as expressly
permitted hereunder) or otherwise disposed of, by operation of law or
otherwise, to any third party (other than an Affiliate of an assigning
Party under the condition that the assignor remain responsible to the
other Party under
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this Agreement), without the prior written consent of the other Party.
Any attempted assignment, delegation, sale, transfer, sublicense or
other disposition, by operation of law or otherwise, of this Agreement
or of any rights or obligations hereunder contrary to this Section 9.1
shall be a material breach of this Agreement by the attempting Party,
and shall be void and without force or effect; provided, however,
either Party may, without such consent, assign the Agreement and its
rights and obligations hereunder to an Affiliate or in connection with
the transfer or sale of all or substantially all of its assets related
to the division or the subject business, or in the event of its merger
or consolidation or change in control or similar transaction. This
Agreement shall be binding upon, and inure to the benefit of, each
Party, its Affiliates, and its permitted successors and assigns. Each
Party shall be responsible for the compliance by its Affiliates with
the terms and conditions of this Agreement.
(b) Change of Control. In the event the ownership or
control of Licensor is acquired by another pharmaceutical company that
has an ongoing development program or commercializes (directly or
through any Affiliate) any compound or product for the Primary
Indication and/or the Secondary Indication, Licensor shall promptly
notify SPL in writing to that effect. Licensor's obligations under
Section 2.11 shall not extend to any such compound or product.
Effective upon such notice, the JMC shall be disbanded and SPL will
assume and thereafter be responsible for all of the rights and
obligations of the JMC. Licensor, and following the change of control
the acquiring party, shall use best efforts to ensure that such
acquiring party does not have any access to any of SPL's Proprietary
Information or other proprietary information relating to the
development and commercialization of Licensed Product. Such best
efforts shall include, without limitation: (i) ensuring that the
acquiring party does not have access to any such information prior to
the change of control of Licensor; and (ii) promptly destroying or
returning to SPL all such information in Licensor's possession or
control upon completion of the change of control. The acquiring party
shall have no rights to use any Licensor Know-How relating to the
Primary Indication or the Secondary Indication in connection with the
development and commercialization of its own compound or product for
the Primary and/or Secondary Indication. All of SPL's obligations under
Article II to provide Licensor and/or the JMC with reports or to
otherwise keep Licensor informed with respect to the development and
commercialization of Licensed Compound, any other compound within the
Compound Library and/or Licensed Product shall immediately terminate;
provided, however, that SPL shall provide such acquiring party with an
annual summary of its activities in developing and commercializing
Licensed Product.
9.2 Governing Law. This Agreement shall be governed, interpreted
and construed in accordance with the laws of the State of New Jersey, without
giving effect to conflict of law principles. All disputes under this Agreement
shall be governed by binding arbitration pursuant to the mechanism set forth in
Schedule 9.2 attached hereto and incorporated hereby. The Parties expressly
exclude application of the United Nations Convention for the International Sale
of Goods.
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9.3 Waiver. Any delay or failure in enforcing a Party's rights
under this Agreement or any waiver as to a particular default or other matter
shall not constitute a waiver of such Party's rights to the future enforcement
of such rights under this Agreement, nor operate to bar the exercise or
enforcement thereof at any time or times thereafter, excepting only as to an
express written and signed waiver as to a particular matter for a particular
period of time.
9.4 Independent Relationship. Nothing in this Agreement shall be
deemed to create an employment, agency, joint venture or partnership
relationship between the Parties hereto or any of their respective Affiliates,
agents or employees, or any other legal arrangement that would impose liability
upon one Party for the act or failure to act of the other Party. Neither Party
shall have any power to enter into any contracts or commitments or to incur any
liabilities in the name of, or on behalf of, the other Party, or to bind the
other Party in any respect whatsoever.
9.5 Export Control. This Agreement is made subject to any
restrictions concerning the export of products or technical information from the
United States of America which may be imposed upon or related to Licensor or SPL
from time to time by the government of the United States of America.
Furthermore, SPL agrees that it will not export, directly or indirectly, any
technical information acquired from Licensor under this Agreement or any
products using such technical information to any country for which the United
States government or any agency thereof at the time of export requires an export
license or other governmental approval, without first obtaining the written
consent to do so from the Department of Commerce or other agency of the United
States government when required by an applicable statute or regulation.
9.6 Complete Agreement.
(a) Entire Agreement; Amendment. This Agreement,
including the Exhibits and Schedules hereto and all the covenants,
promises, agreements, warranties, representations, conditions and
understandings contained herein sets forth the complete, final and
exclusive agreement between the Parties with respect to the subject
matter hereof and supersedes and terminates all prior and
contemporaneous agreements and understandings between the Parties,
whether oral or in writing. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings,
either oral or written, between the Parties other than as are set forth
herein. No subsequent alteration, amendment, change, waiver or addition
to this Agreement shall be binding upon the Parties unless reduced to
writing and signed by an authorized officer of each Party. Each Party
in deciding to execute this Agreement has not relied on any
understanding, agreement, representation or promise by the other Party
which is not explicitly set forth herein.
(b) Relationship to US Agreement; Controlling Provisions.
The parties acknowledge and agree that this Agreement together with the
US Agreement is intended to operate together as a single worldwide
agreement governing the rights and
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obligations of Licensor, SPL and Schering Corporation. For purposes of
clarity and avoidance of doubt, the parties agree that Sections 2.3 and
2.5 of this Agreement shall be subject to and governed by the
corresponding provisions of the US Agreement. The parties further agree
that SPL's rights and obligations with respect to the filing,
prosecution, maintenance and enforcement of patents and patent
applications under Article IV of this Agreement shall be exercised and
performed by the employees and/or agents of Schering Corporation having
responsibility for Schering Corporation's rights and obligations under
Article IV of the US Agreement, and that all such activities will be
performed in a coordinated manner.
9.7 Notices. Except as provided under Section 4.8 hereof, any
notice required or permitted to be given or sent under this Agreement shall be
hand delivered or sent by express delivery service or certified or registered
mail, postage prepaid, or by facsimile transmission (with written confirmation
copy by registered first-class mail) to the Parties at the addresses and
facsimile numbers indicated below.
If to Licensor, to: AtheroGenics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Vice President, Business Development
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to SPL to: Schering-Plough Ltd.
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
Attn.: President
Fax No.: ▇▇-▇▇-▇▇▇-▇▇▇▇
with copies to: Schering Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Vice President, Business Development
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
and Attn.: Law Department - Staff Vice President,
Licensing
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be deemed to have been received on the date
actually received. Either Party may change its address or its facsimile number
by giving the other Party written notice, delivered in accordance with this
Section.
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9.8 Provisions for Insolvency.
(a) Effect on Licenses. All rights and licenses granted
under or pursuant to this Agreement by Licensor to SPL are, for all
purposes of Section 365(n) of Title 11 of the United States Code
(together with its foreign equivalent, the "Insolvency Statute"),
licenses of rights to "intellectual property" as defined in the
Insolvency Statute. Licensor agrees that SPL, as licensee of such
rights under this Agreement shall retain and may fully exercise all of
its rights and elections under the Insolvency Statute provided that SPL
makes all royalty payments under this Agreement. Licensor agrees during
the Term of this Agreement to create and maintain current copies or, if
not amenable to copying, detailed descriptions or other appropriate
embodiments, to the extent feasible, of all such intellectual property.
If a case is commenced by or against Licensor under the Insolvency
Statute, Licensor (in any capacity, including debtor-in-possession) and
its successors and assigns (including, without limitation, an
Insolvency Statute trustee) shall,
(i) as SPL may elect in a written request,
immediately upon such request:
(A) perform all of the obligations
provided in this Agreement to be performed by
Licensor including, where applicable and without
limitation, providing to SPL portions of such
intellectual property (including embodiments thereof)
held by Licensor and such successors and assigns or
otherwise available to them; or
(B) provide to SPL all such
intellectual property (including all embodiments
thereof) held by Licensor and such successors and
assigns or otherwise available to them; and
(ii) not interfere with the rights of SPL under
this Agreement, or any agreement supplemental hereto, to such
intellectual property (including such embodiments), including
any right to obtain such intellectual property (or such
embodiments) from another entity.
(b) Rights to Intellectual Property. If an Insolvency
Statute case is commenced by or against Licensor, and this Agreement is
rejected as provided in the Insolvency Statute, and SPL elects to
retain its rights hereunder as provided in the Insolvency Statute, then
Licensor (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, an Insolvency
Statute trustee) shall provide to SPL all such intellectual property
(including all embodiments thereof) held by Licensor and such
successors and assigns, or otherwise available to them, immediately
upon SPL's written request. Whenever Licensor or any of its successors
or assigns provides to SPL any of the intellectual property licensed
hereunder (or any embodiment thereof) pursuant to this Section 9.8, SPL
shall have the right to perform the obligations
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of Licensor hereunder with respect to such intellectual property, but
neither such provision nor such performance by SPL shall release
Licensor from any such obligation or liability for failing to perform
it.
(c) SPL's Rights. All rights, powers and remedies of SPL
provided herein are in addition to and not in substitution for any and
all other rights, powers and remedies now or hereafter existing at law
or in equity (including, without limitation, the Insolvency Statute) in
the event of the commencement of an Insolvency Statute case by or
against Licensor. SPL, in addition to the rights, power and remedies
expressly provided herein, shall be entitled to exercise all other such
rights and powers and resort to all other such remedies as may now or
hereafter exist at law or in equity (including, without limitation, the
Insolvency Statute) in such event. The Parties agree that they intend
the foregoing SPL rights to extend to the maximum extent permitted by
law, including, without limitation, for purposes of the Insolvency
Statute:
(i) the right of access to any intellectual
property (including all embodiments thereof) of Licensor, or
any third party with whom Licensor contracts to perform an
obligation of Licensor under this Agreement, and, in the case
of the third party, which is necessary for the development,
registration, manufacture and marketing of Licensed Compound
and/or Licensed Product(s); and
(ii) the right to contract directly with any
third party described in (i) to complete the contracted work.
(d) Deemed Grant of Rights. In the event of any
insolvency of Licensor and if any statute and/or regulation in any
country in the Territory requires that there be a specific grant or
specific clause(s) in order for SPL to obtain the rights and benefits
as licensee under this Agreement which are analogous to those rights
under Section 365(n) of Title 11 of the United States Code, then this
Agreement shall be deemed to include any and all such required
grant(s), clause(s) and/or requirements.
(e) Security Interests. In addition to any other rights
granted to SPL hereunder, with respect to any country in the Territory
in which SPL reasonably determines that its rights set forth in this
Section 9.8 are nonexistent or inadequate to protect SPL's interests in
the licenses granted hereunder, Licensor shall, upon SPL's request,
execute a security agreement, or any foreign equivalent, for each
country in the Territory, granting SPL a secured interest in all
intellectual property licensed to SPL under this Agreement.
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9.9 Force Majeure. Failure of any Party to perform its obligations
under this Agreement (except the obligation to make payments when properly due)
shall not subject such Party to any liability or place them in breach of any
term or condition of this Agreement to the other Party if such failure is due to
any cause beyond the reasonable control of such non-performing Party ("force
majeure"), unless conclusive evidence to the contrary is provided. Causes of
non-performance constituting force majeure shall include, without limitation,
acts of God, fire, explosion, flood, drought, war, riot, sabotage, embargo,
strikes or other labor trouble, failure in whole or in part of suppliers to
deliver on schedule materials, equipment or machinery, interruption of or delay
in transportation, a national health emergency or compliance with any order or
regulation of any government entity acting with color of right. The Party
affected shall promptly notify the other Party of the condition constituting
force majeure as defined herein and shall exert reasonable efforts to eliminate,
cure and overcome any such causes and to resume performance of its obligations
with all possible speed; provided, however, that nothing contained herein shall
require any Party to settle on terms unsatisfactory to such Party any strike,
lock-out or other labor difficulty, any investigation or proceeding by any
public authority, or any litigation by any third party. If a condition
constituting force majeure as defined herein exists for more than ninety (90)
consecutive days, the Parties shall meet to negotiate a mutually satisfactory
resolution to the problem, if practicable.
9.10 Severability. If any provision of this Agreement is declared
illegal, invalid or unenforceable by a court having competent jurisdiction, it
is mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court; provided, however, that in the
event that the terms and conditions of this Agreement are materially altered,
the Parties will, in good faith, renegotiate the terms and conditions of this
Agreement to reasonably substitute such invalid or unenforceable provisions in
light of the intent of this Agreement.
9.11 Counterparts. This Agreement shall become binding when any one
or more counterparts hereof, individually or taken together, shall bear the
signatures of each of the Parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against either
Party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
9.12 Captions. The captions of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.
9.13 Recording. Each Party shall have the right, at any time, to
record, register, or otherwise notify this Agreement in appropriate governmental
or regulatory offices anywhere in the world, and each Party shall provide
reasonable assistance to the other in effecting such recording, registering or
notifying. Notwithstanding the foregoing, prior to recording, registering, or
otherwise notifying this Agreement, the Party desiring to so record, register,
or notify shall provide a copy of all materials to be filed for review, comment,
and approval by the other Party, such approval not unreasonably to be withheld
or delayed.
42
49
9.14 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all other acts, as may be necessary
or appropriate in order to carry out the purposes and intent of this Agreement
including, without limitation, any filings with any antitrust agency which may
be required.
IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized representatives of the Parties as of the date set forth below.
ATHEROGENICS, INC. SCHERING-PLOUGH LTD.
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------ ---------------------------
Title: President & CEO Title: Prokurist
------------------------ ---------------------------
Date: 22 October 1999 Date: 21 October 1999
------------------------ ---------------------------
43
50
SCHEDULE 1.6
Elements of Fully Absorbed Manufacturing Cost of Goods
The following expenses are included in manufacturing costs:
1. Direct Materials
Materials used in the manufacturing process that are traced directly to the
completed product, such as:
- Inert raw materials or excipients
- Active substances/ingredients
- Packaging components such as bottles, caps, labels, etc.
2. Direct Labor
The cost of employees engaged in production activities that are directly
identifiable with product costs. Excludes supervision, which is included in
indirect labor, and production support activities such as inspection, plant and
equipment maintenance labor, and material handling personnel. Direct Labor cost
includes:
- Base pay, overtime, vacation and holidays, illness, personal
time with pay and shift differential.
- Cost of employee fringe benefits such as health and life
insurance, payroll taxes, welfare, pension and profit sharing.
3. Indirect Manufacturing Costs
Costs which are ultimately allocated to product based on standard direct labor
hours of the operating departments. These costs include:
- Indirect Production Labor - salaries of employees engaged in
production activities who are not classified as direct labor,
including supervision, clerical, etc.
- Costs of Direct Labor - employees not utilized for the
manufacturing of product such as training, downtime and
general duties.
- Indirect Materials - supplies and chemicals which are used in
the manufacturing process and are not assigned to specific
products but are included in manufacturing overhead costs.
Includes supplies for which direct assignment to products is
not practical.
i
51
- Utilities - expenses incurred for fuel, electricity and water
in providing power for production and other plant equipment.
- Maintenance and Repairs - amount of expense incurred in-house
or purchased to provide services for plant maintenance and
repairs of facilities and equipment.
- Other Services - purchased outside services and rentals such
as the cost of security, ground maintenance, etc.
- Depreciation - of plant and equipment utilizing the
straight-line method of calculation.
- Insurance - cost of comprehensive and other insurance
necessary for the safeguard of manufacturing plant and
equipment.
- Taxes - expense incurred for taxes on real and personal
property (manufacturing site, buildings and the fixed assets
of equipment, furniture and fixtures, etc.). If manufacturing
site includes other operations (marketing, R&D, etc.), taxes
are allocated to manufacturing on the basis of total real and
personal property.
- Cost of manufacturing, service departments - such as:
(where applicable)
- Packaging Engineering
- Manufacturing Maintenance
- Industrial Engineering
- Receiving and Warehousing
- Purchasing and Accounting
- Production Scheduling
- Inventory Management
- Plant Materials Management
- Central Weigh
- Manufacturing Administration
- Allocated costs of services provided to manufacturing
including: (where applicable)
- Cafeteria
- Personnel Operations
- Health and Safety Services
- Division Engineering and Operations Services
- Plant Services (housekeeping)
- Manufacturing Information Systems
- Plant Power
- Office of V.P. Manufacturing
Various bases are used for allocating these costs to manufacturing
operating departments including headcount, square feet, metered
utilities use, estimated
ii
52
services rendered, EDP computer hours, etc.
4. Quality Assurance Costs
Direct labor and indirect costs for Quality Assurance departments testing and
approving materials used in manufacturing and completed manufacturing batches
and finished products. This includes all manufacturing in-process testing and
testing of finished materials. Excluded from product costs are QA costs related
to research and development, stability testing, and other costs customarily
excluded from such Quality Assurance costs.
The following expenses are not included in manufacturing costs:
a) Inventory Carrying Costs
b) Regulatory Affairs Costs
c) Pilot plant costs, research batches and other similar costs
prior to turnover to manufacturing. These are handled as
development costs and expensed to R&D. This excludes
commercial goods produced by a research facility.
d) Costs incurred by Manufacturing for special projects (e.g.
requests by Schering-Plough Research Institute) to establish
and certify new production processes, batch sizes and product
line improvements, and new vendor certification of equipment
and primary materials components.
These costs are expensed to R&D.
e) Manufacturing start-up costs and initial one-time
extraordinary manufacturing costs incurred prior to plant
operation and achievement of a normal production activity
level. Includes costs of training, testing,
qualification/validation of new equipment and facilities and
initial, trial batches. These costs are deferred and then
amortized to Other Production Costs over five years.
f) Significant idle capacity is eliminated from factory overhead
and product cost. Idle or excess capacity costs are culled out
of the Manufacturing Budget and expensed as a period cost to
Other Production Costs.
g) Finished goods warehousing, shipping and other distribution
costs. These are included in distribution costs.
h) Product liability and/or business interruption insurance
expenses.
i) Intercompany profit.
5. Other Production Costs
Three major types of expense are included in the Other Production Costs
classification.
a) Variances from standard cost the difference between the actual
and standard cost of inventory purchased and produced during
the period less any portion applicable to on-hand inventory
which has been capitalized.
(i) Materials purchase price variance
iii
53
(ii) Materials usage/yield variances
(iii) Direct labor efficiency/inefficiency - reflects the
cost difference between the standard and actual
number of direct labor hours used for actual
production.
(iv) Overhead - reflects all other labor and overhead cost
variances including activity and spending production
related and support.
With the exception of overhead, all of the other variances can
be identified by product and can be added (if unfavorable) or
subtracted (if favorable) to determine actual manufacturing
costs of a product.
(b) Non-standard costs: Cost of miscellaneous production related
operations for which standards are not established due to the
nature of the function, such as manufacturing start-up
operations, stock conversions and reclaiming (processing and
returning to finished goods inventory) of products returned by
customers. Also includes miscellaneous expenses incurred in
connection with the production of inventory which for various
reasons (e.g., cyclical, non-recurring) are not included in
standard costs. Examples include excess/idle capacity not
included in standards, abnormal waste or rework, experiments,
unallocated production costs, tooling and package design
costs.
Some of the above costs may be incurred for specific products,
e.g., rework, experiments, tooling, but the majority are
general to all products produced.
(c) Inventory adjustments: Consists of charges or credits due to
adjustments to inventory concerning revaluation to new
standards, stock conversions, capitalized/amortized production
variances, shortages or overages, and damage or obsolescence
of regular on-hand inventory or products returned by
customers.
Each of these charges or credits can be identified to a specific product.
iv
54
Schedule 1.18
PATENT RIGHTS
[ * ]
55
Schedule 2.1(e)
Third Party Agreements
License Agreement between Emory University and Atherogenics, Inc., dated January
11, 1995.
License to the United States Government dated March 27, 1995.
Patent Purchase Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, Ph.D. and Atherogenics,
Inc., dated April 26, 1995.
56
Schedule 2.6(h)
Development Work to be Performed by Licensor
Pre-clinical:
[ * ]
57
SCHEDULE 2.6(i)
ADVERSE EVENT REPORTING PROCEDURES FOR PRODUCTS
The Parties understand and agree that these procedures are intended to
comply with 21 CFR 314.80(b) and 21 CFR 310.305(a) concerning standard written
procedures for adverse event reporting in the United States. These procedures
may be amended by the Parties at any time, at the request of either Party, to
ensure that they fully and accurately reflect the procedures in place for
surveillance, receipt, evaluation and reporting of adverse drug experiences by
the pharmacovigilance departments of the Parties and comply with applicable laws
and regulations in the countries in which the product(s) is marketed and/or is
under investigation. In that regard, upon the written request of either Party,
the Parties shall meet to renegotiate in good faith, all or some of these
procedures. Each Party may request such a meeting no more often than once in any
twelve (12) month period.
1. Definitions:
(a) An Adverse Event ("AE") is defined as:
i) any experience which is adverse, including what are
commonly described as adverse or undesirable
experiences, adverse events, adverse reactions, side
effects, or death due to any cause associated with,
or observed in conjunction with the use of a drug,
biological product, or device in humans, whether or
not considered related to the use of that product:
- occurring in the course of the use of a
drug, biological product or device,
- associated with, or observed in conjunction
with product overdose, whether accidental or
intentional,
- associated with, or observed in conjunction
with product abuse,
- associated with, or observed in conjunction
with product withdrawal
ii) Any significant failure of expected pharmacological
or biologic therapeutical action (with the exception
of in clinical trials).
(b). Associated with or related to the use of the drug is defined
as: A
58
reasonable possibility exists that the AE was caused by the drug.
(c) Expected or unexpected are defined as:
i) Expected ("labeled") AE - An AE which is included in
the Investigators' Brochure for clinical trials,
included in local labeling (e.g., summary of product
characteristics) for Marketed Drugs, or in countries
with no local labeling, in the Company Core Data
Sheet (CCDS).
ii) Unexpected ("unlabeled") AE - An AE that does not
meet the criteria for an expected AE or an AE which
is listed but differs from that event in terms of
severity or specificity.
(d) IND Holder is defined as: A "Sponsor" as defined in 21 CFR
Part 312.2(b) of an investigational new drug in any regulatory jurisdiction,
including a holder of a foreign equivalent thereto.
(e) Life-threatening is defined as: any adverse drug experience
that places the patient, in the view of the initial reporter, at immediate risk
of death from the adverse drug experience as it occurred, i.e., it does not
include an AE that, had it occurred in more severe form, might have caused
death.
(f) NDA Holder is defined as: An "Applicant" as defined in 21 CFR
Part 314.3(b), for regulatory approval of a Licensed Product in any regulatory
jurisdiction, including a holder of a foreign equivalent thereto.
(g) Serious or Non-Serious are defined as:
i) Any adverse drug experience occurring at any dose
that results in any of the following outcomes: Death,
a life-threatening adverse drug experience, inpatient
hospitalization or prolongation of existing
hospitalization, a persistent or significant
disability/incapacity, or a congenital anomaly/birth
defect. Important medical events that may not result
in death, be life-threatening, or require
hospitalization may be considered serious when, based
upon appropriate medical judgment, they may
jeopardize the patient or subject and may require
medical or surgical intervention to prevent one of
the outcomes listed in this definition. Examples of
such medical events include allergic bronchospasm
requiring intensive treatment in an emergency room or
at home, blood dyscrasias or convulsions that do not
result in inpatient hospitalization, or the
development of drug dependency or drug abuse.
59
ii) A Non-serious AE is any AE which does not meet the
criteria for a serious AE.
(h) Not associated or unrelated to the use of the drug means it
does not meet the definition of "associated."
2. Capitalized terms not defined in this Appendix shall have the meaning
assigned thereto in the Agreement.
3. With respect to all Licensed Products:
All initial reports (oral or written) for any and all serious
AEs as defined above which become known to either Party (other
than from disclosure by or on behalf of the other Party) must
be communicated by telephone, telefax or electronically
directly to the other Party, NDA Holder, and/or IND Holder
(individually and collectively referred to as "Holders")
within five (5) calendar days of receipt of the information.
Written confirmation of the Serious AE received by the Party
should be sent to the other Party and the Holders as soon as
it becomes available, but in any event within two (2) business
days of initial report of the Serious AE by such Party.
All Parties and Holders should exchange Medwatch and/or CIOMS
forms and other health authority reports within two (2)
business days of submission to any regulatory agency.
All initial reports and follow-up information received for all
non-serious AEs for marketed Licensed Products which become
known to a Party (other than from disclosure by or on behalf
of the other Party) must be communicated in writing, by
telefax or electronically to the other Party and all Holders
on a monthly basis, on Medwatch or CIOMs forms (where
possible). All follow-up on any AE reports forwarded to either
Party by FDA must be submitted to FDA.
Each Party shall coordinate and cooperate with the other
whenever practicable to prepare a single written report
regarding all Serious AEs, provided, however, that neither
Party shall be obligated to delay reporting or any AE in
violation of applicable law or regulations regarding the
reporting of adverse events.
4. The Parties further agree that:
(a) a written report for AEs for animal studies which suggest a
potential significant risk for humans shall be forwarded to the other Party
within two (2) business days of receipt by the Party making the report,
60
(b) each Party will give the other Party a print-out or computer disk of
all AEs reported to it relating to Products within the preceding 365
days/calendar year, within [ * ] days of receipt of a request from the other
Party;
(c) upon request of a Party, the other Party shall make available
its AE records relating to Licensed Products (including computer disks) for
viewing and copying by the other Party,
(d) disclosure of information hereunder by a Party to the other
Party shall continue as long as either Party continues to clinically test or
market product(s) containing Licensed Products or holds an open IND, NDA or
foreign equivalent thereto.
(e) all written regulatory reports, including periodic NDA, annual
IND, safety updates, or foreign equivalents thereto, etc. should be sent by a
Party to the other Party within 2 business days of submission to the appropriate
regulatory agency. The Parties shall agree on a procedure for preparing these
reports (e.g. electronic mail, facsimile transmission, overnight service, etc.).
5. Each Party shall diligently undertake the following further obligations
where both Parties are or will be commercializing products hereunder and/or
performing clinical trials with respect to Licensed Product:
(a) to immediately consult with the other Party, with respect to
the investigation and handling of any serious AE disclosed to it by the other
Party or by a third Party, including government agencies, and to allow the other
Party to review the serious AE and to participate in the follow-up
investigation;
(b) to immediately advise the other Party of any Product safety
communication received from a health authority and consult with the other Party
with respect to any proposed change to product warnings, labeling or an
Investigator's Brochure involving safety issues, including, but not limited to,
safety issues agreed to by the Parties;
(c) to diligently handle in a timely manner the investigation and
resolution of each AE reported to it; and
(d) to provide the other Party reasonable annual audit rights of
its AE reporting system and documentation, upon prior notice, during normal
business hours, at the expense of the auditing Party and under customary
confidentiality obligations.
(e) to meet in a timely fashion from time to time as may be
reasonably required to implement the adverse event reporting and consultation
procedures described in this Appendix, including identification of those
individuals in each Party's pharmacovigilance group who will be responsible for
reporting to and receiving AE information from the other Party, and the
development of a written standard operating
61
procedure with respect to adverse event reporting responsibilities, including
reporting responsibilities to investigators;
(f) where possible, to transmit all data electronically;
(g) to report to each other any addenda, revisions or changes to
this Agreement (e.g., change in territories, local regulations, addition of new
licensors/licensees to the agreement, etc.) which might alter the adverse event
reporting responsibilities hereunder;
(h) to utilize English as the language of communication and data
exchange between the Parties;
(i) to develop a system of exchange of documents and information
in the event that the Agreement involves more than two Holders.
62
Schedule 3.2
DEFINITION OF SUCCESSFUL COMPLETION
CART STUDY:
Schering recognizes that Licensor's Phase II Study 027, commonly
referred to as the CART Study, is pivotal to the determination of
proof-of-activity in man. Determination by the JMC of "successful completion" of
this study will be based upon the study achieving all of the following three
points, as reflected in the final study report:
[ * ]
63
Schedule 6.2(d)
GOVERNMENT RIGHTS
Pursuant to that certain Assignment agreement between Licensor and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ dated May 2, 1995, U.S. Patent No. 5,262,439 is subject to
a license of rights to the United States Government, as specifically set forth
in the License to the United States Government attached hereto as Exhibit A.
64
Schedule 6.2(k)
Other VCAM-1 Inhibitors
[ * ]
65
Schedule 9.2
ARBITRATION PROVISIONS
(a) Scope. Subject to and in accordance with the terms of this
Agreement and this Schedule 9.2, all differences, disputes, claims or
controversies arising out of or in any way connected or related to this
Agreement, whether arising before or after the expiration of the Term of this
Agreement, and including, without limitation, its negotiation, execution,
delivery, enforceability, performance, breach, discharge, interpretation and
construction, existence, validity and any damages resulting therefrom or the
rights, privileges, duties and obligations of the Parties under or in relation
to this Agreement (including any dispute as to whether an issue is arbitrable)
shall be referred to binding arbitration in accordance with the rules of the
American Arbitration Association, as in effect at the time of the arbitration.
(b) Parties to Arbitration. For the purposes of each arbitration under
this Agreement, SPL shall constitute one party to the arbitration and Licensor
shall constitute the other party to the arbitration.
(c) Notice of Arbitration. A Party requesting arbitration hereunder
shall give a notice of arbitration to the other Party containing a concise
description of the matter submitted for arbitration, including references to the
relevant provisions of the Agreement and a proposed solution (a "Notice of
Arbitration"). Notice of Arbitration shall be delivered to the other Party in
accordance with Section 9.7 of the Agreement.
(d) Response. The non-requesting Party must respond in writing within
forty-five (45) days of receiving a Notice of Arbitration with an explanation,
including references to the relevant provisions of the Agreement and a response
to the proposed solution and suggested time frame for action. The non-requesting
Party may add additional issues to be resolved.
(e) Meeting. Within fifteen (15) days of receipt of the response from
the non-requesting Party pursuant to Paragraph (d), the Parties shall meet and
discuss in good faith options for resolving the dispute. The requesting Party
must initiate the scheduling of this resolution meeting. Each Party shall make
available appropriate personnel to meet and confer with the other Party during
such fifteen-(15) day period.
(f) Selection of Arbitrator. Any and all disputes that cannot be
resolved pursuant to Paragraphs (c), (d) and (e) shall be submitted to an
arbitrator (the "Arbitrator") to be selected by mutual agreement of the Parties.
The Arbitrator shall be a retired judge of a state or federal court, to be
chosen from a list of such retired judges to be prepared jointly by the Parties,
with each Party entitled to submit the names of three such retired judges for
inclusion in the list. No Arbitrator appointed or selected hereunder shall be an
employee, director or shareholder of, or otherwise have any current or previous
relationship with, any Party or its respective Affiliates. If the Parties fail
to
66
agree on the selection of the Arbitrator, the Arbitrator shall be designated by
a judge of the Federal District Court in New York upon application by either
Party.
(g) Powers of Arbitrator. The Arbitrator may determine all questions of
law and jurisdiction (including questions as to whether a dispute is arbitrable)
and all matters of procedure relating to the arbitration. The Arbitrator shall
have the right to grant legal and equitable relief (including injunctive relief)
and to award costs (including reasonable legal fees and costs of arbitration)
and interest. Nothing contained herein shall be construed to permit the
Arbitrator to award punitive, exemplary or any similar damages.
(h) Arbitration Procedure. In the event that SPL is the Party
requesting arbitration, the arbitration shall take place in the State of
Georgia, unless otherwise agreed by the Parties, at such place and time as the
Arbitrator may fix for the purpose of hearing the evidence and representations
that the Parties may present. In the event that Licensor is the Party requesting
arbitration, the arbitration shall take place in the State of New Jersey, unless
otherwise agreed by the Parties, at such place and time as the Arbitrator may
fix for the purpose of hearing the evidence and representations that the Parties
may present. The arbitration proceedings shall be conducted in the English
language. The law applicable to the arbitration shall be the law of the State of
New Jersey. No later than twenty (20) business days after hearing the
representations and evidence of the Parties, the Arbitrator shall make its
determination in writing and deliver one copy to each of the Parties.
(i) Discovery and Hearing. During the meeting referred to in Paragraph
(e), the Parties shall negotiate in good faith the scope and schedule of
discovery, relating to depositions, document production and other discovery
devices, taking into account the nature of the dispute submitted for resolution.
If the Parties are unable to reach agreement as to the scope and schedule of
discovery, the Arbitrator may order such discovery as it deems necessary. To the
extent practicable taking into account the nature of the dispute submitted for
resolution, such discovery shall be completed within [ * ] days from the date of
the selection of the Arbitrator. At the hearing, which shall commence within
[ * ] days after completion of discovery unless the Arbitrator otherwise orders,
the Parties may present testimony (either live witness or deposition), subject
to cross-examination, and documentary evidence. To the extent practicable taking
into account the nature of the dispute submitted for resolution and the
availability of the Arbitrator, the hearing shall be conducted over a period not
to exceed [ * ] consecutive business days, with each Party entitled to
approximately half of the allotted time unless otherwise ordered by the
Arbitrator. Each Party shall have sole discretion with regard to the
admissibility of any evidence and all other matters relating to the conduct of
the hearing.
(j) Witness Lists. At least [ * ] business days prior to the date set
for the hearing, each Party shall submit to the other Party and the Arbitrator a
list of all documents on which such Party intends to rely in any oral or written
presentation to the Arbitrator and a list of all witnesses, if any, such Party
intends to call at such hearing and
67
a brief summary of each witness' testimony. At least five (5) business days
prior to the hearing, each Party must submit to the Arbitrator and serve on each
other Party a proposed findings of fact and conclusions of law on each issue to
be resolved. Following the close of hearings, the Parties shall each submit such
post-hearing briefs to the Arbitrator addressing the evidence and issues to be
resolved as may be required or permitted by the Arbitrator.
(k) Confidentiality. The arbitration proceedings shall be confidential
and, except as required by law, no Party shall make, or instruct the Arbitrator
to make, any public announcement with respect to the proceedings or decision of
the Arbitrator without the prior written consent of the other Party. The
existence of any dispute submitted to arbitration and the award of the
Arbitrator shall be kept in confidence by the Parties and the Arbitrator, except
as required in connection with the enforcement of such award or as otherwise
required by law.
(l) Awards and Appeal. Subject to the provisions of this Schedule 9.2,
the decision of the Arbitrator shall be final and binding upon the Parties in
respect of all matters relating to the arbitration, the conduct of the Parties
during the proceedings, and the final determination of the issues in the
arbitration. There shall be no appeal from the final determination of the
Arbitrator to any court, except in the case of fraud or bad faith on the part of
the Arbitrator or any Party to the arbitration proceeding in connection with the
conduct of such proceedings. Judgment upon any award rendered by the Arbitrator
may be entered in any court having jurisdiction thereof.
(m) Costs of Arbitration. The costs of any arbitration hereunder shall
be borne by the Parties in the manner specified by the Arbitrator in its
determination.
(n) Performance of the Agreement. During the pendency of the
arbitration proceedings, the matter which is the subject of such arbitration
proceedings shall be performed by the Parties (A) in the manner determined by
SPL in its sole discretion if it is a matter relating to SPL's development of
Licensed Product, and (B) in the manner determined by Licensor in its sole
discretion if it is a matter involving payment of License Fees under Section 3.1
and royalty payments under Sections 3.2 or 3.3. Notwithstanding the foregoing,
in the event that SPL makes payments pursuant to Sections 3.1, 3.2 or 3.3 and it
is subsequently determined by the Arbitrator that SPL was not required to make
such payment(s) then Licensor shall promptly repay to SPL all such payments.
Further notwithstanding the foregoing, the time periods set forth in Section
2.6(b) of the Agreement shall be suspended during the pendency of the
arbitration proceedings. For purposes of this Paragraph (n) the term "pendency
of the arbitration proceeding" shall mean the period starting on the date on
which arbitration proceedings are commenced by a Party in accordance with
Paragraph (c) of this Schedule 9.2 and ending on the date on which the
Arbitrator delivers its final determination in writing to the Parties.
68
EXCLUSIVE LICENSE AGREEMENT
BY AND BETWEEN
ATHEROGENICS, INC.
AND
SCHERING CORPORATION
[*] Certain confidential information contained in this document, marked by an
asterisk within brackets, has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 406 of the Securities Act of 1933, as amended.
69
TABLE OF CONTENTS
EXCLUSIVE LICENSE AGREEMENT
PAGE
----
ARTICLE I - DEFINITIONS..................................................................................1
1.1 AFFILIATE.....................................................................................1
1.2 CALENDAR QUARTER..............................................................................1
1.3 CALENDAR YEAR.................................................................................2
1.4 COMBINATION PRODUCT...........................................................................2
1.5 COMPOUND LIBRARY..............................................................................2
1.6 COST OF GOODS.................................................................................2
1.7 EFFECTIVE DATE................................................................................2
1.9 FIRST COMMERCIAL SALE.........................................................................2
1.9 HRD...........................................................................................2
1.10 HSR ACT.......................................................................................2
1.11 "IMPROVEMENT\.................................................................................2
1.12 "INTERNATIONAL AGREEMENT\.....................................................................3
1.13 LICENSED COMPOUND.............................................................................3
1.14 LICENSED PRODUCT(S)...........................................................................3
1.15 LICENSOR KNOW-HOW.............................................................................3
1.16 NDA...........................................................................................4
1.17 NET SALES.....................................................................................4
1.18 PATENT RIGHTS.................................................................................5
1.19 PRIMARY INDICATION............................................................................5
1.20 PROPRIETARY INFORMATION.......................................................................5
1.21 REGULATORY APPROVAL...........................................................................5
1.22 SECONDARY INDICATION..........................................................................6
1.23 "SUBLICENSEE\.................................................................................6
1.24 TERRITORY.....................................................................................6
1.25 "TERM\........................................................................................6
1.26 VALID CLAIM...................................................................................6
ARTICLE II - LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION.......................6
2.1 EXCLUSIVE LICENSE GRANT.......................................................................6
(a) License.......................................................................................6
(a) Co-Exclusive License to Other Indications.....................................................6
(c) Right to Sublicense...........................................................................7
(d) Retained Rights...............................................................................7
(e) Third Party Agreements........................................................................7
2.2 NON-EXCLUSIVE LICENSE GRANT...................................................................7
2.3 DISCLOSURE OF INFORMATION.....................................................................8
i
70
2.4 HSR FILING AND APPROVALS......................................................................8
(a) HSR Filing....................................................................................8
(b) Licensor's Obligations........................................................................9
(c) Additional Approvals..........................................................................9
2.5 JOINT MANAGEMENT COMMITTEE....................................................................9
(a) Composition of the JMC........................................................................9
(b) JMC Meetings.................................................................................10
(c) JMC Responsibilities.........................................................................10
(d) Deadlock.....................................................................................10
2.6 SCHERING'S DEVELOPMENT OBLIGATIONS...........................................................10
(a) Schering Diligence...........................................................................10
(b) Opportunity to Cure..........................................................................11
(c) Research and Development Activities..........................................................11
(d) Licensed Product Registrations; Pricing Reimbursement Approvals..............................11
(e) Data.........................................................................................12
(f) Assistance by Licensor.......................................................................12
(g) Reimbursement of Costs by Schering...........................................................12
(h) Licensor's Additional Development Obligations................................................13
(i) Adverse Event Reporting......................................................................13
2.7 INDEPENDENT DISCOVERIES BY SCHERING..........................................................14
2.8 EXCUSED PERFORMANCE..........................................................................14
2.9 SUPPLY OF LICENSED COMPOUND/LICENSED PRODUCT.................................................14
2.10 REPORTS......................................................................................14
2.11 NON-COMPETE PROVISION........................................................................15
ARTICLE III - PAYMENTS; ROYALTIES AND REPORTS...........................................................16
3.0 COORDINATION OF PAYMENTS UNDER THE INTERNATIONAL AGREEMENT...................................16
3.1 LICENSE FEE..................................................................................16
(a) Development Milestones.......................................................................16
(b) Sales Milestones.............................................................................16
(c) Limitations..................................................................................17
3.3 ROYALTIES....................................................................................17
(a) Cap on Royalties Plus Cost of Goods..........................................................18
(b) Licensor's Option to Manufacture.............................................................18
(c) Royalty Reduction............................................................................18
3.4 THIRD PARTY LICENSES.........................................................................19
3.5 COMPULSORY LICENSES..........................................................................19
3.6 REPORTS AND PAYMENT OF ROYALTY; PAYMENT EXCHANGE RATE AND CURRENCY CONVERSIONS...............19
(a) Royalties Paid Quarterly.....................................................................19
(b) Method of Payment............................................................................20
3.7 MAINTENANCE OF RECORDS; AUDITS...............................................................20
(a) Record Keeping by Schering...................................................................20
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(b) Underpayments/Overpayments...................................................................21
(c) Record Keeping by Sublicensee................................................................21
(d) Confidentiality..............................................................................21
(e) Binding Records..............................................................................21
3.8 INCOME TAX WITHHOLDING.......................................................................21
3.9 DIRECT AFFILIATE LICENSES....................................................................22
ARTICLE IV - PATENTS....................................................................................22
4.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS...............................................22
4.2 OPTION OF SCHERING TO PROSECUTE AND MAINTAIN PATENTS.........................................22
4.3 ENFORCEMENT..................................................................................23
(a) Notice and Discontinuance of Infringement....................................................23
(b) Continuance of Infringement..................................................................23
4.4 THIRD PARTY INFRINGEMENT SUIT................................................................24
(a) Defense......................................................................................24
(b) Licensing....................................................................................24
4.5 CERTIFICATION UNDER DRUG PRICE COMPETITION AND PATENT RESTORATION ACT........................24
4.6 ABANDONMENT..................................................................................25
4.7 PATENT TERM RESTORATION......................................................................25
4.8 NOTICES REGARDING PATENTS....................................................................25
ARTICLE V - CONFIDENTIALITY AND PUBLICATION.............................................................26
5.1 CONFIDENTIALITY..............................................................................26
(a) Nondisclosure Obligation.....................................................................26
(b) Disclosure to Agents.........................................................................27
(c) Disclosure to a Third Party..................................................................27
5.2 PUBLICITY....................................................................................27
5.3 PUBLICATION..................................................................................28
ARTICLE VI - REPRESENTATIONS AND WARRANTIES.............................................................28
6.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY.................................................28
6.2 LICENSOR'S REPRESENTATIONS...................................................................29
6.3 CONTINUING REPRESENTATIONS...................................................................31
6.4 NO INCONSISTENT AGREEMENTS...................................................................31
6.5 REPRESENTATION BY LEGAL COUNSEL..............................................................31
6.6 ADDITIONAL OBLIGATIONS OF LICENSOR...........................................................31
ARTICLE VII - INDEMNIFICATION AND LIMITATION ON LIABILITY...............................................32
7.1 INDEMNIFICATION BY SCHERING..................................................................32
7.2 INDEMNIFICATION BY LICENSOR..................................................................33
7.3 CONDITIONS TO INDEMNIFICATION................................................................33
7.4 SETTLEMENTS..................................................................................34
7.5 LIMITATION OF LIABILITY......................................................................34
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7.6 INSURANCE....................................................................................34
ARTICLE VIII - TERM AND TERMINATION.....................................................................34
8.1 TERM AND EXPIRATION..........................................................................34
8.2 TERMINATION BY SCHERING WITHOUT CAUSE........................................................34
8.3 TERMINATION UPON CESSATION OF DEVELOPMENT....................................................35
(a) Termination by Either Party..................................................................35
(b) Termination by Licensor......................................................................35
8.4 TERMINATION..................................................................................35
(a) Termination for Cause........................................................................35
(b) Effect of Termination for Cause on License...................................................36
(i) Termination by Schering..................................................................36
(ii)Termination by Licensor..................................................................36
(iii)Effect of Bankruptcy....................................................................36
8.5 EFFECT OF TERMINATION........................................................................36
8.6 REMEDIES FOR BREACH..........................................................................37
8.7 LICENSOR'S RIGHTS ON TERMINATION.............................................................37
8.8 CONCURRENT TERMINATION WITH THE INTERNATIONAL AGREEMENT......................................38
ARTICLE IX - MISCELLANEOUS..............................................................................38
9.1 ASSIGNMENT/CHANGE OF CONTROL.................................................................38
(a) Assignment...................................................................................38
(a) Change of Control............................................................................38
9.2 GOVERNING LAW................................................................................39
9.3 WAIVER.......................................................................................39
9.4 INDEPENDENT RELATIONSHIP.....................................................................39
9.5 EXPORT CONTROL...............................................................................39
9.6 ENTIRE AGREEMENT; AMENDMENT..................................................................40
9.7 NOTICES......................................................................................40
9.8 PROVISIONS FOR INSOLVENCY....................................................................41
(a) Effect on Licenses...........................................................................41
(b) Rights to Intellectual Property..............................................................41
(c) Schering's Rights............................................................................42
(d) Deemed Grant of Rights.......................................................................42
(e) Security Interests...........................................................................42
9.9 FORCE MAJEURE................................................................................43
9.10 SEVERABILITY.................................................................................43
9.11 COUNTERPARTS.................................................................................43
9.12 CAPTIONS.....................................................................................43
9.13 RECORDING....................................................................................43
9.14 FURTHER ACTIONS..............................................................................44
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SCHEDULES
SCHEDULE 1.6 COST OF GOODS
SCHEDULE 1.18 PATENT RIGHTS
SCHEDULE 2.1(E) THIRD PARTY AGREEMENTS
SCHEDULE 2.6(H) DEVELOPMENT WORK TO BE PERFORMED BY LICENSOR
SCHEDULE 2.6(I) ADVERSE EVENT REPORTING PROCEDURES
SCHEDULE 3.2 DEFINITION OF SUCCESSFUL COMPLETION
SCHEDULE 6.2(D) GOVERNMENT RIGHTS
SCHEDULE 6.2(K) OTHER VCAM-1 INHIBITORS
SCHEDULE 9.2 ARBITRATION PROVISIONS
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EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement") is made as of
October 22, 1999 by and between ATHEROGENICS, INC., a Georgia corporation having
its principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter referred to as "Licensor") and SCHERING CORPORATION, a
corporation organized and existing under the laws of New Jersey and having its
principal place of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ (hereinafter referred to as "Schering"). Licensor and Schering are
sometimes referred to herein individually as a Party and collectively as the
Parties. References to "Schering" and "Licensor" shall include their respective
Affiliates (as hereinafter defined).
WHEREAS, Licensor has developed certain Licensor Know-How and has
rights to Patent Rights relating to soluble analogs of probucol, including
without limitation the Licensed Compound (each as hereinafter defined); and
WHEREAS, Schering, together with its Affiliates (as hereinafter
defined) possesses extensive capabilities in the development and
commercialization of pharmaceutical products on a worldwide basis; and
WHEREAS, Schering desires to obtain and Licensor is willing to grant to
Schering, an exclusive license under the Patent Rights and to use the Licensor
Know-How, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, Schering and Licensor hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following initially capitalized terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:
1.1 "Affiliate" shall mean any individual or entity directly or
indirectly controlling, controlled by or under common control with, a Party to
this Agreement. For purposes of this Agreement, the direct or indirect ownership
of [ * ] or more of the outstanding voting securities of an entity, or the right
to receive [ * ] or more of the profits or earnings of an entity shall be deemed
to constitute control. Such other relationship as in fact results in actual
control over the management, business and affairs of an entity shall also be
deemed to constitute control.
1.2 "Calendar Quarter" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 or
December 31, for so long as this Agreement is in effect.
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1.3 "Calendar Year" shall mean each successive period of twelve (12)
months commencing on January 1 and ending on December 31, for so long as this
Agreement is in effect.
1.4 "Combination Product" shall mean any form or dosage of
pharmaceutical composition or preparation in final form for sale by
prescription, over-the-counter or any other method and which comprises two (2)
or more active ingredients within the same pharmaceutical formulation, at least
one (1) of which is Licensed Compound and/or any other compound from the
Compound Library.
1.5 "Compound Library" shall mean the collection of compounds
(including, without limitation, the Licensed Compound) which as of the Execution
Date is specifically and/or generically covered by one or more claims in U.S.
Patent No. 5,262,439, entitled "Soluble Monoesters of Probucol", or any
corresponding foreign patents or patent applications. The Compound Library shall
include such compounds in any form, including any salt, hydrate or crystalline
structure thereof.
1.6 "Cost of Goods" shall mean Schering's fully allocated manufacturing
cost of goods as determined in accordance with Schedule 1.6.
1.7 "Effective Date" shall mean the next business day following the
last to occur of (i) expiration or earlier termination of any notice and waiting
period under the HSR Act; or (ii) the date of delivery of fully executed
counterparts of this Agreement (the "Execution Date").
1.8 "First Commercial Sale" shall mean, with respect to any Licensed
Product, the first sale by Schering to any third party, not an Affiliate or
Sublicensee, of such Licensed Product for an indication for which Schering has
obtained Regulatory Approval.
1.9 "HRD" shall mean a health registration dossier or its equivalent,
submitted to a national government or a supranational governmental authority,
consisting of the chemical, pharmaceutical and biological documentation; the
toxicological and pharmacological documentation; and the clinical documentation
respectively, and covering a Licensed Product which is filed in any country
outside the United States and which is analogous to a new drug application,
product license application or its equivalent filed with the United States Food
and Drug Administration seeking approval to market and sell a Licensed Product
in the Territory and including, where applicable, applications for pricing,
pricing reimbursement approval, labeling and Regulatory Approval.
1.10 "HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
1.11 "Improvement" shall mean any enhancement in the formulation,
preparation, presentation, means of delivery, dosage, packaging of, manufacture,
or any new or expanded therapeutic indications(s) for, Licensed Product or
Licensed Compound,
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in each case which is developed prior to or during the Term of this Agreement by
or on behalf of Licensor.
1.12 "International Agreement" shall mean that certain exclusive
license agreement by and between Licensor and Schering-Plough Ltd. entered into
concurrently herewith.
1.13 "Licensed Compound" shall mean the soluble analog of probucol
AGI-1067, having the chemical name butanedioic acid, mono[4-[[1-[3,5-bis
(1,1-dimethyethyl)-4-hydroxyphenyl]thio]-1-[methylethylthio]-2,6-bis
(1,1-dimethylethyl)-phenyl]ester, and any stereoisomers, salts, hydrates and/or
crystalline forms thereof.
1.14 "Licensed Product(s)" shall mean any form or dosage of
pharmaceutical composition or preparation in final form for sale by
prescription, over-the-counter or any other method, which contains as an active
ingredient the Licensed Compound and/or any other compound from the Compound
Library, including, without limitation, Combination Products; provided, however,
that Licensed Product shall not include topical dermatological products as
described in Section 2.11(c).
1.15 "Licensor Know-How" shall mean any of Licensor's information and
materials specifically relating to the research, development, registration,
manufacture, marketing, use or sale of Licensed Compound and/or Licensed Product
and/or the Compound Library, and which prior to or during the Term of this
Agreement are developed by or at the request of Licensor, or those of its
Affiliates involved in the performance of development of Licensed Product under
Article 2, or are in Licensor's or such Affiliates' possession or control
through license or otherwise (provided that Licensor is permitted to make
disclosure thereof to Schering without violating the terms of any third party
agreement), and which are not generally known. Licensor Know-How shall include,
without limitation, discoveries, practices, methods, knowledge, Improvements,
processes, formulas, data, ideas, skill, experience, inventions, know-how,
technology, trade secrets, manufacturing procedures, purification and isolation
techniques, instructions, test data and other intellectual property, patentable
or otherwise, relating to Licensed Compound, Licensed Product or any
Improvements. Licensor Know-How shall also include, without limitation:
(i) all biological, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, clinical, safety,
manufacturing and quality control data and information related
thereto;
(ii) compositions of matter, assays and biological materials
specifically relating to development, manufacture, use or sale
of any Licensed Compound, Licensed Product or Improvement; and
(iii) all applications, registrations, licenses, authorizations,
approvals and correspondence submitted to or received from any
regulatory authorities
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with jurisdiction in the Territory over an investigational
drug containing Licensed Compound and/or Licensed Product
(including, without limitation, minutes and meeting notes
relating to any communications with any regulatory authority
with jurisdiction in the Territory over an investigational
drug containing Licensed Compound and/or Licensed Product).
1.16 "NDA" shall mean a New Drug Application or its equivalent filed
with the United States Food and Drug Administration seeking approval to market
and sell a Licensed Product in the United States.
1.17 "Net Sales" shall mean the amounts actually received on all sales
of Licensed Product by Schering, its Affiliates or Sublicensees to an
unaffiliated third party, and exclusive of intercompany transfers or
inter-company sales, less the following reasonable and customary deductions from
such gross amounts (to the extent actually taken):
(i) normal and customary trade, cash and quantity discounts,
allowances and credits;
(ii) credits or allowances actually granted for damaged goods,
returns or rejections of Licensed Product and retroactive
price reductions;
(iii) sales taxes, duties or other taxes with respect to such sales
(including duties or other governmental charges levied on,
absorbed or otherwise imposed on the sale of Licensed Product
including, without limitation, value added taxes or other
governmental charges otherwise measured by the billing amount,
when included in billing);
(iv) insurance, postage, customs duties and transportation costs,
when included in billing;
(v) charge back payments and rebates granted to managed health
care organizations or to federal, state and local governments,
their agencies, and purchasers and reimbursers or to trade
customers, including but not limited to, wholesalers and chain
and pharmacy buying groups; and
(vi) rebates (or equivalents thereof) granted to or charged by
national, state or local governmental authorities in countries
other than the United States.
In determining Net Sales of a Licensed Product any of the above discounts shall
be accounted for and apportioned based on the list price of each such Licensed
Product.
In the event that Licensed Product is sold in the form of a Combination
Product containing Licensed Compound and one or more other active ingredients
then Net Sales
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for such Combination Product will be calculated by multiplying actual Net Sales
of such Combination Product by the fraction A/(A+B) where: A is the invoice
price of the Licensed Compound contained in the Combination Product if sold
separately by Schering, an Affiliate or Sublicensee and B is the invoice price
of any other active component or components in the Combination Product if sold
separately by Schering, an Affiliate or Sublicensee. In the event that the
Licensed Product is sold in the form of a Combination Product containing one or
more active ingredients other than Licensed Compound and one or more such active
ingredients of the Combination Product are not sold separately, then the above
formula shall be modified such that A shall be the total cost to Schering, its
Affiliate or Sublicensee(s) of the Licensed Compound and B shall be the total
cost to Schering, its Affiliate or Sublicensee of any other active component or
components in the combination.
1.18 "Patent Rights" shall mean all patents and patent applications in
the Territory which during the Term of this Agreement are owned or controlled
(with the right to grant sublicenses) by Licensor and which contain one or more
claims covering Licensed Compound(s), Licensed Product(s), one or more compounds
contained in Compound Library, or any uses, formulations, processes or methods
of preparing any of the foregoing, or any Improvements, including, but not
limited to, those set forth in Schedule 1.18, any and all substitutions,
divisions, continuations, continuations-in-part, reissues, renewals,
registrations, confirmations, re-examinations, extensions, supplementary
protection certificates or any like filing thereof, and provisional applications
of any such patents and patent applications and any international equivalent of
any of the foregoing.
1.19 "Primary Indication" shall mean the treatment and prevention of
[ * ].
1.20 "Proprietary Information" shall mean all other scientific,
clinical, regulatory, marketing, financial and commercial information or data,
whether communicated in writing, verbally or electronically, which is provided
by one Party to the other Party in connection with this Agreement including,
without limitation, Licensor Know-How. When Propriety Information is disclosed
in a manner other than in writing, it shall be reduced to written form, marked
"Confidential" and transmitted to the receiving Party within [ * ] business days
of disclosure to the receiving Party.
1.21 "Regulatory Approval" shall mean any approvals, including any
NDA's, HRD's, supplements, amendments, pre- and post-approvals, marketing
authorizations based upon such approvals (including any prerequisite
manufacturing approvals or authorizations related thereto) and labeling
approval(s), technical, medical and scientific licenses, registrations or
authorizations of any national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity, necessary
for the development, manufacture, distribution, marketing, promotion, offer for
sale, use, import, export or sale of Licensed Product(s) and/or Licensed
Compound(s) in the Territory.
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1.22 "Secondary Indication" shall mean [ * ].
1.23 "Sublicensee" shall mean any party not an Affiliate of Schering,
which party is authorized by Schering or its Affiliates through express or
implied license or consent to import, export, use, distribute, market, promote,
offer for sale and sell Licensed Product(s) under Section 2.1(b).
1.24 "Territory" shall mean the United States, including its
territories, possessions and commonwealths.
1.25 "Term" shall mean the period described in Section 8.1 of the
Agreement.
1.26 "Valid Claim" shall mean a composition of matter claim, or method
of use claim (or its equivalent) for the Primary Indication and/or the Secondary
Indication, of an issued and unexpired patent in a country in the Territory
which covers the Licensed Compound and/or any other compound from the Compound
Library, which is included within the Patent Rights, and which (i) has not been
revoked or held unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal; or (ii) has not been abandoned, disclaimed, or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.
ARTICLE II
LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND
COMMERCIALIZATION
2.1 Exclusive License Grant.
(a) License. Subject to the terms and conditions of this
Agreement, Licensor hereby grants to Schering, as of the Effective
Date, an exclusive license (exclusive even as to Licensor) under the
Patent Rights and Licensor Know-How in the Territory to develop, make,
have made, import, export, use, distribute, market, promote, offer for
sale and sell: (i) Licensed Compound(s) and/or Licensed Product(s)
containing Licensed Compound; and (ii) compound(s) in the Compound
Library other than Licensed Compound, and/or Licensed Product(s)
containing such compound(s) for the Primary Indication and the
Secondary Indication.
(b) Co-Exclusive License to Other Indications Subject to the
terms and conditions of this Agreement, Licensor hereby grants to
Schering, as of the Effective Date, a co-exclusive license under the
Patent Rights and Licensor Know-How in the Territory to develop, make,
have made, import, export, use, distribute, market, promote, offer for
sale and sell compound(s) in the Compound Library other than Licensed
Compound, and/or Licensed Product(s) containing
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such compound(s), for any and all indications other than the Primary
Indication and Secondary Indication. The term "co-exclusive license"
shall mean that with respect to the rights granted to Schering under
this Section 2.1(b), Licensor retains the same rights as are granted to
Schering. With respect to a given compound, indication or territory,
each of Licensor and Schering may either directly exercise and exploit
its co-exclusive rights or grant a co-exclusive license under such
rights, either in whole or in part, to one (1) third party or
Affiliate.
(c) Right to Sublicense. The licenses granted to Schering
under Sections 2.1(a) and 2.1(b) shall include the right to grant
sublicenses to Affiliates and/or any third party (to the extent
provided therein), provided that Schering remains responsible to
Licensor under this Agreement for the performance of its Sublicensees.
(d) Retained Rights Subject to the restrictions set forth in
Section 2.11, Licensor retains all rights under the Patent Rights not
expressly granted to Schering by this Section 2.1, and the right to use
Licensor Know-How pursuant to Sections 2.6(h) and 5.1(c) below.
(e) Third Party Agreements. As of the Execution Date, Licensor
is a party to certain agreements (as listed in Schedule 2.1(e),
redacted copies of which have been provided to Schering) with third
parties pursuant to which Licensor has acquired rights to certain
patent applications, patents and technology, which agreements are
relevant to the Patent Rights and/or Licensor Know-How. The parties
acknowledge that the licenses granted to Schering under this Agreement
are subject to the specific rights retained by or granted to the U.S.
Government, and/or the rights for research use retained by such third
parties, under those agreements. In the event that on or after the
Execution Date and during the Term of this Agreement, Licensor acquires
any additional Patent Rights or Licensor Know-How from any third
parties, by assignment, license or otherwise, Licensor shall promptly
notify Schering in writing to that effect, and provide Schering with a
copy (which may be redacted) of the agreement(s) with such third party.
To the extent that the copies of the agreements listed in Schedule
2.1(e) which were provided to Schering, or any other agreements
provided to Schering under this Section 2.1(e), have been redacted,
Licensor represents and warrants that the redacted portions of such
agreements have no material effect on the scope of the licenses or
other rights granted to Schering under this Agreement. Nothing herein
shall be construed as granting to Schering any greater rights under the
Patent Rights and/or Licensor Know-How than those held by Licensor
2.2 Non-Exclusive License Grant. In the event that the development,
making, having made, importing, exporting, use, distribution, marketing,
promotion, offering for sale or sale by Schering, its Affiliates and/or
Sublicensees of Licensed Product in the Territory would infringe during the Term
of this Agreement a claim of an issued letters patent, and/or any patent rights
which Licensor owns or has the rights to license and
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which patents are not covered by the grant in Section 2.1, Licensor hereby
grants to Schering and its Affiliates, to the extent Licensor is legally able to
do so, a non-exclusive, royalty-free license in the Territory under such issued
letters patent solely for Schering, its Affiliates and/or Sublicensees to
discover, develop, make, have made, use, distribute, market, promote, offer for
sale and sell Licensed Compound and/or Licensed Product(s) in the Territory.
2.3 Disclosure of Information. Promptly after the Effective Date,
Licensor shall, at its own cost, disclose to Schering in writing, or via
mutually acceptable electronic media, copies or reproductions of all existing
Licensor Know-How not previously disclosed to Schering in order to enable
Schering to exploit its rights granted under Section 2.1 and, if applicable,
Section 2.2 of this Agreement. In addition, during the Term of this Agreement,
Licensor shall promptly disclose to Schering in writing, or via mutually
acceptable electronic media, on an ongoing basis copies or reproductions of all
new Licensor Know-How that is reasonably necessary for research, development,
registration, manufacture, marketing, use or sale of Licensed Compound and/or
Licensed Product. Such Licensor Know-How and other information shall be
automatically deemed to be within the scope of the licenses granted herein
without payment of any additional compensation. Upon Schering's request but
reasonably subject to Licensor's other business requirements, Licensor shall
provide reasonable technical assistance to enable Schering to utilize such
additional Licensor Know-How, provided, that Schering shall promptly reimburse
Licensor for reasonable out-of-pocket costs and expenses incurred by Licensor in
providing such technical assistance. Licensor shall invoice Schering for such
costs and expenses, and shall provide documentation for the invoice. The invoice
shall be payable to Licensor or its designee(s) [ * ] days after receipt by
Schering of the invoice provided, however, that such cost and out-of-pocket
expenses must be identified prior to being committed to by Licensor and provided
to Schering to determine whether Schering agrees to have the technical
assistance provided at such cost and the final amount sought to be reimbursed
shall not exceed [ * ] of the estimated cost without Schering's prior written
consent. Schering shall be under no obligation to reimburse Licensor for
out-of-pocket costs and expenses incurred by Licensor without Schering's
agreement. Schering shall have the right to use for all purposes in connection
with obtaining any Regulatory Approval for the Licensed Product(s) all Licensor
Know-How and other information, disclosed pursuant to this Section and under
this Agreement.
2.4 HSR Filing and Approvals.
(a) HSR Filing. To the extent necessary, each of Licensor and
Schering shall file, within ten (10) days after the date of this
Agreement, with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the
"Antitrust Division") any notification and report form (the "Report")
required of it in the reasonable opinion of either or both Parties
under the HSR Act with respect to the transactions as contemplated
hereby and shall cooperate with the other Party to the extent necessary
to assist the other Party in the preparation of its Report and to
proceed to obtain necessary approvals
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under the HSR Act, including but not limited to the expiration or
earlier termination of any and all applicable waiting periods required
by the HSR Act.
(b) Licensor's Obligations. Licensor shall use good faith
reasonable efforts to assist Schering in eliminating any concern on the
part of any court or government authority regarding the legality of the
proposed transaction, including, if required by federal or state
antitrust authorities, Schering's promptly taking all reasonable steps
to secure government antitrust clearance. Licensor shall cooperate in
good faith at its own cost with any government investigation and
promptly produce documents and information demanded by a second request
for documents and of witnesses if requested.
(c) Additional Approvals. Each of Licensor and Schering will
cooperate and use all reasonable efforts to make all other
registrations, filings and applications, to give all notices and to
obtain as soon as practicable all governmental or other consents,
transfers, approvals, orders, qualifications authorizations, permits
and waivers, if any, and to do all other things reasonably necessary or
desirable in Schering's opinion for the consummation of the
transactions as contemplated hereby (including, without limitation,
those acts required to obtain necessary approvals under any foreign
equivalent antitrust statute to the HSR Act or regulation from any
government or regulatory authority having the requisite jurisdiction;
provided, however, that Schering shall promptly reimburse Licensor for
reasonable out-of-pocket costs and expenses incurred by Licensor in
providing such cooperation. Licensor shall invoice Schering for such
costs and expenses, and shall provide supporting documentation for the
invoice. The invoice shall be payable to Licensor or its designee(s)
[ * ] days after receipt by Schering of the invoice.
2.5 Joint Management Committee. The Parties shall establish a Joint
Management Committee (the "JMC") to oversee the development and
commercialization program for Licensed Product for the Primary Indication and
the Secondary Indication, and to facilitate the exchange of information between
the Parties. The JMC will generally serve in an advisory capacity with respect
to the development and commercialization activities to be performed by Schering
under this Agreement, with Schering retaining final decision making authority
with respect to all such matters.
(a) Composition of the JMC. The JMC shall be composed of up to
three (3) representatives from each of Schering and Licensor, and a
quorum shall consist of at least one (1) JMC representative from each
Party. In any matter before the JMC, each Party shall have one (1)
vote, with decisions being made by unanimous decision. Schering shall
seriously consider the recommendations and decisions of the JMC. A
Party's representatives to the JMC shall serve at the discretion of
such Party and may be substituted for or replaced at any time by such
Party. The JMC shall be chaired by a representative of Schering. The
Chairperson shall be responsible for calling meetings, preparing
agendas and
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preparing and issuing minutes of each meeting within [ * ] days
thereafter.
(b) JMC Meetings. The JMC shall meet at least once each
Calendar Quarter during the Term of this Agreement, until such time as
the Parties agree to a more or less frequent meeting schedule. The site
of such meetings shall alternate between the offices of Schering and
Licensor (or any other site mutually agreed upon by the Parties) and
each Party shall bear its own costs of attending such meetings. All
meetings of the JMC shall be summarized in writing and sent to both
Parties and countersigned by both Parties.
(c) JMC Responsibilities. The JMC will be generally
responsible for monitoring the status of Schering's development and
commercialization activities with respect to Licensed Product and for
preparing recommendations for implementation by Schering with regard
to: (i) selection of Licensed Compounds for development by Schering as
Licensed Products for the Primary Indication; (ii) preclinical and
clinical development plans; (iii) development timelines and scheduling;
(iv) strategies for obtaining and maintaining Regulatory Approvals; (v)
marketing and sales strategies for Licensed Product.
(d) Deadlock. In the event that the JMC is unable to reach a
decision by unanimous vote with respect to any matter, then Schering
shall have final decision making authority with respect thereto.
2.6 Schering's Development Obligations.
(a) Schering Diligence. Schering shall, at Schering's expense,
and subject to Licensor's compliance with its obligations under
Sections 2.3 and 2.4, use good faith reasonable efforts to develop,
obtain Regulatory Approval for, and commercialize the Licensed
Product(s) in the Territory for the Primary Indication. Schering shall
have the option, in its sole discretion, to seek Regulatory Approval
for the Licensed Product for any additional indications it determines
are desirable, but shall have no diligence obligations to Licensor with
respect thereto with the exception of those expressly set forth in
Section 2.11(d). The Parties acknowledge and agree that all business
decisions including, without limitation, decisions relating to
Schering's research, development, registration, manufacture, sale,
commercialization, design, price, distribution, marketing and promotion
of Licensed Products covered under this Agreement, shall be within the
sole discretion of Schering. Licensor acknowledges that Schering is in
the business of developing, manufacturing and selling pharmaceutical
products and, subject to the provisions of this Section, nothing in
this Agreement shall be construed as restricting such business or
imposing on Schering the duty to market and/or sell and exploit
Licensed Compound or Licensed Product for which royalties are payable
hereunder to the exclusion of, or in preference to, any other product,
or in any way other than in accordance with its normal commercial
practices.
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(b) Opportunity to Cure. If, in Licensor's reasonable opinion,
Schering fails to comply with any of its diligence obligations under
Sections 2.6(a) and (c), then Licensor shall have the right to give
Schering written notice thereof stating in reasonable detail the
particular failure(s). Schering shall have a period of [ * ] days from
the receipt of such notice to correct the failure or, in the event that
the failure cannot be reasonably cured within a [ * ] day period, then
Schering shall initiate actions reasonably expected to cure the failure
within [ * ] days of receiving notice and shall thereafter diligently
pursue such actions to cure the failure (even if requiring longer than
the [ * ] days specified in Section 8.4(a)(i)). In the event of a
dispute as to whether or not Schering has failed to exercise due
diligence under Sections 2.6(a) and 2.6(c), or whether Schering is
diligently pursuing actions reasonably expected to cure such failure
under this Section 2.6(b), such dispute shall be resolved through
binding arbitration in accordance with Section 9.2.
(c) Research and Development Activities. As of the Effective
Date, Schering shall be responsible, at its cost and expense, and in
its sole judgment, for all research and development activities which
are necessary to obtain Regulatory Approval for a Licensed Product in
the Territory for the Primary Indication and any post-approval studies
required as a condition of obtaining any Regulatory Approval for a
Licensed Product for the Primary Indication. The parties acknowledge
and agree that Schering's obligations under this Section 2.6(c) shall
include all of the costs of conducting the CART Study (whether incurred
before or after the Effective Date) which are estimated at [ * ]. In
addition, Schering shall be responsible for any other studies (or
portions of studies) necessary or desirable, in its sole judgment, for
maintaining any Regulatory Approval (for the Primary Indication or any
other indication for which Schering, in its sole discretion, may decide
to seek Regulatory Approval) in the Territory, as well as any
pre-marketing studies prior to such Regulatory Approval and
post-marketing studies conducted following a Regulatory Approval.
(d) Licensed Product Registrations; Pricing Reimbursement
Approvals. Subject to its diligence obligations set forth in Section
2.6(a), Schering shall be responsible, at its cost and expense, and in
its sole judgment, for determining the appropriate regulatory strategy,
for obtaining and maintaining all Regulatory Approvals and for
obtaining and maintaining any pricing and reimbursement approvals
required for the sale of Licensed Product in the Territory. Each
Regulatory Approval and each pricing and reimbursement approval shall
be placed in Schering's name or the name of a Schering Affiliate unless
applicable law requires, or Licensor and Schering otherwise agree, that
an approval be solely or jointly in the name of Licensor or a
designated Licensor Affiliate. Licensor agrees that notwithstanding
such Regulatory Approval or pricing and reimbursement approval in its
name, Schering retains the exclusive rights to make, have made, import,
export, use, distribute, promote, offer for sale
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and sell Licensed Compound and/or Licensed Product(s) as granted
Schering in Section 2.1.
(e) Data. Schering shall own all data arising out of studies
performed by or on behalf of Schering under this Article II.
(f) Assistance by Licensor. In connection with any NDA, HRD or
other application for Regulatory Approval relating to Licensed Product,
Licensor shall, at Schering's request, provide to Schering in a prompt
manner responses to questions which have been raised by any regulatory
authority in connection with such application for Regulatory Approval
and further provide to Schering estimates of Licensor's [ * ] costs for
rendering such assistance. Licensor shall assist Schering from time to
time, at Schering's request, in the design and implementation of
clinical studies. Subject to Licensor's rights under Section 3.3(b),
Licensor shall assist Schering to enable Schering to self-source bulk
material for the manufacture of Licensed Compound and/or Licensed
Product; provided, however, that Schering shall have no obligation
whatsoever to purchase any bulk material or Licensed Compound from
Licensor.
(g) Reimbursement of Costs by Schering
(i) Schering shall reimburse Licensor for its
reasonable [ * ] costs and expenses incurred in rendering
assistance under Section 2.6(f) (but no more than [ * ] of
those costs which Licensor estimated, as provided above, that
the work would cost unless Schering provides written
approval). Licensor shall invoice Schering for such costs and
expenses, and shall provide documentation for the invoice. The
invoice shall be payable to Licensor or its designee(s) [ * ]
days after receipt by Schering of the invoice, provided,
however, that Schering shall be under no obligation to
reimburse Licensor for [ * ] costs and expenses incurred by
Licensor without Schering's agreement.
(ii) Schering shall reimburse Licensor for its
reasonable [ * ] costs and expenses incurred in performing
research and development activities under Section 2.6 (h) (but
no more than [ * ] of those costs which Licensor estimated, as
provided below, that the work would cost unless the JMC
provides written approval). Licensor shall invoice Schering
for such costs and expenses, and shall provide documentation
for the invoice. The invoice shall be payable to Licensor or
its designee(s) [ * ] days after receipt by Schering of the
invoice, provided, however, that Schering shall be under no
obligation to reimburse Licensor for research and development
costs and expenses incurred by Licensor without the prior
approval of the JMC.
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(h) Licensor's Additional Development Obligations. In addition to
Licensor's obligations under Section 2.6(f), the JMC will assign to Licensor the
responsibility to conduct, on Schering's behalf and at Schering's expense,
certain of the research and development activities, including clinical studies
involving Licensed Product, for which Schering is responsible under Section
2.6(c). The nature and extent of the research and development activities to be
conducted by Licensor is generally set forth in Schedule 2.6(h). The JMC shall
determine the specific aspects of such activities, including the timing and
costs of the work to be performed by Licensor. Licensor agrees to use good faith
reasonable efforts to complete such activities in the manner determined by the
JMC, and shall have the right to utilize contract research organizations and
other third party contractors in the performance of such activities, provided
that Licensor shall remain responsible for the performance of all such
contractors. To the extent that Licensor utilizes third party contractors to
perform such activities, Licensor shall enter into suitable agreements with such
contractors, which agreements shall incorporate provisions consistent with the
terms and conditions of this Agreement, including, without limitation,
provisions governing confidentiality, ownership of data, inventions and other
intellectual property arising from such activities, financial obligations and
termination rights. Licensor shall keep the JMC informed with regard to such
third party contracts and shall provide Schering with a copy of all such
agreements. Any research and development activities conducted by Licensor or its
contractors pursuant to this Section 2.6(h) shall be performed in accordance
with good laboratory practices and good clinical practices, and in compliance
with all applicable laws, rules and regulations in the U.S. and the EU, and
shall meet current regulatory standards. Schering shall promptly notify Licensor
in the event that Schering reasonably determines that all or any part of the
work performed by Licensor and/or its contractors under this Section 2.6(h)
fails to meet such standards. If Licensor reasonably disagrees with such
determination, the parties shall refer the matter to an independent expert
(selected by mutual agreement of the parties) to determine whether or not the
study must be repeated to support Regulatory Approval for Licensed Product. In
the event that Licensor and/or the independent expert agrees with Schering's
determination and such studies are repeated, then Schering shall have the right
to deduct the [ * ] costs of repeating such work from the [ * ] payments due
Licensor under this Agreement.
(i) Adverse Event Reporting Licensor shall promptly report to Schering
any information regarding adverse events related to the use of the Licensed
Product in accordance with the Adverse Event Reporting Procedures (as may be
amended from time to time upon mutual agreement) set forth in Schedule 2.6(i)
and incorporated herein by reference. To the extent that Licensor holds any INDs
or otherwise has any adverse event reporting obligations with respect to
Licensed Product, Schering shall promptly report to Licensor any information
regarding adverse events related to the use of Licensed Product in accordance
with such Adverse Event Reporting Procedures.
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2.7 Independent Discoveries by Schering. Licensor acknowledges that
Schering and/or its Affiliates have ongoing research programs which may now or
in the future independently discover, develop and/or acquire technologies and/or
products relating to treatment and prevention of any disease, disorder or
condition in humans or animals. Licensor agrees that such technologies and
products, to the extent discovered without use of Licensor Know-How, will not be
deemed to be Licensor Know-How and are outside the scope of this Agreement.
2.8 Excused Performance. In addition to the provisions of Article
VIII and Section 9.9, the obligations of Schering with respect to a Licensed
Product under Sections 2.6(a), 2.6(c), 2.6(d) and 2.11(d) are expressly
conditioned upon the continuing absence of any adverse condition or event which
warrants a delay in commercialization of a Licensed Product including, but not
limited to, an adverse condition or event relating to the safety or efficacy of
a Licensed Product or unfavorable labeling, pricing or pricing reimbursement
approvals, or lack of Regulatory Approval, and the obligation of Schering to
develop or market any such Licensed Product shall be delayed or suspended so
long as in Schering's reasonable opinion any such condition or event exists.
2.9 Supply of Licensed Compound/Licensed Product. Licensor shall be
responsible, at Licensor's expense, for supplying Schering with Licensed
Compound (in the form of bulk active), from Licensor's existing inventory of
Licensed Compound, to enable Schering to perform [ * ], for such Licensed
Compound for the Primary Indication. In addition, Licensor has the limited
option to supply all of Schering's requirements of Licensed Products as set
forth in Section 3.3(b). All Licensed Compound to be supplied by Licensor
hereunder shall be delivered FCA (Kenilworth, New Jersey) (Incoterms 1990) via a
carrier to be specified by Schering. Licensor warrants and represents that all
supplies of Licensed Compound provided to Schering by Licensor shall conform to
the applicable specifications for such Licensed Compound and were prepared in
accordance with current Good Manufacturing Practices ("cGMPs") and other
applicable federal, national, state and local laws and regulations in effect at
the time of manufacture. Schering shall be responsible for the formulation and
packaging of the Licensed Compound provided by Licensor hereunder, and for
manufacture and supply of all Licensed Compound and/or Licensed Product
necessary for the performance of [ * ] and for supplying all commercial
quantities of Licensed Compound and Licensed Products. Licensor shall transfer
to Schering all Licensor Know-How relating to the manufacture of Licensed
Compound, and at Schering's request and expense shall provide reasonable
technical support to facilitate the implementation of such manufacturing
technology at Schering.
2.10 Reports. Schering shall provide Licensor with quarterly reports of
the status of the research and development activities and progress of any
application for Regulatory Approval, as applicable, in connection with Licensed
Product in the Territory. Further, Schering shall inform Licensor of
commencement, completion, and results of the major phases of clinical
development of Licensed Product, including but not limited to Phase II and Phase
III clinical trials, NDA and HRD submissions, NDA and HRD filings,
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approvable and approval letters, and launch.
2.11 Non-Compete Provision. Subject to the terms of Section 9.1(b),
Licensor and its Affiliates shall be subject to the non-compete obligations set
forth in this Section 2.11.
(a) During the Term of this Agreement, Licensor shall not
undertake a development program for, or commercialize, either on its
own or in collaboration with any third party:
[ * ]
[ * ]
[ * ]
(b) For the period extending from the Effective Date until the
earlier of [ * ] years after the First Commercial Sale of Licensed
Product in the Territory or [ * ], licensor shall not, either on its
own or in collaboration with any third party:
[ * ]
[ * ]
(c) The foregoing notwithstanding, Licensor shall at all times
retain the right to develop and commercialize topical products
containing any compound other than the Licensed Compound for the
treatment or prevention of dermatological conditions, diseases or
disorders. In addition, Licensor shall have the right at all times to
enter into agreements with third parties relating to the performance by
Licensor of pre-clinical research activities with respect to compounds
owned or controlled by such third parties, provided that such compounds
do not compete through the same mechanism of action with the Licensed
Compound (as determined using the same criteria as set forth in Section
6.2(k)) with respect to the Primary Indication and/or the Secondary
Indication.
(d) Licensor's non-compete obligations under Section
2.11(b)(ii) are expressly conditioned upon Schering's initiating a
development program for Licensed Product for the Secondary indication
within [ * ] years after the Effective Date, and thereafter using good
faith reasonable efforts to develop and commercialize one or more
Licensed Products for the Secondary Indication.
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ARTICLE III
PAYMENTS; ROYALTIES AND REPORTS
3.0 Coordination of Payments under the International Agreement. The
license fee, milestone payments and royalties payable by Schering under this
Article III are in consideration for the rights and licenses granted to Schering
under this Agreement and are in addition to any amounts payable to Licensor
under the International Agreement. It is understood and agreed that, with
respect to the development milestone payable under Section 3.2(a)(i) and the
sales milestones payable under Section 3.2(b) the occurrence of one or more of
such milestone events will result in milestone payment obligations under both
this Agreement and the corresponding provisions of the International Agreement.
It is further understood that Schering's financial obligations with respect to
development costs under Article II shall be [ * ] apportioned between Schering
and the corresponding obligations of Schering-Plough Ltd. under the
International Agreement.
3.1 License Fee. In partial consideration for the licenses and other
rights granted to Schering hereunder, Schering shall pay to Licensor a license
fee ("License Fee") of [ * ], which payment shall be due within [ * ] business
days following the Effective Date.
3.2 Milestone Payments. In partial consideration for the licenses and
other rights granted to Schering hereunder, Schering shall promptly notify
Licensor in writing upon the occurrence of an event triggering one of the
milestone payments set forth in this Section 3.2, and within [ * ] days after
the occurrence of such event pay to Licensor the applicable milestone payment.
(a) Development Milestones:
(i) [ * ]
(ii) [ * ]
(iii) [ * ]
(b) Sales Milestones:
(i) [ * ]
(ii) [ * ]
(iii) [ * ]
(iv) [ * ]
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The foregoing sales milestone payments are in addition to any royalty
payments due Licensor under Section 3.3 with respect to sales of
Licensed Product. For purposes of clarity, the parties acknowledge that
(1) the first achievement of more than one of the above sales
milestones in the same Calendar Year shall not affect Schering's
obligation to make the relevant sales milestone payments to Licensor,
and (2) annual worldwide sales of the Licensed Product shall be
determined based upon the aggregate total of sales in the Territory
under this Agreement and sales in countries outside the Territory under
the International Agreement.
(c) Limitations. Except as expressly set forth below, each
development milestone payment under Section 3.2(a) and each sales
milestone payment under Section 3.2(b) shall be payable one (1) time
only on the first occurrence of the indicated event regardless of the
number of times the event triggering the payment of such milestone
occurs. The development milestone payment set forth in Section
3.2(a)(iii) for U.S. Regulatory Approval of a Licensed Product shall be
payable for the first Licensed Product developed by Schering and
thereafter shall again be payable for each successive Licensed Product
successfully developed by Schering which contains as the active
ingredient a different compound from the Compound Library. For purposes
of clarity and avoidance of doubt, the parties acknowledge that
development milestone 3.2(a)(iii) will not be triggered by repeated
occurrences of that milestone event involving different Licensed
Products containing the same compound from the Compound Library. If the
triggering event for a given milestone payment does not occur prior to
the effective date of termination, or the expiration, of this
Agreement, Schering shall have no obligation to pay such milestone
payment to Licensor. The Parties acknowledge and agree that nothing
herein shall be construed as representing an estimate or projection of
anticipated sales or the actual value of Licensed Compounds or Licensed
Products, and the figures set forth in Section 3.2(b) are merely
intended to define Schering's obligations to Licensor in the event such
sales performance is achieved.
3.3 Royalties. In further consideration for the licenses granted to
Schering hereunder, for so long as the Licensed Product is covered by a Valid
Claim in the Territory at the time of sale by Schering, and subject to the
provisions of Section 3.3 (a)-(c), Schering shall pay to Licensor royalties on a
country-by-country basis of [ * ] of Schering's, its Affiliates' or its
Sublicensees' Net Sales of Licensed Product in the Territory. With respect to
countries in the Territory where no such Valid Claim exists, the royalty rate
shall be [ * ], and such royalties shall be paid for [ * ] years from the first
commercial sale of Licensed Product in such country. No royalties shall be due
upon the sale or other transfer among Schering, its Affiliates or Sublicensees,
but in such cases the royalty shall be due and calculated upon Schering's or its
Affiliates' or its Sublicensees' Net Sales to the first independent third party.
No royalties shall accrue on the disposition of Licensed Product by Schering,
its Affiliates or Sublicensees as samples (promotion or otherwise) or as
donations (for example, to non-profit institutions or government agencies for a
non-commercial purpose) or for clinical studies. Such
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dispositions by Schering shall not be included in the determination of Net Sales
during the period of time in which such third party sales are occurring.
(a) Cap on Royalties Plus Cost of Goods. The parties
acknowledge and agree that the total of (i) royalties payable by
Schering to Licensor under this Agreement, and (ii) the Cost of Goods
of Licensed Product manufactured by Schering and/or paid by Schering to
third parties for the manufacture of Licensed Product, shall not exceed
[ * ] of Net Sales of Licensed Product. Schering shall use good faith
reasonable efforts to keep the Cost of Goods of Licensed Product from
exceeding [ * ] of Net Sales. Schering shall determine the Cost of
Goods for the Licensed Product in a timely manner, and in no event
later than [ * ]. In the event that notwithstanding such efforts by
Schering the Cost of Goods for Licensed Product does exceed [ * ] of
Net Sales, then Schering shall notify Licensor in writing to that
effect. Following receipt of such notice, Licensor shall have the right
to have an independent auditor review Schering's relevant records and
make an independent determination of the Cost of Goods for the Licensed
Product. Any such audit shall be conducted under terms and conditions
essentially the same as those set forth in Section 3.7.
(b) Licensor's Option to Manufacture. In the event that
Schering's Cost of Goods for the Licensed Product is correctly
determined to exceed [ * ] of Net Sales, Licensor shall have the right
to manufacture and supply, or to seek a third party supplier able to
manufacture and supply, Schering's requirements of Licensed Product at
a Cost of Goods equal to or less than [ * ] of Net Sales for Licensed
Product. If Licensor is able, or locates a third supplier able, to
manufacture and supply Licensed Product at a Cost of Goods equal to or
less than [ * ] of Net Sales, Schering shall in good faith negotiate
and enter into a suitable supply agreement with Licensor or such third
party, as appropriate, for the manufacture and supply of Licensed
Product. Any such agreement shall include terms obligating Schering to
purchase, and Licensor or the third party to manufacture and supply,
all of Schering's requirements of Licensed Product at a Cost of Goods
to be agreed upon, not to exceed [ * ] of Net Sales of Licensed
Product. All supplies of Licensed Product to be provided to Schering by
Licensor or such third party manufacturer pursuant to this Section
3.3(b) shall be manufactured at a qualified manufacturing site, shall
conform to the applicable specifications for Licensed Product and shall
be prepared in accordance with cGMPs and all applicable federal,
national, state and local laws and regulations in effect at the time of
manufacture.
(c) Royalty Reduction. In the event that Schering's Cost of
Goods for Licensed Product are correctly determined to exceed [ * ] of
Net Sales of Licensed Product and Licensor is unable to identify a
third party capable of supplying Schering's requirements of Licensed
Product at a price equal to or less than [ * ] of Net Sales of Licensed
Product, then Schering shall remain responsible for the manufacture and
supply of Licensed Product and the royalty
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rate to be paid by Schering under this Section 3.3 shall be reduced so
that the total of (i) royalties payable by Schering to Licensor under
this Agreement, and (ii) the Cost of Goods of Licensed Product
manufactured by Schering and/or paid by Schering to third parties for
the manufacture of Licensed Product, is equal to [ * ] of Net Sales of
Licensed Product. Notwithstanding the foregoing, the royalty payable to
Licensor under this Agreement shall not be reduced pursuant to this
Section 3.3(c) to less then [ * ] where a Valid Claim exists, or [ * ]
where no Valid Claim exists.
3.4 Third Party Licenses. In the event that Schering's outside patent
counsel determines that patent licenses from third parties are required by
Schering, its Affiliates or its Sublicensees in order to discover, develop,
make, have made, import, export, use, distribute, promote, market, offer for
sale or sell Licensed Compound and/or Licensed Product (hereinafter "Third Party
Licenses"), Schering shall provide Licensor with written notice to that effect
and shall be solely responsible for acquiring such licenses at Schering's sole
discretion. Schering may reduce any royalty otherwise due Licensor hereunder to
reimburse it for royalties and or license fees actually paid to such third
parties under any Third Party Licenses of patent claims which would be infringed
by the manufacture, use, import, export or sale of Licensed Compound and/or
Licensed Product in the Territory. Schering shall have no right to reduce any
royalty due Licensor hereunder for any amounts paid to a third party under any
Third Party License to the extent it is a license to technology (other than
Licensor Know-How) or materials (other than Licensed Compound) selected by
Schering for use in connection with the Licensed Product. The amount of
reduction of royalties due Licensor and the amount of reimbursement to Schering
shall be equal to [ * ] of the royalties or license fees paid to such third
parties in consideration for the Third Party License but in no event shall the
royalty due Licensor for any Licensed Product in any country be thereby reduced
to less than [ * ] of the royalty rate otherwise due Licensor hereunder for such
Licensed Product in such country.
3.5 Compulsory Licenses. If a compulsory license is granted under the
Patent Rights to a third party with respect to Licensed Compound and/or Licensed
Product in any country in the Territory with a royalty rate lower than the
royalty rate provided for under Section 3.3, then the royalty rate to be paid by
Schering on Net Sales in that country under Section 3.3 shall be reduced to the
rate paid by the compulsory licensee for so long as such compulsory license is
in effect.
3.6 Reports; Payment of Royalty; Payment Exchange Rate and Currency
Conversions.
(a) Royalties Paid Quarterly. Within [ * ] calendar days
following the close of each Calendar Quarter, following the First
Commercial Sale of a Licensed Product, Schering shall furnish to
Licensor a written report for the Calendar Quarter showing the Net
Sales of Licensed Product(s) sold by Schering, its Affiliates and its
Sublicensees in the Territory during such Calendar
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Quarter and the royalties payable under this Agreement for such
Calendar Quarter. Simultaneously with the submission of the written
report, Schering shall pay to Licensor, for the account of Schering or
the applicable Affiliate or Sublicensee, as the case may be, a sum
equal to the aggregate royalty due for such Calendar Quarter calculated
in accordance with this Agreement (reconciled for any previous
overpayments or underpayments).
(b) Method of Payment. Payments to be made by Schering to
Licensor under this Agreement shall be paid by bank wire transfer in
immediately available funds to such bank account as is designated in
writing by Licensor from time to time. Royalties shall be deemed
payable by the entity making the Net Sales from the country in which
earned in local currency and subject to foreign exchange regulations
then prevailing. Royalty payments shall be made in United States
dollars to the extent that free conversions to United States dollars is
permitted. The rate of exchange to be used in any such conversion from
the currency in the country where such Net Sales are made shall be the
rate of exchange used by Schering Corporation for reporting such sales
for United States financial statement purposes. If, due to restrictions
or prohibitions imposed by national or international authority,
payments cannot be made as aforesaid, the Parties shall consult with a
view to finding a prompt and acceptable solution, and Schering will
deal with such monies as Licensor may lawfully direct at no additional
out-of-pocket expense to Schering. Notwithstanding the foregoing, if
royalties in any country cannot be remitted to Licensor for any reason
within [ * ] months after the end of the Calendar Quarter during which
they are earned, then Schering shall be obligated to deposit the
royalties in a bank account in such country in the name of Licensor.
3.7 Maintenance of Records; Audits.
(a) Record Keeping by Schering. Schering and its Affiliates
shall keep complete and accurate records in sufficient detail to enable
the royalties payable hereunder to be determined. Upon [ * ] days prior
written notice from Licensor, Schering shall permit an independent
certified public accounting firm of nationally recognized standing
selected by Licensor, at Licensor's expense, to have access during
normal business hours to examine pertinent books and records of
Schering and/or its Affiliates as may be reasonably necessary to verify
the accuracy of the royalty reports hereunder. The examination shall be
limited to pertinent books and records for any year ending not more
than [ * ] months prior to the date of such request. An examination
under this Section 3.7(a) shall not occur more than once in any
Calendar Year. Schering may designate competitively sensitive
information, which such auditor may not disclose to Licensor; provided,
however, that such designation shall not encompass the auditor's
conclusions. The accounting firm shall disclose to Licensor only
whether the royalty reports are correct or incorrect and the specific
details concerning any discrepancies. No other information shall be
provided to
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Licensor. All such accounting firms shall sign a confidentiality
agreement (in form and substance reasonably acceptable to Schering) as
to any of Schering's or its Affiliate's confidential information which
they are provided, or to which they have access, while conducting any
audit pursuant to this Section 3.7(a).
(b) Underpayments/Overpayments. If such accounting firm
correctly concludes that additional royalties were owed during such
period, Schering shall pay the additional royalties within [ * ] days
of the date Licensor delivers to Schering such accounting firm's
written report so correctly concluding. If such underpayment exceeds
[ * ] of the royalty correctly due Licensor then the fees charged by
such accounting firm for the work associated with the underpayment
audit shall be paid by Schering. Any overpayments by Schering will be
credited against future royalty obligations. In the event that
Schering disagrees with the audit report and the chief financial
officers of Schering and Licensor (or their designees) fail to resolve
such disagreement, the dispute will be resolved through the dispute
resolution mechanism set forth in Section 9.2.
(c) Record Keeping by Sublicensee. Schering shall include in
each sublicense granted by it pursuant to this Agreement a provision
requiring the Sublicensee to make reports to Schering, to keep and
maintain records of sales made pursuant to such sublicense and to grant
access to such records by Licensor's independent accountant to the same
extent required of Schering under this Agreement.
(d) Confidentiality. Licensor shall treat all financial
information subject to review under this Section 3.7, or under any
sublicense agreement, in accordance with the confidentiality provisions
of this Agreement, and shall cause its accounting firm to enter into an
acceptable confidentiality agreement with Schering obligating it to
retain all such financial information in confidence pursuant to such
confidentiality agreement.
(e) Binding Records. Upon the expiration of [ * ] months
following the end of any Calendar Year, the calculation of royalties
payable under this Agreement with respect to such year shall be binding
and conclusive upon the Parties, and Schering, its Affiliates and its
Sublicensees shall be released from any liability or accountability
with respect to royalties for such Calendar Year.
3.8 Income Tax Withholding. If at any time, any jurisdiction within the
Territory requires the withholding of income taxes or other taxes imposed upon
payments set forth in this Article III, Schering shall make such withholding
payments as required and subtract such withholding payments from the payments
set forth in this Article III, or if applicable, Licensor will promptly
reimburse Schering or its designee(s) of the amount of such payments, it being
understood that such withholding taxes are the obligation of Licensor. Schering
shall provide Licensor with documentation of such withholding and payment in a
manner that is satisfactory for purposes of the U.S. Internal Revenue
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Service. Any withholdings paid when due hereunder shall be for the account of
Licensor and shall not be included in the calculation of Net Sales. Payments of
withholding taxes made by Schering pursuant to this Section 3.8 will be made
based upon financial information to be provided to Schering by Licensor and, to
the extent that such information is incorrect or incomplete, Licensor shall be
liable for any fine, assessment or penalty, or any deficiency, imposed by any
taxing authority in the Territory for any deficiency in the amount of any such
withholding or the failure to make such withholding payment. If Schering is
required to pay any such deficiency, or any such fine, assessment or penalty for
any such deficiency, Licensor shall promptly reimburse Schering for such
payments, which shall not be included in the calculation of Net Sales.
3.9 Direct Affiliate Licenses. Whenever Schering shall reasonably
demonstrate to Licensor that, in order to facilitate direct royalty payments by
an Affiliate, it is desirable that a separate license agreement be entered into
between Licensor and such Affiliate, Licensor will grant such licenses directly
to such Affiliate by means of an agreement which shall be consistent with all of
the provisions hereof, provided that Schering guarantees the Affiliate's
obligations thereunder.
ARTICLE IV
PATENTS
4.1 Filing, Prosecution and Maintenance of Patents. Licensor agrees to
diligently file, prosecute and maintain in the Territory, at Licensor's expense,
all Patent Rights owned in whole or in part by Licensor and licensed to Schering
under this Agreement, including without limitation, any Patent Rights covering
any Improvement(s). Schering shall determine the country(ies) in the Territory
with respect to which Schering desires Licensor to perform such activities and
will promptly notify Licensor to that effect. All such determinations shall be
made by Schering in accordance with its standard practices with respect to the
filing, prosecution and maintenance of patents, and Licensor's obligation to
file, prosecute and maintain each patent application or patent within the Patent
Rights under this Section 4.1 shall be limited to those countries selected by
Schering for such patent application or patent. Licensor shall supply Schering
with a copy of the applications as filed, together with notice of its filing
date and serial number. Licensor shall keep Schering regularly advised of the
status of pending patent applications (including, without limitation, the grant
of any Patent Rights), and upon the written request of Schering shall provide
copies of any substantive papers provided to or received from government patent
authorities related to the filing, prosecution and maintenance of such patent
filings. Schering shall treat all information, papers, and other materials
provided by Licensor pursuant to this Section 4.1 in accordance with the
confidentiality provisions of this Agreement.
4.2 Option of Schering to Prosecute and Maintain Patents. Licensor
shall give [ * ] days prior written notice to Schering of any desire to cease
prosecution and/or maintenance of a particular Patent Right and, in such case,
shall permit Schering, at its sole discretion, to continue prosecution or
maintenance at its own expense. If Schering
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elects to continue prosecution or maintenance, Licensor shall execute such
documents and perform such acts, at Schering's expense, as may be reasonably
necessary to effect an assignment of such Patent Rights to Schering. Any such
assignment shall be completed in a timely manner to allow Schering to continue
such prosecution or maintenance. Any patents or patent applications so assigned
shall not be considered Patent Rights.
4.3 Enforcement.
(a) Notice and Discontinuance of Infringement. In the event
that either Schering or Licensor becomes aware of any third party
infringement within the Territory of any Valid Claim, it will notify
the other Party in writing to that effect. Any such notice shall
include evidence to support an allegation of infringement by such third
party. Licensor shall have a period of [ * ] months from the date of
said notice to obtain a discontinuance of such infringement or bring
suit against the third party infringer. Licensor shall bear all the
expenses of any suit brought by it. Schering shall have the right,
prior to commencement of the trial, suit or action brought by Licensor,
to join any such suit or action, and in such event shall pay one-half
of all costs of such suit or action. In the event that Schering has
joined in the action and shared in the costs thereof as set forth
above, no settlement, consent judgment or other voluntary final
disposition of the suit may be entered into without the consent of
Schering. In the event that Schering has not joined the suit or action,
Schering will reasonably cooperate with Licensor in any such suit or
action and shall have the right to consult with Licensor and be
represented by its own counsel, provided that Licensor shall
periodically reimburse Schering for its out-of-pocket costs (excluding
the costs of retaining its own outside counsel) incurred in cooperating
with Licensor. Any recovery or damages derived from any suit under this
Section 4.3(a) where Schering has joined and shared costs shall be used
first to reimburse each of Licensor and Schering for its documented
out-of-pocket legal expenses relating to the suit, shall be used second
to reimburse Licensor for royalties lost as a result of reduced sales
of Licensed Product, shall be used third to reimburse Schering for
amounts attributed to Schering's lost profits, with any remaining
amounts, including but not limited to punitive, exemplary, or other
enhanced damages, to be shared [ * ] by the Parties. Any recovery or
damages derived from a suit which Schering has not joined shall be
retained by Licensor.
(b) Continuance of Infringement. If Licensor has neither
obtained a discontinuance of such infringement nor brought suit against
such infringer after the expiration of the [ * ] period specified in
Subsection 4.3(a), Schering shall have the right, but not the
obligation, to bring suit against such infringer under the Patent
Rights and join Licensor as a party plaintiff, provided that Schering
shall bear all the expenses of such suit. Licensor shall cooperate with
Schering in any such suit for infringement of a Patent Right brought by
Schering against a third party, and shall have the right to consult
with Schering and to participate in and be represented by independent
counsel in such litigation at its own expense.
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Schering shall periodically reimburse Licensor for its out of pocket
costs (excluding Licensor's costs of retaining independent counsel)
incurred in cooperating with Schering. Schering shall incur no
liability to Licensor as a consequence of such litigation or any
unfavorable decision resulting therefrom, including any decision
holding any of the Patent Rights invalid or unenforceable, except that
Schering shall indemnify and hold Licensor harmless for any monetary
judgment or award against or penalty levied upon either Licensor or
Schering arising out of Schering's acts in the enforcement of such
Patent Rights. In the event that Schering recovers any sums through
litigation under this Section 4.3(b) by way of damages or in settlement
thereof, Schering shall retain all such sums.
4.4 Third Party Infringement Suit.
(a) Defense. In the event that a third party sues Schering
alleging that Schering's, its Affiliates' or its Sublicensees' making,
having made, importing, exporting, using, distributing, marketing,
promoting, offering for sale or selling Licensed Compound and/or
Licensed Product in one or more countries in the Territory infringes or
will infringe said third party's patent, then Schering may elect to
defend such suit at its sole expense and discretion. To the extent that
the alleged infringement is based upon the use of Licensed Compound,
another compound from the Compound Library or the Licensor Know-How,
Schering shall have no obligation to pay royalties to Licensor under
Section 3.3 with respect to sales of Licensed Product in such
country(ies) during the pendency of any such suit. Upon Schering's
request and in connection with Schering's defense of any such third
party infringement suit, Licensor shall cooperate with Schering for
such defense provided, that Schering shall promptly reimburse Licensor
for reasonable out-of-pocket costs and expenses incurred by Licensor in
providing such cooperation (excluding Licensor's costs of retaining
independent counsel). Licensor shall invoice Schering for such costs
and expenses, and shall provide documentation for the invoice. The
invoice shall be payable to Licensor or its designee(s) [ * ] days
after receipt by Schering of the invoice.
(b) Licensing. Schering shall have the right to negotiate with
said third party for a suitable license or assignment of rights under
the relevant patents. In the event that such negotiation results in a
consummated agreement, then any lump sum payment and/or royalty
payments to be made thereunder shall be paid by Schering and shall be
offset against any royalties due Licensor in accordance with the terms
of Article 3.4.
4.5 Certification Under Drug Price Competition and Patent Restoration
Act. Licensor and Schering each shall immediately give written notice to the
other of any certification of which they become aware filed pursuant to 21
U.S.C. ss.355(b)(2)(A)(iv) and 355(j)(2)(A)(vii), or any amendment or successor
statute thereto, claiming that Patent Rights covering Licensed Compound and/or
Licensed Product(s) are invalid or that infringement will not arise from the
manufacture, use or sale of a product containing
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Licensed Compound or otherwise equivalent to Licensed Product by a third party.
Notwithstanding any provision to the contrary, in the event that the Patent
Rights at issue are owned and/or controlled by Licensor and Licensor has failed
to bring an infringement action against such third party at least [ * ] business
days prior to expiration of the forty five (45) day period set forth in 21
U.S.C. ss.355(c)(3)(C) (or any amendment or successor statute thereto), Schering
shall have the right to bring such an infringement action, in its sole
discretion and at its own expense, in its own name and/or in the name of
Licensor. At Schering's request, Licensor shall, at its own expense, provide
Schering reasonable assistance to conduct such infringement action, including,
without limitation, causing the execution of such legal documents as Schering
may deem necessary for the prosecution of such action. Schering shall
periodically reimburse Licensor for its out-of-pocket costs (excluding any of
Licensor's costs of retaining independent counsel) incurred in assisting
Schering. Schering shall incur no liability to Licensor as a consequence of such
litigation or any unfavorable decision resulting therefrom, including any
decision holding any of the Patent Rights invalid or unenforceable, except that
Schering shall indemnify and hold Licensor harmless for any monetary judgment or
award against or penalty levied upon either Licensor or Schering arising out of
Schering's acts in the enforcement of such Patent Rights. In the event that
Schering recovers any sums in such litigation by way of damages or in settlement
thereof, Schering shall have the right to retain all such sums to offset its
costs, losses and expenses.
4.6 Abandonment. Subject to Schering's rights pursuant to Section 4.2,
Licensor shall at the earliest known date give notice to Schering of the grant,
lapse, revocation, surrender, invalidation or abandonment of any Patent Rights
licensed to Schering for which Licensor is responsible for the filing,
prosecution and maintenance under this Agreement.
4.7 Patent Term Restoration. The Parties hereto shall cooperate with
each other in obtaining patent term restoration or its equivalent in the
Territory where applicable to Patent Rights. In the event that elections with
respect to obtaining such patent term restoration are to be made, Schering shall
have the right to make the election and Licensor agrees to abide by such
election.
4.8 Notices Regarding Patents. All notices, inquiries and
communications in connection with this Article IV shall be sent in the manner
set forth in Section 9.7 to the Parties at the addresses and facsimile numbers
indicated below.
If to Licensor: AtheroGenics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Vice President, Business Development
(with a copy to: President)
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Schering: Schering Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Staff Vice President - Patents and Trademarks
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
ARTICLE V
CONFIDENTIALITY AND PUBLICATION
5.1 Confidentiality.
(a) Nondisclosure Obligation. Each of Licensor and Schering
shall use only in accordance with this Agreement, and shall not
disclose to any third party, any of the other Party's Proprietary
Information received by it pursuant to this Agreement without the prior
written consent of the other Party. The foregoing obligations shall
survive the expiration or termination of this Agreement for a period of
[ * ] years. These obligations shall not apply when and to the extent
Proprietary Information:
(i) is known by the receiving Party at the time of
its receipt, and not through a prior disclosure by the
disclosing Party, as documented by business records;
(ii) is at the time of disclosure or thereafter
becomes published or otherwise part of the public domain
without breach of this Agreement by the receiving Party;
(iii) is subsequently disclosed to the receiving
Party by a third party that has the right to make such
disclosure;
(iv) is developed by the receiving Party
independently of Proprietary Information or other information
received from the disclosing Party and such independent
development can be documented by the receiving Party;
(v) is disclosed to any institutional review board of
any entity conducting clinical trials, or any governmental or
other regulatory agencies in order to obtain patents, to gain
approval to conduct clinical trials or to market Licensed
Compound and/or Licensed Product, but such disclosure may be
made only to the extent reasonably necessary to obtain such
patents or authorizations; or
(vi) is required by law, regulation, rule, act or
order of any governmental authority or agency to be disclosed
by a Party, provided that
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notice is promptly delivered to the other Party in order to
provide an opportunity to seek a protective order or other
similar order with respect to such Proprietary Information and
thereafter the disclosing Party discloses to the requesting
entity only the minimum Proprietary Information required to be
disclosed in order to comply with the request, whether or not
a protective order or other similar order is obtained by the
other Party.
(b) Disclosure to Agents. Notwithstanding the provisions of
Section 5.1(a), Schering shall have the right to disclose Licensor's
Proprietary Information to its Sublicensees, agents, consultants,
Affiliates or other third parties (collectively "Agents") in accordance
with this Section 5.1(b). Such disclosure shall be limited only to
those Agents directly involved in the research, development,
manufacture, marketing or promotion of Licensed Compound or Licensed
Product (or for such Agents to determine their interest in performing
such activities) in accordance with this Agreement. Any such Agents
must agree in writing to be bound by confidentiality and non-use
obligations essentially the same as those contained in this Agreement.
The term of confidentiality and non-use obligations for such Agents
shall be no less than [ * ] years. Schering shall be jointly and
severally liable for any disclosure of Licensor Proprietary Information
by Agents.
(c) Disclosure to a Third Party. Licensor shall have the right
to use and disclose any Licensor Know-How at its sole option and
discretion for the limited purpose of filing, prosecuting, and
supporting Patent Rights. Subject to the terms of Section 5.2, either
Party may publish Licensor Know-How under the terms of Section 5.3
below. Licensor shall not otherwise disclose, provide or transfer any
Licensor Know-How to any third party without the prior written approval
of Schering.
5.2 Publicity. Except as provided in Section 5.1 and this Section 5.2,
a Party may not use the name of the other Party in any publicity, advertising or
in any other public way and, may not issue press releases or otherwise publicize
or disclose any information related to the existence of this Agreement, the
terms or conditions of this Agreement, or any information relating to the
subject matter hereof, without the prior written consent of the other Party. The
Parties shall agree upon an initial press release to announce the execution of
this Agreement, together with a corresponding Q&A outline for use in responding
to inquiries about the Agreement. Following such initial press release, Licensor
may use the specific information contained therein, or in any subsequent public
announcements or publications made by Schering or by mutual agreement of the
Parties, in Licensor's investor relations and public relations activities.
Licensor shall make no public announcement, either written, oral or in any
medium relating to the safety of Licensed Compound and/or Licensed Product,
except for statements in official correspondence with government patent
authorities in support of Patent Rights as provided for in Section 5.1(c) [ * ].
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5.4 Publication. Schering and Licensor each acknowledge the potential
benefit in publishing results of certain studies to obtain recognition within
the scientific community and to advance the state of scientific knowledge. Each
Party also recognizes the mutual interest in obtaining valid patent protection
and in protecting business interests and trade secret information. No
publication of Licensor Know-How or Patent Rights may be made without the prior
written consent of Licensor. The Parties agree that Schering, its Affiliates,
employees or consultants shall be free to make any publication which does not
disclose Licensor Know-How or Patent Rights. In the event that any proposed
publication (as defined below) discloses Licensor Know-How or Patent Rights, the
following procedure shall apply: Either Party, its Affiliates, employees or
consultants wishing to make a publication shall deliver to the other Party a
copy of the proposed written publication or an outline of an oral disclosure at
least [ * ] days prior to submission for publication or presentation. For
purposes of this Agreement, the term "publication" shall include, without
limitation, abstracts and manuscripts for publication, slides and texts of oral
or other public presentations, and texts of any transmission through any
electronic media, e.g. any computer access system such as the Internet,
including the World Wide Web. The reviewing Party shall have the right (i) to
propose modifications to the publication for patent reasons, trade secret
reasons or business reasons or (ii) to request delay of the publication or
presentation in order to protect patentable information. If the reviewing Party
requests a delay, the publishing Party shall delay submission or presentation
for a period of up to [ * ] months from the filing date of the first patent
application in the Territory covering the information contained in the proposed
publication or presentation. If the reviewing Party requests modifications to
the publication, the publishing Party may edit such publication to prevent
disclosure of trade secret or proprietary business information prior to
submission of the publication or presentation.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Each Party. Each of Licensor and
Schering hereby represents, warrants and covenants to the other Party hereto
that as of the Execution date it has complied, and during the period extending
from the Execution Date until the expiration or termination of this Agreement it
shall comply, with all applicable material laws and regulations relating to its
activities under this Agreement. Each of Licensor and Schering further
represents, warrants and covenants to the other Party hereto that as of the
Execution Date:
(a) it is a corporation or entity duly organized and validly
existing under the laws of the state or other jurisdiction of its
incorporation or formation;
(b) the execution, delivery and performance of this Agreement
by such Party has been duly authorized by all requisite corporate
action, subject only to receipt of requisite approval of its board of
directors;
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(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such Party of
this Agreement and its compliance with the terms and provisions hereof
does not and will not conflict with or result in a breach of any of the
terms and provisions of or constitute a default under (i) a loan
agreement, guaranty, financing agreement, agreement affecting a product
or other agreement or instrument binding or affecting it or its
property; (ii) the provisions of its charter or operative documents or
bylaws; or (iii) any order, writ, injunction or decree of any court or
governmental authority entered against it or by which any of its
property is bound;
(e) except for the governmental and Regulatory Approvals
required to market Licensed Product in the Territory and any filings or
approvals referred to in Section 2.4, the execution, delivery and
performance of this Agreement by such Party does not require the
consent, approval or authorization of, or notice, declaration, filing
or registration with, any governmental or regulatory authority and the
execution, delivery or performance of this Agreement will not violate
any law, rule or regulation applicable to such Party;
(f) this Agreement has been duly authorized, executed and
delivered and constitutes such Party's legal, valid and binding
obligation enforceable against it in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to the availability of particular remedies under general
equity principles;
(g) to the best of its knowledge there are no third party
pending patent applications (excluding the Patent Rights), which, if
issued, may cover the development, manufacture, use or sale of any
Licensed Compound or Licensed Product.
6.2 Licensor's Representations. Licensor hereby represents,
warrants and covenants to Schering that as of the Execution Date:
(a) to the best of its knowledge, the Patent Rights and
Licensor Know-How are subsisting and are not invalid or unenforceable,
in whole or in part;
(b) it has the full right, power and authority to grant all of
the right, title and interest in the licenses granted to Schering under
Article II hereof;
(c) to the best of its knowledge, it has not previously
assigned, transferred, conveyed or otherwise encumbered its right,
title and interest in the Licensed Compound, Licensed Product, the
Patent Rights, or Licensor Know-
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How;
(d) except as specifically set forth in Schedule 6.2(d), it is
the sole and exclusive owner and/or licensee of the Patent Rights and
Licensor Know-How, all of which are free and clear of any liens,
charges and encumbrances, and to the best of its knowledge no other
person, corporation or other private entity, or governmental entity or
subdivision thereof, has or shall have any claim of ownership with
respect to the Patent Rights or Licensor Know-How, whatsoever;
(e) to the best of its knowledge, the Patent Rights and
Licensor Know-How, and the development, manufacture, use, distribution,
marketing, promotion and sale of Licensed Products do not interfere or
infringe (as applicable) on any intellectual property rights owned or
possessed by any third party;
(f) there are no claims, judgments or settlements against or
amounts with respect thereto owed by Licensor, and to the best of its
knowledge no pending or threatened claims or litigation against
Licensor relating to Licensed Compound, the Patent Rights and Licensor
Know-How;
(g) to the best of its knowledge, there are no circumstances
that would adversely affect the commercial utility or the use of the
Licensed Product;
(h) it has provided to Schering a summary of all material
adverse events known to it relating to the Licensed Compound;
(i) there are no collaborative, licensing, material transfer,
supply, distributorship or marketing agreements or arrangements or
other similar agreements to which it or any of its Affiliates are a
party relating to Licensed Compound, Licensed Product or Patent Rights
which would materially limit the rights granted to Schering under this
Agreement with respect to the Licensed Compound, Licensed Product or
Patent Rights;
(j) there are no trademark(s) chosen, owned or controlled by
Licensor or its Affiliates specifically in connection with the Licensed
Compound and/or the Licensed Product in the Territory; and
(k) except as set forth in Schedule 6.2(k), it has not
identified any compounds outside of the Compound Library which exhibit
both (1) similar or better VCAM-1 inhibition than the Licensed Compound
as determined using Licensor's currently available in vitro screens for
VCAM-1 inhibitory activity (i.e., the human aortic endothelial cell
based screen) and (2) histologically or morphologically demonstrated
anti-atherosclerotic properties similar or better than Licensed
Compound in the Licensor's animal models (i.e., the
hypercholesterolemic rabbit).
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Licensor further represents, warrants and covenants to Schering that:
(l) during the period extending from the Execution Date until
the expiration or termination of this Agreement it will use reasonable
efforts not to diminish the rights under the Patent Rights and Licensor
Know-How granted to Schering hereunder, including without limitation,
by not committing or permitting any actions or omissions which would
cause the breach of any license or other agreements between itself and
third parties which provide for licenses, assignments or other rights
to any Patent Rights or Licensor Know-How, that it will provide
Schering promptly with notice of any such alleged breach, and that as
of the Execution Date, it is in compliance in all material respects
with any such licenses or other agreements with third parties;
(m) as of the Execution Date, and to the best of its
knowledge, all data summaries provided in writing to Schering by
Licensor prior to the Execution Date relating to pre-clinical and
clinical studies of the Licensed Compound accurately represent the raw
data underlying such summaries; and
(n) Licensor shall not seek or file for any trademark for use
in connection with the Licensed Compound and/or the Licensed Product in
the Territory during the period extending from the Execution Date until
the expiration or termination of this Agreement.
6.3 Continuing Representations. The representations and warranties of
each Party contained in Sections 6.1 and 6.2 shall survive the execution of this
Agreement.
6.4 No Inconsistent Agreements. Neither Party has in effect and after
the Effective Date neither Party shall enter into any oral or written agreement
or arrangement that would be inconsistent with its obligations under this
Agreement.
6.5 Representation by Legal Counsel. Each Party hereto represents that
it has been represented by legal counsel in connection with this Agreement and
acknowledges that it has participated in the drafting hereof. In interpreting
and applying the terms and provisions of this Agreement, the Parties agree that
no presumption shall exist or be implied against the Party which drafted such
terms and provisions.
6.6 Additional Obligations of Licensor The Parties acknowledge and
agree that all data and information provided by Licensor to Schering arising out
of or relating to any preclinical and/or clinical studies involving the Licensed
Compound and/or Licensed Product conducted by or on behalf of Licensor (the
"Studies"), or relating to any patent applications or patents having claims
covering the Licensed Compound and/or Licensed Product, are of material
importance to the development and commercialization of the Licensed Compound
and/or Licensed Product and to Schering's decision to enter into this Agreement.
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(a) Licensor represents and warrants that, to the best of its
knowledge and based upon Licensor's diligence in the performance of the
relevant activities, as of the Execution Date it (and its
subcontractors and/or collaborators, if any):
(i) has fully complied with all applicable laws, rules and
regulations, in the preparation, filing and prosecution of
patent applications or patents;
(ii) has fully complied with all applicable laws, rules and
regulations, in the conduct and evaluation of the Studies and
with regard to all applications or submissions for Regulatory
Approval in the Territory, if any;
(iii) knows of no irregularities or information suggesting any
irregularities in connection with the preparation, filing or
prosecution of patent applications or patents which may have a
material adverse effect with respect thereto; and
(iv) knows of no irregularities or information suggesting any
irregularities in connection with the conduct and evaluation
of the Studies which may have a material adverse effect with
respect thereto.
(b) To the extent of Licensor's obligations under this
Agreement, Licensor shall undertake to perform the following in
accordance with all applicable laws, rules and regulations:
(i) to prepare, file, prosecute and maintain, or ensure that its
subcontractors, collaborators and/or agents prepare, file,
prosecute and maintain, any patent applications or patents
relating to the Licensed Compound and/or Licensed Product; and
(ii) to conduct, or ensure that its subcontractors and/or
collaborators, if any, shall conduct, any Studies.
(c) In the event Licensor becomes aware of any known or
suspected impropriety or misconduct relating to the preparation,
filing, prosecution or maintenance of patent applications or patents,
and/or the performance, analysis or reporting of any Studies, or any
application or submission for Regulatory Approval, Licensor shall,
within [ * ] hours notify Schering of such event in writing.
ARTICLE VII
INDEMNIFICATION AND LIMITATION ON LIABILITY
7.1 Indemnification by Schering. Schering shall indemnify, defend and
hold harmless Licensor and its Affiliates, and each of its and their respective
employees,
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officers, directors and agents (each, a "Licensor Indemnified Party") from and
against any and all third party claims, demands, lawsuits, proceedings,
settlement amounts, liability, loss, damage, cost, and expense (including
reasonable attorneys' fees), (collectively, a "Liability") which may be asserted
against the Licensor Indemnified Party or which the Licensor Indemnified Party
may incur, suffer or be required to pay resulting from or arising out of (i) the
discovery, development, manufacture, promotion, distribution, use, testing,
marketing, sale or other disposition of Licensed Compound and/or Licensed
Product(s) by Schering, its Affiliates or Sublicensees (including without
limitation any personal injury, death, or other injuries suffered by users of
Licensed Compound or Licensed Product), or (ii) the breach by Schering of any
covenant, representation or warranty contained in this Agreement; or (iii) the
successful enforcement by a Licensor Indemnified Party of its rights under this
Section 7.1. Notwithstanding the foregoing, Schering shall have no obligation
under this Agreement to indemnify, defend or hold harmless any Licensor
Indemnified Party with respect to any Liability which results from the willful
misconduct or negligent acts or omissions of Licensor, its Affiliates, or any of
their respective employees, officers, directors or agents.
7.2 Indemnification by Licensor. Licensor shall indemnify, defend and
hold harmless Schering and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a "Schering Indemnified Party")
from and against any Liability which the Schering Indemnified Party may incur,
suffer or be required to pay resulting from or arising out of (i) the breach by
Licensor of any covenant, representation or warranty contained in this
Agreement; or (ii) the successful enforcement by a Schering Indemnified Party of
its rights under this Section 7.2. Notwithstanding the foregoing, Licensor shall
have no obligation under this Agreement to indemnify, defend or hold harmless
any Schering Indemnified Party with respect to any Liability which results from
willful misconduct or negligent acts or omissions of Schering, its Affiliates,
or any of their respective employees, officers, directors or agents.
7.3 Conditions to Indemnification. Each Party agrees to promptly give
the other Party notice of any claim for which indemnification may be sought.
Failure of an indemnified Party to provide notice of a claim to the indemnifying
Party shall affect the indemnified Party's right to indemnification only to the
extent that such failure has a material adverse effect on the indemnifying
Party's ability to defend or the nature or the amount of the Liability. Subject
to the provisions of Article IV, the indemnifying Party shall have the right to
assume the defense of any suit or claim related to the Liability if it has
assumed responsibility for the suit or claim in writing; provided, however, that
if in the reasonable judgment of the indemnified Party, such suit or claim
involves an issue or matter which could have a materially adverse effect on the
business operations or assets of the indemnified Party, the indemnified Party
may waive its rights to indemnity under this Agreement and control the defense
or settlement thereof, but in no event shall any such waiver be construed as a
waiver of any indemnification rights such Party may have at law or in equity. If
the indemnifying Party defends the suit or claim, the indemnified Party may
participate in (but not control) the defense thereof at its sole cost and
expense.
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7.4 Settlements. Subject to the provisions of Article IV, neither Party
may settle a claim or action related to a Liability without the consent of the
other Party if such settlement would impose any monetary obligation on the other
Party or require the other Party to submit to an injunction or otherwise limit
the other Party's rights under this Agreement, provided that such consent shall
not be unreasonably withheld or delayed. Any payment made by a Party to settle
any such claim or action shall be at its own cost and expense.
7.5 Limitation of Liability. With respect to any claim by one Party
against the other arising out of the performance or failure of performance of
the other Party under this Agreement, the Parties expressly agree that the
liability of such Party to the other Party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a Party be liable for, punitive, exemplary or consequential
damages suffered or incurred by the other Party.
7.6 Insurance. Each Party acknowledges and agrees that during the Term
of this Agreement it shall maintain adequate insurance and/or a self-insurance
program for contractual liability insurance to cover such Party's obligations
under this Agreement. Each Party shall provide the other Party with evidence of
such insurance and/or self-insurance program, upon request.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term and Expiration. This Agreement shall be effective as of the
Effective Date and unless terminated earlier by mutual written agreement of the
Parties or pursuant to Sections 8.2, 8.3 or 8.4 below, the Term of this
Agreement shall continue in effect on a product-by-product and
country-by-country basis until the expiration of the last to expire Patent Right
incorporating a Valid Claim covering the Licensed Product, or in countries where
no such Patent Rights exist until the tenth anniversary of the First Commercial
Sales of Licensed Product in such country. Upon expiration of this Agreement,
Schering's licenses pursuant to Section 2.1 and 2.2 shall become fully paid-up,
perpetual licenses.
8.2 Termination by Schering Without Cause. Schering shall have the
unilateral right to terminate this Agreement on a product-by-product basis
(without cause) at any time by giving [ * ] days advance written notice to
Licensor. In the event of the exercise of such termination rights, the rights
and licenses granted to Schering under Sections 2.1 and 2.2 shall terminate and
all rights to Licensor Know-How, Licensed Compounds and Licensed Products with
respect to the applicable product which are granted pursuant to this Agreement
shall revert to Licensor.
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8.3 Termination Upon Cessation of Development.
(a) Termination by Either Party Either Party shall have the
unilateral right to terminate this Agreement on a product-by-product
basis at any time by giving [ * ] days advance written notice to the
other Party if Schering ceases development or commercialization of
Licensed Compound or Licensed Product pursuant to Sections 2.6(a) and
(c), subject to Section 2.6(b). In the event of the exercise of such
termination rights, the rights and licenses granted to Schering under
Sections 2.1 and 2.2 shall terminate and all rights to Licensor
Know-How, Licensed Compounds and Licensed Products with respect to the
applicable product which are granted pursuant to this Agreement shall
revert to Licensor.
(b) Termination by Licensor Licensor shall have the unilateral
right to terminate this Agreement by giving [ * ] days written notice
to Schering in the event that:
(i) [ * ]; or
(ii) [ * ].
In the event of the exercise of such termination rights, the rights and
licenses granted to Schering under Sections 2.1 and 2.2 shall terminate
and all rights to Licensor Know-How, Licensed Compounds and Licensed
Products with respect to the applicable product which are granted
pursuant to this Agreement shall revert to Licensor.
8.4 Termination.
(a) Termination for Cause. This Agreement may be terminated by
written notice at any time during the Term of this Agreement:
(i) by either Party, subject to Section 9.2, if the
other Party is in breach of its material obligations with
respect to such product hereunder and has not cured such
breach within [ * ] days ([ * ] days with respect to payment
obligations under Article III) after written notice requesting
cure of the breach with reasonable detail of the particulars
of the alleged breach, or within [ * ] days of receiving
notice initiated actions reasonably expected to cure the cited
failure and thereafter diligently pursued such actions to cure
the failure (even if requiring longer than the [ * ] days set
forth in this subsection); or
(ii) by either Party upon the filing or institution
of bankruptcy, reorganization (in connection with any
insolvency), liquidation or receivership proceedings, or upon
an assignment of a substantial portion of the assets for the
benefit of creditors by the other Party, or in the event a
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receiver or custodian is appointed for such other Party's
business, or if a substantial portion of such other Party's
business is subject to attachment or similar process;
provided, however, that in the case of any involuntary
bankruptcy proceeding such right to terminate shall only
become effective if the proceeding is not dismissed within
[ * ] days after the filing thereof.
(b) Effect of Termination for Cause on License.
(i) Termination by Schering. In the event Schering
terminates this Agreement under Section 8.4(a)(i), due to a
breach by Licensor of its material obligations under Section
2.1(a), 2.1(b) or 2.11(a) of this Agreement, then Schering's
licenses pursuant to Sections 2.1 and 2.2 shall become fully
paid-up, perpetual licenses.
(ii) Termination by Licensor. In the event that
Licensor terminates this Agreement under Section 8.4(a)(i),
then the rights and licenses granted to Schering under
Sections 2.1 and 2.2 shall terminate and all rights to
Licensor Know-How, Licensed Compounds and Licensed Products
granted pursuant to this Agreement shall revert to Licensor.
(iii) Effect of Bankruptcy. In the event Schering
terminates this Agreement under Section 8.4(a)(ii) or this
Agreement is otherwise terminated under Section 8.4(a)(ii),
the Parties agree that Schering, as a licensee of rights to
intellectual property under this Agreement, shall retain and
may fully exercise all of its rights and elections under the
Insolvency Statute including as set forth in Section 9.8
hereof.
8.5 Effect of Termination. Expiration or termination of the Agreement
shall not relieve the Parties of any obligation accruing prior to such
expiration or termination, and the provisions of Articles V and VII shall
survive the expiration of the Agreement. With regard to reimbursement for
development costs incurred by Licensor, including, without limitation, the costs
of clinical studies, Schering's obligations under Section 2.6 shall upon
termination be limited to the costs for actual work performed in accordance with
the relevant research plans or protocols up to the effective date of such
termination, or any irrevocable financial commitments made by Licensor prior to
the date of notice of termination. Any expiration or early termination of this
Agreement shall be without prejudice to the rights of either Party against the
other accrued or accruing under this Agreement prior to termination, including
the obligation to pay royalties for Licensed Product(s) or Licensed Compound
sold prior to such termination. In the event of termination of this Agreement,
Schering shall have the right to continue to sell its existing inventory of
Licensed Product during the [ * ] month period immediately following such
termination, provided that Schering shall continue to make royalty payments with
respect to such sales.
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8.6 Remedies for Breach. In addition to any and all other remedies that
Schering may have under this Agreement, or otherwise under law and/or equity, in
the event that Licensor materially breaches its obligations under Sections
6.6(a) or (b) of this Agreement and/or materially breaches its representation,
warranties and covenants under Section 6.2(m), then Schering shall have the
right, at Schering's sole discretion, upon written notice to Licensor to either:
(i) deduct [ * ] of the remaining unpaid milestone(s) in Section 3.2; (ii)
permanently reduce by [ * ] the royalty rates provided for in Section 3.3; or
(iii) immediately terminate the Agreement.
8.7 Licensor's Rights on Termination. In the event that Licensor
terminates this Agreement under Section 8.3 or 8.4(a)(i), or Schering terminates
this Agreement under Section 8.2 or 8.3, Schering shall provide to Licensor the
following:
(i) all existing Regulatory Approvals and/or applications for
Regulatory Approval for the applicable Licensed Product(s) in
the Territory;
(ii) access, including the right to make copies, of all
preclinical, clinical, pharmacokinetic, toxicology or other
data owned or controlled by Schering which is necessary to
support any of the Regulatory Approvals provided to Licensor
under Section 8.7(i);
(iii) subject to the terms of Section 8.7 (iv), all preclinical and
clinical supplies of the applicable Licensed Product(s),
and/or Licensed Compound or other Compound Library compounds,
in Schering's possession or control;
(iv) access to all manufacturing information relating to the
Licensed Product, including assigning, sublicensing or
otherwise making available, as appropriate, any third party
manufacturing agreements relied upon by Schering for the
manufacture of Licensed Product, in each case to the extent
reasonably necessary for Licensor to manufacture the Licensed
Product following such termination;
(v) to the extent that termination occurs after the First
Commercial Sale of the applicable Licensed Product(s) and
subject to the terms of Section 8.5, Licensor shall have the
right to purchase Schering's remaining inventory of the
applicable Licensed Product(s) and/or Licensed Compound or
other Compound Library compounds for sale in the Territory at
[ * ] of Schering's fully absorbed manufacturing costs.
In addition, in the event of such termination, Schering shall grant to Licensor
a paid-up, non-exclusive, non-transferable license in the Territory under any
issued patents, or pending patent applications, owned or controlled by Schering
which would otherwise be infringed by the manufacture, use or sale of the
applicable Licensed Product(s) in the Territory, which license shall be
restricted to the sole purpose of making, having made, importing, exporting,
using, distributing, marketing, promoting, offering for sale
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and selling such Licensed Product(s).
8.8 Concurrent Termination with the International Agreement. In the
event of any termination of the International Agreement by either Licensor or
Schering-Plough Ltd. under the provisions of Sections 8.2, 8.3 or 8.4 of the
International Agreement, this Agreement shall automatically terminate
concurrently under the corresponding Section 8.2, 8.3 or 8.4 of this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Assignment/Change of Control.
(a) Assignment. Neither this Agreement nor any or all of the
rights and obligations of a Party hereunder shall be assigned,
delegated, sold, transferred, sublicensed (except as expressly
permitted hereunder) or otherwise disposed of, by operation of law or
otherwise, to any third party (other than an Affiliate of an assigning
Party under the condition that the assignor remain responsible to the
other Party under this Agreement), without the prior written consent of
the other Party. Any attempted assignment, delegation, sale, transfer,
sublicense or other disposition, by operation of law or otherwise, of
this Agreement or of any rights or obligations hereunder contrary to
this Section 9.1 shall be a material breach of this Agreement by the
attempting Party, and shall be void and without force or effect;
provided, however, either Party may, without such consent, assign the
Agreement and its rights and obligations hereunder to an Affiliate or
in connection with the transfer or sale of all or substantially all of
its assets related to the division or the subject business, or in the
event of its merger or consolidation or change in control or similar
transaction. This Agreement shall be binding upon, and inure to the
benefit of, each Party, its Affiliates, and its permitted successors
and assigns. Each Party shall be responsible for the compliance by its
Affiliates with the terms and conditions of this Agreement.
(b) Change of Control. In the event the ownership or control
of Licensor is acquired by another pharmaceutical company that has an
ongoing development program or commercializes (directly or through any
Affiliate) any compound or product for the Primary Indication and/or
the Secondary Indication, Licensor shall promptly notify Schering in
writing to that effect. Licensor's obligations under Section 2.11 shall
not extend to any such compound or product. Effective upon such notice,
the JMC shall be disbanded and Schering will assume and thereafter be
responsible for all of the rights and obligations of the JMC. Licensor,
and following the change of control the acquiring party, shall use best
efforts to ensure that such acquiring party does not have any access to
any of Schering's Proprietary Information or other proprietary
information relating to the development and commercialization of
Licensed Product. Such best efforts shall
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include, without limitation: (i) ensuring that the acquiring party does
not have access to any such information prior to the change of control
of Licensor; and (ii) promptly destroying or returning to Schering all
such information in Licensor's possession or control upon completion of
the change of control. The acquiring party shall have no rights to use
any Licensor Know-How relating to the Primary Indication or the
Secondary Indication in connection with the development and
commercialization of its own compound or product for the Primary and/or
Secondary Indication. All of Schering's obligations under Article II to
provide Licensor and/or the JMC with reports or to otherwise keep
Licensor informed with respect to the development and commercialization
of Licensed Compound, any other compound within the Compound Library
and/or Licensed Product shall immediately terminate; provided, however,
that Schering shall provide such acquiring party with an annual summary
of its activities in developing and commercializing Licensed Product.
9.2 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New Jersey, without giving
effect to conflict of law principles. All disputes under this Agreement shall be
governed by binding arbitration pursuant to the mechanism set forth in Schedule
9.2 attached hereto and incorporated hereby.
9.3 Waiver. Any delay or failure in enforcing a Party's rights under
this Agreement or any waiver as to a particular default or other matter shall
not constitute a waiver of such Party's rights to the future enforcement of such
rights under this Agreement, nor operate to bar the exercise or enforcement
thereof at any time or times thereafter, excepting only as to an express written
and signed waiver as to a particular matter for a particular period of time.
9.4 Independent Relationship. Nothing in this Agreement shall be deemed
to create an employment, agency, joint venture or partnership relationship
between the Parties hereto or any of their respective Affiliates, agents or
employees, or any other legal arrangement that would impose liability upon one
Party for the act or failure to act of the other Party. Neither Party shall have
any power to enter into any contracts or commitments or to incur any liabilities
in the name of, or on behalf of, the other Party, or to bind the other Party in
any respect whatsoever.
9.5 Export Control. This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States of America which may be imposed upon or related to Licensor or Schering
from time to time by the government of the United States of America.
Furthermore, Schering agrees that it will not export, directly or indirectly,
any technical information acquired from Licensor under this Agreement or any
products using such technical information to any country for which the United
States government or any agency thereof at the time of export requires an export
license or other governmental approval, without first obtaining the written
consent to do so from the Department of Commerce or other agency of the
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▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ government when required by an applicable statute or regulation.
9.6 Entire Agreement; Amendment. This Agreement, including the Exhibits
and Schedules hereto and all the covenants, promises, agreements, warranties,
representations, conditions and understandings contained herein sets forth the
complete, final and exclusive agreement between the Parties with respect to the
subject matter hereof and supersedes and terminates all prior and
contemporaneous agreements and understandings between the Parties, whether oral
or in writing. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as are set forth herein. No subsequent alteration,
amendment, change, waiver or addition to this Agreement shall be binding upon
the Parties unless reduced to writing and signed by an authorized officer of
each Party. Each Party in deciding to execute this Agreement has not relied on
any understanding, agreement, representation or promise by the other Party which
is not explicitly set forth herein.
9.7 Notices. Except as provided under Section 4.8 hereof, any notice
required or permitted to be given or sent under this Agreement shall be hand
delivered or sent by express delivery service or certified or registered mail,
postage prepaid, or by facsimile transmission (with written confirmation copy by
registered first-class mail) to the Parties at the addresses and facsimile
numbers indicated below.
If to Licensor, to: AtheroGenics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Vice President, Business Development
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Schering to: Schering Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Vice President, Business Development
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Schering Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: Law Department - Staff Vice President,
Licensing
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be deemed to have been received on the date
actually received. Either Party may change its address or its facsimile number
by giving the other Party written notice, delivered in accordance with this
Section.
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9.8 Provisions for Insolvency.
(a) Effect on Licenses. All rights and licenses granted under
or pursuant to this Agreement by Licensor to Schering are, for all
purposes of Section 365(n) of Title 11 of the United States Code
(together with its foreign equivalent, the "Insolvency Statute"),
licenses of rights to "intellectual property" as defined in the
Insolvency Statute. Licensor agrees that Schering, as licensee of such
rights under this Agreement shall retain and may fully exercise all of
its rights and elections under the Insolvency Statute provided that
Schering makes all royalty payments under this Agreement. Licensor
agrees during the Term of this Agreement to create and maintain current
copies or, if not amenable to copying, detailed descriptions or other
appropriate embodiments, to the extent feasible, of all such
intellectual property. If a case is commenced by or against Licensor
under the Insolvency Statute, Licensor (in any capacity, including
debtor-in-possession) and its successors and assigns (including,
without limitation, an Insolvency Statute trustee) shall,
(i) as Schering may elect in a written request,
immediately upon such request:
(A) perform all of the obligations provided
in this Agreement to be performed by Licensor
including, where applicable and without limitation,
providing to Schering portions of such intellectual
property (including embodiments thereof) held by
Licensor and such successors and assigns or otherwise
available to them; or
(B) provide to Schering all such
intellectual property (including all embodiments
thereof) held by Licensor and such successors and
assigns or otherwise available to them; and
(ii) not interfere with the rights of Schering under
this Agreement, or any agreement supplemental hereto, to such
intellectual property (including such embodiments), including
any right to obtain such intellectual property (or such
embodiments) from another entity.
(b) Rights to Intellectual Property. If an Insolvency Statute
case is commenced by or against Licensor, and this Agreement is
rejected as provided in the Insolvency Statute, and Schering elects to
retain its rights hereunder as provided in the Insolvency Statute, then
Licensor (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, an Insolvency
Statute trustee) shall provide to Schering all such intellectual
property (including all embodiments thereof) held by Licensor and such
successors and assigns, or otherwise available to them, immediately
upon
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Schering's written request. Whenever Licensor or any of its successors
or assigns provides to Schering any of the intellectual property
licensed hereunder (or any embodiment thereof) pursuant to this Section
9.8, Schering shall have the right to perform the obligations of
Licensor hereunder with respect to such intellectual property, but
neither such provision nor such performance by Schering shall release
Licensor from any such obligation or liability for failing to perform
it.
(c) Schering's Rights. All rights, powers and remedies of
Schering provided herein are in addition to and not in substitution for
any and all other rights, powers and remedies now or hereafter existing
at law or in equity (including, without limitation, the Insolvency
Statute) in the event of the commencement of an Insolvency Statute case
by or against Licensor. Schering, in addition to the rights, power and
remedies expressly provided herein, shall be entitled to exercise all
other such rights and powers and resort to all other such remedies as
may now or hereafter exist at law or in equity (including, without
limitation, the Insolvency Statute) in such event. The Parties agree
that they intend the foregoing Schering rights to extend to the maximum
extent permitted by law, including, without limitation, for purposes of
the Insolvency Statute:
(i) the right of access to any intellectual property
(including all embodiments thereof) of Licensor, or any third
party with whom Licensor contracts to perform an obligation of
Licensor under this Agreement, and, in the case of the third
party, which is necessary for the development, registration,
manufacture and marketing of Licensed Compound and/or Licensed
Product(s); and
(ii) the right to contract directly with any third
party described in (i) to complete the contracted work.
(d) Deemed Grant of Rights. In the event of any insolvency of
Licensor and if any statute and/or regulation in any country in the
Territory requires that there be a specific grant or specific clause(s)
in order for Schering to obtain the rights and benefits as licensee
under this Agreement which are analogous to those rights under Section
365(n) of Title 11 of the United States Code, then this Agreement shall
be deemed to include any and all such required grant(s), clause(s)
and/or requirements.
(e) Security Interests. In addition to any other rights
granted to Schering hereunder, with respect to any country in the
Territory in which Schering reasonably determines that its rights set
forth in this Section 9.8 are nonexistent or inadequate to protect
Schering's interests in the licenses granted hereunder, Licensor shall,
upon Schering's request, execute a security agreement, or any foreign
equivalent, for each country in the Territory, granting Schering a
secured interest in all intellectual property licensed to Schering
under this Agreement.
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9.9 Force Majeure. Failure of any Party to perform its obligations
under this Agreement (except the obligation to make payments when properly due)
shall not subject such Party to any liability or place them in breach of any
term or condition of this Agreement to the other Party if such failure is due to
any cause beyond the reasonable control of such non-performing Party ("force
majeure"), unless conclusive evidence to the contrary is provided. Causes of
non-performance constituting force majeure shall include, without limitation,
acts of God, fire, explosion, flood, drought, war, riot, sabotage, embargo,
strikes or other labor trouble, failure in whole or in part of suppliers to
deliver on schedule materials, equipment or machinery, interruption of or delay
in transportation, a national health emergency or compliance with any order or
regulation of any government entity acting with color of right. The Party
affected shall promptly notify the other Party of the condition constituting
force majeure as defined herein and shall exert reasonable efforts to eliminate,
cure and overcome any such causes and to resume performance of its obligations
with all possible speed; provided, however, that nothing contained herein shall
require any Party to settle on terms unsatisfactory to such Party any strike,
lock-out or other labor difficulty, any investigation or proceeding by any
public authority, or any litigation by any third party. If a condition
constituting force majeure as defined herein exists for more than ninety (90)
consecutive days, the Parties shall meet to negotiate a mutually satisfactory
resolution to the problem, if practicable.
9.10 Severability. If any provision of this Agreement is declared
illegal, invalid or unenforceable by a court having competent jurisdiction, it
is mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court; provided, however, that in the
event that the terms and conditions of this Agreement are materially altered,
the Parties will, in good faith, renegotiate the terms and conditions of this
Agreement to reasonably substitute such invalid or unenforceable provisions in
light of the intent of this Agreement.
9.11 Counterparts. This Agreement shall become binding when any one or
more counterparts hereof, individually or taken together, shall bear the
signatures of each of the Parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against either
Party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
9.12 Captions. The captions of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.
9.13 Recording. Each Party shall have the right, at any time, to
record, register, or otherwise notify this Agreement in appropriate governmental
or regulatory offices anywhere in the world, and each Party shall provide
reasonable assistance to the other in effecting such recording, registering or
notifying. Notwithstanding the foregoing, prior to recording, registering, or
otherwise notifying this Agreement, the Party desiring to so record, register,
or notify shall provide a copy of all materials to be filed for review, comment,
and approval by the other Party, such approval not unreasonably to be withheld
or delayed.
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9.14 Further Actions. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all other acts, as may be necessary
or appropriate in order to carry out the purposes and intent of this Agreement
including, without limitation, any filings with any antitrust agency which may
be required.
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IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized representatives of the Parties as of the date set forth below.
ATHEROGENICS, INC. SCHERING CORPORATION
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ By: ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------ ------------------------------
Title: President & CEO Title: Vice President
------------------------------ ------------------------------
Date: 22 October 1999 Date: 21 October 1999
------------------------------ ------------------------------
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SCHEDULE 1.6
Elements of Fully Absorbed Manufacturing Cost of Goods
The following expenses are included in manufacturing costs:
1. Direct Materials
Materials used in the manufacturing process that are traced directly to the
completed product, such as:
- Inert raw materials or excipients
- Active substances/ingredients
- Packaging components such as bottles, caps, labels, etc.
2. Direct Labor
The cost of employees engaged in production activities that are directly
identifiable with product costs. Excludes supervision, which is included in
indirect labor, and production support activities such as inspection, plant and
equipment maintenance labor, and material handling personnel. Direct Labor cost
includes:
- Base pay, overtime, vacation and holidays, illness, personal
time with pay and shift differential.
- Cost of employee fringe benefits such as health and life
insurance, payroll taxes, welfare, pension and profit sharing.
3. Indirect Manufacturing Costs
Costs which are ultimately allocated to product based on standard direct labor
hours of the operating departments. These costs include:
- Indirect Production Labor - salaries of employees engaged in
production activities who are not classified as direct labor,
including supervision, clerical, etc.
- Costs of Direct Labor - employees not utilized for the
manufacturing of product such as training, downtime and
general duties.
- Indirect Materials - supplies and chemicals which are used in
the manufacturing process and are not assigned to specific
products but are included in manufacturing overhead costs.
Includes supplies for which direct assignment to products is
not practical.
- Utilities - expenses incurred for fuel, electricity and water
in providing
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power for production and other plant equipment.
- Maintenance and Repairs - amount of expense incurred in-house
or purchased to provide services for plant maintenance and
repairs of facilities and equipment.
- Other Services - purchased outside services and rentals such
as the cost of security, ground maintenance, etc.
- Depreciation - of plant and equipment utilizing the
straight-line method of calculation.
- Insurance - cost of comprehensive and other insurance
necessary for the safeguard of manufacturing plant and
equipment.
- Taxes - expense incurred for taxes on real and personal
property (manufacturing site, buildings and the fixed assets
of equipment, furniture and fixtures, etc.). If manufacturing
site includes other operations (marketing, R&D, etc.), taxes
are allocated to manufacturing on the basis of total real and
personal property.
- Cost of manufacturing, service departments - such as:
(where applicable)
- Packaging Engineering
- Manufacturing Maintenance
- Industrial Engineering
- Receiving and Warehousing
- Purchasing and Accounting
- Production Scheduling
- Inventory Management
- Plant Materials Management
- Central Weigh
- Manufacturing Administration
- Allocated costs of services provided to manufacturing
including: (where applicable)
- Cafeteria
- Personnel Operations
- Health and Safety Services
- Division Engineering and Operations Services
- Plant Services (housekeeping)
- Manufacturing Information Systems
- Plant Power
- Office of V.P. Manufacturing
Various bases are used for allocating these costs to manufacturing
operating departments including headcount, square feet, metered
utilities use, estimated services rendered, EDP computer hours, etc.
ii
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4. Quality Assurance Costs
Direct labor and indirect costs for Quality Assurance departments testing and
approving materials used in manufacturing and completed manufacturing batches
and finished products. This includes all manufacturing in-process testing and
testing of finished materials. Excluded from product costs are QA costs related
to research and development, stability testing, and other costs customarily
excluded from such Quality Assurance costs.
The following expenses are not included in manufacturing costs:
a) Inventory Carrying Costs
b) Regulatory Affairs Costs
c) Pilot plant costs, research batches and other similar costs
prior to turnover to manufacturing. These are handled as
development costs and expensed to R&D. This excludes
commercial goods produced by a research facility.
d) Costs incurred by Manufacturing for special projects (e.g.
requests by Schering-Plough Research Institute) to establish
and certify new production processes, batch sizes and product
line improvements, and new vendor certification of equipment
and primary materials components. These costs are expensed to
R&D.
e) Manufacturing start-up costs and initial one-time
extraordinary manufacturing costs incurred prior to plant
operation and achievement of a normal production activity
level. Includes costs of training, testing,
qualification/validation of new equipment and facilities and
initial, trial batches. These costs are deferred and then
amortized to Other Production Costs over five years.
f) Significant idle capacity is eliminated from factory overhead
and product cost. Idle or excess capacity costs are culled out
of the Manufacturing Budget and expensed as a period cost to
Other Production Costs.
g) Finished goods warehousing, shipping and other distribution
costs. These are included in distribution costs.
h) Product liability and/or business interruption insurance
expenses.
i) Intercompany profit.
5. Other Production Costs
Three major types of expense are included in the Other Production Costs
classification.
a) Variances from standard cost the difference between the actual
and standard cost of inventory purchased and produced during
the period less any portion applicable to on-hand inventory
which has been capitalized.
(i) Materials purchase price variance
(ii) Materials usage/yield variances
(iii) Direct labor efficiency/inefficiency - reflects the
cost difference between the standard and actual
number of direct labor
iii
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hours used for actual production.
(iv) Overhead - reflects all other labor and overhead cost
variances including activity and spending production
related and support.
With the exception of overhead, all of the other variances can
be identified by product and can be added (if unfavorable) or
subtracted (if favorable) to determine actual manufacturing
costs of a product.
(b) Non-standard costs: Cost of miscellaneous production related
operations for which standards are not established due to the
nature of the function, such as manufacturing start-up
operations, stock conversions and reclaiming (processing and
returning to finished goods inventory) of products returned by
customers. Also includes miscellaneous expenses incurred in
connection with the production of inventory which for various
reasons (e.g., cyclical, non-recurring) are not included in
standard costs. Examples include excess/idle capacity not
included in standards, abnormal waste or rework, experiments,
unallocated production costs, tooling and package design
costs.
Some of the above costs may be incurred for specific products,
e.g., rework, experiments, tooling, but the majority are
general to all products produced.
(c) Inventory adjustments: Consists of charges or credits due to
adjustments to inventory concerning revaluation to new
standards, stock conversions, capitalized/amortized production
variances, shortages or overages, and damage or obsolescence
of regular on-hand inventory or products returned by
customers.
Each of these charges or credits can be identified to a specific product.
iv
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Schedule 1.18
PATENT RIGHTS
[*]
124
Schedule 2.1(e)
Third Party Agreements
License Agreement between Emory University and Atherogenics, Inc., dated January
11, 1995.
License to the United States Government dated March 27, 1995.
Patent Purchase Agreement between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇, Ph.D. and Atherogenics,
Inc., dated April 26, 1995.
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Schedule 2.6(h)
Development Work to be Performed by Licensor
Pre-clinical:
[ * ]
126
SCHEDULE 2.6(i)
ADVERSE EVENT REPORTING PROCEDURES FOR PRODUCTS
The Parties understand and agree that these procedures are intended to
comply with 21 CFR 314.80(b) and 21 CFR 310.305(a) concerning standard written
procedures for adverse event reporting in the United States. These procedures
may be amended by the Parties at any time, at the request of either Party, to
ensure that they fully and accurately reflect the procedures in place for
surveillance, receipt, evaluation and reporting of adverse drug experiences by
the pharmacovigilance departments of the Parties and comply with applicable laws
and regulations in the countries in which the product(s) is marketed and/or is
under investigation. In that regard, upon the written request of either Party,
the Parties shall meet to renegotiate in good faith, all or some of these
procedures. Each Party may request such a meeting no more often than once in any
twelve (12) month period.
1. Definitions:
(a) An Adverse Event ("AE") is defined as:
i) any experience which is adverse, including what are
commonly described as adverse or undesirable
experiences, adverse events, adverse reactions, side
effects, or death due to any cause associated with,
or observed in conjunction with the use of a drug,
biological product, or device in humans, whether or
not considered related to the use of that product:
- occurring in the course of the use of a
drug, biological product or device,
- associated with, or observed in conjunction
with product overdose, whether accidental or
intentional,
- associated with, or observed in conjunction
with product abuse,
- associated with, or observed in conjunction
with product withdrawal
ii) Any significant failure of expected pharmacological
or biologic therapeutical action (with the exception
of in clinical trials).
(b) Associated with or related to the use of the drug is defined
as: A
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reasonable possibility exists that the AE was caused by the drug.
(c) Expected or unexpected are defined as:
i) Expected ("labeled") AE - An AE which is included in
the Investigators' Brochure for clinical trials,
included in local labeling (e.g., summary of product
characteristics) for Marketed Drugs, or in countries
with no local labeling, in the Company Core Data
Sheet (CCDS).
ii) Unexpected ("unlabeled") AE - An AE that does not
meet the criteria for an expected AE or an AE which
is listed but differs from that event in terms of
severity or specificity.
(d) IND Holder is defined as: A "Sponsor" as defined in 21 CFR
Part 312.2(b) of an investigational new drug in any regulatory jurisdiction,
including a holder of a foreign equivalent thereto.
(e) Life-threatening is defined as: any adverse drug experience
that places the patient, in the view of the initial reporter, at immediate risk
of death from the adverse drug experience as it occurred, i.e., it does not
include an AE that, had it occurred in more severe form, might have caused
death.
(f) NDA Holder is defined as: An "Applicant" as defined in 21 CFR
Part 314.3(b), for regulatory approval of a Licensed Product in any regulatory
jurisdiction, including a holder of a foreign equivalent thereto.
(g) Serious or Non-Serious are defined as:
i) Any adverse drug experience occurring at any dose
that results in any of the following outcomes: Death,
a life-threatening adverse drug experience, inpatient
hospitalization or prolongation of existing
hospitalization, a persistent or significant
disability/incapacity, or a congenital anomaly/birth
defect. Important medical events that may not result
in death, be life-threatening, or require
hospitalization may be considered serious when, based
upon appropriate medical judgment, they may
jeopardize the patient or subject and may require
medical or surgical intervention to prevent one of
the outcomes listed in this definition. Examples of
such medical events include allergic bronchospasm
requiring intensive treatment in an emergency room or
at home, blood dyscrasias or convulsions that do not
result in inpatient hospitalization, or the
development of drug dependency or drug abuse.
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ii) A Non-serious AE is any AE which does not meet the
criteria for a serious AE.
(h) Not associated or unrelated to the use of the drug means it
does not meet the definition of "associated."
2. Capitalized terms not defined in this Appendix shall have the meaning
assigned thereto in the Agreement.
3. With respect to all Licensed Products:
All initial reports (oral or written) for any and all serious
AEs as defined above which become known to either Party (other
than from disclosure by or on behalf of the other Party) must
be communicated by telephone, telefax or electronically
directly to the other Party, NDA Holder, and/or IND Holder
(individually and collectively referred to as "Holders")
within five (5) calendar days of receipt of the information.
Written confirmation of the Serious AE received by the Party
should be sent to the other Party and the Holders as soon as
it becomes available, but in any event within two (2) business
days of initial report of the Serious AE by such Party.
All Parties and Holders should exchange Medwatch and/or CIOMS
forms and other health authority reports within two (2)
business days of submission to any regulatory agency.
All initial reports and follow-up information received for all
non-serious AEs for marketed Licensed Products which become
known to a Party (other than from disclosure by or on behalf
of the other Party) must be communicated in writing, by
telefax or electronically to the other Party and all Holders
on a monthly basis, on Medwatch or CIOMs forms (where
possible). All follow-up on any AE reports forwarded to either
Party by FDA must be submitted to FDA.
Each Party shall coordinate and cooperate with the other
whenever practicable to prepare a single written report
regarding all Serious AEs, provided, however, that neither
Party shall be obligated to delay reporting or any AE in
violation of applicable law or regulations regarding the
reporting of adverse events.
4. The Parties further agree that:
(a) a written report for AEs for animal studies which suggest a
potential significant risk for humans shall be forwarded to the other Party
within two (2) business days of receipt by the Party making the report,
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(b) each Party will give the other Party a print-out or computer disk
of all AEs reported to it relating to Products within the preceding 365
days/calendar year, within thirty (30) days of receipt of a request from the
other Party;
(c) upon request of a Party, the other Party shall make available its
AE records relating to Licensed Products (including computer disks) for viewing
and copying by the other Party,
(d) disclosure of information hereunder by a Party to the other Party
shall continue as long as either Party continues to clinically test or market
product(s) containing Licensed Products or holds an open IND, NDA or foreign
equivalent thereto.
(e) all written regulatory reports, including periodic NDA, annual IND,
safety updates, or foreign equivalents thereto, etc. should be sent by a Party
to the other Party within 2 business days of submission to the appropriate
regulatory agency. The Parties shall agree on a procedure for preparing these
reports (e.g. electronic mail, facsimile transmission, overnight service, etc.).
5. Each Party shall diligently undertake the following further obligations
where both Parties are or will be commercializing products hereunder and/or
performing clinical trials with respect to Licensed Product:
(a) to immediately consult with the other Party, with respect to the
investigation and handling of any serious AE disclosed to it by the other Party
or by a third Party, including government agencies, and to allow the other Party
to review the serious AE and to participate in the follow-up investigation;
(b) to immediately advise the other Party of any Product safety
communication received from a health authority and consult with the other Party
with respect to any proposed change to product warnings, labeling or an
Investigator's Brochure involving safety issues, including, but not limited to,
safety issues agreed to by the Parties;
(c) to diligently handle in a timely manner the investigation and
resolution of each AE reported to it; and
(d) to provide the other Party reasonable annual audit rights of its AE
reporting system and documentation, upon prior notice, during normal business
hours, at the expense of the auditing Party and under customary confidentiality
obligations.
(e) to meet in a timely fashion from time to time as may be reasonably
required to implement the adverse event reporting and consultation procedures
described in this Appendix, including identification of those individuals in
each Party's pharmacovigilance group who will be responsible for reporting to
and receiving AE information from the other Party, and the development of a
written standard operating
130
procedure with respect to adverse event reporting responsibilities, including
reporting responsibilities to investigators;
(f) where possible, to transmit all data electronically;
(g) to report to each other any addenda, revisions or changes to this
Agreement (e.g., change in territories, local regulations, addition of new
licensors/licensees to the agreement, etc.) which might alter the adverse event
reporting responsibilities hereunder;
(h) to utilize English as the language of communication and data
exchange between the Parties;
(i) to develop a system of exchange of documents and information in the
event that the Agreement involves more than two Holders.
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Schedule 3.2
DEFINITION OF SUCCESSFUL COMPLETION
CART STUDY:
Schering recognizes that Licensor's Phase II Study 027, commonly
referred to as the CART Study, is pivotal to the determination of
proof-of-activity in man. Determination by the JMC of "successful completion" of
this study will be based upon the study achieving all of the following three
points, as reflected in the final study report:
[ * ]
132
Schedule 6.2(d)
GOVERNMENT RIGHTS
Pursuant to that certain Assignment agreement between Licensor and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ dated May 2, 1995, U.S. Patent No. 5,262,439 is subject to
a license of rights to the United States Government, as specifically set forth
in the License to the United States Government attached hereto as Exhibit A.
133
Schedule 6.2(k)
Other VCAM-1 Inhibitors
[ * ]
134
Schedule 9.2
ARBITRATION PROVISIONS
(a) Scope. Subject to and in accordance with the terms of this
Agreement and this Schedule 9.2, all differences, disputes, claims or
controversies arising out of or in any way connected or related to this
Agreement, whether arising before or after the expiration of the Term of this
Agreement, and including, without limitation, its negotiation, execution,
delivery, enforceability, performance, breach, discharge, interpretation and
construction, existence, validity and any damages resulting therefrom or the
rights, privileges, duties and obligations of the Parties under or in relation
to this Agreement (including any dispute as to whether an issue is arbitrable)
shall be referred to binding arbitration in accordance with the rules of the
American Arbitration Association, as in effect at the time of the arbitration.
(b) Parties to Arbitration. For the purposes of each arbitration under
this Agreement, Schering shall constitute one party to the arbitration and
Licensor shall constitute the other party to the arbitration.
(c) Notice of Arbitration. A Party requesting arbitration hereunder
shall give a notice of arbitration to the other Party containing a concise
description of the matter submitted for arbitration, including references to the
relevant provisions of the Agreement and a proposed solution (a "Notice of
Arbitration"). Notice of Arbitration shall be delivered to the other Party in
accordance with Section 9.7 of the Agreement.
(d) Response. The non-requesting Party must respond in writing within
forty-five (45) days of receiving a Notice of Arbitration with an explanation,
including references to the relevant provisions of the Agreement and a response
to the proposed solution and suggested time frame for action. The non-requesting
Party may add additional issues to be resolved.
(e) Meeting. Within fifteen (15) days of receipt of the response from
the non-requesting Party pursuant to Paragraph (d), the Parties shall meet and
discuss in good faith options for resolving the dispute. The requesting Party
must initiate the scheduling of this resolution meeting. Each Party shall make
available appropriate personnel to meet and confer with the other Party during
such fifteen-(15) day period.
(f) Selection of Arbitrator. Any and all disputes that cannot be
resolved pursuant to Paragraphs (c), (d) and (e) shall be submitted to an
arbitrator (the "Arbitrator") to be selected by mutual agreement of the Parties.
The Arbitrator shall be a retired judge of a state or federal court, to be
chosen from a list of such retired judges to be prepared jointly by the Parties,
with each Party entitled to submit the names of three such retired judges for
inclusion in the list. No Arbitrator appointed or selected hereunder shall be an
employee, director or shareholder of, or otherwise have any current or previous
relationship with, any Party or its respective Affiliates. If the Parties fail
to
135
agree on the selection of the Arbitrator, the Arbitrator shall be designated by
a judge of the Federal District Court in New York upon application by either
Party.
(g) Powers of Arbitrator. The Arbitrator may determine all questions of
law and jurisdiction (including questions as to whether a dispute is arbitrable)
and all matters of procedure relating to the arbitration. The Arbitrator shall
have the right to grant legal and equitable relief (including injunctive relief)
and to award costs (including reasonable legal fees and costs of arbitration)
and interest. Nothing contained herein shall be construed to permit the
Arbitrator to award punitive, exemplary or any similar damages.
(h) Arbitration Procedure. In the event that Schering is the Party
requesting arbitration, the arbitration shall take place in the State of
Georgia, unless otherwise agreed by the Parties, at such place and time as the
Arbitrator may fix for the purpose of hearing the evidence and representations
that the Parties may present. In the event that Licensor is the Party requesting
arbitration, the arbitration shall take place in the State of New Jersey, unless
otherwise agreed by the Parties, at such place and time as the Arbitrator may
fix for the purpose of hearing the evidence and representations that the Parties
may present. The arbitration proceedings shall be conducted in the English
language. The law applicable to the arbitration shall be the law of the State of
New Jersey. No later than twenty (20) business days after hearing the
representations and evidence of the Parties, the Arbitrator shall make its
determination in writing and deliver one copy to each of the Parties.
(i) Discovery and Hearing. During the meeting referred to in Paragraph
(e), the Parties shall negotiate in good faith the scope and schedule of
discovery, relating to depositions, document production and other discovery
devices, taking into account the nature of the dispute submitted for resolution.
If the Parties are unable to reach agreement as to the scope and schedule of
discovery, the Arbitrator may order such discovery as it deems necessary. To the
extent practicable taking into account the nature of the dispute submitted for
resolution, such discovery shall be completed within [*] days from the date of
the selection of the Arbitrator. At the hearing, which shall commence within [*]
days after completion of discovery unless the Arbitrator otherwise orders, the
Parties may present testimony (either live witness or deposition), subject to
cross-examination, and documentary evidence. To the extent practicable taking
into account the nature of the dispute submitted for resolution and the
availability of the Arbitrator, the hearing shall be conducted over a period not
to exceed [*] consecutive business days, with each Party entitled to
approximately half of the allotted time unless otherwise ordered by the
Arbitrator. Each Party shall have sole discretion with regard to the
admissibility of any evidence and all other matters relating to the conduct of
the hearing.
(j) Witness Lists. At least [*] business days prior to the date
set for the hearing, each Party shall submit to the other Party and the
Arbitrator a list of all documents on which such Party intends to rely in any
oral or written presentation to the Arbitrator and a list of all witnesses, if
any, such Party intends to call at such hearing and
136
a brief summary of each witness' testimony. At least five (5) business days
prior to the hearing, each Party must submit to the Arbitrator and serve on each
other Party a proposed findings of fact and conclusions of law on each issue to
be resolved. Following the close of hearings, the Parties shall each submit such
post-hearing briefs to the Arbitrator addressing the evidence and issues to be
resolved as may be required or permitted by the Arbitrator.
(k) Confidentiality. The arbitration proceedings shall be confidential
and, except as required by law, no Party shall make, or instruct the Arbitrator
to make, any public announcement with respect to the proceedings or decision of
the Arbitrator without the prior written consent of the other Party. The
existence of any dispute submitted to arbitration and the award of the
Arbitrator shall be kept in confidence by the Parties and the Arbitrator, except
as required in connection with the enforcement of such award or as otherwise
required by law.
(l) Awards and Appeal. Subject to the provisions of this Schedule 9.2,
the decision of the Arbitrator shall be final and binding upon the Parties in
respect of all matters relating to the arbitration, the conduct of the Parties
during the proceedings, and the final determination of the issues in the
arbitration. There shall be no appeal from the final determination of the
Arbitrator to any court, except in the case of fraud or bad faith on the part of
the Arbitrator or any Party to the arbitration proceeding in connection with the
conduct of such proceedings. Judgment upon any award rendered by the Arbitrator
may be entered in any court having jurisdiction thereof.
(m) Costs of Arbitration. The costs of any arbitration hereunder shall
be borne by the Parties in the manner specified by the Arbitrator in its
determination.
(n) Performance of the Agreement. During the pendency of the
arbitration proceedings, the matter which is the subject of such arbitration
proceedings shall be performed by the Parties (A) in the manner determined by
Schering in its sole discretion if it is a matter relating to Schering's
development of Licensed Product, and (B) in the manner determined by Licensor in
its sole discretion if it is a matter involving payment of License Fees under
Section 3.1 and royalty payments under Sections 3.2 or 3.3. Notwithstanding the
foregoing, in the event that Schering makes payments pursuant to Sections 3.1,
3.2 or 3.3 and it is subsequently determined by the Arbitrator that Schering was
not required to make such payment(s) then Licensor shall promptly repay to
Schering all such payments. Further notwithstanding the foregoing, the time
periods set forth in Section 2.6(b) of the Agreement shall be suspended during
the pendency of the arbitration proceedings. For purposes of this Paragraph (n)
the term "pendency of the arbitration proceeding" shall mean the period starting
on the date on which arbitration proceedings are commenced by a Party in
accordance with Paragraph (c) of this Schedule 9.2 and ending on the date on
which the Arbitrator delivers its final determination in writing to the Parties.