EXHIBIT 2.2
AMENDED AND RESTATED
LICENSE AND DISTRIBUTION AGREEMENT
among
CYPRESS BIOSCIENCE, INC.,
Licensor
FRESENIUS HEMOCARE, INC.,
Licensee
and
FRESENIUS HEMOCARE GmbH
Dated January 19, 2001
Table Of Contents
ARTICLE 1
DEFINITIONS
ARTICLE 2
INTENTIONALLY OMITTED
ARTICLE 3
GRANT OF LICENSE AND DISTRIBUTION RIGHTS
Page
3.1 Grant............................................................ 6
3.3 Sublicensing and Subcontracting.................................. 7
3.4 Competition; Alternative Products................................ 7
ARTICLE 4
IMPROVEMENTS
4.1 Disclosure....................................................... 7
4.2 Modifications from Improvements.................................. 8
4.3 Grant under Improvements......................................... 8
ARTICLE 5
INTENTIONALLY OMITTED
ARTICLE 6
OBLIGATIONS OF LICENSEE
6.1 Obligations of Licensee in the U.S. Territory................... 8
6.2 Obligations of Licensee in the Non-U.S. Territory............... 10
6.3 Trademarks; Quality Control..................................... 11
6.4 Operating Procedures............................................ 12
6.5 Manufacture and Supply of Product............................... 13
6.6 Warranties...................................................... 13
ARTICLE 7
CLINICAL TRIALS PROGRAM
7.1 Continuation of Program......................................... 14
7.2 Roles........................................................... 14
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Table Of Contents
(Continued)
Page
7.3 Consulting Services by Licensor................................. 14
7.4 Final Regulatory Approvals...................................... 15
ARTICLE 8
INFORMATION AND REPORTS; CORRECTIVE ACTIONS
8.1 Information Disclosure.......................................... 15
8.2 Adverse Events.................................................. 16
8.3 Use of Information.............................................. 17
8.4 Regulatory Reporting............................................ 17
8.5 Certain Corrective Actions...................................... 17
8.6 Disclosure by Fresenius Parties................................. 17
ARTICLE 9
INTELLECTUAL PROPERTY FILINGS, PROSECUTION, REGISTRATION AND MAINTENANCE
9.1 Prosecution of Registration..................................... 17
9.2 Abandonment of Patents.......................................... 18
9.3 Assistance re Prosecution....................................... 19
9.4 Transfer to Licensor............................................ 19
9.5 No Infringement................................................. 19
9.6 Conflicting Patents or Trademarks............................... 19
9.7 Infringement of Patents or Trademarks........................... 19
9.8 Description as Authorized Licensee.............................. 20
9.9 Existing Third Party Agreements................................. 20
ARTICLE 10
LICENSE FEE AND ROYALTIES
10.1 Payments....................................................... 20
10.2 License Fee for First Five Contract Years...................... 20
10.3 Royalties After the License Fee Period......................... 20
10.4 Total Unit Sales............................................... 21
10.5 Payments....................................................... 21
ARTICLE 11
INTENTIONALLY OMITTED
ARTICLE 12
BOOKS, RECORDS AND REPORTS
12.1 Records........................................................ 21
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(Continued)
Page
12.2 Statements..................................................... 22
12.3 Audits......................................................... 22
ARTICLE 13
REPRESENTATIONS AND WARRANTIES
13.1 By the Licensor................................................. 23
13.2 By the Fresenius Parties........................................ 24
ARTICLE 14
INDEMNIFICATION
14.1 Indemnification for Product Liability and Similar Claims...... 24
14.2 Patent Indemnity.............................................. 25
14.3 Notice of Claim............................................... 26
14.4 Direct Claims................................................. 26
14.5 Third Party Claims............................................ 26
14.6 Settlement of Third Party Claims.............................. 27
14.7 Cooperation................................................... 27
14.8 Insurance..................................................... 27
14.9 Survival...................................................... 28
ARTICLE 15
CONFIDENTIALITY
15.1 Maintenance of Confidentiality................................ 28
15.2 Exceptions.................................................... 29
15.3 Nondisclosure of Agreement.................................... 29
15.4 Compliance with Confidentiality Obligations................... 30
15.5 Injunction.................................................... 30
ARTICLE 16
TERM AND TERMINATION
16.1 Term.......................................................... 30
16.2 Grounds for Early Termination................................. 31
16.3 Rights and Obligations Upon Termination....................... 31
16.4 Certain Rights Upon Expiration or Termination................. 33
16.5 Survival of Certain Rights and Obligations.................... 33
ARTICLE 17
GUARANTY
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Table Of Contents
(Continued)
ARTICLE 18
GOVERNING LAW; DISPUTE RESOLUTION
Page
18.1 Governing Law................................................ 34
18.2 Arbitration.................................................. 35
18.3 Enforcement.................................................. 35
ARTICLE 19
MISCELLANEOUS
19.1 Force Majeure............................................... 35
19.2 Notices..................................................... 36
19.3 Attorneys' Fees............................................. 38
19.4 Assignment.................................................. 38
19.5 Entire Agreement............................................ 38
19.6 Modification and Amendment.................................. 39
19.7 Headings.................................................... 39
19.8 Telecopy; Counterparts...................................... 39
19.9 Severability................................................ 39
19.10 Scope of Authority and Relationship......................... 39
19.11 Cost of Operations.......................................... 39
19.12 Third Parties............................................... 40
19.13 Performance by Subsidiaries................................. 40
19.14 Further Assurances.......................................... 40
19.15 Official Language........................................... 40
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SCHEDULES
---------
List of Patents................................................ Schedule A
List of Trademarks............................................. Schedule B
List of Licensor Distributors.................................. Schedule C
Prosecution of Trademark Registration.......................... Schedule D
Licensor Press Release......................................... Schedule E
v
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. (S)(S) 22.80(b)(4),
200.83 and 240b-2
AMENDED AND RESTATED
LICENSE AND DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into the 19 day of January, 2001 among CYPRESS
BIOSCIENCE, INC., a Delaware corporation (the "Licensor"), FRESENIUS HEMOCARE,
INC., a Delaware corporation (the "Licensee"), and FRESENIUS HEMOCARE GmbH, a
company organized under the laws of the Federal Republic of Germany ("Fresenius
GmbH").
WHEREAS, the Licensor has developed a medical device for the treatment of
certain immune disorders through extracorporeal treatment of human plasma; and
WHEREAS, Licensor, Licensee and Fresenius Aktiengesellschaft ("Fresenius
AG") entered into a License and Distribution Agreement dated March 26, 1999 (the
"Original License") pursuant to which (i) Licensor granted to the Licensee the
exclusive right to manufacture, sell and distribute such device in the United
States of America, its territories and possessions, Europe, South America,
Central America and, subject to the conditions set forth in the Original
License, certain other countries utilizing, certain intellectual property owned
by or licensed to the Licensor and, (ii) Licensor and Licensee established
marketing and distribution arrangements for such device pursuant to which each
undertook certain obligations relating to the marketing and distribution of such
device and related disposable products; and,
WHEREAS, pursuant to a reorganization of the Corporate Sector Intensive
Care and Hemotechnology ("I + H") of Fresenius AG, Fresenius GmbH is the
successor to the business previously conducted by I + H, including the business
relating to the Product conducted under the License; and
WHEREAS, pursuant to an Asset Purchase Agreement of even date herewith
among Buyer, Seller and Fresenius GmbH (the "Asset Purchase Agreement") Buyer
has, on the date hereof, purchased from Seller the pre-marketing approvals
relating to the Product and certain other assets; and
WHEREAS, in connection with the closing under the Asset Purchase Agreement,
Licensor, Licensee and Fresenius GmbH desire to amend and, as so amended, to
restate the Original License;
NOW THEREFORE IN CONSIDERATION of the mutual promises and covenants
contained in this agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree that
the Original License is hereby amended and, as so amended, is restated as
follows:
ARTICLE 1
DEFINITIONS
In this agreement the following terms shall have the following meanings,
respectively:
"Affected Party" has the meaning set out in Section. 19.1.
1
"Affiliate" has the meaning set out in Rule 405 under the United States
Securities Act of 1933, as amended.
"Alternative Product" means an extracorporeal product that is sold or
distributed by Licensee or its Affiliates in the United States of America or its
territories and possessions for use in the treatment of RA or ITP through plasma
apheresis. Without limiting the generality of the foregoing, a device of
product that is based upon or utilizes any of the following features or
functions shall be an Alternative Product:
(a) a carrier material other than silica for the binding of Protein A;
(b) a larger column size;
(c) a two-column structure; or
(d) whole-blood compatibility, permitting treatment without plasma
separation.
"Assignment" shall include a merger or a transfer of more than 50% of the
voting securities of a person in a single transaction or series of related
transactions.
"Assumed Distribution Agreement" means an "Assumed Contract" (as defined in
the Asset Purchase Agreement) with a Licensor Distributor.
"Claim" has the meaning set out in Section 14.3.
"Clinical Trials Program" means the series of clinical trials to be
conducted involving the administration to humans of therapy for RA utilizing the
Product, comprising the Phase I Clinical Trials, Phase II Clinical Trials, Phase
III Clinical Trials, Phase IV Clinical Trials and post-marketing trials.
"Confidential Information" means each party's confidential information,
inventions, know-how, technical data and trade secrets and includes, without
limitation, manufacturing, marketing, financial, personnel and other business
information and plans, whether in oral, written, graphic or electronic form, and
whether in existence on the date hereof or developed or acquired in the future.
Confidential Information shall not include information which the either party
can demonstrate by competent written proof: (a) is now, or hereafter becomes,
through no act or failure to act by the other party, generally known or
available; (b) is known by the other party at the time of receiving such
information, as evidenced by its records; or (c) is the subject of written
permission to disclose provided by the other party.
"Contract Year" means the calendar year.
"Control" means the possession, direct or indirect, of the power to direct
or cause direction of the management and policies of a person, whether through
the ownership of voting securities, by contract, or otherwise.
"D&N Associates Agreement" means that certain License Agreement dated April
9, 1996 between Licensor and D&N Associates, Inc., the successor by merger to
DTER-ENT, Incorporated.
2
"Direct Claim" has the meaning set out in Section 14.3.
"Disposables" means bloodlines, tubings, solutions (in either concentrate
or ready to use form), blood bags, fistula needles, catheters, and other
disposable products used in connection with the administration of therapy
utilizing the Product.
"Effective Date" means January 1, 2001.
"FDA" means the United States Food and Drug Administration.
"Final Regulatory Approval" means, with respect to the United States or a
jurisdiction within the Territory, receipt of all authorizations by the FDA or
the appropriate Territorial Regulator or Regulators, as the case may be,
necessary for commercial sale of the Product within such jurisdiction,
including, without limitation, approval of manufacturing, labeling, price (if
required) and treatment parameters.
"FMC AG" means Fresenius Medical Care Aktiengesellschaft, a German
corporation.
"Fresenius Parties" means Fresenius GmbH and Licensee.
"Force Majeure" has the meaning set out in section 19.1
"GMP" means, (i) with respect to the United States, the code of
manufacturing practices known from time to time as Current Good Manufacturing
Practices published by the FDA, and (ii) with respect to any jurisdiction within
the Non-U.S. Territory, any comparable manufacturing code, rule, regulations or
practices published by the Territorial Regulator for such jurisdiction.
"Improvements" means all improvements, enhancements, extensions,
developments and modifications of the Product which, after the date hereof and
prior to the termination of this Agreement, the Licensor, the Licensee,
Fresenius GmbH, an Affiliate of Licensee or Fresenius GmbH, or any sublicensee
of any Fresenius Parties, as the case may be, may conceive, develop or acquire
or otherwise obtain the right to permit licenses or sublicenses and any and all
improvements, enhancements or modifications to the Patents or Know-How that are
necessary for the manufacture of the Product, in the form approved by the FDA.
"Indemnified Party" has the meaning set out in Section 14.3.
"Indemnifying Party" has the meaning set out in Section 14.3.
"Infringer" has the meaning set out in Section 9.7.
"Intellectual Property Claim" has the meaning set out in Section 14.2.
"ITP" means idiopathic thrombocytopenic purpura.
"Know-How" means all technical information, manufacturing technology
procedures, processes, trade secrets, methods, practices, techniques,
proprietary and other information and specifications necessary or useful for the
design, production, manufacture, inspection and testing
3
of the Product, which are at the date hereof in the Licensor's possession or
that are subsequently developed or acquired by Licensor or Licensee.
"License Fee" means the sum of $4,000,000, which has been paid by Licensee
to Licensor contemporaneously with the execution and delivery of this Agreement.
"License Fee Period" means the five (5) Contract Year period commencing as
of the Effective Date.
"Licensor Distributors" means the persons or companies listed on Schedule
C.
"Losses" has the meaning set out in Section 14.1
"Net Sales" means, when used with respect to sales of Alternative Products,
the aggregate amount of the gross invoice sales price of each Alternative
Product sold by or on behalf of a Fresenius Party in the U.S. Territory, or
where applicable by or on behalf of their respective distributors (but, in any
event, the party that makes the ultimate sale and, for avoidance of doubt,
excluding sales for resale made to distributors that are Affiliates of the
Fresenius Parties), less normal and customary returns only of defective
Alternative Products and Alternative Products shipped in error, and less normal
and customary trade, quantity or other cash discounts actually granted by the
seller or where applicable, its sublicensees with respect to the Alternative
Product, less the net amount of all sales, use and value added taxes with
respect to the Alternative Product that are included in the invoice price to the
customer and actually paid by the seller. In the event that Alternative
Products are sold in kits with Disposables or other products, Alternative
Products shall be invoiced separately from such Disposables and other products,
and the invoice sales price of such Alternative Product shall be the same
invoice sale price then in effect for Alternative Products not sold in kits.
"Non-Affected Party" has the meaning set out in section 19.1.
"Non-U.S. Territory" means the portion of the Territory other than the U.S.
Territory.
"Patents" means those patents and patent applications set out on Schedule A
and any patents issued based on such patent applications.
"Patent Interest" has the meaning set out in Section .9.2.
"Phase I Clinical Trials" means initial studies of the administration of
therapy utilizing the Product in humans, using a limited number of healthy
volunteer subjects for the purpose of obtaining pharmacology data, safety and
other information concerning the Product.
"Phase II Clinical Trials" means controlled clinical studies of the
administration of therapy utilizing the Product for treatment of RA to evaluate
the effectiveness of the Product in patients meeting the criteria for such
indication, to approximate its therapeutic range, to determine appropriate
treatment regimes and parameters and to evaluate safety and common short-term
side effects.
"Phase III Clinical Trials" means expanded trials, performed after
preliminary evidence suggesting effectiveness of the Product for treatment of RA
has been obtained, involving the
4
administration of therapy utilizing the Product to the human target patient
population in sufficient numbers to generate data to support Final Regulatory
Approval of the Product for use in such indication for the purpose of
determining safety, optimal treatment regimens and parameters, efficacy and to
evaluate the overall risk - benefit relationship in the use of the Product. An
additional aim of such trials may be to accumulate data on the pharmacoeconomics
of the therapy utilizing the Product for this indication if such data are
required for eligibility of therapy utilizing the Product for reimbursement by
insurers or other health care payors in the Non-U.S. Territory.
"Phase IV Clinical Trials" means trials conducted after the Product is
marketed for treatment of RA to provide additional details about the Product's
efficacy or safety profile. Such trials may be mandatory at the direction of
regulatory authorities, or they may be voluntary to collect additional patient
information.
"Product" means the Prosorba(R) column, a therapeutic, extracorporeal
immunoadsorption device as described in the PMA approved by the FDA, and as
modified or redesigned by agreement of the parties in accordance with this
Agreement, as described in an amended PMA approved by the FDA.
"Production Facility" means Licensee's production facility in Redmond,
Washington.
"RA" means rheumatoid arthritis.
"Regulatory Clearance" means, with respect to any phase of the Clinical
Trials Program, the issuance by a Territorial Regulator of authorization to
commence or proceed to the next phase of the Clinical Trials Program or, if no
such authorization is legally required, the passage of any required or customary
waiting period following submission of the results of such phase and any other
required data without imposition by a Territorial Regulator of a clinical hold
or other similar action suspending or terminating the Clinical Trials Program in
the jurisdiction in question.
"Strahilevitz Agreement" means that certain Patent License, Settlement
Agreement and Release dated June 1, 1997, between Licensor and ▇▇. ▇▇▇▇
Strahilievitz.
"Territory" means the world.
"Territorial Regulator" means, with respect to any jurisdiction within the
Territory, the agency or organization performing functions and having authority
comparable to the functions and authority of the FDA with respect to the
authorization of the testing and marketing of medical devices or biological
products.
"Third Party" means any individual, firm or corporation other than the
Licensor, Fresenius GmbH or their respective Affiliates.
"Third Party Claim" has the meaning set out in Section 14.3.
"Trademarks" means those trademarks set out on Schedule B.
5
"Unit Sale" means a sale of a Product or an Alternative Product. For
purposes of this definition and the definition of "Net Sales," a sale shall
include a transaction, such a barter, in which the Product has been transferred
for non-cash consideration (in which case, the Product or Alternative Product
shall be deemed to have been sold at its list price), or other transaction not
involving an invoiced sale, provided that sale shall not include (i) the
distribution of samples of the Product or of an Alternative Product, (ii) sales
for resale made to distributors that are Affiliates of the Fresenius Parties or
(iii) sales of the Product or an Alternative Product solely for research and
development uses, including but limited to the Clinical Trials Program or other
clinical trials unless, in the case of Products or Alternative Products used for
clinical trials mandated by the FDA, reimbursement of the cost of the Products
or Alternative Products used in such trials is available from a governmental or
nongovernmental source.
"U.S. Territory" means the portion of the Territory comprising the United
States of America and its territories and possessions.
ARTICLE 2
INTENTIONALLY OMITTED
ARTICLE 3
GRANT OF LICENSE AND DISTRIBUTION RIGHTS
3.1 Grant.
Subject to the terms and conditions of this Agreement, the Licensor
grants to the Licensee the exclusive worldwide license:
(i) under the Patents, to:
(a) manufacture and, subject to the conditions provided in
Section 3.2, have manufactured the Product for commercial use and sale and for
the Clinical Trials Program hereunder at the Production Facility and at other
production facilities of Licensee or Fresenius GmbH in the Territory; and
(b) use, distribute and sell the Product throughout the
Territory, for (I) use in humans for the treatment of RA and ITP and (II) all
other clinical applications approved by the FDA or the applicable Territorial
Regulator(s), provided that the Product is sold under the applicable
Trademark(s);
(ii) under the Trademarks, to use the Trademarks in conjunction with
the manufacture, distribution and sale of the Product throughout the Territory;
and
(iii) under the Know-How, to:
(a) manufacture and, subject to the conditions provided in
Section 3.2, have manufactured the Product for commercial use and sale and for
the Clinical Trials Program hereunder at the Production Facility and other
production facilities of Licensee or Fresenius GmbH in the Territory; and
6
(b) use, distribute and sell the Product throughout the
Territory, for (I) use in humans for the treatment of RA and ITP and (II) all
other clinical applications approved by the FDA or the applicable Territorial
Regulator(s).
3.2 The worldwide rights granted by this Agreement are exclusive rights
against the Licensor and any other person. Subject to Licensee's compliance with
its obligations under this Agreement (including, without limitation, Article 6
hereof), Licensor will not manufacture, have manufactured or grant to any person
any rights under the Patents or the Know-How to manufacture or have manufactured
the Product for any purpose. Subject to the provisions of Article 6, Licensor
may appoint distributors of the Product in any jurisdictions within the
Territory.
3.3 Sublicensing and Subcontracting. Licensee shall have the unrestricted
right to appoint one or more sublicensees or subcontractors to manufacture, use,
distribute and sell the Product in the Territory or one or more subcontractor to
use, distribute and sell the Product in the Territory; provided, however, that
any such sublicense or subcontract will maintain the Fresenius Parties as the
primary parties/obligors with respect to the development, marketing and sale of
the Product and will be intended to maximize Unit Sales under this Agreement.
Any such sublicensing or subcontracting by Licensee to Fresenius GmbH or an
Affiliate of Fresenius GmbH shall be conclusively presumed to have the foregoing
intentions. Any such sublicense or subcontract shall include terms imposing on
the sublicensee or subcontractor all of the applicable obligations of Licensee
hereunder, shall not be inconsistent with the maintenance of the Fresenius
Parties as the primary parties/obligors, as aforesaid, and shall reserve to the
Licensee all of the correlative rights of the Licensor. Notwithstanding any
such sublicensing or subcontracting, Licensee and Fresenius GmbH shall remain
responsible to Licensor for the timely performance of all obligations of the
sublicensee under the sublicense or the subcontractor under the subcontract.
Licensee shall promptly provide Licensor with a copy of each sublicense
agreement entered into by Licensee hereunder (and in any event within ten (10)
business days after the execution thereof).
3.4 Competition; Alternative Products. Nothing in this Agreement shall
obligate Licensee or Fresenius GmbH to refrain from developing, marketing or
distributing any products that would compete with treatments utilizing the
Product (including any Alternative Product) or any related Disposables for any
such Alternative or other competitive Product, regardless of whether such
Disposables are compatible with the Product. The conduct of any such activities
with respect to an Alternative Product or any other competitive product, or
related Disposables, shall not constitute a failure by the Fresenius Parties to
perform their obligations hereunder (including, without limitation, any such
obligations under Article 6).
ARTICLE 4
IMPROVEMENTS
4.1 Disclosure. Each party agrees to promptly disclose to the other
material technical data and information relating to material developments with
respect to or Improvements of the Patents, the Know-How or the Product (whether
or not patentable) that it may develop or acquire during the term of this
Agreement, to the extent that such disclosure is not restricted or prohibited by
law, by any contract with or undertaking given to or any condition, restriction
or restraint imposed by Third Parties, or by considerations relating to the
validity of any patent in
7
respect of which application is about to be made; provided, however, that in its
dealings with a Third Party, the Licensor, the Licensee, or Fresenius GmbH, as
the case may be, shall use its reasonable commercial efforts not to enter into
an agreement restricting it from disclosing the Improvement or development to
the other parties hereto. Any such disclosure by Licensee to Licensor hereunder
shall be deemed to be made solely for the purposes of apprising Licensor, as the
owner of the Patents and Know-How licensed hereunder, of the existence of such
Improvements and shall not affect the restrictions on Licensor set forth in
Section 3.1(c). All patents arising from such developments or Improvements shall
be owned by the party making the invention claimed therein or, if such invention
is made jointly, shall be owned jointly (each as consistent with U.S. laws of
inventorship).
4.2 Modifications from Improvements. Any proposed design changes or
modifications to the Product incorporating any Improvements into the Product may
be implemented by the Licensee or Fresenius GmbH in their sole discretion,
unless such proposed design changes or modifications may require any new
approval of a Territorial Regulator in order for the Product to be marketed as
modified, in which case such Improvement may not be implemented until Licensee
has obtained Final Regulatory Clearance for the manufacture and sale of the
Product as incorporating such Improvement. The cost of implementation of any
such Improvement shall be borne solely by Licensee and Fresenius GmbH.
4.3 Grant under Improvements. Subject to the terms and conditions in this
Agreement, the grant in Section 3.1 by the Licensor to the Licensee includes the
exclusive license to manufacture (and, subject to the conditions set forth in
Section 3.2, have manufactured), use, distribute and sell the Product in the
Territory utilizing all Improvements and developments disclosed by the Licensor
to the Licensee under Section 4.1, together with an ancillary grant of the right
to use any associated trademarks and any associated know-how, provided that
Licensor shall not be obligated to grant such license if the grant or operation
of such license would require the Licensor to make more than de minimis
payments to any Third Party and Licensee declines, in its sole discretion, to
reimburse Licensor for such payments.
ARTICLE 5
INTENTIONALLY OMITTED
ARTICLE 6
OBLIGATIONS OF LICENSEE
6.1 Obligations of Licensee in the U.S. Territory. In connection with the
manufacture and sale of the Product and related Disposables in the U.S.
Territory, and subject to the condition that (except as may be mandated by
applicable law) the Fresenius Parties shall have the final decision with respect
to all aspects of the marketing, sales and distribution of the Product and
related Disposables in the U.S. Territory, Licensee shall, and Fresenius GmbH
shall cause Licensee to:
(a) manufacture the Product in conformity with Licensor's
specifications or in conformity with any changes to the Product specifications,
including any Improvements implemented by Licensee during the term of this
Agreement in accordance with this Agreement, and in compliance with applicable
regulatory requirements, including the maintenance of
8
standards of facility, materials, quality control, production and safety testing
in compliance with GMP and other regulatory requirements in sufficient
quantities, and maintain sufficient inventories of related Disposables, to meet
clinical trials requirements and commercial demands in the Territory or as they
shall develop;
(b) continue product development work with respect to the Product
with a view to developing Improvements that simplify the Product and treatment
procedure and decrease its manufacturing and treatment procedure costs, provided
that Licensee and Fresenius GmbH shall not be required to develop or implement
any Improvement which requires the filing of an amended application for pre-
market approval for the Product (but may, in their sole discretion, determine to
do so as contemplated by Section 4.2);
(c) to the extent permitted by applicable law, lead activities to
support and train customers in the use of the Product (regardless of whether
such customers use equipment manufactured or supplied by Licensee or Fresenius
GmbH), including the services of nurses and technicians or other qualified
personnel and the establishment of training programs having appropriate numbers
of qualified professional staff at a suitable number of treatment sites trained
to correctly use the Product;
(d) use its reasonable commercial efforts in optimizing use of the
Product in conjunction with Fresenius Parties' apheresis equipment, including,
but not limited to, improving set-up procedures, priming, investigating flow
rates, software development and automated agitation;
(e) develop custom Disposables kits to simplify treatment with the
Product on the current generation of the Fresenius Parties' apheresis equipment
and the TA Instrument referred to in subparagraph (k) of this Section;
(f) develop, test and obtain regulatory approvals for the items
listed in subsections (d) and (e) above, as they relate to the Fresenius
Parties' equipment and Disposables, as required in the U.S. Territory;
(g) use reasonable commercial efforts to make therapy utilizing the
product available in renal dialysis centers (regardless of whether such centers
are owned or operated by, or affiliated with, Licensee or Fresenius GmbH, except
as otherwise set forth below), including, without limitation, using reasonable
commercial efforts to obtain appropriate coverage from public and private third
party payors for treatment utilizing the Product, it being understood that,
among other matters to be taken into account in connection with such efforts:
(i) the terms and conditions to be established for such treatment in FMC AG
dialysis centers and for the sale of the Product and related Disposables to FMC
AG and its Affiliates will require the negotiation and execution of appropriate
agreements between Licensee or Fresenius GmbH, on the one hand, and FMC AG or
its Affiliates, on the other; (ii) FMC AG and its Affiliates are subject to
certain covenants set forth in the instruments governing outstanding
indebtedness of FMC AG and its subsidiaries requiring that transactions between
FMC AG and its subsidiaries and Affiliates of FMC AG (which term, for purposes
of such covenants, includes Licensee and Fresenius GmbH) be conducted on arm's-
length terms, and (iii) Licensee may focus its efforts in this area on FMC AG
renal dialysis centers but will also dedicate its efforts to renal dialysis
centers not owned or operated by, or affiliated with, Licensee or Fresenius GmbH
to the extent commercially reasonable or ethically necessary or appropriate;
9
(h) use its best commercial efforts to market, distribute and sell
the Product and related Disposables to optimize its market potential in the U.S.
Territory, which efforts shall include, but not be limited to, maintenance of an
efficient sales and marketing organization (including, independent sales
representatives and distributors) staffed with appropriate numbers of personnel
(in Licensees' good faith judgment) possessing appropriate experience, training
and knowledge of the Product and related Disposables and equipment, developing
plans and strategies for the sale and marketing of the Product and related
Disposables in the U.S. Territory in accordance with applicable laws relating to
referrals and payment and practices related to inducing or incentivizing Product
use, maintaining an adequate stock of Product literature and other promotional
materials and arranging for attendance by representatives of Licensee at
professional meetings, conventions, congresses, symposia and exhibitions at
which the Products may be displayed and promoted and at which research results
and other information relating to the Product intended for distribution to
professionals may be disseminated. Licensee's marketing activities shall extend
to all commercially viable potential users of the Product, including
rheumatologists, hematologists, blood banks, other apheresis service providers
and, subject to the considerations referred to in Section 6.1(g), renal dialysis
centers.
(i) continue to design, implement, finance (at Licensee's sole
expense) and conduct post-product approval U.S. clinical trials, including but
not limited to trials combining therapy utilizing the Product and drug
treatment, and which shall be planned and conducted in accordance with clinical
trial protocols appropriately designed, provided that the Fresenius parties
shall not be required to design, implement, finance or conduct any clinical
trials that are not required by the FDA;
(j) procure and maintain existing Final Regulatory Approvals for the
Product and to procure and maintain all additional approvals, licenses,
permissions and permits necessary for the performance of its obligations under
this Agreement and conduct its business (I) in a manner so as not to compromise
or endanger public and/or private third party insurer coverage, (II) in
compliance with all applicable laws, rules and regulations and (III) in a manner
so as not to bring discredit upon the reputation of the Product, the Trademarks
or Licensor;
(k) use commercially reasonable efforts to finalize and develop a
next generation apheresis instrument utilizing a plasma separation membrane
(based on the Fresenius Parties model 4008ADS as used for LDL apheresis
treatment). Such instrument shall be optimized for plasma generation for use
with the Product ("TA Instrument") and obtain appropriate Final Regulatory
Approval for the TA Instrument in the Territory as promptly as commercially
reasonable, and commercialize the TA Instrument in the Territory; and
(l) continue the activities commenced by Licensor and organize and
undertake additional activities aimed at obtaining coverage of treatment
utilizing the Product by public and private third party insurers and providing
reasonable support and assistance to efforts of Licensee's customers and their
patients to obtain coverage for treatment utilizing the Product.
6.2 Obligations of Licensee in the Non-U.S. Territory. In connection
with the development registration, marketing and sale of the Product and related
Disposables in the Non-U.S. Territory, Fresenius GmbH shall:
10
(a) continue to design, implement, advance expenses for and conduct
the Clinical Trials Program for the Product in the Non-U.S. Territory in
accordance with Article 7 (the costs of which shall be borne solely by Fresenius
GmbH);
(b) use reasonable commercial efforts to complete the registration of
Prosorba(TM) in Europe with the CE ▇▇▇▇ under the Medical Device Directory as
far as legally possible and to coordinate and fund efforts to obtain and
maintain Final Regulatory Approvals for marketing and sale of the Product in
other portions of the Non-U.S. Territory, including the continuation of the
activities in process on the date hereof in Japan and Taiwan;
(c) procure and maintain all other approvals, licenses, permissions
and permits necessary for the performance of its obligations under this
Agreement and conduct its business in a manner so as not to bring discredit upon
the reputation of the Product, the Trademarks or the Licensor; and
(d) upon receipt of Final Regulatory Approval in one or more
jurisdictions in the Non-U.S. Territory, using its best commercial efforts to
commercialize use of the Product in the Non-U.S. Territory for rheumatology and
hematology applications and to market, distribute and sell the Product and
related Disposables in the Non-U.S. Territory, including engaging in such of the
activities described in Section 6.2 as shall be necessary and appropriate in the
Non-U.S. Territory; provided, however, that except as specifically provided in
this Agreement, Fresenius GmbH shall have the final decision with respect to all
aspects of marketing, sales, and distribution of the Product and related
Disposables in the Non-U.S. Territory. Fresenius GmbH shall also have the sole
power to determine, in its discretion, whether to commence to manufacture or
have manufactured the Product in the Non-U.S. Territory, and whether and to what
extent to manufacture, market, distribute and sell the Product in the portions
of the Non-U.S. Territory outside Europe.
6.3 Trademarks; Quality Control.
(a) Labeling; Ownership of Trademarks. Each Product and all labeling,
advertising and promotional material in connection therewith, shall feature the
applicable Trademarks. The ownership and use of such Trademarks shall be
governed by the following provisions:
(i) Licensor or an Affiliate of Licensor shall retain the
ownership of the entire right, title and interest in and to the Trademarks in
the territories set forth on Schedule B.
(ii) Licensee agrees that in using Trademarks upon the Products
or related advertising or promotional materials distributed by it under this
Agreement it will not represent in any way that it has any right or title to the
ownership of the Trademarks or the registration thereof, and the registration
will remain in the ownership of Licensor. Such Trademarks will be used by
Licensee on behalf of, and in the interest of, Licensor and Licensee, and
Licensee will first obtain the written approval of Licensor of the form and
manner in which the Trademarks will be used upon, in connection with, or in
relation to, the Products, labels, containers, advertisements and other
materials, which approval shall not be unreasonably withheld.
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(iii) Licensee recognizes Licensor's title in and to the
Trademarks and to the registration thereof, and will not, at any time, do or
authorize any act or thing that will in any way impair the rights of Licensor in
and to the Trademarks and the registration thereof. Wherever Licensor's
trademarks or tradenames are used, e.g., on any package, label or advertisement,
the first or most prominent use shall always be accompanied by a legend
acceptable to Licensor, acting reasonably, indicating that the Product is an
original invention of Licensor and the trademarks and tradenames are licensed to
Licensee by Licensor. In the event that Licensee, either directly or indirectly,
challenges the title of Licensor to any Trademark or the validity of such
registration obtained by Licensor for the same, and Licensee fails to withdraw
such challenge within one (1) month of receipt of Licensor's written request
therefore, Licensor shall have the right to terminate this Agreement.
(iv) Licensee shall, upon Licensor's request, and at Licensor's
expense, assist Licensor in any action reasonably necessary or desirable to
protect the Trademarks in the territories set forth on Schedule B used or
proposed to be used hereunder. Licensee shall as soon as practicable notify
Licensor of any apparent infringement by a Third Party of any of the Trademarks.
(v) After discussion and upon notice from Licensor, Licensee
shall immediately discontinue the use of any of the Trademarks upon notice from
a Third Party that such use is or is alleged to be an infringement of such Third
Party's trademark rights, unless Licensee determines that it does not wish to
discontinue use of any of the Trademarks, in which case all liability arising
out of Licensee's use of any such Trademark after such notice shall be borne by
Licensee. Any direct costs incurred by Licensee or Fresenius GmbH as a result of
a notice of discontinuation shall be borne by Licensor and promptly reimbursed
by Licensor to the Fresenius Parties upon request. In the event of any such
Third Party notice, and subsequent discontinuance by Licensee, Licensee and
Licensor agree to meet in good faith to select a new Trademark acceptable to
both parties to be used with the particular Product involved.
(vi) Licensee shall use the Trademarks only with the applicable
Product hereunder.
(b) Quality Control; Legal Compliance. Licensee recognizes that the
Products are the result of original research by Licensor or its Affiliates and
that Licensor and its Affiliates have a proper concern in maintaining and
controlling the quality of Products that are publicly associated with Licensor
and its Affiliates and distributors outside the Territory. Licensee accordingly
agrees to ensure that the Products, the manufacture, use, sale and disposition
thereof, and all of Licensee's advertising and promotional materials for the
Products will comply with all applicable laws, rules and regulations. Copies of
all technical and scientific information and therapeutic claims in
advertisements, promotional practices and literature, package inserts, sales
aids, training aids, and the like used by Licensee with respect to the Products
shall be provided to Licensor. Licensor shall have the right to reject or demand
modification to such printed materials only to the extent that such materials
inappropriately describe the Product, the use of the Product or practices
related to the use of the Product, inappropriately describe or use the
Trademarks and/or fail to comply with applicable laws, rules and regulations.
Any such action shall be taken within ten (10) business days after receipt of
the materials for review from the Fresenius Parties.
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6.4 Operating Procedures.
(a) Product Labeling. Each Product shall bear a label and be contained
in an outer package and/or carton and, if applicable, be accompanied by a
package insert, which label, outer package and/or carton and/or package insert
shall comply with all applicable regulatory requirements in the Territory and
shall clearly carry a legend indicating that the Product was developed as a
result of the research of Licensor. The label shall include the appropriate
patent number of the appropriate Patent in accordance with the applicable
requirements in the Territory.
(b) Reports. Licensee shall submit written reports to Licensor,
containing reasonable detail, as follows:
(i) Monthly reports of sales, by customer, with regard to the
Products in the Territory, each of which shall be delivered on the 15th day of
the month following the month to which such report relates; and
(ii) Annual marketing plans detailing Licensee's proposed
marketing strategy and tactics for the Products in the Territory during the
following year.
6.5 Manufacture and Supply of Product.
(a) Sale and Purchase. The Fresenius Parties acknowledge that
notwithstanding Article 3, prior to the Effective Date Licensor granted
distribution rights relating to the Product for certain portions of the
Territory to the Licensor Distributors. A complete list of Licensor
Distributors, the exclusive or non-exclusive status of their distribution rights
and the respective portions of the Territory with respect to which they have
been granted distribution rights, is annexed as Schedule C to this Agreement.
Subject to the terms and conditions of this Agreement and the Assumed
Distribution Agreement, Licensee shall manufacture (or have manufactured) and
sell to the Licensor Distributors, and Licensor Distributors may purchase from
Licensee, such Products as such Licensor Distributors may desire during the
respective terms of the relevant Assumed Distribution Agreements, for resale and
use exclusively in accordance with the Assumed Distribution Agreements. All such
sales shall be FOB the Production Facility or such other manufacturing facility
of the applicable Fresenius Party. Licensee's obligation to provide Products to
a Licensor Distributor hereunder shall be subject to such Licensor Distributor's
compliance with the applicable Assumed Distribution Agreement.
(b) Exculpations. Nothing in this Agreement shall obligate Licensee or
Fresenius GmbH from exercising any right of termination, cancellation, or non-
renewal upon expiration, granted by an Assumed Distribution Agreement.
6.6 Warranties.
(a) Product Warranty/Disclaimer of Warranties. Licensee warrants that
all Products manufactured and sold by Licensee (whether to an Affiliate, a
Licensor Distributor or any other Third Party) under this Agreement shall, when
they leave Licensee's possession and control, conform with the applicable
Product specifications. The Products are also warranted, as of the date of their
shipment, to be on such date not adulterated or misbranded within the meaning of
the Federal Food, Drug, and Cosmetic Act, and not articles which may not, under
the provisions of section 505 thereof, be introduced into interstate commerce.
THESE
13
WARRANTIES ARE THE ONLY WARRANTIES MADE BY LICENSEE. LICENSEE MAKES NO
OTHER EXPRESS OR IMPLIED WARRANTIES OF ANY KIND, AND FURTHER EXPRESSLY DISCLAIMS
THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
(b) Return of Defective Products. Except as otherwise set forth in an
Assumed Distribution Agreement, the Licensor Distributors' exclusive remedy
against Licensee for breach of warranty shall be the return and replacement, at
Licensee's expense, of all Products deemed by the parties to be in breach of
warranty under this Agreement. Replacement shall be made within forty-five (45)
days after Licensee's actual receipt of such defective Products from Licensor or
its Licensor Distributor, as applicable. LICENSEE SHALL NOT, IN ANY EVENT, BE
LIABLE TO THE LICENSOR DISTRIBUTORS FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES INCURRED UNDER ANY LEGAL OR EQUITABLE THEORY WITH RESPECT TO
THE MANUFACTURE, PROMOTION, USE, SALE AND/OR DISTRIBUTION OF THE PRODUCTS.
ARTICLE 7
CLINICAL TRIALS PROGRAM
7.1 Continuation of Program. Fresenius GmbH shall continue the development
and planning of the Clinical Trials Program for the portion of Non-U.S.
Territory comprising the European Union, including the necessity, location,
timing, scope and nature of the trials to be conducted. Fresenius GmbH shall
also conduct such clinical trials for other portions of the Non-U.S. Territory
as it may determine, in its sole discretion, are necessary in connection with
the marketing, sale and distribution of the Product in the Non-U.S. Territory.
To the extent practicable, the Clinical Trials Program for the Non-U.S.
Territory shall be conducted in a manner that is compatible with the clinical
trials conducted in the U.S. Territory by Licensor and to be conducted after the
Effective Date therein by Licensee; subject, nevertheless, to the overriding
necessity to conduct such trials in a manner that will produce results
acceptable to Territorial Regulators. In addition, Licensee shall complete the
Phase IV Clinical Trial required by the FDA for RA and, subject to Section
6.2(d), any other trials that may be required by the Territorial Regulators to
maintain marketing approval.
7.2 Roles. All clinical trials shall be conducted exclusively by the
Fresenius Parties, subject to Section 7.3 and the information exchange
provisions of Article 8. The Fresenius Parties shall provide such personnel and
services with respect to each phase of the Clinical Trials Program as shall be
appropriate for such phase and shall use all reasonable efforts to implement and
complete the Clinical Trials Program as soon as reasonably practicable in light
of applicable regulatory requirements.
7.3 Consulting Services by Licensor.
(a) In addition to any technical services contemplated by Section 5.2,
Licensor shall, at the request of either Fresenius Party, provide consulting
services to them at the Production Facility or another mutually agreed location
with respect to (i) the design, development, planning and implementation of any
post-approval clinical trials of the Product mandated by the FDA (including
clinical trials which, prior to the Effective Date, were the responsibility of
Licensor under the Original License), (ii) other clinical studies and (iii) the
14
conduct of such clinical trials and studies in compliance with applicable rules
and regulations of the FDA and other FDA requirements and at acceptable cost
levels. Without limiting generality of the foregoing, the consulting services
may include assistance in the preparation of submissions to the FDA relating to
clinical trials and responding to FDA comments or other communications from the
FDA to Licensee relating to such trials.
(b) The consulting services contemplated by this Section 7.3 shall be
performed on behalf of Licensor by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M.D. or by another senior
employee of or consultant to Licensor with substantial experience in the design,
development, planning and implementation of clinical trials for medical devices
(such senior employee being the "Consultant"). Licensor shall endeavor to
provide the services of the Consultant for up to 10 eight-hour days each
Contract Year (unless additional services in any Contract Year and the
compensation therefore are mutually agreed upon) at such times and locations as
may be requested by the Fresenius parties on reasonable prior notice, having due
regard for the Consultant's duties and responsibilities as a senior executive
officer or employee of Licensor.
(c) Licensee agrees to pay a consulting fee for the services of the
Consultant provided by Licensor equal to $2,500 per day for an eight-hour day.
Such fee shall be paid within 30 days of receipt of Licensor's invoice for
consulting services rendered. Licensee also agrees to reimburse Licensor for the
reasonable travel, lodging and other expenses incurred by the Consultant in
performing consulting services hereunder upon Licensor's submission of receipts
or other customary documentation supporting its request for reimbursement. The
License Fee includes Licensor's fees for ten (10) eight-hour days of consulting
services during 2001. Licensee shall remain obligated to reimburse Licensor for
the expenses incurred by the Consultant in connection with such prepaid
consulting services.
(d) The consulting services contemplated by this Section 7.3 shall
terminate on January 1, 2004 unless the parties mutually agree to extend the
consulting period. Licensee may terminate the consulting arrangements provided
for in this Section at any time. Such termination shall not require Licensor to
refund any consulting fees for 2001 included in the License Fee.
15
7.4 Final Regulatory Approvals. Promptly upon conclusion of the Clinical
Trials Program, Fresenius GmbH shall prepare and file such applications,
clinical data and other information and documents as may be required to obtain
Final Regulatory Approval for commercial sale of the Product in one or more
jurisdictions in the Non-U.S. Territory and, thereafter, shall use all
reasonable efforts to obtain Final Regulatory Approval for commercial sale of
the Product in as many jurisdictions within the Non-U.S. Territory as is
commercially practicable. Fresenius GmbH shall have the right to obtain Final
Regulatory Approval in all jurisdictions within the Non-U.S. Territory in its
own name and, where required by applicable law, in the name of any permitted
distributor or sublicensee of Fresenius GmbH, and shall own all such Final
Regulatory Approvals as are issued and all submissions as are made in connection
therewith.
ARTICLE 8
INFORMATION AND REPORTS; CORRECTIVE ACTIONS
8.1 Information Disclosure. Licensor will turn over and deliver to Licensee
and Fresenius GmbH promptly all results of the work conducted in the clinical
trials conducted by them as well as all material preclinical, clinical,
regulatory, commercial and other scientific or technical information known by
Licensor, concerning the Product, and therapy utilizing the Product, during the
term of this Agreement, to the extent not previously delivered by Licensor to
the Fresenius Parties. The foregoing obligation shall be subject to any
obligations of confidentiality set forth in any agreement between Licensor, and
a Third Party; provided, however, that (i) Licensee shall use its reasonable
efforts to obtain appropriate waivers of such obligation with respect to any
information relating to the safety or efficacy of the Product and therapy
utilizing the Product or that is otherwise material to the development of a
commercially viable Product, and (ii) any such information received from a Third
Party shall be subject to the confidentiality obligations of Article 15 of this
Agreement. Licensor shall similarly turn over and deliver to the Fresenius
Parties, to the extent not previously delivered to them by Licensor, all
information in its possession relating to recalls or other corrective actions
either ordered by the FDA or a Territorial Regulator or initiated by Licensor
and which involve the safety or integrity of the Product, as well as all such
material information which Licensor may obtain concerning the development by any
Third Party of any product that is or could be competitive with the Product.
Licensor shall also deliver to the Fresenius Parties all information in its
database of clinical trial data and adverse drug event information accumulated
from all clinical trials of the Product for which it was responsible. At the
option of the Fresenius Parties, such data may be provided in a computer
readable format by the providing party, to the extent available, and Licensor
shall also assist in the transfer and validation of such data to the Fresenius
Parties, except that data and information intended to be submitted to a
regulatory authority and required to be submitted in its original form shall in
any event be provided in such original form. All information delivered pursuant
to this Section that is Confidential Information shall be subject to the
limitations on disclosure and use set forth in Article 15 of this Agreement.
8.2 Adverse Events. The parties recognize that the holder of a pre-
marketing approval application or product registration for a new medical device
will be required to submit information and file reports to various governmental
agencies on devices under clinical investigation, devices proposed for
marketing, or marketed devices. Information must be submitted at the time of
initial filing for investigational use for treatment of humans and at the
16
time of a request for market approval of a new device. In addition, supplemental
information must be provided on devices at periodic intervals and adverse
experiences must be reported at more frequent intervals depending on the
severity of the experience. Consequently, in recognition of the Fresenius
Parties' status as the sole holders of such pre-marketing approvals, product
registrations, and other Final Regulatory Approvals with respect to the Product,
Licensor agrees, in each case with respect to all information presently in its
possession not previously delivered to the Fresenius Parties or, subject to the
limitations set forth in the last paragraph of this Section 8.2, which may
subsequently be obtained by Licensor, to:
(a) turn over to the Fresenius Parties for initial and/or periodic
submission to government agencies significant information on the Product from
preclinical laboratory studies and clinical data, as well as adverse drug
experience reports from clinical trials and commercial experiences with the
Product;
(b) report in writing to the Fresenius Parties immediately and, in any
event, within two (2) days of the initial receipt of a report of any unexpected
fatal or life-threatening experience with the Product; and
(c) report in writing to the Fresenius Parties within fifteen (15)
days (or, within such shorter time as shall enable the Fresenius Parties to
comply with the reporting requirements of any Territorial Regulator having
jurisdiction), the initial receipt of a report of any adverse event involving
the Product that is serious or unexpected. Serious adverse experiences mean any
experiences that suggest a significant hazard, contraindication, side effect or
precaution, or any experience that is fatal or life-threatening, is permanently
disabling, requires or prolongs inpatient hospitalization or is a congenital
anomaly, cancer, or overdose. An unexpected adverse experience is one not
identified in nature, specificity, severity or frequency in the current
investigative brochure or the labeling for a product; and
(d) provide to the Fresenius Parties promptly in writing any other
information or reports within its control necessary to permit them to comply
with any regulatory requirement with respect to adverse experiences relating to
the Product.
With respect to information not in Licensor's possession on the
Effective Date, nothing in this Section 8.2 shall impose Licensor any obligation
to take affirmative steps to acquire, or to develop procedures to acquire or
investigate, or to otherwise obtain, any information of the type described in
this Section, it being understood that inasmuch as the Fresenius Parties are the
sole holders of all pre-marketing approvals, product registrations and final
Regulatory Approvals with respect to the Product, Licensor shall be required to
provide to the Fresenius Parties only such disclosable information, if any, as
to which Licensor obtains actual knowledge.
8.3 Use of Information. Information contained in reports made pursuant to
this Article 8 or otherwise communicated between the parties will be
Confidential Information. A party may use any information obtained by it
pursuant to this Article solely for the purposes of regulatory compliance
relating to the Product.
8.4 Regulatory Reporting. The parties acknowledge that the Fresenius
Parties will, and Licensor may, be required to submit information and file
reports with the FDA and Territorial Regulators in addition to those
contemplated by the preceding Sections. The parties
17
agree to cooperate with each other as necessary to allow each party to comply
with its regulatory obligations. To the extent practicable, such procedures
shall be consistent with the parties' current procedures and policies regarding
regulatory compliance.
8.5 Certain Corrective Actions. In the event that the FDA, or any
Territorial Regulator having jurisdiction shall order any change or corrective
action, including a recall, with respect to the Product as then being
manufactured, sold or distributed by the Fresenius Parties or if,
notwithstanding that any such change or corrective action shall not have been
ordered, the Fresenius Parties acting reasonably and in good faith believe,
based on appropriate expert evidence or advice, that absent such change or
corrective action one or both of them will be in violation of a rule of law or
other regulatory requirement applicable to it as the manufacturer or distributor
of the Product, the Fresenius Parties shall have sole authority to determine the
nature and extent of its compliance with such order or any action, including a
recall, to be taken notwithstanding the absence of any such order, as the case
may be; provided, that any such order relating to the safety or integrity of the
Product shall be resolved to the satisfaction of the regulatory authority
issuing such order.
8.6 Disclosure by Fresenius Parties. The Fresenius Parties agree to retain
all information referred to in the Article 8 in accordance with the requirements
of applicable Law and as will permit or facilitate the defense of any litigation
or Claim in respect of the Product, to keep Licensor generally apprised of
informational developments with respect to matters described in this Article 8,
and, to the extent reasonably requested by Licensor in connection with the
investigation or defense of Claims brought against Licensor, audits of Licensor,
or for other appropriate purposes, to provide Licensor with access to and copies
of such information.
ARTICLE 9
INTELLECTUAL PROPERTY FILINGS,
PROSECUTION, REGISTRATION AND MAINTENANCE
9.1 Prosecution of Registration.
(a) Throughout the term of this Agreement the Licensor shall use
reasonable efforts to prosecute and maintain the Patents in the Territory and
shall use reasonable efforts to prepare, file, prosecute and maintain in the
Territory any patents or patent applications on Improvements, the subject of
Section 4 hereof, owned by the Licensor or jointly owned by the Licensor and the
Licensee, Fresenius GmbH, or both, relating to the Product. This shall include
patents and patent applications or patents on Improvements relating to the
Product granted by the European Patent Office, in the national patent offices of
those countries of Europe to which such European patents apply.
(b) Throughout the term of this agreement, the Licensor shall also use
reasonable efforts to prosecute and maintain the Trademarks in the Territory and
use reasonable efforts to prepare, file, prosecute and maintain in the Territory
any new trademarks relating to the Product. Such prosecution shall be limited to
the countries listed in Schedule D hereto.
(c) Such preparation, filing, prosecution and maintenance of Sections
9.1(a) and 9.1(b) shall be at the expense of the Licensor. The Licensee and
Fresenius GmbH shall be kept fully informed of such preparations, filings,
prosecutions, and maintenance and, upon Licensor's request, will provide
reasonable assistance therein, at Licensor's expense for any out
18
of pocket expenses incurred by Licensee or Fresenius GmbH in providing such
assistance. All Patents and Trademarks, and all patents and patent applications
on Improvements made solely by the Licensor (other than a new patent with
respect to an Improvement developed solely by the Licensee or Fresenius GmbH or
jointly by the Licensee or Fresenius GmbH and the Licensor), shall be registered
in the name of the Licensor. The Licensor shall be kept fully informed of
preparations, filings, prosecution and maintenance relating to patent
applications or patents with respect to an Improvement incorporated in the
Product developed solely by Licensee and/or Fresenius GmbH. Such solely-
developed patent applications or patents for Improvements of Licensee and/or
Fresenius GmbH shall be registered in the name of Licensee and/or Fresenius
GmbH, as applicable. Patent applications and patents for jointly-developed
Improvements shall be jointly owned, with each party having an undivided
interest, and registered jointly in the names of Licensor and Licensee and/or
Fresenius GmbH, as applicable.
9.2 Abandonment of Patents. If the Licensor intends to dispose of or
abandon any (a) Patent, (b) right in a Patent, (c) patent application or patent
for an Improvement or (d) the right to file a patent application for an
Improvement under the Paris Convention for a foreign patent (the "Patent
Interest"), which would be covered by this Agreement, it shall notify the
Licensee and Fresenius GmbH of such intention and, to the extent practicable,
give them sufficient notice to permit them to take all steps necessary to
preserve such Patent Interest. Licensee and Fresenius GmbH shall then have the
right during the 60 day period commencing with such notification to assume any
such Patent Interest which the Licensor intends to dispose of or abandon and to
undertake the procuring or preserving of such Patent Interest to itself.
Licensor will co-operate with Licensee or Fresenius GmbH in such endeavor
(including making an assignment of its full right, title and interest in the
Patent Interest) provided that Licensee and Fresenius GmbH shall bear all the
costs (including any tax liability) in connection therewith. If Licensee or
Fresenius GmbH intends to dispose of or abandon any Patent Interest with respect
to an Improvement necessary to the manufacture, use or sale of the Product, it
shall notify Licensor of such intention and, to the extent practicable, give
Licensor sufficient notice to permit it to take all steps necessary to preserve
such Patent Interest. Licensor shall then have the right during the 60 day
period commencing with such notification to assume any such Patent Interest
which the Licensee or Fresenius GmbH intends to dispose of or abandon and to
undertake the procuring or preserving of such Patent Interest to itself.
Licensee and/or Fresenius GmbH, as applicable, will co-operate with Licensor in
such endeavor (including making an assignment of its full right, title and
interest in the Patent Interest) provided that Licensor shall bear all the costs
(including any tax liability) in connection therewith.
9.3 Assistance re Prosecution. Subject to Section 9.1 hereof, Licensee and
Fresenius GmbH shall render all reasonable assistance if so requested by the
Licensor in the prosecution of any present or future patent or trademark
applications filed under this Agreement in the Territory.
9.4 Transfer to Licensor. Should the laws or regulations of any country in
the Territory vest the Licensee or Fresenius GmbH with any property rights to
any of the Trademarks or Patents, or to any new patents, patent applications or
trademarks owned solely by Licensor under Section 9.1 of this Agreement, the
Licensee and Fresenius GmbH shall promptly and co-operatively relinquish to the
Licensor (or, if relinquishment is not possible, grant for the life of such
Trademarks or Patents an exclusive royalty-free license to the Licensor, of) any
and all such rights upon termination of this Agreement for any reason.
19
9.5 No Infringement. Licensee and Fresenius GmbH shall not do anything to
infringe upon or contest the validity, enforceability or ownership of the
Patents or Trademarks or any new patents, patent applications or trademarks
under this Agreement, except as between the parties pursuant to Section 18.2.
9.6 Conflicting Patents or Trademarks. Licensee and Fresenius GmbH shall
promptly report to Licensor in writing regarding any patents, patent
applications or trademarks that potentially or actually conflict with the
Patents or Trademarks of which Licensee or Fresenius GmbH acquires actual
knowledge.
9.7 Infringement of Patents or Trademarks. If the Licensee or Fresenius
GmbH acquires actual knowledge of any infringement of any Patent or infringement
or passing off of any Trademark in the Territory, Licensee or Fresenius GmbH
shall promptly notify the Licensor thereof. The Licensor shall have the first
right to bring suit against the person infringing or passing off (the
"Infringer"). If necessary to the suit or if requested so to do by the Licensor,
the Licensee and Fresenius GmbH agree to be joined or to join as a party in such
suit. If the Licensee or Fresenius GmbH elects to do so, the Licensee or
Fresenius GmbH may be represented in such proceedings by its own counsel at its
own expense. In every case of reported infringement or passing off, the Licensor
shall be allowed a reasonable time to investigate the alleged infringement and
the advisability of starting suit, to correspond and negotiate with the
Infringer, to engage counsel and to commence legal proceedings and/or
discussions with the Infringer. In the event the Licensor does not bring suit in
any such instance within a reasonable time and in any event within 45 days after
being notified by the Licensee or Fresenius GmbH of the alleged infringement or
passing off, the Licensee or Fresenius GmbH, or both shall have the right during
the term of this agreement to suit in its own name or, with the approval of the
Licensor or if necessary to the suit, jointly with the Licensor, for present and
past infringement or passing off. The Licensor shall be kept informed at all
times of all such proceedings taken by the Licensee or Fresenius GmbH. If the
Licensor elects to do so, the Licensor may be represented in such proceedings by
its own counsel at its own expense. The party bringing the action shall control
the prosecution of such proceedings and shall bear all costs incurred in
connection with such infringement and passing off of proceedings in the
Territory. In the event that any such action is successfully prosecuted against
an Infringer, any damages, accounting of profits or other recovery shall be
applied first to reimburse the parties for their respective legal expenses in
connection with the prosecution, and any remaining amounts shall then be divided
equally between the parties.
9.8 Description as Authorized Licensee. During the term of this agreement
the Licensee and Fresenius GmbH are required to describe, refer to and advertise
themselves as licensees of the Licensor for the manufacture and sale of the
Product in the Territory and to ▇▇▇▇ Products with the applicable Trademark(s)
in accordance with Article 6. All written material used by Licensor with respect
to the marketing of the Products hereunder shall expressly identify Licensee as
Licensor's exclusive licensee for the manufacture of the Product.
9.9 Existing Third Party Agreements. Licensor agrees not to terminate or
abandon any existing licenses from Third Parties related to the Product. Any
decision to abandon or terminate such licenses, to challenge the validity of the
patent rights covered by such licenses, or to obtain any additional Third Party
license in connection with the manufacture, use or sale of the Product shall
require the approval of the Fresenius Parties. In any litigation regarding such
20
Third Party licenses, Licensor shall have the first right to bring or defend
suit, in accordance with Section 9.7.
ARTICLE 10
LICENSE FEE AND ROYALTIES
10.1 Payments. As consideration for the licenses granted by Licensor
under the Patents, Trademarks and Know-How, including the exclusive marketing
rights in the Territory and the ability to make Improvements, Licensee agrees to
pay license fees and royalties to Licensor in accordance with this Article 10.
10.2 License Fee for First Five Contract Years.
(a) As a fully paid, up-front royalty with respect to sales of the
Product during the License Fee Period, but subject to Section 10.1(b), Licensee
has paid Licensor the License Fee.
(b) Notwithstanding Section 10.1(a), the License Fee shall be deemed
to cover royalties solely with respect to Unit Sales of the Product of up to
10,000 units in any Contract Year during the License Fee Period. For any
Contract Year during the License Fee Period in which total Unit Sales of the
Product exceed 10,000 Products, (such excess being the "Excess Units"), Licensee
shall pay to Licensor an additional royalty equal to [...***...] per Excess Unit
sold during such Contract Year (the "Additional Royalty")
(c) In addition to the License Fee and any Additional Royalties,
Licensee shall pay Licensor a royalty on sales of Alternative Products in the
U.S. Territory during the License Fee Period equal to [...***...] of Net Sales
of Alternative Products. For avoidance of doubt, the parties confirm that
royalties payable with respect to sales of Alternative Products are independent
of royalties payable on sales of the Product, and that sales of Alternative
Products shall not be included in total Unit Sales of the Product for purposes
of determining whether Additional Royalties are payable pursuant to Section
10.1(b).
10.3 Royalties After the License Fee Period.
(a) For each Contract Year commencing on or after January 1, 2006,
Licensee shall pay royalties to Licensor on total Unit Sales of the Product as
follows:
(i) For the first 10,000 Products sold during such Contract
Year, the royalty shall be [...***...] per unit of Product;
(ii) For each Product sold during such Contact Year in excess
of 10,000 Products up to 20,000 Products, the royalty shall be [...***...] per
unit of Product; and
(iii) For each Product sold during such Contract Year in excess
of 20,000 Products, the royalty shall be [...***...] per unit of Product.
(b) No royalties shall be payable on sales of Alternative Products
after the License Fee Period.
--------
*Confidential Treatment Requested
21
10.4 Total Unit Sales. As used in this Agreement, "total Unit Sales" for
any Contract Year means the gross number of units sold in such Contract Year
minus normal and customary returns of defective Products or Products shipped in
error.
10.5 Payments. All royalty payments due hereunder shall be made in U.S.
dollars, shall be paid after deduction of any applicable withholding taxes and
shall be made in accordance with the following schedule:
(a) The License Fee has been paid in connection with the execution
and delivery of this Agreement, and Licensor acknowledges the receipt thereof.
(b) Any Additional Royalties payable pursuant to Section 10.2(b)
shall be payable quarterly in arrears, commencing on the 30th day following the
conclusion of the first calendar quarter of a Contract Year in which there are
sales of Excess Units, and on the 30th day of each succeeding calendar quarter
of such Contract Year.
(c) Royalties on sales of Alternative Products pursuant to Section
10.2(c) shall be payable quarterly in arrears, on the 30th day following the
conclusion of each calendar quarter during the License Fee Period with final
payment due January 30, 2006.
(d) Royalties on sales of Products during each Contract Year after
the License Fee Period shall be payable quarterly in arrears, on the 30th day
following the conclusion of each calendar quarter during the remainder of the
term of this Agreement.
ARTICLE 11
INTENTIONALLY OMITTED.
ARTICLE 12
BOOKS, RECORDS AND REPORTS
12.1 Records. The Fresenius Parties shall keep at their respective
principal places of business accurate records relating to the Product, including
without limitation manufacturing records, test records, clinical records
(including adverse events) and records of total Unit Sales, categorized by
territory, and of Net Sales in the U.S. Territory, in accordance with Fresenius
GmbH's customary practices and applicable legal requirements. The Fresenius
Parties shall make all such records available for review at their respective
offices by Licensor's representatives, at Licensor's expense, at reasonable
times and on reasonable prior notice.
12.2 Statements.
(a) Licensee shall provide quarterly statements to Licensor on the
30th day following the conclusion of each calendar quarter during the term of
this Agreement. Each such statement shall present, for the quarter to which such
statement relates, (i) total Unit Sales by territory for such quarter
(including, during the License Fee Period, whether any such sales represent
Excess Units and, if so, the amount thereof), and (ii) a computation of any
Additional Royalties or royalties, as the case may be, payable with respect to
such calendar quarter.
22
Quarterly statements for any quarterly period during the License Fee Period
shall also show Net Sales (if any) of Alternative Products and any royalties
payable with respect to such sales.
(b) In addition to the quarterly statements required by Section
12.1(a), the Fresenius Parties shall furnish the Licensor with an annual
statement prepared by Fresenius GmbH and certified by the Chief Financial
Officer of Fresenius GmbH, certifying separately, the quantity of total Unit
Sales of the Product, any portion of such total Unit Sales constituting sales of
Excess Units, Net Sales of any Alternative Products, and total royalties
(including Additional Royalties) payable on sales of the Product and Alternative
Products during the Contract Year to which such annual statement relates. Such
annual statement shall be furnished to Licensor or on or before the 60th day
following the end of the Contract Year to which such statement relates. Any
royalties shown by an annual statement to be due to Licensor for the Contract
Year to which the statement relates in excess of royalties previously paid by
Licensee for such Contract Year shall be added to and paid with the royalty
payment due for the quarter in which royalty payment due for the quarter in
which the annual statement is delivered (or, if no royalty payment is due with
respect to such quarter, at the time of delivery of the first quarterly
statement to be delivered after delivery of the annual statement). Any royalty
payments paid in error, as shown by an annual statement for the Contract Year to
which the statement relates may be offset against any royalty payment due for
the quarter in which the annual statement is delivered, if no such payment is
due, shall be paid by Licensor to Licensee promptly upon receipt of Licensee's
invoice for such erroneous payments.
12.3 Audits. Licensor shall be entitled to appoint independent auditors
reasonably acceptable to the Fresenius Parties, acting reasonably, to review on
an annual basis at Licensor's cost the records for total Unit Sales of the
Product and Net Sales of Alternative Products (for the U.S. Territory only), the
amount spent by the Fresenius Parties as manufacturing costs for the relevant
period, the Fresenius Parties' inventory records for Products and Alternative
Products (for the U.S. Territory only) for the relevant period, and royalties
payable hereunder, and the Fresenius Parties shall give access to such records
and supporting documentation and otherwise reasonably assist in such review;
provided that such right of review shall be exercised only at a time and in a
manner that does not unreasonably interfere with or disrupt the preparation of
Fresenius AG's or Fresenius GmbH's annual report and accounts; provided,
further, the independent auditors shall have access only to records and
documents relating to sales of the Products and the Alternative Products. In the
event that any such audit reveals an under-reporting of payments due under this
Agreement of 5% or more (provided that in all cases the underpayment is more
than $50,000), the full cost of the audit shall be borne by Fresenius GmbH.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES
13.1 By the Licensor. The Licensor hereby represents and warrants to the
Fresenius Parties as follows:
(a) Licensor has title to and ownership of or is a licensee with
respect to, in each case free and clear of encumbrances other than encumbrances
contained in the license agreements appointing the Licensor as such licensee,
the Patents, Trademarks and Know-How licensed by the Licensor to the Licensee
under this Agreement, subject to the D&N Associates
23
Agreement and the Strahilevitz Agreement, both of which are being assigned by
Licensor to Licensee and, to the best of Licensor's knowledge, the manufacture,
sale and distribution of the Product utilizing the Patents, Trademarks and Know-
How does not infringe any intellectual property rights of any person who has not
granted Licensor a license.
(b) Proper use of the Patents, Trademarks and Know-How is sufficient
for the production of the Product as constituted on the date hereof, and the
Licensor has sufficient rights to the Patents, Trademarks and Know-How
reasonably necessary for use in connection with production of the Product, the
absence of which would have a material adverse effect on this Agreement or the
transactions contemplated hereby.
(c) Except as disclosed in writing to the Fresenius Parties, there
is no pending or, to its knowledge, threatened litigation against Licensor which
alleges that Licensor's development, manufacture, use and sale of the Product
have violated or would violate any intellectual property rights of any other
person, and the Licensor has not received any written communication alleging
that the Licensor's development, manufacture or sale of the Product has violated
and has no knowledge that the Licensor's development, manufacture or sale of the
Product have violated, the intellectual property rights of any person.
(d) The Licensor has full right, power, and authority to enter into
and perform its obligations under this Agreement. This Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Licensor, and this Agreement has been duly and
validly executed and delivered by Licensor and, upon due and valid execution and
delivery by each of the other parties hereto, will constitute a legal and
binding obligation of the Licensor, enforceable against Licensor in accordance
with its terms, except as limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors' rights generally
or by general principles of equity.
(e) The execution, delivery and performance of this Agreement by
Licensor and the consummation of the transactions contemplated hereby by
Licensor will not violate, or constitute a breach or default (whether upon lapse
of time and/or the occurrence of any act or event or otherwise) under, the
constitutive documents or by-laws of Licensor, any material contract of
Licensor, result in the imposition of any material encumbrance against any asset
or properties of Licensor (other than pursuant to this Agreement) or, to the
best of Licensor's knowledge, violate, in any material respect, any law. To the
best of Licensor's knowledge, the execution and delivery of this Agreement by
Licensor, the grant of the licenses under the Patents, Trademarks and Know-How
in accordance with the terms hereof and the consummation of any related or
contemplated transactions by Licensor will not require filing or registration by
Licensor with, the issuance of any permit or approval to Licensor by, or waiver
in favor of Licensor of any of the foregoing by, any other Third Party or
governmental entity under the terms of any applicable laws or contracts, other
than Regulatory Clearances, Final Regulatory Approvals and the filings related
thereto contemplated by this Agreement.
13.2 By the Fresenius Parties. Each Fresenius Party, for itself,
represents and warrants to Licensor as follows:
(a) Except as disclosed to Licensor in writing, there is no pending
or, to its knowledge, threatened litigation against such Fresenius Party which
alleges that such Fresenius
24
Party's development, manufacture and sale of the Product would violate any
intellectual property rights of any other person.
(b) Such Fresenius Party has full right, power, and authority to
enter into and perform its obligations under this Agreement. This Agreement has
been duly authorized by all necessary corporate action on the part of such
Fresenius Party, and this Agreement has been duly and validly executed and
delivered by such Fresenius Party and, upon due and valid execution by each of
the other parties hereto, will constitute a legal and binding obligation of such
Fresenius Party, enforceable against such Fresenius Party in accordance with its
terms, except as limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or affecting creditors' rights generally or by
general principles of equity.
(c) The execution, delivery and performance of this Agreement by
such Fresenius Party and the consummation of the transactions contemplated
hereby by such Fresenius Party will not violate, or constitute a breach or
default (whether upon lapse of time and/or the occurrence of any act or event or
otherwise) under, the constitutive documents or by-laws of such Fresenius Party,
any material contract of such Fresenius Party, result in the imposition of any
material encumbrance against any asset or properties of such Fresenius Party or,
to the best of such Fresenius Parties' knowledge, violate, in any material
respect, any law. To the best of such Fresenius Party's knowledge, the execution
and delivery of this Agreement by such Fresenius Party and the consummation of
any related or contemplated transactions by such Fresenius Party will not
require filing or registration by such Fresenius Party with, the issuance of any
permit or approval to such Fresenius Party by, or waiver in favor of such
Fresenius Party of any of the foregoing by, any other Third Party or
governmental entity under the terms of any applicable laws or contracts, other
than Regulatory Clearances, Final Regulatory Approvals and the filings related
thereto contemplated by this Agreement.
ARTICLE 14
INDEMNIFICATION
14.1 Indemnification for Product Liability and Similar Claims.
(a) By Licensor. Licensor hereby agrees to indemnify and hold
harmless the Fresenius Parties and their respective directors, officers,
employees, Affiliates and agents from and against all liabilities, losses,
damages, costs and expenses, including court or arbitral tribunal fees and
costs, reasonable legal fees and expenses and amounts paid in settlement as
permitted hereby (collectively, "Losses") arising out of or relating to:
(i) any claim of bodily injury or similar claims in the nature
of product liability resulting directly or indirectly from the manufacture, use,
handling, storage, sale or other disposition or shipment of the Product by
Licensor at any time prior to April 27, 1999; and
(ii) any misrepresentation made by Licensor herein, or any
breach by Licensor of or failure by Licensor to perform its obligations under,
this Agreement.
25
(b) By the Fresenius Party. Fresenius Parties hereby agree jointly,
and severally, to indemnify and hold harmless Licensor and its directors,
officers, employees, Affiliates and agents from and against all Losses arising
out of or relating to:
(i) any claim of bodily injury or similar claims in the nature
of product liability resulting directly or indirectly from the manufacture, use,
handling, storage, sale or other disposition or shipment by the Fresenius
Parties and their respective sublicensees, agents or distributors of the
Product, including but limited to in connection with clinical trials of the
Product, at any time after April 27, 1999;
(ii) any claim arising from the sale and distribution of the
Product by the Fresenius Parties, and any other matter relating to the Product
arising after the Effective Date (except, in each case, to the extent that
Licensor is obligated to indemnify the Fresenius Parties pursuant to Section
14.1(a) hereof); and
(iii) any claims arising under the Assumed Contracts (as such
term is defined in the Asset Purchase Agreement) relating to events. facts and
circumstances occurring on or after the date hereof or accruing on or after the
date hereof.
(iv) any misrepresentation made by a Fresenius Party herein, or
any breach by Fresenius of or failure by a Fresenius Party to perform its
obligations under, this Agreement.
14.2 Patent Indemnity.
(a) By Licensor. Licensor hereby agrees to indemnify and hold
harmless the Fresenius Parties and their respective directors, officers,
employees, Affiliates and agents from and against:
(i) all Losses (which, for all purposes of this Article 14,
other than Section 14.1, shall include any running or other royalties or other
payments, however characterized, paid under any agreement or arrangement entered
into by the Fresenius Parties, or either of them, in connection with the
settlement or other resolution of an Intellectual Property Claim (as defined
below)) arising out of or relating to any claim made at any time by any Third
Party of patent or trademark infringement or trade secret misappropriation in
the Territory ("Intellectual Property Claim") by reason of the manufacture, use,
handling, storage, sale or other disposition or shipment of the Product in the
Territory by the Fresenius Parties, their respective sublicensees, agents or
distributors utilizing or practicing the Patents, Trademarks or Know-How, which
Losses are attributable to or caused by utilization or practice of the Patents,
Trademarks or Know-How, provided that this indemnity shall not cover or apply to
any Losses attributable to changes in the form of the Product as of the
Effective Date or to any modification to the manufacturing process or the
Product made by Licensee, whether or not such modification is approved by
Licensor; and
(ii) any Losses arising out of any Intellectual Property Claim
by reason of the manufacture, use, handling, storage, sale or other disposition
or shipment of the Product in the Territory by the Fresenius Parties, their
respective sublicensees, agents or distributors utilizing any Improvement
developed by Licensor, which Losses are caused by or attributable to such
Improvement.
26
(b) By the Fresenius Parties. The Fresenius Parties hereby agree,
jointly and severally, to indemnify and hold harmless Licensor and its
directors, officers, employees, Affiliates and agents from and against all
Losses (which, for all purposes of this Article 14, other than Section 14.1,
shall include any running or other royalties or other payments, however
characterized, paid under any agreement or arrangement entered into by Licensor
in connection with the settlement or other resolution of an Intellectual
Property Claim) arising out of or relating to any Intellectual Property Claim by
reason of the manufacture, use, handling, storage, sale or other disposition or
shipment of the Product in the Territory by the Fresenius Parties, their
respective sublicensees, agents or distributors utilizing any Improvement
developed by a Fresenius Party or any changes in the manufacturing process made
by any Fresenius Party, which Losses are caused by or attributable to such
Improvement.
14.3 Notice of Claim. In the event that a party entitled to
indemnification hereunder (the "Indemnified Party") shall become aware of any
claim, proceeding or other matter (a "Claim") in respect of which the other
party (the "Indemnifying Party") has agreed to indemnify the Indemnified Party
pursuant to this Agreement, the Indemnified Party shall promptly give written
notice thereof to the Indemnifying Party. Such notice shall specify whether the
Claim arises as a result of a claim by a person (a "Third Party") against the
Indemnified Party (a "Third Party Claim") or whether the Claim does not so arise
(a "Direct Claim"), and shall also specify with reasonable particularity (to the
extent that the information is available) the factual basis for the Claim and
the amount of the Claim, if known. The failure promptly to give such notice or
the failure of such notice to identify the Claim with sufficient particularity
shall not relieve the Indemnifying Party of any of its indemnification
obligations contained herein if the Indemnified Party has actually given written
notice to the Indemnifying Party and has otherwise complied with the provisions
of this Article 14 except where, and solely to the extent that, such failure
actually materially prejudices the rights of such Indemnifying Party.
14.4 Direct Claims. With respect to any Direct Claim, following receipt
of notice from the Indemnified Party of the Claim, the Indemnifying Party shall
promptly make such investigation of the Claim as is considered necessary or
desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information available to the Indemnified Party as the Indemnifying Party may
reasonably request. If both parties agree at or prior to the expiration of 30
days (or any mutually agreed upon extension thereof) following such notice to
the validity and amount of such Claim, the Indemnifying Party shall immediately
pay to the Indemnified Party the full agreed upon amount of the Claim, failing
which the matter shall be referred to arbitration as provided in Section 18.2.
14.5 Third Party Claims. With respect to any Third Party Claim, the
Indemnifying Party shall have the right, at its expense and with counsel of its
choice satisfactory to the Indemnified Party, acting reasonably, to defend and,
upon written request from the Indemnified Party, shall defend the Claim
(including the negotiation and settlement thereof). If the Indemnifying Party
elects or is required to assume such defense, the Indemnified Party shall have
the right to participate in the negotiation, settlement or defense of such Third
Party Claim and to retain separate counsel to act on its behalf, provided that
the fees and disbursements of such separate counsel shall be paid by the
Indemnified Party unless the Indemnifying Party consents to the retention of
such counsel or unless the named parties to any action or proceeding
27
include both the Indemnifying Party and the Indemnified Party and representation
of both the Indemnifying Party and the Indemnified Party by the same counsel
would be inappropriate due to the actual or potential conflicting interests
between them (such as the availability of different defenses). If the
Indemnifying Party, having assumed such control, thereafter fails to defend the
Third Party Claim within a reasonable time, the Indemnified Party shall be
entitled to assume control of such defense and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such
Third Party Claim. If any Third Party Claim is of a nature such that the
Indemnified Party is required by applicable law to make a payment to any Third
Party with respect to the Third Party Claim before the completion of settlement
negotiations or related legal proceedings, the Indemnified Party may make such
payment and the Indemnifying Party shall, forthwith after demand by the
Indemnified Party, reimburse the Indemnified Party for such payment. If the
amount of any liability of the Indemnified Party under the Third Party Claim in
respect of which such payment was made, as finally determined, is less than the
amount that was paid by the Indemnifying Party to the Indemnified Party, the
Indemnified Party shall, forthwith after receipt of the difference from the
Third Party, pay the amount of such difference, without interest, to the
Indemnifying Party.
14.6 Settlement of Third Party Claims. If the Indemnifying Party does not
elect to assume control of the defense of any Third Party Claim or, after
request by the Indemnified Party, fails to do so, the Indemnified Party shall
have (but shall not otherwise have) the exclusive right to contest, settle or
pay the amount claimed and any Losses incurred by the Indemnified Party in
connection with such contest, settlement or payment shall be conclusive as to
the existence and amount of any liability of the Indemnifying Party to the
Indemnified Party hereunder. Whether or not the Indemnifying Party assumes
control of the negotiation, settlement or defense of any Third Party Claim, the
Indemnifying Party shall not settle any Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld or delayed; provided, however, that (a) no Indemnified Party shall be
obligated to consent to any compromise or settlement that does not provide for a
complete release of the Claim against the Indemnified Party, and (b) the
liability of the Indemnifying Party shall be limited to the proposed settlement
amount if any such consent is not obtained for any reason other than the failure
of such settlement to conform to the requirements of the preceding clause (a).
14.7 Cooperation. The Indemnified Party and the Indemnifying Party shall
co-operate fully with each other with respect to Third Party Claims, and shall
keep each other fully advised with respect thereto (including supplying copies
of all correspondence, demands, pleadings and other relevant documentation
promptly as it becomes available). The Indemnified Party and the Indemnifying
Party shall each use all reasonable efforts to mitigate Losses arising out of
any Claim for which indemnity is sought hereunder.
14.8 Insurance. Licensor and the Fresenius Parties shall each maintain
fire and extended risk insurance on their respective production facilities. The
Fresenius Parties shall also maintain insurance with reputable insurers against
product liability and risks relating to clinical trials during the term of this
License and for five years thereafter. Such product liability insurance shall
have limits of liability of not less than ten million dollars (US$10,000,000)
per occurrence and twenty million dollars (US$20,000,000) aggregate, including
defense costs and shall name Licensor as an additional insured thereunder so
long as the additional annual premium for doing so shall not exceed $15,000. The
Fresenius Parties shall provide Licensor
28
with a certificate of insurance evidencing this coverage within thirty (30) days
after the Effective Date. The certificate shall include a notation that Licensor
swill be notified within thirty (30) days of any cancellation or material change
in the policy. Maintenance of such insurance and the performance by a party of
its obligations under this Section 14.8 shall not relieve the party under its
indemnity obligations set out in this Agreement.
14.9 Survival. This Article 14 shall survive any termination or
expiration of this Agreement. In addition, any matter as to which an arbitration
claim has been asserted in accordance with Article 18 that is pending or
unresolved at the end of any applicable limitation period shall continue to be
covered by this Article 14 notwithstanding any applicable statute of
limitations, which shall be tolled during the pendency of the arbitration
proceeding, until such matter is finally terminated or otherwise resolved by the
parties under this Agreement and any amounts payable hereunder are finally
determined and paid.
ARTICLE 15
CONFIDENTIALITY
15.1 Maintenance of Confidentiality. Each party shall keep in strict
confidence and secrecy all of the other's Confidential Information and shall not
disclose the same to any person or firm whatsoever during the term of this
Agreement or at any time for a period of five (5) years thereafter, unless such
Confidential Information becomes public knowledge through no act or fault on the
part of such party, except that may disclose Confidential Information or any
part thereof:
(a) to the FDA or a Territorial Regulator in connection with the
development and implementation of the Clinical Trials Program or the conduct of
any other clinical trials, a request for Regulatory Clearance or an application
for Final Regulatory Approval, provided that the Fresenius Parties agree to use
their reasonable efforts to secure confidential treatment of such information;
(b) subject to the limitations set forth below, to its officers,
directors, employees and agents for the purpose of performing its obligations
hereunder; or
(c) pursuant to compulsory legal process or as may otherwise be
required by applicable law, but only after having made reasonable efforts to
secure the court's or other appropriate governmental entity's order to (i) limit
production, use and disclosure of said information for the purposes of the
proceeding and to the narrowest class of disclosure practicable under the
circumstances and (ii) hold all proceedings in camera with a sealed record.
Each party agrees to limit the above-contemplated disclosure of Confidential
Information to only those of its directors, officers, employees and authorized
agents whose need to know and whose access to such information is necessary for
the proper discharge of such party's functions and responsibilities under this
Agreement, and further agrees to take all reasonable safeguards so as to protect
the secret and proprietary nature of such information and to prevent the
unauthorized use, reproduction, disclosure or other dissemination thereof. Prior
to disclosing any Confidential Information of a party hereto, or any part
thereof to any of its authorized agents, the party intending to make such
disclosure shall obtain from each such person an agreement in which such person
agrees to keep in strict confidence and secrecy all of the information disclosed
to
29
him or her under the provisions of this clause. Each party shall be responsible
for the disclosure of any Confidential Information contrary to the provisions of
this Article 15 by its directors, officers, employees and authorized agents.
15.2 Exceptions. The provisions of this Article 15 shall not apply to the
extent and upon the occurrence of any one of the following events: (a) the
information is subsequently otherwise legally acquired by a party hereto from a
Third Party whose disclosure thereof is not in any breach of any applicable
confidentiality obligation; or (b) the information is in or comes into the
public domain or is or becomes generally known in the industry otherwise than by
a breach of this Agreement or any other applicable confidentiality obligation.
In the event that any material disclosure under (a) or (b) occurs, Licensor or
the Fresenius Parties (as applicable) shall after receiving knowledge thereof
promptly notify the Fresenius Parties or Licensor (as applicable) of the
occurrence of such event.
15.3 Nondisclosure of Agreement.
(a) Each party shall obtain the prior written consent of the other
parties hereto, not to be unreasonably withheld or delayed, prior to disclosing
any material information about this Agreement. Consent shall not be required,
however, for disclosures to tax or regulatory authorities, provided, that in
connection with such disclosure, each party agrees to use its reasonable efforts
to secure confidential treatment of such information. Each party shall have the
further right to disclose the terms of this Agreement without the other parties'
prior written consent (i) as required by applicable law, including the
Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as
amended, and the rules and regulations thereunder and the rules and regulations
promulgated by the NASDAQ National Market, the NASDAQ SmallCap Market, the
Frankfurt Stock Exchange, the Dusseldorf Stock Exchange or the Munich Stock
Exchange, provided the disclosing party provides to the other party a copy of
the information to be disclosed and, subject to the remainder of this Section
15.3, an opportunity to comment thereon not less than 5 business days (or such
shorter period as may be available under applicable law) prior to such
disclosure, and (ii) to underwriters, investment, merchant or commercial
bankers, financial advisors, legal counsel and accountants in connection with
due diligence investigations or audits of the party by any such person. Any copy
of this Agreement required to be disclosed pursuant to item (i) of the preceding
sentence shall be redacted to delete Product (or, if applicable, Alternative
Product) pricing and other Confidential Information to the maximum extent
permitted by law or the rules of the organizations referred to therein as
determined by Licensor (with respect to filings to be made by it) in its
reasonable discretion without having any undue burden or delay in preparing any
confidential treatment request or receiving confidential treatment from the U.S.
Securities and Exchange Commission ("SEC")or by Fresenius GmbH (with respect to
filings to be made by it or its Affiliates) in its reasonable discretion without
having any undue burden or delay in preparing any confidential treatment request
or receiving confidential treatment from the SEC or the German stock exchanges.
If either party determines that a release of such information to the public
other than as a result of the disclosure referred to above or to any regulatory
authority is required by law it shall, to the extent practicable in light of
legal requirements relating to such release, notify the other in writing as soon
as practicable prior to the time of the proposed release. At the other party's
request and before the release (if time permits under applicable law), the party
seeking disclosure shall consult with the other on the necessity for the
disclosure and the text of the proposed release.
30
(b) In addition to the foregoing limitations on disclosure, each
party shall obtain the other parties' written consent (not to be unreasonably
withheld or delayed) prior to making or including any reference to or
description of such other parties, this Agreement, any of the Schedules hereto,
the terms hereof and thereof or the transactions contemplated hereby or thereby,
in any prospectus, offering memorandum, road show presentation, press conference
or presentation to investors or prospective investors; provided, however, that,
absent any material change in the facts or circumstances relating to the subject
matter of such disclosures, disclosures of information by a party in form and
content substantially similar to disclosures previously approved in writing by
the other parties shall not require new or additional prior written consent.
Licensor's intended press release disclosing the transactions contemplated by
this Agreement, which the parties hereby agree to, is attached hereto as
Schedule E.
15.4 Compliance with Confidentiality Obligations. Each party represents
and warrants to the other that neither the execution and delivery of this
Agreement by such party nor the performance of such party's obligations
hereunder does or will conflict with or result in a breach or violation of any
agreement or undertaking of confidentiality to which such party is a signatory
or by which such party is bound.
15.5 Injunction. Each party acknowledges that any violation by it of its
obligations under this Article 15 may cause irreparable injury to the other
party for which damages may not be adequate compensation. Therefore, in addition
to all other remedies available at law or in equity, the non-violating party
will be entitled to seek injunctive relief in the event of a violation or
threatened violation of this Article 15 by the other party.
ARTICLE 16
TERM AND TERMINATION
16.1 Term.
(a) Subject to the provisions for early termination contained
herein, this Agreement shall remain in full force and effect until the later to
occur of the 10th anniversary of the date on which Products for RA are first
sold by Fresenius GmbH, Licensee or their Affiliates hereunder and (i) with
respect to each country in the Territory which is a member of the European Union
or the European Economic Area and in which any Patent is registered or has been
applied for, until the date of expiration of the last of the Patents registered
or applied for in that country, (ii) with respect to each country in the
Territory which is a member of the European Union or the European Economic Area
but in which no Patent is registered or been applied for, until the tenth
anniversary of the date of the first commercial sale of the Product to a Third
Party in that country, and (iii) with respect to each country in the Territory
which is a member of neither the European Union nor the European Economic Area,
until the date of expiration of the last of the Patents wherever registered or
applied for in any country in the Territory.
(b) If there is an Improvement or development relating to the
Product which is the subject of a patent or patent application, then the term
set out in clauses (i), (ii) and (iii) of Section 16.1(a) with respect to a
country shall be extended as follows: (i) with respect to a country referred to
in clause (i), until the later of the term otherwise set out in clause (i) with
respect to such country or until the date of expiration of the last of such
patents covering such Improvement or development registered or applied for in
such country; (ii) with respect to a
31
country referred to in clause (ii), until the later of the term otherwise set
out in clause (ii) with respect to such country or until the date of expiration
of the last of such patents covering such Improvement or development registered
or applied for in such country; and (iii) with respect to a country referred to
in clause (iii), until the later of the term otherwise set out in clause (iii)
with respect to such country or until the date of expiration of the last or such
patents covering such Improvement or development wherever registered or applied
for in the Territory.
(c) Upon the expiration of the term of this Agreement pursuant to
Section 16.1(a) or Section 16.1(b), this Agreement shall be automatically
renewed for successive one-year periods on the terms and conditions set forth
herein, and may be terminated upon not less than one-year's notice by Licensor
or a Fresenius Party.
16.2 Grounds for Early Termination.
(a) This Agreement and all licenses granted hereunder may be
terminated:
(i) by either Licensor or the Fresenius Parties if the other
party or parties shall have committed a "material breach or default" in the
performance of its or their obligations hereunder; or
(ii) by either Licensor or the Fresenius Parties if the other
party shall discontinue business or become bankrupt or insolvent, or apply for,
or consent to the appointment of a trustee, receiver or liquidator of assets, or
seek relief under any reorganization bankruptcy, insolvency or similar law for
the aid of debtors, or take or permit to be taken any action under any such
laws.
(b) As used in this Agreement, a "material breach or default" shall
mean a material misstatement or omission in any representation or warranty of a
party to this Agreement or a breach or default in the performance of any
agreement, covenant or obligation of a party hereto which in any such case
(i) deprives or will deprive the other party of any material
rights or benefits conferred on, received by, or intended to be conferred on or
received by, such other party pursuant to this Agreement, or by virtue of the
collaborative efforts contemplated hereby, or
(ii) diminishes or will diminish any of such rights or benefits
in any material respect,
and which in either case continues for a period of 60 days from the date written
notice of such material breach or default is received by a party from the party
claiming the existence of such material breach or default, provided that any
payment default shall be curable within five (5) business days of a written
notice of non-payment and of termination of this Agreement from the non-
breaching party. Any late payment will bear interest from the date due until
paid in full at a rate of twelve percent (12%) per annum.
16.3 Rights and Obligations Upon Termination.
(a) Upon termination of this Agreement pursuant to Section 16.2,
except as otherwise expressly set forth in this Article 16 (including, without
limitation, elsewhere in this
32
Article 16), the licenses and sublicenses granted in this Agreement to the
Fresenius Parties shall terminate, including all rights with respect to the
Product in all versions and with any Improvements made solely by Licensor during
the term of this Agreement granted hereunder shall terminate and the following
terms and conditions shall apply:
(i) for a period of one-hundred eighty (180) days following
termination, the Fresenius Parties shall be permitted to continue to manufacture
Product from existing work in process and to sell existing inventory of the
Product, subject to the provisions of Article 10, and Licensor shall have the
option to purchase any inventory of finished Products remaining in the
possession of any Fresenius Party at any time during such period at such party's
manufacturing cost therefore, upon written notice to such Fresenius Party;
(ii) except to the extent necessary to continue to sell the
Product pursuant to this Section 16.3, the Fresenius Parties shall immediately
turn over to Licensor all sales inquiries and unfilled orders;
(iii) the parties shall negotiate in good faith with respect to
the assumption by the Licensor of the Fresenius Parties' obligations under any
agreements obligating them to supply Product and or related Disposables to Third
Parties;
(iv) each party shall make any payments then due hereunder to
the other party that accrued prior to the effective date of termination;
(v) the Licensor shall refrain from using the Confidential
Information of the Fresenius Parties and the Fresenius Parties shall refrain
from using the Confidential Information of the Licensor, in each case for the
period specified in Section 15.1 hereof;
(vi) the Fresenius Parties shall cease using the Patents, Know-
How and Trademarks in the Territory and shall deliver to the Licensor the
Patents, Know-How and rights to Trademarks, except to the extent that any of
such matters are required to be retained by the Fresenius Parties for the
purposes of Section 16.3(a)(i) above, provided, however, that if applicable law
or any regulation of any country in the Territory vests the Fresenius Parties
with any property rights to any of the Patents or Trademarks, the Fresenius
Parties shall, at Licensor's expense, co-operatively relinquish to the Licensor
(or, if such relinquishment is not possible, grant to the Licensor, for the life
of such Trademarks or Patents (including any Improvements), an exclusive
royalty-free license for) any and all such rights; and
(vii) the Fresenius parties shall not be entitled to any refund
or repayment of any portion of the License Fee notwithstanding any termination
of this Agreement by them during the License Fee Period.
(b) The parties acknowledge that this Agreement is a contract for
the license of intellectual property and that, notwithstanding the provisions of
Section 16.2(a)(ii), Licensee is entitled to the benefits of 11 U.S.C. (S)
365(n)
33
16.4 Certain Rights Upon Expiration or Termination. The Licensor
acknowledges that the Fresenius Parties shall have the right to continue to
manufacture, have manufactured, use, distribute and sell the Product upon
expiration of the term of this Agreement specified in Section 16.1, subject,
however, to the payment to Licensor of a commercially reasonable Trademark
royalty to be negotiated in good faith by the parties to the extent the
Fresenius Parties desire to continue using the Trademark(s). The Fresenius
Parties acknowledge that the Licensor shall have the right to manufacture, have
manufactured, use, distribute and sell the Product in the Territory upon the
expiration of the term of this Agreement specified in Section 16.1.
16.5 Survival of Certain Rights and Obligations. The rights and
obligations of the parties under the following provisions of this Agreement
shall survive the expiration or any termination hereof:
(a) Section 8.2 with respect to notification of adverse drug events
of which Licensor acquired actual knowledge;
(b) Section 8.6 with respect to Licensor's right of access set forth
therein;
(c) Article 10 (to the extent that the Fresenius Parties are
entitled to continue selling existing inventory of Products after termination in
accordance with this Agreement);
(d) Article 12, provided that the right of access provided in
Section 12.1 shall be limited to the records relating to the manufacture,
distribution and sale of the Product while this Agreement was in effect,
including inventory sold after termination;
(e) Article 14;
(f) Article 15 for the period set forth in Section 15.1;
(g) Section 16.4;
(h) Article 17 with respect to obligations of Licensee under
surviving provisions specified in this Section 16.5;
(i) Section 18.2 with respect to arbitration of any claims of non-
performance of a party's obligations prior to expiration or termination of this
Agreement or under any surviving provision referred to in this Section;
(j) any payment obligation hereunder accruing prior to expiration or
termination; and
(k) any other provision of this Agreement which states that it
survives the expiration or termination of this Agreement.
ARTICLE 17
GUARANTY
In order to induce Licensor to enter into this Agreement and grant
the Licenses and rights granted to Licensee hereunder, Fresenius GmbH hereby
unconditionally, irrevocably
34
and absolutely guaranties, as primary obligor and not merely as surety, the due
and punctual performance and payment in full of all Obligations (as hereinafter
defined) when the same shall be required to be performed or become due
hereunder. The term "Obligations" includes any an all obligations of Licensee
now or hereafter made, incurred or created, whether absolute or contingent,
liquidated or unliquidated, and however arising under or in connection with this
Agreement. Fresenius GmbH waives any right to (a) require Licensor to proceed
against Licensee; or (b) pursue any other remedy Licensor may have whatsoever.
Fresenius GmbH further agrees to pay all costs and expenses, including, without
limitation, attorneys' fees and related costs, at any time paid or incurred by
Licensor in endeavoring to enforce this guaranty. This guaranty is absolute and
unconditional and shall not be affected by any act or thing whatsoever, except
as expressly provided herein. This guaranty is not an accommodation, but rather
a material consideration bargained for by Licensor in agreeing to enter into the
transactions contemplated by this Agreement. No modification or amendment of any
provision of this guaranty shall be effective unless in writing and subscribed
by a duly authorized officer of Licensor. If any provision of this guaranty or
portion of such provision, or the application thereof to any person or
circumstance, shall, to any extent, be held invalid or unenforceable, the
remainder of this guaranty or the remainder of such provision and the
application thereof to other persons or circumstances, other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this guaranty shall be valid and enforced to the
fullest extent permitted by the law. Fresenius GmbH waives all defenses to
payment or performance available to guarantors or sureties by virtue of being
guarantors or sureties and that are not otherwise available to the primary
obligor.
In its performance of the foregoing guaranty, Fresenius GmbH shall be
subject to all of the obligations of Licensee and Fresenius GmbH shall be
entitled to assert any facts or circumstances constituting a material breach of
this Agreement by Licensor or which would constitute a legal or equitable
discharge of any Obligation of Licensee hereunder. The foregoing
notwithstanding, Fresenius GmbH shall not be released or discharged from this
guaranty by reason of any sublicensing, subcontracting or assignment permitted
by this Agreement and, upon any such event, this guaranty shall continue in full
force and effect.
ARTICLE 18
GOVERNING LAW; DISPUTE RESOLUTION
18.1 Governing Law. This Agreement, the legal relations between the
parties and any claim instituted by any party with respect to matters arising
under or in connection with or in respect of this Agreement, including but not
limited to the negotiation, execution, interpretation, coverage, scope,
performance, breach, termination, validity, or enforceability of this Agreement,
shall be governed by and construed in accordance with the laws of the State of
New York, without regard to conflicts of law doctrines, except (a) to the extent
that matters relating to the internal affairs and corporate status of the
parties are governed as a matter of controlling law by the law of the
jurisdiction of incorporation of the parties, and (b) if any issue is to be
determined by reference to the interpretation of GMP or other regulatory
requirements in any country in the Territory and there is a conflict between the
interpretation of GMP or such other regulatory requirements under New York law
and the laws of such country, GMP or such other regulatory requirements shall be
construed and interpreted in accordance with the law of such country. The
parties expressly exclude the United Nations Convention on the International
Sale of Goods.
35
18.2 Arbitration. (a) Except as provided in Section 14.4 or Section 18.3,
a party asserting the existence of any dispute or controversy arising out of or
in connection with this Agreement (a "Dispute"), including any Dispute relating
to the existence, materiality or cure of a claimed material breach, shall notify
to the other parties to this Agreement in writing of the existence and subject
matter of the Dispute. For a thirty-day period following such notification, the
parties shall meet and negotiate in good faith to attempt the resolve the
Dispute and shall escalate the dispute to the respective Chief Executive
Officers of Licensor and Fresenius GmbH if resolution is not made within fifteen
days. If such efforts do not resolve the Dispute within such thirty-day period,
or if a Direct Claim is subject to arbitration pursuant to Section 14.4, the
Dispute or Direct Claim shall be referred to and finally resolved by arbitration
under the rules of the American Arbitration Association, and except (i) as
provided in Section 18.3 or, (ii) for proceedings commenced to enforce an
arbitration award, each party hereby irrevocably waives its right to commence
any proceeding in any court with respect to any matter arising under this
Agreement. Unless the parties otherwise agree, the tribunal shall consist of
three arbitrators, two of whom shall be appointed by the respective parties and
the third arbitrator shall be appointed jointly by the first two. The place of
arbitration shall be New York, New York or such other location as the parties
shall agree. The language of the arbitration shall be English. The parties shall
be entitled to conduct discovery, which shall be limited by the arbitrators as
to both time and scope in order to minimize expense and adverse impact on the
operations of the parties. No arbitrator shall be an Affiliate, employee,
officer or director of either party or of their respective Affiliates, nor shall
any Arbitrator have any interest that would be affected in any material respect
by the outcome of the Dispute or Direct Claim. The decision of the arbitrators
shall be final and binding on the parties and their respective successors and
assigns. The decision shall not be subject to appeal or judicial review except
in circumstances of fraud. The prevailing party in any such arbitration shall be
entitled to recover reasonable fees of attorneys and other professionals in
addition to all court costs and arbitrator's fees which that party may incur as
a result. Judgment upon the award granted by the arbitrator(s) may be entered in
any court having jurisdiction over the relevant party or its assets.
18.3 Enforcement. It is expressly agreed that a party will or would
suffer irreparable injury if the other party were to commit any action in
violation of Article 15 or Section 16.3(a)(v) of this Agreement and/or fail to
perform its or their obligations under such provisions, that money damages would
be insufficient to remedy such injury, and that the party affected by or
threatened with any such violation or non-performance shall, by reason of such
violation or non-performance be entitled, in addition to any remedy available at
law, to injunctive relief, specific performance or other equitable relief from a
court of appropriate jurisdiction requiring the cessation or cure of any such
actual or threatened violation or non-performance. Each party consents and
stipulates to the entry of such injunctive relief, specific performance or other
equitable relief in such a court against any such actual or threatened violation
or non-performance.
ARTICLE 19
MISCELLANEOUS
19.1 Force Majeure. In the case of Force Majeure preventing or hindering
either party from performing its obligations under this Agreement, except for
the obligation to make payments when due, the party prevented or hindered from
performing (the "Affected Party")
36
may give written notice to the other (the "Non-Affected Party") containing
reasonable particulars of the Force Majeure in question and the effect of such
Force Majeure as it relates to the obligations of the Affected Party, and such
Force Majeure shall not constitute a default under this Agreement, provided that
the Affected Party works diligently to correct the reason for such delay,
excuses performance by the Non-Affected Party during the period for such delay
and reimburses the Non-Affected Party for any Losses incurred by the Non-
Affected Party by reason of such delay. For the purpose of this Agreement,
"Force Majeure" shall mean any of the following events beyond the control of the
Affected Party:
(a) lightning, storms, earthquakes, landslides, floods, washouts and
other acts of God;
(b) substantial or material fires, explosions, breakage of or
accidents to plant, machinery, equipment and storage of the Affected Party;
(c) strikes, lockouts or other industrial disturbances of the
Affected Party;
(d) civil disturbances, sabotage, war, blockades, insurrections,
vandalism, riots, epidemics;
(e) inability to obtain supplies necessary to manufacture the
product at the Production Facility or inability to obtain transportation or
electric power, water, fuel or other utilities, or services necessary to operate
the Production Facility; and
(f) any similar material event that is beyond the reasonable control
of the Affected Party;
but shall not include the inability of either party to obtain financing or any
other financial inability on the part of either party.
19.2 Notices.
(a) Any notice or other documents required or permitted to be given
under this Agreement shall be in writing and shall be delivered, mailed by
prepaid registered mail, return receipt requested, or sent by telecopy addressed
to the party to whom it is to be given at the address shown below or at such
other address or addresses as the party to whom such writing or document is to
be given shall have last notified the other party in accordance with the
provisions of this Section:
If to Licensor, to it at:
Cypress Bioscience, Inc
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopy No.: ▇▇▇▇▇-▇▇▇-▇▇▇▇
37
With a copy to:
Cooley Godward LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: ▇▇▇▇▇- ▇▇▇-▇▇▇▇
If to Fresenius GmbH, to it at:
Fresenius HemoCare GmbH
Adsorber Technology Division
Attn: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇. ▇-▇
▇-▇▇▇▇▇ ▇▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇▇-▇▇▇▇-▇▇▇▇▇▇
With copies to:
Fresenius Aktiengesellschaft
Law Department
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
If by mail: 61346 Bad Homburg v.d.H.
Germany
If by delivery: ▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
Telecopy No.: ▇▇▇▇-▇▇▇▇-▇▇▇-▇▇▇▇
and to:
O'Melveny & ▇▇▇▇▇ LLP
Citicorp Center
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telecopy No.: ▇▇▇▇▇-▇▇▇-▇▇▇▇
and if to Licensee, to it at:
Fresenius HemoCare, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: President
Telecopy No.: ▇▇▇▇▇-▇▇▇-▇▇▇▇
38
With copies to Fresenius GmbH and O'Melveny & ▇▇▇▇▇ LLP at their
respective addresses set forth above.
(b) Any such notice or other document shall:
(i) if delivered in person, be deemed to have been received at
the place of receipt on the date of delivery, provided that if such date is a
day other than a business day in the place of receipt, such notice or document
shall be deemed to have been given and received at the place of receipt on the
first business day thereafter in the place of receipt;
(ii) if transmitted by telecopy, be deemed to have been
received at the place of receipt on the next business day in the place of
receipt, following the day of sending; and
(iii) if mailed, be deemed to have been received at the place of
receipt on the date which is 5 business days after the date of mailing.
19.3 Attorneys' Fees. In the event of any action for the breach of this
Agreement or misrepresentation by any party, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and expenses incurred in such
action, in addition to any other relief to which such party shall be entitled.
19.4 Assignment. Except as provided in Section 3.2 with respect to
sublicensees and distributors, neither this Agreement nor any of the rights or
duties of the parties hereunder shall be Assigned, transferred or conveyed by a
party by operation of law or otherwise. Notwithstanding the foregoing, this
Agreement may be assigned to a purchaser of the entire business or substantially
all of the assets of Fresenius GmbH, without the prior written consent of
Licensor, provided that the purchaser assumes in writing all of the obligations
of Fresenius GmbH and Licensee hereunder. In addition, notwithstanding the
foregoing, this Agreement may be assigned by Licensor to an Affiliate of
Licensor or to a purchaser of all or substantially all of the assets of Licensor
relating to the Product, provided that such purchaser assumes in writing all of
the obligations of Licensor hereunder, and may be transferred by Licensor by
operation of law in connection with a change of control of Licensor through a
tender offer, merger, sale of equity securities or other similar transaction.
Neither this Agreement nor any rights of a party hereunder shall inure to the
benefit of any trustee in bankruptcy, receiver, creditor, liquidator or trustee
of the business of such party without the prior written consent of the other
party, which such other party may grant or withhold in its sole discretion.
Except as provided in this Section or as referenced herein, no party shall
delegate duties of performance or assign, in whole or in part, rights or
obligations under this Agreement without the prior written consent of the other
party, and any attempted delegation or assignment without such written consent
shall be void and of no force or effect. Subject to the restrictions contained
in the preceding sentence, this Agreement shall be binding upon the successors
and assigns of the parties.
19.5 Entire Agreement. This Agreement and the Asset Purchase Agreement
constitute the entire agreement between the parties relating to the subject
matter hereof and
39
thereof and supersede all prior or contemporaneous agreements and understandings
of the parties in connection therewith. Anything in this Section 19.5 to the
contrary notwithstanding, the Warrant dated March 29, 1999 for the purchase of
up to 324,466 shares of Seller's common stock issued to Fresenius AG and the
Registration Agreement dated March 29, 1999 between Seller and Fresenius AG
remain in full force and effect.
19.6 Modification and Amendment. Neither this Agreement nor any of the
terms hereof or any exhibit hereto may be terminated, amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by the
parties hereto. No failure on the part of either party to exercise, no delay in
exercising, no partial exercise of, and no course of dealing with respect to,
any right, power or privilege under this Agreement shall operate as a waiver
thereof.
19.7 Headings. The descriptive headings of the Articles, Sections and
Sections of this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
19.8 Telecopy; Counterparts. This Agreement and any amendment hereto or
any other agreement (or document) delivered pursuant hereto may be executed by
telecopy, in one or more counterparts, and by different parties in separate
counterparts. All of such counterparts shall constitute one and the same
agreement (or other document) and shall become effective (unless otherwise
provided therein) when one or more counterparts have been signed by each party
and delivered to the other party. Any execution by telecopy shall be followed
promptly by the delivery of signed original counterparts to the party or parties
receiving the telecopy.
19.9 Severability. If any provision of this Agreement is determined to be
invalid, illegal or unenforceable, the remaining provisions of this Agreement to
the extent permitted by law shall remain in full force and effect. In the event
of any such determination, the parties agree to negotiate in good faith to
modify this Agreement to fulfill as closely as possible the original intent and
purposes hereof. To the extent permitted by law, the parties hereby to the same
extent waive any provision of law that renders any provision hereof prohibited
or unenforceable in any respect
19.10 Scope of Authority and Relationship. The relationship between the
Fresenius Parties and Licensor is that of independent contractors and neither
this Agreement nor any act of the parties hereunder or in accordance herewith
creates or shall create any relationship of agency, master and servant,
employment, partnership, or joint venturers between the parties hereto or
between a party and the employees of the other. Neither the Fresenius Parties
nor Licensor shall act or attempt to act, or represent itself, directly or by
implication, as agent, joint venturer, partner or representative of the other or
in any manner assume or attempt to assume or create any obligation or liability
of any kind, nature or sort, express or implied, on behalf of or in the name of
the other.
19.11 Cost of Operations. Except as expressly provided herein, all costs
and expenses of whatever kind or nature incurred by either party hereto in the
conduct of its operations or the performance of its responsibilities in
connection with or pursuant to this Agreement shall be for the account of and
shall be paid by such party, and such party shall not be entitled to
reimbursement therefore from the other party hereto, whether upon the expiration
or earlier termination of this Agreement or otherwise.
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