EXHIBIT 10.10
**CERTAIN CONFIDENTIAL MATERIAL CONTAINED IN THIS DOCUMENT HAS BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO 17
C.F.R. SUBSECTION 200.80(B)(4), 200.83 AND 230.406.**
EXCLUSIVE LICENSE AND SUPPLY AGREEMENT
BETWEEN
ICN PHARMACEUTICALS, INC.
AND
SCHERING-PLOUGH LTD.
JULY 28, 1995
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS .............................................................. 1
1.1 "Affiliate" ...................................................... 1
1.2 "Cost of Goods" .................................................. 1
1.3 "CPMP Opinion" ................................................... 2
1.4 "Effective Date" ................................................. 2
1.5 "EU" ............................................................. 2
1.6 "Exclusive Period" ............................................... 2
1.7 "FDA" ............................................................ 2
1.8 "ICN" ............................................................ 2
1.9 "ICN Facility" ................................................... 2
1.10 "ICN Trademark" .................................................. 3
1.11 "Improvements" ................................................... 3
1.12 "Know-How" ....................................................... 3
1.13 "Labelling" ...................................................... 3
1.14 "License Period" ................................................. 3
1.15 "Major Market" ................................................... 3
1.16 "Minimum Labelling" .............................................. 3
1.17 "NDA" ............................................................ 3
1.18 "Net Sales" ...................................................... 4
1.19 "Product" ........................................................ 4
1.20 "Product Price" .................................................. 5
1.21 "Product Specifications" ......................................... 5
1.22 "Regulatory Approval" ............................................ 5
1.23 "Schering" ....................................................... 5
1.24 "Schering Trademark" ............................................. 5
1.25 "Stock Purchase Agreement" ....................................... 5
1.26 "Territory" ...................................................... 5
ARTICLE 2
GRANT OF RIGHTS TO SCHERING .............................................. 5
2.1 Grant of Exclusive License ....................................... 5
2.2 Acceptance of Appointment ........................................ 6
2.3 ICN Retained Rights .............................................. 6
2.4 Prices ........................................................... 6
2.5 Know-How ......................................................... 7
i
2.6 Approvals; Effective Date ........................................ 7
ARTICLE 3
CERTAIN DEVELOPMENT AND REGULATORY MATTERS DURING EXCLUSIVE PERIOD ....... 7
3.1 Research and Development Activities .............................. 7
3.2 Product Registrations ............................................ 9
3.3 Pricing and Reimbursement Approvals .............................. 12
3.4 Failure to Obtain Approvals; Restrictions ........................ 12
3.5 Governmental Inspections ......................................... 13
3.6 Notice of Adverse Reactions ...................................... 13
3.7 Recalls and Market Withdrawals ................................... 14
3.8 Additional Indications ........................................... 14
3.9 Improvements ..................................................... 15
ARTICLE 4
CERTAIN OBLIGATIONS OF THE PARTIES DURING EXCLUSIVE PERIOD ............... 16
4.1 Diligence in Marketing the Product ............................... 16
4.2 Compliance with Laws ............................................. 17
4.3 Trademark Registration and Infringements ......................... 17
ARTICLE 5
MARKETING ACTIVITIES ..................................................... 20
5.1 Establishment of Scientific and Commercial Liaison Committees .... 20
5.2 Product Labelling ................................................ 21
5.3 Product Sampling ................................................. 22
ARTICLE 6
COMPENSATION PAYABLE TO ICN; PAYMENT TERMS ............................... 22
6.1 License Fee ..................................................... 22
6.2 Royalty Payment ................................................. 23
6.3 Royalty Reduction ............................................... 23
6.4 Product Price to Schering ....................................... 23
6.5 Royalty Payment Dates ........................................... 24
6.6 Direct Affiliate Licenses, Supporting Licenses and Compulsory
Royalties ....................................................... 25
6.7 Place of Royalty Payment and Currency Conversions ............... 25
6.8 Royalties on Resales ............................................ 26
ii
6.9 Duration of Royalty Payments .................................... 26
6.10 Maintenance of Royalty Records; Audit Rights .................... 26
6.11 Equity Purchase ................................................. 27
6.12 Withholding Taxes, etc .......................................... 27
ARTICLE 7
ICN'S MARKETING RIGHTS; DISTRIBUTION ..................................... 28
7.1 ICN's Marketing Rights .......................................... 28
7.2 Distribution .................................................... 28
7.3 Ireland Sales ................................................... 29
ARTICLE 8
SUPPLY OF PRODUCT BY ICN DURING EXCLUSIVE PERIOD ......................... 30
8.1 Supply .......................................................... 30
8.2 Forecasts and Procedures ........................................ 30
8.3 Schering's Right to Manufacture ................................. 32
8.4 Limited Warranty ................................................ 34
8.5 Rejection of Product ............................................ 35
ARTICLE 9
CONFIDENTIALITY .......................................................... 35
9.1 Confidentiality ................................................. 35
9.2 No Publicity .................................................... 36
ARTICLE 10
REPRESENTATIONS AND WARRANTIES ........................................... 37
10.1 Representations and Warranties of Each Party .................... 37
10.2 ICN'S Representations ........................................... 38
10.3 Continuing Representations ...................................... 39
10.4 No Inconsistent Agreements ...................................... 39
ARTICLE 11
INDEMNIFICATION AND LIMITATION ON LIABILITY .............................. 40
11.1 Indemnification by Schering ..................................... 40
11.2 Indemnification by ICN .......................................... 40
11.3 Conditions to Indemnification.................................... 40
11.4 Settlements ..................................................... 41
11.5 Limitation of Liability ......................................... 41
iii
11.6 Insurance ................................................... 42
ARTICLE 12
TERM AND TERMINATION ..................................................... 42
12.1 Term of Agreement ............................................ 42
12.2 Termination by Either Party .................................. 42
12.3 Continuing Obligations ....................................... 43
12.4 Partial Termination of Territory by ICN ...................... 43
12.5 Effects of Termination by Schering ........................... 43
12.6 Effects of Termination by ICN ................................ 45
12.7 Change of Control ............................................ 45
12.8 Remedy Not Exclusive ......................................... 46
ARTICLE 13
DISPUTE RESOLUTION ....................................................... 46
ARTICLE 14
PROVISION FOR INSOLVENCY ................................................. 50
ARTICLE 15
MISCELLANEOUS ............................................................ 52
15.1 Assignment ................................................... 52
15.2 Governing Law ................................................ 52
15.3 Waiver ....................................................... 52
15.4 Independent Relationship ..................................... 52
15.5 Export Control ............................................... 52
15.6 Entire Agreement; Amendment................................... 52
15.7 Notices ...................................................... 53
15.8 Force Majeure ................................................ 54
15.9 Non-Solicitation ............................................. 54
15.10 Severability ................................................. 54
15.11 Counterparts ................................................. 55
GUARANTEE ................................................................ 57
EXHIBIT A ................................................................ A-1
Cost of Goods ...................................................... A-1
EXHIBIT B ................................................................ B-1
PRODUCT SPECIFICATIONS ............................................. B-1
iv
EXHIBIT C ................................................................ C-1
STOCK PURCHASE AGREEMENT ........................................... C-1
EXHIBIT D ................................................................ D-1
RESEARCH AND DEVELOPMENT PLANS...................................... D-1
EXHIBIT E................................................................. E-1
ADVERSE EVENT REPORTING PROCEDURES.................................. E-1
EXHIBIT F................................................................. F-1
PUBLICATION PROCEDURES.............................................. F-1
EXHIBIT 2.1
LICENSE AGREEMENTS..................................................
v
EXCLUSIVE LICENSE AND SUPPLY AGREEMENT
This EXCLUSIVE LICENSE AND SUPPLY AGREEMENT ("Agreement") is
made as of July 28, 1995, by and between ICN PHARMACEUTICALS, INC., a Delaware
corporation ("ICN"), and SCHERING-PLOUGH LTD., a corporation organized under the
laws of Switzerland ("Schering"), each on behalf of itself and its Affiliates.
ICN and Schering are sometimes referred to herein individually as a "Party" and
collectively as the "Parties."
WHEREAS, ICN has developed ribavirin, an oral antiviral
product; and WHEREAS, Schering wishes to obtain a license to use the know-how
and data developed by ICN concerning ribavirin; and
WHEREAS, Schering wishes to market, sell and distribute the
Product (as hereinafter defined) for the treatment of chronic hepatitis C under
the terms and conditions of this Agreement; and
WHEREAS, ICN wishes to grant Schering such right under the
terms and conditions of this Agreement and any and all exhibits hereto.
NOW, THEREFORE, in consideration of the mutual promises
contained herein and intending to be legally bound hereby, the Parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following capitalized terms
shall have the meanings set forth below. Capitalized terms in this Agreement
used in the plural shall have the meaning as for the singular and vice versa.
1.1 "Affiliate" means any individual or entity directly or
indirectly controlling, controlled by or under common control with, the
specified individual or entity. For purposes of this Agreement, the direct or
indirect ownership of over 50% of the outstanding voting securities of an
entity, or the right to receive over 50% of the profits or earnings of an entity
shall be deemed to constitute control. Such other relationship as in fact
results in actual control over the management, business and affairs of an
entity, shall also be deemed to constitute control.
1.2 "Cost of Goods" means the cost to ICN or Schering, as the
case may be, of Products shipped in finished bulk capsules. As used herein, the
cost of the Product means (i) in the case of products and services acquired from
third parties, payments made to such third parties, and (ii) in the case of
manufacturing services performed by the
1
Parties, including manufacturing services in support of third party
manufacturing, the actual unit costs of manufacture in bulk form or final
manufacturing, as the case may be. Actual unit costs shall consist only of
direct material and direct labor costs plus manufacturing overhead directly
attributable to the Product at standard cost, all calculated in accordance with
reasonable cost accounting methods, consistently applied, of the party
performing the work, and as more fully set forth on Exhibit A hereto.
1.3 "CPMP Opinion" means a final, written majority or
unanimous positive opinion by the committee on Proprietary Medicinal Products of
the European Community ("CPMP"), or any successor to the CPMP.
1.4 "Effective Date" means the receipt of requisite boards of
directors' approvals and expiration or earlier termination of any notice and
waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976,
as amended.
1.5 "EU" means each of the countries of the European Union (or
its successor), which currently include Austria, Belgium, United Kingdom,
Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain and Sweden, as such membership may change from time
to time, and includes countries upon their admission for full membership (with
commercial rights and privileges substantially comparable to those of the
foregoing countries); provided, however, that for purposes of this Agreement, if
a country is or becomes a member of the European Union (or its successor) at any
time during the Exclusive Period, such country shall be deemed to be included in
the EU even if such country in fact withdraws from or is otherwise no longer a
member of the European Union (or its successor).
1.6 "Exclusive Period" means the period commencing on the
Effective Date and continuing until the earlier of (i) the tenth anniversary of
the first commercial sale of the Product in the last country in the Major Market
in which the Product was introduced into commerce, or (ii) the fifteenth
anniversary of the Effective Date, unless terminated earlier in accordance with
Section 12.2 hereof.
1.7 "FDA" means the United States Food and Drug Administration
or any corresponding foreign drug registration governmental authority, or its
successor agency.
1.8 "ICN" means ICN Pharmaceuticals, Inc.
1.9 "ICN Facility" means the facility or facilities (which may
be a third party facility or facilities) used by ICN for the manufacture of the
Product to meet Schering's supply requirements under this Agreement.
2
1.10 "ICN Trademark" means Virazole and any and all variations
thereof and/or substitute marks proposed, chosen, owned or controlled by ICN or
its Affiliates for use with the Product in the Territory.
1.11 "Improvements" means any change with respect to the
Product for use in the treatment of chronic hepatitis C, including without
limitation, any change in formulation, dosage or mode of delivery, any
additional indications and any change in the Product resulting from a change in
the manufacturing process.
1.12 "Know-How" means all ideas, inventions, data,
instructions, package inserts, promotional materials (after commercial launch),
know-how, processes, formulas, expert opinion and information (whether or not
patented or patentable), technology and other intellectual property (including
patents and any pending patent applications, but excluding the ICN Trademark)
owned or controlled by ICN and its Affiliates, or under which ICN and its
Affiliates have the right to grant sublicenses, on the Effective Date or during
the Exclusive Period, as all of the foregoing relate to the discovery, research,
development, manufacture, marketing, use or sale of Product for the treatment of
chronic hepatitis C, including, without limitation, all biological, chemical,
pharmacological, toxicological, pharmaceutical, physical and analytical,
clinical, safety, manufacturing and quality control data and information related
thereto, all correspondence with the FDA relating to the Product and all other
documents pertaining to communications with the FDA (including, but not limited
to, minutes of any FDA communications relating to the Product) and all
applications for Regulatory Approval.
1.13 "Labelling" means the bottle label, the package inserts
and the packaging for the Product sold in the Territory, including, where
applicable the Minimum Labelling.
1.14 "License Period" means the period commencing on the
Effective Date and continuing in perpetuity thereafter.
1.15 "Major Market" means each of France, Germany, Italy,
Spain, the United Kingdom, the United States and Japan.
1.16 "Minimum Labelling" means the following labelling of the
Product:
(i) The Product, in combination therapy with recombinant
interferon alfa 2b, is indicated for use as First-Line Therapy as well as
Second-Line Therapy (Retreatment) for treatment of chronic hepatitis C so
as not to impair the projected marketability of commercialization of the
Product within the Territory. "First-Line Therapy" means [REDACTED].
"Second-Line Therapy (Retreatment)" means [REDACTED].
(ii) The Product is approved for substantially
unrestricted use for monotherapy indication for the treatment of chronic
hepatitis C so as to not impair the projected marketability or
commercialization of the Product within the territory.
1.17 "NDA" means a New Drug Application, Product License
Application or its equivalent in the United States or any corresponding foreign
application, registration or certification for approval to market the Product,
including where applicable, applications for pricing, pricing reimbursement
approval and Labelling.
3
1.18 "Net Sales" means, with respect to each country in the
Territory, the proceeds actually received by Schering or its Affiliates on all
sales of Product to an unaffiliated third party (whether an end-user, a
distributor or otherwise) including prelicense sales of the Product made prior
to Regulatory Approval, and exclusive of intercompany transfers or sales in the
Territory, less the reasonable and customary accrual-basis deductions from such
gross amounts including: (i) normal and customary trade, cash and quantity
discounts, allowances and credits; (ii) credits or allowances actually granted
for damaged goods, returns or rejections of Product and retroactive price
reductions; (iii) sales or similar taxes (including duties or other governmental
charges levied on, absorbed or otherwise imposed on the sale of Product
including, without limitation, value added taxes or other governmental charges
otherwise measured by the billing amount, when included in billing); (iv)
freight, postage, shipping, customs duties and insurance charges; (v) with
respect to sales outside the EU only, charge back payments and rebates granted
to managed health care organizations or to federal, state and local governments,
their agencies, and purchasers and reimbursers or to trade customers, including
but not limited to, wholesalers and chain and pharmacy buying groups; and (vi)
commissions paid to third parties other than sales personnel and sale
representatives or sales agents. For purposes of calculating Net Sales under
this Agreement, all sales of Product hereunder, whether made for cash or
otherwise, shall be deemed to be made for cash, at the applicable fair market
value of the Product.
In the event that Product is sold in the form of a combination
product containing one or more active ingredients other than ribavirin
("Combination Product"), Net Sales for such Combination Product will be
calculated by multiplying actual Net Sales of such Combination Product by the
fraction A/(A+B) where A is the invoice price of the Product if sold separately
by Schering, an Affiliate or sublicensee and containing ribavirin as the only
active ingredient and B is the invoice price of any other active component or
components in the Combination Product if sold separately by Schering, an
Affiliate or sublicensee. In the event that the Product is sold in the form of a
Combination Product containing one or more active ingredients other than
ribavirin and one or more such active ingredients of the Combination Product are
not sold separately, then the above formula shall be modified such that A shall
be the total cost to Schering, its Affiliate or sublicensee of the Product and B
shall be the total cost to Schering, its Affiliate or sublicensee of any other
active component or components in the combination.
1.19 "Product" means any oral product containing as its sole
active ingredient ribavirin and any Improvements thereto. The term "Product"
also shall include any pharmaceutical product for the treatment of chronic
hepatitis C containing oral ribavirin in combination with another active
ingredient; provided, however, that nothing in this Agreement shall be deemed to
grant to ICN any rights or license to recombinant interferon alfa 2b.
4
1.20 "Product Price" has the meaning specified in Section 6.4
hereof.
1.21 "Product Specifications" means the general specifications
for the Product set forth as Exhibit B hereto, as such may be modified to
reflect an Improvement. The Product Specifications also shall be supplemented
and/or modified from time to time to the extent required by any regulatory
authority in the Territory with respect to obtaining or maintaining a Regulatory
Approval, and may otherwise be modified only by the written agreement of ICN and
Schering. The Product Specifications and any supplements or modifications
thereto shall be documented in such reasonable level of detail as is customary
in the pharmaceutical industry
1.22 "Regulatory Approval" means the technical, medical and
scientific licenses, registrations, authorizations and/or approvals of the
Product for the treatment of chronic hepatitis C in combination therapy with
recombinant interferon alfa 2b or as monotherapy and the marketing
authorizations based upon such approvals (including any prerequisite
manufacturing approvals or authorizations related thereto) that are required or
deemed necessary by any national, supra-national (e.g., the European Commission
or the Council of the European Union), regional, state or local regulatory
agency, department, bureau or other governmental entity in the Territory,
including the CPMP Opinion, if applicable, and any pricing, third party
reimbursement approvals and Labelling approvals as necessary for the
manufacture, distribution, use or sale of Product in a regulatory jurisdiction.
1.23 "Schering" means Schering-Plough Ltd.
1.24 "Schering Trademark" means any and all trademarks
proposed, chosen, owned or controlled by Schering or its Affiliates for use with
the Product in the Territory.
1.25 "Stock Purchase Agreement" means the Stock Purchase
Agreement, in the form attached hereto as Exhibit C, providing for the purchase
by Schering-Plough Corporation of certain common stock of ICN.
1.26 "Territory" means the entire world.
ARTICLE 2
GRANT OF RIGHTS TO SCHERING
2.1 Grant of Exclusive License. Subject to the other
applicable terms and conditions of this Agreement, ICN hereby grants to
Schering, as of the Effective Date, (a) the exclusive licenses, exclusive even
with respect to ICN, to make, have made, develop, use, sell and distribute
Product for the treatment of chronic hepatitis C, in each
5
country in the Territory during the Exclusive Period (1) under the Know-How and
(2) at Schering's option, under either the ICN Trademark or the Schering
Trademark, and (b) the non-exclusive license in and to the Know-How to enable
Schering to make, have made, develop, use, sell and distribute the Product for
the treatment of chronic hepatitis C in the Territory during the License Period.
The exclusive licenses granted in this Section 2.1 (i) are subject to the rights
of ICN retained by or reserved to ICN under this Agreement, including without
limitation, the rights to manufacture the Product and to distribute, market and
sell the Product as provided for in Section 7.1 hereof; (ii) do not include the
right to sublicense, except to Affiliates of Schering; (iii) shall prohibit ICN
from selling the Product for the treatment of chronic hepatitis C through any
distributorship agreements, marketing arrangements or similar agreements other
than those in effect on the Effective Date and set forth in Exhibit 2.1 hereto;
and (iv) shall prohibit ICN from selling ribavirin in bulk form to any third
parties (except pursuant to agreements relating to respiratory syncytial virus
and those agreements set forth on Exhibit 2.1).
2.2 Acceptance of Appointment. Subject to the other applicable
terms and conditions of this Agreement, Schering hereby accepts the granted
licenses and agrees to serve as ICN's exclusive licensee of the Product in the
Territory during the Exclusive Period (except for ICN's rights under Sections
2.1 and 7.1), and as ICN's non-exclusive licensee of the Product in the
Territory during the License Period, to sell the Product in accordance with the
terms of this Agreement.
2.3 ICN Retained Rights. During the License Period, ICN
retains all rights to the Product in the Territory that are not explicitly
granted to Schering under this Agreement. Without in any way limiting the
foregoing, ICN retains, both during and after the License Period, all rights in
the Territory for products owned or controlled by it other than the Product,
including, without limitation, the right to distribute, market and sell any such
other product in the Territory (e.g. lyophilized ribavirin, or cream, ointment
or liquid ribavirin). Except for such retained rights or as expressly provided
elsewhere in this Agreement, nothing in this Section 2.3 shall be deemed to
compromise or limit the exclusive license granted to Schering under Section 2.1.
2.4 Prices. During the Exclusive Period, Schering shall have
the sole authority to determine the price, payment terms, discounts, allowances
and other terms of sale extended by Schering to third party purchasers of the
Product in the Territory. Nothing in this Section 2.4 or elsewhere in this
Agreement shall be deemed to limit or restrict ICN in any way with respect to
its sole authority to determine the price, payment terms, discounts, allowances
and other terms of sale extended by ICN to third party purchasers of the Product
in the EU.
6
2.5 Know-How. ICN shall furnish Schering promptly after the
Effective Date all Know-How which is necessary or useful to enable Schering to
exploit its rights under this Agreement. ICN shall promptly identify to Schering
and disclose to Schering, during the Exclusive Period, all additional Know-How,
which could relate to making, developing, using or selling Product licensed
hereunder, to which ICN or its Affiliates have or obtain rights, and such
Know-How shall be automatically deemed to be within the scope of the licenses
herein granted without payment of any additional compensation. ICN shall provide
reasonable technical assistance at no additional cost to enable Schering to
utilize such additional Know-How if Schering elects to do so; provided that
Schering shall promptly reimburse ICN for any out-of-pocket expenses incurred by
ICN in providing such assistance.
2.6 Approvals; Effective Date.
(a) Promptly after execution of this Agreement, the Parties
shall proceed diligently to make all appropriate filings under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended ("HSR"), and to
proceed to obtain necessary approvals under HSR, including but not limited to
the expiration or earlier termination of any and all applicable waiting periods
required by the HSR. In addition the Parties shall proceed to obtain any other
authorizations, approvals and permits, if any, required for the consummation of
the transactions contemplated by this Agreement and the Stock Purchase
Agreement.
(b) If the Effective Date does not occur by December 15, 1995,
then either Party (or Schering-Plough Corporation, in the case of the Stock
Purchase Agreement) may terminate this Agreement and the Stock Purchase
Agreement on five day's notice to the other Party, in which event each such
agreement shall be terminated and all provisions of each such agreement shall be
of no further force or effect.
ARTICLE 3
CERTAIN DEVELOPMENT AND REGULATORY MATTERS DURING EXCLUSIVE PERIOD
3.1 Research and Development Activities.
(a) Following the Effective Date, Schering or its Affiliates
shall assume and incur all costs and expenses in connection with the research
and development activities which in its sole judgment are necessary to obtain
any CPMP Opinion or Regulatory Approval for the Product for the chronic
hepatitis C indication in the Territory. ICN shall supply Schering with all of
its requirements of Product for such research and development activities in
finished bulk capsules, and bulk substance as necessary for preclinical studies,
[REDACTED]. During the Exclusive Period, Schering shall also be responsible, at
its cost and expense, for all preclinical studies, pre-marketing and
7
compassionate use programs, clinical trials, chemistry/pharmacy data, any post
approval studies required as a condition of obtaining any CPMP Opinion or
Regulatory Approval for the Product for the chronic hepatitis C indication in
the Territory, and any other information and data required as a condition of
obtaining any CPMP Opinion or Regulatory Approval for the Product for the
chronic hepatitis C indication in the Territory. The studies which Schering
intends to undertake, together with preliminary timetables and preliminary
budgets, are set forth in Exhibit D attached hereto and incorporated herein by
reference. Schering shall commence, within 45 days after the Effective Date, the
activities necessary to obtain Regulatory Approval in the EU, and shall
diligently pursue and conduct such activities as may be necessary in order to
obtain regulatory Approval for the Product for the chronic hepatitis C
indication in each country in the Territory, in accordance with Section 3.2.
(b) During the Exclusive Period, ICN shall assist Schering
from time to time, at Schering's reasonable request, in the design and
implementation of clinical studies, if Schering chooses, to undertake such
studies for a CPMP Opinion or Regulatory Approval for the chronic hepatitis C
indication for the Product. ICN shall assist Schering at Schering's reasonable
request, in the identification of clinical study sites in the Territory, the
recruitment of investigators, the review of study protocols and the monitoring
of the clinical studies (to the extent feasible in conjunction with ICN's own
scheduled monitoring for studies related to its other products, without the need
for additional resources). Schering shall reimburse ICN for its reasonable
out-of-pocket costs and expenses (equitably prorated, if applicable, for
monitoring expenses) incurred in rendering such assistance, unless otherwise
agreed by ICN. ICN shall invoice Schering for such expenses, and, upon request,
shall provide documentation for the invoice. The invoice shall be payable to ICN
or its designee(s) thirty (30) days after receipt by Schering of the invoice.
(c) During the Exclusive Period, Schering shall be responsible
for any quality of life, cost-benefit, cost-effectiveness, pharmacoeconomic and
any other studies (or portions of studies) necessary or desirable for pricing
and reimbursement approvals in the Territory, as well as any pre-marketing
studies prior to Regulatory Approval and post-marketing studies conducted
following a Regulatory Approval. ICN shall assist Schering from time to time, at
Schering's reasonable request, with incidental support in the conduct of the
studies.
(d) All data obtained by Schering or ICN which is reasonably
available to be reported from any activities conducted under Section 3.1(a), (b)
or (c) shall be jointly owned by the Parties, and Schering and ICN shall each
have the right to use all such data for all purposes contemplated or permitted
by this Agreement. Notwithstanding such joint ownership, any such data shall be
subject to the publication procedures set forth in
8
Exhibit F. ICN will use its reasonable efforts to apply such procedures to any
studies that commenced prior to and are planned as of the Effective Date.
(e) Schering shall have the right to use for all purposes in
connection with obtaining Regulatory Approval for the Product in the Territory
for the treatment of chronic hepatitis C, all existing data relating thereto
owned, controlled or in the possession of ICN as of the Effective Date.
(f) The Parties recognize that ICN's development studies with
respect to other indications of the Product should not interfere with the
development activities conducted by Schering with respect to the chronic
hepatitis C indication. Accordingly:
(i) ICN shall promptly disclose to Schering all studies
in progress and planned as of the Effective Date
relating to the Product in connection with any
hepatitis indications;
(ii) If Schering determines in its reasonable business
judgment that the continuation of any such studies by
ICN would significantly interfere with Schering's
studies with respect to chronic hepatitis C, Schering
may require ICN to postpone such studies for so long
as is necessary such that ICN's continuation of its
studies would not interfere with Schering's studies,
but such postponement shall not be more than
[REDACTED];
(iii) If after the Effective Date ICN wishes to commence a
clinical development program for the Product for a
hepatitis indication other than the chronic hepatitis
C indication, then ICN shall consult with Schering
with respect to the possible joint development of
such indication. If Schering declines or does not
agree within 30 days to participate in such a joint
development program, then ICN shall be free to
continue such development. If Schering determines in
its reasonable business judgment that the
continuation of any such studies by ICN would
significantly interfere with Schering's studies with
respect to chronic hepatitis C, Schering may require
ICN to postpone such studies for so long as is
necessary such that ICN's continuation of its studies
would not interfere with Schering's studies, but such
postponement shall not be more than [REDACTED].
3.2 Product Registrations.
(a) Schering shall be responsible, at its cost and expense,
and in its sole judgment, for determining the appropriate regulatory strategy,
and for obtaining and
9
maintaining all Regulatory Approvals for the sale of the Product in the
Territory, except for costs and expenses to be borne by ICN with respect to its
own Regulatory Approval in the EU as provided in this Agreement. Schering shall
use its reasonable efforts to diligently obtain Regulatory Approvals with
Minimum Labelling within the Territory and in any event shall file for such
Regulatory Approvals in each country in the Major Market within nine months of
the completion of clinical trials and studies required in each such country for
Regulatory Approval, including any additional or supplemental clinical trials or
studies subsequently required by a regulatory authority for such Regulatory
Approval. For purposes of this Section 3.2, "completion of clinical trials"
shall in no event be deemed to occur sooner than the time of availability of the
integrated summary of safety reports and integrated summary of efficacy reports.
Schering shall use reasonable efforts to complete such reports promptly after
completion of treatment. With respect to countries in the Territory other than
the Major Market, Schering's efforts shall be commensurate with those efforts
used to pursue regulatory approval for its own products of similar potential,
value and status in such country or a comparable country in the Territory, as
the case may be, or, if Schering has no such similar products in a comparable
country, Schering's efforts shall be commensurate with the efforts that other
reputable pharmaceutical companies of comparable size and product portfolio
would use with respect to a product of similar potential, value and status in
such country. In connection with any health registration application of ICN
relating to the Product pending as of the Effective Date with the CPMP or FDA or
any successor to the CPMP or FDA, ICN shall, at Schering's request, provide to
Schering in a prompt manner, but in no event later than December 31, 1995,
responses to non-clinical questions which have been raised by the CPMP or FDA.
In addition, at the request of Schering, ICN shall provide to Schering
chemistry-pharmacy data and any other technical information which Schering may
reasonably require in order to obtain any CPMP Opinion or Regulatory Approval
for the Product in the Territory. At the request of Schering, ICN may agree to
continue its current efforts, and undertake where necessary and commercially
practicable additional efforts, including clinical trials in addition to those
already in progress, to maximize the opportunities of Schering to obtain
Regulatory Approval with Minimum Labelling in each country in the Territory at
the time of initial Regulatory Approval in such country, or as soon thereafter
as possible. All costs incurred by ICN in making such efforts shall be included
in the costs incurred in pursuing Regulatory Approval for purposes of Section
3.2(e). Notwithstanding the foregoing, ICN acknowledges that there can be no
assurance that Minimum Labelling will be obtained in any country in the
Territory. ICN shall advise and assist Schering, upon request, in the CPMP
process and the local registration process.
(b) Except as to the EU, each Regulatory Approval shall be
placed in Schering's name or the name of a designated Schering Affiliate unless
local law requires (whether because of the Product Labelling provisions of this
Agreement, pricing approval requirements, or otherwise), or ICN and Schering
otherwise agree, that a Regulatory
10
Approval be in the name of ICN or a designated ICN Affiliate. In such event,
Schering shall transfer the Regulatory Approval to ICN upon request at any time
that is commercially reasonable, or as soon thereafter as and to the extent
permitted by law. ICN agrees that notwithstanding such transfer of Regulatory
Approval from Schering to ICN, Schering shall retain the exclusive rights to
make, have made, develop, use, sell and distribute Product under the terms of
this Agreement.
(c) In the EU, the Parties shall each file applications for
Regulatory Approval in its own name and shall each be responsible for its own
filing fees. Schering shall use its reasonable efforts to provide ICN on a
timely basis with all reports, data, samples (if necessary), and, if
specifically requested by a regulatory authority, other information, necessary
to allow ICN to file for Regulatory Approval in the EU concurrently with
Schering.
(d) Prior to Regulatory Approval of the Product in each
country in the Territory, each Party shall promptly furnish to the other Party's
designated regulatory representative all data, and a copy of all material
correspondence and other material documents, received or sent to the FDA or a
regulatory authority in the Territory relevant to such Regulatory Approval.
(e) ICN shall reimburse Schering for [REDACTED], up to a
maximum amount of $5.0 million to be reimbursed by ICN, of the reasonable costs
and expenses incurred by Schering in pursuing Regulatory Approval in the EU for
clinical and preclinical trials performed in the EU specifically required for EU
Regulatory Approval, and for regulatory costs required for EU Regulatory
Approval (other than each Party's filing fees, which shall be for the Parties'
respective accounts); provided, however, that such costs and expenses shall
exclude the cost of any studies performed in the EU or otherwise which are not
specifically required for EU Regulatory Approval. Schering shall invoice ICN
after the end of each calendar quarter commencing September 30, 1995, for ICN's
share of such costs and expenses, and shall provide ICN with a statement of such
costs and expenses, describing the costs and expenses in reasonable detail. If
ICN fails to pay any such invoice (or, in the event of a good faith dispute with
respect to such invoice, fails to pay the amount of the invoice into escrow in
accordance with the provisions of this Section 3.2(e)), by l7:00 Lucerne time on
the 90th day after the date on which it is received by ICN, then the royalties
that would otherwise be due to ICN for Net Sales of the Product in the EU shall
be permanently reduced to [REDACTED] of the amounts set forth in Article 6. If,
following such a failure to pay an invoice, ICN fails to pay a second invoice
(or, in the event of a good faith dispute with respect to such invoice, fails to
pay the amount of the invoice into escrow in accordance with the provisions of
this Section 3.2(e)), by 17:00 Lucerne time on the 90th day after the date on
which it is received by ICN, then at 17:00 Lucerne time on the 90th day day
after the date on which ICN received such second invoice, the rights granted to
Schering by this Agreement as to
11
the EU shall become exclusive, even as to ICN. In the event of a good faith
dispute as to any invoice rendered pursuant to this Section 3.2(e), ICN may
deposit the amount of the invoice with an independent third party escrow agent
mutually acceptable to the Parties, in an interest-bearing account, pending
resolution of such dispute. In such event, the Parties shall promptly negotiate
in good faith in an attempt to resolve any such dispute; provided, however, that
if the Parties are unable to resolve such dispute within 30 days after the date
on which payment of the invoice was due, such dispute shall be resolved in
accordance with the provisions of Article 13. Upon resolution of such dispute,
the interest, if any, earned on the amount held in escrow shall belong to the
Party entitled to receive the amount in escrow, appropriately allocated for any
allocation of the principal amount in escrow. ICN, through its independent
public accountants, shall have the right at reasonable times and on reasonable
notice to audit the books and records of Schering for the purpose of verifying
the costs and expenses charged to ICN under this Section 3.2(e) in accordance
with and subject to the procedures set forth in Section 6.10(a).
3.3 Pricing and Reimbursement Approvals.
(a) Schering shall be responsible for obtaining and
maintaining any pricing and reimbursement approvals required for the sale by
Schering of the Product in each country in the Territory. In the EU, ICN shall
be responsible for ICN's pricing and reimbursement approvals and structure.
Schering shall use its reasonable efforts to diligently obtain pricing and
reimbursement approvals for the Product in each country within the Territory
throughout the Exclusive Period, except as provided in the last sentence of
Section 4.1. Schering shall undertake reasonable efforts, including additional
studies of the type contemplated under Section 3.1(c), to diligently maximize
the opportunities to obtain commercially reasonable pricing for the Product in
each country in the Territory by the time of initial launch of the Product in
such country. Such efforts shall be commensurate with those efforts used for its
other products of similar potential, value and status in such country or, if
Schering has no comparable product in such country, a comparable country in the
Territory.
(b) Except as to the EU, each pricing and reimbursement
approval shall be placed in Schering's name or the name of a designated Schering
Affiliate unless local law requires, or ICN and Schering otherwise agree, that
such approval be in the name of ICN or a designated ICN Affiliate. In the EU,
pricing and reimbursement approvals shall be placed separately in the names of
ICN and Schering, or their respective designated Affiliates.
3.4 Failure to Obtain Approvals; Restrictions.
(a) If Schering does not file for Regulatory Approval in any
country or countries in the Major Market as required by Section 3.2(a), the
rights granted to Schering under this Agreement shall automatically terminate in
such country or countries. If Schering does not file for Regulatory Approval in
any country or countries in the
12
Territory (other than the Major Market) as required by Section 3.2(a), then ICN
at any time may notify Schering that ICN intends to pursue Regulatory Approval
in such country or countries within 90 days after the date of such notice by ICN
to Schering. Schering shall have the right, by giving notice to ICN within 30
days after receipt of such notice from ICN, to elect to pursue Regulatory
Approval in such country or countries; provided, however, that if Schering does
not file for Regulatory Approval in such country or countries as required by
Section 3.2 within 60 days after its notice to ICN, the rights granted to
Schering under this Agreement shall automatically terminate in such country or
countries. If Schering does not exercise its right to elect to pursue Regulatory
Approval as provided above, then ICN shall commence pursuing Regulatory Approval
in such country or countries within 90 days after the date of its notice to
Schering; if ICN does not do so, then the Parties shall have such rights as if
ICN did not provide an initial notice to Schering pursuant to this Section
3.4(a).
(b) If Schering at any time decides not to pursue Regulatory
Approval in any country or countries in the Territory, then Schering shall
notify ICN within 30 days of such decision. In such event, ICN at any time may
notify Schering that ICN intends to pursue Regulatory Approval in such country
or countries within 90 days after the date of such notice by ICN to Schering. If
ICN does not commence pursuing Regulatory Approval in such country or countries
within 90 days after the date of its notice to Schering, then the Parties shall
have such rights as if ICN did not provide an initial notice to Schering
pursuant to this Section 3.4(b).
3.5 Governmental Inspections. During the Exclusive Period,
each Party shall advise and provide a reasonable description to the other Party
of any governmental visits to, or written or oral inquiries about, any
facilities or procedures for the manufacture, storage or handling of Product,
promptly (but in no event later than five (5) calendar days) after such visit or
inquiry. Each Party shall furnish to the other Party, (a) within two (2) days
after receipt, any report or correspondence issued by the governmental authority
in connection with such visit or inquiry, including but not limited to, any FDA
Form 483 Establishment Inspection Reports, warning letters, and (b) at the same
it provides to a governmental authority, copies of any and all responses or
explanations relating to items set forth in Section 3.5(a), in each case purged
only of trade secrets of the receiving Party that are unrelated to the other
Party's activities under this Agreement and any information that is unrelated to
the Product.
3.6 Notice of Adverse Reactions. During the Exclusive Period,
either Party shall promptly report to the other Party any information regarding
adverse events related to the use of the Product in accordance with the Adverse
Event Reporting Procedures (as may be amended from time to time upon mutual
agreement) set forth as Exhibit E and incorporated herein by reference.
13
3.7 Recalls and Market Withdrawals.
(a) If at any time during the Exclusive Period (i) any
governmental or regulatory authority in the Territory issues a request,
directive, or order that the Product be recalled or withdrawn, or (ii) a court
of competent jurisdiction orders such a recall or withdrawal in the Territory,
or (iii) either Party determines in its sole discretion that the Product should
be recalled or withdrawn, the Parties shall take all appropriate corrective
actions. The final decision of a Party to recall pursuant to (iii) of this
subsection shall not be subject to arbitration under Article 13 of this
Agreement (or any other legal action, subject to Section 13(g)), although the
consequences to the other Party of any improper decision shall be subject to
arbitration.
(b) If the negligent act or omission by one Party or the
breach by one Party of an applicable product warranty (which, in the case of
Product manufactured by ICN shall be the warranty contained in Section 8.4(a))
is the proximate cause of a recall or withdrawal under any provision of Section
3.7(a), that Party shall be solely responsible for such costs and expenses for
its own account. If the negligent act or omission or breach of product warranty
by one Party is not the proximate cause of such a recall or withdrawal, (i) the
costs and expenses of notification and destruction or return of the recalled or
withdrawn Product in connection with a recall or withdrawal resulting from a
determination pursuant to Section 3.7(a)(iii), above shall be borne by the Party
making such determination, and (ii) the costs and expenses of notification and
destruction or return of the recalled or withdrawn Product in connection with a
recall or withdrawal pursuant to Section 3.7(a)(i) or (ii) shall be borne
equally by the Parties.
3.8 Additional Indications. In further recognition by the
Parties that ICN's development studies with respect to other indications of the
Product should not interfere with the development activities conducted by
Schering with respect to the chronic hepatitis C indication, if ICN pursues an
additional indication for the Product in any country in the Territory, then
(subject to compliance with Section 3.1(f) in the case of a hepatitis C
indication):
(i) ICN may so notify Schering by providing Schering with
a description of ICN's development activities, all
associated preclinical and clinical data, ICN's
aggregate costs and expenses incurred in pursuing
such development activities to date, and the
estimated costs and expenses for remaining
activities, and such other information as Schering
may reasonably request. In such event, Schering shall
have the right, exercisable by notice to ICN given
not later than 75 days after receipt of the notice
from ICN, to elect to have such indication become
included in and subject to the terms and conditions
of this Agreement (including without limitation,
14
those relating to territory and royalties), and all
definitions shall be appropriately adjusted to
include such additional indication, effective upon
receipt by ICN of Regulatory Approval with respect to
such indication in any country in the Territory. If
Schering exercises such right, then (A) Schering
shall assume and be responsible for any and all
further development activities with respect to such
indication in accordance with the terms and
conditions of this Agreement, and (B) promptly after
receiving such Regulatory Approval, ICN shall notify
Schering of ICN's aggregate costs and expenses
incurred in pursuing Regulatory Approval for such
indication, and Schering shall reimburse ICN for such
costs and expenses within 45 days after receipt of an
invoice from ICN. Schering shall have the right to
audit such costs and expenses in accordance with the
provisions of Section 6.10(b).
(ii) If ICN does not provide such notice to Schering or if
Schering declines to exercise such rights, then ICN
shall be free to pursue such indication without
further obligation to Schering, except as expressly
provided under this Agreement; provided, however,
that (i) ICN shall not sell the Product for any such
indication in any country in the Territory until five
years after the date of the first commercial sale in
such country by Schering of the Product for the
chronic hepatitis C indication, and (ii) ICN shall
not sublicense any third party to develop, make, have
made, use, sell or distribute the Product for such
indication in such countries and shall only sell the
Product in such countries directly or through its
direct or indirect subsidiaries, and only under the
brand name for the Product which ICN is then using
for the hepatitis C indication.
3.9 Improvements.
(a) Any Improvements relating to the Product made after the
Effective Date relating to the indication for chronic hepatitis C developed
during the Exclusive Period by or on behalf of a Party shall be deemed to be
included in the Product for all purposes under this Agreement. Without in any
way limiting the foregoing, each Party shall have the fully paid-up,
non-exclusive license to commercialize any such Improvements made by the other
Party during and after the Exclusive Period, in those countries of the Territory
where each Party has rights under this Agreement, subject to the other terms and
conditions of this Agreement; provided, however, if the non-exclusive licensee
breaches this Agreement, becomes insolvent or undergoes a change in control (as
defined in
15
Section 12.7) or Schering exercises its right under Section 12.2(a), no such
licenses to Improvements shall be granted.
(b) Any Improvements (other than those relating to the
indication for chronic hepatitis C) developed during the Exclusive Period by or
on behalf of a Party shall be owned by the Party or Parties whose employee(s),
contractee(s) or designee(s) would be deemed to be the inventor under U.S.
patent laws; provided, however, that (i) if Schering develops such an
Improvement then ICN shall have the right to commercialize any such Improvement
on such commercially reasonable terms as to which the Parties shall agree
following good faith negotiations, and (ii) if ICN develops such an Improvement
(other than an additional indication covered by Section 3.8) then Schering shall
have the right to commercialize any such Improvement for use in connection with
the treatment of hepatitis (other than hepatitis A and hepatitis B) on such
commercially reasonable terms as to which the Parties shall agree following good
faith negotiations.
(c) For the avoidance of doubt, ICN acknowledges that Schering
or its Affiliates are not granting any type of right or license to ICN under any
alpha-interferon patent rights or know-how owned, controlled or licensed to
Schering and its Affiliates.
ARTICLE 4
CERTAIN OBLIGATIONS OF THE PARTIES
DURING EXCLUSIVE PERIOD
4.1 Diligence in Marketing the Product.
Schering agrees to make a commercial launch of Product in each
country within the Territory within six (6) months of obtaining Regulatory
Approval in each country (including, where applicable, pricing and third party
reimbursement approval). Schering shall use its reasonable efforts to diligently
promote, market and sell the Product in each country within the Territory
throughout the Exclusive Period. Such efforts shall be commensurate with those
efforts used to promote its own products of similar potential, value and status
in such country or a comparable country in the Territory, as the case may be,
or, if Schering has no such similar products in a comparable country,
commensurate with the efforts that other reputable pharmaceutical companies of
comparable size and product portfolio would use with respect to a product of
similar potential, value and status in such country. Both Parties recognize that
extenuating circumstances may arise that warrant a delay in launching the
Product, including but not limited to, unfavorable pricing, pricing
reimbursement or Labelling. The Parties agree that such circumstances shall be
considered in connection with excusing Schering from its obligation to launch
within the specified six (6) month period. Notwithstanding the foregoing,
however, Schering shall not be required to use reasonable efforts to diligently
launch, market or sell Product or pursue pricing and reimbursement approvals
under this Agreement in any country within
16
the Territory where a Regulatory Approval has been obtained that is less than
the Minimum Labelling for the Product. The Parties agree that if ICN makes a
commercial launch of the Product in any country of the EU prior to Schering
making such a launch in such country, and Schering has not made such launch
because of unfavorable pricing, pricing reimbursement or Labelling, then
Schering shall be relieved of its obligation to pay minimum royalties (as
described in Section 6.2) in all of the countries of the EU.
4.2 Compliance with Laws. During the Exclusive Period, each of
Schering and ICN shall comply with all material laws, rules and regulations
applicable to its respective activities under this Agreement.
4.3 Trademark Registrations and Infringements.
(a) Notwithstanding the grant of rights to Schering under
Section 2.1, ICN acknowledges that Schering intends
to develop and use Schering Trademarks for the
Product in the Territory, and that Schering shall not
be required to use the ICN Trademark in connection
with the rights granted to Schering under this
Agreement and shall be free to use the Schering
Trademark, the use of the ICN Trademark being solely
at the election of Schering. Schering acknowledges
that ICN intends to use ICN Trademarks for the
Product in the EU, as provided in this Agreement.
(b) Should Schering elect to use the ICN Trademark in any
country in the Territory, Schering shall notify ICN
in writing, and, if the ICN Trademark is filed or
registered there, ICN shall prosecute, maintain and
defend in its or an Affiliate's name, and at its own
cost and expense, the ICN Trademark in such country
relating to the marketing or sale of the Product. If
the ICN Trademark is not filed or registered in such
country, then ICN shall so notify Schering and, upon
Schering's written request, which shall not be
unreasonably refused, ICN shall file and prosecute
the ICN Trademark in such country, with the
reasonable out-of-pocket costs of ICN for such filing
and prosecution to be reimbursed to ICN by Schering.
In addition, Schering shall provide reasonable
cooperation to ICN so as to be entered as a
Registered User or recorded licensee of the ICN
Trademark in any country of the Territory, including
the execution of any documents pursuant to ICN's
reasonable request. Upon termination of this
Agreement for any reason, Schering shall also provide
reasonable cooperation to ICN, so as to be removed as
Registered User or recorded licensee of the ICN
Trademark in the Territory, including the execution
of any documents pursuant to
17
ICN's reasonable request, and this obligation shall
survive termination of this Agreement.
(c) Schering and ICN each acknowledge the rights of the
other in their respective trademarks, trade names,
trade dress and logos used in connection with the
Product, and, except and to the extent expressly
provided in this Agreement, nothing in this Agreement
shall be deemed to give either Party during or after
the duration of this Agreement any right, title or
interest in the trademarks, trade names, trade dress
or logos of the other Party.
(d) Neither Schering nor ICN shall use nor seek to
register any trademarks which are confusingly similar
to each others' respective trademarks, trade names,
trade dress or logos used in connection with the
Product, without the other Party's prior written
consent.
(e) ICN agrees that, except for the rights retained by it
pursuant to this Agreement (including without
limitation, the rights to manufacture the Product and
to distribute, market and sell the Product in the EU
under the ICN Trademark), ICN shall neither use
itself, nor grant to a third party or to an
Affiliate, the right to the use of the ICN Trademark
in the Territory during the Exclusive Period for the
Product in any country where Schering has elected to
use the ICN Trademark as permitted by this Agreement
without the consent of Schering, which shall not be
unreasonably withheld.
(f) Should Schering elect to use the ICN Trademark,
Schering shall submit to ICN, in writing, intended
formats for use on the ICN packaging and on
promotional and sales materials prior to the first
use thereof by Schering. Should ICN not provide a
reasonable basis for disapproval of the intended
formats within thirty (30) days of receipt, Schering
may then use the ICN Trademark in the formats
submitted on those and on subsequently developed
packaging and promotional materials. Schering agrees
that it will not thereafter implement any changes to
such formats unless the same has been submitted to
ICN in accordance with the procedure set forth in the
preceding sentence.
(g) In any country of the Territory where Schering elects
to use the ICN Trademark, Schering shall notify ICN
promptly and in writing upon learning that the ICN
Trademark is actually or potentially infringed by a
third party, or if an allegation is made the ICN
Trademark may infringe the rights of a third party.
ICN shall be responsible for taking appropriate
action to stop the infringement or to defend the
18
right to the continued use of its trademark. Should
ICN decline to take action within thirty (30) days of
receipt of notice from Schering in a country of the
Territory where Schering has elected to use the ICN
Trademark, then Schering is not obligated to but may,
at its option, take reasonable action to stop the
infringement or to defend the right to the continued
use of the ICN Trademark. The Party bringing the
action shall be deemed the "Litigating Party" and the
other Party, the "Non-Litigating Party" for purposes
of this Section 4.3.
(h) In any action brought pursuant to Section 4.3(g), the
costs of the action shall be borne and any recovery
shall be retained by the Litigating Party; provided,
however that if the Litigating Party recovers damages
attributable to (i) the profits of a third party
infringer; or (ii) lost profits or lost sales of the
Non-Litigating party; or (iii) punitive damages
against the third party infringer; then any net
recovery to the Litigating Party (i.e. total amount
of recovery, less court costs and attorneys' fees),
shall be divided equally between ICN and Schering. If
Schering is the Litigating Party in an action to
defend the right to the continued use of the ICN
Trademark and is successful in obtaining a final
judgment of a court of competent jurisdiction
defending the right to the continued use of the ICN
Trademark, then ICN shall reimburse Schering for half
of its reasonable out-of-pocket net costs in
obtaining the judgment (i. e. court costs and
reasonable attorneys' fees less any recoveries
received).
(i) In any action brought pursuant to this Section 4.3,
the Non-Litigating Party shall provide reasonable
assistance and information to the Litigating Party
and shall be reimbursed for its reasonable
out-of-pocket costs and expenses.
(j) Should for any reason the ICN Trademark, in any
country of the Territory where Schering has elected
to use it, or the Schering Trademark, in any country
of the Territory, be prevented from being used, then
the Parties shall consult as to a suitable other
trademark for use in connection with the Product for
purposes of this Agreement and in accordance with its
terms and conditions.
(k) At the termination or expiration of the rights
granted by this Agreement or the Exclusive Period in
any country of the Territory for any reason, Schering
shall cease all use of the ICN Trademark, except for
any sell-off of Inventory of Product by Schering
following termination of this Agreement.
19
ARTICLE 5
MARKETING ACTIVITIES
5.1 Establishment of Scientific and Commercial Liaison
Committees.
(a) Promptly following the Effective Date, Schering and
ICN shall establish a Scientific Liaison Committee
and a Commercial Liaison Committee (the "Committees")
that shall be advisory committees only. Schering
shall promptly provide to the Committees material
data, reports and other information concerning
scientific and commercial matters relating to the
Product. Schering shall be the final decision-maker
as to the scope of the activities within the purview
of the Committees.
(b) The activities set forth in Exhibit D, incorporated
herein by reference, among others, related to the
Product within the Territory during the Exclusive
Period shall be within the purview of the advisory
Scientific Liaison Committee. Notwithstanding the
foregoing, such activities, to the extent they relate
to the EU, shall not be within the purview of such
committee following Regulatory Approval in the EU.
(c) The following activities, among others, related to
the Product within the Territory during the Exclusive
Period shall be within the purview of the advisory
Commercial Liaison Committee:
(i) worldwide Product branding for promotional
materials,
(ii) consideration of positioning statements and
detailing message for the Product for the
Territory;
(iii) planning market research and exchanging
market research data;
(iv) review of advertising and promotional
materials;
(v) coordination of international symposia and
congresses;
(vi) publication planning; and
(vii) opinion leader development.
Notwithstanding the foregoing, such activities, to
the extent they relate to the EU, shall not be within
the purview of such committee following Regulatory
Approval in EU.
(d) Schering shall be entitled to designate in writing to
ICN up to three (3) members of each Committee, and
ICN shall be entitled to designate in writing to
Schering up to three (3) members. A Party may change
its designated members at any time, upon written
notice
20
to the other Party. Each Party also shall be entitled
to bring a reasonable number of non-member attendees
to each meeting of the Committees. The chairs of the
Committees shall be designated by Schering during the
Exclusive Period.
(e) The Committees shall meet from time to time, as
mutually agreed to by the members, but not fewer than
two times each calendar year during the Exclusive
Period, unless the members determine that fewer
meetings are required.
(f) The chairs of the Committees shall designate the
location of the meetings of the Committees, but
unless ICN otherwise agrees, at least half of the
meetings shall take place in California. All travel,
lodging and similar expenses incurred by a member in
attending meetings of the Committees shall be borne
by the corresponding Party.
(g) During the Exclusive Period, the members designated
by ICN and Schering shall be entitled to provide
input and comments with respect to the activities of
the Committees. It is understood that the Committees
are to serve as forums for information and input by
ICN as to the activities outlined in subsections (b)
and (c) above, but it is further understood that
Schering is not required to empower the Committees to
make final decisions as to such matters.
5.2 Product Labelling.
(a) During the Exclusive Period, the Labelling shall, if
Schering elects to use the ICN Trademark, contain the
ICN Trademark and shall otherwise be consistent in
format (but not substance) with the Labelling for
Schering's other pharmaceutical products sold in the
corresponding country within the Territory at the
time in question. Unless prohibited by applicable
law, if Schering elects to use the ICN Trademark, the
Labelling shall indicate that the Product is under
license from ICN.
(b) To the extent Schering elects to use the ICN
Trademark, Schering shall not change the Labelling in
format (but not substance) during the Exclusive
Period without the prior written authorization of ICN
(which shall not be unreasonably withheld), except
that ICN's consent is not required if Schering, at
its own cost and expense, desires to change the
colors and other elements of trade dress to conform
to the trade dress of Schering's other pharmaceutical
products, provided that such change does not affect
the other applicable Labelling requirements of this
Section 5.2.
21
5.3 Product Sampling.
(a) Schering may provide sampling for the Product for use
in the treatment of chronic hepatitis C in a country
within the Territory, in reasonable quantities
comparable to the sampling conducted for its other
anti-viral and/or oncology products in that country;
provided, however, that subsequent to commercial
launch of the Product in any country, the amount of
such sampling in such country shall be limited to
[REDACTED]. The free use of Product prior to
commercial launch for the treatment of chronic
hepatitis C in (i) pre-marketing programs (where
permitted by applicable law) and compassionate
programs, and (ii) other marketing and Phase IV
studies, shall all be deemed sampling of the Product.
All samples of the Product shall be purchased at a
price equal to [REDACTED].
(b) Subsequent to commercial launch of the Product by ICN
in any country, the amount of sampling in such
country by ICN shall be limited to [REDACTED]. If the
amount of such sampling by ICN in any such country
exceeds [REDACTED], then ICN shall pay to Schering an
amount equal to the [REDACTED], determined in
accordance with the provisions of Section 6.2.
(c) The distribution of Product by Schering during the
[REDACTED] preceding the date on which Schering
reasonably expects to receive Regulatory Approval
shall be consistent with the Research and Development
Plan set forth as Exhibit D and with Schering's
previous historical compassionate use programs for
ribavirin in connection with the treatment of chronic
hepatitis C. Schering shall not engage in
pre-approval distribution of the Product (other than
for clinical trials, which are those with protocols
and case report forms) in a manner that could
reasonably be expected to compromise the distribution
by ICN of the Product in the EU following Regulatory
Approval.
ARTICLE 6
COMPENSATION PAYABLE TO ICN; PAYMENT TERMS
6.1 License Fee. On the Effective Date, Schering shall pay ICN
a license fee in the amount of $23.0 million, by wire transfer of immediately
available funds to an account designated by ICN.
22
6.2 Royalty Payment. In partial consideration of the grant of
rights to Schering by ICN under this Agreement, Schering shall pay ICN a royalty
in the following amount:
(a) with respect to sales of Product in the EU, [REDACTED]
of Net Sales, [REDACTED], but in no event less than
[REDACTED] of Net Sales; and
(b) with respect to sales of Product in the Territory,
other than in the EU:
[REDACTED];
[REDACTED]; and
[REDACTED];
provided, however, that in no event shall the royalty on sales of the Product in
any country in the Territory (including the EU) be less than [REDACTED] per
capsule sold based on a [REDACTED], [REDACTED] per capsule sold based on a
[REDACTED], and [REDACTED] sold based on a [REDACTED], such amounts to be
proportionately adjusted based on a scale of [REDACTED] for other capsule sizes
less than [REDACTED] and based on a scale of [REDACTED] for other capsule sizes
in excess of [REDACTED]; provided further, however, that if in any country in
the Territory ICN is also marketing the Product, and if at any time ICN's
current actual net selling price for the Product is less than [REDACTED] of
Schering's current actual net selling price for the Product (based on the same
capsule size and comparable terms and conditions, and other than due to
increases in price by Schering), then such minimum royalty shall no longer apply
to sales of the Product by Schering in such country (and such minimum royalty
shall not be reinstated). In the event any third party is also marketing oral
ribavirin in any country in the Territory, then Schering shall not be obligated
to pay the minimum royalty provided for in this Section 6.2 for that country.
The royalty shall apply to all compassionate use sales and programs, promotional
sampling (in those countries where permitted before Regulatory Approval and in
all countries after Regulatory Approval is obtained) and other marketing
programs that do not constitute sampling pursuant to and in compliance with the
provisions of Section 5.3(a), but shall not apply to Product for clinical trials
for Regulatory Approval and any Phase IV study which is a condition for
Regulatory Approval and any Phase IV study which is mutually agreed upon by the
Parties. For purposes of this Section 6.2, the current actual net selling price
shall be determined on a country-by-country basis, for each calendar quarter, by
dividing the Net Sales of capsules of a particular capsule strength by the total
number of capsules of the same strength that were sold and sampled in such
country during such period. Each Party shall have the right to audit the books
and records of the other Party for the purpose of verifying the current actual
net selling price, in accordance with the procedures set forth in Section 6.10.
6.3 Royalty Reduction. The royalty payable by Schering
pursuant to this Agreement shall be reduced by [REDACTED] until the cumulative
royalty that would otherwise be payable but for such reduction equals [REDACTED]
million.
6.4 Product Price to Schering.
(a) The price to be charged to Schering for supplies of
finished bulk Product furnished pursuant to Article
8, FOB ICN's plant, shall be
23
the greater of (i) [REDACTED] of Net Sales,
calculated on a country-by-country basis, or (ii)
ICN's Cost of Goods plus [REDACTED]. Schering shall
have the right to verify ICN's cost price of Product
pursuant to the procedures set forth in Section 6.10
hereof.
(b) Schering shall establish an estimated sales price per
unit ("Estimated Selling Price") for the Product in
each country of the Territory. Schering agrees to
apply the same policy in establishing the Estimated
Selling Price for the Product as Schering would do in
the case of its own products of similar status.
Schering shall pay for all Product purchased under
this Agreement within 30 days after receipt of an
invoice from ICN, which shall be rendered upon
shipment, based on the Estimated Selling Price,
subject to adjustment for the final price as provided
in Section 6.4(e).
(c) Schering may change its Estimated Selling Price on a
quarterly basis by notifying ICN at least fifteen
(15) days prior to the beginning of any calendar
quarter and such Estimated Selling Price shall then
apply for the calculation of the price at which
Schering shall purchase Product from ICN and all
orders of Product delivered to Schering in that
quarter shall be effected at said purchase price,
subject to adjustment for the final price as provided
in Section 6.4(e).
(d) The price to be invoiced to Schering at time of
shipment for supplies of finished bulk Product shall
be equal to [REDACTED] of the Estimated Selling Price
of the Product in the Territory, plus relevant
customs duties, shipping, bulk packaging and
insurance costs, which shall be the responsibility of
and shall be duly paid by Schering.
(e) Reconciliations of the price paid to ICN for Product
based on the Estimated Selling Prices as against
actual Net Sales (in order to arrive at the
[REDACTED] calculation of Net Sales), shall be made
by Schering on a quarterly basis within ninety (90)
days of the end of each calendar quarter.
6.5 Royalty Payment Dates. Within 60 days after the end of
each March, June, September and December in each and every calendar year during
the Exclusive Period, following the commencement of marketing of Product,
Schering shall furnish and deliver to ICN a full and true accounting of its
worldwide Net Sales of Product hereunder during the three (3) month period
ending with the previous March 31st, June 30th, September 30th and December 31st
and shall simultaneously pay to ICN, for the account of Schering or the
applicable Affiliate or sublicensee, as the case may be, a sum equal to the
aggregate of the royalty due thereon as calculated pursuant to Section
24
6.2 hereof (reconciled for any previous overpayments or underpayments), to such
account as ICN shall have designated from time to time in writing to Schering.
6.6 Direct Affiliate Licenses, Supporting Licenses and
Compulsory Royalties.
(a) Whenever Schering shall reasonably demonstrate to ICN
that, in order to facilitate direct royalty payments
by an Affiliate, it is desirable that a separate
license agreement be entered into between ICN and
such Affiliate, ICN will grant such licenses directly
to such Affiliate by means of an agreement which
shall be consistent with all of the provisions
hereof, provided that Schering guarantees the
Affiliate's obligations thereunder or otherwise
provides to ICN assurances of performance
satisfactory to ICN in its sole discretion.
(b) If Schering, its Affiliates or sublicensees are
legally obliged by any governmental authority in any
country in the Territory to grant licenses under the
Know-How to any third party to make, use, or sell
Product at royalty rates less than those payable
pursuant to this Agreement, then the royalty payable
prospectively hereunder with respect to Net Sales in
such country shall be reduced to such lesser rate as
long as such reduced royalty remains effective.
6.7 Place of Royalty Payment and Currency Conversions. All
royalties, with the exception of those payable on sales to customers in the
United States, shall be paid by Schering from its office in Lucerne,
Switzerland. Royalties payable on U.S. sales shall be paid directly to ICN by
Schering Corporation from its offices in Kenilworth, New Jersey. All royalty
payments shall be made in United States dollars to the extent that free
conversion to United States dollars is permitted. Royalties payable on sales in
countries other than the United States shall be calculated by multiplying the
appropriate royalty rate times the sales in each currency in which they are made
and converting the resulting amount into United States dollars at the rates of
exchange used by Schering for reporting such sales for United States financial
statement purposes. If, due to restrictions or prohibitions imposed by a
national or international authority, payments cannot be made as aforesaid, the
Parties shall consult with a view to finding a prompt and acceptable solution,
and Schering will, from time to time, deal with such monies as ICN may lawfully
direct at no additional out-of-pocket expense to Schering. Notwithstanding the
foregoing, if royalties cannot be remitted to ICN for any reason within six (6)
months after the end of the calendar quarter during which they are earned, then
Schering shall be obligated to deposit the royalties in a bank account in
Switzerland in the name of ICN. Royalties payable by Schering shall be net of
any foreign withholding taxes due, it being understood that such withholding
taxes are the obligation of ICN. Schering shall forward to ICN in a timely
manner all tax receipts relating to such withholding taxes.
25
6.8 Royalties on Resales. No earned royalty shall be payable
in respect of sales between and among Schering, its Affiliates and sublicensees,
it being understood that royalties are to be paid on resale of Product to
independent third parties.
6.9 Duration of Royalty Payments. With respect to Net Sales of
any Product in any country in the Territory, royalties shall be paid hereunder
with respect to Net Sales of such Product until ten (10) years from the date of
first commercial sale after Regulatory Approval of such Product in such country,
but no longer than the duration of the Exclusive Period.
6.10 Maintenance of Royalty Records; Audit Rights.
(a) Schering shall maintain and cause its Affiliates to
maintain books of account and adequate records of all
Net Sales of Product, including those made by
sublicensees. ICN shall have the right, following
written request by ICN, by its regularly employed
independent certified public accounting firm of
national standing, and at its own expense, during
normal business hours, to examine pertinent books and
records of Schering at all reasonable times (but no
later than forty-five (45) days after written request
is made and not more often than once each calendar
year) for the purpose of verifying and reporting to
ICN as to the computation of the royalty payments
made hereunder; it being understood that the right to
conduct such examination and the actual examination
with respect to any quarterly accounting period
hereunder shall take place not later than two (2)
years years following the expiration of said period.
Said accounting firm shall only report as to the
computation of the royalty payments made to ICN and
shall not disclose to ICN any other information. The
accounting firm representatives shall execute
customary confidential agreements prior to any
examination.
(b) ICN shall maintain at a location in the United States
accurate books and records in accordance with
generally accepted accounting principles, in
sufficient detail to enable ICN's Cost of Goods
hereunder to be verified. All such records shall be
maintained for three (3) years after the submission
of each report required to be provided under this
Agreement. The independent certified public
accountant of Schering shall have access, subject to
a customary confidentiality agreement, during normal
business hours and following reasonable prior notice
to ICN, to the books and records of ICN to conduct a
review or audit thereof to verify the calculation of
ICN's Cost of Goods. Such access shall be available
not more than once each calendar year and for
eighteen (18) months after the
26
expiration or termination of this Agreement, but in
no event shall Schering be entitled to review or
audit ICN's Cost of Goods calculation occurring more
than three years before the requested date of the
review or audit.
(c) If Schering manufactures Product pursuant to this
Agreement, then Schering shall maintain accurate
books and records in accordance with generally
accepted accounting principles, in sufficient detail
to enable Schering's Cost of Goods hereunder to be
verified. All such records shall be maintained for
three (3) years after the submission of each report
required to be provided under this Agreement. The
independent certified public accountant of ICN shall
have access, subject to a customary confidentiality
agreement, during normal business hours and following
reasonable prior notice to Schering, to the books and
records of Schering to conduct a review or audit
thereof to verify the calculation of Schering's Cost
of Goods. Such access shall be available not more
than once each calendar year and for eighteen (18)
months after the expiration or termination of this
Agreement, but in no event shall ICN be entitled to
review or audit Schering's Cost of Goods calculation
occurring more than three years before the requested
date of the review or audit.
(d) Nothing in this Section 6.10 shall limit the rights
of any Party to obtain any and all relevant
information for purposes of an ADR (as defined in
Article 13) or otherwise pursuant to legal process in
the event of a dispute under this Agreement.
6.11 Equity Purchase. ICN and Schering-Plough Corporation are
contemporaneously with this Agreement entering into the Stock Purchase
Agreement.
6.12 Withholding Taxes, etc. If at any time during or after
the Agreement, any jurisdiction within the Territory requires that taxes be
withheld from any payment (or portion thereof) of ICN's compensation under this
Article 6, Schering may deduct such amount from the corresponding payment, or,
if applicable, ICN will promptly reimburse Schering or its designee(s) such
amounts. Schering shall provide ICN with documentation of such withholding and
payment in a manner that is satisfactory for purposes of the U.S. Internal
Revenue Service. Any withholdings paid when due hereunder shall be for the
account of ICN and shall not be included in the calculation of Net Sales. ICN
shall be liable for any deficiency, and any fine, assessment or penalty imposed
by any taxing authority in the Territory for any deficiency in the amount of any
such withholding or the failure to make such withholding payment; if Schering is
required to pay any such deficiency, or any fine, assessment or penalty for any
such deficiency, ICN shall promptly reimburse Schering for such payments, which
shall not be included in
27
the calculation of Net Sales. Notwithstanding the foregoing, in no event shall
ICN be liable for any deficiency, fine, assessment or penalty resulting from
Schering's failure to withhold the proper amount in accordance with the written
instructions of ICN to Schering given in accordance with Section 15.7 hereof.
ARTICLE 7
ICN'S MARKETING RIGHTS; DISTRIBUTION
7.1 ICN's Marketing Rights. Notwithstanding the rights granted
to Schering under this Agreement, ICN shall have the right at any time following
ICN's receipt of Regulatory Approval in the EU to distribute, market, use and
sell the Product for the treatment of chronic hepatitis C, at ICN's expense, in
the EU; provided, however, that ICN shall not sell the Product to any entity in
the EU that could reasonably be expected to resell the Product outside the EU,
except for resales to non-EU countries that are members of the European Economic
Area. In addition, in recognition of ICN's current sales of the Product for the
treatment of chronic hepatitis C pursuant to a Regulatory Approval in Egypt, ICN
shall have the right under its existing contractual obligations (on a
semi-exclusive basis with Schering) at any time to distribute, market, use and
sell the Product for the treatment of chronic hepatitis C, at ICN's expense, in
Egypt; provided, however, that ICN shall not sell the Product to any entity in
Egypt that could reasonably be expected to resell the Product outside Egypt.
7.2 Distribution. In furtherance of the rights granted to
Schering to distribute Product throughout the Territory as and to the extent
provided in this Agreement:
(a) Promptly after the Effective Date, ICN shall deliver
to Schering a report of sales of Product by ICN in
the Territory during each of the four most recently
ended fiscal quarters of ICN.
(b) ICN shall provide to Schering a sales report on a
quarterly basis showing all sales and all units
shipped of Product by ICN in the Territory during the
preceding quarter.
(c) As promptly as practicable following sales of the
Product to new customers by ICN, ICN shall provide to
Schering a report of such new customers for the
Product.
(d) If, at any time, Schering determines, based on the
quarterly reports provided pursuant to Section
7.2(b), that there has been a significant change in
purchasing patterns by any customer or customers of
ICN, then Schering may require ICN to provide to
Schering, in advance of acceptance by ICN, all orders
from such customer or customers, and
28
Schering shall have the right to require ICN to
reject any such orders as to which Schering
reasonably concludes that the Product covered by such
orders are likely to be resold for use for chronic
hepatitis C outside the country from which the order
was placed. For purposes of this Section 7.2(d), a
"significant change in purchasing patterns" means
[REDACTED]. Schering shall not be entitled to require
ICN to reject any order as to which ICN reasonably
believes is justifiable in light of new indications,
changed labelling, outbreaks of disease or similar
circumstances.
(e) ICN shall notify its existing distributors and
customers that it intends to restrict orders for
off-label and similar purposes.
(f) If Schering has required ICN to provide it with all
orders prior to acceptance as provided above, then
ICN shall cause its independent auditors to certify
to Schering after the end of each calendar quarter,
that ICN has provided to Schering all such orders for
such quarter.
(g) ICN's obligations under this Section 7.2 shall
terminate as to each country in the EU upon ICN's
receipt of Regulatory Approval in each such country
of the EU.
7.3 Ireland Sales. In furtherance of the rights granted to
Schering to distribute Product throughout the Territory as and to the extent
provided in this Agreement, ICN grants to Schering the right to, and Schering
shall, at its option, assume, perform or discontinue, and ICN shall cease, until
receipt by Schering of Regulatory Approval of the Product in the EU, the
distribution, marketing and sale of the Product currently being conducted by ICN
or any Affiliate of ICN in Ireland (including without limitation, any
obligations of ICN under distribution and other marketing agreements and
arrangements relating to Ireland). Schering shall pay to ICN, during each year
during the Exclusive Period (other than any year during the Exclusive Period
during which ICN actually sells the Product in Ireland, with the permission of
Schering) until receipt by Schering of Regulatory Approval of the Product in the
EU, an amount determined by [REDACTED] for sale of Product in Ireland in 1994,
[REDACTED], times [REDACTED], payable annually on January 10 of each year.
Schering shall have the right to audit the books and records of ICN once, within
[REDACTED] after the Effective Date, solely to verify such [REDACTED], and
otherwise in accordance with the provisions of Section 6.10(b).
29
ARTICLE 8
SUPPLY OF PRODUCT BY ICN DURING EXCLUSIVE PERIOD
8.1 Supply.
(a) Subject to the provisions of Section 8.3, Schering
shall purchase the Product from ICN, and ICN shall
supply all of Schering's requirements of the Product
(including, but not limited to, research and
development requirements, including placebos, which
shall be in accordance with reasonable procedures for
ordering and production as agreed by the Parties) in
finished bulk capsules, or bulk substance as
necessary, subject to the terms and conditions of
this Article 8. If at any time ICN experiences a
shortage of Product supply and the available supplies
are not sufficient to satisfy all of Schering's
requirements for the Product in the Territory, ICN
shall allocate its available worldwide supplies
(including inventory in excess of customary supplies)
equitably among its own requirements and Schering's,
based on the purchasing history of such entities
during the prior six-month period.
(b) For so long as ICN is supplying Product to Schering,
ICN shall furnish Schering with all information
related to the pre-approval inspections for the
Product and shall promptly resolve, at ICN's expense,
any manufacturing deficiencies in order to receive
timely Regulatory Approval. ICN shall thereafter be
solely responsible, at ICN's expense, for compliance
with current Good Manufacturing Practices as
determined by the FDA. ICN shall promptly address and
remedy any deficiencies noted in any Form 483 reports
or warning letters issued by the FDA.
8.2 Forecasts and Procedures.
(a) Product will be supplied by ICN to Schering in
finished bulk capsules and only against receipt of
Schering's written purchase order and ICN's written
confirmation of the same. The delivery shall be
within [REDACTED] from the receipt of Schering's firm
purchase order if the quantity ordered does not
exceed the current forecast provided in accordance
with Section 8.2(b) by more than [REDACTED], and
within [REDACTED] if the ordered quantity exceeds the
current forecast by more than [REDACTED] but less
than [REDACTED]. The Parties shall discuss and
mutually agree on delivery schedules if the quantity
ordered exceeds the current forecast by more than
[REDACTED]. ICN shall within five days of receipt of
any Schering written purchase order confirm receipt
of
30
such purchase order (via facsimile to a facsimile
number supplied by Schering for this purpose).
(b) To better enable ICN to plan its Product production
program for the Territory, Schering agrees to provide
ICN monthly its then current forecast for the
quantities of the Product that Schering will require
during the successive eighteen (18) months. Schering
shall break down each forecast indicating the
quantity and a requested delivery date by month for
the first successive twelve (12) months followed by
the next six (6) months indicated in two (2)
quarterly aggregates. Each monthly forecast issued
shall reflect a continuously rolling/progressive
eighteen (18) month cycle. Each current monthly
forecast shall be deemed to be a binding purchase
order. Schering shall purchase from ICN at least
[REDACTED] of the sum of its estimated Product orders
for the second calendar quarter indicated in the
latest forecast; provided, however, that if, for the
third and fourth calendar quarters indicated in such
monthly forecast, Schering does not purchase at least
[REDACTED] of the sum of its estimated Product
orders, Schering shall pay to ICN, at the time of
payment for Product purchased for such quarters, an
amount equal to ICN's carrying cost (including
warehousing, finance costs and similar items) of the
amount of inventory (including bulk substance and
finished capsules) reflected in such estimated
Product orders in excess of the amount of Product
purchased for such quarters. ICN shall not be under
any obligation to accept any order of the Product
which is in excess of [REDACTED] of the latest
forecast relating to Schering's requirement for the
first twelve (12) months.
(c) Schering shall place orders in increments of single
batches equivalent to [REDACTED]; provided, however,
that solely for purposes of clinical trials the
minimum batch size shall be [REDACTED]. ICN will use
reasonable efforts to provide capsules having the
longest available shelf life for purposes of such
clinical trials.
(d) ICN may reject Schering's purchase order if the
purchase order fails to substantially comply with the
requirements of this Article 8. In the event of any
discrepancy between a purchase order for the Product
and this Agreement, the terms of this Agreement shall
govern. ICN shall use commercially reasonable efforts
to meet any Product requirements of Schering.
31
(e) All Product shall be packed for air freight shipment
and storage in accordance with Schering's
specifications as mutually agreed upon and in
accordance with applicable laws and regulations.
(f) Schering shall be responsible for the costs,
including customs duties, freight and insurance, that
may be required to ship the Product from ICN's plant
to any destination.
(g) Risk of loss and damage to the Product shall pass to
Schering upon tender of the Product at ICN's plant.
(h) ICN shall prepare, obtain, and transmit to Schering
such documents as shall be required for Schering to
take over customs clearance and to satisfy other
import formalities into the Territory. Schering shall
use diligent efforts to promptly clear shipments of
Product through customs and shall handle and store
the Product thereafter in a manner which maintains
the integrity of the Product.
(i) At the reasonable request of Schering at any time
during the Exclusive Period, ICN shall promptly enter
into a written supply agreement for supply of Product
to a Schering Affiliate (located within the
Territory) designated by Schering on terms and
conditions consistent with those contained in this
Agreement as well as any additional terms as may be
required by applicable law and any customary
additional terms as shall be agreed to by the Parties
(such consent not to be unreasonably withheld). If
there is any inconsistency between this Agreement and
such supply agreement, the terms of this Agreement
shall control.
(j) ICN shall provide to Schering, at the commencement of
Schering's purchases of Product from ICN, and shall
update from time to time, the test methodologies used
by ICN in preparing the certificates of analysis
referred to in Section 8.4, and any differences
between the then-current specifications for the
Product and the Product Specifications.
8.3 Schering's Right to Manufacture.
(a) Within 24 months after the Effective Date, Schering
shall notify ICN as to whether Schering elects to
continue to purchase Product from ICN or to
discontinue all or, if agreed to by ICN, a part of
Schering's purchase of Product from ICN, and to
manufacture Product itself or have Product
manufactured for it by a third party. If Schering
elects to continue to purchase Product from ICN, then
the Parties shall negotiate in good faith as to any
capacity requirements, and the cost of any related
capital investment, required to meet Schering's
requirements. Subject to agreement of the Parties as
to such matters,
32
from the Effective Date, ICN shall only be required
to supply Schering to the extent of ICN's current
available capacity, taking into account ICN's own
requirements and commitments with respect to Product.
ICN represents that ICN has adequate capacity to
supply Schering's requirements of Product for
clinical programs for Regulatory Approval. If, after
deciding to manufacture or have manufactured the
Product, Schering wishes to again purchase Product
from ICN, Schering shall give ICN not less than 6
months' notice. ICN may, but shall not be required
to, supply Product to Schering, on such terms to
which the Parties may agree.
(b) In the event that Schering elects to manufacture
Product itself or have Product manufactured for it by
a third party, then so long as this Agreement remains
in effect, Schering shall, at the request of ICN,
supply Product to ICN at a price and on other terms
and conditions consistent with the terms and
conditions on which ICN supplies Product to Schering
under this Agreement. Schering shall only be required
to supply ICN to the extent of Schering's available
capacity, taking into account Schering's own
requirements and commitments with respect to Product.
For so long as Schering is supplying Product to ICN,
Schering shall furnish ICN with all information
related to the pre-approval inspections for the
Product and shall promptly resolve, at Schering's
expense, any manufacturing deficiencies in order to
receive timely Regulatory Approval. Schering shall
thereafter be solely responsible, at Schering's
expense, for compliance with current Good
Manufacturing Practices as determined by the FDA.
Schering shall promptly address and remedy any
deficiencies noted in any Form 483 reports or warning
letters issued by the FDA.
(c) If Schering elects to purchase Product from ICN, ICN
shall maintain its production facilities (including
those of any third party supplier) used to
manufacture the Product, so as to permit the
importation and supply of Product in a timely manner
under this Agreement in all applicable countries in
the Territory. So long as Schering is purchasing
Product from ICN, ICN will permit Schering
representatives to inspect the Product-related
portion of its production facilities, at Schering's
cost and expense, at any time during normal business
hours and upon reasonable prior notice. Any such
inspection that involves third party facilities shall
be subject to such limitations (including
confidentiality obligations) as may be imposed under
the applicable agreement between ICN and the third
party.
33
8.4 Limited Warranty.
(a) ICN warrants that each shipment of the Product
supplied to Schering pursuant to this Agreement, when
shipped from the ICN Facility, shall conform to the
Product Specifications, shall be manufactured by ICN
and supplied to Schering in accordance with the
requirements of applicable law in the country of
manufacture and any other applicable regulatory legal
requirements in the Territory, including, without
limitation, any current Good Manufacturing Practices
requirements, and shall be of substantially
equivalent quality as the Product produced by ICN for
its own use. ICN shall provide to Schering
concurrently with each shipment of Product a
Certificate of Analysis which contains analytical
results and specifications of the batch. THE WARRANTY
PROVIDED FOR IN THIS SECTION 8.4(a) IS EXCLUSIVE AND
IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE, WHETHER PERTAINING TO THE
PRODUCT AND WHETHER ARISING BY LAW, CUSTOM, CONDUCT,
OR USAGE OR TRADE, AND THE RIGHTS AND REMEDIES
PROVIDED IN SECTION 8.4(b) ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER RIGHTS AND REMEDIES (EXCEPT AS PROVIDED
IN SECTION 8.4(d)).
(b) Subject to Section 3.7(b) if any Product is shown to
be in breach of ICN's warranty ("Non-Conforming
Product") contained in Section 8.4(a), Schering's
exclusive remedy shall be to return to ICN the
Non-Conforming Product and to receive a credit (with
ICN paying related transportation costs) in the
amount paid to ICN hereunder for such Non-Conforming
Product and related transportation costs (including
costs of returning such Non-Conforming Product) or to
have ICN replace such Non-Conforming Product.
(c) EXCEPT FOR ICN'S OBLIGATION TO REFUND OR REPLACE
NON-CONFORMING PRODUCT AS SET FORTH IN SECTION 8.4(b)
ABOVE, ICN SHALL NOT BE LIABLE TO SCHERING FOR, AND
SCHERING WAIVES ANY AND ALL CLAIMS AGAINST ICN FOR,
ALL DAMAGES, INCLUDING SPECIAL, INDIRECT,
CONSEQUENTIAL OR INCIDENTAL DAMAGES, WHICH MAY BE
CAUSED BY, OR IN ANY WAY RESULT FROM, THE PRODUCT OR
THEIR DELIVERY UNDER THIS AGREEMENT, INCLUDING
DAMAGES RESULTING FROM DELAYS IN DELIVERY, OR FAILURE
TO DELIVER, ANY
34
PRODUCT WHETHER BASED ON BREACH OF WARRANTY, STRICT
LIABILITY OR ANY OTHER CAUSE OF ACTION.
(d) NOTHING IN THIS SECTION SHALL BE DEEMED IN ANY WAY TO
LIMIT SCHERING'S RIGHTS OF INDEMNIFICATION PURSUANT
TO SECTIONS 11.2(a)(ii) AND 11.2(b)
8.5 Rejection of Product.
(a) Schering may reject any shipment of Product from ICN
that does not meet ICN's warranty set forth in
Section 8.4, upon notice to ICN delivered within
forty five (45) days after receipt by Schering of
such shipment or, in the case of any latent defect,
after Schering discovered or had a reasonable basis
for discovering such defect. Any shipment of Product
that is not rejected by Schering within such period
shall be deemed accepted. In no event shall ICN be
liable for any nonconformity of the Product resulting
from the shipment, storage or handling of the Product
after tender by ICN in accordance with Section 8.2(g)
(unless resulting from the fault of ICN, such as not
shipping in accordance with agreed specifications),
or the tampering, alteration or mishandling of the
Product by any person (including any customer of
Schering) following such tender.
(b) Upon the request of ICN, Schering shall furnish
evidence of nonconformity of the shipment of Product.
If ICN confirms the nonconformity, ICN will use
diligent efforts to, at Schering's request, either
promptly replace the Product at no additional charge
to Schering with a conforming shipment (which may
include rework of the Product if feasible), or issue
a credit to Schering (pro rated, if less than a full
shipment is rejected) for the Product Price and any
other costs and expenses incurred by Schering in
shipping the rejected Product to ICN. If ICN
disagrees with Schering's determination, the Parties
shall promptly submit the dispute to a mutually
acceptable laboratory for a binding determination (in
lieu of the procedures described in Article 13) of
the conformance or nonconformity of the Product and
ICN shall submit as part of its documentation
retained manufacturing samples. The non-prevailing
Party shall pay the costs and expenses of the
laboratory tests.
ARTICLE 9
CONFIDENTIALITY
9.1 Confidentiality. ICN and Schering shall use only in
accordance with this Agreement and shall not disclose to any third party any
confidential or proprietary
35
information, whether patentable or not, related to the subject matter of this
Agreement furnished by the other Party pursuant to this Agreement or otherwise,
without the prior written consent of the other Party. The foregoing obligations
shall survive the expiration or termination of this Agreement for a period of
twenty (20) years. These obligations shall not apply to:
(a) Information that is known to the receiving Party
prior to the time of disclosure, to the extent
evidenced by written records of the receiving Party;
(b) Information disclosed to the receiving Party by a
third party which has a right to make such
disclosure;
(c) Information that is at the time of disclosure or
thereafter becomes published or otherwise part of the
public domain without breach of this Agreement by the
receiving Party;
(d) Information which is independently developed by
employees of the receiving Party or its Affiliates
and such independent development can be properly
demonstrated by the receiving Party; or
(e) Information that is required to be disclosed by law,
regulation, rule, act or order of the FDA or similar
authority or agency or a court of competent
jurisdiction; provided that the receiving Party gives
the other Party sufficient advance notice to permit
it to seek a protective order or other similar order
with respect to such information and thereafter
discloses only the minimum information required to be
disclosed in order to comply with the request,
whether or not a protective order or other similar
order is obtained by the other Party.
9.2 No Publicity. A Party may not use the name of the other
Party in any publicity or advertising and, except as provided in section 9.1,
may not issue a press release or otherwise publicize or disclose any information
related to this Agreement or the terms or conditions hereof, without the prior
written consent of the other Party. The Parties shall agree on a form of initial
press release that may be used by either Party to describe this Agreement.
Nothing in the foregoing, however, shall prohibit a Party from making such
disclosures to the extent deemed necessary under applicable federal or state
securities laws or any rule or regulation of any nationally recognized
securities exchange; in such event, however, the disclosing Party shall use good
faith efforts to consult with the other Party prior to such disclosure and,
where applicable, shall request confidential treatment to the extent available.
36
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Representations and Warranties of Each Party. Each of ICN
and Schering hereby represents, warrants and covenants to the other Party hereto
as follows:
(a) It is a corporation duly organized and validly
existing under the laws of the state or other
jurisdiction of incorporation or formation;
(b) The execution, delivery and performance of this
Agreement by such Party has been duly authorized by
all requisite corporate action, subject only to
receipt of requisite boards of directors' approvals;
(c) It has the power and authority to execute and deliver
this Agreement and to perform its obligations
hereunder;
(d) The execution, delivery and performance by such Party
of this Agreement and its compliance with the terms
and provisions hereof does not and will not conflict
with or result in a breach of any of the terms and
provisions of or constitute a default under (i) a
loan agreement, guaranty, financing agreement,
agreement affecting a product or other agreement or
instrument binding or affecting it or its property;
(ii) the provisions of its charter documents or
bylaws; or (iii) any order, writ, injunction or
decree of any court or governmental authority entered
against it or by which any of its property is bound;
(e) Except for the governmental and regulatory approvals
required to market the Product in the Territory, the
execution, delivery and performance of this Agreement
by such Party does not require the consent, approval
or authorization of, or notice, declaration, filing
or registration with, any governmental or regulatory
authority and the execution, delivery or performance
of this Agreement will not violate any law, rule or
regulation applicable to such Party;
(f) This Agreement has been duly authorized, executed and
delivered and constitutes such Party's legal, valid
and binding obligation enforceable against it in
accordance with its terms subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or
affecting creditors' rights and to the availability
of particular remedies under general equity
principles; and
(g) It shall comply with all applicable material laws and
regulations relating to its activities under this
Agreement.
37
10.2 ICN'S Representations. ICN hereby represents, warrants
and covenants to Schering as follows:
(a) ICN owns or has sufficient rights in and to the
Know-How and ICN Trademark, free and clear of any
liens or encumbrances, to grant the rights to
Schering as contained in this Agreement;
(b) ICN is not aware of any existing third party
trademark, trade name or other intellectual property
rights in the Territory that might be infringed by
the import, distribution, marketing, use or sale of
the Product in the Territory under the ICN Trademark
or through the use of the ICN name;
(c) During the Exclusive Period, ICN will use diligent
efforts not to diminish the right under its Know-How
and ICN Trademark granted to Schering hereunder,
including without limitation by not committing or
permitting any acts or omissions which would cause
the breach of any agreements between itself and third
parties which provide for intellectual property
rights applicable to the development, manufacture,
use or sale of Product. ICN agrees to provide
Schering promptly with notice of any such alleged
breach. ICN is in compliance in all material respects
with any such agreements with third parties;
(d) Data summaries provided to Schering by ICN prior to
the Effective Date relating to the clinical trials of
the Product, taken as a whole, accurately represent
the underlying raw data;
(e) ICN has provided to Schering a summary of all adverse
events known to ICN relating to the Product;
(f) ICN has disclosed to Schering all information known
to ICN concerning (i) patents owned by third parties
that might be infringed by Schering's use of the
Product to treat chronic hepatitis C; or (ii) patent
applications owned, or reasonably believed by ICN to
be owned, by third parties that, if issued as a
patent, might be infringed by Schering's use of the
Product to treat chronic hepatitis C;
(g) ICN has no knowledge of any circumstances that (i)
would adversely affect the commercial utility of the
use of the Product to treat chronic hepatitis C; or
(ii) that would render Schering liable to a third
party for patent infringement as a consequence of
Schering's use of the Product to treat chronic
hepatitis C; and
(h) (i) ICN has disclosed to Schering all distributorship
agreements, marketing arrangements or similar
agreements whereby ICN is
38
selling, distributing or supplying the Product
(including directly or through Affiliates of ICN) or
whereby ICN has authorized third parties to make,
sell, distribute or supply the Product (collectively
"License Agreements"); (ii) Exhibit 2.1 sets forth a
list of all License Agreements; (iii) no contract,
agreement or understanding, either oral or in
writing, modifies, amends or supplements the License
Agreements; and (iv) ICN shall not enter into any
License Agreements between the date hereof and the
Effective Date.
(i) Except as set forth in Exhibit 2.1, ICN has not
granted any rights under the Know-How to any third
party to either make, sell, distribute or supply the
Product.
(j) As soon as practicable following the Effective Date,
ICN shall at its sole cost and expense (A) terminate
(and not renew, where applicable), or allow to
expire, the License Agreements listed on Exhibit
2.1(A); (B) terminate (by agreement with the other
Party thereto, or otherwise) the License Agreements
listed on Exhibit 2.1(B); and (C) use reasonable
efforts to amend the License Agreements listed on
Exhibit 2.1(C) to prohibit the other party from
making, selling, distributing or supplying any oral
formulation of the Product in the Territory in
derogation of Schering's rights under this Agreement.
Except as previously disclosed to Schering or as
contemplated by Article 7, Article 8 or this Section
10.2(j), during the Exclusive Period, ICN shall not
distribute, market, sell or supply the Product
(including directly or through Affiliates of ICN) in
any country in the Territory.
(k) Neither ICN nor any officer of ICN or Affiliate of
such officer is currently engaged in any research or
development programs for any other products for the
treatment of hepatitis C (including directly or
through Affiliates of ICN).
10.3 Continuing Representations. The representations and
warranties of each Party contained in Sections 10.1 and 10.2 shall survive the
execution of this Agreement and shall remain true and correct after the date
hereof with the same effect as if made as of the date hereof.
10.4 No Inconsistent Agreements. Neither Party has in effect
and after the Effective Date neither Party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its obligations under
this Agreement.
39
ARTICLE 11
INDEMNIFICATION AND LIMITATION ON LIABILITY
11.1 Indemnification by Schering.
(a) Schering shall indemnify, defend and hold harmless
ICN and its Affiliates, and each of its and their
respective employees, officers, directors and agents
(each, a "ICN Indemnified Party") from and against
any and all liability, loss, damage, cost, and
expense (including reasonable attorneys' fees),
subject to the limitations in section 11.5
(collectively, a "Liability") which the ICN
Indemnified Party may incur, suffer or be required to
pay resulting from or arising in connection with (i)
the breach by Schering of any covenant,
representation or warranty contained in this
Agreement, (ii) any negligent act or omission or
willful misconduct of Schering (or any Affiliate
thereof) in the promotion, marketing and sale of the
Product or any other activity conducted by Schering
under this Agreement which is the proximate cause of
injury, death or property damage to a third party, or
(iii) the successful enforcement by an ICN
Indemnified Party of any of the foregoing.
(b) Schering also shall indemnify, defend and hold
harmless each ICN Indemnified Party from and against
any Liability which the ICN Indemnified Party may
incur, suffer or be required to pay resulting from or
arising in connection with any negligent act or
omission or willful misconduct of Schering (or any
Affiliate thereof) in the manufacture, promotion or
marketing of the Product or any other activity
conducted by Schering under this Agreement after the
Exclusive Period which is the proximate cause of
injury, death or property damage to a third party.
11.2 Indemnification by ICN.
(a) ICN shall indemnify, defend and hold harmless
Schering and its Affiliates, and each of its and
their respective employees, officers, directors and
agents (each, an "Schering Indemnified Party") from
and against any Liability which the Schering
Indemnified Party may incur, suffer or be required to
pay resulting from or arising in connection with (i)
the breach by ICN of any covenant, representation or
warranty contained in this Agreement, (ii) any
negligent act or omission or willful misconduct of
ICN (or any Affiliate thereof) in providing the
Know-How or in the manufacture, promotion, marketing
or sale of the Product or any other activity
conducted by ICN under this Agreement which is the
proximate
40
cause of injury, death or property damage to a third
party, or (iii) the successful enforcement by an
Schering Indemnified Party of any of the foregoing.
(b) ICN also shall indemnify, defend and hold harmless
each Schering Indemnified Party from and against any
Liability which the Schering Indemnified Party may
incur, suffer or be required to pay resulting from or
arising in connection with any negligent act or
omission or willful misconduct of ICN (or any
Affiliate thereof) in the manufacture, promotion or
marketing of the Product or any other activity
conducted by ICN under this Agreement after the
Exclusive Period which is the proximate cause of
injury, death or property damage to a third party.
11.3 Conditions to Indemnification. The obligations of the
indemnifying Party under paragraphs 11.1 and 11.2 are conditioned upon the
delivery of written notice to the indemnifying Party of any potential Liability
promptly after the indemnified Party becomes aware of such potential Liability.
The indemnifying Party shall have the right to assume the defense of any suit or
claim related to the Liability if it has assumed responsibility for the suit or
claim in writing; however, if in the reasonable judgment of the indemnified
Party, such suit or claim involves an issue or matter which could have a
materially adverse effect on the business operations or assets of the
indemnified Party, the indemnified Party may waive its rights to indemnity under
this Agreement and control the defense or settlement thereof, but in no event
shall any such waiver be construed as a waiver of any indemnification rights
such Party may have at law or in equity. If the indemnifying party defends the
suit or claim, the indemnified Party may participate in (but not control) the
defense thereof at its sole cost and expense.
11.4 Settlements. Neither Party may settle a claim or action
related to a Liability without the consent of the other Party, if such
settlement would impose any monetary obligation on the other Party or require
the other Party to submit to an injunction or otherwise limit the other Party's
rights under this Agreement. Any payment made by a Party to settle any such
claim or action shall be at its own cost and expense.
11.5 Limitation of Liability. With respect to any claim by one
Party against the other arising out of the performance or failure of performance
of the other Party under this Agreement, the Parties expressly agree that the
liability of such Party to the other Party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a Party be liable for, punitive, exemplary or consequential
damages.
41
11.6 Insurance. Each Party acknowledges that they each
maintain and shall, during the term of this Agreement, maintain a self-insurance
program for liability insurance, including products liability and contractual
liability insurance, adequately covering such Party's obligations under this
Agreement. Each Party shall provide the other Party with evidence of such
self-insurance program, upon request.
ARTICLE 12
TERM AND TERMINATION
12.1 Term of Agreement. The term of this Agreement shall begin
on the Effective Date and shall continue in perpetuity unless terminated earlier
in accordance with this Article 12. Upon the expiration of the Exclusive Period,
(a) Schering shall be granted a worldwide, perpetual, fully-paid up,
non-exclusive license in and to the Know-How to enable Schering to develop,
make, have made, use, sell and distribute Product in the Territory, and (b)
Schering shall grant ICN reference to any Regulatory Approvals and pricing or
reimbursement approvals relating to the Product in the Territory.
12.2 Termination by Either Party. This Agreement may be
terminated upon written notice to the other Party in the event of any of the
following:
(a) unilaterally by Schering at any time, with or without
cause, upon 180 days' written notice;
(b) by either Party upon nonpayment of any properly due
and payable amount that is continuing for twenty (20)
business days after the defaulting Party has received
written notice from the non-defaulting Party of such
nonpayment;
(c) by either Party upon material breach by the other
Party of any provision herein that is continuing
forty-five (45) days after the non-breaching Party
gives the breaching Party notice of such breach
specifying in reasonable detail the particulars of
the alleged breach; or
(d) by either Party in the event the other Party becomes
insolvent, or voluntary or involuntary proceedings
are instituted by or against the other Party and are
not dismissed within 60 days, or a receiver or
custodian is appointed for such Party's business, or
a substantial portion of such Party's business is
subject to attachment or similar process, or the
other Party is unable to satisfy its obligations as
they become due, enters into any composition or
arrangement with its creditors or enters into
liquidation.
42
12.3 Continuing Obligations. Neither ICN nor Schering shall be
relieved of their respective obligations to pay any sums of money due or payable
or accrued under this Agreement as of the effective date of such termination.
All accounts between ICN and Schering shall be settled in full within ninety
(90) days following the expiration or termination of this Agreement. Articles 9,
10 and 13 and Sections 3.1(d), 3.9, 4.3(b), 4.3(k), 6.10, Article 11, 12.7(a),
15.9, this Section 12.3 and any other provision which by its terms is stated to
survive this Agreement, shall survive the termination or expiration of this
Agreement. In addition, any other provision required to interpret and enforce
the Parties' rights and obligations under this Agreement also shall survive to
the extent required for the full observation and performance of this Agreement
by the Parties hereto.
12.4 Partial Termination of Territory by ICN. Subject to the
terms and conditions of Section 3.4 hereof, ICN may terminate Schering's rights
with respect to a particular country within the Territory, effective upon sixty
(60) days' written notice to Schering if Schering has failed to make any
commercial sale of the Product in such country within six (6) months following
Regulatory Approval with the Minimum Labelling with respect to the Product in
such country. Upon such termination, Schering shall grant ICN reference to all
applicable Regulatory Approvals and pricing or reimbursement approvals related
to the Product in order to enable ICN to market, sell or promote the Product in
such country, or appoint any agent, distributor or other entity to do so,
without liability to Schering.
12.5 Effects of Termination by Schering.
(a) In the event of termination of this Agreement by
Schering under Section 12.2 (a), and if termination
occurs prior to Regulatory Approval of the Product in
any country of the Territory then the following shall
occur: (i) Schering shall be granted a worldwide,
perpetual, non-exclusive license in and to the
Know-How to enable Schering to make, have made, use
and sell Product in the Territory; (ii) Schering
shall provide to ICN all reports, data, samples (if
necessary), and, if specifically required by a
regulatory authority, other information, necessary to
allow ICN to file for Regulatory Approval in any such
country either concurrently with Schering or, if
Schering is not then pursuing Regulatory Approval in
such country, within a reasonable time period; (iii)
Schering shall pay to ICN the royalties (including
minimum royalties) provided for under and in
accordance with Section 6.2 hereof with respect to
any and all sales of Product by Schering in the
Territory; and (iv) Schering-Plough Corporation shall
have no obligation to make the purchases of common
stock of ICN as set forth in the Stock Purchase
Agreement which are triggered by Regulatory Approval
in the United States and
43
the EU if the relevant Regulatory Approval has not
occurred as of the termination by Schering.
(b) In the event of termination of this Agreement by
Schering under Section 12.2(a) and if termination
occurs after Regulatory Approval of the Product in
any country of the Territory then the following shall
occur: (i) Schering shall be granted a worldwide,
perpetual, non-exclusive license and in to the
Know-How to enable Schering to make, have made, use
and sell Product in the Territory; (ii) Schering
shall grant ICN reference to any Regulatory Approvals
and pricing or reimbursement approvals relating to
the Product outside of the EU; (iii) Schering shall
provide to ICN all reports, data, samples (if
necessary), and, if specifically required by a
regulatory authority, other information, necessary to
allow ICN to file for Regulatory Approval in the
Territory; (iv) Schering shall pay to ICN the
royalties (including minimum royalties) provided for
and in accordance with the terms of Section 6.2
hereof with respect to any and all sales of Product
by Schering in the Territory; and (v) Schering-Plough
Corporation shall have no obligation to make the
purchases of common stock of ICN as set forth in the
Stock Purchase Agreement which are triggered by
Regulatory Approval in the United States and the EU
if the relevant Regulatory Approval has not occurred
as of the termination by Schering.
(c) In the event of termination of this Agreement by
Schering under Section 12.2(a), unless Schering fully
complies with the provisions of Sections 12.5(a) and
12.5(b) above, Schering shall not manufacture, use or
sell the Product in the Territory for a period of
three years from the date of termination of this
Agreement.
(d) In the event of termination of this Agreement by
Schering under Sections 12.2(b), (c) or (d), without
limiting any other rights or remedies Schering may
have, the following shall occur: (i) Schering shall
retain a worldwide, perpetual, fully-paid up,
exclusive license (exclusive even as to ICN,
including in the EU) in and to the Know-How to enable
Schering to develop, make, have made, use, sell and
distribute Product in the Territory; (ii) Schering
shall be obligated to pay to ICN any royalties (other
than any minimum royalties) provided for under
Section 6.2 hereof with respect to any and all sales
of Product by Schering in the Territory; provided,
however, that such royalties shall be offset and/or
reduced to reflect damage suffered by Schering in the
event of a breach of this Agreement giving rise to
Schering's right to terminate, to the extent
determined
44
by the neutral in accordance with the provisions of
Article 13; and (iii) Schering-Plough Corporation
shall have no obligation to make the purchases of
common stock of ICN as set forth in the Stock
Purchase Agreement which are triggered by Regulatory
Approval in the United States and the EU if the
relevant Regulatory Approval has not occurred as of
the termination by Schering.
12.6 Effects of Termination by ICN.
(a) In the event of termination of this Agreement by ICN
under Sections 12.2(b) or (d) then all of the rights
granted to Schering under this Agreement shall
terminate. Except as set forth immediately below in
Section 12.6(b), in the event of termination of this
Agreement by ICN pursuant to 12.2(c), all of the
rights granted to Schering under this Agreement shall
terminate.
(b) In the event of a material breach by Schering of its
obligations under Section 3.1(a) (research and
development obligations), or Section 4.1 (diligence
in marketing the Product), which material breach is
continuing after the cure period provided for in
Section 12.2(c), then the rights granted to Schering
under this Agreement shall terminate on a
country-by-country basis relative to the country of
the Territory in which Schering's breach occurred.
12.7 Change of Control.
(a) Schering agrees not to effect or in any way
participate in or facilitate a change of control of
ICN for a period of ten (10) years following the date
of this Agreement, unless requested by ICN's board of
directors.
(b) For purposes of this Section 12.7, a "change of
control" means (i) a merger, consolidation or
combination in which a Party to this Agreement is not
the surviving corporation, (ii) any "person" (within
the meaning of Section 13(d) and Section 14(d) (2) of
the Securities Exchange Act of 1934) is or becomes
the beneficial owner, directly or indirectly, of
securities of the Party representing 40% or more of
the combined voting power of the Party's
then-outstanding securities; or (iii) during any
period of two consecutive years, individuals who at
the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least
a majority thereof, unless the election of each new
director by the Party's stockholders was approved by
a vote of at least two-thirds of the directors then
still in office who were directors at the beginning
of the period.
45
12.8 Remedy Not Exclusive. The exercise by a Party of any
right of termination under this Agreement shall be in addition to, and shall not
constitute a waiver of, any other right or remedy the Party may have at law or
in equity.
ARTICLE 13
DISPUTE RESOLUTION
(a) The Parties recognize that a bona fide dispute as to
certain matters may from time to time arise during
the Exclusive Period which relate to either Party's
rights and/or obligations hereunder. In the event of
the occurrence of such a dispute, either Party may,
by written notice to the other Party, have such
dispute referred to their respective officers
designated below or their successors, for attempted
resolution by good faith negotiations within thirty
(30) days after such notice is received. Said
designated officers are as follows:
For ICN ▇▇▇▇▇ ▇▇▇▇▇ - President
For Schering ▇.▇. ▇▇▇▇▇▇ - President
In the event the designated officers are not able to resolve such dispute
through good faith negotiations within such (30) thirty-day period, either Party
may invoke the provisions of paragraph (b) below any time within such thirty day
period.
(b) Except for Schering's unilateral right to terminate
this Agreement pursuant to Section 12.2(a), which
shall not be subject to the dispute resolution
process set forth in this Article 13, any dispute,
controversy or claim arising out of or relating to
the validity, construction, enforceability or
performance of this Agreement including disputes
relating to an alleged breach or termination of this
Agreement shall be settled by binding Alternative
Dispute Resolution ("ADR") in the manner described
below; provided, however, that in resolving any such
dispute the neutral referred to below shall give
effect to the provisions of this Agreement and shall
not adjust, modify or change the effects of
termination as set forth in Sections 12.5 and 12.6:
58
(i) If a Party intends to begin an ADR to
resolve a dispute, such Party shall provide
written notice (the "ADR Request") by
certified or registered mail or properly
documented overnight delivery to the other
Party informing such other Party of such
intention and the issues to be resolved. The
notice shall explain the nature of the
complaint and refer to the relevant sections
of
46
the Agreement upon which the complaint is
based. The complaining Party shall also set
forth a proposed solution to the problem,
including a suggested time frame within
which the Parties must act.
(ii) The non-complaining Party must respond in
writing within forty-five (45) of receiving
the notice with an explanation, including
references to the relevant provisions of the
Agreement and a response to the proposed
solution and suggested time frame for
action. The non-complaining Party may add
additional issues to be resolved.
(iii) Within fifteen (15) days of receipt of the
response from the non-complaining Party, the
Parties shall meet and discuss options for
resolving the dispute. The complaining Party
must initiate the scheduling of this
resolution meeting. Each Party shall make
available all appropriate personnel to meet
and confer with the other Party within the
fifteen (15) days period following the
complaining Party's receipt of the response
by the non-complaining Party.
(iv) Any and all disputes that cannot be resolved
pursuant to Section 13(b)(iii) shall be
submitted to a neutral who shall be selected
by the then-President of the Center for
Public Resources ("CPR"), ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇. The neutral shall
be an individual who shall preside over and
resolve any disputes between the Parties.
The neutral selected shall be a former judge
of a state or federal court selected from
the Judicial Panel of the CPR and shall not
be an employee, director or shareholder of,
or otherwise have any current or previous
relationship with, either Party or of an
Affiliate of any Party. Either Party shall
have ten (10) business days from the date
the neutral is selected to object in good
faith to the selection of that person. If
either Party makes such an objection, the
Parties shall instruct the then-President of
the CPR to select, as soon as possible
thereafter and in any event within ten (10)
days, another neutral under the same
conditions set forth above. This second
selection shall be final. The ADR shall be
conducted in accordance with the rules of
the CPR then in effect, subject to the time
periods and other provisions of this Article
13.
(v) Consistent with the time schedule
established pursuant to Section 13(b)(vi),
the neutral shall hold a hearing to resolve
47
each of the issues identified by the Parties
and shall render the award as expeditiously
thereafter as possible but in no event more
than thirty (30) days after the close of
hearings. In making the award the neutral
shall rule on each disputed issue and shall
adopt in whole or in part the proposed
ruling of one of the Parties on each
disputed issue.
(vi) During the meeting referred to in Section
13(b)(iii), the Parties shall negotiate in
good faith the scope and schedule of
discovery, relating to depositions, document
production and other discovery devices,
taking into account the nature of the
dispute submitted for resolution. If the
Parties are unable to reach agreement as to
the scope and schedule of discovery, the
neutral may order such discovery as he deems
necessary. To the extent practicable taking
into account the nature of the dispute
submitted for resolution, such discovery
shall be completed within sixty (60)days
from the date of selection of the neutral.
At the hearing, which shall commence within
twenty (20) days after completion of
discovery unless the neutral otherwise
orders, the Parties may present testimony
(either by live witness or deposition),
subject to cross-examination, and
documentary evidence. To the extent
practicable taking into account the nature
of the dispute submitted for resolution and
the availability of the neutral, the hearing
shall be conducted over thirty (30)
consecutive business days, with each Party
entitled to approximately half of the
allotted time unless otherwise ordered by
the neutral. The hearing shall be held in
the United States at such place as agreed
upon by the Parties or if they are unable to
agree at a place designated by the neutral.
Each Party shall have the right to be
represented by counsel. The neutral shall
have sole discretion with regard to the
admissibility of any evidence and all other
matters relating to the conduct of the
hearing. The neutral shall, in rendering his
decision, apply the substantive law of New
Jersey. The decision of the neutral shall be
final and not appealable, except in cases of
fraud or bad faith on the part of the
neutral or any Party to the ADR proceeding
in connection with the conduct of such
proceedings.
(vii) At least twenty (20) business days prior to
the date set for the hearing, each Party
shall submit to each other Party and the
neutral a list of all documents on which
such Party intends to rely in any oral or
written presentation to the neutral and a
list
48
of all witnesses, if any, such Party intends
to call at such hearing and a brief summary
of each witness' testimony. At least five
(5) business days prior to the hearing, each
Party must submit to the neutral and serve
on each other Party a proposed findings of
fact and conclusions of law on each issue to
be resolved. Following the close of
hearings, the Parties shall each submit such
post-hearing briefs to the neutral
addressing the evidence and issues to be
resolved as may be required or permitted by
the neutral.
(c) The neutral shall determine the proportion in which
the Parties shall pay the costs and fees of the ADR.
Each Party shall pay its own costs (including,
without limitation, attorneys fees) and expenses in
connection with such ADR; provided, however, that if
the neutral determines that the action of any Party
was arbitrary, frivolous or in bad faith, the neutral
may award such costs (including, without limitation,
attorneys fees) and expenses to the prevailing Party.
(d) The ADR proceeding shall be confidential and, except
as required by law, neither Party shall make (or
instruct the neutral to make) any public announcement
with respect to the proceedings or decision of the
neutral without the prior written consent of the
other Party. The existence of any dispute submitted
to ADR, and the award of the neutral, shall be kept
in confidence by the Parties and the neutral, except
as required in connection with the enforcement of
such award or as otherwise required by applicable
law.
(e) For the purposes of this Article 13, the Parties
acknowledge their diversity and agree to accept the
jurisdiction of the Federal District Court in Newark,
New Jersey for the purposes of enforcing awards
entered pursuant to this Article and for enforcing
the agreements reflected in this Article.
(f) Nothing contained herein shall be construed to permit
the arbitrator(s) or any court or any other forum to
award punitive, exemplary or any similar damages. By
entering into this Agreement to arbitrate, the
Parties expressly waive any claim for punitive,
exemplary or any similar damages. The only damages
recoverable under this Agreement are compensatory
damages.
(g) The procedures specified in this Article 13 shall be
the sole and exclusive procedures for the resolution
of disputes between the Parties arising out of or
relating to this Agreement; provided, however, that a
Party, without prejudice to the above procedures,
49
may seek a preliminary injunction or other
provisional judicial relief (which may include an
order of specific performance), if in its sole
judgment such action is necessary to avoid
irreparable damage or to preserve the status quo
(including, without limitation, in the event of a
breach by Schering of Section 12.7(a)). If a
preliminary injunction is granted, the Parties agree
that the final relief, including but not limited to,
the issuance of a permanent injunction, will be
decided by the neutral according to the procedures
outlined in this Article 13. If a preliminary
injunction is denied, the preliminary injunction
action will be discontinued and the neutral shall be
responsible for deciding the issue that was the
subject of the preliminary injunction action, and all
costs and expenses incurred by the prevailing Party
in defending such a preliminary injunction action
shall be reimbursed by the non-prevailing Party.
Despite the preliminary injunction action the Parties
will continue to participate in good faith in the ADR
according to the procedures specified in this Article
13.
ARTICLE 14
PROVISION FOR INSOLVENCY
(a) All rights and licenses granted under or pursuant to
this Agreement by ICN to Schering are, for all
purposes of Section 365(n) of Title 11 of the U.S.
Code ("Title 11"), licenses of rights to intellectual
property as defined in Title 11. ICN agrees during
the Exclusive Period to maintain and preserve any
current copies of all such intellectual property
which are in existence and in its possession as of
the commencement of a case under Title 11 by or
against ICN. If a case is commenced by or against ICN
under Title 11, then, unless and until this Agreement
is rejected as provided in Title 11, ICN (in any
capacity, including debtor-in-possession) and its
successors and assigns (including, without
limitation, a Title 11 Trustee) shall, as Schering
may elect in a written request, immediately upon such
request (A) (i) perform all of the obligations
provided in this Agreement to be performed by ICN, or
(ii) provide to Schering all such intellectual
property (including all embodiments thereof) held by
ICN and such successors and assigns as of the
commencement of a case under Title 11 by or against
ICN and from time to time thereafter, and (B) not
interfere with the rights of Schering as provided in
this Agreement, or any agreement supplementary
hereto, to such intellectual property (including all
such embodiments
50
thereof, including any right of Schering to obtain
such intellectual property (or such embodiment) from
any other entity.
(b) If a Title 11 case is commenced by or against ICN,
this Agreement is rejected as provided in Title 11
and Schering elects to retain its rights hereunder as
provided in Title 11, then ICN (in any capacity,
including debtor-in-possession) and its successors
and assigns (including, without limitation, a Title
11 Trustee) shall provide to Schering all such
intellectual property (including all embodiments
thereof) held by ICN and such successors and assigns
immediately upon Schering's written request therefor.
Whenever ICN or any of its successors or assigns
provides to Schering any of the intellectual property
licensed hereunder (or any embodiment thereof)
pursuant to this Article 14, Schering shall have the
right to perform the obligations of ICN hereunder
with respect to such intellectual property, but
neither such provision nor such performance by
Schering shall release ICN from any such obligation
or liability for failing to perform it; provided,
however, that in such event Schering shall not be
entitled to compel specific performance by ICN under
this Agreement except to the extent of enforcing the
exclusivity of the license granted hereunder.
(c) All rights, powers, remedies, obligations and
conditions of Schering provided herein are in
addition to and not in substitution for any and all
other rights, powers, remedies, obligations and
conditions of ICN or Schering now or hereafter
existing at law or in equity (including, without
limitation, Title 11) in the event of the
commencement of a Title 11 case by or against ICN.
Schering, in addition to the rights, power and
remedies expressly provided herein, shall be subject
to all obligations and conditions, and shall be
entitled to exercise all other such rights and powers
and resort to all other such remedies as may now or
hereafter exist at law or in equity (including,
including, without limitation, Title 11) in such
event. The Parties agree that they intend the
foregoing rights and obligations of Schering to apply
to the maximum extent permitted by law, including
without limitation for purposes of Title 11, (i) the
right of access to any intellectual property
(including all embodiments thereof) of ICN, or any
third party with whom ICN contracts to perform an
obligation of ICN under this Agreement, and, in the
case of the third party, which is necessary for the
development, registration and manufacture of Product,
and (ii) the right to contract directly with any
third party described in clause (i) in this sentence
to complete the contracted work.
51
ARTICLE 15
MISCELLANEOUS
15.1 Assignment. Neither this Agreement nor any or all of the rights
and obligations of a Party hereunder shall be assigned, delegated, sold,
transferred, sublicensed or otherwise disposed of, by operation of law or
otherwise, to any third party other than an Affiliate of such Party, without the
prior written consent of the other Party, and any attempted assignment,
delegation, sale, transfer, sublicense or other disposition, by operation of law
or otherwise, of this Agreement or of any rights or obligations hereunder
contrary to this Section 15.1 shall be a material breach of this Agreement by
the attempting Party, and shall be void and without force or effect. This
Agreement shall be binding upon, and inure to the benefit of, each Party, its
Affiliates, and its permitted successors and assigns. Each Party shall be
responsible for the compliance by its Affiliates with the terms and conditions
of this Agreement.
15.2 Governing Law. This Agreement shall be governed, interpreted
and construed in accordance with the laws of the State of New Jersey, without
giving effect to conflict of law principles.
15.3 Waiver. A waiver of any breach or any provision of this
Agreement shall not be construed as a continuing waiver of other breaches of the
same or other provisions of this Agreement.
15.4 Independent Relationship. Nothing herein contained shall be
deemed to create an employment, agency, joint venture or partnership
relationship between the Parties hereto or any of their agents or employees, or
any other legal arrangement that would impose liability upon one Party for the
act or failure to act of the other Party. Neither Party shall have any power to
enter into any contracts or commitments or to incur any liabilities in the name
of, or on behalf of, the other Party, or to bind the other Party in any respect
whatsoever.
15.5 Export Control. This Agreement is made subject to any
restrictions concerning the export of products or technical information from the
United States of America which may be imposed upon or related to ICN or Schering
from time to time by the government of the United States of America.
Furthermore, Schering agrees that it will not export, directly or indirectly,
any technical information acquired from ICN under this Agreement or any products
using such technical information to any country for which the United States
government or any agency thereof at the time of export requires an export
license or other governmental approval, without first obtaining the written
consent to do so from the Department of Commerce or other agency of the United
States government when required by an applicable statute or regulation.
15.6 Entire Agreement; Amendment. This Agreement, including the
Exhibits hereto, sets forth the complete,
52
final and exclusive agreement and all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the Parties
hereto and supersedes and terminates all prior agreements and understandings
between the Parties. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written, between
the Parties other than as are set forth herein and therein. No subsequent
alteration, amendment, change or addition to this Agreement shall be binding
upon the Parties unless reduced to writing and signed by an authorized officer
of each Party.
15.7 Notices. Each notice required or permitted to be given or sent
under this Agreement shall be given by facsimile transmission (with confirmation
copy by registered first-class mail) or by registered or overnight courier
(return receipt requested), to the Parties at the addresses and facsimile
numbers indicated below.
If to ICN, to:
ICN Pharmaceuticals, Inc.
ICN Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇
If to Schering, to:
Schering-Plough Ltd.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇
Attention: President
FAX: ▇▇-▇▇-▇▇-▇▇▇▇
with copies to:
Schering-Plough International
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
and
53
Schering Corporation
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Senior Vice President and
General Counsel
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be deemed to have been received on the earlier of the date
actually received and the date five (5) days after the same was posted. Either
Party may change its address or its FAX number by giving the other Party written
notice, delivered in accordance with this Section.
15.8 Force Majeure. Failure of any Party to perform its obligations
under this Agreement (except the obligation to make payments when properly due)
shall not subject such Party to any liability or place them in breach of any
term or condition of this Agreement to the other Party if such failure is caused
by any cause beyond the reasonable control of such non-performing Party,
including without limitation acts of God, fire, explosion, flood, drought, war,
riot, sabotage, embargo, strikes or other labor trouble, failure in whole or in
part of suppliers to deliver on schedule materials, equipment or machinery,
interruption of or delay in transportation, a national health emergency or
compliance with any order or regulation of any government entity acting with
color of right. If a condition constituting force majeure as defined herein
exists for more than ninety (90) consecutive days, the Parties shall meet to
negotiate a mutually satisfactory solution to the problem, if practicable.
15.9 Non-Solicitation. To the maximum extent permitted by applicable
law, during the Exclusive Period and for one (1) year thereafter, neither Party
shall, directly or indirectly, solicit any individual who is then an employee of
a Party or its Affiliate within the Territory and who was involved in the
manufacturing, marketing, distribution or sale of the Product under this
Agreement, unless consented to in writing by the other Party.
15.10 Severability. If any provision of this Agreement is declared
invalid or unenforceable by a court having competent jurisdiction, it is
mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by, order of such court. The Parties shall consult and
use their best efforts to agree upon a valid and enforceable provision which
shall be a reasonable substitute for such invalid or unenforceable provision in
light of the intent of this Agreement.
54
15.11 Counterparts. This Agreement shall become binding when any one
or more counterparts hereof, individually or taken together, shall bear the
signatures of each of the Parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against either
Party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
55
IN WITNESS WHEREOF, the Parties hereto have caused their duly
authorized officers to execute this Agreement.
ICN PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President,
General Counsel & Corporate Secretary
SCHERING-PLOUGH LTD.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D.
----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D.
Title: Prokurist
56
GUARANTEE
In consideration of ICN's execution of the foregoing Exclusive
License and Supply Agreement dated the date hereof ("Agreement"), Schering
Corporation ("Schering") hereby guarantees to ICN as principal and not as surety
the performance by Schering-Plough Ltd. and any Affiliate of Schering-Plough
Ltd. of all of Schering-Plough Ltd.'s obligations under the Agreement.
Schering hereby consents to the jurisdiction of the courts
(including the Federal courts) in the State of California with respect to any
and all disputes, claims, actions or proceedings arising out of the execution,
delivery or performance of this Guarantee and waives all rights it might
otherwise have to object to venue before, and the jurisdiction of, such courts.
Nothing herein shall in any way detract from or limit the obligation of the
Parties to submit any dispute arising under the Agreement to arbitration and to
be bound by any decision of the neutral rendered in accordance with the dispute
resolution procedures set forth in Article 13 of the Agreement.
This Guarantee shall survive the expiration or other termination of
the Agreement and shall survive and apply regardless of any amendments, waivers,
extensions, modifications or other changes in the obligations of Schering-Plough
Ltd. under the Agreement.
July 28, 1995 SCHERING CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------
Its: Vice President
57
EXHIBIT A
ICN shall not be required to supply Product at a price less than ICN's Cost of
Goods plus five percent.
Cost of Goods, if ICN or any Affiliate or third party is the manufacturer of
finished Product, shall include the following categories:
1. Direct Materials
Materials used in the manufacturing process that are traced directly to
the completed Product, including, but not limited to:
- Inert raw materials or excipients
- Active substances/ingredients
- Packaging components such as bottles, caps, labels, etc.
2. Direct Labor
The Cost of employees engaged in production activities that are directly
identifiable with Product costs. Excludes supervision (which is included
in indirect labor) and production support activities such as inspection,
plant and equipment maintenance labor, and material handling personnel.
Direct Labor cost includes:
- Base pay, overtime, vacation and holidays, illness, personal time
with pay, and shift differential.
- Cost of employee fringe benefits such as health and life insurance
payroll taxes, welfare, pension and profit sharing.
3. Indirect Manufacturing Costs
Costs which are ultimately allocated to Product based on an appropriate
method such as standard direct labor hours, tank hours, grams, vials, etc.
of the operating departments. These costs include:
- Indirect Production Labor - salaries of employees engaged in
production activities who are not classified as direct labor,
including supervision, clerical, etc.
58
- Costs of certain direct labor - employees not utilized for the
manufacturing of Product, such as training, downtime and general
duties.
- Indirect Materials - supplies and chemicals which are used in the
manufacturing process and are not assigned to specific Product but
are included in manufacturing overhead costs. Includes supplies for
which direct assignment to Product is not practical.
- Utilities - expenses incurred for communications, fuel, electricity
and water in providing power for production and other plant
equipment.
- Maintenance and repairs - amount of expense incurred in-house or
purchased to provide services for plant maintenance and repairs of
facilities and equipment.
- Other services - purchased outside services and rentals, such as the
cost of security, ground maintenance, etc.
- Depreciation of plant and equipment utilizing the straight-line
method of calculation.
- Insurance - cost of comprehensive and other insurance necessary for
the safeguard of manufacturing plant and equipment.
- Taxes - expense incurred for taxes on real and personal property
(manufacturing site, buildings and the fixed assets of equipment,
furniture and fixtures, etc.). If manufacturing site includes other
operations (marketing, R&D, etc.), taxes are allocated to
manufacturing on the basis of total real and personal property.
- Cost of manufacturing service departments such as (where
applicable):
- Packaging Engineering
- Manufacturing Maintenance
- Industrial Engineering
- Receiving and Warehousing
- Production Scheduling
- Inventory Scheduling
- Plant Materials management
- Central Weigh
59
- Manufacturing Administration
- Purchasing
- Accounting
- Allocated costs of services provided to manufacturing including:
(where applicable):
- Cafeteria
- Personnel Operations
- Health and Safety Services
- Division Engineering and Operations Services
- Plant Services (housekeeping)
- Manufacturing Information Services
- Plant Power
- Office of VP Manufacturing
Various basis are used for allocating these costs to manufacturing operating
departments including head count, square feet, metered utilities use, estimated
services rendered, EDP computer hours, etc.
4. Quality Assurance Costs - direct labor and indirect costs for Quality
Assurance departments' testing and approving materials used in
manufacturing and completed manufacturing batches and finished Product.
This includes all manufacturing in-process testing and testing of finished
materials. Excluded from Product costs are QA costs related to research
and development, stability testing, etc.
The following are not included in manufacturing costs:
(a) Inventory Carrying Costs
(b) Regulatory Affairs costs
(c) Pilot plant costs - research batches and other similar costs prior
to turnover to manufacturing. This excludes commercial goods
produced by a research facility.
(d) Costs incurred for special projects to establish and certify new
production processes, batch sizes, product line improvements and new
vendor certification of equipment and primary materials components.
60
(e) Manufacturing start-up costs and initial one-time extraordinary
manufacturing costs incurred prior to plant operations and
achievement of a normal production activity level. Includes costs
training, testing, qualification/validation of new equipment and
facilities and initial trial batches.
(f) Significant idle capacity is eliminated from factory overhead and
Product cost.
(g) Shipping and other distribution costs.
(h) Product liability and/or business interruption insurance
expenses.
61
EXHIBIT B
PRODUCT SPECIFICATIONS
[REDACTED]
62
EXHIBIT C
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
ICN PHARMACEUTICALS, INC.
AND
SCHERING-PLOUGH CORPORATION
JULY 28, 1995
63
TABLE OF CONTENTS
1. Purchase and Sale of Shares........................................... 1
1.1 Purchase of Shares.............................................. 1
1.2 Closing dates; Delivery......................................... 3
2. Representations and Warranties of the Company......................... 3
2.1 Organization and Corporate Power................................ 3
2.2 Authorization................................................... 3
2.3 Capitalization.................................................. 4
2.4 Subsidiaries.................................................... 4
2.5 Financial Statements............................................ 4
2.6 Absence of Undisclosed Liabilities.............................. 4
2.7 Absence of Certain Developments................................. 5
2.8 Title to Properties............................................. 5
2.9 Tax Matters..................................................... 5
2.10 Intellectual Property........................................... 5
2.11 Effect of Transactions.......................................... 6
2.12 No Governmental Consent or Approval Required.................... 6
2.13 Litigation...................................................... 6
2.14 Securities Laws................................................. 7
2.15 Business........................................................ 7
2.16 Brokerage....................................................... 7
2.17 Insurance....................................................... 7
2.18 Environmental and Safety Laws................................... 7
2.19 Retirement Obligations, etc..................................... 8
2.20 Investment Company.............................................. 8
2.21 Registration Rights............................................. 8
2.22 Employees....................................................... 8
2.23 Absence of Certain Business Practices........................... 8
2.24 Disclosure...................................................... 9
3. Representations and Warranties of Schering and Other Agreements....... 9
3.1 Representations and Warranties.................................. 9
3.2 Further Provisions Regarding Disposition........................ 11
3.3 Legends......................................................... 11
4. Conditions to Schering's Obligations at Closing....................... 11
4.1 Initial Milestone Closing....................................... 11
4.2 U.S. Milestone Closing......................................... 13
4.3 EU Milestone Closing............................................ 14
5. Conditions of the Company's Obligations at Closing.................... 15
5.1 Initial Milestone Closing....................................... 15
5.2 U.S. Milestone Closing......................................... 16
5.3 EU Milestone Closing............................................ 16
6. Registration of Common Stock; Covenants of the Company; Other
Agreements............................................................ 17
6.1 Definitions..................................................... 17
6.2 Demand Registration............................................. 18
6.3 "Piggyback" Registration........................................ 19
6.4 Registration Expenses........................................... 21
6.5 Registration Procedures......................................... 21
6.6 Form S-3 Registration........................................... 23
6.7 Indemnification................................................. 24
6.8 Reports Under Exchange Act...................................... 26
6.9 Transferability................................................. 27
6.10 Cross Default................................................... 27
6.11 Limitation of Liability......................................... 28
7. Miscellaneous......................................................... 28
7.1 Survival of Warranties.......................................... 28
7.2 Incorporation by Reference...................................... 28
7.3 Parties in Interest............................................. 28
7.4 Amendments and Waivers.......................................... 28
7.5 Governing Law................................................... 28
7.6 Notices......................................................... 28
7.7 Counterparts.................................................... 29
7.8 Effect of Headings.............................................. 29
7.9 Entire Agreement................................................ 29
7.10 Publicity....................................................... 29
7.11 Severability.................................................... 29
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made as of this
28th day of July, 1995, by and between ICN Pharmaceuticals, Inc., a Delaware
corporation (the "Company") and Schering-Plough Corporation, a New Jersey
corporation ("Schering").
RECITAL
The Company and Schering are entering into this Agreement as an
inducement for the Company to enter into that certain Exclusive License and
Supply Agreement dated of even date herewith (the "License Agreement"). Pursuant
to this Agreement, Schering intends to invest in the Company and the proceeds of
such investment will be used by the Company for general corporate purposes.
Other than the right of Schering to vote its shares of Company common stock as
Schering deems appropriate, nothing contained in this Agreement is intended to
confer, or be deemed to confer, on Schering the power to direct, influence or
control the management, policies or operations of the Company.
THE PARTIES AGREE AS FOLLOWS:
1. Purchase and Sale of Shares. Subject to the terms and conditions
of this Agreement and on the basis of the representations and warranties set
forth herein, the Company agrees to sell to Schering, and Schering agrees to
purchase from the Company, shares of the Company's common stock (the "Common
Stock"), as set forth below. The shares of Common Stock being purchased
hereunder are hereinafter referred to as the "Shares."
1.1 Purchase of Shares.
(a) On the Initial Milestone Closing Date (as defined below), the
Company shall sell to Schering and Schering shall purchase from the Company, for
a total consideration of seven million dollars ($7,000,000), that number of
Shares which equals (A) seven million dollars ($7,000,000) divided by (B) the
average closing price of the Common Stock as quoted on the New York Stock
Exchange ("NYSE") for the 20 trading days ending on the day immediately
preceding the Initial Milestone Closing Date (or, if a stock split or
recapitalization occurred during such 20 day trading day period, then for the 20
trading day period ending on the date of such stock split or recapitalization).
(b) On the U.S. Milestone Closing Date (as defined below), the
Company shall sell to Schering and Schering shall purchase from the Company, for
a total
C-1
consideration of twenty million dollars ($20,000,000), that number of Shares
which equals (A) twenty million dollars ($20,000,000) divided by (B) the average
closing price of the Common Stock as quoted on the NYSE for the 20 trading days
ending on the day immediately preceding the U.S. Milestone Closing Date (or, if
a stock split or recapitalization occurred during such 20 trading day period
period, then for the 20 trading day period ending on the date of such stock
split or recapitalization).
(c) On the EU Milestone Closing Date (as defined below), the Company
shall sell to Schering and Schering shall purchase from the Company, for a total
consideration of fifteen million dollars ($15,000,000) that number of Shares
which equals (A) fifteen million dollars ($15,000,000) divided by (B) the lower
of (i) $25.00 (adjusted for stock splits, recapitalizations, reclassifications
or similar events occurring after the date hereof and prior to the EU Milestone
Closing Date) or (ii) the average closing price of the Common Stock as quoted on
the NYSE for the 20 trading day period ending on the day immediately preceding
the EU Milestone Closing Date (or, if a stock split or recapitalization occurred
during such 20 trading day period, then for the 20 trading day period ending on
the date of such stock split or recapitalization).
(d) Within 30 days following the satisfaction of the conditions set
forth in Section 4.1 below, the closing of the purchase and sale of Shares
hereunder as set forth in Section 1.1(a) above (the "Initial Milestone Closing")
shall be held at the offices of Schering-Plough Corporation (or such other place
as the parties shall mutually agree) at such time as the parties shall mutually
agree (the date of the Initial Milestone Closing is referred to herein as the
"Initial Milestone Closing Date"). At the Initial Milestone Closing, the Company
shall deliver to Schering a certificate or certificates, registered in
Schering's name, representing the Shares purchased at the Initial Milestone
Closing, and Schering shall pay the total consideration for such Shares by wire
transfer in immediately available funds to an account designated by the Company.
(e) Within 30 days following the satisfaction of the conditions set
forth in Section 4.2 below, the closing of the purchase and sale of Shares
hereunder as set forth in Section 1.1(b) above (the "U.S. Milestone Closing")
shall be held at the offices of Schering-Plough Corporation (or such other place
as the parties shall mutually agree) at such time as the parties shall mutually
agree (the date of the U.S. Milestone Closing is referred to herein as the "U.S.
Milestone Closing Date"). At the U.S. Milestone Closing, the Company shall
deliver to Schering a certificate or certificates, registered in Schering's
name, representing the Shares purchased at the U.S. Milestone Closing, and
Schering shall pay the total consideration for such Shares by wire transfer in
immediately available funds to an account designated by the Company.
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1.2 Closing dates; Delivery.
(a) Within 30 days following the satisfaction of the conditions set
forth in Section 4.3 below, the closing of the purchase and sale of Shares
hereunder as set forth in Section 1.1(c) above (the "EU Milestone Closing")
shall be held at the offices of Schering-Plough Corporation (or such other place
as the parties shall mutually agree) at such time as the parties shall mutually
agree (the date of the EU Milestone Closing is referred to herein as the "EU
Milestone Closing Date"). At the EU Milestone Closing, the Company shall deliver
to Schering a certificate or certificates, registered in Schering's name,
representing the Shares purchased at the EU Milestone Closing, and Schering
shall pay the total consideration for such Shares by wire transfer in
immediately available funds to an account designated by the Company.
2. Representations and Warranties of the Company. Company hereby
represents and warrants to Schering that:
2.1 Organization and Corporate Power. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to do business as a foreign corporation in
each jurisdiction where failure to so qualify would have a Material Adverse
Effect on the Company. For purposes of this Agreement, a "Material Adverse
Effect" or a "Material Adverse Change" shall mean, with respect to the Company,
any adverse effect or change in the condition (financial or other), business,
results of operations, assets, liabilities or operations of the Company or on
the ability of the Company to consummate any of the transactions contemplated
hereby, or any event or condition that would, with or without the passage of
time, constitute a "Material Adverse Effect" or "Material Adverse Change." The
Company has full power and authority to own its property, to carry on its
business as presently conducted and to carry out the transactions contemplated
hereby. The copies of the Certificate of Incorporation and Bylaws of the
Company, as amended to date, which have been furnished to Schering by the
Company, are correct and complete.
2.2 Authorization. The Company has full power to execute, deliver
and perform this Agreement and each other agreement entered into by the Company
in connection with this Agreement. Each such agreement has been duly executed
and delivered by the Company and is the legal, valid and, assuming due execution
by the other parties hereto and thereto, binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors, rights generally, and to general equitable principles. The
execution, delivery and performance of this Agreement, including the sale,
issuance and delivery of the Shares and each other agreement entered into by the
Company in connection with this Agreement, has been duly authorized by all
necessary corporate action of the Company.
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2.3 Capitalization. The entire authorized capital stock of the
Company consists of 100,000,000 shares of Common Stock, of which 29,188,829
shares are issued and outstanding, and 1,000,000 shares of Series A Preferred
Stock, none of which are issued and outstanding. The shares of Common Stock
outstanding are duly authorized, validly issued and outstanding, fully paid and
nonassessable, and were issued in compliance with all applicable federal and
state securities laws. No shares of Common Stock are held in the Company's
treasury. When issued in accordance with the terms of this Agreement, the Shares
will be duly authorized, validly issued and outstanding, fully paid and
nonassessable, free of any preemptive rights or rights of first refusal and will
be issued in compliance with all applicable federal and state securities laws.
Except as disclosed in the Financial Statements and SEC Filings (each as defined
below), there are no outstanding warrants, rights of first refusal, options or
other rights to purchase or acquire, or exchangeable for or convertible into,
any shares of Common Stock. The Company has reserved 5,333,000 shares of Common
Stock under its stock option plans. There are no preemptive rights with respect
to the issuance or sale by the Company of any of its securities. Upon
consummation of the transactions contemplated hereby, Schering will acquire good
and valid title to the Shares, free and clear of any encumbrances, liens,
claims, charges or assessments of any nature whatsoever.
2.4 Subsidiaries. The Company has no subsidiaries, except as set
forth in Schedule 2.4.
2.5 Financial Statements. The Company has delivered to Schering a
copy of the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 (the "1994 10-K"), containing audited balance sheets,
statements of operations and cash flows for the Company for the fiscal years
ended December 31, 1994, December 31, 1993, and December 31, 1992 (the
"Financial Statements") and copies of the Company's Quarterly Reports on Form
10-Q for the quarters ended March 31, 1994, June 30, 1994, September 30, 1994
and March 31, 1995 (collectively, together with the 1994 10-K, the "SEC
Filings"). The Financial Statements are complete and correct in all matters and
respects, are in accordance with the books and records of the Company, have been
prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly present the financial position of the Company
as of each such date and the results of operations for each such period then
ended.
2.6 Absence of Undisclosed Liabilities. Except as and to the extent
reflected or stated in the SEC Filings and the Financial Statements, and except
for liabilities arising in the ordinary course of its business and consistent
with past practice, and liabilities not required to be set forth in the
Financial Statements, the Company has no material debts, liabilities or
obligations of any nature, whether accrued, contingent or absolute, assigned or
otherwise, or whether due or to become due.
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2.7 Absence of Certain Developments. Since January 1, 1995, except
as disclosed in the Financial Statements, there has not been (a) any Material
Adverse Change with respect to the Company, (b) any declaration, setting aside
or payment of any dividend or other distribution with respect to the capital
stock of the Company, (c) loss, destruction or damage to any property of the
Company, whether or not insured, which had or may have a Material Adverse Effect
on the Company, (d) any issuance of any stock, bonds or other securities of the
Company or options, warrants or rights or agreements or commitments to purchase
or issue such securities or grant such options, warrants or rights, or (e) any
change in the accounting methods or practices by the Company.
2.8 Title to Properties. Except as disclosed in the Financial
Statements, the Company has good and marketable title to, or has a valid
leasehold interest in, or a valid license for, all of the material properties
and assets reflected in the Financial Statements, free and clear of all
mortgages, security interests, liens, restrictions or encumbrances other than
(i) the lien of current taxes not yet due and payable, and (ii) possible minor
liens and encumbrances which do not in any case, individually or in the
aggregate, materially detract from the value of the property subject thereto or
materially impair the operations of the Company, and would not result in the
occurrence of a Material Adverse Change, and which have not arisen otherwise
than in the ordinary course of business.
2.9 Tax Matters. The provisions for taxes in the Financial
Statements are sufficient for the payment of all accrued and unpaid federal,
state, county and local taxes of the Company.
2.10 Intellectual Property.
(a) The Company has good title to and ownership of, free and clear
of all liens, claims and encumbrances of any nature, or a valid license to, all
patents, patent rights, patent applications, inventions, trademarks, service
marks, trade names, copyrights and information, proprietary rights and processes
necessary to the proper conduct of its business as described in the SEC Filings
and the Financial Statements (the "Proprietary Rights"); and (ii) to the best
knowledge of the Company, such business does not conflict with or constitute an
infringement of the rights of others.
(b) The Company has not received any communications alleging that,
and has no knowledge that the Company has violated or, by conducting its
business, would violate any of the patents, patent applications, inventions,
trademarks, service marks, trade names, copyrights or trade secrets,
information, proprietary rights or processes of any other person or entity.
(c) No other firm, corporation, association or person (i) has
notified the Company that such firm, corporation, association or person is
claiming any ownership of
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or right to use any of the Proprietary Rights or (ii) to the best of the
Company's knowledge, is infringing upon any such Proprietary Rights in any way
that could reasonably be expected to have a Material Adverse Effect on the
Company.
2.11 Effect of Transactions. The execution, delivery and performance
of this Agreement and the transactions contemplated hereby, and compliance with
the provisions hereof by the Company, do not and will not, with or without the
passage of time or the giving of notice or both, (a) violate, in any material
respect, any provision of law, statute, rule or regulation or any ruling, writ,
injunction, order, judgment or decree of any court, administrative agency or
other governmental body or (b) conflict with or result in any breach of any of
the terms, conditions or provisions of, or constitute a default (or give rise to
any right of termination, cancellation or acceleration) under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company under the Certificate of Incorporation or
Bylaws, as amended to date, of the Company or any material note, indenture,
mortgage, lease, agreement, contract, purchase order or other material
instrument, document or agreement to which the Company is a party or by which it
or any of its properties or assets is bound or affected, except as would not
have a Material Adverse Effect on the Company.
2.12 No Governmental Consent or Approval Required. Based in part on
the representations made by Schering in Section 3 of this Agreement, no
authorization, consent, approval or other order of, declaration to, or
registration, qualification, designation or filing with, any federal, state or
local governmental agency or body is required for or in connection with the
valid and lawful authorization, execution and delivery by the Company of this
Agreement or any other agreement entered into by the Company in connection with
this Agreement, and the consummation of the transactions contemplated hereby or
thereby, or for or in connection with the valid and lawful authorization,
issuance, sale and delivery of the Shares other than the qualification (or
taking of such action as may be necessary to secure an exemption from
qualification if available) of the offer and sale of the Shares under the
applicable state securities laws, which filings and qualifications, if required,
will be accomplished in a timely manner so as to comply with such qualification
or exemption from qualification requirements.
2.13 Litigation. Except as disclosed in the SEC Filings, there is no
claim, arbitration, action, suit, proceeding, investigation or inquiry pending,
or to the best knowledge of the Company, threatened against the Company, which
questions the validity of this Agreement or any other agreement entered into by
the Company in connection with this Agreement or the right of the Company to
enter into any such agreements or to consummate the transactions contemplated
hereby or thereby, or which might result, either individually or in the
aggregate, in any Material Adverse Effect on the Company, or any change in the
current equity ownership of the Company. The information described on Schedule
2.13 is not material to the business, assets or
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operations of the Company or its subsidiaries (taken as a whole), no Current
Report on Form 8-K need be filed with the Securities and Exchange Commission
(the "SEC") to report such information, and such information will be disclosed
in the Company's Quarterly Report on Form 10-Q for the second quarter to be
filed with the SEC on or before August 14, 1995. The Company is not a party to,
or subject to the provisions of, any order, writ, injunction, judgment or decree
of any court or governmental agency or instrumentality which would have a
Material Adverse Effect on the Company.
2.14 Securities Laws. Assuming that Schering's representations and
warranties contained in Section 3 of this Agreement are true and correct, the
offer, issuance and sale of the Shares are and will be exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933,
as amended (the "1933 Act"), and have been registered or qualified (or are
exempt from registration and qualification) under the registration, permit or
qualification requirements of all applicable state securities laws.
2.15 Business. The Company has all franchises, permits, governmental
licenses and other governmental rights and privileges necessary to permit it to
own its properties and to conduct its present business or its business as
proposed to be conducted, except where the failure to hold such franchises,
permits, governmental licenses or other rights would not have a Material Adverse
Effect on the Company.
2.16 Brokerage. There are no claims for brokerage commissions or
finder's fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement made by or on behalf of
the Company and the Company agrees to indemnify and hold Schering harmless
against any damages incurred as a result of any such claim.
2.17 Insurance. The Company maintains in full force such types and
amounts of insurance issued by issuers of recognized responsibility insuring the
Company, with respect to its liability, workers' compensation, business and
properties, in such amounts and against such losses and risks as are adequate
against risks usually insured against by other corporations, entities or persons
operating similar businesses and properties.
2.18 Environmental and Safety Laws. To the best of the Company's
knowledge, except with respect to the Portland facility as previously described
to Schering (which to the best knowledge of the Company will not have a Material
Adverse Effect on the Company), the Company is in substantial compliance with
every applicable statute, law or regulation relating to the environment or
occupational health and safety, and no material expenditures are required in
order to comply with any such existing
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statute, law or regulation, except in each case as would not have a Material
Adverse Effect on the Company.
2.19 Retirement Obligations, etc. The Company does not have any
Employee Benefit Plan, as defined in the Employee Retirement Income Security Act
of 1974 other than as disclosed in the SEC Filings or the Financial Statements.
2.20 Investment Company. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended and will
not, as a result of the transactions contemplated hereby, become an "investment
company."
2.21 Registration Rights. Except with respect to the obligations of
the Company to register its securities on Form S-8 in connection with its stock
option plans, the Company is not under any contractual obligation to register
any of its currently outstanding securities or any of its securities that may
hereafter be issued.
2.22 Employees. The Company has complied in all material respects
with all applicable state and federal laws and regulations respecting employment
and employment practices, terms and conditions of employment, wages and hours
and other laws related to employment.
2.23 Absence of Certain Business Practices. To the best of the
Company's knowledge, none of the Company, or any agent of the Company, or any
other person or entity acting on behalf of or associated with the Company,
acting alone or together, has: (a) received, directly or indirectly, any
rebates, payments, commissions, promotional allowances or any other economic
benefits, regardless of their nature or type, from any customer, supplier,
employee or agent of any customer or supplier, official or employee of any
government (domestic or foreign) or other person; or (b) directly or indirectly,
given or agreed to give any money, gift or similar benefit to any customer,
supplier, employee or agent of any customer or supplier, official or employee of
any government (domestic or foreign), or any political party or candidate for
office (domestic or foreign) or other person or entity who was, is or may be in
a position to help or hinder the business of the Company (or assist the Company
in connection with any actual or proposed transaction) which (i) may subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not continued in the future, may have a
Material Adverse Effect on the Company or subject the Company to suit or penalty
in any private or governmental litigation or proceeding. The Company's existing
accounting controls and procedures are sufficient to cause it to materially
comply with the Foreign Corrupt Practices Act of 1977, as amended ("FCPA"), in
all areas, except as to operations in the former country of Yugoslavia where, to
the best of the Company's knowledge (without the benefit of an internal audit),
it believes that its
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existing accounting controls and procedures are sufficient to cause it to
materially comply with the FCPA.
2.24 Disclosure. The Company has provided Schering with all the
information that it has requested for deciding whether to purchase the Shares.
Neither the SEC Filings, nor the representations and warranties of the Company
contained in this Agreement and schedules delivered in connection herewith,
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements herein or therein, at the time and in light of
the circumstances under which they were made, not misleading.
3. Representations and Warranties of Schering and Other Agreements.
3.1 Representations and Warranties. Schering hereby represents and
warrants to the Company that:
(a) Organization and Corporate Power. Schering is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and is qualified to do business as a foreign corporation in each
jurisdiction where failure to so qualify would have a Material Adverse Effect on
Schering. Schering has full power and authority to own its property, to carry on
its business as presently conducted and to carry out the transactions
contemplated hereby.
(b) Authorization. Schering has full power to execute, deliver and
perform this Agreement and each other agreement entered into by Schering in
connection with this Agreement. Each such agreement has been duly executed and
delivered by Schering and is the legal, valid and, assuming due execution by the
other parties hereto and thereto, binding obligation of Schering, enforceable
against Schering in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws affecting creditors,
rights generally, and to general equitable principles. The execution, delivery
and performance of this Agreement and each other agreement entered into by
Schering in connection with this Agreement, has been duly authorized by all
necessary corporate action of Schering.
(c) No Governmental Consent or Approval Required. No authorization,
consent, approval or other order of, declaration to, or registration,
qualification, designation or filing with, any federal, state or local
governmental agency or body is required for or in connection with the valid and
lawful authorization, execution and delivery by Schering of this Agreement or
any other agreement entered into by Schering in connection with this Agreement,
and the consummation of the transactions contemplated hereby or thereby.
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(d) Litigation. Except as disclosed in Schering's filings with the
Securities and Exchange Commission, there is no claim, arbitration, action,
suit, proceeding or investigation pending, or to the best knowledge of Schering,
threatened against Schering, which questions the validity of this Agreement or
any other agreement entered into by Schering in connection with this Agreement
or the right of Schering to enter into any such agreements or to consummate the
transactions contemplated hereby or thereby, or which might result, either
individually or in the aggregate, in any Material Adverse Effect on Schering.
Schering is not a party to, or subject to the provisions of, any order, writ,
injunction, judgment or decree of any court or governmental agency or
instrumentality which would have a Material Adverse Effect on Schering.
(e) Purchase Entirely for Own Account. The Shares to be received by
Schering will be acquired for investment for Schering's own account, not as a
nominee or agent and not with a view to the distribution of any portion thereof.
Schering has no present intention of selling, granting any participation in, or
otherwise distributing the Shares. Schering does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer, or
grant participation to such person or to any third person, with respect to any
of the Shares.
(f) Restrictions on Disposition. Schering covenants that in no event
will it dispose of any of the Shares (other than pursuant to Rule 144
promulgated under the 1933 Act ("Rule 144") or pursuant to a registration
statement filed with the Securities and Exchange Commission (the "SEC") pursuant
to the ▇▇▇▇ ▇▇▇) unless and until (i) Schering shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition; and (ii) if
requested by the Company, Schering shall have furnished the Company with an
opinion of Schering's counsel, reasonably satisfactory in form and substance to
the Company and the Company's counsel, to the effect that (a) such disposition
will not require registration under the 1933 Act or (b) appropriate action
necessary for compliance with the 1933 Act and any applicable state, local or
foreign law has been taken. The restrictions on transfer imposed by this Section
3.1(f) shall cease and terminate as to the Shares when: (i) such securities
shall have been effectively registered under the 1933 Act and sold by the holder
thereof in accordance with such registration; or (ii) an opinion of the kind
described in the preceding sentence states that all future transfers of such
securities by the holder thereof would be exempt from registration under the
1933 Act. Each certificate evidencing the Shares shall bear an appropriate
restrictive legend as set forth in Section 3.3 below, except that such
certificate shall not be required to bear such legend after a transfer thereof
if the transfer was made in compliance with Rule 144 or pursuant to a
registration statement or, if the opinion of counsel referred to above is issued
and provides that such legend is not required in order to establish compliance
with any provisions of the 1933 Act.
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(g) Receipt of Information. Schering has been furnished access to
the business records of the Company and all such additional information and
documents Schering has requested and has been afforded an opportunity to ask
questions of and receive answers from representatives of the Company concerning
the terms and conditions of this Agreement and the purchase of the Shares. (h)
BROKERAGE. There are no claims for brokerage commissions or finder's fees or
similar compensation in connection with the transactions contemplated by this
Agreement based on any arrangement or agreement made by or on behalf of
Schering, and Schering agrees to indemnify and hold the Company harmless against
any damages incurred as a result of any such claims.
3.2 Further Provisions Regarding Disposition.
(a) Transfer to Affiliates. Notwithstanding the provisions of
Section 3.1(f) above, no registration statement or opinion of counsel shall be
necessary for a transfer by Schering of the Shares to a subsidiary, shareholder
or affiliate of Schering, if the transferee agrees in writing to be subject to
the terms hereof to the same extent as if such transferee were Schering
hereunder. (b) NEW CERTIFICATES. Whenever the restrictions imposed by Section
3.1(f) shall terminate as herein provided, the holder of the securities as to
which such restrictions have terminated shall be entitled to receive from the
Company, without expense, one or more new certificates not bearing restrictive
legends and not containing any reference to the restrictions imposed by this
Agreement.
3.3 Legends. Subject to Sections 3.1(f) and 3.2(b), the certificates
evidencing the Shares shall bear substantially the following legends:
(a) THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
(b) Any legend required by the laws of any other applicable
jurisdiction.
4. Conditions to Schering's Obligations at Closing.
4.1 Initial Milestone Closing. The obligation of Schering under
Section 1.1(a) of this Agreement to purchase the Shares at the Initial Milestone
Closing is subject to the fulfillment on or before the Initial Milestone Closing
of each of the following conditions:
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(a) Representations and Warranties. The representations and
warranties of the Company contained in Section 2 above shall be true on and as
of the Initial Milestone Closing Date with the same effect as though such
representations and warranties had been made on and as of the Initial Milestone
Closing Date.
(b) Performance. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Initial
Milestone Closing Date.
(c) Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required for consummation of the transactions contemplated by
this Agreement shall have been duly obtained, including, without limitation, the
expiration or earlier termination of any notice and waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and shall be
effective on and as of the Initial Milestone Closing Date.
(d) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the Initial Milestone
Closing and all documents incident thereto shall be reasonably satisfactory in
form and substance to Schering and Schering's counsel, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
(e) Other Agreements. The License Agreement shall have been executed
and delivered by the Company.
(f) Opinion of Company Counsel. Schering shall have received from
counsel for the Company an opinion addressed to Schering substantially covering
the matters set forth in Sections 2.1, 2.2, 2.3 (as to the due authorization,
valid issuance, full payment and nonassessability of the Shares), 2.12, 2.13 and
2.14 (as to federal law).
(g) Compliance Certificate. The Chief Executive Officer of the
Company shall deliver to Schering at the Initial Milestone Closing a certificate
certifying that the conditions specified in Sections 4.1(a), 4.1(b), and 4.1(c)
hereof have been fulfilled and stating that there has been no Material Adverse
Change in the Company since January 1, 1995.
(h) Approval. This Agreement, the License Agreement and the
transactions contemplated hereby and thereby shall have been approved by the
board of directors of Schering.
(i) License Agreement Milestone. The Regulatory Approval of the
Product [Specified North American and European regulatory bodies redacted] or
any applicable national health authority with Minimum Labelling (as defined in
the License Agreement) in any one of the following seven territories:
[specified North American, European and Asian countries redacted] shall have
occurred.
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4.2 U.S. Milestone Closing. The obligation of Schering under Section
1.1(b) of this Agreement to purchase the Shares at the U.S. Milestone Closing is
subject to the fulfillment of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
U.S. Milestone Closing Date with the same effect as though such representations
and warranties had been made on and as of the U.S. Milestone Closing Date.
(b) Performance. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the U.S. Milestone
Closing Date.
(c) Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required for consummation of the transactions contemplated by
this Agreement shall have been duly obtained, including, without limitation, the
expiration or earlier termination of any notice and waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and shall be
effective on and as of the U.S. Milestone Closing Date.
(d) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the U.S. Milestone Closing
and all documents incident thereto shall be reasonably satisfactory in form and
substance to Schering and Schering's counsel, and they shall have received all
such counterpart original and certified or other copies of such documents as
they may reasonably request.
(e) Opinion of Company Counsel. Schering shall have received from
counsel for the Company an opinion addressed to Schering substantially covering
the matters set forth in Sections 2.1, 2.2, 2.3 (as to the due authorization,
valid issuance, full payment and nonassessability of the Shares to be purchased
at the U.S. Milestone Closing), 2.12, 2.13 and 2.14 (as to federal law).
(f) Compliance Certificate. The Chief Executive Officer of the
Company shall deliver to Schering at the U.S. Milestone Closing a certificate
certifying that the conditions specified in Sections 4.2(a), 4.2(b), and 4.2(c)
hereof have been fulfilled and stating that there has been no Material Adverse
Change in the Company since the Initial Closing.
(g) License Agreement Milestone. The earlier of (i) the Regulatory
Approval of the Product with Minimum Labelling (as defined in the License
Agreement) by the United States Food and Drug Administration, or (ii) the date
on which, following any 12 month period, the royalties for that 12 month period
due to the Company on sales
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in the United States after Regulatory Approval (as defined in the License
Agreement) in the United States exceed [REDACTED], shall have occurred.
(h) Approval. This Agreement, the License Agreement and the
transactions contemplated hereby and thereby shall have been approved by the
board of directors of Schering.
4.3 EU Milestone Closing. The obligation of Schering under Section
1.1(c) of this Agreement to purchase the Shares at the EU Milestone Closing is
subject to the fulfillment of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
date of the EU Milestone Closing Date with the same effect as though such
representations and warranties had been made on and as of the date of the EU
Milestone Closing Date.
(b) Performance. The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the EU Milestone
Closing Date.
(c) Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required for consummation of the transactions contemplated by
this Agreement shall have been duly obtained, including, without limitation, the
expiration or earlier termination of any notice and waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as amended, and shall be
effective on and as of the EU Milestone Closing Date.
(d) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the EU Milestone Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to Schering and Schering's counsel, and they shall have received all
such counterpart original and certified or other copies of such documents as
they may reasonably request.
(e) Opinion of Company Counsel. Schering shall have received from
counsel for the Company an opinion addressed to Schering substantially covering
the matters set forth in Sections 2.1, 2.2, 2.3 (as to the due authorization,
valid issuance, full payment and nonassessability of the Shares to be purchased
at the EU Milestone Closing), 2.12, 2.13 and 2.14 (as to federal law).
(f) Compliance Certificate. The Chief Executive Officer of the
Company shall deliver to Schering at the EU Milestone Closing a certificate
certifying that the conditions specified in Sections 4.3(a), 4.3(b), and 4.3(c)
hereof have been fulfilled and
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stating that there has been no Material Adverse Change in the Company, since the
Initial Closing.
(g) License Agreement Milestone. The Regulatory Approval of the
Product in the European Union (including, as applicable, the CPMP or the
European Agency for the Evaluation of Medicinal Products) with Minimum Labelling
(as defined in the License Agreement) in at least [REDACTED] of the [specified
European countries REDACTED], shall have occurred.
(h) Approval. This Agreement, the License Agreement and the
transactions contemplated hereby and thereby shall have been approved by the
board of directors of Schering.
5. Conditions of the Company's Obligations at Closing.
5.1 Initial Milestone Closing. The obligations of the Company under
Section 1.1(a) of this Agreement are subject to the fulfillment on or before the
Initial Milestone Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Schering contained in Section 3 shall be true on and as of the
Initial Milestone Closing Date with the same effect as though such
representations and warranties had been made on and as of the Initial Milestone
Closing Date.
(b) Performance. Schering shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Initial
Milestone Closing Date.
(c) Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required for consummation of the transactions contemplated by
this Agreement shall have been duly obtained, including, without limitation, the
expiration or earlier termination of any notice and waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and shall be
effective on and as of the Initial Milestone Closing Date.
(d) Other Agreements. The License Agreement shall have been executed
and delivered by Schering-Plough Ltd.
(e) Opinion of Schering Counsel. The Company shall have received
from counsel for Schering an opinion addressed to the Company covering the
matters set forth in Sections 3.1(a), (b), (c) and (d).
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(f) Compliance Certificate. An officer of Schering shall deliver to
the Company at the Closing a certificate certifying that the conditions
specified in Sections 5.1(a), 5.1(b), and 5.1(c) hereof have been fulfilled.
(g) Approval. This Agreement, the License Agreement and the
transactions contemplated hereby and thereby shall have been approved by the
board of directors of the Company.
5.2 U.S. Milestone Closing. The obligations of the Company under
Section 1.1(b) of this Agreement are subject to the fulfillment on or before the
U.S. Milestone Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Schering contained in Section 3 shall be true on and as of the
U.S. Milestone Closing Date with the same effect as though such representations
and warranties had been made on and as of the U.S. Milestone Closing Date.
(b) Performance. Schering shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the U.S. Milestone
Closing Date.
(c) QUALIFICATIONS. ALL AUTHORIZATIONS, APPROVALS, OR PERMITS, IF
ANY, OF ANY GOVERNMENTAL AUTHORITY OR REGULATORY BODY OF THE UNITED STATES OR OF
ANY STATE THAT ARE REQUIRED FOR CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, SHALL HAVE BEEN DULY OBTAINED, INCLUDING, WITHOUT LIMITATION,
THE EXPIRATION OR EARLIER TERMINATION OF ANY NOTICE AND WAITING PERIOD UNDER THE
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND SHALL BE
EFFECTIVE ON AND AS OF THE U.S. MILESTONE CLOSING DATE.
5.3 EU Milestone Closing. The obligations of the Company under
Section 1.1(c) of this Agreement are subject to the fulfillment on or before the
EU Milestone Closing of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Schering contained in Section 3 shall be true on and as of the EU
Milestone Closing Date with the same effect as though such representations and
warranties had been made on and as of the date of the EU Milestone Closing Date.
(b) Performance. Schering shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the EU Milestone
Closing Date.
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(c) Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required for consummation of the transactions contemplated by
this Agreement, shall have been duly obtained, including, without limitation,
the expiration or earlier termination of any notice and waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended, and shall be
effective on and as of the EU Milestone Closing Date.
6. Registration of Common Stock; Covenants of the Company; Other
Agreements.
6.1 Definitions. Unless the context otherwise requires, the terms
defined in this Section 6 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined.
"Board" means the Board of Directors of the Company.
"HOLDER" of any security means the record or beneficial owner of
such security or any permitted assignee thereof.
"Person" means any natural person, corporation, trust, association,
company, partnership, joint venture or other entity or any government,
governmental agency, instrumentality or political subdivision.
The terms "Register", "Registered" and "Registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act, and the declaration for ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (i) the shares of Common Stock sold
pursuant to this Agreement and (ii) any Common Stock issued or issuable (either
directly or upon the conversion of or exercise of any warrant, right or other
security) with respect to the Common Stock referred to in clause (i) above by
way of a stock dividend or stock split or in connection with a combination of
shares, reclassification, recapitalization, merger or consolidation or
reorganization; provided, however that such shares of Common Stock shall only be
treated as Registrable Securities if and so long as they have not been (x) sold
to or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, or (y) sold in a transaction exempt from the
registration and prospectus delivery requirements of the 1933 Act pursuant to
Rule 144 thereunder so that all the transfer registrations and restrictive
legends with respect to such Common Stock are removed upon the consummation of
such sale and the Company receives an opinion of counsel for the Company (with a
copy to the seller of such Common Stock), which shall be in form and content
reasonably satisfactory to the Company, to the effect
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that such Common Stock in the hands of the purchaser is freely transferable
without restriction or registration under the 1933 Act in any public or private
transaction.
6.2 Demand Registration.
(a) If and whenever the Company shall receive at any time after one
year after the earlier to occur of the Initial Milestone Closing Date, the U.S.
Milestone Closing Date or the EU Milestone Closing Date hereunder, a written
request therefor from the Holders of at least 30 percent of the Registrable
Securities then outstanding, the Company agrees to prepare and file promptly a
registration statement under the 1933 Act covering the shares of Registrable
Securities which are the subject of such request and agrees to use its best
efforts to cause such registration statement to become effective as
expeditiously as possible. Upon the receipt of such request, the Company agrees
to give prompt written notice to all Holders of Registrable Securities that such
registration is to be effected. The Company agrees to include in such
registration statement such shares of Registrable Securities for which it has
received a written request to register such shares by the Holders thereof within
twenty (20) days after the receipt by the Holders of the written notice from the
Company.
(b) The Company shall be obligated to prepare, file and cause to
become effective only four registration statements pursuant to this Section 6.2.
A registration required to be effected by the Company pursuant to this Section
6.2 shall not be deemed to have been effected even though a registration
statement with respect thereto has become effective (i) if, after it has become
effective, such registration is interfered with by any stop order, injunction,
or other order or requirement of the SEC or other governmental agency or court,
for any reason not attributable to the Holders initiating the registration
request hereunder (the "Initiating Holders") with respect to such registration
statement, and has not thereafter become effective or (ii) if the conditions to
closing specified in the underwriting agreement, if any, entered into in
connection with such registration are not satisfied or waived, other than by
reason of a failure on the part of the Initiating Holders with respect to such
registration statement.
(c) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they agree to
provide the Company with the name of the managing underwriter or underwriters
(the "Managing Underwriter") that the Initiating Holders holding a majority of
the Shares to be included in the registration propose to employ, as part of
their request made pursuant to this Section 6.2, and the Company agrees to
include such information in its written notice referred to in Section 6.2(a). In
such event, the right of any Holder to registration pursuant to this Section 6.2
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by the Holders of a majority of the shares of
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Registrable Securities to be included in such registration and such Holder). All
Holders proposing to distribute their securities through such underwriting agree
to enter into (together with the Company) an underwriting agreement with the
underwriter or underwriters elected for such underwriting, in the manner set
forth above, provided that such underwriting agreement is in customary form and
is reasonably acceptable to the Holders of a majority of the shares of
Registrable Securities to be included in such registration.
(d) Notwithstanding the foregoing, if the Managing Underwriter of an
underwritten distribution advises the Company and the Holders of Registrable
Securities participating in such registration in writing that in its good faith
judgment the number of shares of Registrable Securities and the other securities
requested to be included in such registration exceeds the number of shares of
Registrable Securities and the other securities which can be sold in such
offering, then (i) the other securities so requested to be included in such
registration shall initially be reduced and the number of shares of Registrable
Securities so requested to be included in such registration shall subsequently
be reduced, together to that number of shares which in the good faith judgment
of the Managing Underwriter can be sold in such offering and (ii) the reduced
number of Registrable Securities to be included in the underwriting shall be
allocated pro rata among all Holders of Registrable Securities. Those
Registrable Securities which are excluded from the underwriting by reason of the
Managing Underwriter's marketing limitation shall not be included in such
registration and shall be withheld from the market by the Holders thereof for a
period not in excess of 120 days, which the Managing Underwriter reasonably
determines is necessary to effect the underwritten public offering.
(e) Notwithstanding any other provision of this Section 6.2, if
within ten (10) days following receipt of a request to file a demand
registration statement under this Section 6.2, the Company shall furnish to
Schering and the Holders a certificate signed by the Chief Executive Officer of
the Company stating that in the good faith judgment of the Board of the Company
it would be seriously detrimental to the Company or its shareholders for a
registration statement to be filed in the near future, then the Company's
obligation to file a registration statement under this Section 6.2 shall be
deferred for a period not to exceed three (3) months; provided, however, that
the Company shall not obtain such a deferral to file any registration statement
under this Section 6.2 more than once in any 12-month period.
6.3 "Piggyback" Registration
(a) Each time the Company shall determine to file a registration
statement under the 1933 Act (other than pursuant to Section 6.2 hereof and
other than on Form ▇-▇, ▇-▇ or a registration statement on Form S-1 covering
solely any employee benefit plan) in connection with the proposed offer and sale
for money of any of its securities either for its
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own account or on behalf of any other security holder, the Company agrees to
give prompt written notice of its determination to all Holders of Registrable
Securities. Upon the written request of a Holder of any shares of Registrable
Securities given within twenty (20) days after the receipt of such written
notice from the Company, the Company agrees to cause all such Registrable
Securities, the Holders of which have so requested registration thereof, to be
included in such registration statement and to use its best efforts to cause
such registration statement to become effective under the 1933 Act, all to the
extent requisite to permit the sale or other disposition by the prospective
seller or sellers of the Registrable Securities to be so registered. In the
event that the proposed registration by the Company is, in whole or in part, an
underwritten public offering of securities of the Company, any request pursuant
to this Section 6.3(a) to register Registrable Securities may specify that such
securities are to be included in the underwriting (i) on the same terms and
conditions as the shares of Common Stock, if any, otherwise being sold through
underwriters, under such registration, or (ii) on terms and conditions
comparable to those normally applicable to offerings of Common Stock in
reasonably similar circumstances in the event that no shares of Common Stock
other than Registrable Securities are being sold through underwriters in such
registration.
(b) If the registration of which the Company gives written notice
pursuant to Section 6.3(a) is for an underwritten public offering, the Company
agrees to so advise the Holders as a part of its written notice. In such event
the right of any Holder to registration pursuant to this Section 6.3 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their Registrable
Securities through such underwriting agree to enter into (together with the
Company and the other Holders distributing their securities through such
underwriting) an underwriting agreement with the underwriter or underwriters
selected for such underwriting by the Company.
(c) Notwithstanding any other provision of this Section 6.3, if the
Managing Underwriter of an underwritten distribution advises the Company and the
Holders of the Registrable Securities requesting participation in such
registration in writing that in its good faith judgment the number of shares of
Registrable Securities and the other securities requested to be registered under
this Section 6.3 exceeds the number of shares of Registrable Securities and
other securities which can be sold in such offering, then (i) the number of
shares of Registrable Securities and other securities so requested to be
included in the offering shall be reduced to that number of shares which in the
good faith judgment of the Managing Underwriter can be sold in such offering
(except for shares to be issued by the Company in a public offering, which shall
have priority over the Registrable Securities), and (ii) such reduced number of
shares shall be allocated among all participating Holders of Registrable
Securities and holders of other securities in proportion, as nearly as
practicable, to the respective number of shares of Registrable
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Securities and other securities requested to be registered held by such Holders
at the time of filing the registration statement. All Registrable Securities and
other securities which are excluded from the underwriting by reason of the
Managing Underwriters's marketing limitation and all other Registrable
Securities not originally requested to be so included shall not be included in
such registration and shall be withheld from the market by the Holders thereof
for a period, not in excess of 120 days, which the Managing Underwriter
reasonably determines is necessary to effect the underwritten public offering.
6.4 Registration Expenses.
(a) The Company shall pay all expenses incurred in effecting the
registration of Registrable Securities pursuant to Section 6 including, without
limitation, all federal and state registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the Company, reasonable
fees and disbursements of one counsel for the participating Holders together,
blue sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, but not including underwriting discounts,
commissions and expenses.
(b) Notwithstanding the foregoing, in the event that a registration
pursuant to Section 6.2 is requested by the Initiating Holders and such request
is withdrawn prior to the filing of a registration statement by the Company, or
such Holders cause the Company to withdraw a registration statement prior to its
effectiveness, then either (i) the Initiating Holders and other Holders
requesting inclusion of their shares in such registration shall bear pro rata
all fees, costs and expenses of the registration and preparation of the
registration statement or (ii) such requested registration shall be deemed to be
one of the registrations the Company is required to effect pursuant to Section
6.2 hereof; provided however, if at the time of the withdrawal, the Initiating
Holders and the other Holders have learned of a Material Adverse Change with
respect to the Company which was not known to such Holders at the time of their
request, then such Holders shall not be required to pay any of such registration
expenses and shall retain their rights pursuant to Section 6.2.
6.5 Registration Procedures. If and whenever the Company is required
by the provisions of Section 6 to effect the registration of Registrable
Securities under the 1933 Act, the Company will, as expeditiously as possible:
(a) prepare and file with the SEC a registration statement which
includes the Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective until the distribution
described in the registration statement has been completed;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be
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necessary to keep such registration statement effective and to comply with the
provisions of the 1933 Act with respect to the sale or other disposition of
Registrable Securities covered by such registration statement whenever a Holder
shall desire to sell or otherwise dispose of the same;
(c) furnish to each participating Holder (and to each underwriter,
if any, of Registrable Securities) such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
1933 Act, and such other documents, as such Holder may reasonably request in
order to facilitate the public sale or other disposition of the Registrable
Securities;
(d) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under such state securities or
blue sky laws of such jurisdiction as each participating Holder shall reasonably
request and do any and all other acts and things which may be necessary under
such securities or blue sky laws to enable such Holder to consummate the public
sale or other disposition of the Registrable Securities in such jurisdictions,
except that the Company shall not for any purpose be required to consent
generally to service of process or qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) before filing the registration statement or prospectus or
amendments or supplements thereto, furnish to counsel selected by the
participating Holders copies of such documents proposed to be filed which shall
be subject to the reasonable approval of such counsel;
(f) enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the Managing Underwriter of such
offer;
(g) notify the participating Holders at any time when a prospectus
relating to any Registrable Securities covered by such registration statement is
required to be delivered under the 1933 Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing and promptly
file such amendments and supplements as may be necessary so that, as thereafter
delivered to such Holders of such Registrable Securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing and use its best
efforts to cause each such amendment and supplement to become effective;
(h) furnish at the request of the participating Holders on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a
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registration pursuant to Section 6 (i) an opinion addressed to the underwriters,
if any, and to such Holders, dated such date, of the counsel representing the
Company for purposes of such registration in form and substance as is
customarily given by company counsel to the underwriters in an underwritten
public offering, and (ii) a letter dated such date addressed to the
underwriters, if any, and to such Holders, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering; and
(i) use its best efforts to cause all such Registrable Securities to
be listed on the securities exchange, if any, or the NMS, on which the Common
Stock is then listed.
6.6 Form S-3 Registration. In case the Company shall at any time
after one year after the earlier to occur of the Initial Milestone Closing
Date, the U.S. Milestone Closing Date or the EU Milestone Closing Date
hereunder, receive from any Holder or Holders a written request or requests that
the Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company shall:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, file a registration statement and effect
such registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Holder's or Holders' Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as are
specified, in a written request given within 15 business days after receipt of
such written notice from the Company, provided, however, that the Company shall
not be obligated to effect any such registration, qualification or compliance
pursuant to this Section 6.6: (i) if Form S-3 is not available for such offering
by the Holders; (ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public (net of any underwriters' discounts or commissions) of less
than Five Hundred Thousand Dollars ($500,000); (iii) if the Company shall
furnish to the Holders a certificate signed by the President or Chief Executive
Officer of the Company stating that in the good faith judgment of the Board, it
would be seriously detrimental to the Company and its stockholders for such Form
S-3 Registration to be effected at such time, in which event the Company shall
have the right to defer the filing of the Form S-3 Registration Statement for a
period of not more than 60 days after receipt of the request of the Holder or
Holders under this Section 6.6; provided,
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however, that the Company shall not utilize this right more than once in any
12-month period; (iv) if the Company has, within the 12-month period preceding
the date of such request, already effected two registrations on Form S-3 for the
Holders pursuant to this Section 6.6; or (v) in any particular jurisdiction in
which the Company would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance.
(c) Registrations effected pursuant to this Section 6.6 shall be
counted as demands for purposes of the number of registrations effected pursuant
to Section 6.2.
6.7 Indemnification. In the event Registrable Securities are
registered pursuant to this Section 6:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder of Registrable Securities which are included in a
registration statement pursuant to the provisions of this Agreement and any
underwriter (within the meaning of the ▇▇▇▇ ▇▇▇) with respect to the Registrable
Securities, and each officer, director, employee and agent thereof and each
person, if any, who otherwise controls such Holder or underwriter (within the
meaning of the 1933 Act), against any losses, claims, damages, expenses or
liabilities, joint or several, to which they may become subject under the 1933
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
other federal or state law, or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue or allegedly untrue statement of any material fact
contained in the registration statement for the Registrable Securities,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or any document incident to the
registration or qualification of any Registrable Securities, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or allegedly necessary to make the statements
therein not misleading or arise out of any violation or alleged violation by the
Company of the 1933 Act, the Exchange Act, any state securities law or any rule
or regulation promulgated under the 1933 Act, the Exchange Act or any state
securities law; and will reimburse such Holder, any underwriter, officer,
director, employee, agent or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 6.7(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, expense, liability or action
if such settlement is effected without the written consent of the Company, which
shall not be unreasonably withheld, nor shall the Company be liable under this
Section 6.7(a) to such Holder, such underwriter, officer, director, employee,
agent or controlling person for any such loss, claim, damage, expense, liability
or action to the extent that it arises out of, or is based upon, an untrue
statement or allegedly untrue statement or omission or alleged omission
C-24
made in connection with such registration statement, preliminary prospectus,
final prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with information furnished in writing expressly for use in connection
with such registration by such Holder, such underwriter, officer, director,
employee, agent or such controlling person.
(b) To the extent permitted by law, each Holder of Registrable
Securities which are included in a registration statement pursuant to the
provisions of this Agreement will indemnify and hold harmless the Company, each
of its employees, agents, directors and officers, each person, if any, who
otherwise controls the Company (within the meaning of the 1933 Act), and any
underwriter (within the meaning of the ▇▇▇▇ ▇▇▇) against any losses, claims,
damages, expenses or liabilities to which the Company or any such person or
underwriter may become subject under the 1933 Act, the Exchange Act or other
federal or state law or otherwise, insofar as such losses, claims, damages,
expenses or liabilities (or actions in respect thereof) arise out of, or are
based upon any untrue or allegedly untrue statement of any material fact
contained in a registration statement for the Registrable Securities, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or any document incident to the registration
or qualification of any Registrable Securities, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or allegedly necessary to make the statements therein not
misleading; in each case to the extent that such untrue statement or allegedly
untrue statement or omission or alleged omission was made in such registration
statement, preliminary prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with information furnished in writing by such
Holder expressly for use in connection with such registration; provided,
however, that the indemnity agreement contained in this Section 6.7(b) shall not
apply to amounts paid in settlement of any such loss, claim, damage, expense,
liability or action if such settlement is effected without the written consent
of such Holder, which shall not be unreasonably withheld; and such Holder will
reimburse the Company or any such person or underwriter for any legal or other
expenses reasonably incurred by the Company or any such person or underwriter in
connection with investigating or defending such loss, claim, damage, liability,
expense or action.
(c) Promptly after receipt by an indemnified party under this
Section 6.7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 6.7, notify the indemnifying party in writing of the
commencement thereof and generally summarize such action. The indemnifying party
shall have the right to participate in and to assume the defense thereof with
counsel mutually satisfactory to the parties. An indemnifying party shall not
have the right to direct the defense of such an action on behalf of an
indemnified party if such indemnified party has reasonably concluded that there
may be
C-25
defenses available to it that are different from or additional to those
available to the indemnifying party; provided, however, that in such event, the
indemnifying party shall bear the fees and expenses of only one (1) separate
counsel for all indemnified parties. The failure to notify an indemnifying party
promptly of the commencement of any such action if prejudicial to the ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 6.7, but the omission so to notify the
indemnifying party will not relieve such party of any liability that such party
may have to any indemnified party otherwise than under this Section 6.7.
(d) To the extent permitted by law, the indemnification provided for
under this Section 6.7 will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified party or any officer,
director or controlling person (within the meaning of the ▇▇▇▇ ▇▇▇) of such
indemnified party and will survive the transfer of any securities.
(e) If for any reason the foregoing indemnity is unavailable to, or
is insufficient to hold harmless an indemnified party, then the indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of such losses, claims, damages, expenses or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, or provides a lesser sum to the indemnified party than the
amount representing such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party on the one hand and the
indemnified party on the other but also the relative fault of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. Notwithstanding the foregoing, no underwriter, if any, shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligation of any underwriters to contribute pursuant to
this Section 6.7(e) shall be several in proportion to their respective
underwriting commitments and not joint.
6.8 Reports Under Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the 1933 Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
Registrable Securities to the public without registration, and with a view to
making it possible for any such Holder to register the Registrable Securities
pursuant to a registration on Form S-3, the Company agrees to:
C-26
(a) make and keep public information available at all times, as
those terms are understood and defined in Rule 144;
(b) take such action as is necessary to enable a Holder to utilize
Form S-3 for the sale of Registrable Securities;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the Exchange Act; and
(d) furnish to a Holder owning any Registrable Securities upon
request (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the 1933 Act and the Exchange Act, or that
it qualifies as a registrant whose Registrable Securities may be resold pursuant
to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
required in availing any Holder of Registrable Securities of any rule or
regulation of the SEC which permits the selling of any such Registrable
Securities without registration or pursuant to such form.
6.9 Transferability. The right to cause the Company to register
Registrable Securities granted by the Company to the Holders under this
Agreement may be assigned by any Holder to a transferee or assignee of any
Registrable Securities, provided that the Company must receive written notice
prior to or at the time of said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
rights are being assigned. The limitations set forth in this Section 6 with
respect to registration rights shall apply to all transferees or assignees of
Registrable Securities.
6.10 Cross-Default. The termination, expiration or failure of the
License Agreement to become effective for any reason other than a breach thereof
by Schering-Plough Ltd. or any of its affiliates shall terminate this Agreement
as of the date of such termination (or, if Schering-Plough Ltd. terminates the
License Agreement without cause, as of the date Schering-Plough Ltd. provides
Company with notice of such termination). In the event of the termination of the
License Agreement by the Company upon the breach thereof by Schering-Plough,
Ltd., then such breach shall be deemed to be a material breach of this Agreement
and this Agreement shall also terminate. Any such termination shall be without
prejudice to any other rights the Company may have. The Company's obligations
and the rights of Schering and other Holders of Registrable Securities under
this Article 6 shall survive any termination of this Agreement with respect to
Registrable Securities owned by Schering and other Holders as of the date of
such termination.
C-27
6.11 Limitation of Liability. With respect to any claim by one party
against the other arising out of the performance or failure of performance of
the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a party be liable for, punitive, exemplary or consequential
damages.
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations,
agreements, covenants and undertakings of the Company or Schering contained in
or made pursuant to this Agreement shall survive the execution and delivery of
this Agreement and the Initial Closing, the U.S. Milestone Closing and the EU
Milestone Closing, as the case may be, and shall in no way be affected by an
investigation of the subject matter thereof made by or on behalf of Schering or
the Company.
7.2 Incorporation by Reference. All schedules appended to this
Agreement are herein incorporated by reference and made a part hereof.
7.3 Parties in Interest. All terms, covenants, agreements,
representations, warranties and undertakings in this Agreement made by and on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including transferees
of any Shares), subject to Section 6.9 hereof.
7.4 Amendments and Waivers. Changes in or additions to this
Agreement may be made or compliance with any term, covenant, agreement,
condition or provision set forth herein may be omitted or waived, only upon the
written consent of the Company and Schering.
7.5 Governing Law. This Agreement shall be deemed a contract made
under the laws of the State of New Jersey and, together with the rights or
obligations of the parties hereunder, shall be construed under and governed by
the laws of such State.
7.6 Notices. All notices, requests, consents and demands shall be in
writing and shall be deemed given when (i) personally delivered, (ii) mailed in
a registered or certified envelope, postage prepaid or (iii) sent by Federal
Express or another nationally recognized overnight delivery service (paid by
sender):
to the Company at:
ICN Pharmaceuticals, Inc.
ICN Plaza
C-28
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to Schering at:
Schering-Plough Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as may be furnished in writing by a party
to the other party hereto.
7.7 Counterparts. This Agreement may be executed in counterparts,
all of which together shall constitute one and the same instrument.
7.8 Effect of Headings. The section and paragraph headings herein
are for convenience only and shall not affect the construction hereof.
7.9 Entire Agreement. This Agreement, the Supply Agreement and the
schedules hereto and thereto constitute the entire agreement between the Company
and Schering with respect to the subject matter hereof. There are no
representations, warranties, covenants or undertakings with respect to the
subject matter hereof other than those expressly set forth herein. This
Agreement supersedes all prior agreements between the parties with respect to
the Shares purchased hereunder and the subject matter hereof.
7.10 Publicity. No party shall originate any publicity, news
release, or other announcement, written or oral, relating to this Agreement, or
to performance hereunder or the existence of an arrangement between the parties
hereto without the prior written approval of the other. Nothing contained herein
shall prevent any party from at any time furnishing any information to any
governmental authority which it is by law so obligated to disclose or from
making any disclosure which its counsel deems necessary or advisable in order to
fulfill such party's disclosure obligations under applicable law or the rules of
the New York Stock Exchange.
7.11 Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written, by the duly authorized representatives of parties hereto.
C-29
ICN PHARMACEUTICALS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Vice President,
General Counsel and Corporate
Secretary
SCHERING-PLOUGH CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D.
--------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D.
Title: Authorized Signatory
C-30
SCHEDULE 2.13
In the Company's Form 10-Q for the period ended March 31, 1995,
under Item 3, "Legal Proceedings," reference was made to various actions,
including securities class actions (the "Securities Actions") and shareholder
derivative actions (the "Federal Derivative Actions") filed in February and
March 1995 in the United States District Court for the Central District of
California, alleging, INTER ALIA, that the Company and certain of its officers
and directors had made various deceptive and untrue statements of material fact
and omitted to state material facts in connection with information it received
from the U.S. Food and Drug Administration ("FDA") regarding the Company's New
Drug Application ("NDA") for the use of Virazole(R) for the treatment of chronic
hepatitis C (the "Hepatitis C NDA"), and that certain officers of the Company
had allegedly engaged in illegal ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
By order dated May 2, 1995, the Securities Actions were consolidated
and directed to be coordinated with the related Federal Derivative Actions.
PURSUANT TO THE TIME SCHEDULES SET FORTH IN THE MAY 2 ORDER, ON JUNE 15 AN
AMENDED CONSOLIDATED COMPLAINT WAS SERVED IN THE SECURITIES ACTIONS, AND AN
AMENDED CONSOLIDATED COMPLAINT WAS SERVED IN THE FEDERAL DERIVATIVE ACTIONS.
PURSUANT TO THE ORDER, DEFENDANTS HAVE UNTIL AUGUST 1 TO ANSWER OR MOVE WITH
RESPECT THERETO.
In May 1995, an additional securities class action was filed against
the Company and its chairman in the Central District of California alleging
that, INTER ALIA, the proxy materials and prospectus prepared in connection with
the merger of ICN Pharmaceuticals, Inc. ("Old ICN"), SPI Pharmaceuticals, Inc.
("SPI"), Viratek, Inc. and ICN Biomedicals, Inc. ("Biomedicals"), effective
November 10, 1994 ("the Merger"), contained false and misleading information
regarding the potential approval by the FDA of Virazole(R) for the Hepatitis C
indication, and that defendants had therefore established an excessive value for
the shares of Viratek in setting the exchange ratios for the four companies in
connection with the Merger. Plaintiff further alleges that the Company's
chairman had engaged in illegal ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of the Company's common stock.
On behalf of a purported class of individuals who exchanged their shares of Old
ICN, SPI or Biomedicals for newly issued shares of New ICN, plaintiff seeks
damages and related relief. Counsel for defendants has agreed with counsel for
the plaintiffs to adjourn defendants' time to answer or move with respect to the
complaint until August 1, 1995. This action was consolidated with the Securities
Actions as described above.
Pursuant to an Order Directing Private Investigation Officers to
Take Testimony, entitled IN THE MATTER OF ICN PHARMACEUTICALS, INC., (P-177)
(the "Order"), a private investigation is being conducted by the SEC with
respect to
C-1
certain matters pertaining to the status and disposition of the Company's
Hepatitis C NDA. As set forth in the Order, the investigation concerns whether,
during the period June 1994, through February 1995, the Company, persons or
entities associated with it and others, in the offer and sale or in connection
with the purchase and sale of ICN common stock, engaged in possible violations
of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the
Securities and Exchange Act of 1934 and Rule 10b-5 thereunder, by having
possibly (i) made false or misleading statements or omitted to state material
facts with respect to the status and disposition of the Hepatitis C NDA, or (ii)
purchased or sold ICN common stock while in possession of material, non-public
information concerning the status and disposition of the Hepatitis C NDA or
(iii) conveyed material, non-public information concerning the status and
disposition of the Hepatitis C NDA to other persons who may have purchased or
sold ICN stock. The Company is cooperating with the SEC in its investigation.
C-2
EXHIBIT D
Research and Development Plans
Schering Plough Research Institute will diligently pursue regulatory approvals
for ribavirin. This research and development program will be designed to meet
regulatory requirements in the major markets of commercial interest, including
France, Germany, Italy, Spain, the United Kingdom, the United States, and Japan.
Based on our current understanding of the ribavirin dossier and discussions
with health authorities, the following activities are envisioned. Of course,
actual research and development activities may vary depending on the results of
earlier studies and discussions with health authorities.
[REDACTED]
It is expected that the total research and development program will cost
approximately $60 million and require approximately five years to complete.
D-1
EXHIBIT E
ADVERSE EVENT REPORTING PROCEDURES
The Parties hereby agree that the following terms will govern disclosures of
each Party to the other with respect to adverse event reporting relating to the
Product as clinically tested or marketed by or on behalf of either Party.
1. An Adverse Event ("AE) is defined as:
(a) any experience which is adverse, including what are
commonly described as adverse or undesirable experiences, adverse events,
adverse reactions, side effects, or death due to any cause associated with or
observed in conjunction with the use of a drug, biological product, or devise in
humans, whether or not considered related to the use of that product:
- occurring in the course of the use of the drug,
biological product or device,
- associated with, or observed in conjunction with product
overdose, whether accidental or intentional,
- associated with, or observed in conjunction with product
abuse, and/or
- associated with, or observed in conjunction with product
withdrawal.
(b) Any significant failure of expected pharmacological or
biologic therapeutical action (with the exception of in clinical trials).
2. Serious or Non-Serious is defined as:
(a) A Serious AE is one that is life threatening or fatal,
permanently disabling, requires or prolongs in-patient hospitalization or
prolonged hospitalization, or is a congenital anomaly, cancer or overdose. In
addition, end organ toxicity, including hematological, renal, hepatic, and
central nervous system AE's, may be considered serious. In laboratory tests in
animals, a serious AE includes any experience suggesting significant risk for
human subjects.
(b) A Non-Serious AE is any AE which does not meet the
criteria for a serious AE.
1
3. Life-threatening is defined as: the patient is at immediate
risk of death from the AE as it occurs.
4. End-Organ Toxicity is defined as: A medically significant
event or lab value change in which a patient may not necessarily be
hospitalized or disabled, but is clinically significant enough to warrant
monitoring (e.g. seizures, blood dyscrasias).
5. Expected or unexpected to defined as:
(a) Expected AE - An AE which is listed in the Investigator's
Brochure for clinical trials, included in local labelling (e.g., Summary of
Product Characteristics) for Marketed Drugs, or in countries with no local
labelling, in the Corporate Standard Prescribed Document.
(b) Unexpected AE - An AE that does not meet the criteria for
an expected AE or an AE which is listed but differs from that event in terms of
severity or specificity.
6. Associated with or related to the use of the drug is
defined as: A reasonable possibility exists that the AE was caused by the
drug.
7. Un-associated or unrelated to the use of the drug is
defined as: A reasonable possibility exists that the AE may not have been
caused by the drug.
8. NDA Holder is defined as: An "Applicant" as defined in 21 CFR
Part 314.3(b), for regulatory approval of a Product in any regulatory
jurisdiction, including a holder of a foreign equivalent thereto.
9. NDA Holder is defined as: A "Sponsor" as defined in 21 CFR
Part 312.3(b) of an investigational new drug in any regulatory jurisdiction,
including a holder of a foreign equivalent thereto.
10. Capitalized terms not defined in this Exhibit shall have the
meaning assigned thereto in the Exclusive License and Supply Agreement (the
"Agreement").
11. With respect to the Product, the Parties agree as follows:
All initial reports and any follow-up information (oral or
written) for any and all Serious AEs as defined above, (other
than with respect to animal studies) which become known to
either Party (other than from disclosure) by or on behalf of
the other Party must be communicated by telephone, telefax, or
electronically directly to the other Party and/or the NDA
Holder, IND Holder (individually and collectively referred to
as "Holders") within forty-eight hours of
2
receipt of the information. Written confirmation of the
Serious AE received by such Party should be sent to the other
Party and/or the Holders as soon as it becomes available, but
in any event within forty eight hours of initial report of the
Serious AE by such Party.
Both Parties shall exchange Medwatch and/or CIOMS forms and
other health authority reports within forty eight hours of
submission to any regulatory agency.
All initial reports and follow-up information received for all
Non-Serious AEs for marketed Product which become known to a
Party (other than from disclosure by or on behalf of the other
Party) must be communicated in writing, by telefax or
electronically to the other Party on a monthly basis.
3
EXHIBIT F
PUBLICATION PROCEDURES
In recognition of the importance of disseminating information relating to
data arising from any activities conducted under the Agreement and understanding
that such need must be balanced with each Party's obligations to maintain
control over confidential information as well as to comply with appropriate
rules and regulations of the FDA, the Parties hereby agree to the following:
A. For purposes of this Exhibit a "Public Presentation" shall be defined as
the submission for publication in any scientific or academic journal or the
public presentation of either, individually or collectively, drafts of abstracts
and manuscripts (including slides and texts of oral or other public
presentations), which report any data obtained from any activities conducted
under Sections 3.1(a), (b) or (c) of the Agreement.
B. Prior to Regulatory Approval, in any country of the Territory, the
decision regarding any Public Presentation shall be at Schering's sole
discretion, subject to advice from the Scientific and/or Commercial Liaison
Committees. Following Regulatory Approval in any country of the Territory, the
decision regarding any Public Presentation of any additional data (data not
previously submitted to an regulatory authority in connection with any
Regulatory Approval or published in the scientific literature) shall be at
Schering's sole discretion, subject to advice from the Scientific and/or
Commercial Liaison Committees. Notwithstanding the foregoing, such Public
Presentation by Schering (both prior to and following Regulatory Approval) shall
not adversely affect ICN's ability to use data obtained from any activities
conducted under Section 3.1(a), (b) of (c) of the Agreement in the EU for
purposes other than a Public Presentation and only for the purposes contemplated
or permitted by the Agreement (for example, preparation of marketing materials).
In addition, prior to any Public Presentation, Schering shall first provide a
copy of such Public Presentation to ICN. Following Regulatory Approval in any
country of the Territory, any Public Presentation by either Party shall follow
the review procedures set forth in subsections (C) and (D) below.
C. Each Party agrees to provide thirty (30) days written notice to the
other Party prior to any Public Presentation. Each Party shall have the right to
review and comment on the data analysis and presentation of each Public
Presentation to:
(i) ensure that confidential information (as described in Article 9 of
the Agreement) is protected;
(ii) ensure the accuracy of the information contained in the Public
Presentation; and
(iii) ensure that the Public Presentation is fairly balanced and in
compliance with FDA regulations.
If the reviewing Party disagrees with the submitting Party concerning the
accuracy and appropriateness of the data analysis and presentation, and/or
confidentiality of confidential information, the reviewing Party shall notify
the other Party no later than thirty (30) days after submission to the reviewing
Party of the proposed Public Presentation. The Parties agree to meet within ten
(10) days of such notice of disagreement for the purpose of making good faith
efforts to discuss and resolve any such issues or disagreement. If the Parties
are unable to resolve any such issues or disagreement, the dispute shall be
subject to the dispute resolution mechanism set forth in Article 13 of the
Agreement.
D. No Public Presentation shall contain any confidential information (as
described in Article 9) and shall be confined to new discoveries and
interpretations of scientific fact.