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EXHIBIT 10.1
NOTE: CERTAIN CONFIDENTIAL PORTIONS OF THIS AGREEMENT HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
RELAXIN
DEVELOPMENT, COMMERCIALIZATION AND LICENSE AGREEMENT
This DEVELOPMENT, COMMERCIALIZATION AND LICENSE AGREEMENT
("Agreement"), effective as of April 23, 1998 ("Effective Date") is made by and
between Suntory Limited, a corporation of Japan having its principal place of
business at 0-00, Xxxxxxxxxx 0-xxxxx, Xxxx-xx, Xxxxx 000, Xxxxx ("Suntory") and
Connetics Corporation (formerly known as Connective Therapeutics, Inc.), a
corporation of the State of Delaware, U.S.A., having its principal place of
business at 0000 Xxxx Xxxxxxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, X.X.X. ("Connetics")
(each, respectively, a "Party" and collectively, the "Parties").
BACKGROUND
A. Connetics possesses certain technology and intellectual property
rights pertaining to Relaxin as defined below.
B. Connetics and Suntory desire to collaborate to develop and
commercialize Relaxin Products as defined herein for use in treatment of
scleroderma in the Japanese market.
THEREFORE, the Parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Additional Relaxin Patents" means any and all patents which
Connetics and/or its Affiliates acquires ownership of and the right to license
to Suntory during the Term (as defined in Section 8.1), including but not
limited to any substitutions, extensions, reissues, renewals, divisions,
continuations, or continuations-in-part of the Relaxin Patents relating to the
Relaxin Materials and/or the Product, provided that such patents would be
infringed by the unlicensed manufacture, use or sale of the Product in the Field
in the Territory; Connetics shall promptly notify Suntory of the details of such
Additional Relaxin Patents.
1.2 "Affiliate" means an entity that controls, is controlled by or is
under common control with a Party. For purposes of this definition, "control"
shall mean the possession directly or indirectly, of a majority of the voting
power of such entity (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise); provided that such entity
shall be deemed an Affiliate only so long as such control continues.
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1.3 "Best Efforts" mean the good faith deployment by Suntory or
Connetics, in light of prevailing circumstances and taking into account Third
Party obligations and commitments, of sufficient of its resources, capital
equipment, material and labor as might reasonably be expected to achieve in the
shortest practical time, the benefits which are anticipated to accrue to Suntory
and Connetics from the commercial exploitation of the Product, and if the Best
Efforts are to be directed to a specific goal, then that goal.
1.4 "Core Relaxin Patents" means patents and patent applications that
are (i) the certain Relaxin Patents specified in Exhibit B-2 and (ii) such
Additional Relaxin Patents and/or intellectual property rights arising after the
Effective Date under the Third Party Licenses as may be designated by Suntory
within thirty (30) days of Connetics notice to Suntory of the details of such
patents and patent applications, which notice shall be promptly given to Suntory
upon application or registration in the Territory during the Term of this
Agreement.
1.5 "Dollars" or "$" means the lawful currency of the United States.
1.6 "Field" means the treatment of scleroderma.
1.7 "Gross Sales" means all amounts invoiced and/or received by Suntory
and/or an Affiliate or assignee of Suntory or a distributor appointed by Suntory
("Seller") for sales of Product in the Territory to a Third Party.
1.8 "IND" means an Investigational New Drug application filed with the
U.S. Food and Drug Administration ("FDA") and such comparable application in
Japan.
1.9 "Licensed IP" means the Core Relaxin Patents, Relaxin Information
and Third Party Licenses.
1.10 "Net Sales" means Gross Sales less: (i) price reductions or
discounts, including cash discounts, or rebates, actually granted, (ii) credits
or allowances actually granted upon claims, rejections or returns of Product,
including recalls, regardless of the Party requesting such, (iii) the actual
cost of packaging, freight and insurance that has been included in the Gross
Sales amounts invoiced, and (iv) any tax imposed or other governmental charge
(other than an income or withholding tax) charged or levied on the sale,
transportation, or delivery of a Product and borne by Suntory on such sales in
the Territory. [It is estimated that Net Sales will be approximately [1] percent
([1]%) of the XXX Xxxxx.]
1.11 "NDA" means any one of: a New Drug Application, or (as long as
equivalent under the U.S. Food, Drugs and Cosmetics Act to a New Drug
Application for purposes of securing regulatory approval for commercial sale of
the Product in the United States) a Biologics License Application or a Product
License Application filed with the FDA or any such comparable application in
Japan.
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[1] Confidential treatment has been requested for the language which has been
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1.12 "NHI" means the National Health Insurance in Japan.
1.13 "XXX Xxxxx" means the price approved for NHI reimbursement for the
Product in the Territory.
1.14 "Product" means a commercial pharmaceutical product containing
Relaxin for use in the Field in a finished form that is supplied to Suntory by
Connetics pursuant to this Agreement for sale in the Territory.
1.15 "Relaxin" means recombinant human relaxin (H2), also known by
Connetics' proprietary trade name ConXn(R), having the structure and
Specifications as identified in Exhibit A hereto.
1.16 "Relaxin Information" means the trade secrets and know-how
relating to Relaxin, Relaxin Materials and the Product in the Field, including
but not limited to pre-clinical, clinical and regulatory information as may be
required by Suntory for the purposes of this Agreement that: (i) is owned by
Connetics and/or its Affiliates as of the Effective Date or comes into the
ownership of Connetics and/or its Affiliates during the Term, or (ii) to the
extent existing as of the Effective Date of this Agreement and owned by a Third
Party, which Connetics and/or its Affiliates has a right under the Third Party
Licenses in effect as of the Effective Date to license to Suntory and its
Affiliates hereunder.
1.17 "Relaxin Materials" means bulk Relaxin or formulated Relaxin
required by Suntory for use in performing pre-clinical studies, clinical trials
and/or procuring regulatory approval in the Field in the Territory.
1.18 "Relaxin Patents" mean the patents and patent applications owned
by Connetics and/or its Affiliates or included in the Third Party Licenses
which: (i) are in existence as of the Effective Date; (ii) would be infringed by
the unlicensed manufacture, use or sale of the Product in the Field in the
Territory; and (iii) with respect to the Third Party Licenses Connetics and/or
its Affiliates has a right to license to Suntory and its Affiliates hereunder. A
list of such Relaxin Patents is attached hereto as Exhibit B-1.
1.19 "Specifications" means the specifications for the Relaxin
Materials and the Product as set forth in Exhibit A hereto, or such changes as
may subsequently be agreed to in writing signed by the Parties.
1.20 "Suntory Improvements" means any inventions, discoveries,
improvements or enhancements relating to the Licensed IP, including but not
limited to pre-clinical and clinical data and information relating to Relaxin,
whether patentable or not, made by Suntory during the Term and any and all
intellectual property rights therein and thereto; Suntory shall promptly notify
Connetics of the details of such Suntory Improvements.
1.21 "Territory" means Japan.
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1.22 "Third Party Licenses" means any and all licenses to Third Party
intellectual property rights covering Relaxin, Relaxin Materials and Product,
including but not limited to patents, patent applications, trade secrets,
know-how and/or technology, which (i) have been granted to Connetics and/or its
Affiliates as of the Effective Date or thereafter during the Term (to the extent
included in the Core Relaxin Patents and/or accepted by Suntory as Licensed IP
pursuant to Section 2.3); (ii) would be infringed by the unlicensed manufacture,
use or sale of the Product in the Field in the Territory; and (iii) to which
Connetics and/or its Affiliates has a right to sublicense to Suntory and its
Affiliates hereunder. A list of the Third Party Licenses as of the Effective
Date is attached hereto as Exhibit C. If Connetics and/or its Affiliates acquire
any licenses to Third Party intellectual property rights covering Relaxin,
Relaxin Materials and Product in the Field in the Territory (including but not
limited to patents, patent applications, trade secrets, know-how and/or
technical information) during the Term with the right to sublicense to Suntory
and its Affiliates hereunder, Connetics shall promptly offer Suntory a
sublicense thereunder.
1.23 "Third Party(ies)" means any person or entity other than Suntory
or Connetics, or an Affiliate of Suntory or Connetics.
1.24 "Yen" or "(Y)" means the lawful currency of Japan.
ARTICLE II
LICENSE
2.1 License. Subject to the terms and conditions of this Agreement,
during the Term, Connetics grants to Suntory and its Affiliates an exclusive,
non-transferable license, without the right to sublicense, under the Licensed
IP, solely within the Territory and in the Field, to: (i) use Relaxin Materials
for the purpose of conducting pre-clinical studies and clinical trials and
procuring regulatory approval for commercial sale of the Product; and (ii) use,
distribute, offer for sale and sell the Product; provided that Suntory may
appoint a Third Party as its distributor for marketing and sale of the Product
in the Territory subject to Connetics' approval which shall not be unreasonably
withheld nor delayed.
2.2 License to Suntory Improvements. Subject to the terms and
conditions of this Agreement, Suntory grants to Connetics and its Affiliates an
exclusive, non-transferable (except in accordance with Section 9.8),
royalty-free license, without the right to sublicense (except as provided
herein), to any Suntory Improvements in the Field in all territories of the
world excluding the Territory. Connetics may sublicense such license to Suntory
Improvements to any Third Party subject to payment to Suntory of royalties
agreed by the Parties in advance.
2.3 Third Party Technology. Suntory acknowledges that the licenses
granted to Suntory herein include Third Party Licenses. While Connetics shall be
responsible for all payments attributable to this Agreement for Third Party
Licenses, Suntory agrees to abide by the terms and conditions of such Third
Party Licenses pertinent to Suntory as Connetics' sublicensee (e.g., not
including certain financial conditions) and disclosed to Suntory as of the
Effective Date. No future Third Party License nor any future amendment(s) to the
Third Party Licenses disclosed as of the Effective Date shall affect Suntory's
rights under this Agreement unless Suntory is
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notified thereof and agrees in writing to abide thereby. Suntory shall have no
rights under any Third Party intellectual property arising after the Effective
Date from a Third Party License in effect as of the Effective Date or entered
thereafter, until Suntory agrees to include such rights as Core Relaxin Patents
(or otherwise as Licensed IP) under this Agreement, including the payment by
Suntory of such additional royalties therefor as may be agreed between the
Parties; provided that no increased royalty payment by Suntory shall be required
for intellectual property arising after the Effective Date from a Third Party
License in effect as of the Effective Date. Connetics also shall abide by the
terms and conditions of all provisions of such Third Party Licenses as are
pertinent for the maintenance of the Third Party Licenses for Suntory as
Connetics' sublicensee.
2.4 Reservation of Rights. The licenses granted to Suntory under
Section 2.1 do not grant to Suntory, expressly or by implication, the right to
make or have made Relaxin Materials or Product, except as specifically provided
under Section 4.12 of this Agreement. Notwithstanding the foregoing, no right,
title, or interest is granted, whether expressly or by implication to any
technology or intellectual property rights owned by either Party, except for the
rights and licenses expressly granted hereunder, and each Party hereby reserves
all rights not expressly granted hereunder, nor shall anything in this Agreement
be deemed to restrict either Party from exploiting any of its rights not
expressly granted to the other Party hereunder.
2.5 Enforcement. As between the Parties, Connetics shall initially have
the primary right and discretion regarding enforcement of the Licensed IP
against Third Parties who may be infringing or misappropriating such
intellectual property rights in the Territory; provided, however, Connetics
shall use Best Efforts, at its sole expense, to protect the exclusive license
granted to Suntory pursuant to this Agreement, taking into account the costs and
benefits of such action, including, without limitation, the costs to be incurred
in any such action and the amount and likelihood of the damages that may be
awarded in any such action. If Connetics (i) decides not to enforce the Licensed
IP, or (ii) does not bring such action within ninety (90) days after notice of
Suntory's request to enforce the Licensed IP, then Suntory may do so at its own
expense. The Party enforcing shall be entitled to recover all of its costs,
expenses and fees incurred in such action from the damages awarded, and any
remaining amount shall be equitably divided between the Parties (and any Third
Party licensee of Connetics) in relative proportion to their damage by the acts
giving rise to such action. The Party not enforcing agrees to cooperate with the
Party enforcing the Licensed IP to the extent reasonably requested by and at the
expense of the enforcing Party, including, without limitation, being named as a
party in such proceeding. The Party not enforcing may choose to be represented
in any such action by counsel of its own choice and at its own expense. Upon
notice by Suntory to Connetics of any pharmaceutical products (other than the
Suntory Product) containing Relaxin in the Field in the Territory during the
Term of this Agreement by any Third Party, if (i) Connetics elects not to
enforce the Licensed IP or does not bring a lawsuit against such Third party
within ninety (90) days, or if the Licensed IP is held invalid or not infringed
by a final decision of a court of competent jurisdiction from which no further
appeal is or can be taken and (ii) total market share of all pharmaceutical
products containing Relaxin sold in the Field in the Territory (other than the
Suntory Product) reach twenty percent (20%) or more of the overall market, then
the Royalties payable by Suntory pursuant to Section 4.4.2 shall thereafter be
reduced by fifty percent (50%) during any such continuing period of
non-exclusivity.
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2.6 Third Party Patent Rights.
2.6.1 If a notice of infringement is threatened or received or
a suit is initiated against either Suntory, its Affiliates, its assignee and/or
its distributor, or Connetics and/or its Affiliates with respect to the Relaxin
Materials and/or the Product, the Parties will discuss with each other the best
way to respond.
2.6.2 To the extent that such suit is initiated against
Suntory, its Affiliates, its assignee and/or its distributor, and not against
Connetics or Connetics' licensor(s) or other licensees, it is agreed that
Connetics will give due consideration (including in Connetics discussions with
the licensors of the Third Party Licenses as to the best way to respond ) to
have Suntory defend against such suit or threatened suit, subject to the advice
and consent of Connetics. Connetics shall, upon request of Suntory, give all
reasonable assistance to Suntory with respect to the defense of such suit or
threatened suit.
2.6.3 Provided that such suit or threatened suit is related to
the use of the Product in the Field in the Territory (but not due to any
combinations of or modifications to the Product, its method of use,
administration and/or manufacture or other like acts or any omissions of
Suntory, its Affiliates, its assignee and/or its distributor) Suntory may offset
any amounts actually paid by Suntory, its Affiliates, its assignee and/or its
distributor for any actual claims, losses, damages, liabilities or expenses
(including reasonable attorneys fees) caused by or incurred in connection with
such suit or threatened suit, in that Suntory may withhold such amounts actually
paid from up to fifty percent (50%) of any Royalties payable to Connetics under
this Agreement after assumption of such defense or beginning of settlement
negotiations by Suntory. Suntory, its Affiliates, its assignee and/or its
distributor shall have no authority to settle any suit or threatened suit
without the express prior written consent of Connetics, which consent shall not
be unreasonably withheld..
ARTICLE III
PRODUCT DEVELOPMENT AND REGULATORY APPROVAL
3.1 Connetics' Responsibilities.
3.1.1 Connetics is undertaking Relaxin development activities
and shall keep Suntory reasonably informed of its progress. Within fourteen (14)
days following the Effective Date Connetics shall provide Suntory with a list
identifying all of Connetics' pre-clinical data, clinical data and regulatory
information, and thereafter promptly upon Suntory's reasonable request,
Connetics shall provide or have any of Connetics' Affiliates or through a Third
Party provide such data and information to the extent included in Relaxin
Information as may be required by Suntory for the accomplishment of Suntory's
responsibilities under this Agreement at such time. At the conclusion by
Connetics of its pivotal clinical trial in the U.S. for Relaxin ("Pivotal
Clinical Trial"), Connetics shall use its Best Efforts to promptly provide
Suntory with a draft report of the data from such Pivotal Clinical Trial, and
promptly provide Suntory with the final report of such Pivotal Clinical Trial
("Pivotal Clinical Trial Report"). Connetics shall use its Best Efforts to
promptly determine, in its sole discretion, whether to go forward with the
filing
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of an NDA in the U.S., and Connetics shall notify Suntory in writing within
seven (7) days of making such decision (the "Go Forward Notice").
3.1.2 Connetics shall use its Best Efforts to file an NDA and
to obtain regulatory approval for commercialization of the Product in the U.S.
If Connetics fails to use its Best Efforts to file an NDA or fails to use its
Best Efforts to obtain regulatory approval for commercialization of the Product
in the U.S. and ceases Relaxin development, Suntory may elect to proceed with
procuring regulatory approval for and commercialization of the Product in the
Field in the Territory in accordance with the terms of this Agreement, in which
event:
(i) Suntory shall be entitled to withhold, from any future
payments or Royalties due Connetics under this Agreement, [1] percent
([1]%) of all amounts previously paid by Suntory to Connetics under
Sections 3.2 and 3.3 hereof; and
(ii) Suntory shall assume all responsibility for manufacturing
in accordance with Section 4.12, except that Connetics shall not be
entitled to resume manufacture of Relaxin Materials and/or Product for
Suntory nor shall Connetics be liable for any of Suntory's investment
expenses, or losses attributable thereto in excess of [1] percent
([1]%) of the Royalties due Connetics in any given period hereunder,
taking such expenses or losses cumulatively with any other credits or
withholding permitted under this Agreement.
3.2 Suntory's Responsibilities.
3.2.1 No later than thirty (30) days following the Go Forward
Notice, or within sixty (60) days following Suntory's receipt of the Pivotal
Clinical Trial Report, whichever is later, Suntory shall notify Connetics in
writing as to whether Suntory elects to proceed with regulatory approval for and
commercialization of the Product in the Field in the Territory in accordance
with the terms of this Agreement. If Suntory elects not to proceed, this
Agreement shall terminate (consistent with the provisions of Section 8.4) upon
receipt of Suntory's notice, and in lieu of any and all additional remedies
available to Connetics against Suntory under law and equity:
(i) Connetics shall be entitled to retain all amounts
previously paid or then owed by Suntory to Connetics pursuant to this
Agreement, and
(ii) if Connetics has decided to go forward with the filing of
an NDA in the U.S., and if the Pivotal Clinical Trial Report contains
statistically significant data showing efficacy in the primary endpoint
(modified Rodnan skin score) and a therapeutic ratio (vs any
side-effects) that is acceptable under reasonable standards
then-prevailing in the biotechnology industry giving consideration to
the Product, the Field and the Territory, Suntory shall immediately pay
to Connetics [1] Yen.
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3.2.2 On the date of Suntory's notice, if Suntory elects to
proceed pursuant to Section 3.2.1 (the "Suntory Decision Date") and thereafter
during the Term of this Agreement, Suntory shall use its Best Efforts to secure
regulatory approval for commercialization of the Product in the Territory,
including but not limited to achieving each of following regulatory milestones
(each a "Regulatory Milestone") by its corresponding due date ("Due Date") as
set forth in the schedule below:
Regulatory Milestone Due Date
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[1] No later than [1] months after the Suntory Decision Date
[1] No later than [1] months after the Suntory Decision Date
[1] No later than [1] months after the Suntory Decision Date
[1] No later than [1] months after the Suntory Decision Date
3.2.3 In case of any substantial delay in Suntory's
achievement of a Regulatory Milestone, the Parties shall discuss the reason
therefor (e.g., the necessity of conducting significant additional reproductive
toxicology or nine-month chronic toxicity pre-clinical testing prior to IND
filing under the applicable rules and regulations in the Territory) and any
mutually acceptable remedial steps (e.g., a re-scheduling of such due dates). If
such delay is attributable to any cause within Suntory's reasonable control the
Parties shall discuss in good faith such remedial steps as may be mutually
agreeable; if the Parties cannot so-agree, the dispute shall be submitted for
resolution in accordance with Section 9.4 pursuant to which the remedies
available shall include termination of the Agreement or conversion of the
license granted to Suntory hereunder into a non-exclusive license.
3.3 Payments. Subject to Section 9.2, Suntory shall pay to Connetics a
total of [1] Yen in accordance with the following schedule, payable within
thirty (30) days of the applicable Payment Date, except the Up-front payment,
which shall be due within ten (10) days of execution of this Agreement (Stage 2
Payment Dates shall not become due prior to the Suntory Decision Date):
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Stage 1
Amount in Millions of Yen Payment Due
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[1] Up-front payment upon execution of this Agreement
[1] Development costs advance upon Suntory's receipt of
Connetics' notice that it has initiated the Pivotal
Clinical Trial in the U.S.
[1] On Suntory Decision Date if Suntory elects to proceed
under Section 3.2.1, payable: [1]% as a success-based
milestone, and [1]% as a technology transfer fee
whereupon Suntory may proceed to use Connetics' Pivotal
Clinical Trial Report
Total: [1]
Stage 2
Amount in Millions of Yen Payment Due
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[1] [1]
[1] [1]
[1] [1]
[1] [1]
[1] [1]
Total: [1]
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Stage 3
Amount in Millions of Yen Payment Due
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[1] After the [1] year when annual Net Sales exceed [1]Yen,
payable with Suntory's Sales Report for the last
calendar quarter of such year
[1] After the [1] year when annual Net Sales exceed [1]Yen,
payable with Suntory's Sales Report for the last
calendar quarter of such year
Total: [1]
ARTICLE IV
COMMERCIALIZATION AND SUPPLY
4.1 Commercialization. After obtaining regulatory approval for the
Product in the Field in the Territory, Suntory shall use its Best Efforts to
market and sell Product successfully in the Field in the Territory.
4.2 Product Markings. Product shall be marketed and sold by Suntory in
the Territory as Suntory's products under trademarks selected and solely owned
by Suntory; provided, however, that each Product marketed and sold by Suntory
hereunder shall be marked with: (i) a notice that such Product is manufactured
by and sold under license from Connetics Corporation; and (ii) all patent and
other intellectual property notices relating to the Licensed IP as directed by
Connetics. Other than expressly permitted herein, no right or license is granted
to Suntory to use Connetics' name or any trademarks or tradenames of Connetics
in advertising, publicity or other promotional activities without the express
written approval of Connetics.
4.3 Supply of Product. Subject to the terms and conditions of this
Agreement, commencing from the Go Forward Notice until Suntory receives approval
to market the Product in the Territory, Connetics shall use its Best Efforts to
manufacture for and supply to Suntory all Suntory's requirements for Relaxin
Materials at the transfer price set forth in Section 4.4.1; provided that
Suntory shall not transfer the Relaxin Materials to any Third Party at any time
except to the extent transfer is required for pre-clinical studies, clinical
trials or regulatory approval or filing related to the Product in the Field and
Territory. Subject to the terms and conditions of this Agreement, commencing
upon Suntory's receipt of approval to market the Product in the Territory until
the termination or expiration of this Agreement, Connetics shall use its Best
Efforts to manufacture for and supply to Suntory all Suntory's requirements for
Product at the transfer price set forth in Section 4.4.2. In the event that
Connetics decides that change or modification of the production procedure of the
Product is necessary during the Term for any
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reason, Connetics shall promptly notify Suntory of the need for such change or
modification. Connetics may implement such change or modification to the actual
production procedure only upon Suntory's prior written consent, which shall not
be unreasonably withheld and shall be deemed given unless Connetics is otherwise
notified in writing by Suntory within 60 days of Connetics' corresponding
notice. Connetics shall have the right to subcontract with a Third Party the
manufacture of Relaxin Materials and Product for supply to Suntory. Subject to
the terms and conditions of this Agreement, during the Term, Suntory shall
purchase all its requirements for Relaxin Materials and Product from Connetics.
Upon Suntory's request, during the one (1) year period preceding the expiration
of the Term, the Parties agree to negotiate in good faith for an extension of
supply by Connetics and purchase of the Product by Suntory.
4.4 Price and Royalties.
4.4.1 Relaxin Materials. Connetics shall supply [1] Suntory's
reasonable requirements of Relaxin Materials for Suntory's pre-clinical and
clinical obligations under this Agreement. Suntory shall pay to Connetics a
Manufacturing Scale-up Reimbursement in the amount of [1]mg (formulated and
filled) and [1]mg (bulk).
4.4.2 Product. Connetics shall provide Product to Suntory in
exchange for Suntory's payment of a Transfer Price for the Product provided and
a Royalty on Net Sales of the Product in the Field in the Territory, calculated
at the rates set forth in the following table, as determined by the XXX Xxxxx
for the Product in the Field, provided that Suntory shall enjoy a credit of [1]
Yen against the first royalties owed Connetics hereunder unless Connetics has
first paid such amount to Suntory at Connetics' sole election.
XXX XXXXX (Y)/MG PRODUCT TRANSFER PRICE ROYALTY
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[1] [1] [1]
[1] [1] [1]
[1] [1] [1]
[1] [1] [1]
[1] [1] [1]
If the XXX xxxxx for the Product in the Field is less than [1] the Parties shall
meet and discuss in good faith such adjustments to the Transfer Price and
Royalty as may be commercially warranted under the circumstances at such time.
If the Parties cannot agree to any adjustment, then Suntory may elect to proceed
at the rates set forth for [1] or to terminate this Agreement pursuant to
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Section 8.2.3(i). If the amounts payable by Connetics upon Net Sales to a Third
Party under any Third Party Licenses are reduced or terminated for any reason
during the Term, the Parties shall meet and discuss in good faith any
corresponding adjustments to the Royalty as may be warranted taking into account
the amount of any such reduction and any change in the value of the
then-existing Licensed IP as well as the financial situation of Suntory's
business involving the Product. If Connetics' production costs for the Product
change during the Term, the Parties shall meet and discuss in good faith any
corresponding adjustments to the Transfer Price.
4.5 Forecasting.
4.5.1 Relaxin Materials. No later than the Suntory Decision
Date, Suntory shall deliver to Connetics an initial purchase forecast, by
quarter, setting forth the quantity and delivery dates of Relaxin Materials
required by Suntory for the twelve (12) month period following the delivery of
such initial forecast. Thereafter, until Suntory receives approval to market the
Product in the Territory, Suntory shall deliver to Connetics, on a semi-annual
basis, twelve (12) month forecasts setting forth Suntory's required quantities
and delivery dates for Relaxin Materials no later than six (6) months prior to
the commencement of the period covered by such forecast.
4.5.2 Product. No later than one (1) year before Suntory
expects in good faith to receive regulatory approval to market the Product in
the Territory, Suntory shall deliver to Connetics an initial forecast setting
forth the quantity and delivery dates of Product required by Suntory for Product
launch and the twelve (12) month period following the receipt of regulatory
approval in the Territory. Suntory shall review the initial Product purchase
forecast no later than six (6) months before Suntory expects in good faith to
receive the XXX Xxxxx for the Product in the Field in the Territory. Thereafter,
commencing upon Suntory's receipt of the XXX Xxxxx for the Product in the Field
in the Territory and until the termination or expiration of this Agreement,
Suntory shall deliver to Connetics, on a semi-annual basis, twelve (12) month
forecasts setting forth Suntory's required quantities and delivery dates for
Product no later than six (6) months prior to the commencement of the period
covered by such forecast; the first six (6) months of such forecasts shall
constitute Suntory's "Fixed Forecast."
4.6 Order and Acceptance. During the first two (2) years after Product
launch, Suntory shall be required to submit purchase orders on a quarterly basis
for Product in quantities no less than [1] percent ([1]%) of the quantities set
forth in the Fixed Forecasts submitted by Suntory in accordance with Section 4.5
and Connetics shall be required to supply quantities of Product no more than [1]
percent ([1]%) of the quantities in such Fixed Forecast. Thereafter, Suntory
shall be required to submit purchase orders on a quarterly basis for Product in
quantities no less than [1] percent ([1]%) of the quantities set forth in the
Fixed Forecasts submitted by Suntory in accordance with Section 4.5 and
Connetics shall be required to supply quantities of Product no more than [1]
percent ([1]%) of the quantities in such Fixed Forecasts. No purchase order
shall be binding upon Connetics until accepted by Connetics in writing. Once
accepted by Connetics, Suntory may cancel or reschedule purchase orders only
with prior written approval by Connetics.
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4.7 Minimums.
4.7.1 Sales Forecasts. Suntory's Preliminary Five Year Sales
Forecast is attached as Exhibit D. No later than six (6) months before Suntory
expects in good faith to receive the XXX Xxxxx for the Product in the Field in
the Territory, Suntory shall review and revise the Preliminary Five Year Sales
Forecast, the first one (1) year as revised constituting Suntory's "Fixed Sales
Forecast." Thereafter, such Five Year Sales Forecast shall be reviewed and
revised annually by Suntory, no later than six (6) months prior to commencement
of each subsequent year, the first one (1) year constituting Suntory's next
Fixed Sales Forecast; provided that, in the event of a substantial unforeseeable
change of circumstance, such Fixed Sales Forecast may be revised by Suntory.
4.7.2 Commencing upon the receipt by Suntory of regulatory approval to
market the Product in the Territory, Suntory shall be obligated to meet and
maintain annual minimum sales equal to at least [1] percent ([1]%) of Suntory's
Fixed Sales Forecast for the first [1] years after Product launch in the Field
in the Territory (the "Minimums"). If Suntory fails to meet the Minimums for a
calendar year, Connetics may, upon thirty (30) days written notice to Suntory,
change the license granted to Suntory hereunder into a non-exclusive license,
unless prior to the end of such thirty (30) day period, Suntory pays to
Connetics an amount equal to the royalty calculated on the Minimums for such
year less any actual royalty amount already paid by Suntory to Connetics for
such year (the "Royalty Shortfall Payment"). If Suntory fails to meet the
Minimums for [1] consecutive calendar years, but Suntory has made the respective
Royalty Shortfall Payments to Connetics, then Connetics may change the exclusive
license granted to Suntory hereunder into a non-exclusive license upon thirty
(30) days written notice to Suntory. If Suntory elects not to make a Royalty
Shortfall Payment to Connetics, then Connetics may terminate this Agreement upon
thirty (30) days written notice to Suntory.
4.8 Invoice and Sales Report.
4.8.1 For each shipment of Relaxin Materials or Product
ordered by Suntory, Connetics shall submit an invoice, packing list and airway
xxxx to Suntory, a certificate of analysis for each batch thereof confirming its
compliance with the Specifications. Invoices shall state:
(i) the quantity of Relaxin Material in such
shipment and the Manufacturing Scale-up
Reimbursement therefor in accordance with
Section 4.4.1; and/or
(ii) the quantity of Product in such shipment and
the Transfer Price therefor in accordance
with Section 4.4.2.
All invoices and other shipping documents shall be sent via first class mail or
by fax to Suntory's address for notices hereunder.
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4.8.2 Suntory shall within [1] days after the last day of each
calendar quarter provide Connetics with a written report ("Sales Report")
setting forth:
(i) the Gross Sales and corresponding Net Sales
received therefor in Yen;
(ii) a calculation of the aggregate Gross Sales
and corresponding Net Sales for the calendar
year in which the sales were made;
(iii) a calculation of the Royalties payable to
Connetics with respect to such sales
including the applicable Conversion Rate in
accordance with Section 9.2.
4.9 Delivery. Connetics shall ship Relaxin Materials and/or Product to
the address specified in the applicable purchase order for delivery on the
scheduled delivery date specified in the applicable purchase order; provided,
however, that such scheduled delivery date shall not be less than [1] days from
the date of receipt by Connetics of such purchase order. All shipments shall be
F.O.B. Connetics' manufacturing facilities, and Suntory shall bear the risk of
loss and cost of transportation of the Relaxin Materials and/or Product upon
delivery by Connetics to Suntory's carrier for shipping to Suntory. Connetics
shall suitably pack the Relaxin Materials and/or Product for shipment to Suntory
in such manner as agreed by the Parties prior to the first shipment thereof. All
freight and insurance shall be paid by Suntory. Relaxin Materials and Product
supplied to Suntory shall be labeled and packaged in accordance with Suntory's
instructions; all such labeling and inner packaging materials shall be supplied
by Suntory to Connetics at Suntory's expense.
4.10 Payment and Audit. Suntory shall pay Connetics for all invoiced
amounts within thirty (30) days of receipt of Connetics' invoice. Suntory shall
pay the Royalties due Connetics for each quarter on the same day as the Sales
Report for such quarter is delivered. Upon reasonable notice to Suntory,
Connetics shall have the right to have an independent certified public
accountant, selected by Connetics and reasonably acceptable to Suntory, audit
Suntory's records during normal business hours to verify all records pertaining
to the calculation of Suntory's Net Sales and calculation of the transfer price
and/or Royalties due Connetics; provided, however, that such audit shall not
take place more frequently than [1] and shall not cover records for more than
the preceding [1] years. Each Party shall promptly pay or refund to the other
Party the amount of any overpayment or underpayment determined in such audit.
Any such audit shall be at the expense of the Party requesting the audit unless
such audit indicates greater than five percent (5%) error in payment based on
the records and/or calculations of the audited Party, in which case such audit
shall be at the expense of the audited Party and such payment or refund shall
bear interest from the date due at five percent (5%) plus the prime rate
established by the U.S. Federal Reserve Bank, or the maximum interest permitted
by applicable law, if lesser. Each Party shall preserve and maintain all such
records and accounts required for audit for a period of [1] years after the
calendar quarter for which the record applies. All
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information resulting from such audits conducted pursuant to this Section 4.10
shall be kept confidential pursuant to Section 7.2. The results of any such
audit shall be disclosed to the auditing Party, provided that the certified
public accountants shall not disclose to the auditing Party the business details
of the audited Party's records, but shall report only as to whether the amounts
charged or royalties paid were correct, or if not, the amount by which the
certified public accountant's calculation varies from the audited Party's
calculation.
4.11 Inspection.
4.11.1 Suntory shall complete inspection and analysis of
analytically representative samples from each shipment of Relaxin Materials
and/or Product within thirty (30) days after receipt by Suntory in a bonded
warehouse in Japan. If the result of such inspection and analysis indicates that
the Relaxin Materials or Product fails to meet Connetics' warranty pursuant to
Section 6.1, Suntory shall immediately give Connetics written notice of such
failure including the detailed reasons therefor accompanied by a representative
sample from the Relaxin Material or Product believed to be defective. Suntory
shall be entitled to withhold payment for such shipment pending resolution of
the alleged defect. Connetics shall inspect and analyze such sample for the
alleged defect within thirty (30) days of receipt of Suntory's notice and
sample, and promptly report the results to Suntory. At its option, Connetics may
perform the inspection and analysis itself, through Connetics' supplier or
through an independent testing laboratory.
(i) If the result of Connetics' inspection and analysis
confirms that such sample fails to meet Connetics' warranty, Suntory
shall be entitled to such remedy as is provided under Section 6.3 of
this Agreement.
(ii) If the result of Connetics' inspection and analysis
confirms that such sample meets Connetics' warranty pursuant to Section
6.1, the Parties shall use their Best Efforts to discover the reason
for reaching inconsistent results, and to resolve the matter. If the
Parties are unable to resolve the matter within fifteen (15) days of
Connetics' report to Suntory, the sample (or additional samples) of the
Relaxin Materials or Product shall be submitted to an independent
laboratory mutually agreeable to the Parties, to repeat the inspection
and analysis. The determination of the independent laboratory shall be
binding on the Parties.
4.11.2 Suntory, upon its own discretion and at its own cost
and expense, is entitled during ordinary business hours and at dates acceptable
to Connetics to inspect or to have inspected (including by representatives of
the competent authorities in the Territory) Connetics' or Connetics' Third Party
manufacturer's plant and procedures used for manufacture and storage of the
Relaxin Materials and/or Product. Connetics undertakes to use its Best Efforts
to follow, or have the Third Party Manufacturer follow, any guidelines and
official orders resulting from such inspections.
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4.12 Inability to Supply.
4.12.1 In the event Connetics fails for any reason, including
without limitation, a force majeure event described in Section 9.7, to deliver
Relaxin Materials and/or Product to Suntory, Connetics shall immediately inform
Suntory of such inability in order to arrive at a mutually acceptable resolution
of such inability. In such case, Suntory may provide its assistance, including
but not limited to financial or technical support to Connetics, its Affiliates
and/or its sub-contractors in order to overcome the cause of such inability. In
the event that such inability exceeds a period of one hundred twenty (120) days,
then Suntory shall have the right to make or have made all of its requirements
of Relaxin Materials and/or Product until Connetics provides Suntory with
appropriate evidence that Connetics is capable of manufacturing Suntory's
requirements for Relaxin Materials and/or Product pursuant to the terms hereof.
4.12.2 If Suntory assumes manufacture of the Relaxin Materials
and/or Products pursuant to Section 4.12.1, then:
(i) at Suntory's request, Connetics shall provide [1] such
technology transfer as is reasonably necessary to facilitate the
assumption of manufacturing by or for Suntory, including granting to
Suntory a non-exclusive, license solely for such purpose, under such of
the Licensed IP as would be infringed by the unlicensed manufacture of
Relaxin Materials and/or Product under Connetics' then-current
manufacturing process by or for Suntory; and
(ii) Connetics shall cooperate with Suntory to attempt to make
available such portions of its existing manufacturing capabilities
(e.g., fill, finish, labeling and packaging) as are not effected by
such inability, and
(iii) Suntory shall cooperate with Connetics with regard to
supplying, on mutually acceptable conditions [1] such of Connetics'
requirements for Relaxin and/or Product as can be reasonably provided
during such period.
4.12.3 If Connetics provides Suntory with appropriate evidence
of Connetics' capability of manufacturing Suntory's requirements for Relaxin
Materials and/or Product, Connetics shall resume manufacture of all of Suntory's
requirements of Relaxin Materials and/or Product.
4.12.4 For Net Sales of Product manufactured by or for Suntory
pursuant to Section 4.12.2, Suntory shall pay Connetics the royalty as provided
in Section 4.4.2, against which Suntory shall be entitled to a credit equal to
the sum of:
(i) [1],
(ii) [1], and
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(iii) [1].
Suntory's credit shall apply against royalties owed Connetics under this
Agreement commencing upon Suntory's assumption of manufacture, and creditable
against up to [1] percent ([1]%) of the Royalties payable for any subsequent
quarterly period while Relaxin Materials and/or Product is manufactured by or
for Suntory pursuant to Section 4.12.2. Upon Connetics resumption of manufacture
pursuant to Section 4.12.3, any remaining credit shall be divided by the number
of quarterly periods while Relaxin Materials and/or Product was manufactured by
or for Suntory pursuant to Section 4.12.2 and credited equally over the
Royalties payable for an equal number of subsequent quarterly periods, after
which any remaining credit shall be paid to Suntory within [1] days.
ARTICLE V
MEETINGS AND REPORTS
5.1 Meetings. Unless otherwise mutually agreed upon by the Parties, the
Parties shall meet at least once per year. The venue shall alternate between
Palo Alto, California, U.S.A. and Tokyo, Japan, or shall be at such other
mutually acceptable place, with the first meeting to take place within [1] days
of the signing of this Agreement at Palo Alto. The meetings will provide the
forum where the Parties discuss and exchange information on development and
commercialization of the Product in their respective territories, including the
development and commercial plans for the Product in the Territory; provided that
Suntory shall have sole discretion in and responsibility for development and
commercialization of the Product in the Field in the Territory. Suntory and
Connetics shall discuss in good faith the acceptability of Suntory's Product
Purchase and Fixed Forecasts from a standpoint of Connetics' manufacturing
capacity and consistency/suitability of the Fixed Sales Forecasts as provided
under Section 4.7 of this Agreement
5.2 Reports. Beginning on the [1] anniversary of the Effective Date,
and every [1] months thereafter until the launch of the Product in the Field in
the Territory, Suntory shall submit to Connetics a progress report covering
Suntory's activities related to the development and commercial plans for the
Product.
5.3 Adverse Experience Information. During the Term of this Agreement,
each Party shall provide the other Party with any and all data, reports and
other information about the safety of the Relaxin Materials and/or the Product
(in the case of Suntory originating from the Field in the Territory, and in the
case of Connetics originating except from the Field in the Territory), including
but not limited to: clinical case records, reports, non-clinical data, abnormal
findings suggesting serious adverse drug reactions or serious drug-drug
interactions and, in particular, any unusual finding or evidence of serious
adverse drug reactions or serious drug-drug interactions, as well as remedial
actions therefor. Such information shall be promptly communicated between the
Parties in such manner as may be separately agreed upon between the Parties in
order to enable the informed Party to timely and completely report to the
appropriate regulatory authorities in its territory.
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ARTICLE VI
WARRANTIES AND INDEMNITIES
6.1 Warranty. Connetics represents and warrants that Relaxin Materials
and/or Product supplied by it to Suntory under this Agreement shall conform to
the Specifications, and shall be free from defects in material, manufacturing
and workmanship for the shelf life of the Relaxin Materials and/or Product as
set forth in the Specifications ("Warranty Period").
6.2 Limitations on Warranty. The warranty furnished in Section 6.1
shall not apply to defects caused by accident or willful damage, abuse, misuse,
neglect, improper testing, handling, storage or use after delivery as set forth
in Section 4.9 by Connetics of the Relaxin Materials and/or Product in question
to Suntory.
6.3 Effect of Warranty. If, during the Warranty Period, any Relaxin
Materials and/or Product fails to conform to the warranty provided in Section
6.1, then Connetics will, at Suntory's option, either replace such Relaxin
Materials and/or Product within forty-five (45) days (or as soon as possible
employing Connetics' Best Efforts) after Connetic's confirmation that such
Relaxin Materials and/or Product are defective or credit Suntory for such
Relaxin Materials and/or Product if already paid for by Suntory, provided, that:
(i) Connetics is notified promptly in writing (including a
reasonable detailed description of the alleged defect) upon discovery
of any defect in the Relaxin Materials and/or Product,
(ii) such allegedly defective Relaxin Materials and/or Product
is returned to Connetics F.O.B. Connetics' manufacturing facilities,
and
(iii) the Relaxin Materials and/or Product is determined to be
defective in accordance with Section 4.1 and such defect(s) are due to
causes other than the causes excluded from warranty in Section 6.2;
in which case Connetics shall also reimburse Suntory's transportation costs for
return of the defective Relaxin Materials and/or Product and bear all
transportation costs for delivery of any replacement as reasonably directed by
Suntory (if Suntory opts to receive a credit, such credit shall include
Suntory's transportation costs for shipment and return of the defective Relaxin
Materials and/or Product and other costs for labeling and inner packaging borne
by Suntory pursuant to Section 4.9). The remedy set forth in this Section 6.3
shall be Suntory's exclusive remedy and Connetics' sole liability for breach of
the warranty set forth in Section 6.1.
6.4 Representations and Warranties of Connetics. Connetics hereby
represents and warrants to Suntory as follows:
(i) Connetics has the corporate power and authority to execute
and deliver this Agreement and to perform its obligations thereunder,
and the execution, delivery and performance of this Agreement have been
validly authorized by Connetics.
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(ii) Connetics has the right to grant to Suntory the rights
and licenses under the Licensed IP herein granted.
(iii) To the best of Connetics' knowledge, all Relaxin
Information disclosed to Suntory shall be free from any substantial
errors, omissions or misleading information.
(iv) Connetics shall use its Best Efforts to maintain the
Licensed IP in the Territory, to the extent Connetics is permitted
under the Third Party Licenses.
(v) To the best of Connetics' knowledge, there are no pending
or threatened legal claims relating to the Relaxin Patents, Relaxin
Information and Third Party Licenses hereunder as of the Effective
Date, and there is no infringement or threatened infringement of a
Third Party's patent rights with respect to any use or sale of Relaxin
Materials and/or Product in the Field in the Territory.
(vi) The Relaxin Materials and Product supplied to Suntory
shall be manufactured according to the applicable current Good
Manufacturing Practices ("cGMP").
(vii) [1].
6.5 Representation and Warranty of Suntory. Suntory hereby represents
and warrants to Connetics as follows:
(i) Suntory has the corporate power and authority to execute
and deliver this Agreement and to perform its obligations thereunder,
and the execution, delivery and performance of the Agreement have been
validly authorized by Suntory.
(ii) On or after the Suntory Decision Date, Suntory shall use
its Best Efforts to develop and commercialize the Product in the Field
in the Territory.
(iii) Without in any way diminishing Suntory's right to
independently decide whether to proceed under Section 3.2.1, as of the
date on which Suntory executes this Agreement, Suntory has the bona
fide intent to proceed with the development and commercialization of
the Product in the Field in the Territory upon receipt of the Go
Forward Notice if Connetics has decided to proceed with the filing of
its NDA for Relaxin and the Pivotal Clinical Trial Report meets the
criteria set forth in Section 3.2.1(ii).
6.6 Disclaimer of Warranties. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
CONNETICS MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES,
RIGHTS, OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL
WARRANTIES, CONDITIONS OR
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REPRESENTATIONS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
IMPLIED WARRANTIES OF PERFORMANCE, MERCHANTABILITY, SATISFACTORY QUALITY,
FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OF THIRD PARTY INTELLECTUAL
PROPERTY RIGHTS. SOME JURISDICTIONS DO NOT ALLOW LIMITATIONS OR EXCLUSIONS OF
CERTAIN IMPLIED WARRANTIES OR CONDITIONS, SO THE ABOVE LIMITATION MAY NOT APPLY
TO THE EXTENT SO PROHIBITED.
6.7 Product Liability Indemnity.
6.7.1 Subject to Section 6.8, Connetics shall defend,
indemnify and hold harmless Suntory, its Affiliates, its assignee and/or its
distributor from any claim, suit or proceeding brought against Suntory by a
Third Party arising from any alleged manufacturing defect or nonconformity with
the Specifications of any Relaxin Materials and/or Product supplied by Connetics
to Suntory, or arising from Connetics' breach of any representation, warranty or
obligation hereunder ("Third Party Suit"); provided that Suntory:
(i) provides Connetics with prompt notification of any such
claim, suit or proceeding;
(ii) allows Connetics to control the defense or settlement of
such claim, suit or proceeding, provided that Connetics shall not
settle any such claim, suit or proceeding which does not provide for a
general release of Suntory without the prior written consent of
Suntory; and
(iii) complies with any good faith request made by Connetics
for assistance in such defense, provided that Connetics will reimburse
Suntory for any such assistance.
Connetics agrees to pay the costs, expenses and damages arising from any such
Third Party Suit and any final judgment entered by a court of law against
Suntory, its Affiliates, its assignee and/or its distributor, provided that
Connetics shall not be liable for any costs or expenses incurred without its
written authorization. Suntory, its Affiliates, its assignee and/or its
distributor shall have no authority to settle any claim on behalf of Connetics.
6.7.2 So long as reasonably available, Connetics agrees to
carry sufficient liability insurance to cover its indemnification obligations
under this Agreement. As soon as practicable upon execution of this Agreement,
Connetics will provide Suntory with certificate(s) of insurance evidencing this
coverage.
6.8 Qualification to Indemnity. Connetics assumes no liability under
Section 6.7 for: (i) use of the Relaxin Materials and/or Products in an
application other than the applications as indicated in the Specifications or
product label claims; (ii) modifications to the Relaxin Materials and/or
Products unless such modifications were made by Connetics, where liability would
not have occurred but for such modifications; or (iii) any liability arising out
of or relating to any (a) act or negligence or (b) representation or statement
regarding the Relaxin Materials and/or Products which is inconsistent with the
Specifications or product label claims by Suntory or an Affiliate, assignee,
distributor or representative of Suntory, or (c) Suntory's breach of any
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representation, warranty or obligation hereunder, against which Suntory shall
defend, indemnify and hold harmless Connetics to the same extent and in the same
manner as the indemnification by Connetics under Section 6.7.
6.9 Limitation of Liability. EXCEPT AS PROVIDED FOR PRODUCT LIABILITY
INDEMNITY PURSUANT TO SECTION 6.7, IN NO EVENT SHALL CONNETICS' LIABILITY
ARISING UNDER THIS AGREEMENT EXCEED THE AMOUNTS PAID TO CONNETICS BY SUNTORY
UNDER THIS AGREEMENT. EXCEPT FOR (A) ANY LOSS, LIABILITY, DAMAGE OR OBLIGATION
ARISING OUT OF OR RELATING TO THE DISCLOSURE OF CONFIDENTIAL INFORMATION
PURSUANT TO ARTICLE VII OR (B) THE PRODUCT LIABILITY INDEMNITY OBLIGATIONS OF
CONNETICS SET FORTH IN SECTION 6.7, OR AS OTHERWISE EXPRESSLY SET FORTH IN THIS
AGREEMENT, IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY TO THE OTHER PARTY
OR ANY OTHER THIRD PARTY FOR ANY LOST OPPORTUNITY OR PROFITS, COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES ARISING OUT OF THIS AGREEMENT, UNDER
ANY CAUSE OF ACTION OR THEORY OF LIABILITY (INCLUDING NEGLIGENCE), AND WHETHER
OR NOT SUCH PARTY TO THIS AGREEMENT HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGE. THESE LIMITATIONS SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY. SOME JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR
LIMITATION OF CERTAIN LIABILITIES, SO THE ABOVE LIMITATIONS OR EXCLUSIONS MAY
NOT APPLY TO YOU TO THE EXTENT SUCH LIMITATION IS SO PROHIBITED.
ARTICLE VII
CONFIDENTIALITY AND PUBLICITY
7.1 Public Relations And Announcements. The Parties shall agree upon
and issue a press release upon the signing of this Agreement. The Parties shall
endeavor to provide courtesy copies of any public announcements concerning the
relationship created by this Agreement in advance of its publication thereof. No
representations shall be made by either Party concerning the other without the
prior consent from the other Party.
7.2 Confidentiality. The Parties acknowledge that by reason of their
relationship to each other hereunder, each will have access to certain
information and materials concerning the other's business, plans, customers
(including, but not limited to, customer lists of both Parties), technology,
and/or products that is confidential and of substantial value to that Party,
which value would be impaired if such information were disclosed to Third
Parties ("Confidential Information"). For the purposes of this Agreement,
information shall be deemed Confidential Information if such information, by its
nature or due to the context within which it is disclosed, is obviously intended
by the disclosing Party to be kept confidential even if not identified as such
in writing or with legends or other markings, provided that Relaxin Information
shall automatically be treated as Confidential Information. Upon request by
either Party, the other Party will advise whether or not it considers any
particular information or materials to be Confidential Information. Each Party
agrees that it will not use in any way other than expressly authorized or
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contemplated under this Agreement, nor disclose to any Third Party, any such
Confidential Information revealed to it by the other Party (except that
Confidential Information may be disclosed, as required for the purposes of this
Agreement, to an Affiliate, assignee, distributor, consultant or Third Party
contractor or R&D organization under similar written obligations of
non-disclosure and non-use), and will take every reasonable precaution to
protect the confidentiality of such information and with no less restrictive
precautions than it takes to protect its own confidential information. If
Confidential Information is required to be disclosed in response to a valid
order by a court, regulatory authority or other government body of competent
jurisdiction, or if otherwise required to be disclosed by law, or if necessary
to establish the rights of either Party under this Agreement, the receiving
Party shall use commercially reasonable efforts to provide the disclosing Party
with advance notice of such required disclosure to give the disclosing Party
sufficient time to seek a protective order or other protective measures, if any
are available, for such Confidential Information. Confidential Information does
not include information, technical data or know-how which: (i) is rightfully in
the possession of the receiving Party at the time of disclosure as shown by the
receiving Party's files and records immediately prior to the time of disclosure;
(ii) prior or after the time of disclosure becomes part of the public knowledge
or literature, not as a result of any inaction or action of the receiving Party;
(iii) is independently developed by a Party without the use of any Confidential
Information of the other Party; (iv) is obtained from any Third Party who is
authorized to disclose such data and information without obligation of
confidentiality to the disclosing party, or (v) is approved for release by the
disclosing Party.
7.3 Remedy. If either Party breaches any of its obligations with
respect to this Article VII, or if such a breach is likely to occur, the other
Party shall be entitled to seek equitable relief, including specific performance
or an injunction, in addition to any other rights or remedies, including money
damages, provided by law.
7.4 Agreement Terms. Subject to Section 7.1 and the exclusions set
forth in Section 7.2 (i) to (v), the Parties shall treat the terms and
conditions of this Agreement as Confidential Information; provided, however,
after written notification to the other Party, each Party may disclose the
existence of this Agreement and the material terms and conditions hereof under
circumstances that reasonably ensure the confidentiality thereof to: (i) any
government or regulatory authorities, including without limitation the United
States Security and Exchange Commission pursuant to applicable law (excluding,
to the extent legally permitted, disclosure of financial terms in any publicly
available versions of information so-disclosed), (ii) its legal representatives
and advisors (and prospective investors upon approval by the other Party, which
approval shall not be unreasonably withheld), and (iii) to Connetics' licensors
(excluding financial terms) to the extent required for compliance with
Connetics' obligations under the Third Party Licenses.
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ARTICLE VIII
TERM AND TERMINATION
8.1 Term.
8.1.1 The term of this Agreement shall commence on the
Effective Date and continue in full force and effect until the later of: [1]; or
(ii) [1] ("Term"), unless earlier terminated by either Party in accordance with
the terms of this Agreement.
8.1.2 [1].
8.1.3 If Connetics notifies Suntory of Additional Relaxin
Patents, new Relaxin Information or new Third Party License rights ("Additional
Rights") and Suntory elects not to include such rights as Licensed IP and for
any Additional Relaxin Patents as Core Relaxin Patents, and the inclusion of
such Additional Rights would extend the Term as provided in Section 8.1.1, the
Parties shall discuss in good faith Suntory's reasons therefor.
8.2 Termination.
8.2.1 In addition to and notwithstanding the termination
rights stated elsewhere in this Agreement, failure by either Party to comply
with any of the material obligations contained in this Agreement shall entitle
the other Party to give the Party in default notice specifying the nature of
such default and stating its intent to terminate this Agreement if such default
is not cured. This Agreement shall terminate if such default is not cured by the
defaulting Party within forty-five (45) days after the receipt of such notice.
8.2.2 [1].
8.2.3 Voluntary Termination. At any time after the Suntory
Decision Date, Suntory shall have the right to terminate this Agreement without
compensation by giving thirty (30) days prior written notice to Connetics:
(i) if Suntory determines, consistent with
biotechnology industry standards in the Territory reasonably applied
under similar circumstances, that the Product cannot be reasonably
developed or marketed for reasons of safety or clinical efficacy, or
that the development or marketing of the Product is not economically
viable (e.g., if the XXX Xxxxx is less than [1] and the Parties cannot
in good faith agree upon a restructuring of the Agreement's payment and
Royalty terms as provided in Section 4.4.2);
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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(ii) if the Product cannot be commercially marketed
in the Field in the Territory due to a final written order of an
official government agency of competent authority and jurisdiction,
after Suntory has used its Best Efforts to secure approval and/or
appeal such order; or
(iii) if the Relaxin Materials and/or Product are
found to infringe the patent rights of a Third Party and an injunction
or similar order prohibiting commercial marketing of the Product in the
Field in the Territory is entered by a court of competent jurisdiction
from which no further appeal is or can be taken, except in the case
that Connetics secures and pays for a license, or in the case that
Suntory secures and pays for a license thereto as provided under
Section 2.6.3 under which Suntory's development and marketing of
Products would be, in Suntory's sole discretion, economically viable.
8.3 Termination for Insolvency. Either Party may terminate this
Agreement immediately upon delivery of written notice to the other Party (i)
upon the institution by or against the other Party of insolvency, receivership
or bankruptcy proceedings or any other proceedings for the settlement of the
other Party's debts, provided, with respect to involuntary proceedings, that
such proceedings are not dismissed within [1] days, (ii) upon the other Party's
making an assignment for the benefit of creditors, or (iii) upon the other
Party's dissolution or ceasing to do business.
8.4 Effect of Termination. Expiration or termination of this Agreement
pursuant to the terms and conditions set forth in this Agreement shall not
relieve the Parties of any right or obligation, including but not limited to any
payment obligations, accruing prior to or upon such expiration or termination.
Upon expiration or termination of this Agreement for any reason, each Party
shall immediately return to the other Party or destroy any Confidential
Information (except those included in the Licensed IP and Suntory Improvements
in case of expiration of the Term of this Agreement) disclosed by the other
Party. In the event of termination pursuant to Section 3.2.1 or if Connetics
terminates this Agreement under Section 8.2.1, then Suntory shall assign and
deliver to Connetics all data and information (including registration dossier)
obtained in pursuing regulatory approvals, and assign all regulatory approvals
(e.g., to Connetics' designee in the Territory as permitted under the applicable
law) for the Product in the Territory received by Suntory, its Affiliates, its
assignee and/or its distributor as of such termination date. In the event,
pursuant to a provision of this Agreement, that Connetics changes the exclusive
license granted to Suntory hereunder into a non-exclusive license, or upon any
expiration of this Agreement following Suntory's election not to include
Additional Rights as Licensed IP, the inclusion of which would have extended the
Term of this Agreement pursuant to Section 8.1.1(ii), then Suntory shall deliver
to Connetics copies of all data and information (including registration dossier)
obtained in pursuing regulatory approvals, and provide to Connetics (or
Connetics' designee in the Territory as permitted under the applicable law) a
right of cross-reference or such equivalent grant as permits commercialization
under all regulatory approvals for the Product in the Territory received by
Suntory, its Affiliates, its assignee and/or its distributor as of such date.
Except for the provisions of Sections 4.10, 6.1, 6.2, 6.3, 6.6, 6.7, 6.8, 6.9,
8.1 and 8.4 and
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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Articles I, VII and IX which shall survive such expiration or termination, all
other rights and obligations of the Parties shall cease upon expiration or
termination of this Agreement. Notwithstanding the foregoing, upon early
termination of this Agreement, Suntory shall have the right to sell all
remaining Product in its inventory within [1] months after the date of
termination, subject to the payment to Connetics of the amounts specified in
Section 4.4; provided that upon Connetics' request all Relaxin Materials and
Product in Suntory's possession at the time of such termination shall be sold to
Connetics at Connetics' Direct Cost.
ARTICLE IX
MISCELLANEOUS
9.1 Taxes, Tariffs, Fees. All Purchase Prices for the Relaxin Materials
and/or the Product shall be exclusive of, and Suntory shall bear any export,
import, sales, use or excise taxes, VAT, duties, tariffs, federal, state or
local tax, or any other taxes levied on the sale, shipment or purchase of the
Relaxin Materials and/or the Product pursuant to this Agreement, except any
taxes based on Connetics' net income. Connetics shall be entitled to receive
from Suntory, in cash, the exact amount specified in Sections 3.3 and 4.4 of
this Agreement notwithstanding the effect of any and all withholding or other
payments made by Suntory as a result of applicable tax laws of Japan and the
U.S. Notwithstanding the foregoing, Suntory has the right to deduct from the
payments set forth in Sections 3.3 and Royalties set forth herein any tax
applicable to Connetics' income which Suntory is obliged to pay by Japanese tax
law and according to the Tax Treaty between Japan and the United states;
provided that Suntory shall provide Connetics with an appropriate tax receipt
for the deducted amount which Connetics can present to its tax authority and
sufficient for Connetics to receive the corresponding credit to which it is
entitled.
9.2 Currency of Payments. All amounts payable to Connetics by Suntory
pursuant to this Agreement shall be made to Connetics in Dollars and by wire
transfer to the U.S. bank account(s) specified by Connetics from time to time.
The "Conversion Rate" from Yen to Dollars for amounts payable under this
Agreement shall be the average of the conversion rates in effect as reported in
the Wall Street Journal (Western Edition) on the last [1] business days of the
quarterly period for which such payment is due. The amounts payable to Connetics
for Stage 1 pursuant to Section 3.3 shall be converted as follows:
(i) first payment (i.e., [1] at the Conversion Rate prevailing
on the date the payment is due, and [1] at said Conversion Rate but in
no event greater than [1],
(ii) second payment (i.e., [1] at the Conversion Rate
prevailing on the date the payment is due, and [1] at said Conversion
Rate but in no event greater than [1], and
(iii) third payment (i.e., [1]) at a conversion rate of [1].
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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Failure by Suntory to timely render payments to Connetics of any amounts due
hereunder shall be deemed a material breach of this Agreement.
9.3 Compliance With Laws. In performing this Agreement, each Party
shall comply with all applicable laws and government regulations at all times,
including but not limited to any applicable laws and regulations of Japan and
the U.S. regarding the export or re-export or release of technology and
technical data.
9.4 Dispute Resolution, Governing Law and Jurisdiction.
9.4.1 All disputes and conflicts arising from or relating to
the subject matter of this Agreement shall be resolved pursuant to the
procedures set forth in this Section 9.4. The Parties shall endeavor to resolve
in good faith any disputes or conflicts arising from or relating to the subject
matter of this Agreement, failing which either Party shall submit such conflict
for resolution to the Chief Executive Officers (or the Executive Manager of the
Pharmaceutical Divisions, or equivalent) of Suntory and Connetics. In the event
the Chief Executive Officers of Suntory and Connetics are unable to resolve such
conflict within thirty (30) days after having such conflict submitted to them
for resolution, such conflict shall be submitted for mediation if mutually
acceptable, or if not, then to arbitration in [1] administered by the American
Arbitration Association ("AAA") in accordance with the then-current Commercial
Arbitration Rules of the AAA by a panel of three (3) impartial arbitrators, one
(1) appointed by each Party and the third appointed by the other two (2)
arbitrators (collectively, the "Arbitrators"). The Arbitrators shall apply the
governing law. The judgment of the Arbitrators shall be final and binding on the
Parties and enterable as a judgment by a court of competent jurisdiction.
9.4.2 This Agreement shall be governed, controlled,
interpreted and defined by and under the laws of the State of New York and the
United States without regard to that body of law known as conflicts of law;
provided that issues relating to the validity and enforceability of Japanese
patents shall be governed by the laws of Japan. The Parties specifically
disclaim application of the Convention on Contracts for the International Sale
of Goods to this Agreement.
9.5 Section Headings; Controlling Language Version. The section
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. The
controlling language version of this Agreement shall be the English language
version of this Agreement.
9.6 Notices. Any notice required or permitted by this Agreement shall
be in writing and in English and shall be sent by prepaid registered or
certified mall, return receipt requested, internationally recognized courier or
personal delivery, addressed to the other Party at the address below or at such
other address for which such Party gives notice hereunder.
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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Connetics Corporation
Attn: President and Chief Executive Officer
0000 Xxxx Xxxxxxxx Xxxx
Xxxx Xxxx, XX 00000 U.S.A.
Suntory Limited
Attn: Executive Manager, Pharmaceutical Division
Garden Court, 8th Floor
0-0 Xxxxxxx, Xxxxxxx-xx
Xxxxx 000-0000 Xxxxx
Such notice shall be deemed to have been given when delivered or, if delivery is
not accomplished by some fault of the addressee, when tendered.
9.7 Force Majeure. Neither Party shall be considered in default of
performance of its obligations under this Agreement, except any obligation
hereunder to make payments when due, to the extent that performance of such
obligations is delayed by force majeure or contingencies or causes beyond the
reasonable control of such Party or its suppliers, including but not limited to
strike, fire, flood, earthquake, windstorm, governmental acts or orders or
restrictions, failure of suppliers, or any other reason to the extent that the
failure to perform is beyond the reasonable control and not caused by the
negligence or willful misconduct of the nonperforming Party.
9.8 Nonassignability and Binding Effect. Each Party agrees that its
rights and obligations under this Agreement may not be transferred or assigned
directly or indirectly without the prior written consent of the other Party,
which consent shall not be unreasonably withheld, except in connection with the
sale of all or substantially all of the assigning Party's related business.
Subject to the foregoing sentence, this Agreement shall be binding upon and
inure to, the benefit of the Parties hereto, their successors and assigns;
except that upon any attempted assignment contrary to the provisions of this
Section 9.8, either Party may terminate this Agreement immediately upon notice
to the other Party.
9.9 Partial Invalidity. If any provision of this Agreement is held to
be invalid by a court of competent jurisdiction, then the remaining provisions
shall remain, nevertheless, in full force and effect. The Parties agree to
renegotiate in good faith any term held invalid and to be bound by the mutually
agreed substitute provision in order to give the most approximate effect
intended by the Parties.
9.10 No Waiver. No waiver of any term or condition of this Agreement
shall be valid or binding on either Party unless agreed in writing by the Party
to be charged. The failure of either Party to enforce at any time any of the
provisions of this Agreement, or the failure to require at any time performance
by the other Party of any of the provisions of this Agreement, shall in no way
be construed to be a present or future waiver of such provisions, nor in any way
affect the validity of either Party to enforce each and every such provision
thereafter.
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9.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
9.12 Entire Agreement. This Agreement, including the Exhibits attached
hereto, constitutes the entire agreement of the Parties with respect to the
subject matter hereof, and supersedes all prior or contemporaneous
understandings or agreements, whether written or oral, between Connetics and
Suntory with respect to such subject matter. No amendment or modification hereof
shall be valid or binding upon the Parties unless made in writing and signed by
the duly authorized representatives of both Parties.
9.13 Independent Contractors. The Parties to this Agreement are
independent contractors. There is no relationship of agency, partnership, joint
venture, employment or franchise between the Parties and neither Party shall
have any authority to bind the other Party or incur any obligation on the other
Party's behalf.
The undersigned have executed this Agreement on behalf of Suntory and
Connetics, as applicable, effective as of the Effective Date.
CONNETICS CORPORATION SUNTORY LIMITED
("Connetics") ("Suntory")
By:/s/ Xxxxxx X. Xxxxxxx By:/s/ Xxxxxx Xxxxxxxx
----------------------------- ---------------------------------
Name: Xxxxxx X. Xxxxxxx Name: Xxxxxx Xxxxxxxx
----------------------------- -------------------------------
Title: President and CEO Title: Executive Manager
----------------------------- ------------------------------
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EXHIBIT A
RELAXIN SPECIFICATION [1]
CONFIDENTIAL
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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EXHIBIT A
RELAXIN SPECIFICATION (CONTINUED) [1]
CONFIDENTIAL
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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\
EXHIBIT B-1
RELAXIN PATENTS [1]
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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EXHIBIT B-2
CORE RELAXIN PATENTS [1]
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
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EXHIBIT C
THIRD PARTY LICENSES
1. Grant by the Xxxxxx Xxxxxx Institute of Experimental Physiology and
Medicine ("HFI") to Genentech, Inc. ("GNE") of an exclusive, worldwide
license to certain patents and know-how owned by HFI pertaining to the
hormone(s) known as Relaxin pursuant to the License Agreement made on
December 31, 1982 and re-executed as amended and varied as of June 30,
1987 (the "HFI/GNE Agreement").
2. Grant by Genentech, Inc. to Connetics ("CNCT") of an exclusive,
worldwide license to certain patents and know-how owned by Genentech
pertaining to the hormone(s) known as Relaxin and an exclusive
sublicense under its license from HFI pursuant to the License
Agreement, effective September 27, 1993, as amended July 14, 1994 (the
"GNE/CNCT Agreement").
3. Grant by Genentech, Inc. to Connetics of an exclusive license to make,
use and sell Relaxin in the territory of Japan, the Republic of Korea
and the Republic of China (the "Asia Territory") relinquished and
returned to Genentech by Mitsubishi Chemical Corporation (formerly
Mitsubishi Kasei Corporation; "MCC"), pursuant to an agreement dated
April 1, 1996 (the "MCC/GNE/CNCT Agreement").
4. Agreement between the Xxxxxx Xxxxxx Institute of Experimental
Physiology and Medicine and Connetics with regard to payment terms and
obligations pursuant to Section 4.1.1 (as amended by Paragraph 26) of
the GNE/CNCT Agreement and Clauses 5.1 and 5.2 of the HFI/GNE Agreement
(the "HFI/CNCT Agreement").
5. Side Agreement between the Xxxxxx Xxxxxx Institute of Experimental
Physiology and Medicine, Suntory and Connetics providing for survival
of sublicense in event of reversion (the "HFI/SUNTORY/CNCT Agreement").
6. Side Agreement between Genentech, Inc., Suntory and Connetics providing
for survival of sublicense in event of reversion (the "GNE/SUNTORY/CNCT
Agreement").
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EXHIBIT D
SUNTORY'S PRELIMINARY FIVE YEAR SALES FORECAST [1]
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[1] Confidential treatment has been requested for the language which has been
omitted. All such material has been filed separately with the SEC.
