1
Exhibit 99.5
AS EXECUTED - CONFORMED
KBI LIMITED SUBLICENSE AGREEMENT
This KBI LIMITED SUBLICENSE AGREEMENT ("Agreement") is made as
of July 1, 1998 by and between Astra Merck Enterprises Inc., a corporation
organized and existing under the laws of the State of Delaware ("KBI-E"), and
Astra Merck Inc., a corporation organized and existing under the laws of the
State of Delaware ("KBI").
Recitals
WHEREAS, Astra AB ("KB"), Merck & Co., Inc. ("TR"), KBI, KBI Sub Inc.
("KBI Sub"), KBI-E and certain related parties have entered into that certain
Master Restructuring Agreement dated as of June 19, 1998 (the "Master
Restructuring Agreement"); and
WHEREAS, KB and KBI have entered into that certain Amended and Restated
License and Option Agreement made as of July 12, 1982 and amended and restated
as of the date hereof, as such agreement is amended, modified, supplemented or
restated from time to time (the "KBI License"), pursuant to which KB has
licensed to KBI the right under certain Licensed Patents, Trademarks and
Technical Information to make, have made, use and sell certain Licensed
Compounds in the Territory and has granted to KBI options to obtain licenses
with respect to certain Compounds; and
WHEREAS, pursuant to the Trademark Rights Contribution Agreement and
the Selected Compounds Contribution Agreement (as each such term is defined in
the Master Restructuring Agreement), which agreements have been or are being
assigned by KBI Sub to Astra Pharmaceuticals, L.P., a limited partnership
organized and existing under the laws of the State of Delaware (the
"Partnership"), pursuant to the KBI Sub Assignment and Assumption Agreement (#1)
and the KBI Sub Assignment and Assumption Agreement (#2) (as each such term is
defined in the Master Restructuring Agreement), KBI has assigned to the
Partnership all of its rights with respect to Trademarks and all of its rights
with respect to Selected Compounds (as defined in the Selected Compounds
Contribution Agreement) and certain rights with respect to Selected Uses (as
defined in the Selected Compounds Contribution Agreement) for Licensed
Compounds; and
WHEREAS, KBI has previously sublicensed to KBI-E certain rights under
the KBI License with respect to the Compounds omeprazole and felodipine pursuant
to the Sublicense Agreement dated as of February 15, 1995, between KBI and
KBI-E; and
WHEREAS, pursuant to that certain Assignment and Assumption of Amended
and Restated License and Option Agreement (the "KBI-E Assignment") dated as of
the date hereof by and between KBI-E and KBI, KBI has assigned to KBI-E all of
KBI's remaining rights and obligations under the KBI License as a contribution
to the capital of KBI-E; and pursuant to the KBI-E Asset Contribution Agreement
(as defined in the Master Restructuring Agreement), which agreement has been
assigned by KBI Sub to the Partnership, KBI-E has assigned to the Partnership,
among other things, all of its rights with respect to the Selected Uses (as
defined in the KBI-E Asset Contribution Agreement) of the Compounds omeprazole
and felodipine; and
2
WHEREAS, KBI-E and KBI now wish to enter into a non-exclusive
sublicense of KBI-E's rights under the Licensed Patents and Technical
Information, as such rights are set forth in the KBI License and assigned to
KBI-E pursuant to the KBI-E Assignment, to make and have made Licensed Compounds
for the sole purpose of supplying Distribution Products (as defined in the
Distribution Agreement) to the Partnership (or any permitted assignee or
subdistributor) pursuant to the KBI Supply Agreement and Exclusive Second Look
Products and Non-Exclusive Second Look Products (each as defined in the
Manufacturing Agreement) to any permitted sublicensee or distributor of KBI-E,
all pursuant and subject to the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and the
covenants and conditions herein contained, the parties hereby agree as follows:
A. DEFINITIONS
Without limiting any other terms defined herein, as used in
this Agreement the following terms shall have the following respective meanings:
Agreement shall have the meaning set forth in the Preamble.
Confidential Information shall have the meaning set forth in the Master
Restructuring Agreement.
Distribution Agreement shall have the meaning set forth in the KBI License.
KB shall have the meaning set forth in the Recitals.
KBI shall have the meaning set forth in the Preamble.
KBI-E shall have the meaning set forth in the Preamble.
KBI-E Asset Option Agreement shall have the meaning set forth in the KBI
License.
KBI-E Assignment shall have the meaning set forth in the Recitals.
KBI License shall have the meaning set forth in the Recitals.
KBI Supply Agreement shall have the meaning set forth in the Manufacturing
Agreement.
Licensed Compound shall have the meaning set forth in the KBI License, except
that as used herein "Licensed Compound" shall not include any Selected Compounds
or any rights with respect to the Selected Uses of any Licensed Compound.
Manufacturing Agreement shall have the meaning set forth in the KBI License.
Master Restructuring Agreement shall have the meaning set forth in the Recitals.
Non-Affiliate shall have the meaning set forth in the KBI License.
-2-
3
Partnership shall have the meaning set forth in the Recitals.
Selected Compounds Contribution Agreement shall have the meaning set forth in
the Recitals.
TR shall have the meaning set forth in the Recitals.
Capitalized terms used but not defined in this Agreement shall have the
definitions set forth in the KBI License or the Manufacturing Agreement, as the
case may be.
B. KBI-E SUBLICENSE
1. Grant and Assumption of Sublicense.
(a) KBI-E hereby grants KBI a non-exclusive sublicense of
KBI-E's rights under the Licensed Patents and Technical Information, as such
rights are set forth in the KBI License, with the right to sublicense, to make
and have made Licensed Compounds in any form in the Territory for the sole
purpose of supplying Distribution Products to the Partnership (or any permitted
assignee or subdistributor) pursuant to the KBI Supply Agreement and Exclusive
Second Look Products and Non-Exclusive Second Look Products Agreement to any
permitted sublicensee or distributor of KBI-E.
(b) KBI hereby accepts such sublicense and assumes, covenants
and agrees to comply with the obligations of KBI-E under the KBI License insofar
as such obligations relate to the sublicense and rights granted by KBI-E
pursuant to Section B.1(a) hereof.
(c) When and to the extent that any Group C Compound becomes
covered by the license granted under the KBI License, such Group C Compound
shall automatically at such time be deemed to be covered by the sublicense and
rights granted hereunder. When and to the extent that the license for any
Licensed Compound under the KBI License is terminated, such Licensed Compound
shall at such time cease to be covered by the sublicense granted hereunder.
(d) Upon the instruction of KBI-E, which instruction may be
given in KBI-E's sole discretion, KBI shall request that KB USA enter into an
exclusive toll manufacturing arrangement relating to the Packaging Manufacturing
Stage for a KB Pipeline Product (as such terms are defined in the Manufacturing
Agreement) with KBI on terms mutually agreeable to KBI-E, KBI and KB USA. Any
such request shall be made within thirty (30) days after the exercise by the
Partnership of the option referred to in Section C.1 of the Distribution
Agreement for any Group C Compound contained in such KB Pipeline Product or
within thirty (30) days after the commencement of Phase III Clinical Evaluation
for any additional KB Pipeline Product containing such Licensed Compound.
(e) The parties acknowledge that KBI shall enter into the
Manufacturing Agreement pursuant to which KB and TR and their Affiliates and
subcontractors and certain other Producers (as defined in the Manufacturing
Agreement) may perform certain Manufacturing Stages (as defined in the
Manufacturing Agreement). Except as specifically provided otherwise, all rights
granted to KBI hereunder are subject to the following conditions and
limitations: (i) neither KB nor any of its Affiliates or subcontractors shall
perform in the
-3-
4
Territory pursuant to the Manufacturing Agreement any Manufacturing Stage (other
than toll Packaging by KB USA as the Producer for the Packaging Manufacturing
Stage or by any of its Affiliates as subcontractors of KB USA) with respect to
any Product without the prior written consent of KBI-E, which consent may be
given or withheld in KBI-E's sole discretion, and (ii) neither KB USA nor any of
its subcontractors may perform pursuant to the Manufacturing Agreement the
Packaging Manufacturing Stage with respect to any Product outside the Territory
without the prior written consent of KBI-E, which consent may be given or
withheld in KBI-E's sole discretion; provided, however, that KB (and its
Affiliates) may continue to perform any Manufacturing Stage in the Territory
with respect to an Acquired Compound.
2. Royalties.
(a) KBI shall pay royalties to KBI-E with respect to the
Licensed Compounds in an amount equal to 99% of the excess of the aggregate
amount of the Agreed Xxxx-Up collected by KBI with respect to the supply of
Distribution Products pursuant to the KBI Supply Agreement (as such term is
defined therein) over the aggregate amount of inter-affiliate xxxx-ups excluded
in the computation of the Supply Price (as defined in the KBI Supply Agreement)
for such products under Section 4.02 of the KBI Supply Agreement.
(b) After the First Commercial Sale of any Licensed Compound
for which royalties are payable hereunder, KBI shall render to KBI-E within 25
days after the end of each calendar quarter a royalty report for such quarter as
to the royalty payments due under this Section B.2 for such quarter and, within
30 days after the end of each calendar quarter, KBI shall pay the royalty
payment due for such quarter. The royalty report shall state, in reasonable
detail, (i) the aggregate amount of the Agreed Xxxx-Up collected by KBI with
respect to the supply of Distribution Products pursuant to the KBI Supply
Agreement, (ii) the aggregate amount of inter-affiliate xxxx-ups excluded in the
computation of the Supply Price for such products under Section 4.02 of the KBI
Supply Agreement, and (iii) such other information, if any, as may be necessary
to compute the amount of royalties due pursuant to Section B.2(a). The royalty
payment due for each quarter of any Calendar Year shall be an amount equal to
(x) the aggregate royalties due with respect to such Calendar Year through the
end of such quarter less (y) the aggregate royalties theretofore paid with
respect to such Calendar Year. All royalties payable pursuant to this Section
B.2 shall be paid in the aggregate to KBI-E or to a Person designated by KBI-E
as agent. All such royalty payments shall be made in United States dollars in
immediately available funds and to such place in the Territory as KBI-E may
specify by notice to KBI from time to time. If any royalty payments have been
made for any period and it is subsequently determined that such royalty payments
total less or more than the aggregate royalty payments required to be made
pursuant to this Section B.2, KBI or KBI-E shall pay promptly to the other such
amount as will result in the aggregate royalties actually paid for such period
equaling those required to be paid for such period.
(c) KBI shall keep, and shall cause its Affiliates and
sublicensees to keep, true, accurate and complete records in sufficient detail
to permit determination of royalties payable hereunder. Upon KBI-E's request,
KBI shall permit an independent certified public accountant selected and paid by
KBI-E (except one to whom KBI has some reasonable objection) to have reasonable
access during ordinary business hours to such of KBI's, its Affiliates' and
sublicensees' records as may be necessary in such accountant's judgment to
-4-
5
permit it to attest that the royalties paid or payable hereunder conform to the
terms of this Agreement. This right to request a review for any Calendar Year
shall terminate two years after the close of each Calendar Year in respect of
royalties paid or payable for such Calendar Year. Such accountant shall keep its
findings confidential and shall not disclose to KBI-E (or any of its Affiliates)
any information except that it shall report to KBI-E (i) its findings and any
other information relating to the accuracy of the reports and payments made, or
required to be made, under this Section B.2, (ii) interpretations of the terms
of this Agreement applied by KBI to its computation of royalties payable
hereunder, and (iii) any restrictions on access to KBI's and its Affiliates' and
sublicensees' data which the accountant deems to be a restriction of scope with
respect to the attestation engagement. In no event shall quantities or prices to
individual customers be disclosed to KBI-E (or any of its Affiliates) or any
other Person.
3. Infringement. KBI shall promptly inform KBI-E of any infringement,
potential infringement or suspected infringement within the Territory of any
Licensed Patent or Technical Information.
C. TERM
1. This Agreement shall be subject and subordinate to the KBI License,
shall be co-extensive in duration to the KBI License, and shall automatically
terminate upon any termination of the KBI License, for any reason; provided,
however, that upon any termination of the license or option for any Compound
subject to the KBI License, this Agreement shall terminate only to the extent of
such termination of the KBI License.
2. This Agreement shall terminate effective on the Assignment Date (as
such term is defined in the KBI-E Asset Option Agreement) with respect to all
Compounds, other than with respect to the Compounds omeprazole and perprazole,
if either KB or KBI-E exercises its Assignment Right (as such term is defined in
the KBI-E Asset Option Agreement) or the Required Sale (as such term is defined
in the KBI Asset Option Agreement) occurs under the KBI-E Asset Option
Agreement.
D. CONFIDENTIALITY AND PERMITTED DISCLOSURE EXCEPTIONS
1. Each party shall maintain in strict confidence all Confidential
Information pursuant to and in accordance with Sections 4.1 and 4.2 of the
Master Restructuring Agreement; provided, however, that:
(a) KBI may disclose such information (other than any
privileged and work product-protected information that may have been shared by
the other party pursuant to any common or joint interest agreement) to any
governmental agency or authority to the extent necessary to obtain the approval
of any agency or authority to make, have made, use or sell any Compound for the
purposes contemplated by this Agreement; provided, further, however, to the
extent permitted by applicable law, such disclosure shall be made on a
confidential and restricted basis; and
(b) KBI-E may disclose such information (other than any
privileged and work product-protected information that may have been shared by
the other party pursuant to any common or joint interest agreement) to any
governmental agency or authority to the extent
-5-
6
necessary to obtain the approval of any agency or authority to make, have made,
use or sell any Compound to the extent provided in the KBI License; provided,
further, however, to the extent permitted by applicable law, such disclosure
shall be made on a confidential and restricted basis.
E. DISCLAIMER; LIMITATION OF DAMAGES
1. Except for the express representations and warranties set forth in
the Master Restructuring Agreement and in the Ancillary Agreements, neither
Party makes any representation or warranty of any kind, express or implied,
written or oral, including, without limitation, any representation or warranty
with respect to the value, adequacy, freedom from fault of, or the quality,
efficiency, suitability, characteristics or usefulness of, or merchantability or
fitness for a particular purpose of, any Compound, or of any Licensed Patents,
Technical Information, Trademarks or other information, data or know-how
relating in any way to any Compound; provided, however, nothing contained in
this Section E.1 shall be deemed a waiver of, or be deemed to limit, the
obligations of each party hereunder.
2. In no event shall either party be liable for special, indirect,
incidental or consequential damages ("Special Losses") arising under or in
connection with this Agreement, or the performance of, or failure to perform,
any obligations hereunder, whether in contract, warranty, negligence, tort,
strict liability or otherwise; provided, however, that the foregoing shall not
apply in the case of willful misconduct or gross negligence of any party or any
of its Affiliates, or to any Special Losses which are incurred by any party or
any of its Affiliates to any Non-Affiliate of such party; and provided further
that the Parties agree that Special Losses shall not include any amounts set
forth in Section 10.6 (w), (x), (y) or (z) of the Master Restructuring
Agreement.
F. INDEMNIFICATION
1. Indemnification by KBI-E. KBI-E shall indemnify and hold harmless
KBI and each of its officers, directors, employees and agents (each, a "KBI-E
Indemnitee") from and against any and all losses, damages, liabilities or
expenses (including reasonable attorney's fees and other costs of defense)
(collectively, "Losses") in connection with any and all actions, suits, claims
or demands (collectively, "Claims") that may be brought or instituted against
any KBI-E Indemnitee by any Non-Affiliate of KBI based on or arising out of the
manufacture, use, further licensing, sublicensing or sale of any Licensed
Compound licensed hereunder, including, without limitation, any investigation by
any governmental agency with respect to the quality of such Licensed Compound,
or any claim for death or personal injury or property damage asserted by any
user of such Licensed Compound. Such indemnification shall be net of any
recovery received by KBI pursuant to the Manufacturing Agreement or otherwise in
respect of such Claims.
2. Indemnification Procedures. As promptly as practicable after any
KBI-E Indemnitee obtains knowledge of any action, suit, claim or demand as to
which it will or may be entitled to indemnity under Section F.1, such KBI-E
Indemnitee shall give notice to KBI-E. KBI-E shall be entitled to assume control
of the defense or settlement of such action, suit, claim or demand, provided,
however, that (i) the KBI-E Indemnitee shall be entitled to participate in the
defense of such matter and to employ counsel of its own choosing and at its own
expense to
-6-
7
assist in the handling of such matter, and (ii) KBI-E shall obtain the prior
written approval of the KBI-E Indemnitee, which approval shall not be
unreasonably withheld or delayed, before entering into any settlement of such
matter or ceasing to defend against such matter.
G. ARBITRATION
Subject to Section 9.4 of the Master Restructuring Agreement, any
dispute, controversy or claim between KBI and KBI-E arising out of or related to
this Agreement, or the interpretation or breach hereof, shall be settled by
binding arbitration pursuant to the principles and procedures set forth in
Article 9 of the Master Restructuring Agreement.
H. MISCELLANEOUS
1. KBI acknowledges and agrees that the provisions of Sections D and E
hereof also shall apply directly between KBI and KB, and KBI and KBI-E
acknowledge and agree that this Agreement (other than Section B.2) may not be
amended, modified, supplemented, waived or terminated without the prior written
consent of KB; provided, however, that the royalties provided for in Section B.2
shall not exceed 100% of the aggregate Agreed Xxxx-Up collected by KBI pursuant
to the KBI Supply Agreement.
2. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns. KB shall be a
third-party beneficiary of this Agreement and shall have the right to enforce
this Agreement against each of the parties hereto. Neither party shall assign
this Agreement or any of its rights and obligations hereunder without the prior
written consent of the other party and KB. Any such permitted assignee or
assignees shall expressly assume the due and punctual performance of all
obligations which are so assigned, and any such assignment shall not release the
assignor from such obligations except to the extent that they are performed by
the assignee or assignees.
3. This Agreement shall be construed and governed in accordance with
the laws of the State of New York without regard to any choice of law rules
other than Section 5-1401 of the New York General Obligations Law.
4. Any notice, request or other communication under or with respect to
this Agreement shall be in writing and shall be deemed to have been duly given
upon receipt of: hand delivery; certified or registered mail, return receipt
requested; overnight courier service; or telecopy transmission with confirmation
of receipt to either party at its address set forth below:
If to KBI, to: Astra Merck Inc.
c/o Merck & Co., Inc.
One Merck Drive
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, Xxx Xxxxxx 00000-0000
X.X.X.
Attention: Secretary
Telecopier: 000-000-0000
-7-
8
If to KBI-E, to: Astra Merck Enterprises Inc.
c/o Merck & Co., Inc.
One Merck Drive
X.X. Xxx 000
Xxxxxxxxxx Xxxxxxx, Xxx Xxxxxx 00000-0000
X.X.X.
Attention: Secretary
Telecopier: 000-000-0000
Either party by written notice to the other party in accordance with
the above may change the address to which such notices, requests or other
communications to it shall be directed.
5. Subject to the provisions of Section H.1, this Agreement may be
amended, modified or supplemented only by a written instrument duly executed by
each party, and may be waived only by a written instrument duly executed by the
party to be bound. No omission or delay on the part of either party in requiring
the due and punctual fulfillment by the other party of any of its obligations
hereunder shall constitute a waiver by the omitting or delaying party of any of
its rights to require such due and punctual fulfillment of any obligation
hereunder, whether similar or otherwise, or a waiver of any remedy it may have
hereunder or otherwise.
-8-
9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ASTRA MERCK ENTERPRISES INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
ASTRA MERCK INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
Acknowledged and consented to:
ASTRA AB
(publ)
By: /s/ Goran Lerenius
-------------------------------
Name: Goran Lerenius
Title: Authorized Signatory
-9-
