EXHIBIT 10.6
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
LICENSE, MANUFACTURING AND SUPPLY AGREEMENT
This Agreement ("AGREEMENT") is made and entered into on February 5, 2002 (the
"EFFECTIVE DATE") by and between:
1. Shearwater Corporation, having its principal place of business at
000 Xxxxxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx, 00000, X.X.X.
("SHEARWATER"); and
2. Eyetech Pharmaceuticals, Inc., 666 Fifth Avenue, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx, 00000, X.X.X. ("EYETECH").
WHEREAS
A. EYETECH is in the business of developing pharmaceutical products,
including in particular a vascular endothelial growth factor
antagonist designated as EYE001, as defined below.
B. SHEARWATER has PEGylation technology, including in particular the
LICENSED TECHNOLOGY, for the formulation of pharmaceutical products
for the treatment of human and animal disease which typically, among
other benefits, have increased circulating lifetimes and enhanced
therapeutic utility.
C. SHEARWATER has certain rights and rights to sublicense under ENZON
PATENTS to make, have made, use, sell, have sold and import products
pursuant to a Cross-License Agreement ("CROSS-LICENSE AGREEMENT")
entered into with Enzon, Inc. ("ENZON") on January 7, 2002.
D. EYETECH wishes to use the LICENSED TECHNOLOGY and may wish to
practice technology covered by SHEARWATER'S rights under the
CROSS-LICENSE AGREEMENT in order to apply the REAGENT to EYE001 to
produce the formulation of the PRODUCT.
E. EYETECH desires to obtain an exclusive license to the LICENSED
TECHNOLOGY from SHEARWATER to develop, market and sell the PRODUCT
throughout the
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TERRITORY, and SHEARWATER desires to grant such license to EYETECH
under the terms and conditions specified herein.
F. Furthermore, SHEARWATER is also engaged in the business of
manufacturing bulk quantities of pharmaceutical raw materials, and
possesses the requisite plant, equipment and personnel to produce
the REAGENT in accordance with the SPECIFICATIONS and all applicable
governmental regulations, including, without limitation, U.S. Food
and Drug Administration regulations, and consistent with EYETECH'S
requirements.
G. EYETECH desires SHEARWATER to manufacture and supply bulk quantities
of the REAGENT to EYETECH for the sole purpose of permitting EYETECH
to make, use and sell the PRODUCT, and SHEARWATER agrees to
undertake the manufacture and supply of the REAGENT specified under
this AGREEMENT in accordance with all of the terms and conditions
specified below.
AGREEMENT
1. Definitions
1.1. "ACTIVE MOLECULE" shall mean any molecule that has not been
conjugated to polyethylene glycol, and that has potential or actual
preventive or therapeutic activity.
1.2. "AFFILIATE" shall mean, with respect to any PERSON, any other PERSON
which controls, is controlled by, or is under common control with,
such PERSON. A PERSON shall be regarded as in control of another
PERSON if it owns, or controls, at least fifty percent (50%) of the
voting stock or other ownership interest of the other PERSON, or if
it possesses the power to direct or cause the direction of the
management and policies of the other PERSON by any means whatsoever.
1.3. "BEST EFFORTS" shall mean that EYETECH shall act in a manner
reasonably calculated to obtain MARKETING AUTHORIZATION and
commercialize and market the PRODUCT, but shall not be required to:
(a) act in a manner inconsistent with EYETECH'S overall business
strategy; (b) take action which
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results in a materially adverse change to this AGREEMENT; (c) act in
a manner contrary to its normal commercial practices; or (d)
commence any litigation.
1.4. "BIOLOGICS LICENSE APPLICATION" shall mean a Biologics License
Application, as defined in the U.S. Federal Food, Drug, and
Cosmetics Act, as amended, and the regulations promulgated
thereunder, and any corresponding supranational, foreign or domestic
MARKETING AUTHORIZATION application, registration or certification,
necessary or useful to market the PRODUCT in the TERRITORY.
1.5. "CONTROLLED" shall mean the ability to grant a license or sublicense
as contemplated herein without violating the terms of any agreement
or other arrangement with any THIRD PARTY.
1.6. "DOLLARS" shall mean U.S. dollars.
1.7. "EMEA" shall mean the European Medicines Evaluation Agency, and any
successor agency thereto, having the administrative authority to
regulate the marketing of human pharmaceutical products or
biological therapeutic products, delivery systems and devices in the
European Union.
1.8. "ENZON PATENTS" shall mean (a) all patent applications owned or
CONTROLLED by Enzon, Inc. ("ENZON") or its AFFILIATES that [**]) all
patents owned or CONTROLLED by ENZON or the ENZON AFFILIATES that
[**]). For clarity, excluded from ENZON PATENTS are patents and
patent applications [**]. Further excluded from ENZON PATENTS are
[**]. The ENZON PATENTS include those listed on Schedule IV.
1.9. "EYE001" shall mean EYETECH'S lead compound as of the EFFECTIVE
DATE, known to EYETECH as "EYE001," an anti-VEGF aptamer.
1.10. "FDA" shall mean the U.S. Food and Drug Administration, and any
successor agency thereto, having the administrative authority to
regulate the marketing of human pharmaceutical products or
biological therapeutic products, delivery systems and devices in the
United States.
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1.11. "FIRST COMMERCIAL SALE" shall mean, with respect to any PRODUCT, the
first sale for use or consumption by the general public of such
PRODUCT. A transfer of the PRODUCT by EYETECH, its AFFILIATES or its
SUBLICENSEES (a) solely for research and development purposes and
for the purpose of directly enabling EYETECH, its AFFILIATES and its
permitted SUBLICENSEES to research and develop PRODUCTS under this
AGREEMENT and (b) prior to EYETECH'S receipt of MARKETING
AUTHORIZATION from the FDA (or from the governing health authority
of any other country) for use of such PRODUCT in humans, shall not
be considered a FIRST COMMERCIAL SALE, except in the case of (b) to
the extent such PRODUCT is purchased for sale to a THIRD PARTY end
user after such Marketing Authorization is obtained.
1.12. "GOOD MANUFACTURING PRACTICES" or "GMP" shall mean the current good
manufacturing practices required by the FDA and set forth in the
Food, Drug and Cosmetics Act or FDA regulations, policies or
guidelines in effect at a particular time for the manufacturing and
testing of pharmaceutical materials.
1.13. "ICH" shall mean the International Conference on Harmonization.
1.14. "LAW" means any local, state or federal rule, regulation, statute or
law in any jurisdiction relevant to the activities undertaken
pursuant to this AGREEMENT or applicable to either of the parties
with respect to any matters set forth herein.
1.15. "LICENSED TECHNOLOGY" shall mean, collectively, the SHEARWATER
PATENT RIGHTS and the SHEARWATER KNOW-HOW.
1.16. "MARKETING AUTHORIZATION" shall mean such governmental approval for
the marketing of the PRODUCT in a country or countries in the
TERRITORY as is necessary to enable EYETECH, its AFFILIATES, or its
SUBLICENSEES to sell and distribute lawfully the PRODUCT to such
countries in the TERRITORY.
1.17. "NET INVOICED SALES" means the actual amount invoiced for PRODUCT
sold less (a) [**]; (b) [**]; (c) [**]; (d) [**], (to the extent
separately stated on the invoice and billed to the purchaser); (e)
[**] the PRODUCT to the extent identified specifically on the
invoice, (f) [**] , provided that where the PRODUCT is:
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1.17.1. sold by EYETECH [**]; or
1.17.2. sold to any AFFILIATE of EYETECH;
the NET INVOICED SALES amount of each such PRODUCT shall be [**].
For sales made by SUBLICENSEES of EYETECH, the NET INVOICED SALES
amount shall be [**] the PRODUCT, which shall also be subject to
Sections 1.17.1 and 1.17.2.
1.18. "NET SALES" shall mean the aggregate of the NET INVOICED SALES of
all PRODUCT sold by EYETECH, its AFFILIATES and SUBLICENSEES.
1.19. "PEG" shall mean poly (ethylene glycol).
1.20. "PEGYLATION", with a correlative meaning for "PEGYLATED", shall mean
[**] bonding of polyethylene glycol [**] with or to other materials,
including but not limited to proteins, peptides, biomolecules, small
molecules, therapeutic agents, diagnostic agents, imaging agents,
implanted devices, and equipment. "PEGYLATION" shall include the
synthesis, derivatization, characterization, and modification of
polyethylene glycol for such purposes, together with the synthesis,
derivatization, characterization, and modification of the raw
materials and intermediates for the manufacture of the REAGENT or
PRODUCT by means of [**] bonding, and all methods of making and
using each and all of the foregoing. For clarity, PEGYLATION shall
[**].
1.21. "PERSON" shall mean an individual, corporation, partnership, limited
liability company, trust, business trust, association, joint stock
company, joint venture, pool, syndicate, sole proprietorship,
unincorporated organization, governmental authority, or any other
form of entity not specifically listed herein.
1.22. "PRODUCT" shall mean a product produced by linking EYE001 to the
REAGENT.
1.23. "REAGENT" shall mean [**].
1.24. "ROYALTY TERM" shall mean, with respect to each PRODUCT in each
country in the TERRITORY, the period of time equal to the longer of
(a) [**] years from
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the date of the FIRST COMMERCIAL SALE of such PRODUCT in such
country, or (b) if the manufacture, use or sale of such PRODUCT in
such country is covered in whole or in part by a VALID PATENT CLAIM,
the term for which such VALID PATENT CLAIM remains in effect.
1.25. "SHEARWATER CORE TECHNOLOGY" shall mean technology relating to the
[**], including, without limitation, the SHEARWATER KNOW-HOW and the
SHEARWATER PATENT RIGHTS.
1.26. "SHEARWATER KNOW-HOW" shall mean (a) all technical, scientific and
other know-how, information, trade secrets, knowledge, technology,
ideas, concepts, formulae, procedures, methods, processes,
protocols, techniques, materials and results of experimentation and
testing, including samples, data, results and other materials,
(whether or not patented or patentable) in written, electronic or
any other form, in which SHEARWATER has an ownership or licensable
interest; and (b) which are necessary or useful for EYETECH to make,
use, develop, sell or seek MARKETING AUTHORIZATION to market a
PRODUCT, or otherwise necessary or useful to practice the licenses
granted under this AGREEMENT.
1.27. "SHEARWATER PATENT RIGHTS" shall mean all of the legal rights
conferred upon SHEARWATER under the patents and patent applications
listed in Schedule III in the TERRITORY and all provisionals,
converted provisionals, non-provisional U.S. applications,
continuations, divisionals, continuations-in-part, or substitutes
thereof and all patents issuing therefrom or reexamination, reissues
or extensions of said patents and all foreign counterparts of said
applications and patents, and which are necessary or useful to
produce and sell the PRODUCT. Schedule III sets forth the status of
the patents included in the SHEARWATER PATENT RIGHTS as of the time
this AGREEMENT is executed. Schedule III may be updated from time to
time to list any other patents or patent applications which become
included in the SHEARWATER PATENT RIGHTS.
1.28. "SHEARWATER'S MANUFACTURING COST" shall mean the sum of the
following costs incurred by SHEARWATER, [**] to the REAGENT sold to
EYETECH by SHEARWATER, and to other services performed by SHEARWATER
for EYETECH: [**] relating to the [**], including, without
limitation, [**] related to the [**] pursuant to Section 4, and the
[**].
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1.29. "SPECIFICATIONS" shall mean the specifications of the REAGENT set
forth in Schedule I hereto. The SPECIFICATIONS and test methods
listed in Schedule I may be modified at any time but only by the
mutual agreement of both parties as set forth in Section 5.3. Any
such modification to the SPECIFICATIONS shall be rendered into
writing and appended at Schedule I.
1.30. "SUBLICENSEE" shall mean any PERSON, including AFFILIATES, to which
EYETECH grants a sublicense to develop, make, have made, use,
import, export, offer for sale and sell the PRODUCT. SUBLICENSEE
shall not include distributors or other parties to which EYETECH
sells the PRODUCT in the ordinary course of business, or
manufacturers or contract synthesis facilities which produce the
active molecule in EYE001 for EYETECH.
1.31. "TERRITORY" shall mean the world.
1.32. "THIRD PARTY" shall mean any party other than SHEARWATER, EYETECH
and their respective AFFILIATES.
1.33. "VALID PATENT CLAIM" shall mean either (a) a claim of an issued and
unexpired patent included within the SHEARWATER PATENT RIGHTS or
ENZON PATENTS which has not been held unenforceable, unpatentable or
invalid by a decision of a court or other governmental agency of
competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reexamination, reissue, disclaimer or
otherwise, or (b) a claim of a pending patent application included
within the SHEARWATER PATENT RIGHTS or ENZON PATENTS, which claim
has not been abandoned or finally disallowed without the possibility
of appeal or refiling of such application.
1.34. The following schedules are attached hereto and incorporated in and
are deemed to be an integral part of this AGREEMENT:
Schedule I THE SPECIFICATIONS
Schedule II REMUNERATION AND INITIAL FORECAST
Schedule III SHEARWATER PATENT RIGHTS
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Schedule IV ENZON PATENTS
2. Representations and Warranties
2.1. By Both Parties. Each party represents and warrants to the other
that: (a) it has the full right and power to enter into and perform
this AGREEMENT; (b) this AGREEMENT constitutes its legal, valid and
binding obligation; (c) to the best of its knowledge, there are no
agreements or arrangements between such party and any THIRD PARTY
which could prevent it from, or conflict with such party's carrying
out all of its obligations hereunder, including (without
limitation), in the case of SHEARWATER, its grant to EYETECH of the
licenses described in Section 3.1 below; (d) to the best of its
knowledge, it has sufficient legal and/or beneficial title under its
intellectual property rights necessary for the purposes contemplated
under this AGREEMENT and to grant the licenses contained in this
AGREEMENT; (e) to the best of its knowledge, it is not aware of any
material communications alleging that it has violated or, by
conducting its obligations as currently proposed under this
AGREEMENT, it would violate any of the intellectual property rights
of any THIRD PARTY; and (f) all of its employees, officers and
consultants have executed agreements requiring assignment to the
party of all inventions made during the course of and as a result of
their association with such party and obligating the individual to
maintain as confidential the CONFIDENTIAL INFORMATION of such party,
as set forth in Section 9 herein.
2.2. By SHEARWATER. In addition to the representations and warranties set
forth in Section 5.2, SHEARWATER represents and warrants to EYETECH
that:
2.2.1. As of the EFFECTIVE DATE, SHEARWATER is not aware of:
(A) any existing claims or litigation brought by a THIRD
PARTY under any THIRD PARTY patent, trade secret or
other THIRD PARTY proprietary right in respect of
SHEARWATER'S exploitation of the LICENSED TECHNOLOGY;
(B) any basis upon which practice of the inventions
described in the SHEARWATER PATENT RIGHTS or KNOW-HOW
would infringe on the rights of THIRD PARTIES; or
Page 8 of 40
2.2.2. any licenses or restrictions other than those included
herein on its or its licensees' ability to practice the
LICENSED TECHNOLOGY.
2.2.3. SHEARWATER has made or will make available to EYETECH
all material technical information in its possession of which
it is aware that is pertinent to the development, manufacture,
commercialization or use of the PRODUCT, and useful or
necessary to enable EYETECH to exercise its rights under this
AGREEMENT.
2.2.4. SHEARWATER shall comply with all applicable present and
future LAWS applicable to the transportation, storage, use
handling and disposal of hazardous materials. SHEARWATER has
and will maintain during the term of this AGREEMENT all
government permits, including without limitation health,
safety and environmental permits necessary for the conduct of
the activities that SHEARWATER undertakes pursuant to this
AGREEMENT.
2.3. By EYETECH. EYETECH warrants to SHEARWATER that it will use
its BEST EFFORTS to seek MARKETING AUTHORIZATION, and develop,
commercialize and market the PRODUCT by [**]. If EYETECH
believes that it cannot, within the exercise of reasonable
business judgment, commercialize the PRODUCT in one or more
countries in the TERRITORY by [**], then EYETECH may request
from SHEARWATER an extension of time, and the parties shall
negotiate in good faith to determine a time extension that is
mutually acceptable. In the event that EYETECH does not use
BEST EFFORTS in this regard, the licenses granted to EYETECH
in Section 3.1 [**]. In the event that the licenses granted to
EYETECH in Section 3.1 [**] of the TERRITORY as provided for
herein above, EYETECH'S obligations to pay milestones and
royalties to SHEARWATER, as provided for in this AGREEMENT,
shall continue. Notwithstanding the foregoing, in the event
EYETECH does not use at least reasonable efforts to develop,
seek MARKETING AUTHORIZATION, commercialize and market the
PRODUCT in [**] in the TERRITORY by [**] or such later date as
mutually agreed to by the parties, it shall be deemed a
material breach of this AGREEMENT by EYETECH and SHEARWATER
may terminate this AGREEMENT under Section 11.4.
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2.4. Limitation of Liability. EXCEPT AS EXPRESSLY PROVIDED
ELSEWHERE IN THIS AGREEMENT, NEITHER PARTY SHALL BE LIABLE TO
THE OTHER FOR SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL,
PUNITIVE OR EXEMPLARY DAMAGES ARISING OUT OF ANY OF THE TERMS
OR CONDITIONS OF THIS AGREEMENT OR WITH RESPECT TO ITS
PERFORMANCE HEREUNDER, EXCEPT WHERE SUCH DAMAGES WERE CAUSED
BY NEGLIGENCE OR WILLFUL MISCONDUCT OF A PARTY.
Notwithstanding the foregoing, each party shall be liable to
the other for special, indirect, incidental, consequential,
punitive or exemplary damages arising out a breach of the
non-disclosure and non-use obligations under Section 9.
Nothing in this Section 2.4 is intended to limit either
party's obligations under Section 10.
2.5. EXCEPT AS SET FORTH IN THIS AGREEMENT, SHEARWATER AND EYETECH
DISCLAIM ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
3. Grant of Licenses
3.1. Grant.
(A) Subject to the terms and conditions of this AGREEMENT,
SHEARWATER hereby grants to EYETECH, for the term of this
AGREEMENT, an exclusive license (with the right to grant
sublicenses as set forth in Section 3.2 below) under the
LICENSED TECHNOLOGY to develop, make, have made, use, import,
offer for sale and sell the PRODUCT in the TERRITORY.
(B) Subject to the terms and conditions of this AGREEMENT,
SHEARWATER shall grant to EYETECH, until the last-to-expire
VALID PATENT CLAIM of ENZON PATENTS, a sole license (with the
right to grant sublicenses as set forth in Section 3.2 below)
under those rights SHEARWATER has to the ENZON PATENTS, solely
to develop, make, have made, use, import, offer for sale and
sell in the TERRITORY that version of the PRODUCT that [**].
Such license shall be subject to the retained rights of ENZON
and the ENZON AFFILIATES to practice all the
Page 10 of 40
inventions described and claimed in the ENZON PATENTS for the
conduct of research and development (such purposes not
including in connection with human clinical trials) of
pharmaceutical products that it is developing either itself,
with its AFFILIATE, or in conjunction with a THIRD PARTY.
(C) Subject to the terms and conditions of this AGREEMENT,
SHEARWATER shall grant to EYETECH, for the sole purpose of,
and with respect to and only with respect to, the manufacture,
use, sale, offer for sale, and importation in the TERRITORY of
that version of the PRODUCT that [**], a non-exclusive license
under those rights SHEARWATER has:
(I) to patents or patent applications (other than the ENZON
PATENTS) owned or CONTROLLED by ENZON or the ENZON
AFFILIATES; and
(II) all patent claims owned or CONTROLLED by ENZON or the
ENZON AFFILIATES that (x) are not within the ENZON
PATENTS or the PATENTS in subclause (i) above; (y) [**];
and (z) claim the composition, manufacture, or use of
that version of [**].
The license granted under this Section 3.1(c) excludes [**].
The license granted under this Section 3.1(c) shall remain in
effect on a country-by-country basis until the longer of (1)
the [**] anniversary of the FIRST COMMERCIAL SALE of the
PRODUCT in a particular country, or (2) the expiration of the
last-to-expire VALID PATENT CLAIM of the ENZON PATENTS
claiming the composition, manufacture, or use of such PRODUCT
in such country.
3.2. Sublicenses. EYETECH shall have the right to grant sublicenses under
the licenses in Section 3.1 above to any THIRD PARTY or AFFILIATE,
provided that, under each sublicense, each SUBLICENSEE shall be
subject to terms and conditions that are consistent with the terms
and conditions of this AGREEMENT as applicable; provided, however,
that [**] this AGREEMENT.
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3.3. ENZON Patent Rights.
3.3.1. EYETECH agrees and acknowledges that the availability of the
licenses to be granted under Sections 3.1(b) and 3.1(c) are
subject to the following condition precedent: EYETECH must
[**] with the [**]PRODUCT: [**] in the PRODUCT[**] and the
[**] to be [**] to be used to [**] of the [**], to the extent
known[**], to the extent known[**] PRODUCT with [**]; so that
[**] the PRODUCT and that such license [**]. In the event that
[**] product [**] as the PRODUCT and that the [**], the
licenses under Sections 3.1(b) and 3.1(c) shall be [**]. If,
at anytime during the term of this AGREEMENT, EYETECH wishes
to make, use, import, export, offer for sale and sell in the
TERRITORY [**] EYETECH shall [**] of the PRODUCT, [**] of
PRODUCT based on those terms provided in this AGREEMENT.
3.3.2. EYETECH agrees and acknowledges that any such licenses to be
granted under Sections 3.1(b) and 3.1(c) are subject to the
following limitations and conditions:
(A) Such licenses shall [**];
(B) Such licenses shall [**];
(C) Such licenses shall [**] the PRODUCT
(D) [**]Such licenses shall [**] a product with the [**]
(E) Such licenses shall [**] the PRODUCT [**];
(F) Such licenses shall [**] the PRODUCT [**];
(G) EYETECH shall [**] for such PRODUCT, [**];
(H) [**]EYETECH shall [**];
(I) Subject to any prior termination, such licenses shall
[**]; and
(J) Such licenses shall [**].
3.4. SHEARWATER Covenant. SHEARWATER covenants that, during the
term of this AGREEMENT, and subject to the terms of this
AGREEMENT, it will not grant
Page 12 of 40
any THIRD PARTY a license under the LICENSED TECHNOLOGY or its
rights under the ENZON PATENTS to, and shall not itself, make,
have made, use, sell or have sold the PRODUCT in the
TERRITORY. Furthermore, SHEARWATER covenants that, during the
term of this AGREEMENT, it will not enter into any agreement
with a THIRD PARTY in which it licenses the LICENSED
TECHNOLOGY to such THIRD PARTY for use in making, using,
selling or importing products which [**]. Notwithstanding the
foregoing, the parties understand and agree that any agreement
existing as of the EFFECTIVE DATE between SHEARWATER and a
THIRD PARTY, under which SHEARWATER grants a license, a
license option or other rights under SHEARWATER'S LICENSED
TECHNOLOGY, is not subject to the foregoing indication
limitation.
3.5. EYETECH Covenant.
3.5.1. EYETECH hereby covenants that it will refrain from
judicially challenging the validity or enforceability
of any ENZON PATENTS and will contractually restrict
its SUBLICENSEES from similarly challenging the
validity or enforceability of the ENZON PATENTS. In the
event EYETECH or its SUBLICENSEES so challenge the
ENZON PATENTS: (a) EYETECH shall pay for all attorney's
fees, costs of suit, and other out-of-pocket expenses
incurred by ENZON and/or SHEARWATER in resisting or
opposing such challenge in the event that such
challenge is not successful; and (b) EYETECH'S and its
SUBLICENSEES' sublicense rights to such ENZON PATENTS
shall terminate.
3.5.2. EYETECH hereby covenants that it will refrain from
judicially challenging the validity or enforceability
of any SHEARWATER PATENT RIGHTS and will contractually
restrict its SUBLICENSEES from similarly challenging
the validity or enforceability of the SHEARWATER PATENT
RIGHTS. In the event EYETECH or its SUBLICENSEES so
challenge the SHEARWATER PATENT RIGHTS: (a) EYETECH
shall pay for all attorney's fees, costs of suit, and
other out-of-pocket expenses incurred by SHEARWATER in
resisting or opposing such challenge in the event that
such challenge is not successful; and (b) EYETECH'S and
its SUBLICENSEES' sublicense rights to such SHEARWATER
PATENT RIGHTS shall terminate.
4. Manufacture and Supply of the Reagent
4.1. Exclusivity. SHEARWATER will manufacture and supply one hundred
percent (100%) of EYETECH'S, its AFFILIATES' and SUBLICENSEES'
purchase requirements of the REAGENT for the manufacturing of the
PRODUCT.
Page 13 of 40
EYETECH, its AFFILIATES and SUBLICENSEES will purchase the REAGENT
exclusively from SHEARWATER for the manufacture of the PRODUCT,
subject to Sections 4.7 and 4.8.
4.2. Audit. During the term of this AGREEMENT, SHEARWATER shall supply
the REAGENT for use in manufacturing PRODUCT exclusively to EYETECH,
its AFFILIATES and SUBLICENSEES. Upon reasonable advance notice,
EYETECH shall grant to SHEARWATER reasonable access to EYETECH'S
books and records during normal business hours for the purpose of
verifying EYETECH'S compliance with the purchase requirement in
Section 4.1 above.
4.3. Minimum Purchases and Rolling Forecast. As soon as practicable after
the EFFECTIVE DATE the parties shall mutually agree upon the
contents of Schedule II which shall set forth the minimum purchase
requirements of EYETECH for the REAGENT for the [**] calendar
quarters immediately following the EFFECTIVE DATE. EYETECH shall, at
least thirty (30) days prior to the commencement of the [**] each
successive calendar quarter following the EFFECTIVE DATE, furnish
SHEARWATER with a rolling forecast of its requirements of the
REAGENT during the forthcoming [**] calendar quarters, with the
required quantities for the first [**] calendar quarters to be a
binding order for supply of the REAGENT and the forecast for the
remaining [**]) calendar quarters to be an estimate only.
Notwithstanding the foregoing, (i) SHEARWATER shall only be bound to
supply up to [**] percent ([**]%) of the initial forecast for any
calendar quarter. In the event that EYETECH'S forecast exceeds [**]
percent ([**]%) of the initial forecast for any calendar quarter,
then the parties will meet in good faith to discuss how SHEARWATER
can meet the revised forecast, and (ii) in no event shall EYETECH
purchase less than [**] percent ([**]%) of the initial forecast for
any calendar quarter.
4.4. Purchase Orders. EYETECH will order the REAGENT from SHEARWATER by
means of a standard EYETECH purchase order and SHEARWATER shall ship
or cause the REAGENT to be shipped pursuant to its standard shipping
documents; provided, however, that all terms and conditions
respecting any orders of REAGENT other than quantity and delivery
dates shall be governed exclusively by the terms of this AGREEMENT.
Such EYETECH purchase order
Page 14 of 40
shall specify the quantity and delivery date of the REAGENT.
However, in case of inconsistency between the purchase order or the
standard shipping documents and the terms and conditions of this
AGREEMENT, the terms and conditions of this AGREEMENT or any
modification of this AGREEMENT agreed to in writing by the parties
shall govern as to matters dealt with in this AGREEMENT, any such
inconsistent terms in such purchase order or shipping documents are
hereby expressly rejected. EYETECH shall, at least thirty (30) days
prior to the commencement of the third and each successive calendar
quarter following the EFFECTIVE DATE, provide SHEARWATER with a
written purchase order for such calendar quarter. Any such purchase
order shall be sent to the attention of SHEARWATER'S Sales Manager.
4.5. Fulfillment. To the extent that any orders for REAGENT do not exceed
[**] percent ([**]%) of EYETECH'S forecast for a respective calendar
quarter, and to the extent forecasts and purchase orders are
submitted as provided hereunder, SHEARWATER shall commence
fulfilling these orders no later than: (a) [**] of the date an order
is placed; or (b) any other mutually agreed upon delivery date. If
SHEARWATER determines that it cannot commence fulfilling an order by
the later of [**] of the date an order is placed or any other agreed
upon delivery date, then SHEARWATER will promptly notify EYETECH in
writing within [**] hours of such determination. To the extent that
such order for REAGENT does not exceed [**] percent ([**]%) of
EYETECH'S forecast for a respective calendar quarter, and to the
extent that such purchase order is submitted as provided hereunder,
the provisions of Section 4.7 apply.
4.6. Payment of Invoices. SHEARWATER shall send invoices to EYETECH for
the REAGENT shipped to EYETECH no earlier than the date on which the
REAGENT is placed aboard the carrier at the point of shipment from
the place of manufacture or storage owned or controlled by
SHEARWATER. All shipments of REAGENT will be delivered to EYETECH at
the address first set forth above. All risk of loss or damage to
REAGENT shall transfer upon delivery to such destination. All
invoices will be in DOLLARS, payable to SHEARWATER, at the address
provided above or such other address as SHEARWATER may from time to
time advise EYETECH. Payment will be due thirty (30) days from
receipt of invoice unless acceptance is delayed pursuant to Sections
6.2, 6.3 and 6.4, in
Page 15 of 40
which case they shall be due as provided thereunder. Amounts past
due shall bear interest at the rate of one and a quarter percent
(1.25%) per month, compounded daily, or the maximum rate allowed
under law, whichever is less.
4.7. Failure to Supply. Subject to Section 15.1, if SHEARWATER cannot
supply at least seventy-five percent (75%) of the amount of the
REAGENT consistent with and at the times specified by Sections 4.3
and 4.4 and does not cure the deficiency within ninety (90) days
after EYETECH so notifies SHEARWATER in writing that a portion of
the REAGENT due for delivery has not been delivered, after using all
reasonable efforts, then SHEARWATER will be considered as being
unable to manufacture and sell to EYETECH the REAGENT under this
AGREEMENT ("FAILURE"). In the case of a FAILURE for any reason,
SHEARWATER shall, subject to this Section 4.7, immediately work with
EYETECH and grant to one THIRD PARTY contract manufacturer (the
"CONTRACT MANUFACTURER" such CONTRACT MANUFACTURER being subject to
approval by EYETECH, such approval to not be unreasonably withheld)
a personal, non-assignable, non-exclusive right and license under
the LICENSED TECHNOLOGY to make the amount of REAGENT, for the sole
purpose of EYETECH producing the PRODUCT, in accordance with
EYETECH'S order for the relevant calendar quarter as well as during
the following three (3) calendar quarters or such longer period if
required to fully address the FAILURE in accordance with Section
4.8. Such FAILURE by SHEARWATER to supply EYETECH with the REAGENT
will not be taken as a refusal by SHEARWATER to supply EYETECH with
the REAGENT for subsequent calendar quarters unless SHEARWATER so
indicates. With respect to such subsequent calendar quarters, if
SHEARWATER has demonstrated that it has the ability to supply all of
EYETECH'S REAGENT requirements hereunder, EYETECH will resume
purchases of the REAGENT from SHEARWATER in the manner provided for
by this AGREEMENT. Payments made by EYETECH to the CONTRACT
MANUFACTURER for REAGENT supplied during a FAILURE shall be
recognized by SHEARWATER, and SHEARWATER shall not seek payment for
such supply. Notwithstanding the foregoing, all of EYETECH'S
milestone and royalty obligations shall remain in effect during the
period of any FAILURE. If SHEARWATER, for any reason, shall on two
(2) separate occasions FAIL under this Section 4.7 to supply EYETECH
with the REAGENT, EYETECH shall thereafter be allowed to purchase
from the CONTRACT MANUFACTURER all of its future requirements of the
REAGENT without regard to SHEARWATER'S willingness and ability to
supply EYETECH with its requirements of the REAGENT.
4.8. Technology Transfer. In the event that SHEARWATER grants to the
CONTRACT MANUFACTURER, as contemplated in Section 4.7, a personal,
non-assignable, non-exclusive right and license under the LICENSED
Page 16 of 40
TECHNOLOGY to make, have made and use the REAGENT for the sole
purpose of manufacturing for EYETECH the PRODUCT, SHEARWATER shall,
at its expense, transfer sufficient of its technology, including
required SHEARWATER KNOW-HOW and training of personnel, to enable
the CONTRACT MANUFACTURER to manufacture the REAGENT for the sole
purpose of EYETECH producing the PRODUCT. Such CONTRACT MANUFACTURER
shall be bound to treat all such SHEARWATER KNOW-HOW as SHEARWATER
CONFIDENTIAL INFORMATION, subject to the obligations of Section 9.
4.9. Intellectual Property. Any and all rights to any improvement,
modification, application or invention discovered, conceived or
reduced to practice by either party or both (or by such CONTRACT
MANUFACTURER, EYETECH, its AFFILIATES or its SUBLICENSEES ) in the
course of the manufacture of the PRODUCT (but not EYE001 alone) and
which relate to SHEARWATER CORE TECHNOLOGY shall be solely owned by
SHEARWATER ("CORE TECHNOLOGY INVENTIONS"). EYETECH, its CONTRACT
MANUFACTURER, AFFILIATES and SUBLICENSEES shall each assign to
SHEARWATER all of its interests in such CORE TECHNOLOGY INVENTIONS
and in all intellectual property rights therein. Such CORE
TECHNOLOGY INVENTIONS shall be included in the LICENSED TECHNOLOGY
and subject to the license granted to EYETECH pursuant to this
AGREEMENT. SHEARWATER shall be responsible, at its sole expense and
discretion, and with the cooperation of EYETECH, for the filing,
prosecution and maintenance of foreign and domestic patent
applications and patents covering such CORE TECHNOLOGY INVENTIONS.
Any and all rights to any inventions discovered, conceived or
reduced to practice by either party or both in the course of the
manufacture of PRODUCTS (but not EYE001 alone) which relate solely
to EYE001 and that are not SHEARWATER CORE TECHNOLOGY or CORE
TECHNOLOGY INVENTIONS, shall belong solely to EYETECH ("EYETECH
INVENTIONS"). SHEARWATER shall assign to EYETECH all of its
interests in such EYETECH INVENTIONS and in all intellectual
property rights therein. EYETECH shall be responsible, at its sole
expense and discretion, and with the cooperation of SHEARWATER if
requested by EYETECH, for the filing, prosecution and maintenance of
foreign and domestic patent applications and patents covering such
EYETECH INVENTIONS. Except as otherwise provided in this Section,
all inventions made solely by employees of a party during the course
of the manufacture of PRODUCTS shall be the property of such party.
Further, also except as otherwise provided in this Section, if
employees of SHEARWATER and EYETECH jointly develop any invention
during the manufacture of PRODUCT ("JOINT INVENTION"), SHEARWATER
and
Page 17 of 40
EYETECH shall each own an undivided one-half (1/2) interest, without
a duty of accounting to the other party, in and to such JOINT
INVENTION. With respect to patent applications on a JOINT INVENTION,
the parties shall determine which party shall be responsible for
filing, prosecuting, maintaining and defending patent applications
and patents on behalf of both parties, based on a good faith
determination of the relative contributions of the parties to the
invention and the relative level of interest of the parties in the
invention.
5. Specifications, GMP and Manufacturing Process
5.1. Specifications. The quality of the REAGENT is defined in the
SPECIFICATIONS as per Schedule I attached hereto.
5.2. Warranty. SHEARWATER warrants that the REAGENT will be manufactured
in compliance with the current GMP requirements of the FDA and the
ICH. SHEARWATER warrants that the REAGENT will, upon delivery to the
carrier, be in conformity with said SPECIFICATIONS. Except as
provided in Sections 2.1 and 2.2, SHEARWATER provides no other
warranties, express or implied, regarding the REAGENT and disclaims
all other express and implied warranties, including the implied
warranties of merchantability and fitness for a particular purpose.
SHEARWATER'S liability for breach of the foregoing warranty shall be
limited to the actions and procedures required in Sections 4.7 and
4.8 above and Section 6 below.
5.3. Modifications. Any modifications of the SPECIFICATIONS will require
reasonable prior written approval of EYETECH and SHEARWATER. Each
party may propose a change to the SPECIFICATIONS to the other party
for evaluation considering the relative costs, benefits and
technical ability to make such change. EYETECH shall bear any and
all costs of developing and implementing revised SPECIFICATIONS.
Page 18 of 40
6. Quality and Complaints
6.1. Analysis. Promptly after arrival of a shipment of the REAGENT at
EYETECH, EYETECH shall analyze the REAGENT using methods approved by
both parties according to the analytical procedures in Schedule I.
6.2. Complaints. Any complaints by EYETECH that a shipment of the REAGENT
does not comply with the requirements of Section 5.1 or Section 5.2
shall be delivered to SHEARWATER in writing at the latest within
[**] days after arrival of the shipment of the REAGENT and shall
include full details of such complaint including supporting data for
purposes of consideration and verification by SHEARWATER. If no such
written complaint is received by SHEARWATER within the above [**]
day period, EYETECH will be deemed to have accepted the applicable
shipment of REAGENT, which shall conclusively be presumed to be
without defect and to meet all SPECIFICATIONS and warranties
hereunder.
6.3. Complaints Procedure. If SHEARWATER receives a complaint under
Section 6.2 the following procedures shall apply:
6.3.1. Within [**] days from the date on which such details of
EYETECH'S complaint are received by SHEARWATER, or if such
quantity is not then available, as soon as SHEARWATER has the
necessary quantities available, provided it is not later than
[**] days after SHEARWATER'S receipt of the details of
EYETECH'S complaint, SHEARWATER shall supply EYETECH the
replacement quantity of the REAGENT that was allegedly missing
or defective from the original shipment.
6.3.2. If the alleged defect concerns the quality of the REAGENT
delivered and SHEARWATER accepts the details submitted by
EYETECH as to the non-compliance of the REAGENT, the
replacement material described in Section 6.3.1 will be
provided to EYETECH at no additional cost.
6.3.3. If the alleged defect concerns the quality of the REAGENT
delivered and SHEARWATER, acting reasonably and in good faith,
does not accept the details submitted by EYETECH, then within
[**] days from the date on which the details of EYETECH'S
complaint are received by
Page 19 of 40
SHEARWATER, SHEARWATER and EYETECH will agree upon and appoint
an independent scientific and technical expert to review
EYETECH'S details supporting its complaint of non-compliance.
EYETECH shall not unreasonably withhold acceptance of the
independent scientific and technical expert. The findings of
the expert shall be final and conclusively binding on the
parties as to whether the REAGENT complies with the
requirements of Sections 5.1 and 5.2 as to defects in quality.
If the analysis of the expert does not confirm EYETECH'S
complaint, EYETECH shall be obligated to pay for any
replacement quantities shipped by SHEARWATER. If the expert
holds that the REAGENT does not meet requirements of Sections
5.1 and 5.2, all the fees of the expert and the laboratory
shall be paid by SHEARWATER and EYETECH shall have no
obligation to pay for the quantities of defective REAGENT, but
shall be responsible for payment of replacement quantities
which are in conformance with Sections 5.1 and 5.2 within [**]
days after EYETECH'S receipt of such replacement shipment. On
the other hand, if the expert does not confirm EYETECH'S
complaint, all of the fees of the laboratory and the expert
will be paid by EYETECH, EYETECH shall be obligated to pay for
any replacement quantities shipped by SHEARWATER in addition
to the original quantities shipped, and EYETECH shall be
considered to have finally and completely accepted such
allegedly defective shipment of the REAGENT.
6.4. Compliance. SHEARWATER warrants that it will perform regular
self-inspections in order to assure compliance with GMP requirements
and submit to inspections by EYETECH and/or regulatory authorities
such as the FDA. Upon thirty (30) days prior written notice, EYETECH
shall have the right once in each twelve (12) month period and at
reasonable hours to audit the quality systems of SHEARWATER. Such
audits shall be performed to verify, among other things: (1) the
quality of the facilities providing the REAGENT; (2) the general
controls and security practices and procedures at any facility or
part of a facility used by SHEARWATER to provide the REAGENT; and
(3) SHEARWATER'S compliance with all applicable laws. In addition,
EYETECH will have the option to designate an independent THIRD
PARTY, subject to confidentiality obligations to
Page 20 of 40
SHEARWATER, to verify that all proprietary manufacturing operations
and associated technologies relating to the manufacture of the
REAGENT are in compliance with GMP and all other equivalent
governmental requirements in the TERRITORY. If SHEARWATER becomes
aware that any shipment of the REAGENT to EYETECH does not meet all
of the requirements of Section 5.1 and Section 5.2, SHEARWATER will
promptly notify EYETECH.
7. Remuneration
7.1. Milestone Payments. The parties hereto agree that in partial
consideration for the rights acquired by EYETECH under this
AGREEMENT, EYETECH will pay to SHEARWATER milestone payments in
accordance with and at the times set out in Schedule II herein. Such
payments shall be in addition to any royalty or other payments due
under this AGREEMENT. The payment of the milestone due upon the
grant of MARKETING AUTHORIZATION shall be [**] [**] DOLLARS ($[**])
[**] due SHEARWATER under Section 7.2.1 [**] DOLLARS ($[**]) amount
equal to [**] the amount due to SHEARWATER[**] a royalty on NET
SALES of PRODUCT under Section 7.2.1, [**] DOLLARS ($[**])
[**].
7.2. Royalties. In partial consideration for the licenses granted to
EYETECH herein, during the ROYALTY TERM, EYETECH shall pay the
following royalties:
7.2.1. SHEARWATER. EYETECH shall pay a royalty to SHEARWATER in an
amount equal to [**] percent ([**]%) of the portion of annual
NET SALES of all PRODUCT sold in each country in the TERRITORY
in which the manufacture, use or sale of such PRODUCT is
covered by a VALID PATENT CLAIM that is less than [**] DOLLARS
($[**]), and in an amount equal to [**] percent ([**]%) of the
portion of annual NET SALES of all PRODUCT sold in each
country in the TERRITORY in which the manufacture, use or sale
of such PRODUCT is covered by a VALID PATENT CLAIM that is
equal to or greater than [**] DOLLARS ($[**]). EYETECH shall
pay a royalty to SHEARWATER in an amount equal to [**] percent
([**]%) of the portion of annual NET SALES of all PRODUCT sold
in each country in the TERRITORY in which the manufacture, use
or sale of such PRODUCT is not covered by a VALID PATENT
CLAIM, but uses SHEARWATER KNOW-HOW that is less than [**]
dollars ($[**]).
Page 21 of 40
EYETECH shall pay a royalty to SHEARWATER in an amount equal
to [**] percent ([**]%) of the portion of annual NET SALES of
all PRODUCT sold in each country in the TERRITORY in which the
manufacture, use or sale of such PRODUCT is not covered by a
VALID PATENT CLAIM, but uses SHEARWATER KNOW-HOW that is equal
to or more than [**] dollars ($[**]).
7.3. Accrual of Royalties. No royalties shall be payable on a PRODUCT
distributed to THIRD PARTIES solely for marketing and advertising
purposes or as a sample for testing or evaluation purposes. No
royalties shall be payable on sales among EYETECH, its AFFILIATES
and its SUBLICENSEES, but royalties shall be payable on subsequent
sales by EYETECH, its AFFILIATES or its SUBLICENSEES to a THIRD
PARTY. No multiple royalty shall be payable on a PRODUCT because the
manufacture, use or sale of such PRODUCT is covered by more than one
SHEARWATER PATENT RIGHT or ENZON PATENT or is subject to both
SHEARWATER KNOW-HOW and a VALID PATENT CLAIM.
7.4. Third Party Royalties. If EYETECH, its AFFILIATES or its
SUBLICENSEES are required to pay royalties to any THIRD PARTY
because the manufacture, use or sale of the PRODUCT infringes any
patent rights of such THIRD PARTY in any country of the TERRITORY
(but only with respect to the use or the manufacture of the REAGENT
or use of the REAGENT or LICENSED TECHNOLOGY in the manufacture of
the PRODUCT), EYETECH, its AFFILIATES or its SUBLICENSEES may deduct
from royalties thereafter due with respect to the NET INVOICED SALES
of such PRODUCT in such country, an amount equal to up to [**]
percent ([**]%) of the royalties or such other fees paid to such
THIRD PARTY, subject to the limitation in the immediately following
sentence. In no event shall the royalties due on the NET INVOICED
SALES of the PRODUCT on account of any reduction pursuant to this
Section 7.4 be reduced by means of such deductions by more than [**]
percent ([**]%) of the royalties which otherwise would have been due
SHEARWATER hereunder on the NET INVOICED SALES of the PRODUCT.
7.5. Manufacturing and Supply of the REAGENT.
Page 22 of 40
7.5.1. In addition, EYETECH shall pay to SHEARWATER for the supply
of the REAGENT complying with the SPECIFICATIONS and GMP the
prices in DOLLARS per unit of REAGENT set forth in Schedule
II.
7.5.2. The DOLLARS per unit prices provided for in Section 7.5.1
shall remain in full force and effect for a period ending [**]
years after the EFFECTIVE DATE of the AGREEMENT. Thereafter,
the price at which EYETECH purchases the REAGENT from
SHEARWATER may be increased by SHEARWATER in each succeeding
[**] period in accordance with [**].
7.5.3. If based on EYETECH'S projected forecast of the REAGENT,
SHEARWATER determines that improvement to or expansion of its
manufacturing capabilities are required, then SHEARWATER shall
provide written notification thereof within [**] days of
receipt of any EYETECH forecast. EYETECH and SHEARWATER shall
agree on the scope of the work required and shall prepare an
estimated budget for the SHEARWATER MANUFACTURING COSTS
attributed to such work before any work is performed, for
which EYETECH must pay SHEARWATER hereunder. EYETECH agrees to
pay all SHEARWATER'S MANUFACTURING COSTS of [**] SHEARWATER
[**] including, but not limited to, [**] including, but not
limited to, [**] for any particular use. In the event that any
governmental or regulatory agency requests information
regarding the REAGENT or requires that any further work or
testing be performed on the current GMP manufacturing process
of the REAGENT, such information shall be obtained, or such
work shall be done, at the expense of EYETECH, as provided
herein.
8. Royalty Reports and Accounting
8.1. Reports, Exchange Rates. EYETECH shall notify SHEARWATER in writing
promptly upon the FIRST COMMERCIAL SALE of a PRODUCT by EYETECH, its
AFFILIATES or its SUBLICENSEES. During the portion of the term of
this AGREEMENT following the FIRST COMMERCIAL SALE of a PRODUCT,
EYETECH shall furnish to SHEARWATER a quarterly written report
showing in reasonably specific detail, on a country by country
basis: (a) the gross sales of each PRODUCT sold by EYETECH, its
AFFILIATES and its SUBLICENSEES
Page 23 of 40
during the reporting period and the amounts deducted therefrom to
determine NET INVOICED SALES from such gross sales; (b) the
royalties payable in DOLLARS, if any, which shall have accrued
hereunder based upon the NET INVOICED SALES of each PRODUCT; (c) the
withholding taxes, if any, required by LAW to be deducted in respect
of such sales; (d) the date of the FIRST COMMERCIAL SALE of each
PRODUCT in each country during the reporting period; and (e) the
exchange rates used in determining the amount of DOLLARS. With
respect to sales of PRODUCTS invoiced in DOLLARS, the gross sales,
NET INVOICED SALES, and royalties payable shall be expressed in
DOLLARS. With respect to sales of PRODUCTS invoiced in a currency
other than DOLLARS, the gross sales, NET INVOICED SALES and
royalties payable shall be expressed in the domestic currency of the
party making the sale together with the DOLLAR equivalent of the
royalty payable. The DOLLAR equivalent shall be calculated using the
average exchange rate (local currency per DOLLAR) published in The
Wall Street Journal, Western Edition, under the heading "Currency
Trading", on the last business day of each month during the
applicable calendar quarter. Reports shall be due on the thirtieth
(30th) day following the close of each quarter. EYETECH, its
AFFILIATES and its SUBLICENSEES shall keep complete and accurate
records in sufficient detail to properly reflect all gross sales and
NET INVOICED SALES of each PRODUCT and to enable the royalties
payable hereunder to be determined.
8.2. Audits.
8.2.1. Upon at least ten (10) business days of the written request
of SHEARWATER, and not more than once in each calendar year,
EYETECH shall permit an independent certified public
accounting firm of nationally recognized standing, selected by
SHEARWATER and reasonably acceptable to EYETECH, at
SHEARWATER'S expense, to have access during normal business
hours to such of the records of EYETECH as may be reasonably
necessary to verify the accuracy of the royalty reports
hereunder for any year ending not more than twenty-four (24)
months prior to the date of such request. The accounting firm
shall disclose to each party whether the NET INVOICED SALES or
NET SALES are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be
provided to SHEARWATER.
Page 24 of 40
8.2.2. If such accounting firm concludes that additional royalties
were owed during such period, EYETECH shall pay the additional
royalties within thirty (30) days of the date SHEARWATER
delivers to EYETECH such accounting firm's written report so
concluding. The fees charged by such accounting firm shall be
paid by SHEARWATER; provided however, that if the audit
discloses that the royalties payable by EYETECH for the
audited period are more than one hundred five percent (105%)
of the royalties actually paid for such period, then EYETECH
shall pay the reasonable fees and expenses charged by such
accounting firm.
8.2.3. EYETECH shall include in each sublicense granted by it
pursuant to this AGREEMENT a provision requiring the
SUBLICENSEE to make reports to EYETECH, to keep and maintain
records of sales made and deductions taken pursuant to such
sublicense, and to grant access to such records by
SHEARWATER'S independent accountant to the same extent
required of EYETECH under this AGREEMENT. Upon the expiration
of [**] months following the end of any calendar year, the
calculation of royalties payable with respect to such calendar
year shall be binding and conclusive upon SHEARWATER and
EYETECH, its AFFILIATES and SUBLICENSEES.
8.3. Payment Terms. Royalties shown to have accrued by each royalty
report provided for under Section 8.2 above shall be due and payable
on the date such royalty report is due. Payment of royalties in
whole or in part may be made in advance of such due date.
8.4. Payment Method. Except as provided for in this Section 8.4, all
royalty payments by EYETECH under this AGREEMENT shall be paid in
DOLLARS, and all such payments shall be originated from a United
States bank located in the United States and made by bank wire
transfer in immediately available funds to such account as
SHEARWATER shall designate before such payment is due. Upon the
election of SHEARWATER made in writing not less than thirty (30)
days prior to any payment date, EYETECH shall pay all royalties
owing to SHEARWATER hereunder in the currency in which such
royalties accrued, without conversion into DOLLARS.
Page 25 of 40
8.5. Exchange Control. If at any time legal restrictions prevent the
prompt remittance of part or all royalties with respect to any
country of the TERRITORY where the PRODUCT is sold, payment shall be
made through such lawful means or methods as SHEARWATER reasonably
shall determine.
9. Confidentiality
9.1. Confidential Information. During the term of this AGREEMENT, and for
a period of ten (10) years following the expiration or earlier
termination hereof, each party shall maintain in confidence all
information of the other party (including samples) disclosed by the
other party and identified as, or acknowledged to be, confidential
(the "CONFIDENTIAL INFORMATION"), and shall not use, disclose or
grant the use of the CONFIDENTIAL INFORMATION except as permitted
under this AGREEMENT or necessary to perform its obligations
hereunder, except on a need-to-know basis to those directors,
officers, AFFILIATES, employees, permitted SUBLICENSEES, permitted
assignees and agents, the CONTRACT MANUFACTURER, INDEPENDENT
COUNSEL, consultants, lawyers, bankers, clinical investigators or
contractors, to the extent such disclosure is reasonably necessary
in connection with such party's activities as expressly authorized
by this AGREEMENT. Each party shall advise the foregoing who have
access to the CONFIDENTIAL INFORMATION of the other party of its
confidential and proprietary nature, and shall impose on the
foregoing the duties of non-use and non-disclosure as stated in the
Section 9.1. SHEARWATER KNOW-HOW is hereby deemed to be SHEARWATER
CONFIDENTIAL INFORMATION. Each party shall notify the other promptly
upon discovery of any unauthorized use or disclosure of the other
party's CONFIDENTIAL INFORMATION.
9.2. Permitted Disclosures.
9.2.1. The non-disclosure obligations contained in Section 9.1 shall
not apply to the extent that any receiving party (the
"RECIPIENT") is required (a) to disclose information by LAW,
order, or regulation of a government agency or a court of
competent jurisdiction, or by the rules of a securities
exchange; (b) to disclose information to a patent office for
the purposes of filing a patent on RECIPIENT'S method or
invention; (c) to disclose information to any governmental
agency for purposes of obtaining
Page 26 of 40
approval to test or market a PRODUCT, provided in either case
that the RECIPIENT shall provide written notice thereof to the
other party and sufficient opportunity to object to any such
disclosure or to request confidential treatment thereof.
9.2.2. The non-disclosure and non-use obligations contained in
Section 9.1 shall not apply to the extent that the RECIPIENT
can demonstrate that (a) the disclosed information was public
knowledge at the time of such disclosure to the RECIPIENT, or
thereafter became public knowledge, other than as a result of
action or omission of the RECIPIENT in violation hereof; (b)
the disclosed information was rightfully known by the
RECIPIENT without the obligation of confidentiality (as shown
by its written records) prior to the date of disclosure to the
RECIPIENT by the other party hereunder; (c) the disclosed
information was disclosed to the RECIPIENT on an unrestricted
basis from a source unrelated to any party to this AGREEMENT
and not under a duty of confidentiality to the other party; or
(d) the disclosed information was independently developed by
the RECIPIENT (as shown by its written records) without use of
CONFIDENTIAL INFORMATION disclosed by the other party.
9.3. Return of Confidential Information. Within ten (10) days following a
request from either party or upon the expiration or termination of
this AGREEMENT by either party, for any reason, each party shall
deliver to the other party or, at the other party's election,
destroy any and all CONFIDENTIAL INFORMATION, together with any and
all copies thereof, provided that each party may keep one copy of
such CONFIDENTIAL INFORMATION for purposes of complying with its
contractual obligations under this AGREEMENT.
9.4. Terms of this Agreement. Except as otherwise provided in Section 9.2
above and subject to either party's reporting obligations under
applicable state and federal LAWS, (a) SHEARWATER and EYETECH shall
not disclose any terms or conditions of this AGREEMENT to any THIRD
PARTY without the prior written consent of the other party, such
consent not to be unreasonably withheld or delayed, and (b)
SHEARWATER and EYETECH shall not use the other party's name in
publicity materials without the prior written consent of the other
party,
Page 27 of 40
such consent not to be unreasonably withheld or delayed.
Notwithstanding the foregoing, SHEARWATER and EYETECH shall prepare
and issue a joint press release reasonably acceptable to both
parties announcing the relationship created under this AGREEMENT.
9.5. Publication. After an AFFIRMATIVE DETERMINATION by the INDEPENDENT
COUNSEL pursuant to Section 3.3.1. it may be to the mutual interest
of the parties to publish articles relating to data generated or
analyzed as a part of this AGREEMENT. Neither party shall submit for
written or oral publication or presentation any manuscript,
abstract, writing, printed material or the like which includes data
or any other CONFIDENTIAL INFORMATION of the other party without
first obtaining the prior written consent of the other party, which
consent shall not be unreasonably withheld or delayed; provided
however, that valid commercial reasons may exist for withholding
such consent. Nothing contained herein shall be construed as
precluding either party from making, in its discretion, any
disclosures of information of any type which relate to the safety,
efficacy, toxicology, or pharmacokinetic characteristics of the
PRODUCT to the extent that either party may be required by LAW to
make disclosures of such information.
9.6. Data. Any data which arises from testing of the PRODUCT by EYETECH,
its AFFILIATES or its SUBLICENSEES which is reasonably necessary for
SHEARWATER to monitor the quality and/or performance of the REAGENT,
including, without limitation, the results of animal studies,
toxicological testing and human clinical trials, shall be deemed
CONFIDENTIAL INFORMATION and shall be shared with SHEARWATER, within
a reasonable time of EYETECH receiving or deriving such data.
10. Indemnification
10.1. Indemnity.
10.1.1. By SHEARWATER. SHEARWATER shall defend, indemnify and hold
EYETECH, EYETECH'S AFFILIATES, and EYETECH'S directors,
officers, employees and agents harmless from and against all
claims, actions, losses, liabilities, damages and expenses
(including reasonable attorney's fees and costs) resulting
from all claims, demands, actions and other proceedings by any
THIRD PARTY to the extent arising from (a) the
Page 28 of 40
breach of any representation, warranty or covenant of
SHEARWATER under this AGREEMENT or (b) the negligence,
recklessness or willful misconduct of SHEARWATER in the
performance of its obligations and its permitted activities
under this AGREEMENT.
10.1.2. By EYETECH. EYETECH shall defend, indemnify and hold
SHEARWATER, SHEARWATER'S AFFILIATES, and SHEARWATER'S
officers, employees and agents harmless from and against all
losses, liabilities, damages and expenses (including
reasonable attorney's fees and costs) resulting from all
claims, demands, actions and other proceedings by any THIRD
PARTY to the extent arising from (a) the breach of any
representation, warranty or covenant of EYETECH under this
AGREEMENT, (b) the research, development, manufacturing,
commercialization or marketing of the PRODUCT (without regard
to culpable conduct), or (c) the negligence, recklessness or
willful misconduct of EYETECH or its AFFILIATES or
SUBLICENSEES in the performance of its or their obligations
and its or their permitted activities under this AGREEMENT.
10.2. Indemnification Procedures. A party seeking indemnification under
this Section 10 (the "INDEMNIFIED PARTY") shall give prompt notice
of the claim to the other party (the "INDEMNIFYING PARTY") and,
provided that the INDEMNIFYING PARTY is not contesting the indemnity
obligation, shall permit the INDEMNIFYING PARTY to control any
litigation relating to such claim and disposition of any such claim,
provided that the INDEMNIFYING PARTY shall act reasonably and in
good faith with respect to all matters relating to the settlement or
disposition of any claim as the settlement or disposition relates to
the parties being indemnified under this Section 10, and the
INDEMNIFYING PARTY shall not settle or otherwise resolve any claim
without prior notice to the INDEMNIFIED PARTY and the consent of the
INDEMNIFIED PARTY, if such settlement involves any remedy other than
the payment of money by the INDEMNIFYING PARTY. The INDEMNIFIED
PARTY shall cooperate with the INDEMNIFYING PARTY in its defense of
any claim for which indemnification is sought under this Section 10.
Page 29 of 40
10.3. Insurance. EYETECH, at its own expense, shall maintain
comprehensive general liability insurance, including product
liability insurance, against claims regarding the research,
development, manufacture, commercialization or marketing of
the PRODUCT under this AGREEMENT in the minimum amount of one
million DOLLARS ($1,000,000) per occurrence, and five million
DOLLARS ($5,000,000) in the aggregate, with SHEARWATER named
as an additional insured, such policies shall include a
provision that coverage will not be terminated unless
SHEARWATER has been given at least thirty (30) days written
notice. EYETECH shall maintain such insurance for so long as
it continues to research, develop, manufacture, commercialize,
or market the PRODUCT, and shall from time to time provide
copies of certificates of such insurance to SHEARWATER upon
its request.
11. Term and Termination
11.1. Expiration. This AGREEMENT comes into effect on the EFFECTIVE
DATE and will remain in force until the last to expire of any
VALID PATENT CLAIM included in the SHEARWATER PATENT RIGHTS or
ENZON PATENTS (such date, the "INITIAL TERM DATE").
11.2. Renewal of Term. At least one hundred twenty (120) days before
the expiration of the INITIAL TERM DATE under Section 11.1,
the parties shall discuss in good faith whether and on what
terms to extend the term of this AGREEMENT.
11.3. Termination by EYETECH. EYETECH shall have the right to
terminate this AGREEMENT in the following circumstances:
11.3.1. If the MARKETING AUTHORIZATION for the PRODUCT is
withdrawn or suspended by the regulatory authorities
(the FDA and the EMEA) in both the major markets
(both the United States and Europe) of the TERRITORY;
11.3.2. If scientific or medical findings, which clearly
indicate serious hazards associated with the PRODUCT,
prohibit further marketing of the PRODUCT;
11.3.3. If significant changes in competitiveness seriously
inhibit the effective marketing of the PRODUCT; or
Page 30 of 40
11.3.4. In the event EYETECH is unable to market the PRODUCT
in the TERRITORY due to valid patent infringement
claims of THIRD PARTIES.
11.4. Termination for Cause. Each party shall have the right to
terminate this AGREEMENT for failure to comply with the
material terms of this AGREEMENT by the other party, provided
such failure to comply is not corrected by the failing party
within twenty (20) days of written notice of any failure to
make timely payment of royalties or any other amount, when due
hereunder, or within ninety (90) days of receipt of written
notice of any other failure from the non-failing party. The
right of either party to terminate this AGREEMENT as provided
herein above shall not be affected in any way by such party's
waiver of or failure to take actions with respect to any
previous default.
11.5. Bankruptcy. In case of the filing of a voluntary petition for
bankruptcy, the failure to cause an involuntary petition in
bankruptcy to be dismissed within sixty (60) days after the
filing thereof, suspension of payment, assignment for the
benefit of creditors, voluntary liquidation or otherwise of
one party then the other party shall be entitled to terminate
this AGREEMENT by giving thirty (30) days written notice.
11.6. Effect of Termination.
11.6.1. The provisions of Sections 2, 3.5, 4.9, 5.2, 9 and 10
shall survive termination of this AGREEMENT for any
reason whatsoever.
11.6.2. In the event of termination of this AGREEMENT by
EYETECH pursuant to Section 11.2, EYETECH shall
continue to be obligated to purchase REAGENT pursuant
to any issued purchase orders. If EYETECH terminates
this AGREEMENT prior to the end of the first [**]
quarters after the EFFECTIVE DATE, it shall be
obligated to purchase the minimum quantities
specified for such first [**] quarters pursuant to
Section 4.3.
11.6.3. If EYETECH terminates this AGREEMENT pursuant to
Section 11.4, the following shall occur so long as
EYETECH continues to develop, make, have made, use,
import, offer for sale or sell the PRODUCT: (a) the
licenses granted pursuant to Section 3.1 shall
survive such termination,
Page 31 of 40
subject to the terms and conditions of the
CROSS-LICENSE AGREEMENT; and (b) EYETECH shall
continue to pay SHEARWATER royalties and milestones
payments and make reporting obligations pursuant to
Sections 7 and 8. During the period in which EYETECH
is obligated to pay SHEARWATER royalties for use of
the REAGENT, the SHEARWATER covenant of Section 3.4
shall survive. In addition, EYETECH shall pay
SHEARWATER other payments which have accrued
hereunder prior to such termination.
11.6.4. In the event this AGREEMENT is terminated by either
party for any other reason, all licenses granted to
EYETECH in Section 3.1 shall immediately terminate.
Termination of this AGREEMENT by either party shall
not terminate EYETECH'S obligation to pay all
milestone payments, royalties, and other payments
which shall have accrued hereunder prior to such
termination.
12. Assignment
12.1. Unless otherwise expressly permitted hereunder, except as part
of the sale of the entire business to which this AGREEMENT
relates, a merger, consolidation, reorganization or other
combination with or into another PERSON, or the transfer or
assignment to an AFFILIATE, pursuant to which the surviving
entity or assignee assumes the assigning or merging parties
obligations hereunder, neither party may assign any of its
rights or delegate any of its duties under this AGREEMENT
unless the other party has given specific written approval
thereto, with such approval not to be unreasonably withheld.
Any purported assignment not in accordance with this Section
12.1 shall be void and of no effect.
12.2. This AGREEMENT shall not only be binding upon each party
signatory hereto but also to its successors by consolidation,
combination, acquisition or merger, and assignees.
13. Notices
13.1. Any notice or document required or permitted hereunder shall
be deemed to have been served properly if personally
delivered, delivered by facsimile transmission, or mailed by
registered or certified United States mail, postage
Page 32 of 40
prepaid and properly addressed, to the respective party to
whom such notice relates at the applicable address set forth
in the caption of this AGREEMENT or at such alternate address
as shall be specified by notice given in the manner herein
provided. Facsimile transmission shall be deemed received on
the first business day following a confirmed transmission, and
a mailed notice or document shall be deemed received on the
fourth (4th) business day following the date of posting.
14. Re-negotiation
14.1. In the event the CROSS-LICENSE AGREEMENT terminates or expires
while this AGREEMENT is still in effect, the parties agree to
meet to discuss in good faith any resulting changes to be made
in the terms of this AGREEMENT, including but not limited to,
financial terms.
15. Miscellaneous
15.1. Force Majeure. Neither party shall be held liable or
responsible to the other party nor be deemed to have defaulted
under or breached this AGREEMENT for failure or delay in
fulfilling or performing any term of this AGREEMENT to the
extent, and for so long as, such failure or delay is caused by
or results from causes beyond the reasonable control of the
affected party including but not limited to fire, floods,
embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or
other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or other party;
provided, however, that the foregoing shall not be applied to
excuse or delay any royalty or other payment obligation of
either party under this AGREEMENT. When such circumstances
arise, the parties shall discuss what, if any modification of
the terms of this AGREEMENT may be required to arrive at an
equitable solution.
15.2. Severability. All the terms and provisions of this AGREEMENT
are distinct and severable, and if any term or provision is
held unenforceable, illegal or void in whole or in part by any
court, regulatory authority or other competent authority it
shall to that extent be deemed not to form part of this
AGREEMENT, and the enforceability, legality and validity of
the remainder of this AGREEMENT will not
Page 33 of 40
be affected, provided that, in any case where as a result of
the operation of this Section 15.2 the rights or obligations
of a party are materially altered to the detriment of that
party, that party may terminate this AGREEMENT within thirty
(30) days from the date of the relevant decision of the
relevant court, regulatory authority or other competent
authority.
15.3. Variation. This AGREEMENT may not be released, discharged,
supplemented, amended, varied or modified in any manner except
by an instrument in writing signed by a duly authorized
officer or representative of each of the parties hereto.
15.4. Forbearance and Waiver. No waiver by a party in respect of any
breach will operate as a waiver in respect of any subsequent
breach. No failure or delay by a party in exercising any right
or remedy will operate as a waiver thereof, nor will any
single or partial exercise or waiver of any right or remedy
prejudice its further exercise or the exercise of any other
right or remedy.
15.5. Counterparts. This AGREEMENT may be executed in more than one
counterpart, each of which constitutes an original and all of
which together shall constitute one enforceable agreement.
15.6. No Partnership. The relationship of the parties is that of
independent contractors and this AGREEMENT will not operate so
as to create a partnership or joint venture of any kind
between the parties.
15.7. Construction. The parties have participated jointly in the
negotiation and drafting of this AGREEMENT. In the event that
an ambiguity or question of intent or interpretation arises,
this AGREEMENT shall be construed as if drafted jointly by the
parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this AGREEMENT.
15.8. Entire Agreement. This AGREEMENT constitutes the entire
understanding between the parties and supersedes any prior
understanding and agreements between and among them respecting
the subject matter hereof. There are no representations,
agreements, arrangements or understandings, oral or written,
between the parties relating to the subject matter of this
AGREEMENT which are
Page 34 of 40
not fully expressed in this AGREEMENT. This AGREEMENT shall be
binding upon, and inure to the benefit of, the parties and
their respective successors and assigns.
15.9. Governing Law. This AGREEMENT shall be governed by and
construed in accordance with the LAWS of the State of
California, U.S.A., without regard to its choice of law rules.
IN WITNESS WHEREOF, the parties hereto have caused their authorized
representatives to execute this AGREEMENT by signing below:
SIGNED:
For and on behalf of: For and on behalf of:
Shearwater Corporation Eyetech Pharmaceuticals, Inc.
Signature /s/ Xxxxxxx X. Xxxxxxx Signature /s/ Xxxxxx Xxxxxx
---------------------------- ----------------------------
Name: Xxxxxxx X. Xxxxxxx, Ph.D. Name: Xxxxxx Xxxxxx
Title: Vice President, Corporate Title: Vice President, Business
Development Strategy & General Counsel
Page 35 of 40
SCHEDULE I
THE SPECIFICATIONS
[**][**]
PROCEDURE NUMBER TEST SPECIFICATION
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
[**]
[**] [**] [**]
[**] [**] [**]
[**] [**] [**]
ALL FORMS PRESENTING THE ABOVE RESULTS MUST BE ATTACHED
[**]
Page 36 of 40
SCHEDULE II
REMUNERATION AND INITIAL FORECAST
Pursuant to Section 7.1 the following milestone payments will be payable by
EYETECH to SHEARWATER:
MILESTONE MILESTONE PAYMENT (US DOLLARS)
Within ten (10) days from the INDEPENDENT
COUNSEL'S AFFIRMATIVE DETERMINATION $1,500,000
Within [**] of [**] $[**]
Within [**] of [**] $[**]
The above payments shall be made only upon the first time achieved for the
PRODUCT.
Pursuant to Section 4.3, EYETECH shall purchase the following amounts of REAGENT
from SHEARWATER:
CALENDAR QUARTER FOLLOWING THE EFFECTIVE DATE AMOUNT OF REAGENT REQUIRED (KG)
1
2
3
4
5
6
7
8
Page 37 of 40
Pursuant to Section 7.5.1, EYETECH will pay to SHEARWATER the following prices
for the REAGENT manufactured according to cGMP and the SPECIFICATIONS.
TOTAL AMOUNT OF REAGENT PURCHASED OVER 12 PRICE PER GRAM (DOLLARS)
MONTH PERIOD (KG)
Less than [**] kg $[**]
Equal to or greater than [**] kg and less than [**] kg $[**]
Equal to or greater than [**] kg and less than [**] kg $[**]
Equal to or greater than [**] kg $[**]
Page 38 of 40
SCHEDULE III
SHEARWATER PATENT RIGHTS
SC REFERENCE PATENT NUMBER PRIORITY DATE STATUS
[**] [**] [**] [**]
[**] [**] [**] [**]
[**] [**] [**] [**]
Page 39 of 40
SCHEDULE IV
ENZON PATENTS
[**]
Page 40 of 40
