EXHIBIT 10.1
VERTEX PHARMACEUTICALS INCORPORATED HAS OMITTED FROM THIS EXHIBIT 10.1 PORTIONS
OF THE AGREEMENT FOR WHICH THE COMPANY HAS REQUESTED CONFIDENTIAL TREATMENT FROM
THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THIS EXHIBIT FOR WHICH
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH BRACKETED ASTERISKS
([****]), AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
BETWEEN
VERTEX PHARMACEUTICALS INCORPORATED
AND
HOECHST XXXXXX XXXXXXX DEUTSCHLAND GMBH
Execution Copy--September 1, 1999
INTRODUCTION........................................................................ 1
ARTICLE I-- DEFINITIONS............................................................. 2
ARTICLE II-- LICENSE................................................................ 9
2.1 Grant to HMR............................................................... 9
2.2 Grant to VERTEX............................................................ 10
2.3 Second Generation Compounds................................................ 11
2.4 Noncompete................................................................. 11
ARTICLE III-- DEVELOPMENT........................................................... 12
3.1 Development Option......................................................... 12
3.2 Joint Development Committee................................................ 16
3.3 Development Plan........................................................... 21
3.4 Development Responsibility and Costs....................................... 21
3.5 Regulatory Approvals....................................................... 22
3.6 Step-In Rights............................................................. 23
3.7 Reasonable Efforts in Development.......................................... 25
ARTICLE IV-- MANUFACTURE AND SUPPLY................................................. 25
4.1 Manufacturing of Bulk Drug Substance and Drug Product...................... 25
ARTICLE V-- COMMERCIALIZATION....................................................... 26
5.1 Marketing and Promotion.................................................... 26
5.2 Joint Marketing Committee.................................................. 26
5.3 Marketing Plans............................................................ 28
5.4 Co-Promotion in North America.............................................. 30
5.5 European Co-promotion Rights............................................... 33
5.6 Termination of Co-Promotion Obligations.................................... 34
5.7 Co-labeling................................................................ 34
5.8 Marketing Efforts.......................................................... 35
ARTICLE VI-- PAYMENTS............................................................... 35
6.1 Closing Payment............................................................ 35
6.2 Milestone Payments by HMR.................................................. 36
6.3 Royalties.................................................................. 41
6.4 Term for Royalty Payments.................................................. 44
6.5 [************************************************]......................... 45
6.6 Sales Reports.............................................................. 45
ARTICLE VII-- INTELLECTUAL PROPERTY................................................. 49
7.1 Information Sharing........................................................ 49
7.2 Patentable Inventions and Know-How......................................... 50
7.3 Infringement Claims by Third Parties....................................... 56
7.4 Infringement Claims Against Third Parties.................................. 58
7.5 Notice of Certification.................................................... 59
7.6 Patent Term Extensions..................................................... 60
License, Development and Commercialization Agreement -- Confidential -- Page i
ARTICLE VIII-- REPORTING............................................................ 61
8.1 Exchange of Information.................................................... 61
ARTICLE IX-- REPRESENTATIONS AND WARRANTIES OF VERTEX............................... 62
9.1 VERTEX Represents and Warrants to HMR...................................... 62
ARTICLE X-- REPRESENTATIONS AND WARRANTIES OF HMR................................... 62
10.1 HMR Represents and Warrants to VERTEX...................................... 62
ARTICLE XI-- CONFIDENTIALITY........................................................ 63
11.1 Undertaking................................................................ 63
11.2 Exceptions................................................................. 64
11.3 Publicity.................................................................. 65
11.4 Survival................................................................... 65
ARTICLE XII-- PUBLICATION........................................................... 65
12.1 Publication................................................................ 65
ARTICLE XIII-- TERM AND TERMINATION................................................. 67
13.1 Term....................................................................... 67
13.2 Termination by VERTEX for Cause............................................ 68
13.3 HMR Right to Terminate Without Cause....................................... 69
13.4 HMR Right to Terminate for Lack of Commercial Viability.................... 70
13.5 Termination of Co-Promotion Rights......................................... 70
13.6 Termination by HMR for Cause............................................... 71
13.7 Effects of Termination..................................................... 72
ARTICLE XIV-- INDEMNIFICATION....................................................... 74
14.1 Indemnification by VERTEX.................................................. 74
14.2 Indemnification by HMR..................................................... 74
14.3 Claims Procedures.......................................................... 75
14.4 Compliance................................................................. 76
14.5 Insurance.................................................................. 76
ARTICLE XV-- MISCELLANEOUS PROVISIONS............................................... 77
15.1 Governing Law; Jurisdiction................................................ 77
15.2 Waiver..................................................................... 77
15.3 Force Majeure.............................................................. 77
15.4 Registration of License.................................................... 77
15.5 Severability............................................................... 77
15.6 Government Acts............................................................ 78
15.7 Government Approvals....................................................... 78
15.8 Assignment................................................................. 78
15.9 Affiliates................................................................. 79
15.10 Counterparts............................................................... 77
License, Development and Commercialization Agreement -- Table of Contents --
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15.11 No Agency.................................................................. 79
15.12 Notice..................................................................... 79
15.13 Headings................................................................... 80
15.14 Authority.................................................................. 80
15.15 Entire Agreement........................................................... 80
Schedule 1.5 -- Compounds
Schedule 1.19 -- HMR Patents
Schedule 1.25 -- Countries of Latin America
Schedule 1.26 -- Major Market Countries
Schedule 1.42 -- VERTEX Patents
Schedule 7.2.1 -- Prior Patents
Schedule 7.2.2 -- Minimum Patent Filing Countries
Schedule 9.1 -- VERTEX Disclosures
License, Development and Commercialization Agreement -- Table of Contents --
Confidential -- Page ii
LICENSE, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Agreement is made and entered into as of September 1, 1999 ( the "Effective
Date") between Vertex Pharmaceuticals Incorporated (hereinafter "VERTEX"), a
Massachusetts corporation with principal offices at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000-0000, and Hoechst Xxxxxx Xxxxxxx Deutschland GmbH
(hereinafter "HMR"), a German corporation with principal offices at
Xxxxxxxxxxxxx Xxxxxxx 00, 00000 Xxx Xxxxx xx Xxxxxx, Xxxxxxx.
INTRODUCTION
WHEREAS, VERTEX and Xxxxxxx Uclaf were parties to a certain Research,
Development and License Agreement dated September 8, 1993 (the "Research
Agreement") under which VERTEX and Xxxxxxx Uclaf collaborated in the discovery
and design of novel compounds targeted at inhibition of interleukin 1(beta)
converting enzyme ("ICE") for the treatment of inflammation; and
WHEREAS, HMR is Xxxxxxx Uclaf's successor in interest under the Research
Agreement; and
WHEREAS, the parties have elected to develop and commercialize certain
compounds discovered and/or tested in the course of the Research Program and to
provide HMR with a further option to develop and commercialize certain other
compounds as set forth herein; and
WHEREAS, VERTEX and HMR intend for development and commercialization to
proceed under the terms of this Agreement, which supercedes the provisions of
the License Agreement attached as Exhibit A to the Research Agreement; and
NOW THEREFORE, in consideration of the foregoing premises, the parties
agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following initially capitalized terms
in this Agreement, whether used in the singular or plural, shall have the
following meanings:
1.1 "AFFILIATE" shall mean, with respect to any Person, any other Person
which
License, Development and Commercialization Agreement -- Confidential -- Page 1
directly or indirectly, by itself or through one or more
intermediaries, controls, or is controlled by, or is under direct or
indirect common control with, such Person. The term "control" means
the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
Control will be presumed if one Person owns, either of record or
beneficially, more than 50% of the voting stock of any other Person.
1.2 "BUSINESS DAY" shall mean any day, Monday through Friday, on which
banking institutions in Frankfurt, Germany and Boston, Massachusetts,
are open for business.
1.3 "BULK DRUG SUBSTANCE" shall mean a Drug Product Candidate in bulk
crystal, powder or other form suitable for incorporation in a Drug
Product.
1.4 "CLOSING DATE" shall mean the latest of (a) the date on which VERTEX
executes this Agreement; (b) the date on which HMR executes this
Agreement; and (c) if applicable, the third business day following the
expiration or earlier termination of any notice and waiting period
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended ("HSR Act").
1.5 "COMPOUND" shall mean (a) the chemical compound referred to by HMR as
HMR3480 and by VERTEX as VX-740 and identified as such on SCHEDULE 1.5
(hereinafter referred to as "HMR3480/VX-740"); (b) all other compounds
that fall within the scope of a Live Claim of a Patent and that (i)
possess each of the following characteristics (referencing
HMR3480/VX-740): [**
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or before December 31, 1997 during the course of the Research Program
conducted under the Research Agreement. Compounds which are described
in Subsections 1.5(a) and (b) are sometimes referred to in this
Agreement as the "AB Compounds." Compounds which are described in
Subsection 1.5(c) are sometimes referred to in this Agreement as the
"C
License, Development and Commercialization Agreement -- Confidential -- Page 2
Compounds."
1.6 "CONTROLLED" shall mean the legal authority or right of a party hereto
to grant a license or sublicense of intellectual property rights to
another party hereto, or to otherwise disclose proprietary or trade
secret information to such other party, without breaching the terms of
any agreement with a Third Party, infringing upon the intellectual
property rights of a Third Party, or misappropriating the proprietary
or trade secret information of a Third Party.
1.7 "CO-PROMOTE" shall mean the right of VERTEX, as provided herein and
subject to applicable law, to promote and Detail (as defined in this
Section) Drug Product in North America and in the European Union
through its own sales force and to otherwise engage in activities in
accordance with the provisions of Article V hereof, as may be
applicable. "DETAIL", as used above, shall mean
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1.8 "DEVELOPMENT OPTION" shall have the meaning ascribed to it in Section
3.1 hereof.
1.9 "DEVELOPMENT PLAN" shall have the meaning ascribed to it in Section
3.3 hereof.
1.10 "DEVELOPMENT PROGRAM" shall mean activities associated with
development of a Bulk Drug Substance, Drug Product Candidate and/or a
Drug Product for sale, including but not limited to:
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1.11 "DRUG PRODUCT" shall mean a finished dosage form which is prepared
from Bulk Drug Substance and is ready for administration to the
ultimate consumer as a pharmaceutical product.
1.12 "DRUG PRODUCT CANDIDATE" shall mean any Compound as to which HMR has
exercised its Development Option.
1.13 "EFFECTIVE DATE" shall mean the date specified in the first paragraph
of this Agreement.
1.14 "EUROPEAN UNION" shall include Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands,
Portugal, Spain, Sweden, the United Kingdom and any other countries
that may have been admitted to the European Union as of the Effective
Date.
1.15 "FIELD" shall mean the diagnosis, treatment, and treatment monitoring
of diseases in humans associated with interleukin-1 beta production.
1.16 "FIRST COMMERCIAL SALE" shall mean the first shipment of a Drug
Product to a Third Party by HMR or an Affiliate or sublicensee of HMR
in a country in the Territory following applicable Regulatory Approval
of the Drug Product in such country.
1.17 "GMP" shall mean the current Good Manufacturing Practice regulations
promulgated by the FDA, published at 21 CFR Part 210 et seq., as such
regulations may be amended, and such equivalent foreign regulations or
standards as may be applicable with respect to Bulk Drug Substance or
Drug Product(s) manufactured or sold outside the United States.
1.18 "HMR KNOW-HOW" shall mean all Know-How of HMR.
1.19 "HMR PATENTS" shall mean any Patents Controlled by HMR (or any of its
Affiliates) claiming a Compound or a method of using a Compound or an
improvement to the subject matter of a Patent covering a Compound or a
method of using a Compound. A list of HMR Patents is appended hereto
as SCHEDULE
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1.19 and will be updated periodically to reflect additions
thereto during the course of the Agreement.
1.20 "HMR TECHNOLOGY" shall mean all HMR Patents and all HMR Know-How.
1.21 "JOINT DEVELOPMENT COMMITTEE" or "JDC" shall have the meaning ascribed
to it in Section 3.2 hereof.
1.22 "JOINT MARKETING COMMITTEE" or "JMC" shall have the meaning ascribed
to it in Section 5.2 hereof.
1.23 "KNOW-HOW" shall mean all proprietary material and information
including data, technical information, know-how, experience,
inventions, discoveries, trade secrets, compositions of matter and
methods, whether currently existing or developed or obtained during
the course of this Agreement and whether or not patentable or
confidential, that are now Controlled by a party or its Affiliates,
and that relate to the development, utilization, or use of any
Compound, Drug Product Candidate or Drug Product, including but not
limited to processes, techniques, methods, products, materials and
compositions; PROVIDED, HOWEVER, that for the purposes of the
definition of "HMR KNOW-HOW" only, the term "KNOW-HOW" shall not
include [**********************************************
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1.24 "LIVE CLAIM" shall mean a claim of any issued, unexpired United States
or non-United States Patent which shall not have been withdrawn,
canceled or disclaimed, nor held invalid or unenforceable by a court
of competent jurisdiction in an unappealed or unappealable decision.
1.25 "LATIN AMERICA" shall mean those countries listed on SCHEDULE 1.25
hereto.
1.26 "MAJOR MARKET" shall mean those countries listed on SCHEDULE 1.26
hereto.
1.27 "MANUFACTURING COST" shall mean [*************************************
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1.28 "NET SALES" shall mean [***************************************
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1.29 "NORTH AMERICA" shall mean the United States and Canada, including
their respective territories and possessions.
1.30 "PATENTS" shall mean all existing patents and patent applications and
all patent applications hereafter filed, including any continuations,
continuations-in-part, divisions, provisionals or any substitute
applications, any patent issued with respect to any such patent
applications, any reissue, reexamination, renewal or extension
(including any supplemental patent certificate) of any such patent,
and any confirmation patent or registration patent or patent of
addition based on any such patent, and all foreign counterparts of any
of the foregoing.
1.31 "PERSON" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization
or government or political subdivision thereof.
1.32 "PHASE II CLINICAL TRIALS" shall mean human clinical trials conducted
for inclusion in (i) that portion of the FDA submission and approval
process which provides for trials of a Drug Product on a limited
number of patients for the purposes of collecting data on dosage,
evaluating safety and collecting preliminary information regarding
efficacy in the proposed therapeutic indication, as more fully defined
in 21 C.F.R. Section 312.21(b), and (ii) equivalent submissions with
similar requirements in other countries in the Territory.
1.33 "PHASE III CLINICAL TRIALS" shall mean human clinical trials conducted
for inclusion in (i) that portion of the FDA submission and approval
process which
License, Development and Commercialization Agreement -- Confidential -- Page 7
provides for the continued trials of a Drug Product on sufficient
numbers of patients to generate safety and efficacy data to support
Regulatory Approval in the proposed therapeutic indication, as more
fully defined in 21 C.F.R.Section 312.21(c), and (ii) equivalent
submissions with similar requirements in other countries in the
Territory.
1.34 "PHASE IV CLINICAL TRIALS" shall mean human clinical trials conducted
for inclusion in (i) that portion of the FDA submission and approval
process which provides for continued trials of a Drug Product after
Regulatory Approval has been achieved (such trials may be designed to
provide information that will optimize or expand use of the Drug
Product, provide information from additional drug interaction,
dose-response and safety studies, or provide pharmacoeconomic,
epidemiological, comparative efficacy or other data from studies in a
therapeutic use environment) and (ii) equivalent submissions with
similar requirements in other countries in the Territory.
1.35 "REGULATORY APPROVAL" shall mean, with respect to a country in the
Territory, all authorizations by the appropriate governmental entity
or entities necessary for commercial sale of a Drug Product in that
country including, without limitation and where applicable, approval
of labeling, price, reimbursement and manufacturing. "Regulatory
Approval" in the United States shall mean final approval of a new drug
application pursuant to 21 C.F.R. Section 314, permitting marketing of
the applicable Drug Product in interstate commerce in the United
States.
1.36 "REST OF WORLD" or "ROW" shall mean all other countries in the
Territory outside North America and Latin America.
1.37 "SECOND GENERATION COMPOUND" shall mean compounds synthesized [*
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1.38 "TECHNOLOGY" shall mean HMR Technology and VERTEX Technology.
1.39 "TERRITORY" shall mean all the countries in the world.
1.40 "THIRD PARTY" shall mean any unincorporated body, person, corporation
or other entity other than HMR, VERTEX or their respective Affiliates
or sublicensees of
License, Development and Commercialization Agreement -- Confidential -- Page 8
rights conveyed under this Agreement.
1.41 "VERTEX KNOW-HOW" shall mean all Know-How of VERTEX.
1.42 "VERTEX PATENTS" shall mean any Patents Controlled by VERTEX (or any
of its Affiliates) claiming (i) a Compound or a method of using a
Compound or (ii) a method of manufacturing, process development or
packaging related to a Compound or (iii) an improvement to the subject
matter of a Patent covering a Compound or a method of using a Compound
or a method of manufacturing, process development or packaging related
to a Compound. A list of VERTEX Patents is appended hereto as SCHEDULE
1.42 and will be updated periodically to reflect additions thereto
during the course of this Agreement.
1.43 "VERTEX TECHNOLOGY" shall mean all VERTEX Patents and all VERTEX
Know-How.
ARTICLE II
LICENSE
2.1 GRANT TO HMR.
(a) Subject to the other provisions of this Agreement, VERTEX hereby
grants to HMR an exclusive license or (as appropriate) sublicense
under VERTEX Technology to the extent necessary to permit HMR to
carry out its rights and obligations set forth in this Agreement
and to develop, manufacture, have manufactured, market, use, sell
and import for sale Compound, Bulk Drug Substance, Drug Product
Candidates, and Drug Product in the Territory, with the right to
sublicense only as set forth in (b) below. Notwithstanding the
foregoing grant, VERTEX reserves the right to use all VERTEX
Technology necessary to discharge its obligations and exercise
its rights under this Agreement, including but not limited to its
"Step-In" rights under Section 3.6 hereof and its Co-Promotion
rights under Article V hereof. VERTEX retains all rights to
VERTEX Technology except to the extent explicitly granted to HMR
hereunder. The foregoing license shall not extend to the sale of
Compound, Bulk Drug Substance or Drug Product Candidates separate
from Drug Product except as incorporated in a Drug Product.
License, Development and Commercialization Agreement -- Confidential -- Page 9
(b) HMR may sublicense its rights under the foregoing license to any
of its Affiliates, may sublicense or subcontract its rights to
manufacture Bulk Drug Substance and Drug Product to any
Affiliates or Third Parties and may contract with reputable
research organizations to conduct or assist in the conduct of
human clinical trials and the evaluation of trials data, after
prior notice to, but without the consent of, VERTEX. HMR shall be
responsible to VERTEX for the performance by the sublicensee or
subcontractor under any such sublicense or other agreement and
under any provisions of this Agreement for which the sublicensee
or subcontractor is responsible pursuant to the terms of the
sublicense or subcontract. HMR shall not permit any sublicensees
or subcontractor to use VERTEX Technology without provisions
safeguarding confidentiality at least equivalent to those
provided in this Agreement. Any such provisions will allow VERTEX
the right to directly enforce the obligations of confidentiality
with respect to VERTEX Know-How and other confidential
information in the possession of the Third Party. HMR may
sublicense its rights, in whole or in part and from time to time,
under this Agreement to any Third Party with the written consent
of VERTEX, such consent not to be unreasonably withheld.
2.2 GRANT TO VERTEX. Subject to the other provisions of this Agreement,
HMR hereby grants to VERTEX a nonexclusive, royalty-free license or
(as appropriate) sublicense under HMR Technology to the extent
necessary to allow VERTEX to carry out its rights and obligations set
forth in this Agreement. HMR retains all rights to HMR Technology
except to the extent explicitly granted to VERTEX hereunder. VERTEX
shall not permit any subcontractors or sublicensees to use HMR
Technology without provisions safeguarding confidentiality equivalent
to those provided in this Agreement. Any such provisions will allow
HMR the right to directly enforce the obligations of confidentiality
with respect to HMR Know-How and other confidential information in the
possession of the Third Party.
2.3 SECOND GENERATION COMPOUNDS. VERTEX may, at its sole discretion,
continue to develop and commercialize Second Generation Compounds.
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2.4 NONCOMPETE. Neither party shall develop, license, market or sell any
pharmaceutical product that includes a Compound as an active
ingredient, other than a Drug Product under this Agreement, except
insofar as such product or Compound is obtained in connection with a
merger, acquisition or similar transaction not consummated primarily
for the purpose of obtaining such product or Compound and is either
(a) not claimed under an HMR Patent, a Vertex Patent, a Prior Joint
Invention, a Prior Patent or a Joint Invention (as such terms are
defined in Section 7.2(a)) covering the Compound itself or a use
thereof, or (b) if claimed under an HMR Patent, a Vertex Patent, a
Prior Joint Invention a Prior Patent or a Joint Invention covering the
Compound itself or a use thereof, is
License, Development and Commercialization Agreement -- Confidential -- Page 11
the subject of an existing Third Party license from VERTEX, in the
case of a merger, acquisition or similar transaction by HMR, or from
HMR, in the case of a merger, acquisition or similar transaction by
VERTEX, but in either case only to the extent permitted to the
licensee under the terms of the Third Party license.
ARTICLE III
DEVELOPMENT
3.1 DEVELOPMENT OPTION. HMR shall have the option (the "Development
Option") to develop and commercialize any Compound in accordance with
the provisions of this Agreement.
(a) WRITTEN NOTICE. The Development Option may be exercised by HMR
with respect to any one or more of the Compounds by delivering
written notice of exercise (an "Exercise Notice") to VERTEX prior
to expiration of the Development Option, specifying the Compound
as to which the Development Option is being exercised.
(b) DRUG PRODUCT CANDIDATE. Any Compound as to which the Development
Option is exercised shall become a Drug Product Candidate under
this Agreement, and development of that Compound shall proceed in
accordance with the terms of this Agreement, including the
provisions of Section 3.7 and Section 5.8 hereof relating to
development and marketing of Drug Product Candidates and Drug
Product.
(c) OPTION EXERCISED. The parties acknowledge that HMR has exercised
its Development Option with regard to HMR3480/VX-740.
(d) SECOND GENERATION COMPOUNDS. In the event
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Generation Option") exercisable as set forth below, to develop
and commercialize a Second Generation Compound.
(i) FIRST NOTICE PERIOD HMR shall give VERTEX written notice
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(the "First Notice") in the event that HMR wishes to
consider exercise of the Second Generation Option,
specifying that the foregoing conditions have been met and
briefly describing the basis for that judgment. VERTEX and
HMR shall meet (the "Diligence Meeting") within thirty (30)
days after VERTEX's receipt of the First Notice to discuss
available Second Generation Compounds and the potential
exercise of HMR's Second Generation Option.
(ii) DUE DILIGENCE PERIOD.
(A) VERTEX will provide HMR, for evaluation, with such
proprietary information about those Second Generation
Compounds which are subject to the Second Generation
Option, and any samples of those Second Generation
Compounds, as shall be in VERTEX's control and which
are reasonably requested in writing by HMR within
fifteen (15) days after the Diligence Meeting. The
requested information and samples will be provided by
VERTEX to HMR as soon as reasonably practicable after
receipt by VERTEX of the foregoing request. Any
Compound samples provided to HMR by VERTEX shall be
supplied under a mutually agreeable materials transfer
agreement, with customary terms and provisions. If any
of the Second Generation Compounds with respect to
which information and/or samples are requested have
been, at the time of the request, designated by VERTEX
as development candidates ("Second Generation
Development Candidates") VERTEX will so inform HMR.
(B) HMR shall have a period of one hundred twenty (120)
days to review the information provided by VERTEX, to
generally conduct due diligence, and, if HMR so
chooses, to test any Second Generation Compounds
received from VERTEX under (A) above, and to
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synthesize and test any Second Generation Compounds not
supplied by VERTEX. All Second Generation Development
Candidates shall be tested by HMR only pursuant to
testing protocols agreed in advance by the parties;
provided that VERTEX's consent to a protocol proposed
by HMR may not be unreasonably withheld. If the
foregoing 120-day period is not sufficient to enable
HMR to conduct at least sixty (60) days of IN VIVO or
IN VITRO tests as it deems appropriate with respect to
a Second Generation Compound, HMR will so notify VERTEX
within sixty (60) days after commencement of the
120-day period, and additional time will be provided as
may be reasonably agreed by the parties to facilitate
the testing. All of the data generated by any such IN
VITRO or IN VIVO tests will be provided to VERTEX and
may be used by VERTEX without restriction, if HMR does
not exercise its Development Option with respect to any
Second Generation Compound or as otherwise would be
required by the U.S. FDA, or an equivalent regulatory
authority, if VERTEX had conducted the same test under
the same protocol.
(iii) OPTION EXERCISE. HMR may exercise the Second Generation
Option with respect to a Second Generation Compound by
written notice provided to VERTEX not later than one hundred
twenty (120) days after receipt of the information provided
to it by VERTEX under clause (ii)(A) above, and the Second
Generation Option provided in this subsection (d) shall
expire if not exercised prior to that time. VERTEX will
provide HMR with a list of all development costs incurred by
VERTEX from January 1, 1998 through the date upon which the
Second Generation Option is exercised, with respect to the
Second Generation Compound which is the subject of the
option exercise. For purposes of the foregoing, "development
costs" shall mean
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Upon the written request of HMR, at HMR's expense and not
more than once in respect of the exercise of any one
particular Second Generation Option, VERTEX shall permit an
independent public accountant of national prominence
selected by HMR to have access during normal business hours
to those records of VERTEX as may be reasonably necessary to
verify the accuracy of VERTEX's list of such development
costs and their applicability to the Second Generation
Compound which is the subject of the option exercise.
Subject to such audit rights, HMR will promptly reimburse
VERTEX for those development costs incurred by VERTEX in the
course of generating data or information which HMR intends
to include in any filings with a Regulatory Authority. HMR
may not use any data or information generated by or at the
direction of VERTEX with respect to a Second Generation
Compound unless it has reimbursed VERTEX for such associated
development costs.
(iv) EFFECT OF OPTION EXERCISE. A Second Generation Compound as
to which the Second Generation Option has been validly
exercised shall be considered a Compound hereunder and no
longer subject to the provisions of Section 2.3 hereof. The
Development Option provided to HMR under Section 3.1 shall
be deemed to have been exercised with respect to that Second
Generation Compound.
(v) EXCLUSIONS FROM SECOND GENERATION OPTION; NO FIRST REFUSAL.
HMR shall have no right to exercise the Second Generation
Option (and the provisions of Section (d)(ii) above relating
to the supply of information and samples by VERTEX to HMR
shall be inapplicable to) any Second Generation Compound
which, at the time VERTEX receives the First Notice under
Section(d)(i)
License, Development and Commercialization Agreement -- Confidential -- Page 15
above,[*****************************************************
************************************************************
************************************************************
***************************************.] The Second
Generation Option shall not be construed to create a right
of first refusal or any analogous right for HMR with
respect to any Second Generation Compound.
(e) DEVELOPMENT OPTION EXPIRATION. The Development Option will expire
with respect to any Compound as to which the Development Option
has not then been exercised at 5:00 P.M. Eastern Standard Time on
the expiration date of the last Patent containing a Live Claim
covering such Compound.
3.2 JOINT DEVELOPMENT COMMITTEE.
(a) FORMATION AND RESPONSIBILITIES. As soon as practicable after the
execution of this Agreement, HMR and VERTEX will establish a
Joint Development Committee (the "JDC") comprised of eight (8)
representatives, four of whom shall be designated by each party.
Additional JDCs may be established from time to time as the
parties deem necessary to handle development of additional
Indications as defined in Section 6.2(e). Unless otherwise
indicated by the context in which it is used, the term "JDC" as
referenced herein shall also include the members of the JDC and
any subcommittees which may be established from time to time by
the JDC.
(i) DEVELOPMENT PLAN. The JDC will determine the goals and
strategy for, and will develop a detailed Development Plan
as set forth in Section 3.3 below for implementation of the
Development Program for each Drug Product Candidate.
(ii) SUBCOMMITTEES. The JDC may act directly or through such
working groups or sub-committees as it may deem appropriate
to establish. VERTEX and HMR will each be entitled to
designate a reasonable number of representatives on each
working group or sub-committee which may be established by
the JDC. Each of
License, Development and Commercialization Agreement -- Confidential -- Page 16
HMR and VERTEX shall have one vote on any such working group
or subcommittee, and Subsection 3.2(a) (iii) below will
apply to any decisions delegated by the JDC to any working
group or subcommittee.
(iii) DECISION-MAKING.
(A) COMMITTEE STRUCTURE. The JDC Committee Chair (the "JDC
Chair") will be appointed by HMR from among the members
of the Committee designated by HMR. Each of HMR and
VERTEX shall have one vote on the JDC. The objective of
the JDC shall be to reach agreement by consensus on all
matters falling within its authority hereunder. In the
event of a deadlock with respect to any action (which
shall be deemed to have occurred if either party shall
request a vote of the JDC on a matter and that vote
shall either not be taken within thirty (30) days of
the request, or if taken shall result in a tie vote),
and subject to the procedure set forth in the balance
of this subsection (iii) as to certain matters,
[******************************************************
*******************************************************
*******************************************************
****************************************************]
(B) DISPUTE REGARDING A MATTER OF MAJOR STRATEGIC
IMPORTANCE. If VERTEX and HMR deadlock on any matter of
major strategic importance (as hereinafter defined) to
the Development Program with respect to a Drug Product
Candidate or Drug Product (a "Disputed Matter"), then
VERTEX may provide written notification of its
disagreement to the JDC Chair within seven (7) Business
Days after the meeting of the JDC at which the Disputed
Matter was considered and a vote formally taken on the
Matter. In its notification
License, Development and Commercialization Agreement -- Confidential -- Page 17
VERTEX will set forth the basis for its disagreement in
reasonable detail.
(C) SUBMISSION TO REVIEW EXECUTIVES FOR RESOLUTION. If the
Disputed Matter is not resolved within seven (7)
Business Days after delivery of VERTEX's notification
to the JDC Chair, then copies of the notification shall
be distributed by the JDC Chair as soon as practicable
to [***************************************************
*******************************************************
*******************************************************
*********************]
(D) [******************************************************
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(E) DEFINITION OF "MATTER OF MAJOR STRATEGIC IMPORTANCE".
For purposes of the foregoing, a "matter of major
strategic importance" shall mean:
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*******************************************************
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*******************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 18
*******************************************************
*************************************]
(iv) AMENDMENTS TO DEVELOPMENT PLAN. The JDC will actively
participate in amending and revising the Development Plan
with respect to a Drug Product Candidate as may be necessary
or desirable from time to time. The JDC shall not have the
power to amend or modify this Agreement, which may only be
amended or modified as provided in Sections 15.2 and 15.15
hereof.
(b) QUARTERLY MEETINGS. While a Drug Product Candidate is under
development, the JDC shall meet formally at least quarterly, or
with such other frequency, and at such time and location, as may
be established by the Committee, for the following purposes,
among others:
(i) REVIEW OF DEVELOPMENT PLAN. To prepare, review and, if
necessary, revise the Development Plan for a particular Drug
Product Candidate, to oversee and coordinate development
activities and to review the conduct of development of Drug
Product Candidates and Drug Product;
(ii) REPORTS. To receive and review reports by HMR and (to the
extent there is information to report) VERTEX, which shall
be prepared by each party and submitted to the other party
and to the JDC on a quarterly basis within fifteen (15) days
after the end of each calendar quarter, setting forth in
reasonable detail, with supporting data, the results of work
performed during the preceding calendar quarter under the
Development Program by the party submitting the report,
including any planned or filed patent applications covering
Bulk Drug Substance, Drug Product Candidates, and Drug
Product and the uses thereof;
(iii) INTERNAL COORDINATION. To assist in coordinating scientific
interactions and resolving disagreements between HMR and
VERTEX during the course of the Development Program; and
License, Development and Commercialization Agreement -- Confidential -- Page 19
(iv) PATENT POSITION. To discuss matters relating to Patents,
including but not limited to issues of inventorship and
decisions relating to the filing, prosecution and
maintenance of Patents. If not otherwise scheduled for
discussion, Patent matters relating to this Agreement shall
be reviewed at any JDC meeting if requested by either party
on reasonable prior notice.
HMR and VERTEX shall each bear the costs and expenses of
attendance at JDC meetings by their respective representatives.
(c) DEVELOPMENT INFORMATION. HMR will promptly notify the JDC as soon
as material information and data generated in the course of the
Development Program become available to HMR. HMR will promptly
provide the JDC with all such material information and data that
is reasonably necessary to enable the JDC to fully participate in
the Development Program as provided in this Agreement. HMR will
make development plans, clinical protocols, investigator
brochures and regulatory submissions available to the JDC for
discussion in the early concept stage and thereafter as those
documents are proposed for modification from time to time.
[****************************************************************
*****************************************************************
***********************************************]
In the event VERTEX obtains any such information that is
Confidential Information hereunder, it shall treat such
information as proprietary and confidential and it shall not use
such information for any purpose except as specifically provided
in this Agreement.
(d) HMR DISCRETION. Nothing in the foregoing shall alter the fact
that HMR shall have sole discretion and responsibility for the
development and manufacture of Bulk Drug Substance, Drug Product
Candidates and Drug Product.
3.3 DEVELOPMENT PLAN. The JDC shall prepare and oversee the implementation
of the overall Development Plan for each Drug Product Candidate and
each Indication.
License, Development and Commercialization Agreement -- Confidential -- Page 20
(a) CONTENT. Such Plan shall, among other things, detail and schedule
the proposed preclinical studies, toxicology, clinical trials,
regulatory plans, clinical trial and commercial material
requirements, process development and manufacturing plans, and
key elements of obtaining Regulatory Approval in each country
where the Drug Product is to be marketed.
(b) DEVELOPMENT TASKS. [*************************
*****************************************************************
*****************************************************************
************************************************************]
(c) ADDITIONAL STUDIES. [***********************
*****************************************************************
*****************************************************************
**************************************************************]
3.4 DEVELOPMENT RESPONSIBILITY AND COSTS. Except as provided herein and in
Section 3.6 below, HMR will have sole responsibility for, and bear the
cost of conducting, the Development Program in the Territory with
respect to each Drug Product Candidate.
(a) [****************************************************************
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**********************]
(b) [****************************************************************
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*****************************************************************
**********************]
(c) [****************************************************************
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License, Development and Commercialization Agreement -- Confidential -- Page 21
(d) [****************************************************************
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3.5 REGULATORY APPROVALS. HMR shall use commercially reasonable efforts to
submit registration dossiers to relevant health authorities with
respect to all necessary Regulatory Approvals in the Territory.
(a) HMR OWNERSHIP. Except as provided in Section 3.6 hereof, HMR
shall have the sole right to obtain Regulatory Approvals, which
shall be held by and in the name of HMR, and HMR shall own all
submissions in connection therewith, provided that VERTEX shall
have a right of reference to all or any part of the submissions
if the "Step-In Rights" become effective under Section 3.6
hereof.
(b) PRINCIPAL INTERFACE. All formulary or marketing approvals shall
also be obtained by and in the name of HMR, and HMR will be the
principal interface with and will otherwise handle all
interactions with regulatory agencies concerning any Drug Product
including, to the extent legally possible, being the sole contact
with such agencies, subject to the rights of VERTEX under this
Section 3.5.
(c) REGULATORY MEETINGS. To the extent not prohibited by law or
regulation, VERTEX shall have the right to have one
representative participate in all material meetings between
representatives of HMR and any of the FDA, the EMEA and Koseisho
(MHW Japan).
(i) HMR will provide VERTEX, at least five (5) Business Days
before any such meeting, with copies of all documents,
correspondence and other materials in its possession which
are relevant to the matters to be addressed at any such
meeting.
(ii) HMR will also provide VERTEX with prompt access to all
exchanges of material correspondence with the FDA, the EMEA
and Koseisho.
(iii) Notwithstanding the foregoing,
License, Development and Commercialization Agreement -- Confidential -- Page 22
[**********************************************************
***********************************************************
***********************************************************
****************************************]
3.6 STEP-IN RIGHTS. If HMR is not using commercially reasonable efforts to
conduct development activities on the critical path provided for in
the then current Development Plan ("Development Work") and, as a
result, such Development Work is not completed substantially in
accordance with the timetable set forth in the applicable Development
Plan, then VERTEX may, after [**************] prior written notice to
HMR, undertake that particular Development Work at its own expense,
unless by the end of that [***************] HMR has begun to carry out
that Development Work in a commercially reasonable manner and has so
notified VERTEX.
(a) Notwithstanding the foregoing, if the Development Work is
terminated or delayed (i) as a result of Force Majeure, or (ii)
as a result of [******************************************
************************************************************
*********************************], then VERTEX may not
in that instance exercise its Step-In rights.
(b) If VERTEX exercises its Step-In rights:
(i) REGULATORY ACTIONS. HMR will continue to make any necessary
and appropriate regulatory filings with respect to the
Development Work and will, if required for VERTEX to
exercise its Step-In rights effectively, transfer to VERTEX
at VERTEX's expense any INDs (or equivalents thereof)
relevant to such Development Work.
(ii) MANUFACTURE OF CLINICAL SUPPLY OF DRUG PRODUCT CANDIDATE.
HMR will supply VERTEX [***************]with the necessary
clinical supply of Drug Product Candidate required to
License, Development and Commercialization Agreement -- Confidential -- Page 23
perform such Development Work in accordance with HMR's then
current scale of manufacturing at HMR's Manufacturing Cost
and upon such other reasonable and customary terms as to
shipment, delivery and similar matters as may be agreed.
(iii) MILESTONES. If HMR resumes the Development Program of a
Drug Product Candidate, it will reimburse VERTEX for the
actual direct cost of the Development Work of good quality,
if such work conforms with the requirements of the relevant
Development Plan. Such payment will be made upon completion
of the Development Work and attainment of the next occurring
milestone under Article VI hereof relating to the Drug
Product Candidate which was the subject of the Development
Work. HMR will pay VERTEX interest on the reimbursable costs
incurred by VERTEX in the conduct of the Development Work,
and on any milestones under Section 6.2 earned but not paid
by HMR, [***************************************************
************************************************************
************************************************************
************************************************************
********************]
(iv) NOTICE. HMR shall provide written notice to VERTEX within
[******************] of the commencement of the Development
Work to be performed by VERTEX under this Section, that it
intends to resume the Development Work for the Drug Product
Candidate, and shall resume the Development Work within
[**************] of delivery of such notice.
3.7 REASONABLE EFFORTS IN DEVELOPMENT. HMR will use diligent, commercially
reasonable efforts consistent with those used by HMR for its own
compounds of similar commercial potential to develop the Compounds
into Drug Product.
(a) COMMERCIAL VIABILITY. In the event that HMR exercises its
Development Option with respect to a particular Compound which
thereby becomes a Drug Product Candidate, HMR shall use diligent,
License, Development and Commercialization Agreement -- Confidential -- Page 24
commercially reasonable efforts consistent with those used by HMR
for its own compounds of similar commercial potential to develop
Drug Product with respect to that Drug Product Candidate, so long
as in HMR's good faith opinion, development of that Drug Product
Candidate is technically feasible and commercially justifiable.
(b) NOTIFICATION. HMR will promptly notify VERTEX in writing if it
should determine that development of any Drug Product Candidate
is not technically feasible or commercially justifiable,
specifying in reasonable detail the reasons for that
determination.
ARTICLE IV
MANUFACTURE AND SUPPLY
4.1 MANUFACTURE OF BULK DRUG SUBSTANCE AND DRUG PRODUCT. HMR will be
responsible for manufacturing and supply of all Bulk Drug Substance,
Drug Product Candidate, and Drug Product as necessary for the conduct
of preclinical and clinical trials and for all commercial purposes in
the Territory. All material will be manufactured in accordance with
GMP and will be provided to VERTEX, as required for VERTEX to exercise
its rights and perform its obligations under this Agreement, at the
price (if any) and upon such terms as may be specified herein, or if
not specified, as may be reasonably agreed in writing between the
parties hereto.
ARTICLE V
COMMERCIALIZATION
5.1 MARKETING AND PROMOTION. HMR shall have exclusive rights to market,
sell and distribute all Drug Product in the Territory, subject to the
co-promotion and other rights of VERTEX set forth in this Article V,
and subject to its obligation to proceed as specified in Section 5.8.
HMR will book all sales of Drug Product and will report those sales to
VERTEX as specified in Section 6.6.
5.2 JOINT MARKETING COMMITTEE. Not later than the commencement of Phase
III Clinical Trials for any Drug Product Candidate, HMR and VERTEX
will form a Joint Marketing Committee ("JMC") comprised of six
representatives, three of whom will be designated by each party.
Unless otherwise indicated by the
License, Development and Commercialization Agreement -- Confidential -- Page 25
context in which it is used, the term "JMC" as referenced herein shall
also include any working group or subcommittee which may be
established from time to time by the JMC.
(a) GLOBAL STRATEGY. The JMC will establish the overall strategy and
oversee the global marketing of all Drug Product. The JMC will
have the opportunity to review all market research plans and
research results, clinical development results and similar items,
as well as HMR's proposed marketing and sales budget for each
Drug Product for the purpose of advising and assisting in
communicating a unified global marketing strategy.
(b) SUBCOMMITTEES. The JMC may act directly or through such working
groups or sub-committees as it may deem appropriate to establish.
In particular, matters before the JMC that relate to North
American and European marketing and sale will be delegated to
subcommittees (the "JMC-NA" and the "JMC-EU," respectively), each
of which shall be responsible for oversight of its particular
territory and for coordinating with the JMC. The JMC
subcommittees will be structured and operated in the same manner
as outlined in Section 5.2 for the JMC; provided that, although
VERTEX and HMR will each be entitled to designate a reasonable
number of representatives on any working group or subcommittee
which may be established by the JMC, each party shall have one
vote on any such working group or subcommittee
(c) DECISION-MAKING.
(i) COMMITTEE STRUCTURE. HMR shall designate a Committee Chair,
from among its member designates (the "JMC Chair"). HMR and
VERTEX shall each have one vote on the JMC. The objective of
the JMC shall be to reach agreement by consensus on all
matters falling within its authority hereunder.
(ii) DEADLOCK. In the event of a deadlock with respect to any
action, and subject to the procedure set forth in the
balance of this subsection (c) as to certain matters,
[*************** *****************************************
*******************************]
License, Development and Commercialization Agreement -- Confidential -- Page 26
(iii) DISPUTES REGARDING MATTER OF MAJOR STRATEGIC IMPORTANCE. If
VERTEX and HMR shall disagree on any matter of major
strategic importance (as hereinafter defined) with respect
to the Marketing Plan for a Drug Product (a "Disputed
Matter"), then VERTEX may provide written notification of
its disagreement to the JMC Chair within seven (7) business
days after the meeting of the JMC at which the Disputed
Matter was considered and a vote formally taken on the
Matter. In its notification VERTEX will set forth the basis
for its disagreement in reasonable detail.
(iv) SUBMISSION TO REVIEW EXECUTIVES. If the Disputed Matter is
not resolved within seven (7) business days after delivery
of VERTEX's notification to the JMC Chair, then copies of
the notification shall be distributed by the JMC Chair as
soon as practicable to [************************************
************************************************************
************************************************************
************************************************************
**************]
(v) [***********************************************************
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*************************************]
(vi) DEFINITION OF MATTER OF MAJOR STRATEGIC IMPORTANCE. For
purposes of the foregoing, a "matter of major strategic
importance" shall mean: [***********************************
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************************************************************
************************************************************
**************************************]
(d) HMR DISCRETION. Nothing in the foregoing shall alter the fact
that HMR
License, Development and Commercialization Agreement -- Confidential -- Page 27
shall have sole discretion as to the marketing strategy and
decision-making for any Drug Product.
5.3 MARKETING PLANS. HMR will be solely responsible, in accordance with
its customary practices and procedures, for the preparation and
execution of a detailed marketing plan (a "Marketing Plan") for the
launch of each Drug Product.
(a) PREPARATION OF PLAN. HMR will use its diligent, commercially
reasonable efforts consistent with its customary practices and
procedures to substantially complete (subject to normal revision
in the ordinary course) the Marketing Plan for each Drug Product
not later than [******] prior to the projected date of First
Commercial Sale of the Drug Product.
(b) PLAN REVIEW. HMR (and VERTEX if it intends to co-promote in North
America or Europe, as the case may be, and has participated in
launch planning or market research with respect to the Drug
Product in such region) will submit to the JMC for its review and
comment on a timely basis a draft Marketing Plan, budgets, market
research results and other customary planning and marketing aids
with respect to launch of the Drug Product (collectively,
"Marketing Materials"). The Marketing Materials and any material
amendments thereto will be submitted to the JMC in sufficient
time prior to launch of a Drug Product to provide the JMC with a
reasonable opportunity to influence the form and substance of the
Marketing Plan.
(c) JMC PARTICIPATION. The JMC will have the opportunity to provide
input in the Plan, as it may be amended and updated from time to
time, with respect to the global strategy pertaining to the
following matters, among others:
(i)
[***********************************************************
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License, Development and Commercialization Agreement -- Confidential -- Page 28
(ii) [***********************************************************
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(iii)[***********************************************************
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(iv) [***********************************************************
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**************]
(v) [***********************************************************
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(d) MARKETING PLAN UPDATES; MARKETING DATA. HMR, in consultation with
the JMC, will update its Marketing Plans in accordance with HMR's
customary practices (which currently involve annual plan updates)
to reflect materially changed circumstances as they occur. The
JMC will meet periodically to review marketing matters, and HMR
and VERTEX will share with the JMC on a regular basis and to the
extent reasonably available, all materials and information (such
as, to the extent available to HMR or VERTEX as the case may be,
market research and data, including market growth and trend data;
research reports; sales research data and forecasts; sales force
deployment data; public relations plans; and information
concerning competition and competitors) generated by or at the
direction of HMR or VERTEX or their respective Affiliates and
sublicensees which are relevant to the marketing of Drug Product.
5.4 CO-PROMOTION IN NORTH AMERICA VERTEX may elect to Co-Promote a Drug
License, Development and Commercialization Agreement -- Confidential -- Page 29
Product in North America under the terms of a mutually agreeable
nonexclusive co-promotion plan (the "Co-Promotion Plan").
(a) CO-PROMOTION OPTION. HMR will inform VERTEX of the projected date
of First Commercial Sale, in writing, as early as possible but in
any event not less than [******************] prior to the
projected date of First Commercial Sale. VERTEX shall inform HMR
of its desire to make an election by providing written notice
delivered to HMR not less than [****************] prior to the
projected First Commercial Sale of a Drug Product in North
America. The parties will then negotiate the Co-Promotion Plan
within [******** *****] following the date of delivery of such
notice of election by VERTEX.
(b) PROVISIONS OF A CO-PROMOTION PLAN. Among other things, the
Co-Promotion Plan will include terms and conditions substantially
similar to the following:
(i) [***********************************************************
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(ii) [***********************************************************
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(iii)[***********************************************************
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*****************]
(A) [******************************************************
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License, Development and Commercialization Agreement -- Confidential -- Page 30
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(B) [******************************************************
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(C) [******************************************************
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(D) [******************************************************
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(iv) [***********************************************************
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(v) [***********************************************************
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5.5 EUROPEAN CO-PROMOTION RIGHTS. Except where prohibited by law, VERTEX
License, Development and Commercialization Agreement -- Confidential -- Page 31
may elect to have VERTEX's European sales representatives Co-promote a
Drug Product in the European Union under the terms of a mutually
agreeable co-promotion plan substantially similar to that provided
under Section 5.4 for North America and approved by the JMC-EU.
Notwithstanding the foregoing:
(a) NOTICE. HMR will inform VERTEX of the projected date of First
Commercial Sale in the European Union, in writing, as early as
possible but in any event not less than [******************]
prior to the projected date of First Commercial Sale. VERTEX
shall inform HMR of its desire to make such election by providing
written notice delivered to HMR not less than [****************]
prior to the projected First Commercial Sale of that Drug Product
in the European Union. In that notice, VERTEX shall indicate how
it would propose to distribute its sales representatives among
the countries of the European Union, with the understanding that
[****************************************************************
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(b) CO-PROMOTION PLAN. The parties will then negotiate a co-promotion
plan within [**************] following the date of delivery of
such notice.
(c) REIMBURSEMENT FOR COSTS. HMR will reimburse VERTEX for the
activities of [**************************************************
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***********************]
(d) PROMOTIONAL MATERIALS. The provisions of Subsection 5.4(b)(v)
concerning the preparation and use of promotional materials in
North America will apply, MUTATIS MUTANDIS, to the preparation
and use of promotional material in the European Union and to the
activities of the JMC-EU in connection therewith.
5.6 TERMINATION OF CO-PROMOTION OBLIGATION. Upon not less than [******
****] prior written notice to HMR, VERTEX may terminate its right and
obligation to Co-promote a particular Drug Product in North America or
in the European Union, provided that the effective date of termination
shall be
License, Development and Commercialization Agreement -- Confidential -- Page 32
[************************************************************
**********************************************************************
**********************************************************************
****************] HMR shall not be responsible for reimbursement of
any of VERTEX's costs under Section 5.4(b)(iii) or Section 5.5(c), as
may be applicable, incurred after the effective date of termination of
its co-promotion rights and obligations or, with respect to
termination of its North American Co-Promotion Rights, the increased
royalty specified in Section 5.4(b)(ii) hereof with respect to sales
of Drug Product made after the effective date of termination of its
rights and obligations under Section 5.4.
5.7 CO-LABELING. In any country in which VERTEX has the right to
co-promote Drug Product under this Agreement and Japan, to the extent
not prohibited by law or regulation and subject to approval by the FDA
or its equivalent, Drug Product (including labels, packaging and
inserts) and all promotional materials for the same will bear both
HMR's and VERTEX's company names and logos with equal prominence
(including equal sized type face), or if equal prominence is
prohibited by law, with such prominence as may otherwise be permitted
by law. In countries (other than Japan) in which VERTEX is not
co-promoting Drug Product under this Agreement, to the extent not
prohibited by law or regulation and subject to approval by the FDA or
its equivalent, Drug Product (including labels, packaging and inserts)
and all promotional materials for the same, will include VERTEX's
company name (in the English alphabet) and logo with the designation:
"under license from."
(a) REVIEW OF REGULATORY FILINGS. HMR will permit VERTEX to review
all material regulatory filings which relate to product labeling,
and all proposed labels, packaging, package inserts, and
promotional materials required under the Agreement to bear
VERTEX's name, prior to the filing of any such materials with any
regulatory authority.
(b) REGULATORY COMMUNICATIONS.
(i) HMR will permit VERTEX to participate with HMR in material
communications with regulatory officials which concern the
matters referenced in this Section 5.7.
License, Development and Commercialization Agreement -- Confidential -- Page 33
(ii) HMR will immediately inform VERTEX of any material
regulatory communications received by HMR which might
operate to restrict VERTEX's rights under this Section, and
will cooperate with any reasonable request of VERTEX aimed
at facilitating approval by a regulatory authority for
co-labeling consistent with this provision.
5.8 MARKETING EFFORTS. HMR (and VERTEX to the extent it is co-promoting
under the terms of this Agreement) shall use diligent, commercially
reasonable efforts consistent with those customarily used by HMR for
its own compounds of similar commercial potential to effect
introduction of Drug Product into the countries in the Major Markets
as soon as reasonably practicable.
(a) AVAILABILITY TO PUBLIC. Following the First Commercial Sale of a
Drug Product and until the expiration or termination of this
Agreement, HMR shall endeavor to keep Drug Product reasonably
available to the public in each Major Market country.
(b) COMMERCIAL VIABILITY. HMR shall promptly notify VERTEX if it
shall determine that the marketing and sale of a Drug Product in
any country is not commercially reasonable.
ARTICLE VI
PAYMENTS
6.1 CLOSING PAYMENT. In recognition of VERTEX's research expenditures in
the Field to date, HMR will make the following payments by wire
transfer or such other payment method as may be mutually agreed by the
parties hereto:
(a) on the Closing Date, HMR will pay to VERTEX the sum of $10
million (U.S.);
(b) within five (5) Business Days after the later of (i) the Closing
Date or (ii) May 14, 2000 if this Agreement is still in effect on
that date, an additional sum of $10 million (U.S.).
License, Development and Commercialization Agreement -- Confidential -- Page 34
6.2 MILESTONE PAYMENTS BY HMR.
(a) MILESTONE PAYMENTS. HMR will make the following payments to
VERTEX after the Closing Date and at such time or times as any
one or more of the following milestones is achieved with respect
to any Drug Product Candidate incorporating a Compound identified
in SCHEDULE 1.5 and ------------ used for the treatment of: (1)
adult-onset rheumatoid arthritis ("RA"); (2) osteoarthritis
("OA"); or (3) any other Indication for which a Drug Product
Candidate is being developed hereunder; provided, however, there
is no requirement that the first two indications pursued for
development under this Agreement be RA and OA. A particular
milestone shall be paid each time it is achieved for a particular
Indication by a Drug Product Candidate.
----------------------------------------------------------- ----------------- ----------------- -------------------
Payments in U.s. Dollars
----------------------------------------------------------- ----------------- ----------------- -------------------
[***]
Milestone RA [**] [**********]
----------------------------------------------------------- ----------------- ----------------- -------------------
1. The first dosing of a particular Drug Product $5,000,000 [**********] [**********]
Candidate for treatment, in humans, of the
Indications referenced in the table opposite this
entry, under an agreed Phase II Clinical Trials (or
foreign equivalent thereof) protocol, in any
country.
----------------------------------------------------------- ----------------- ----------------- -------------------
[* ********************************* ********** **********
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License, Development and Commercialization Agreement -- Confidential -- Page 35
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[****
[*******] [*] [*] **********]
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License, Development and Commercialization Agreement -- Confidential -- Page 36
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[* ********************************* *********** ********** **********
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----------------------------------------------------------- ----------------- ----------------- -------------------
[****
[*******] [*] [*] **********]
----------------------------------------------------------- ----------------- ----------------- -------------------
[* ********************************* ********** ********** **********
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[* ********************************* ********** ********** **********
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[* ********************************* ********** ********** **********
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License, Development and Commercialization Agreement -- Confidential -- Page 37
----------------------------------------------------------- ----------------- ----------------- -------------------
[* ********************************* ********** ********** **********
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----------------------------------------------------------- ----------------- ----------------- -------------------
*****
**********]
[******** *** **
----------------------------------------------------------- ----------------- ----------------- -------------------
[* ********************************* ******** ********** **********
****************************************************
****************************************************
*************]
----------------------------------------------------------- ----------------- ----------------- -------------------
---------------
* Where this milestone relates to a Drug Product which has previously been
approved and commercially launched for a different indication, the
milestone payment for commercial launch of such Drug Product and the
milestone payment for approval of such Drug Product shall both be made at
the time of approval of such Drug Product.
(b) ADDITIONAL DRUG PRODUCT CANDIDATE FOR SAME INDICATION. If HMR
initiates development of a Drug Product Candidate, for a
particular Indication, later ceases development of that Drug
Product Candidate, for that Indication, and provides written
notice thereof to VERTEX, then HMR will be entitled to a credit
for each particular milestone payment previously made with
respect to that Drug Product Candidate for that Indication,
against the same milestone payment subsequently due with respect
to the next Drug Product Candidate being developed for the same
Indication.
(c) ACCELERATION OF UNEARNED MILESTONES. If any milestone is achieved
with respect to the development of a particular Drug Product
Candidate or Drug Product for a particular Indication, any
previously unearned milestone with respect to that Drug Product
Candidate or Drug Product for that Indication will become
immediately due and payable.
License, Development and Commercialization Agreement -- Confidential -- Page 38
(d) ADDITIONAL INDICATIONS FOR THE SAME DRUG PRODUCT. If, on the
basis (in whole or in part) of Phase IV Clinical Trials approved
by the JDC, the FDA shall approve the marketing and sale of a
Drug Product for a previously unapproved Indication, all
milestones which would have been payable had that Drug Product
been initially developed for that Indication, and which had not
previously been made for that Indication, will become immediately
due and payable, and any such milestones with respect to
development of that Drug Product for that Indication in Japan or
the European Union will become due upon marketing approval of the
Drug Product for that Indication (if marketing approval has not
previously been granted and the milestone paid) in the European
Union or Japan.
(e) INDICATION. As used in this Section 6.2, the term "Indication"
shall mean [ ************************************
******************************************
*****************************************************************
*****************************************************************
********************]
(f) ADDITIONAL INDICATIONS. The parties shall negotiate and agree in
good faith on the level of milestone payments which shall be
payable with respect to Indications for each Drug Product
Candidate other than RA and OA. [*********** ***************
*****************************************************************
*****************************************************************
**************************************************]
(g) ADDITIONAL MILESTONES FOR C COMPOUNDS. Notwithstanding anything
to the contrary in Section 6.2(b), HMR will make the following
payments to VERTEX, in addition to any amounts otherwise payable
under Section 6.2(a) hereof, at such time as the following
milestones are achieved: [***********************
*****************************************************************
*****************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 39
*****************************************************************
********************]
(h) TIMING. Payment shall be made on or before the thirtieth (30th)
Business Day following the occurrence of an event giving rise to
a payment obligation hereunder. All payments shall be made by
wire transfer in United States dollars to the credit of such bank
account as may be designated by VERTEX in writing to HMR.
(i) TAX WITHHOLDING. Any income or other taxes which HMR is required
by law to pay or withhold on behalf of VERTEX with respect to
milestones, and any interest thereon, payable to VERTEX under
this Agreement shall be deducted from the amount of such
milestones and interest due and paid or withheld, as appropriate,
by HMR on behalf of VERTEX. Any such tax required to be paid or
withheld shall be an expense of, and borne solely by, VERTEX. HMR
shall furnish VERTEX with reasonable evidence of such withholding
payment, in electronic or written form, as soon as practicable
after such payment is made. The parties hereto will reasonably
cooperate in completing and filing documents required under the
provisions of any applicable tax laws or under any other
applicable law in connection with the making of any required
withholding payment, or any claim to a refund of any such
payment.
6.3 ROYALTIES. HMR will pay royalties to VERTEX at the following annual
rate, on Net Sales of Drug Product in the Territory, subject to
adjustments herein:
(a) ON NET SALES IN NORTH AMERICA FOR EACH CALENDAR YEAR:
(i) [**]of aggregate Net Sales in North America, if aggregate
annual Net Sales of all Drug Product in North America for
the calendar year are [******************************** ]
(ii) [*] of aggregate Net Sales in North America, if aggregate
annual Net Sales of all Drug Product in North America for
the calendar year are [*********************************
*****************************]
License, Development and Commercialization Agreement -- Confidential -- Page 40
(iii) [*] of aggregate Net Sales in North America, if aggregate
annual Net Sales of all Drug Product in North America for
the calendar year are [*********************************
***************************]; and
(iv) [*] of aggregate Net Sales in North America, if aggregate
annual Net Sales of all Drug Product in North America for
the calendar year are [***********************]
(b) ON NET SALES IN THE ROW:
(i) [*] of aggregate Net Sales in the ROW, if aggregate annual
Net Sales of all Drug Product in the ROW and Latin America
for the calendar year are [********************]
(ii) [*] of aggregate Net Sales in the ROW, if aggregate annual
Net Sales of all Drug Product in the ROW and Latin America
for the calendar year are [****************************
*********************************];
(iii) [*] of aggregate Net Sales in the ROW, if aggregate annual
Net Sales of all Drug Product in the ROW and Latin America
for the calendar year are [****************************
*********************************];
(iv) [*] of aggregate Net Sales in the ROW, if aggregate annual
Net Sales of all Drug Product in the ROW and Latin America
for the calendar year are [***********************].
(c) ON NET SALES IN LATIN AMERICA:
(i) [*] of aggregate Net Sales in Latin America; provided that
(ii) [***********************************************************
************************************************************
***********************************].
(d) REDUCTION OR INCREASE OF ROYALTIES IN THE ROW. [*****
*****************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 41
*****************************************************************
*************************************************************]
(i) [***********************************************************
************************************************************
************************************************************
*******************************];
(ii) [***********************************************************
************************************************************
************************************************************
*******************************].
(iii)[***********************************************************
************************************************************
************************************************************
*******************************].
[****************************************************************
*****************************************************************
******************]
(e) [****************************************************************
*****************************************************************
*****************************************************************
*****************************************************************
*****************************************************************
****************************]
(f) TAX WITHHOLDING. Any income or other taxes which HMR is required
by law to pay or withhold on behalf of VERTEX with respect to
royalties, and any interest thereon, payable to VERTEX under this
License, Development and Commercialization Agreement -- Confidential -- Page 42
Agreement shall be deducted from the amount of such royalties and
interest due and paid or withheld, as appropriate, by HMR on
behalf of VERTEX. Any such tax required to be paid or withheld
shall be an expense of, and borne solely by, VERTEX. HMR shall
furnish VERTEX with reasonable evidence of such withholding
payment, in electronic or written form, as soon as practicable
after such payment is made. The parties hereto will reasonably
cooperate in completing and filing documents required under the
provisions of any applicable tax laws or under any other
applicable law in connection with the making of any required
withholding payment, or any claim to a refund of any such
payment.
6.4 TERM FOR ROYALTY PAYMENTS. [*********************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
********************************************************************
***********]
[*********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 43
**********************************************************************
**********************************************************************
*****************************************************************].
6.5 [********************************************************]
(a) [****************************************************************
*****************************************************************
*********************]
(b) [****************************************************************
*****************************************************************
*********************]
(c) [***************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
****************************************************************
***************************************************]
6.6 SALES REPORTS.
(a) SUBSTANCE OF QUARTERLY REPORTS. During the term of this Agreement
and after the First Commercial Sale of the first Drug Product,
HMR shall furnish or cause to be furnished to VERTEX on a
quarterly basis a written report or reports covering each quarter
(each such quarter being sometimes referred to herein as a
"reporting period") showing:
(i) the Net Sales of each Drug Product in each country in the
world during the reporting period by HMR and each Affiliate,
License, Development and Commercialization Agreement -- Confidential -- Page 44
sublicensee and marketing partner and the aggregate Net
Sales for North America, Latin America and the ROW accrued
for the calendar year through the closing date of the
report;
(ii) the royalties, payable in United States Dollars ("Dollars"),
which shall have accrued under Section 6.3 hereof in respect
of such sales and the basis of calculating those royalties;
(iii) the exchange rates used in converting into Dollars, from
the currencies in which sales were made, any payments due
which are based on Net Sales; and
(iv) dispositions of Drug Product other than pursuant to sale for
cash.
(b) TIMING. Final reports shall be due on the sixtieth (60th) day
following the close of each reporting period. In addition, at
least ten (10) days prior to the end of the calendar quarter, HMR
shall provide VERTEX with a draft report containing forecasted
sales and royalties payable to VERTEX for the quarter, based on
HMR's then-current forecast for that quarter.
(c) RECORDS. HMR shall keep accurate records in sufficient detail to
enable the amounts due hereunder to be determined and to be
verified by VERTEX. HMR shall be responsible for all payments
that are due to VERTEX but have not been paid by HMR's
sublicensees or marketing partners.
(d) CURRENCY EXCHANGE. With respect to sales of Drug Product invoiced
in Dollars, the Net Sales amounts and the amounts due to VERTEX
hereunder shall be expressed in Dollars.
(i) With respect to sales of Drug Product invoiced in a currency
other than Dollars, the Net Sales and amounts due to VERTEX
hereunder shall be expressed in the domestic currency of the
party making the sale, together with the Dollar equivalent
of the amount payable to VERTEX, calculated
[***************************************
************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 45
************************************************************
************************************************************
************************************************************
**************************************]
(ii) If any sublicensee or marketing partner makes any sales
invoiced in a currency other than its domestic currency, the
Net Sales shall be converted to its domestic currency in
accordance with the sublicensee's normal accounting
principles.
(iii) All payments shall be made in Dollars. If at any time legal
restrictions in any country in the Territory prevent the
prompt remittance of any payments with respect to Drug
Product sold in that country, HMR or its sublicensees or
marketing partners shall have the right and option to make
such payments by depositing the amount thereof in local
currency to VERTEX's account in a bank or depository in such
country.
(e) CHANGE IN ROYALTY RATES. Any royalties payable for a calendar
quarter during which an annual Net Sales royalty threshold has
been met will be paid at the higher royalty rate, and payment
will include any incremental royalty payable with respect to
prior quarters to which the incremental royalty rate is
applicable.
(f) ROYALTY PAYMENT DUE DATE; ACCRUAL. Royalties which have accrued
during any month and are required to be shown on a final
quarterly sales report provided for under this Section 6.6 shall
be due and payable on the date such final quarterly sales report
is due.
(g) AUDIT. Upon the written request of VERTEX, at VERTEX's expense
and not more than once in or in respect of any calendar year, HMR
shall permit an independent public accountant of national
prominence selected by VERTEX to have access during normal
business hours to those records of HMR as may be reasonably
necessary to verify the accuracy of the Net Sales report and
royalty calculation conducted by HMR pursuant to this Section
6.5, in respect of any calendar year ending not
License, Development and Commercialization Agreement -- Confidential -- Page 46
more than [********************] prior to the date of such
notice.
(i) HMR shall include in each sublicense or marketing agreement
entered into by it pursuant to this Agreement a provision
requiring the sublicensee or marketing partner to keep and
maintain adequate records of sales made pursuant to such
sublicense or marketing agreement and to grant access to
such records by the aforementioned independent public
accountant for the reasons specified in this Section 6.5.
(ii) Upon the expiration of [********************] following the
end of any calendar year, the calculation of amounts payable
with respect to such fiscal year shall be binding and
conclusive upon VERTEX, and HMR and its sublicensees and
marketing partners shall be released from any liability or
accountability with respect to payments for such year.
(iii) The report prepared by such independent public accountant,
a copy of which shall be sent or otherwise provided to HMR
by such independent public accountant at the same time it is
sent or otherwise provided to VERTEX, shall contain the
conclusions of such independent public accountant regarding
the audit and will specify that the amounts paid to VERTEX
pursuant thereto were correct or, if incorrect, the amount
of any underpayment or overpayment.
(iv) If such independent public accountant's report shows any
underpayment, HMR shall remit or shall cause its
sublicensees or marketing partners to remit to VERTEX within
thirty (30) days after HMR's receipt of such report, (i) the
amount of such underpayment and (ii) if such underpayment
exceeds [***************] of the total amount owed for the
calendar year then being audited, the reasonable and
necessary fees and expenses of such independent public
accountant performing the audit, subject to reasonable
substantiation thereof.
(v) Any overpayments shall be fully creditable against amounts
License, Development and Commercialization Agreement -- Confidential -- Page 47
payable in subsequent payment periods.
(vi) VERTEX agrees that all information subject to review under
this Section 6.5 or under any sublicense or marketing
agreement is confidential and that VERTEX shall retain and
cause its accountant to retain all such information in
confidence.
(h) INTEREST DUE. In case of any delay in payment by HMR to VERTEX
not occasioned by Force Majeure, interest on the overdue payment
shall accrue at
[****************************************************************
*****************************************************************
*****************************************************************
*******************]. The foregoing interest shall be due from
HMR without any special notice.
ARTICLE VII
INTELLECTUAL PROPERTY
7.1 INFORMATION SHARING.
(a) PRECLINICAL AND CLINICAL RESULTS. HMR will provide VERTEX,
through the JDC, any and all preclinical and clinical results
generated by it, or at its direction, as part of the development
of Bulk Drug Substance, Drug Product Candidate and Drug Product
as may be required under Section 3.2(c).
(b) IMPROVEMENTS AND INVENTIONS. Each party shall keep the other
fully advised of:
(i) any improvements relating to Bulk Drug Substance, Drug
Product Candidates or Drug Product, made by such party or
its Affiliates or sublicensees during the term of this
Agreement, or made previously under the Research Agreement;
and
(ii) any other inventions, improvements, and Know-How relating to
Bulk Drug Substance, Drug Product Candidates or Drug Product
made jointly with the other party or its Affiliates during
the term
License, Development and Commercialization Agreement -- Confidential -- Page 48
of this Agreement or under the Research Agreement.
7.2 PATENTABLE INVENTIONS AND KNOW-HOW.
(a) OWNERSHIP. Subject to this Section 7.2, each of VERTEX and HMR
shall own all Patents and Know-How with respect to any inventions
made exclusively by it prior to and during the term of the
Research Agreement, and from termination of the Research Program
conducted thereunder through the term of this Agreement.
(i) DISCLOSURE. All information relating to VERTEX Technology
and HMR Technology will be disclosed, respectively, by
VERTEX to HMR or by HMR to VERTEX, (a) upon the execution of
this Agreement as to any previously undisclosed matters, and
(b) as to matters arising hereafter, promptly after the
disclosing party recognizes the significance thereof,
unless, in the case of process developments, the same shall
have been developed as part of a collaboration with a Third
Party, the terms of which prohibit disclosure to the other
party.
(ii) JOINT INVENTIONS. Inventions made jointly by one or more
employees of VERTEX and one or more employees of HMR during
the term of this Agreement, as determined by United States
laws of inventorship, and any Patent covering any such
invention ("Joint Inventions"), shall be owned jointly by
the parties.
(iii) PRIOR INVENTIONS. The parties acknowledge that HMR assigned
to VERTEX its interest in certain inventions made during the
term of the Research Agreement, and the patent applications
covering those inventions, with respect to which one or more
of its employees were named as inventors (the "Prior Joint
Inventions" and the "Prior Patents"). The Prior Patents are
identified in Schedule 7.2.1. [****************
************************************************************
************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 49
*****************************************************].
(A) JOINT OWNERSHIP. As soon as practicable after the
execution of this Agreement,
1. [*************************************************
**************************************************
**************************************************
**************************************************
**************************************************
******************************].
2. [*************************************************
**************************************************
**************************************************
**************************************************
**************************************************
********************************].
3. [*************************************************
**************************************************
**************************************************
**************************************************
**************************************************
******************************].
4. [*************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
****************************].
License, Development and Commercialization Agreement -- Confidential -- Page 50
5. [*************************************************
**************************************************
**************************************************
**************************************************
**************************************************
****************************].
(B) R&D LICENSE. Upon execution of this Agreement, VERTEX
will grant HMR a fully paid up, royalty free,
worldwide, and irrevocable (regardless of termination
or expiration of this Agreement) nonexclusive license
under the Prior Joint Inventions and Prior Patents only
for purposes of research and development.
(C) OPTION. VERTEX grants to HMR an option exercisable
during the term of the foregoing licenses to enter into
an exclusive licensing arrangement, on mutually
agreeable terms negotiated in good faith:
1. [*************************************************
**************************************************
**************************************************
**************************************************
**************************************************
****************************].
2. [*************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
**************************************************
***********************************].
License, Development and Commercialization Agreement -- Confidential -- Page 51
(D) DISPOSITION OF CERTAIN PENDING PATENT APPLICATIONS.
[******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************************************************
*******************].
(b) PATENT PROSECUTION.
(i) VERTEX. VERTEX shall be responsible for the preparation,
filing, prosecution and maintenance of all Patents other
than HMR Patents.
(ii) HMR. HMR shall be responsible for the preparation, filing,
prosecution and maintenance of all Patents which are HMR
Patents.
(iii) MINIMUM FILINGS. The parties hereby agree that to the
extent legally possible and commercially reasonable, the
responsible party shall, at a minimum, prepare file,
prosecute and maintain patent coverage as described in this
section in the countries listed in SCHEDULE 7.2.2.
(iv) DISCONTINUANCE. The party initially responsible for
preparation, filing, prosecution and maintenance of a
particular Patent (the "Initial Responsible Party") shall
give at least thirty (30) days
License, Development and Commercialization Agreement -- Confidential -- Page 52
advance notice, and in no event less than a reasonable
period of time for the other party to act, to the other
party of any decision (the "Discontinuance Election") to
cease preparation, filing, prosecution and maintenance of
that Patent in any jurisdiction (a "Discontinued Patent").
(A) In such case, the other party may elect at its sole
discretion to continue preparation, filing and
prosecution or maintenance of the Discontinued Patent
at its sole expense.
(B) The party so continuing shall own any such Patent; and
the Initial Responsible Party shall execute such
documents and perform such acts as may be reasonably
necessary for the other party to file or to continue
prosecution or maintenance, including assigning
ownership of such Patent to such electing party.
(C) Discontinuance may be elected on a country-by-country
basis or for a patent application or patent series in
total.
(c) COOPERATION. Each party will consult the other party with respect
to its choice of patent counsel and will keep that party
continuously informed of all matters relating to the preparation,
filing, prosecution and maintenance of Patents covered by this
Agreement.
(i) Each party shall endeavor in good faith to coordinate its
efforts with those of the other party to minimize or avoid
interference with the prosecution of the other party's
patent applications.
(ii) To the extent practicable, each party shall provide the JDC
with a copy of any patent application covering Compounds or
methods of using Compounds, prior to filing the first of
such applications in any jurisdiction, for review and
comment by the JDC or its designees.
(iii) Each party shall provide, at the other party's reasonable
request, copies of all material correspondence with the
relevant patent
License, Development and Commercialization Agreement -- Confidential -- Page 53
office.
(d) COSTS. Each party will be responsible for the costs of patent
preparation, prosecution and maintenance for its patents
worldwide. In cases of co-owned or joint patents, each party will
bear [********
*****************************************************************
***************]. Upon ninety (90) days' written notice to
VERTEX, HMR may elect not to reimburse VERTEX for out of pocket
preparation, prosecution and maintenance costs incurred by
VERTEX. If HMR elects not to reimburse VERTEX, HMR will have no
further rights under this Agreement with respect to any such
Patent.
(e) COMPOUND-RELATED PATENT FILINGS. HMR and VERTEX will each keep
the other informed of its plans and intentions regarding the
filing of any patent applications covering any Compounds, and
methods of making or using Compounds, within a reasonable time
prior to any such filing.
7.3 INFRINGEMENT CLAIMS BY THIRD PARTIES.
(a) NOTICE. If the manufacture, use or sale of Bulk Drug Substance,
Drug Product Candidate and/or a Drug Product results in a claim
or a threatened claim by a Third Party against a party hereto for
patent infringement or for inducing or contributing to patent
infringement ("Infringement Claim"), the party first having
notice of an Infringement Claim shall promptly notify the other
in writing. The notice shall set forth the facts of the
Infringement Claim in reasonable detail.
(b) THIRD PARTY LICENSES. In the event that practicing the VERTEX
Technology or HMR Technology in connection with manufacture, use
or sale of the Drug Product in a country would infringe a Third
Party Patent and a license to such Third Party Patent is
available, the parties agree:
(i) VERTEX will be responsible for [*******************
************************************************************
*********************************];
(ii) HMR will be responsible
[****************************************
************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 54
************************************************]
(iii)[***********************************************************
************************************************************
**********].
(iv) VERTEX and/or HMR, as the case may be, will use reasonable
efforts to obtain required licenses under the Third Party's
Patents, with a right to sublicense to the other, under
reasonable terms mutually acceptable to both parties.
(c) DISCONTINUED SALES, LICENSE OR DEFENSE OF SUIT. If the required
license is unavailable or its terms are unacceptable both to
VERTEX and to HMR, then HMR may elect at its sole discretion to
discontinue sales of the Drug Product in such country or to
undertake the defense of a patent infringement action or the
prosecution of a declaratory judgment action with respect to the
Third Party Patents.
(i) OFFSET. HMR shall be entitled to offset against royalties
otherwise due to VERTEX in respect of Net Sales of the
affected Drug Product in that country [****************
************************************************************
************************************************************
************************************************************
***********************************************************]
(ii) VERTEX OUT OF POCKET EXPENSES. If HMR is conducting the
defense of the Infringement Claim or the prosecution of any
such declaratory judgment action, and VERTEX is a party to
the action, then VERTEX's out-of-pocket costs shall be
reported to HMR and [******************************
****************].
(iii) REIMBURSEMENT OF COSTS. [************************
************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 55
************************************************************
************************************************].
(iv) DIVISION OF DAMAGES. Any remaining compensatory damages
[***********************************************************
************************************************************
************************************************************
************************************************].
(v) SETTLEMENT. Any settlement or consent judgment or other
voluntary final disposition of a suit under this Section 7.3
will be at HMR's sole discretion and good business judgment,
but if entered into without VERTEX's consent (which shall
not be unreasonably withheld), no amounts due to VERTEX
hereunder shall be reduced on account of any such
settlement, consent judgment or other disposition. The
proceeds of any such settlement will be divided between the
parties as above.
(vi) LICENSE. If the terms of a Third Party license under Section
7.3(b) are unacceptable to VERTEX but not to HMR, then HMR
may nonetheless obtain such license on the terms proposed,
after full and complete disclosure to and discussions with,
VERTEX concerning the facts and circumstances giving rise to
HMR's conclusions with respect to the proposed license.
Under those circumstances, HMR shall be entitled to offset
against royalties otherwise due VERTEX as follows: [**
********************************************
****************************************************
***********************].
7.4 INFRINGEMENT CLAIMS AGAINST THIRD PARTIES
(a) COOPERATION. VERTEX and HMR each agree to take reasonable actions
to protect their respective Patents and Technology from
infringement and from unauthorized possession or use. (Such
reasonable actions shall include, but shall not be limited to,
reasonable actions necessary to
License, Development and Commercialization Agreement -- Confidential -- Page 56
control the sale of parallel imports or xxxx market goods
through appropriate filings with a country's international trade
regulatory agency, e.g., the United States International Trade
Commission and the U.S. Customs Service.) If one party brings any
such action or proceeding, the second party may be joined as a
party plaintiff if necessary for the action or proceeding to
proceed and, in case of joining, the second party agrees to give
the first party reasonable assistance and authority to file and
to prosecute such suit.
(b) NOTICE. If any VERTEX Patents, HMR Patents or jointly owned
Patents are infringed or VERTEX Know-How or HMR Know-How is
misappropriated, as the case may be, by a Third Party, the party
to this Agreement first having knowledge of such infringement or
misappropriation, or knowledge of a reasonable probability of
such infringement or misappropriation, shall promptly notify the
other in writing. The notice shall set forth the facts of such
infringement or misappropriation in reasonable detail.
(c) INSTITUTION OF PROCEEDINGS. The party prosecuting and maintaining
the Patent, shall have the primary right, but not the obligation,
to institute, prosecute, and control with its own counsel any
action or proceeding with respect to infringement or
misappropriation of such Patent or technology and the other party
shall have the right, at its own expense, to be represented in
such action by its own counsel.
(d) FAILURE TO INSTITUTE PROCEEDINGS. If the party having the primary
right or responsibility to institute, prosecute, and control such
action or prosecution fails to do so within a period of one
hundred twenty (120) days after receiving notice of the
infringement, the other party shall have the right to bring and
control any such action by counsel of its own choice, and the
other party shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice.
(e) COSTS AND EXPENSES. The costs and expenses of all suits brought
by a party under this Section 7.4 shall be
[***********************
*****************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 57
***********************************].
(f) DIVISION OF DAMAGES AWARD. Any remaining compensatory damages
[*****************************
*****************************************************************
********].
(g) SETTLEMENT. The settlement or consent judgment or other voluntary
final disposition of a suit under this Section 7.4 may be
undertaken at the sole discretion and good business judgment of
the party who initiated the suit. The proceeds of any such
settlement will be [**** *****************************].
7.5 NOTICE OF CERTIFICATION. VERTEX and HMR each shall immediately give
notice to the other of any certification filed under the U.S. "Drug
Price Competition and Patent Term Restoration Act of 1984" claiming
that a VERTEX Patent, an HMR Patent or a Joint Patent is invalid or
that any infringement will not arise from the manufacture, use or sale
of any Drug Product by a Third Party.
(a) If VERTEX decides not to bring infringement proceedings against
the entity making such a certification, VERTEX shall give notice
to HMR of its decision not to bring suit within twenty-one (21)
days after receipt of notice of such certification.
(b) HMR may then, but is not required to, bring suit against the
party that filed the certification.
(c) Any suit by HMR or VERTEX shall either be in the name of HMR or
in the name of VERTEX, or jointly in the name of HMR and VERTEX,
as may be required by law.
(d) For this purpose, the party not bringing suit shall execute such
legal papers necessary for the prosecution of such suit as may be
reasonably requested by the party bringing suit.
7.6 PATENT TERM EXTENSIONS. The parties shall cooperate in good faith with
each other in gaining patent term extension wherever applicable to
VERTEX Patents, Joint Patents and HMR Patents covering Drug Product
Candidates or Drug
License, Development and Commercialization Agreement -- Confidential -- Page 58
Product.
(a) HMR and VERTEX shall each determine which of its Patents shall be
extended. The parties shall mutually determine which of the Joint
Patents shall be extended.
(b) All filings for such extension shall be made by the party
responsible for prosecution and maintenance of the Patent,
provided, however, that in the event that the party who is
responsible for prosecution and maintenance of the Patent elects
not to file for an extension, such party shall (i) inform the
other party of its intention not to file and (ii) grant the other
party the right to file for such extension.
ARTICLE VIII
REPORTING
8.1 EXCHANGE OF INFORMATION.
(a) GENERAL. HMR and VERTEX will promptly and freely share technical
information useful in connection with the development of Bulk
Drug Substance, Drug Product Candidates or Drug Product,
including VERTEX Know-How and HMR Know-How. Each party will
permit the other to review the ongoing activities which it is
conducting under the Development Program and to discuss that
information with its officers, all at such reasonable times and
as often as may be reasonably requested. Notwithstanding the
foregoing, [**
*****************************************************************
*****************************************************************
*************************].
(b) NOTICE OF PHARMACEUTICAL SIDE-EFFECTS. HMR and VERTEX will
provide to each other the information necessary to monitor the
safety of Bulk Drug Substance, Drug Product Candidates and Drug
Product and to meet in a timely manner, for all countries where
either party has responsibility for the Drug Product, all
regulatory requirements for reporting adverse reactions or
adverse events. Each party shall forward to the other on a
regular basis information on adverse reactions and any
License, Development and Commercialization Agreement -- Confidential -- Page 59
material difficulties associated with clinical use, studies,
investigations, tests and prescriptions of Drug Product
Candidates and Drug Product. For the purposes of this agreement,
definitions stated in the International Conference on
Harmonization ("ICH") documents from E2A (Clinical Safety Data
Management Definitions and Standards for Expedited Reporting) and
E2C (Clinical Safety Data Management Periodic Safety Update
Report for Marketed Drugs) will be used. The parties will
exchange expedited and non-expedited case reports from all
sources, changes in product labeling, actions taken by local
regulators and other information pertinent to human safety of the
products. The parties further agree to prepare a mutually
agreeable procedure for sharing safety data.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF VERTEX
9.1 VERTEX REPRESENTS AND WARRANTS TO HMR AS FOLLOWS:
(a) AUTHORIZATION. This Agreement has been duly executed and
delivered by VERTEX and constitutes the valid and binding
obligation of VERTEX, enforceable against VERTEX in accordance
with its terms except as enforceability may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors'
rights generally and by general equitable principles. The
execution, delivery and performance of this Agreement have been
duly authorized by all necessary action on the part of VERTEX,
its officers and directors.
(b) NO THIRD PARTY RIGHTS. Except as disclosed on SCHEDULE 9.1
hereof, (a) to the best of its knowledge, VERTEX owns or
possesses adequate licenses or other rights to use all VERTEX
Technology, and to grant the licenses herein; and (b) to the best
of its knowledge, the granting of the licenses to HMR hereunder
does not violate any right known to VERTEX of any Third Party.
(c) NO THIRD PARTY PATENTS. Except as disclosed on SCHEDULE 9.1
hereof, to VERTEX's actual knowledge and based on its current
understanding
License, Development and Commercialization Agreement -- Confidential -- Page 60
of the Compounds and their use, the development, manufacture, use
or sale of any Bulk Drug Substance, Drug Product Candidates or
Drug Product pursuant to this Agreement will not infringe or
conflict with any Third Party right or Patent, and VERTEX is not
aware of any pending patent application that, if issued, would be
infringed by the development, manufacture, use or sale of any
Bulk Drug Substance, Drug Product Candidates or Drug Product
pursuant to this Agreement.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF HMR
10.1 HMR REPRESENTS AND WARRANTS TO VERTEX AS FOLLOWS:
(a) AUTHORIZATION. This Agreement has been duly executed and
delivered by HMR and constitutes the valid and binding obligation
of HMR, enforceable against HMR in accordance with its terms,
except as enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium and other laws
relating to creditors' rights generally and by general equitable
principles. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary action on
the part of HMR, its officers and directors.
(b) NO THIRD PARTY RIGHTS. (a) To the best of its knowledge, HMR owns
or possesses adequate licenses or other rights to use all HMR
Technology, and to grant the licenses herein; and (b) to the best
of its knowledge, the granting of the licenses to VERTEX
hereunder does not violate any right known to HMR of any Third
Party.
(c) NO THIRD PARTY PATENTS. To HMR's actual knowledge and based on
its current understanding of Compounds and their use, the
manufacture, use or sale of any Bulk Drug Substance, Drug Product
Candidates or Drug Product pursuant to this Agreement will not
infringe or conflict with any Third Party right or Patent, and
HMR is not aware of any pending patent application that, if
issued, would be infringed by the development, manufacture, use
or sale of any Bulk Drug Substance, Drug Product Candidate or
Drug Product pursuant to this Agreement.
License, Development and Commercialization Agreement -- Confidential -- Page 61
ARTICLE XI
CONFIDENTIALITY
11.1 UNDERTAKING. During the term of this Agreement, each party shall
keep confidential, and other than as provided herein shall not use
or disclose, directly or indirectly, any trade secrets,
confidential or proprietary information, or any other knowledge,
information, documents or materials, owned, developed or possessed
by the other party, whether in tangible or intangible form, the
confidentiality of which such other party takes reasonable
measures to protect, including but not limited to VERTEX Know-How
and HMR Know-How.
(a) Each party shall take any and all lawful measures to prevent
the unauthorized use and disclosure of such information, and
to prevent unauthorized persons or entities from obtaining or
using such information.
(b) Each party further agrees to refrain from directly or
indirectly taking any action which would constitute or
facilitate the unauthorized use or disclosure of such
information. Each party may disclose such information to its
officers, employees and agents, to authorized licensees and
sublicensees, and to subcontractors in connection with the
development or manufacture of Bulk Drug Substance, Drug
Product Candidates or Drug Product, to the extent necessary to
enable such parties to perform their obligations hereunder or
under the applicable license, sublicense or subcontract, as
the case may be; provided, that such officers, employees,
agents, licensees, sublicensees and subcontractors have
entered into appropriate confidentiality agreements for
secrecy and non-use of such information which by their terms
shall be enforceable by injunctive relief at the instance of
the disclosing party.
(c) Each party shall be liable for any unauthorized use and
disclosure of such information by its officers, employees and
agents and any such sublicensees and subcontractors.
11.2 EXCEPTIONS. Notwithstanding the foregoing, the provisions of
Section 11.1 hereof shall not apply to knowledge, information,
documents or materials which the receiving party can conclusively
establish:
License, Development and Commercialization Agreement -- Confidential -- Page 62
(a) have entered the public domain without such party's breach of
any obligation owed to the disclosing party;
(b) are permitted to be disclosed by the prior written consent of
the disclosing party;
(c) have become known to the receiving party from a source other
than the disclosing party, other than by breach of an
obligation of confidentiality owed to the disclosing party;
(d) are disclosed by the disclosing party to a Third Party without
restrictions on its disclosure;
(e) are independently developed by the receiving party without
breach of this Agreement; or
(f) are required to be disclosed by the receiving party to comply
with applicable laws or regulations, to defend or prosecute
litigation or to comply with governmental regulations,
provided that the receiving party provides prior written
notice of such disclosure to the disclosing party and takes
reasonable and lawful actions to avoid or minimize the degree
of such disclosure.
11.3 PUBLICITY. The parties will agree upon the timing and content of
any initial press release or other public communications relating
to this Agreement and the transactions contemplated herein.
(a) Except to the extent already disclosed in that initial press
release or other public communication, no public announcement
concerning the existence or the terms of this Agreement or
concerning the transactions described herein shall be made,
either directly or indirectly, by VERTEX or HMR, except as may
be legally required by applicable laws, regulations, or
judicial order, without first obtaining the approval of the
other party and agreement upon the nature, text, and timing of
such announcement, which approval and agreement shall not be
unreasonably withheld.
(b) The party desiring to make any such public announcement shall
provide the other party with a written copy of the proposed
announcement in
License, Development and Commercialization Agreement -- Confidential -- Page 63
sufficient time prior to public release to allow such other
party to comment upon such announcement, prior to public
release.
11.4 SURVIVAL. The provisions of this Article XI shall survive the
termination of this Agreement and shall extend for a period of five
(5) years thereafter.
ARTICLE XII
PUBLICATION
12.1 PUBLICATION. Each of HMR and VERTEX reserves the right to publish
or publicly present the results of the Development Program
(research, clinical, etc.) (the "Results") subject to the following
terms and conditions:
(a) As soon as reasonably practical after its formation, the JMC
and/or the JDC, will establish a long term strategic
publication plan governing publication of the Results and
public appearances (congresses, presentations, press releases,
advisory boards and the like) with the goal to use and combine
all existing data to support and maximize the commercial
success of the Compound (the "Publication Plan"). VERTEX has
provided to HMR, and HMR will approve with such approval not
to be unreasonably withheld, a proposed list of publications
for inclusion in the overall publication plan, pursuant to
which VERTEX personnel will make disclosures concerning
VERTEX's pre-clinical work in discovering and characterizing
HMR3480/VX-740 and related Compounds. Authorship of each
publication will be determined at time of submission for
publication based on the contributions provided thereto.
(b) The party proposing to publish or publicly present the Results
(the "publishing party") will submit a draft of any proposed
manuscript or speech to the other party (the "non-publishing
party") for comments and to the JMC and, with respect to
matters relating to Compound discovery and preclinical
activities, to the JDC, for approval and inclusion in the
Publication Plan prior to submission for publication or oral
presentation.
(c) If the publishing party shall disagree with the non-publishing
party's assessment of the impact of the publication, then the
issue shall be
License, Development and Commercialization Agreement -- Confidential -- Page 64
referred to the JMC and, as appropriate, the JDC which will
have sole discretion for resolution in accordance with Article
V, based upon a determination whether that publication would
have a material adverse impact on contemplated patent filings,
or on the development or commercialization of a Drug Product.
(d) The parties agree that authorship of any publication will be
determined based on the customary standards then being applied
in the relevant scientific journal.
(e) The parties will use their best efforts to gain the right to
review proposed publications by consultants or contractors
relating to the subject matter of the Development Program.
(f) No party may publish confidential or proprietary information
of the other party, the use of which is restricted under
Article XI hereof, without the consent of the other party.
(g) No party may publish information or results that are the
subject of, or are deemed to be suitable for, patent
protection by the JDC or JMC, without first obtaining approval
from patent counsel in charge of prosecuting that patent
application (who shall take into consideration the absolute
novelty requirements of applicable jurisdictions).
(h) This Article XII shall be inapplicable to the publication of
information presented in substantially the same form in which
was previously published or disclosed to the public, and to
any other disclosures which, on the advice of counsel, are
required by law to be disclosed.
ARTICLE XIII
TERM AND TERMINATION
13.1 TERM
(a) TERM. The term of this Agreement shall extend in each country
until the later of: (a) the last to expire of the VERTEX
Patents with a Live Claim encompassing a Compound utilized in
a Drug Product; or (b) [******]years from the date of First
Commercial Sale of a Drug Product in that
License, Development and Commercialization Agreement -- Confidential -- Page 65
country; unless earlier terminated in accordance with this
Agreement. It is understood and acknowledged that the
expiration or termination of the obligation to make royalty
payments shall be governed by Section 6.4.
(b) ACCRUED OBLIGATIONS. Except where explicitly provided
elsewhere herein, termination of this Agreement for any
reason, or expiration of this Agreement, will not affect: (i)
obligations, including the payment of any royalties or other
sums which have accrued as of the date of termination or
expiration, and (ii) rights and obligations which, from the
context thereof, are intended to survive termination or
expiration of this Agreement.
13.2 TERMINATION BY VERTEX FOR CAUSE.
(a) NON-COMPETE. VERTEX may terminate this Agreement upon
[**************] prior written notice to HMR upon the material
breach by HMR of any of its obligations under Section 2.4 of
this Agreement; provided, however, that such termination shall
become effective only if HMR shall fail to remedy or cure the
breach within such [*************] period.
(b) FAILURE TO DEVELOP. VERTEX shall have the right to terminate
this Agreement upon the occurrence of any of the following:
(i) If VERTEX has exercised its Step-in rights under Section
3.6 and, within [******************] after receipt of
written notification of such exercise, HMR has not
notified VERTEX of its intent to resume the Development
Work; or
(ii) If HMR shall breach its obligations under Section 3.7
hereof and shall remain in material breach of those
obligations [**************] after written notice of that
breach is delivered to HMR by VERTEX, provided, however,
that VERTEX may not exercise the foregoing termination
right (by written notice or otherwise) during the period
extending from the exercise of its Step-In rights under
Section 3.6 hereof through the earlier of
[************************
License, Development and Commercialization Agreement -- Confidential -- Page 66
**********************************************************
*********************************].
(c) FAILURE TO COMMERCIALIZE. In furtherance of HMR's obligations
under Sections 3.5 and 5.8, VERTEX shall have the right to
terminate this Agreement upon [**************] prior written
notice to HMR in each case, if HMR has not put the Drug
Product into commercial use in such Major Market Country
within a commercially reasonable period after the date of the
first Regulatory Approval for a Drug Product in that Major
Market Country, or following the First Commercial Sale in such
Major Market Country, is not using commercially reasonable
efforts consistent with those used by HMR for its own
compounds of similar commercial potential to keep the Drug
Product reasonably available to the public in such Major
Market Country, UNLESS with respect to any particular Major
Market Country:
(i) [***********************************************************
************************************************************
************************************************************
************************************************************
************************************************************
*****************]
(ii) [***********************************************************
************************************************************
************************************************************
************************************************************
************************************************************
*********************************]
(iii)[***********************************************************
************************************************************
************************************************************
************************************************************
************************************************************
*********************************]
(iv) [***********************************************************
************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 67
************************************************************
************************************************************
************************************************************
*********************************]
(d) PAYMENT OBLIGATION. VERTEX may terminate this Agreement upon
[**************] prior written notice to HMR upon the material
breach by HMR of its payment obligations under Article 6,
provided, however, that such payment obligation is not the
subject of a good faith dispute and such termination shall
become effective only if HMR shall fail to remedy or cure the
breach within such [*************] period.
13.3 HMR RIGHT TO TERMINATE WITHOUT CAUSE. HMR may terminate this
Agreement without cause upon [************************] prior
written notice to VERTEX.
13.4 HMR RIGHT TO TERMINATE FOR LACK OF COMMERCIAL VIABILITY. HMR may
terminate this Agreement if in its sole discretion, and upon
[************] written notice, HMR determines that commercial
conditions (which it shall describe to VERTEX in reasonable detail
in its notice) are such that [**************************************
***************************************************].
13.5 TERMINATION OF CO-PROMOTION RIGHTS.
(a) BREACH OF CO-PROMOTION OBLIGATIONS IN NORTH AMERICA. If VERTEX
shall materially breach its obligations to Co-Promote a Drug
Product in North America under Section 5.4 hereof, HMR may
terminate VERTEX's right to Co-Promote Drug Product in North
America, effective upon [**************] prior written notice
to VERTEX, provided that such termination shall become
effective only if VERTEX shall fail to remedy or cure its
breach within that [************]period. Upon the effective
date of termination of VERTEX's Co-Promotion rights under this
Section 13.5(a):
(i) [***********************************************************
************************************************************
License, Development and Commercialization Agreement -- Confidential -- Page 68
************************************************************
*********************************]
(ii) [***********************************************************
************************************************************
************************************************************
*********************************]
(iii)[***********************************************************
************************************************************
************************************************************
*********************************]
(b) BREACH OF CO-PROMOTION OBLIGATIONS IN EUROPE. If VERTEX has
exercised its right to Co-Promote a Drug Product in the
European Union pursuant to Section 5.5 hereof, and shall
thereafter materially breach its obligations to Co-Promote
that Drug Product under Section 5.5, then HMR may terminate
VERTEX's right to Co-Promote that Drug Product in the European
Union, effective upon [*************] prior written notice to
VERTEX, provided that such termination shall become effective
only if VERTEX shall fail to remedy or cure its breach within
that [*************] period. Upon the effective date of
termination of VERTEX's Co-Promotion rights under this Section
13.5(b):
(i) [***********************************************************
************************************************************
************************************************************
*********************************]
(ii) [***********************************************************
************************************************************
************************************************************
*********************************]
(c) TERMINATION. HMR may terminate VERTEX's co-promotion rights
hereunder on a country-by-country basis upon the occurrence of
an event contemplated by Section 6.4(1) and as a result of
which, and so long as,
License, Development and Commercialization Agreement -- Confidential -- Page 69
HMR significantly reduces or terminates its promotional
expenditure in such country.
13.6 TERMINATION BY HMR FOR CAUSE.
(a) NON COMPETE. HMR may terminate this Agreement upon
[*************] prior written notice to VERTEX upon the
material breach by VERTEX of any of its obligations under
Section 2.4; provided, however, that such termination shall
become effective only if VERTEX shall fail to remedy or cure
the breach within such [************] period.
(b) REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION. HMR may
terminate this Agreement upon [**************] prior written
notice to VERTEX upon the material breach by VERTEX of any of
its representations or warranties under Article 9 or any of
its obligations under Article 14; provided, however, that such
termination shall become effective only if such material
breach amounts to fraud (including, but not limited to,
willful misrepresentation or misconduct) and VERTEX shall fail
to remedy or cure the breach within such [*************]
period.
13.7 EFFECTS OF TERMINATION.
(a) In the event of an effective termination by VERTEX under
Section 13.2 hereof:
(i) HMR TECHNOLOGY (MANUFACTURING). VERTEX shall have a
nonexclusive license (with the right to sublicense or
subcontract) to the manufacturing technology Controlled
by HMR as of the effective date of termination and
necessary to make Drug Product or Drug Product Candidate;
PROVIDED, that VERTEX shall not permit any sublicensee or
subcontractor to use HMR technology without provisions
safeguarding confidentiality at least equivalent to those
provided in this Agreement. For a period of [************]
following the effective date of termination, HMR will
provide VERTEX and its sublicensees, at VERTEX's expense
and in accordance with procedures to be
License, Development and Commercialization Agreement -- Confidential -- Page 70
agreed by the parties, with reasonable access to
information and know-how necessary for VERTEX to apply
the licensed technology and will otherwise provide VERTEX
with reasonable assistance as may be required by VERTEX
in connection therewith.
(ii) ROYALTY. VERTEX shall pay HMR a royalty of [*************]
of Net Sales of any Drug Product manufactured under the
manufacturing technology Controlled by HMR or a Prior
Joint Invention, Joint Invention, or Prior Patent so long
as the Drug Product would infringe any of such
proprietary rights.
(iii)HMR SUPPLY OF DRUG PRODUCT CANDIDATES AND DRUG PRODUCT.
At VERTEX's option and for a period of up to [*******]
following termination of this Agreement by VERTEX under
Section 13.2 hereof, HMR will supply VERTEX with all of
its requirements for clinical supplies of each Drug
Product Candidate under development on the effective date
of termination, and each Drug Product in the amount being
sold on the effective date of termination or as
forecasted to be sold for the [**********] (immediately
after the effective date of termination) by and in
accordance with the JMC approved marketing plan in effect
immediately prior to delivery of the notice of
termination; PROVIDED THAT HMR shall not be required to
supply either Drug Product Candidates or Drug Product
hereunder [*************************************************
************************************************************
************************************************************
************************************************************
************************************************************
************************************************************
****************************].
(iv) REGULATORY FILINGS. All filings with regulatory
authorities concerning Drug Product Candidates and Drug
Product will be assigned or otherwise transferred to
VERTEX as soon as
License, Development and Commercialization Agreement -- Confidential -- Page 71
practicable and at HMR's expense.
(v) TRADEMARK ROYALTY. If a trademark owned by HMR is being
used by VERTEX in connection with the sale of a Drug
Product [**********] after termination, VERTEX shall pay
to HMR a royalty of [***********************************
******************************************] so long as the
trademark is in use by VERTEX thereafter.
(b) In the event of an effective termination by HMR under Section
13.3 or Section 13.4 hereof: VERTEX shall have the same rights
referenced in Section 13.7(a), [*********************************
*****************************************************************
*****************************************************************
************************************************].
(c) In the event of an effective termination by HMR under Section
13.6 hereof: HMR shall have an exclusive, royalty-free,
license in the Field under the VERTEX Patents and under
VERTEX's interest in any Joint Inventions necessary to make,
have made, use, sell or have sold the Drug Product or Drug
Product Candidate.
ARTICLE XIV
INDEMNIFICATION
14.1 INDEMNIFICATION BY VERTEX. VERTEX will indemnify and hold HMR and
its Affiliates, and their employees, officers and directors
harmless against any loss, damages, action, suit, claim, demand,
liability, expense, bodily injury, death or property damage (a
"Loss"), that may be brought, instituted or arise against or be
incurred by such persons to the extent such Loss is based on or
arises out of:
(a) the development, manufacture, use, sale, storage or handling
of a Compound, a Drug Product Candidate or a Drug Product by
VERTEX or its Affiliates or their representatives, agents or
subcontractors under this Agreement, or any actual or alleged
violation of law resulting therefrom;
(b) the breach by VERTEX of any of its covenants, representations
or warranties set forth in this Agreement; or
License, Development and Commercialization Agreement -- Confidential -- Page 72
(c) provided however, that the foregoing indemnification shall not
apply to any Loss to the extent such Loss is caused by the
negligent or willful misconduct of HMR or its Affiliates.
14.2 INDEMNIFICATION BY HMR. HMR will indemnify and hold VERTEX, and its
Affiliates, and their employees, officers and directors harmless
against any Loss that may be brought, instituted or arise against
or be incurred by such persons to the extent such Loss is based on
or arises out of:
(a) the development, manufacture, use, sale, storage or handling
of Bulk Drug Substance, a Drug Product Candidate or a Drug
Product by HMR or its Affiliates or their representatives,
agents or subcontractors under this Agreement, or any actual
or alleged violation of law resulting therefrom (with the
exception of Losses based on infringement or misappropriation
of intellectual property rights); or
(b) the breach by HMR of any of its covenants, representations or
warranties set forth in this Agreement;
(c) provided that the foregoing indemnification shall not apply to
any Loss to the extent such Loss is caused by the negligent or
willful misconduct of VERTEX or its Affiliates.
14.3 CLAIMS PROCEDURES. Each Party entitled to be indemnified by the
other Party (an "Indemnified Party") pursuant to Section 15.1 or
15.2 hereof shall give notice to the other Party (an "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge
of any threatened or asserted claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom;
provided:
(a) That counsel for the Indemnifying Party, who shall conduct the
defense of such claim or any litigation resulting therefrom,
shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld) and the Indemnified Party
may participate in such defense at such party's expense
(unless (i) the employment of counsel by such Indemnified
Party has been authorized by the Indemnifying Party; or (ii)
the Indemnified Party shall have reasonably concluded that
there may be
License, Development and Commercialization Agreement -- Confidential -- Page 73
a conflict of interest between the Indemnifying Party and the
Indemnified Party in the defense of such action, in each of
which cases the Indemnifying Party shall pay the reasonable
fees and expenses of one law firm serving as counsel for the
Indemnified Party, which law firm shall be subject to
approval, not to be unreasonably withheld, by the Indemnifying
Party); and
(b) The failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement to the extent that the
failure to give notice did not result in harm to the
Indemnifying Party.
(c) No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the approval of each
Indemnified Party which approval shall not be unreasonably
withheld, consent to entry of any judgment or enter into any
settlement which (i) would result in injunctive or other
relief being imposed against the Indemnified Party; or (ii)
does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or
litigation.
(d) Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and shall be
reasonably required in connection with the defense of such
claim and litigation resulting therefrom.
14.4 COMPLIANCE. The parties shall comply fully with all applicable laws
and regulations in connection with their respective activities
under this Agreement.
14.5 INSURANCE. Each party shall use all commercially reasonable efforts
to maintain insurance, including product liability insurance, with
respect to its activities hereunder.
(a) Such insurance shall be in such amounts and subject to such
deductibles as the parties may agree based upon standards
prevailing in the industry at the time.
(b) Either party may satisfy its obligations under this Section
through self-
License, Development and Commercialization Agreement -- Confidential -- Page 74
insurance to the same extent.
(c) At such time as a Drug Product is being manufactured by a
party for commercial sale, that party shall name the other
party as an additional insured on any such policies.
ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware.
15.2 WAIVER. The failure on the part of HMR or VERTEX to exercise or
enforce any rights conferred upon it hereunder shall not be deemed
to be a waiver of any such rights nor operate to bar the exercise
or enforcement thereof at any time or times thereafter. The
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) by the party entitled to enforce such term, but any
such waiver shall be effective only if in writing signed by the
party against whom such waiver is to be asserted.
15.3 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, other than an obligation to make a payment,
when such failure or delay is caused by or results from fire,
floods, embargoes, government regulations, prohibitions or
interventions, war, acts of war (whether war be declared or not),
insurrections, riots, civil commotion, strikes, lockouts, acts of
God, or any other cause beyond the reasonable control of the
affected party.
15.4 REGISTRATION OF LICENSE. HMR may, at its own expense and its sole
discretion, register the license granted under this Agreement in
any country where the use, sale or manufacture of a Drug Product in
such country would be covered by a Live Claim. Upon request by HMR,
VERTEX will promptly execute any "short form" licenses submitted to
it by HMR in order to effect the foregoing registration in such
country, but such licenses shall in no way alter or affect the
obligations of the parties hereunder.
License, Development and Commercialization Agreement -- Confidential -- Page 75
15.5 SEVERABILITY. It is the intention of the parties to comply with all
applicable laws domestic or foreign in connection with the
performance of its obligations hereunder. In the event that any
provision of this Agreement, or any part hereof, is found invalid
or unenforceable, the remainder of this Agreement will be binding
on the parties hereto, and will be construed as if the invalid or
unenforceable provision or part thereof had been deleted, and the
Agreement shall be deemed modified to the extent necessary to
render the surviving provisions enforceable to the fullest extent
permitted by law.
15.6 GOVERNMENT ACTS. In the event that any act, regulation, directive,
or law of a government, including its departments, agencies or
courts, should make impossible or prohibit, restrain, modify or
limit any material act or obligation of HMR or VERTEX under this
Agreement, the party, if any, not so affected shall have the right,
at its option, to suspend or terminate this Agreement as to such
country, if good faith negotiations between the parties to make
such modifications to this Agreement as may be necessary to fairly
address the impact thereof, after a reasonable period of time are
not successful in producing mutually acceptable modifications to
this Agreement.
15.7 GOVERNMENT APPROVALS. HMR will use reasonable efforts to obtain any
government approval required to enable this Agreement to become
effective, or to enable any payment hereunder to be made, or any
other obligation hereunder to be observed or performed. Each party
will keep the other informed of progress in obtaining any such
approvals.
15.8 ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by either party without the prior written consent of
the other party; provided, however, that either party may assign
this Agreement, without the consent of the other party, (i) to any
of its Affiliates, if the assigning party guarantees the full
performance of its Affiliates' obligations hereunder, or (ii) in
connection with the transfer or sale of all or substantially all of
its assets or business or in the event of its merger or
consolidation with another company. In all cases the assigning
party shall provide the other party with prompt notice of any such
assignment. Any purported assignment in contravention of this
Section shall, at the option of the nonassigning party, be null and
void and of no effect. No assignment shall release either party
from responsibility for the performance of any accrued
License, Development and Commercialization Agreement -- Confidential -- Page 76
obligation of such party hereunder.
15.9 AFFILIATES. Each party may perform its obligations hereunder
personally or through one or more Affiliates, although each party
shall nonetheless be solely responsible for the performance of its
Affiliates. Neither party shall permit any of its Affiliates to
commit any act (including any act of omission) which such party is
prohibited hereunder from committing directly.
15.10 COUNTERPARTS. This Agreement may be executed in duplicate, both of
which shall be deemed to be originals, and both of which shall
constitute one and the same Agreement.
15.11 NO AGENCY. Nothing herein contained shall be deemed to create an
agency, joint venture, `amalgamation, partnership or similar
relationship between VERTEX and HMR. Notwithstanding any of the
provisions of this Agreement, neither party shall at any time enter
into, incur, or hold itself out to third parties as having
authority to enter into or incur, on behalf of the other party, any
commitment, expense, or liability whatsoever, and all contracts,
expenses and liabilities undertaken or incurred by one party in
connection with or relating to the development, manufacture or sale
of Bulk Drug Substance, Drug Product Candidates or Drug Product
shall be undertaken, incurred or paid exclusively by that party,
and not as an agent or representative of the other party.
15.12 NOTICE. All communications between the parties with respect to any
of the provisions of this Agreement will be sent to the addresses
set out below, or to other addresses as designated by one party to
the other by notice pursuant hereto, by internationally recognized
courier or by prepaid certified, air mail (which shall be deemed
received by the other party on the seventh business day following
deposit in the mails), or by facsimile transmission or other
electronic means of communication (which shall be deemed received
when transmitted), with confirmation by letter given by the close
of business on or before the next following business day:
if to HMR, at:
HOECHST XXXXXX XXXXXXX XXXXXXXXXXX XxxX
Xxxxxxxxxxxxx Xxxxxxx 00
00000 Bad Xxxxx am Taunus
License, Development and Commercialization Agreement -- Confidential -- Page 77
GERMANY
Attention: General Manager
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
if to VERTEX, at:
Vertex Pharmaceutical Incorporated
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX X.X.X. 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Senior Vice President and
Chief Business Officer
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxxxx & Xxxxxxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX X.X.X. 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
15.13 HEADINGS. The paragraph headings are for convenience only and will
not be deemed to affect in any way the language of the provisions
to which they refer.
15.14 AUTHORITY. The undersigned represent that they are authorized to
sign this Agreement on behalf of the parties hereto. The parties
each represent that no provision of this Agreement will violate any
other agreement that such party may have with any other person or
company. Each party has relied on that representation in entering
into this Agreement.
15.15 ENTIRE AGREEMENT. This Agreement, including the Schedules appended
hereto, contains the entire understanding of the parties relating
to the matters referred to herein, and may only be amended by a
written document, duly executed on behalf of the respective parties.
License, Development and Commercialization Agreement -- Confidential -- Page 78
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
VERTEX PHARMACEUTICALS
INCORPORATED
By:
-----------------------------------------
Xxxxxxx X. Xxxxxxx
Title: Senior Vice President and Chief Business
Officer
HOECHST XXXXXX XXXXXXX
DEUTSCHLAND GMBH
By:
-----------------------------------------
Title:
---------------------------------------
By:
-----------------------------------------
Title:
---------------------------------------
License, Development and Commercialization Agreement -- Confidential -- Page 79
SCHEDULE 1.5
COMPOUNDS
--------------------------------------------------------------------------------
HMR3480/VX-740 is the compound 9S-[(Isoquinoline-1-carbonyl)-amino]-6,
10-dioxo-octahydropyradazino[1,2-a][1,2]diazepine-1S-carboxylic
acid (2R-ethoxy-5-oxo-tetrahydrofuran-3S-yl)-amide, illustrated below.
[Compound Structure Diagram]
[*******************************************************************************
********************************************************************************
********************************************************************************
*******]
[**************************]
SCHEDULE 1.19
HMR PATENTS
---------------------------------------------------------------------------------------------------------
[********* *********** ************ *****]
---------------------------------------------------------------------------------------------------------
[****** ****** *********** *********************************************
*********************************************
*********************************************
*********************************************
*********************************************
***]
---------------------------------------------------------------------------------------------------------
[****** ****** *********** *********************************************
*********************************************
*********************************************
*********************************************
*********************************************
***]
---------------------------------------------------------------------------------------------------------
SCHEDULE 1.25
COUNTRIES OF LATIN AMERICA
--------------------------------------------------------------------------------
Belize
Costa Rica
Guatemala
Honduras
Mexico
Nicaragua
Panama
Salvador
Argentina
Bolivia
Brazil
Chile
Colombia
Ecuador
Guiana
Paraguay
Peru
Surinam
Uruguay
Venezuela
Anguilla
Antigua
Bahamas
Barbados
British Guyana
British Virgin Islands
Cuba
Dominica
Dominican Republic
Grenada
Grenadienes
Haiti
Jamaica
Montserat
Netherland Antilles
Nevis
St. Kitts
St. Lucia
St. Xxxxxxx
Suriname
Tortola
SCHEDULE 1.26
MAJOR MARKET COUNTRIES
-------------------------------------------------------------------------------
[************
*******************************************************************
*****
******
*********
*****]
SCHEDULE 1.42
VERTEX PATENTS
(THE FOLLOWING DOCKET #S AND EQUIVALENTS WORLDWIDE)
--------------------------------------------------------------------------------
[******* **** ********** *********** ****** ********** *****]
-------- ----- ---------- ----------- ------ ----------
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
SCHEDULE 7.2.1
PRIOR PATENTS
(THE FOLLOWING DOCKET #S AND EQUIVALENTS WORLDWIDE)
--------------------------------------------------------------------------------
[******* **** ********** *********** ****** ********** *****]
-------- ----- ---------- ----------- ------ ----------
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
[**** ***** *********** ******** * ********** ***********************************
****************************]
SCHEDULE 7.2.2
MINIMUM PATENT FILING COUNTRIES
--------------------------------------------------------------------------------
[************
************
****]
SCHEDULE 9.1
VERTEX DISCLOSURES
--------------------------------------------------------------------------------
[****************** *******************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
****].
[ ****************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
*******************************************************************************
]
[*********************************]
[********************************************************************]
********* *********
********* ********
********************************************************************]
*************************
***********************************************************
************************
************************************************
********** *********
********* ********]
