1
CONFIDENTIAL TREATMENT EXHIBIT 10.4(b)
RESEARCH, DEVELOPMENT AND MARKETING AGREEMENT
Research, Development and Marketing Agreement, dated as of July 1, 1995
between LEUKOSITE, INC., a Delaware corporation ("LeukoSite"), located at 000
Xxxxx Xxxxxx, Xxxxxxxxx, XX 00000, and XXXXXX-XXXXXXX COMPANY, a Delaware
corporation ("Warner"), located at 000 Xxxxx Xxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx
00000.
WITNESSETH:
WHEREAS, LeukoSite and Warner each has certain expertise in the
discovery and development of compounds that inhibit the action of IL-8 (the
"Field"); and
WHEREAS, Warner and LeukoSite each wishes to enter into a collaborative
effort to share such expertise, to develop new expertise in the Field, to
research together potential applications thereof and, if successful. to market
certain of such applications (the "Collaboration");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, covenants and conditions contained herein, LeukoSite and Warner
agree as follows:
ARTICLE A
DEFINITIONS
The following capitalized terms shall have the following meanings for
purposes of this Agreement:
"Affiliate" shall mean any corporation, association or other entity
which directly or indirectly controls, is controlled by or is under common
control with the party in question. As used herein the term "control" means
control with possession of the power to direct, or cause the direction of. the
management and policies of a corporation, association or other entity.
"Background Technology" shall mean individually and collectively Warner
Background Technology and LeukoSite Background Technology.
"Budgeted Detail Effort" shall mean for each party for each calendar
year each party's Selling Percentage of the Budgeted Total Detail Effort, or
with respect to LeukoSite, a lower percentage of the Budgeted Total Detail
Effort elected by LeukoSite for the calendar year pursuant to Section 6.1.
2
2
"Budgeted Total Detail Effort" shall mean for each calendar year the
total number of Details for Warner-LeukoSite Product in the Designated
Co-Promotion Territory as budgeted by the Marketing Committee or in the case
where the sales force sells other than through Details, the total selling
efforts of the sales force of each party for such calendar year.
"Collaboration Technology" shall mean individually and collectively
Warner Collaboration Technology and LeukoSite Collaboration Technology.
"Co-Promotion Countries" shall mean, subject to Section 6.9, the United
States of America, Mexico, the Commonwealth of Canada and their respective
territories and possessions, including the Commonwealth of Puerto Rico.
"Cost of Goods" means for experimental, clinical and commercial
supplies of Warner-LeukoSite Product the fully allocated manufacturing cost
(determined in a reasonable manner consistent with Warner's normal internal
accounting practices and in accordance with generally accepted accounting
principles ("GAAF)) which includes (i) direct and indirect labor (salaries,
wages and employee benefits); (ii) direct and indirect materials; (iii)
operating costs of building and equipment used in connection with the
manufacture of Warner-LeukoSite Product; (iv) allocated depreciation and repairs
and maintenance; (v) quality and in-process control; (vi) any charges for
obsolescence, out of date product, spoilage, scrap or rework costs; (vii)
royalties paid to third parties (except royalties in respect of rights that a
party hereto currently has an interest in or could have an interest in pursuant
to any currently existing agreements) and (viii) the net cost or credit of any
value added taxes paid with respect to the manufacture of Warner-LeukoSite
Product. To the extent that manufacturing of Warner-LeukoSite Product or any
component thereof is performed for Warner by a third party (which is not an
Affiliate of Warner), amounts paid to such third parry in connection with the
manufacturing of Warner-LeukoSite Product or any component thereof shall be
added to the aggregate amount of the applicable hereinabove items (i) through
(viii).
"Designated Co-Promotion" Country' shall mean with respect to each
Warner-LeukoSite Product each Co-Promotion Country designated under Section 4.1
as to which LeukoSite retains marketing rights.
"Detail" shall mean a sales presentation by a professional sales
representative to a target physician or other person involved in prescribing or
influencing drug usage of a Warner-LeukoSite Product in
3
3
which the primary purpose is to discuss the benefits and features of such
Warner-LeukoSite Product in order to encourage a sale of such Product.
"Detail Effort" shall mean with respect to a party, and for any
calendar year, the actual number of Details given by its sales force for such
calendar year or in the case where the sales force sells other than through
Details the selling efforts of the party performed by its sales force for such
calendar year.
"Development" shall mean the conduct of all preclinical, clinical,
chemical synthesis, formulation, stability, assays and validation, testing and
development in accordance with then current Good Laboratory, Clinical and
Manufacturing Practices or other designated quality standards in connection with
any Development Candidate or Product insofar as the same are reasonably
necessary to obtain marketing approval by the relevant regulatory authorities
for a Product's first approved indication in any country (including studies
required to be per-formed after approval as a condition of approval) and the
costs of preparation, filing and submission of regulatory filings in Designated
Co-Promotion Countries.
"Development" Candidate" shall have the meaning set forth in Section
4.1.
"Development Committee" shall have the meaning set forth in Section
2.3.
"Effective Date" shall mean the date of this Agreement first stated
above.
"FDA" shall mean the United States Food and Drug Administration.
"IL-8 Inhibitor" shall mean a compounds) other than antibody(ies) which
inhibits the action of IL-8.
"LeukoSite Background Technology" shall mean all technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) which relate to or are potentially
useful as an IL-8 Inhibitor or is an IL-8 Inhibitor and/or techniques for the
discovery, screening, design, synthesis, delivery, development, testing, use,
manufacture or sale of IL-8 Inhibitors which exists as of the Effective Date
which is either owned by LeukoSite or which is licensed to LeukoSite and as to
which LeukoSite has a right to sublicense or otherwise transfer.
4
4
"LeukoSite Collaboration Technology" shall mean all technology,
inventions, information, data, know-how, compounds, materials and substances
(whether or not patented or patentable) which is either owned by LeukoSite
(alone or together with Warner) or which is licensed to LeukoSite and as to
which LeukoSite has a right to sublicense or otherwise transfer, and which is
conceived or reduced to practice pursuant to the Stage 1 Research Plan or
pursuant to the Stage 2 Research Plan or pursuant to development of a LeukoSite
Product or a Warner-LeukoSite Product.
"LeukoSite Product" shall have the meaning set forth in Section 4.1.
"LeukoSite's Share of Profit" shall have the meaning set forth in
Section 8.1.
"Management Committee" shall have the meaning set forth in Section 2.1.
"Marketing Committee" shall have the meaning, set forth in Section 2.4.
"Marketing Expense" shall mean to the extent approved by the Marketing
Committee all costs and expenses incurred by Warner (including without
limitation. the salaries, commissions, bonuses, transportation. meals, lodging,
benefits and healthcare insurance expenses of appropriate employees) associated
with launch, advertising and sales promotion (including, without limitation,
expenses related to promotional publications, space or time in various media,
direct mail campaigns, samples, if any, advertising agency fees and other
promotional activities), the cost of product samples, Phase IV Studies,
Pharmacoeconomic Studies, Phase V Studies, and any other clinical studies not
reasonably necessary to obtain marketing approval by the relevant regulatory
authorities for a Product's first approved indication in any country, in each
case determined in accordance with Warner's normal internal accounting practices
and GAAP.
"Market Price" shall mean the average exchange closing price for
LeukoSite's Common Stock during the five business days beginning, on the day
that work is initiated on the Stage 2 Research Plan or the five (5) business
days preceding Warner's stock purchase under Section 1.4(c), as the case may
be.
5
5
"MCP-1 Agreement" shall mean the Research, Development and Marketing
Agreement, dated as of September 30, 1994 between LeukoSite and Warner.
"Net Sales" shall mean the gross amount invoiced for sales of a Product
to non-affiliated commercial customers after deduction of the following items:
(i) trade, quantity and cash discounts; (ii) credits, rebates, chargeback
rebates. fees. reimbursements or similar payments granted or given to
wholesalers and other distributors, buying groups, healthcare insurance
carriers. governmental agencies and other institutions provided that such will
not grant a preference or otherwise favor other product(s) of Warner or
LeukoSite, as the case may be, if such preference is based on the fact LeukoSite
or Warner, as the case may be, is entitled to royalties or a share of
co-promotion rights; (iii) credits or allowances to the extent allowed for
rejection or return of such Product previously sold, (iv) allowance for bad debt
expense in accordance with Warner's normal internal accounting practices and
GAAP; (v) any tax, tariff, duty or other governmental charge (other than an
income tax) levied on the sale, transportation or delivery of such Product and
borne by the seller thereof, (vi) payments or rebates paid in connection with
state or federal Medicare, Medicaid or similar programs; and (vii) any charge
for freight or insurance to the extent separately invoiced.
"Patent Rights" shall mean, with respect to LeukoSite or Warner, all
United States and foreign patents owned in whole or in part or licensed to
LeukoSite or Warner, respectively, as to which a sublicense can be granted, at
any time during the Term of this Agreement, which would be infringed by the
manufacture, use or sale of a Product or which would be infringed by activities
to be performed by the parties under the Stage 1 and/or Stage 2 Research Plan
including all United States and foreign patents and patent applications
(including, without limitation, all reissues, extensions, substitutions,
confirmations, registrations, revalidations, additions, continuations,
continuations-in-part, and divisions thereof). Excluded from "Patent Rights" are
compounds that Warner identifies as having anti-inflammatory activity
independent of LeukoSite.
"Pharmacoeconomic Studies" shall mean clinical studies designed with
the primary intention of developing pharmacoeconomic data.
"Phase IV Studies" shall mean clinical studies designed to enhance
sales for an approved indication, but shall not include Pharmacoeconomic
Studies.
6
6
"Phase V Studies" shall mean clinical studies directed for approval of
additional indications, new dosages or other line extensions.
"Products" shall mean Warner Products, LeukoSite Products,
Warner-LeukoSite Products and/or any product derived from or based on Warner
Collaboration Technology as to which LeukoSite has rights under Section 1.4(a),
as applicable.
"Research Cost" shall mean the aggregate amount of costs incurred by
LeukoSite to perform research under the Stage 2 Research Plan determined in a
reasonable manner and consistent with normal internal accounting practices and
GAAP.
"Research" Committee" shall have the meaning set forth in Section 2.2.
"Sales Cost" with respect to each of Warner and LeukoSite for any
applicable period shall equal the aggregate amount of expenses incurred by such
party for maintaining its sales force (including the costs set forth below) for
Warner-LeukoSite Product in the Designated Co-Promotion Countries. The costs
shall include but not be limited to salary, commissions, bonuses.
transportation, meals, lodging, benefits and health care insurance expenses for
the sales force, and sales force management and support in the Designated
Co-Promotion Countries, all only as it relates to Warner-LeukoSite Product but
specifically excluding any cost or expense included in Marketing Expenses, in
each case determined in accordance with the parties' normal internal cost
accounting practices and GAAP.
"Selling Percentage" with respect to any calendar year shall mean for
LeukoSite * or such lower percentage selected by LeukoSite under Section 4.2 and
for Warner shall mean the difference between one hundred percent (100%) and
LeukoSite's Selling Percentage.
"Stage 1" shall mean the period of research under the Stage I Research
Plan, which period terminates as set forth in Section 1.3
"Stage 1 Research Plan" shall mean the research plan attached hereto as
Exhibit 1.
"Stage 2 Research Plan" shall have the meaning set forth in Section
1.4(b).
"Stage 2 Lead Compound" shall mean a compound that in accordance with
standards established by the Management Committee is
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
7
7
sufficiently promising to warrant termination of Stage 1 and initiation of work
under the Stage 2 Research Plan.
"Term of Co-Promotion" for a Warner-LeukoSite Product shall mean, in
each Designated Co-Promotion Country, the period beginning when such
Warner-LeukoSite Product is first sold in such country and lasting until the
Warner-LeukoSite Product will no longer be sold in the applicable Designated
Co-Promotion Country. For the purpose of this definition only, a
Warner-LeukoSite Product does not include a "generic" form of a Warner-LeukoSite
Product which is not covered by a Patent Right.
"Term of this Agreement" shall mean from the Effective Date until this
Agreement is terminated pursuant to its terms.
"Term of the Stage 1 Research Collaboration" shall have the meaning set
forth in Section 1.3.
"Total Profit" shall mean with respect to a Warner-LeukoSite Product,
Net Sales minus the sum of (i) the Cost of Goods, (ii) Marketing Expenses and
(iii) the cost of distribution. For the purposes of this definition only,
Warner-LeukoSite Product does not include a "generic" form of a Warner-LeukoSite
Product which is not covered by a Patent Right.
"Warner Background Technology" shall mean all technology, inventions,
information, data, know-how, compounds, materials and substances (whether or not
patented or patentable) which relate to or are potentially useful as an IL-8
Inhibitor or is an IL-8 Inhibitor and/or techniques for the discovery,
screening, design, synthesis, delivery, development, testing, use, manufacture
or sale of IL-8 Inhibitors which exists as of the Effective Date which is either
owned by Warner or which is licensed to Warner and as to which Warner has a
right to sublicense or otherwise transfer. Excluded from "Warner Background
Technology" is Warner's high volume screening technology and compounds that
Warner identifies as having anti-inflammatory activity independent of LeukoSite.
"Warner Collaboration Technology" shall mean all technology,
inventions, information, dam, know-how, compounds, materials and substances
(whether or not patented or patentable) which is either owned by Warner (alone
or together with LeukoSite) or which is licensed to Warner and as to which
Warner has a right to sublicense or otherwise transfer), which is conceived or
reduced to practice pursuant to the Stage 1 Research Plan or Stage 2 Research
Plan or pursuant to development of a Warner Product or Warner-LeukoSite Product.
8
8
"Warner-LeukoSite Product" shall have the meaning set forth in Section
4.1.
"Warner Product" shall have the meaning set forth in Section 4.1.
ARTICLE I
RESEARCH PROGRAM
1.1 Undertaking and Scope. Each party agrees to use its best efforts to
perform the activities detailed in the Stage I Research Plan attached hereto as
Exhibit 1 in a professional and timely manner. Xxxxxx Xxxxx 0, XxxxxXxxx will
use its best efforts at its cost (including the cost of any royalties or other
amounts owed to third parties by LeukoSite) to develop and transfer to Warner a
receptor-ligand screen for IL-8 Inhibitors and (ii) cells containing an IL-8
receptor useful in creating an IL-8 triggered cell based screen for IL-8
Inhibitors. Xxxxxx Xxxxx 0, Xxxxxx will use its best efforts, utilizing its high
volume screening technology, at its cost (including the cost of any royalties or
other amounts owed to third parties by Warner) to screen substantially all of
its compound library with such screen provided by LeukoSite. Pursuant to the
Stage 1 Research Plan, during Stage 1, LeukoSite will use its best efforts, at
its cost, to conduct in vitro and in vivo characterization of the compounds
identified as blocking IL-8 activity in such-screen.
Notwithstanding the foregoing, Warner may withhold from the
Collaboration any compound that it identifies as possessing anti-inflammatory
activity independent of LeukoSite. Such compounds are excluded from the
Collaboration and Warner may pursue development and marketing of such compounds
independently of this Agreement and LeukoSite.
1.2 Personnel and Resources. Each party agrees to commit the personnel,
facilities, expertise and other resources necessary to perform its obligations
under this Agreement in accordance with its terms; provided, however, that
neither party warrants that the Collaboration will achieve any of the research
objectives contemplated by the parties. Each party agrees to use its best
efforts to assure the complete and prompt exchange of Background Technology,
Collaboration Technology and the results of all activities conducted pursuant to
the Stage 1 Research Plan, the Revised Stage 1 Research Plan and/or the Stage 2
Research Plan. The scientific priorities and direction of the parties'
respective staff under the Stage 1 Research Plan, the Revised Stage 1 Research
Plan and under the Stage 2 Research Plan will be determined by the Management
Committee.
9
9
1.3 Term of the Stage 1 Research Collaboration. Activities under the
Stage 1 Research Plan, as the same may be amended or expanded from time to time
but only by mutual agreement of the parties, shall commence as of the Effective
Date and, unless terminated earlier by either party pursuant to the terms of
this Agreement or extended by mutual agreement of the parties, shall end upon
designation by the Management Committee of a Stage 2 Lead Compound, but in no
event will such activities continue after the later of (i) January 3, 1997 or
(ii) 15 months after development and transfer by LeukoSite to Warner of a
receptor-ligand screen for IL-8 Inhibitors that is suitable for Warner to mass
screen its compound library (such period being referred to herein as the "Term
of the Stage 1 Research Collaboration").
1.4 Stage 2 Collaboration Options. Promptly after termination or
expiration of Stage 1, but in no event later than thirty (30) days thereafter,
Warner will elect to proceed under one of the following options:
a. Option 1. Warner may terminate this Agreement. In such event, Warner
will grant to LeukoSite a perpetual, royalty-free (except as stated in this
Section below), worldwide, exclusive license (with the right to sublicense) in
the Warner Collaboration Technology (including but not limited to any product
which is identified in the Stage 1 Research as a potential inhibitor of the
action of IL-8 (a "Stage 1 Product")) and any Patent Rights based thereon,
solely for use in the field of chemokine modulation. In addition, Warner will
grant a non-exclusive license under Patent Rights not based on Warner
Collaboration Technology to the extent required to exploit Warner Collaboration
Technology and any patent rights based thereon solely for use in the field of
chemokine modulation. The licenses granted in the preceding two sentences shall
not include any Warner Collaboration Technology (as defined herein), Patent
Rights (as defined herein) or other patent rights insofar as any of the same are
also "Warner Collaboration Technology" (as defined in the MCP-1 Agreement) or
"Patent Rights" (as defined in the MCP-1 Agreement) and licensed to LeukoSite
under the MCP-1 Agreement unless and until the MCP-1 Agreement is terminated
pursuant to Section 1.4(a) thereof. Notwithstanding the foregoing, Warner will
retain a perpetual, royalty-free, worldwide interest in Warner Collaboration
Technology and Patent Rights of Warner based thereon to make, use or sell any
product or process (i) for use outside the field of chemokine modulation or (ii)
discovered after the Term of the Stage 1 Research and which is within the field
of chemokine modulation and which is not derived from or based on LeukoSite
Background Technology, provided that in each case such product is not identical
to a product which is being actively pursued by LeukoSite or any one of its
licensees. LeukoSite shall pay Warner a
10
10
royalty of * of worldwide Net Sales of (i) any Stage 1 Product (or any
product which results from research by or on behalf of LeukoSite directed to
such Stage 1 Product or any other compound provided by Warner to LeukoSite
pursuant to the Stage 1 Research) sold by LeukoSite or its sublicensee and (ii)
any product sold by LeukoSite or its sublicensee that is covered by a Warner
Patent Right licensed to LeukoSite under this Section, in each case for the
period set forth in Section 5.6(d).
In the event that at any time after exercise of Option 1, Warner
desires to exercise Option 2 with respect to a Stage 1 Product under the terms
and conditions of this Agreement, Warner shall notify LeukoSite in writing, and
if LeukoSite is not actively researching, developing, marketing or selling, such
Stage 1 Product and has not granted rights to such Stage 1 Product to any third
party, then Option 2 shall be considered to be exercised by Warner.
b. Option 2. Warner and LeukoSite may agree to continue collaborative
research in the Field pursuant-to a mutually acceptable expanded research plan
("Stage 2 Research Plan'). Warner will provide funding to LeukoSite for * of
LeukoSite's Research Cost of performing work under the Stage 2 Research Plan
from initiation of such work until three years thereafter and 100% of
LeukoSite's Research Cost under the Stage 2 Research Plan after the expiration
of the three-year period, which amount shall be paid quarterly in advance with a
reconciliation at the end of the year such that LeukoSite receives for the
calendar year the applicable percentage of such Research Cost for the calendar
year. In no event will LeukoSite be required to perform (nor shall Warner be
required to fund) activities under the Stage 2 Research Plan which would require
support for more than five (5) persons per year: provided, however, that in all
events LeukoSite will be reimbursed only for work approved by the Management
Committee. Upon the later of (i) January 3, 1997 and (ii) 2 weeks after
initiation of work under the Stage 2 Research Plan, Warner will purchase $1
Million of capital stock (Preferred if at the time of purchase LeukoSite has not
completed its initial public offering (the "IPO"), and Common if the IPO has
been completed by such time), upon terms substantially similar to those of the
Preferred Stock Purchase Agreement dated November 8, 1994 at (i) $5.00 per share
(subject to adjustment from and after the date hereof upon each stock dividend,
stock split, reverse stock split or other similar event if at the time of
initiation of work under the Stage 2 Research Plan LeukoSite has not yet
completed its IPO or (ii) 125% of the Market Price for LeukoSite's Common Stock
at the time of initiation of work under the Stage 2 Research Plan if at such
initiation LeukoSite has completed its IPO. In the event that any such sale and
purchase shall be of shares of Preferred Stock of LeukoSite, the terms of such
shares of Preferred Stock shall be identical to the terms of
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
11
11
LeukoSite's Series C Convertible Preferred Stock, except that (i) such shares of
Preferred Stock shall be from a separate, newly-created series of Preferred
Stock and (ii) unless otherwise agreed to by the parties, the liquidation
preference of such shares of Preferred Stock shall be equal to the purchase
price per share paid by Warner for such shares of Preferred Stock. If LeukoSite
completes an initial public offering of Common Stock for its own account at a
public offering price per share of less than $5.00 (subject to adjustment from
and after the date hereof upon each stock dividend, stock split, reverse stock
split or other similar event), taking into account the fair market value of any
warrants or other rights issued as units with the Common Stock sold in any such
initial public offering, Warner will be issued additional Common Stock, promptly
after the initial public offering is completed, at no cost to Warner, in an
amount sufficient to make Warner's average price per share of capital stock of
LeukoSite purchased pursuant to this Section and then owned by Warner equal to
the public offering price per share of the Common Stock issued in any such
initial public offering.
If LeukoSite does not initiate research under the Stage 2 Research Plan
(or similar plan of research) or after initiating research under the Stage 2
Research Plan LeukoSite terminates such research and such failure to initiate
research or such termination results other than as a result of a breach by
Warner, in such event, by written notice from Warner to LeukoSite, Warner may
terminate LeukoSite's right to participate in such Stage 2 research. If such
right is terminated by Warner in accordance with the preceding sentence, any
compound which is or becomes the subject of the Stage 2 Research Plan (or
similar plan of research) as an IL-8 Inhibitor (or as an inhibitor for a
chemokine other than IL-8 pursuant to Option 3) shall become a Warner Product
subject to the terms and conditions of this Agreement.
c. Option 3. In the event that during Stage 1 or Stage 2, a compound
has been identified as an IL-8 Inhibitor and such compound also has activity as
an inhibitor for a chemokine other than IL-8, and Warner notifies Leukosite in
writing that Warner desires to optimize that non-IL-8 activity instead of IL-8
under Option 2 the parties shall proceed under Option 2 (with appropriate
expansion to the definitions of "Field", "Background Technology", "Collaboration
Technology" and similar terms hereof) with respect to such compound for such
activity unless within thirty (30) days thereafter LeukoSite elects in writing
not to proceed under Option 2. If LeukoSite elects in writing not to continue
with collaborative research with respect thereto (or is prevented from
continuing such collaborative research with respect thereto because of
conflicting third party obligations), in such event, such compound shall
12
12
become a Warner Product subject to the terms and conditions of this Agreement,
except that no license is granted by LeukoSite under Section 5.1 to such Warner
Product to the extent that LeukoSite is prohibited from granting licenses under
its Patent Rights which are not Background Technology with respect to such
Warner Product as an inhibitor of a chemokine other than IL-8 by an agreement
with a third party. As a result of such compound becoming a Warner Product under
this Option 3 upon the later of (i) January 3, 1997 or (ii) two weeks after
LeukoSite elects in writing not to continue such collaborative research Warner
will purchase $1 Million of LeukoSite capital stock (Preferred if at the time of
purchase the IPO has not been completed, and common if the IPO has been
completed by such time), upon terms substantially similar to those of the
Preferred Stock Purchase Agreement dated November 8, 1994, at (i) $5.00 per
share (subject to adjustment from and after the date hereof upon each stock
dividend, stock split, reverse stock split or other similar event) if at the
time of purchase LeukoSite has not yet completed its IPO or (ii) 125% of the
Market Price for LeukoSite's Common Stock at the time of purchase if at such
time of purchase LeukoSite has completed its IPO. In the event that any such
sale and purchase shall be of shares of Preferred Stock of LeukoSite, the terms
of such shares of Preferred Stock shall be identical to the terms of LeukoSite's
Series C Convertible Preferred Stock, except that (i) such shares of Preferred
Stock shall be from a separate, newly-created series of Preferred Stock and (ii)
unless otherwise agreed to by the parties, the liquidation preference of such
shares of Preferred Stock shall be equal to the purchase price per share paid by
Warner for such shares of Preferred Stock. If LeukoSite completes an initial
public offering of Common Stock for its own account at a public offering price
per share of less than $5.00 (subject to adjustment from and after the date
hereof upon each stock dividend, stock split, reverse stock split or other
similar event), taking into account the fair market value of any warrants or
other rights issued as units with the Common Stock sold in any such initial
public offering, Warner will be issued additional Common Stock, promptly after
the initial public offering is completed, at no cost to Warner, in an amount
sufficient to make Warner's average price per share of capital stock of
LeukoSite purchased pursuant to this Section and then owned by Warner equal to
the public offering price per share of the Common Stock issued in any such
initial public offering.
In the event that Option 2 has been previously exercised and the stock
purchase completed pursuant thereto, Warner shall not be required to purchase
stock pursuant to this Option 3. In addition, if stock is purchased under this
Option 3, and Option 2 is subsequently exercised, the amount of stock that
Warner will be required to purchase the first time that Warner exercises such
Option 2 will be reduced by $1,000,000.
13
13
Notwithstanding the foregoing, this Section 1.4(c) shall not apply to
inhibitors of MCP-1. In the event that Warner identifies a compound hereunder
that it wishes to optimize for MCP-1 activity, it shall do so pursuant to the
MCP-1 Agreement.
1.5 Rights to Background Technology and Collaboration Technology.
Subject to the terms and conditions of this Agreement each party hereby grants
and agrees to grant to the other a non-exclusive, worldwide, royalty-free
license to use such party's Background Technology and Collaboration Technology
for research and development of an IL-8 Inhibitor under the Stage 1 Research
Plan and under the Stage 2 Research Plan and as to LeukoSite for development of
a LeukoSite Product and as to Warner for development of a Warner Product and/or
Warner-LeukoSite Product. In addition, to the extent permitted by agreements
with third parties, LeukoSite hereby agrees to grant to Warner a non-exclusive,
world-wide, royalty-free license to make and use all data, information and
inventions (whether or not patentable) related to cell based assays developed by
or on behalf of LeukoSite alone or with one or more collaborators, and promptly
to disclose the existence of the same to Warner, for research and development of
an IL-8 Inhibitor under the Stage 1 Research Plan or the Stage 2 Research Plan
or for development of a Warner Product and/or Warner-LeukoSite Product.
1.6 Collaboration Expenses. Subject to the terms of Section 1.4(b) and
Article IV, each party shall bear the costs and expenses of work done pursuant
to the Collaboration at its laboratories and its affiliated laboratories.
1.7 Exclusivity. Until termination of, or a determination not to
initiate activities under, the Stage 1 Research Plan, and the Stage 2 Research
Plan, neither LeukoSite nor Warner will undertake any research or development of
IL-8 Inhibitors except pursuant to this Agreement. Notwithstanding the
foregoing, LeukoSite may undertake research and development, alone or with one
or more third parties, on antibodies against IL-8 or its receptor for inhibiting
the action of IL-8 and may undertake activities alone or with a third party or
grant rights to a third party to test or screen a compound for inhibition of
IL-8 as part of a program to research and develop a compound as a non-IL-8
inhibitor and/or may grant rights to a third party under LeukoSite Background
Technology with respect to an IL-8 inhibitor, provided that such program and/or
such IL-8 inhibitor is a direct result of identification of a compound as an
inhibitor of a chemokine other than IL-8.
14
14
1.8 Third Party Collaborations. LeukoSite agrees that it will not
assist any third party, nor permit any third party to use any of its technology,
data, information or inventions (whether or not patentable), in connection with
the research, development or commercialization of any compound that has a
similar structure to a compound that at the later of (i) the time of discovery
of such third party's compound or (ii) the date that LeukoSite is to become
first involved in the research or development or commercialization of such third
party compound is the subject of active research, development or
commercialization by Warner or one of its licensees under this Agreement. The
foregoing shall apply only for so long as such compound remains subject to
active research, development, clinical development or commercialization by
Warner or one of its licensees under this Agreement.
ARTICLE II
MANAGEMENT COMMITTEE; RECORDS AND REPORTS
2.1 Management Committee. Promptly after the Effective Date, Warner and
LeukoSite will each appoint 3 representatives to a management committee (the
"Management Committee"). The Warner representatives on such committee will
together have only one vote and the LeukoSite members on such committee will
together have only one vote. The Management Committee will meet promptly after
the Effective Date to prepare such procedures and mechanisms as may be necessary
for the operation of the Management Committee, the Research Committee and the
Development Committee(s) to assure the most efficient conduct of the
Collaboration. Thereafter, the Management Committee will meet quarterly or as
otherwise mutually agreed. The Management Committee will assure that agendas and
minutes are prepared for each of its meetings. The personnel, facilities,
expertise and other resources of each party to be used in performance of the
Collaboration shall be established by the Management Committee. The Management
Committee will have the authority to designate Stage 2 Lead Compounds and
Development Candidates pursuant to Section 4.1 and will have the other rights
and responsibilities specifically set forth in this Agreement. The Management
Committee will have the authority to resolve disputes among the members of the
Research Committee and among the members of any Development Committee. All
actions taken and decisions made by the Management Committee shall be by
unanimous agreement. If the Management Committee fails to reach unanimous
consent on any matter, the matter will be resolved by the senior officer of
Warner's pharmaceutical business with the advice of LeukoSite's President. A
party may change any of its appointments to the Management Committee at any time
upon giving
15
15
written notice to the other party. The Management Committee does not itself have
the authority to amend this Agreement in any manner that would require the
separate approval of authorized officers of the respective parties.
2.2 Research Committee. Warner and LeukoSite will each appoint up to 4
representatives to a research committee (the "Research Committee"), which will
oversee the pre-clinical aspects of the Collaboration; except that such
responsibilities will pass to the Development Committee in the case of a
Warner-LeukoSite Product, to Warner in the case of a Warner Product and to
LeukoSite in the case of a LeukoSite Product. The Warner representatives on such
committee will together have only one vote and the LeukoSite members on such
committee will together have only one vote. The Research Committee will meet
quarterly, or more frequently if mutually agreed, and will report to the
Management Committee. Warner's and LeukoSite's initial representatives to the
Research Committee will be appointed by each of them promptly after the
Effective Date. The Research Committee will be responsible for recommending
compounds to be designated Development Candidates. All actions taken and
decisions made by the Research Committee will be by unanimous agreement. The
Management Committee will resolve disputes among the members of the Research
Committee. A party may change any of its appointments to the Research Committee
at any time upon giving written notice to the other party.
2.3 Development Committee. Warner and LeukoSite will each appoint up to
4 representatives to one or more development committees (the "Development
Committee(s)"), which will oversee the pre-clinical and clinical development of
each Warner-LeukoSite Product. A separate Development Committee will be
established for each Warner-LeukoSite Product promptly after a Development
Candidate is designated a Warner-LeukoSite Product. The Warner representatives
on such committee will together have only one vote and the LeukoSite members on
such committee will together have only one vote. All actions taken and decisions
made by the Development Committee will be by unanimous consent. Warner will have
primary responsibility for interfacing with all regulatory agencies worldwide in
connection with the relevant Warner-LeukoSite Product. LeukoSite will be invited
to attend all regulatory meetings and will be kept fully apprised of all
regulatory interactions. The Management Committee will resolve disputes among
the members of any Development Committee. A party may change any of its
appointments to any Development Committee at any time upon giving written notice
to the other party.
16
16
2.4 Marketing Committee. Each party will appoint four members to one or
more marketing committees (the "Marketing Committee(s)"), which will oversee the
marketing and promotion of each Warner-LeukoSite Product in each Designated
Co-Promotion Country. A separate Marketing Committee will be formed for each
Warner-LeukoSite Product promptly after completion of phase II clinical studies
of such Warner-LeukoSite Product. The Warner representatives on such committee
will together have only one vote and the LeukoSite members on such committee
will together have only one vote. Decisions of the Marketing Committee will be
by unanimous consent and disputes relating thereto will be resolved in
accordance with Section 12.4. A party may change any of its appointments to any
Marketing Committee at any time upon giving written notice to the other party.
2.5 Meetings. The Management Committee, the Research Committee, the
Development Committees and the Marketing Committees may meet by telephone or in
person at such times as are agreeable to the members of each such committee.
Attendance at meetings shall be at the respective expense of the participating
parties. Warner and LeukoSite shall alternate the right to determine the
location of each meeting, with LeukoSite determining the location of the first
meeting of each committee. A quorum for the conduct of business at each meeting
shall require the attendance of at least one Warner member and at least one
LeukoSite member.
ARTICLE III
PATENTS, KNOW-HOW, RIGHTS AND INVENTIONS
3.1 Rights to Inventions. Ownership of Collaboration Technology shall
be determined in accordance with United States laws of inventorship. The owner
(the "Inventor") of any patentable Collaboration Technology (an "Invention")
shall have the right, at its option and expense, to prepare, file and prosecute
worldwide in its own name any patent applications with respect to any Invention
owned by it and to maintain any patents issued. In connection therewith, the
non-Inventor party agrees to cooperate with the Inventor at the Inventor's
expense in the preparation and prosecution of all such patent applications and
in the maintenance of any patents issued. This obligation shall survive the
expiration or termination of this Agreement.
3.2 Joint Inventions. Collaboration Technology jointly invented by
LeukoSite and Warner will be jointly owned by them; however, Warner will have
the rights and responsibilities of the "Inventor" as described in
17
17
this Article III in respect of any such patentable, jointly owned Collaboration
Technology and LeukoSite shall have the rights and responsibilities of a
non-Inventor therein. Warner shall pay all expenses in connection with the
preparation, filing and prosecution of patent applications that claim
patentable, jointly owned Collaboration Technology and maintain, enforce and
protect all patents issuing thereon. Warner shall from time to time notify
LeukoSite of the amount of its out-of-pocket expenses in connection with the
foregoing and LeukoSite shall promptly thereafter pay Warner 50% of the
out-of-pocket expenses incurred by Warner. At LeukoSite's option, such payments
to Warner may be delayed and to the extent so delayed, such payments may be
credited by Warner against milestone, royalty or co-promotion payments to be
made by Warner to LeukoSite hereunder or pursuant to the MCP-1 Agreement,
regardless of which Product (as defined herein and/or in the MCP-1 Agreement)
such payments relate to, but in no event may any such payment to LeukoSite be
reduced by more than 30% as a result of this provision.
3.3 Protection of Patent Rights. (a) The Inventor shall keep the other
party currently informed of all steps to be taken in the preparation,
prosecution and maintenance of all of its patents and patent applications now or
hereafter existing which claim such Invention and shall furnish the other party
with copies of patents and applications, amendments thereto and other related
correspondence relating to such Invention to and from patent offices and permit
the other party to offer its comments thereon before the Inventor makes a
submission to a patent office which could materially affect the scope or
validity of the patent coverage that may result. The non-Inventor party shall
offer its comments promptly. LeukoSite and Warner shall each promptly notify the
other of any infringement and/or unauthorized use of an Invention that comes to
its attention.
(b) The non-Inventor party may request in writing that the Inventor
take specific, reasonable actions to (i) prepare, file or prosecute patent
applications in the United States of America and all other countries of the
world with respect to an Invention, (ii) maintain any patents issued with
respect to an Invention, (iii) protect against abandonment of a patent or
application which claims an Invention or (iv) obtain a discontinuance of an
infringement or unauthorized use of such patent or application. If such actions
are not undertaken within thirty days of the Inventor's receipt of such written
request and timely pursued thereafter, the Inventor shall permit, and the
non-Inventor party at its option and expense may undertake, such actions in the
name and on behalf of the Inventor. The party not undertaking such actions shall
fully
18
18
cooperate with the other party and shall provide to the other party whatever
documents that may be needed in connection therewith. The party not undertaking
such actions may require a suitable indemnity against all damages, costs and
expenses and impose such other reasonable conditions as such party's advisors
may require.
(c) If either party commences any actions or proceedings (legal or
otherwise) pursuant to this Section, it shall prosecute the same vigorously at
its expense and shall not abandon or compromise them or fail to exercise any
rights of appeal without giving the other party the right to take over their
conduct at its own expense. The party finally conducting legal actions or
proceedings against an alleged infringer or other party shall be entitled to any
damages or costs awarded against such infringer or other party, provided,
however, that if Warner initiates such action to protect a Warner Product or
Warner-LeukoSite Product, then the amount of the award less applicable legal
expenses incurred by Warner will be considered Net Sales of the applicable
Warner or Warner-LeukoSite Product, and if LeukoSite initiates such action to
protect a LeukoSite Product, the amount of the award less applicable legal
expenses incurred by LeukoSite shall be considered Net Sales of the applicable
LeukoSite Product.
3.4 Allegations of Infringement by Third Parties. In the event that
Warner or LeukoSite receives notice that any action by either of them under this
Agreement is alleged to be a violation of the patent or other intellectual
property rights of a third party, it shall immediately notify the other party to
this Agreement. The Management Committee shall promptly determine an appropriate
response and course of action. In the case of a Warner-LeukoSite Product Warner
will control any defense, and the costs thereof (including any damages, costs or
expenses resulting from any action) shall be borne by Warner. In the case of a
Warner Product or a LeukoSite Product the control and costs of defense
(including any damages, costs or expenses resulting from any action) will be
borne by Warner or LeukoSite, respectively.
ARTICLE IV
DESIGNATION OF DEVELOPMENT CANDIDATES AND MARKETING RIGHTS
4.1 Designation of Development Candidate. Each chemokine inhibitor
which is the subject of a Stage 2 Research Plan (including modifications of such
inhibitors), will be designated a "Development Candidate", if ever, upon the
declaration by the Management Committee
19
19
that such compound satisfies Warner's then current, internal standards for a
"lead compound." LeukoSite shall have the right to request that the Management
Committee designate such a chemokine inhibitor as a Development Candidate if
LeukoSite reasonably believes that there is sufficient biological and chemical
data to initiate pre IND studies in accordance with Good Laboratory Practices.
In the event that such compound is not designated as a Development Compound by
the Management Committee within one year after such request by LeukoSite, then
such compound shall automatically be designated and shall become a Development
Candidate subject to the terms and conditions of this Agreement. Within one
month after designation of a Development Candidate, Warner will notify LeukoSite
in writing whether it elects to pursue marketing rights in such Development
Candidate pursuant to this Agreement. Forty-five (45) days after Warner provides
to LeukoSite in writing its non-binding, best estimate of the costs for
Development of the Development Candidate, LeukoSite shall notify Warner in
writing whether or not LeukoSite will exercise marketing rights therein in the
U.S. and any of the other Co-Promotion Countries and designate each such other
Country. Upon such exercise of marketing rights by LeukoSite the Development
Candidate shall become a "Warner-LeukoSite Product". If LeukoSite fails to
exercise marketing rights within the stated period the Development Candidate
shall become a "Warner Product". If Warner fails to exercise marketing rights
for a Development Candidate within the stated period, the Development Candidate
shall become a "LeukoSite Product".
4.2 Warner-LeukoSite Product. For each Warner-LeukoSite Product,
pre-clinical and clinical Development thereof will be pursued jointly under the
direction of the Development Committee to the extent necessary or desirable for
regulatory approval in each Designated Co-Promotion Country. The preparation,
filing and prosecution of Investigational New Drug Applications, New Drug
Applications and other regulatory filings required to be filed with the FDA and
its foreign equivalents in regard to any Warner-LeukoSite Product will be in the
name of and at the responsibility of Warner, subject, in the case of Designated
Co-Promotion Countries, to the advice of LeukoSite. The costs incurred by Warner
or LeukoSite (and approved by the Development Committee) in the preparation,
filing and submission of such regulatory filings in Designated Co-Promotion
Countries and all costs of Development related to regulatory approvals in such
countries (not including the costs of Pharmacoeconomic Studies incurred after
initiation of the Term of Co-Promotion, Phase IV Studies, Phase V Studies or any
other clinical studies not reasonably necessary for authorization by relevant
regulatory authorities to sell such Product for its first approved
20
20
indication in each country), will be borne 70% by Warner and 30% by LeukoSite
(whether incurred by Warner or LeukoSite), retroactive to the date the
Warner-LeukoSite Product was designated a Development Candidate. LeukoSite
within its sole discretion at the time of designation of a Development Candidate
as a Warner-LeukoSite Product may elect to pay less than thirty percent (30%) of
such costs of Development but in no event less than twenty percent (20%)
thereof. LeukoSite may not thereafter change the percentage of Development costs
borne by it without Warner's consent. Neither party warrants that any regulatory
filings will actually be filed or, if filed, will be approved. All such costs
shall be paid/reimbursed on a current basis. Cost of Development shall mean the
following insofar as they are reasonably charged directly to Development of the
Product: salaries, fringe benefits, overtime, chemicals, lab supplies, animals
and other direct charges, all at actual cost plus an overhead allocation of 25%
(cost X 1.25). In addition, costs of Development will also include actual costs
for travel (other than costs relating to committee meetings referred to in
Section 2.5), experimental products (experimental product cost is the actual,
direct cost of manufactured drug for clinical trial and stability purposes),
clinical studies performed by investigators under contract with Warner or
LeukoSite, toxicology studies performed by outsiders under contract with Warner
or LeukoSite and out-of-pocket costs for other outside professional services all
to the extent that the same are approved by the Development Committee and
supported by invoices and actual payments.
4.3 Warner Product. Subject to Sections 4.5, 4.6 and 4.7 Warner may
pursue Development and commercialization of a Warner Product at its direction.
All costs of Development of a Warner Product will be borne by Warner from the
date of such election.
4.4 LeukoSite Product. LeukoSite may pursue Development and
commercialization of a LeukoSite Product at its direction. All costs of
Development of a LeukoSite Product will be borne by LeukoSite from the date of
such election.
4.5 Warner agrees to use at least that level of effort that it employs
for its other products of similar scientific and commercial promise to develop,
obtain regulatory approval for and to market and sell in each country each
Warner Product and each Warner-LeukoSite Product and to continue to market and
sell in each country each Warner Product and each Warner-LeukoSite Product (in
each case by itself or through one or more Affiliates or licensees).
21
21
4.6 Warner agrees to promptly notify LeukoSite in writing if at any
time Warner does not intend to continue to: develop and/or obtain regulatory
approval for and/or market and sell any Warner Product or Warner-LeukoSite
Product (in each case by itself or through one or more Affiliates or licensees).
4.7 In the event that Warner does not meet its obligations under
Section 4.5 with respect to any Warner Product or any Warner-LeukoSite Product
in any country(ies) or Warner provides LeukoSite with notice pursuant to Section
4.6 with respect to any Warner-LeukoSite Product or Warner Product with respect
to any country(ies), such Warner Product and/or Warner-LeukoSite Product in such
country(ies), upon written notice from LeukoSite to Warner, shall become a
LeukoSite Product.
4.8 In the event that any Warner Product or Warner-LeukoSite Product
becomes a LeukoSite Product in any country(ies), Warner shall transfer to
LeukoSite any and all information, data, technology and know-how related to the
development, manufacture and sale of such Warner Product and/or Warner LeukoSite
Product. In addition, to the extent allowed by law, Warner shall permit
LeukoSite to refer to and use any regulatory filings and/or information
contained therein to obtain approval for marketing and sale by LeukoSite or its
sublicensees or agents of such Warner and/or Warner-LeukoSite Product and to the
extent permitted by law Warner shall transfer to and/or permit LeukoSite and/or
its agents or sublicensees to operate under any regulatory approval or
regulatory application with respect to such Warner Product and/or
Warner-LeukoSite Product in such country(ies).
4.9 Upon sixty (60) days prior written notice, LeukoSite may terminate
LeukoSite's obligation to fund Development of any Warner-LeukoSite Product in
the Designated Co-Promotion Countries, in which case, upon sending of such
notice, such Warner-LeukoSite Product shall become a Warner Product, provided,
however, that LeukoSite will be obligated to continue its Development efforts
and pay its share of the costs with respect to such Product until the expiration
of such notice period.
4.10 Upon six (6) months prior written notice by Warner to LeukoSite,
Warner may terminate its obligation to pursue a Warner-LeukoSite Product in any
country and upon sending of such notice such Warner-LeukoSite Product shall
become a LeukoSite Product in such country, however, Warner shall be obligated
to continue its Development efforts and pay its share of the costs with respect
to such Warner-LeukoSite Product in such country until the expiration of the
first 60 days of such six (6) month period. At the request of LeukoSite Warner
will
22
22
continue its Development efforts with respect to such Warner-LeukoSite Product
for the remainder of such six month period, provided that LeukoSite reimburses
Warner for the costs of such effort promptly after Warner invoices such costs.
4.11 In the event a Warner Product or a Warner-LeukoSite Product
becomes a LeukoSite Product, and for so long as Warner is manufacturing such
product for its own purposes, Warner agrees to manufacture and supply to
LeukoSite such LeukoSite Product to the extent that Warner is able to do so
without adversely affecting its requirements therefor upon terms and conditions
and profit margins which are customary in the industry for a supplier of
products of such type.
4.12 No earlier than one year after a product becomes a LeukoSite
Product, Warner can request in writing that such LeukoSite Product become a
Warner Product, or in the case where such LeukoSite Product was originally a
Warner-LeukoSite Product that such LeukoSite Product become a Warner-LeukoSite
Product, subject to the terms and conditions of this Agreement, and if LeukoSite
is not actively researching, developing, marketing or selling such LeukoSite
Product and has not granted rights thereto to a third party, such LeukoSite
Product shall become a Warner Product or a Warner-LeukoSite Product, as the case
may be, subject to the terms and conditions of this Agreement.
ARTICLE V
LICENSES AND ROYALTIES
5.1 Grant by LeukoSite. Except as provided in Section 1.4(c), LeukoSite
hereby grants and agrees to grant to Warner under the Patent Rights of LeukoSite
and under LeukoSite Collaboration Technology and LeukoSite Background Technology
(i) exclusive, worldwide licenses to the limited extent necessary to make, have
made, use and sell (with the right to sublicense) each Warner Product and each
Warner-LeukoSite Product outside of the Designated Co-Promotion Countries, (ii)
exclusive licenses to the limited extent necessary to make or have made each
Warner-LeukoSite Product in the Designated Co-Promotion Countries and (iii)
co-exclusive licenses (non-sublicensable and shared only with LeukoSite) to the
limited extent necessary to use and sell each Warner-LeukoSite Product in the
Designated Co-Promotion Countries pursuant to the terms of this Agreement.
5.2 Grant by Warner. Warner hereby grants and agrees to grant to
LeukoSite under the Patent Rights of Warner and under Warner
23
23
Collaboration Technology and Warner Background Technology (i) exclusive,
worldwide licenses to the limited extent necessary to make, have made, use and
sell (with the right to sublicense) each LeukoSite Product and (ii) co-exclusive
licenses (non-sublicensable and shared only with Warner) to the limited extent
necessary to use and sell each Warner-LeukoSite Product in the Designated
Co-Promotion Countries pursuant to the terms of this Agreement.
5.3 (a) Warner agrees that Warner will not use or grant rights to use
Warner compounds identified as IL-8 Inhibitors using the screens referred to in
Section 1.1 for an IL-8 Inhibitor and will not use or grant rights to use
LeukoSite Background Technology or LeukoSite Collaboration Technology except for
(i) activities under the Stage 1 Research Plan, (ii) activities under the Stage
2 Research Plan, and/or (iii) activities with respect to development, marketing,
sale, manufacture or use of a Warner Product and/or a Warner-LeukoSite Product
for which payments are to be made to LeukoSite under this Agreement.
(b) LeukoSite agrees that LeukoSite will not use or grant rights to use
Warner compounds identified as IL-8 Inhibitors using the screens referred to in
Section 1.1 as an IL-8 Inhibitor and will not use or grant rights to use Warner
Background Technology or Warner Collaboration Technology except for (i)
activities under the Stage 1 Research Plan, (ii) activities licensed under the
Stage 2 Research Plan, (iii) activities licensed to LeukoSite pursuant to
Section 1.4(a) and/or (iv) activities with respect to development, marketing,
sale, manufacture or use of a LeukoSite Product for which payments are to be
made to Warner under this Agreement.
5.4 Warner and LeukoSite each acknowledges and agrees to the extent
that it is granted a right or license under this Agreement as a sublicensee such
sublicense is subject to the terms and conditions of the agreement under which
the sublicense is granted. Warner or LeukoSite, as a sublicensee, will perform
the obligations (other than payment obligations) which are applicable to a
sublicensee pursuant to the agreement under which the sublicense is granted. No
such sublicense shall be granted until LeukoSite has expressly notified Warner
in writing of the obligations of such sublicense and Warner has acknowledged
that it will perform such obligations.
5.5 Manufacturing. (a) Warner will notify LeukoSite if Warner and its
Affiliates elect not to manufacture the active ingredient of any Warner Product
or Warner-LeukoSite Product. In such event, LeukoSite may
24
24
offer to perform such manufacturing. Warner, in its reasonable judgment, may
elect to have LeukoSite or a third party perform such manufacturing.
(b) LeukoSite will notify Warner if LeukoSite and its Affiliates elect
not to manufacture the active ingredient of any LeukoSite Product. In such
event, Warner may offer to perform such manufacturing. LeukoSite, in its
reasonable judgment, may elect to have Warner or a third party perform such
manufacturing.
(c) The reasonable judgment of a party choosing a manufacturer shall
include issues such as price, competence, reliability and experience of the
proposed manufacturer.
5.6 Royalties and Other Compensation. (a) Warner will pay LeukoSite one
of the following royalties on worldwide Net Sales of Warner Products, whichever
is applicable:
(i) If LeukoSite does not timely elect to pursue marketing rights to
the Development Candidate under Section 4.1 or if a Warner-LeukoSite Product
becomes a Warner Product prior to LeukoSite paying its designated share of
Development Costs under Section 4.2 up to and including acceptance by the FDA of
the relevant IND, the applicable royalty rate will be * of worldwide Net Sales.
(ii) If LeukoSite pays its designated share of Development Costs under
Section 4.2 up to and including the acceptance by the FDA of the relevant IND,
but thereafter revokes its marketing rights such that the Warner-LeukoSite
Product becomes a Warner Product, the applicable royalty rate will be * of
worldwide, annual Net Sales up to $100 Million; * of worldwide, annual Net
Sales from above $100 Million to $250 Million and * of worldwide, annual Net
Sales above $250 Million.
(iii) If LeukoSite pays its designated share of Development Costs under
Section 4.2 up to and including completion of all Phase II clinical studies
reasonably deemed necessary by the Management Committee for regulatory approval
to market the Product in the United States of America, but thereafter revokes
its marketing rights such that the Warner-LeukoSite Product becomes a Warner
Product, the applicable royalty rate will be * of worldwide, annual Net Sales
up to $100 Million; * of worldwide, annual Net Sales from above $100 Million to
$250 Million and * of worldwide, annual Net Sales above $250 Million.
(iv) For Warner Products, which become Warner Products under Section
1.4(b) and/or Section 1.4(c), the applicable royalty will be * of
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
25
25
worldwide, annual Net Sales up to $100 Million and * of worldwide, annual Net
Sales above $100 Million.
(b) Warner will pay LeukoSite the following royalties on Net Sales of
all Warner-LeukoSite Products sold outside of the Designated Co-Promotion
Countries for which LeukoSite has paid its designated share of Development Costs
under Section 4.2 up to and including NDA approval in the United States: * of
such annual Net Sales up to $100 Million and * of such annual Net Sales above
$100 Million.
(c) LeukoSite will pay Warner one of the following royalties on
worldwide Net Sales of LeukoSite Products, whichever is applicable:
(i) The applicable royalty rate will be 3% of the worldwide
Net Sales, except as provided in 5.6(c)(ii) below;
(ii) If Warner pays its designated share of Development Costs
under Section 4.2 up to and including filing of the relevant IND, but thereafter
revokes its marketing rights, the applicable royalty rate will be * of
worldwide, annual Net Sales up to $100 Million and * of worldwide, annual Net
Sales above $100 Million.
(d) The royalties set forth in this Section will be payable on a
Product by Product and country by country basis for a period of ten (10) years
from first commercial sale in a country as part of nationwide introduction of
the Product. If at the expiration of such ten (10) year period, a Product(s) is
sold in a country(ies) and such Product(s) where manufactured, used or sold
infringes a Patent Right, then the royalty shall continue with respect to such
Product(s) in such country(ies) until expiration of such Patent Right.
(e) As used herein, "Annual Net Sales" shall mean Net Sales in a
calendar year.
(f) In addition to royalties, Warner shall pay to LeukoSite the sum of
* upon execution of this Agreement.
5.7 Currency of Payment. All payments to be made under this Agreement
shall be made in United States dollars in the United States to a bank account
designated by the party to be paid. Royalties earned shall first be determined
in the currency of the country in which they are earned and then converted to
its equivalent in United States currency. The buying rates of exchange for the
currencies involved into the currency of the United States quoted by Citibank
(or its successor in interest) in
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
26
26
New York, New York at the close of business on the last business day of the
quarterly period in which the royalties were earned shall be used to determine
any such conversion.
5.8 Payment and Reporting. The royalties due under Section 5.6 shall be
paid quarterly, within sixty (60) days after the close of each calendar quarter,
or earlier if possible (i.e., on or before the last day of each of the months of
May, August, November and February) immediately following each quarterly period
of each year in which such royalties are owed. With each such quarterly payment,
the payor shall furnish the payee a royalty statement (the "Royalty Statement"),
setting forth on a country-by-country basis the total number of units of each
Product made, used and/or sold hereunder for the quarterly period for which the
royalties are due.
5.9 Records. The royalty paying party shall keep accurate books and
accounts of record in connection with the manufacture, use and/or sale by or for
it of all products in sufficient detail to permit accurate determination of all
figures necessary for verification of royalty obligations set forth in this
Article V. Such records shall be maintained for a period of 3 years from the end
of each year in which sales occurred. The payee, at its expense, through a
certified public accountant, shall have the right to access such books and
records for the sole purpose of verifying the Royalty Statements; such access
shall be conducted after reasonable prior notice by the payee to the payor
during the payor's ordinary business hours and shall not be more frequent than
once during each calendar year. Said accountant shall not disclose to the payee
or any other party any information except that which should properly be
contained in a royalty report required under this Agreement. In the event that
there has been an underreporting of royalties of ten percent (10%) or greater
over the full period reviewed by such accountants, then the cost of such
accountants shall be paid by the payor. Any underpaid royalties shall be paid
within thirty (30) days after notice of the underpayment.
5.10 Taxes Withheld. Any income or other tax that one party hereunder,
its Affiliates or sublicensees is required to withhold (the "Withholding Party")
and pay on behalf of the other party hereunder (the "Withheld Party") with
respect to the royalties or other amounts payable under this Agreement shall be
deducted from and offset against said royalties or other amounts prior to
remittance to the Withheld Party; provided, however, that in regard to any tax
so deducted, the Withholding Party shall give or cause to be given to the
Withheld Party such assistance as may reasonably be necessary to enable the
Withheld Party
27
27
to claim exemption therefrom or credit therefor, and in each case shall furnish
the Withheld Party proper evidence of the taxes paid on its behalf.
5.11 Computation of Royalties. All sales of LeukoSite Products between
LeukoSite and any of its Affiliates and sublicensees with the intent of resale
by such Affiliates and sublicensees shall be disregarded for purposes of
computing royalties under this Article V, but in such instances royalties shall
be payable only upon commercial sales to unlicensed third parties by the
Affiliates and sublicensees. Nothing herein contained shall obligate LeukoSite
to pay Warner more than one royalty on any unit of a LeukoSite Product. All
sales of Warner Products or Warner-LeukoSite Products between Warner and any of
its Affiliates and sublicensees with the intent of resale by such Affiliates and
sublicensees shall be disregarded for purposes of computing royalties under this
Article V, but in such instances royalties shall be payable only upon commercial
sales to unlicensed third parties by the Affiliates and sublicensees. Nothing
herein contained shall obligate Warner to pay LeukoSite more than one royalty on
any unit of a Warner Product or Warner-LeukoSite Products.
5.12 Licenses to Affiliates. Each party shall, at the other party's
request, sign license and/or royalty agreements in respect of Warner Products,
LeukoSite Products or Warner-LeukoSite Products not being co-promoted by the
parties hereunder directly with the other party's Affiliates and sublicensees in
those situations where such agreements would not decrease the amount of
royalties or other amounts which would be owed hereunder. Such agreements shall
contain the same language as contained herein with appropriate changes in
parties and territory. No such license and/or royalty agreement will relieve
Warner or LeukoSite, as the case may be, of its obligations hereunder, and such
party will guarantee the obligations of its Affiliate or sublicensee in any such
agreement. Royalties and other amounts received directly from one party's
Affiliates and sublicensees shall be credited towards such party's obligations
hereunder.
5.13 Milestone Payments.
(a) Warner will pay LeukoSite the following amounts the first time that
each of the following milestones is achieved:
(i) Designation of a Development
Candidate as a Warner Product
or a Warner-LeukoSite Product................$*
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
28
28
(ii) Acceptance by the FDA of an IND (or its equivalent in
Japan or in each of the United Kingdom, France,
Italy, Germany and Spain hereinafter such five
countries being collectively "EU") for a Warner
Product or a Warner-LeukoSite
Product....................................$*
(iii) Acceptance for filing by the FDA of an NDA (or its
equivalent in EU or Japan) for a Warner Product or a
Warner-LeukoSite
Product....................................$*
(iv) Approval by the FDA of an NDA (or its equivalent in
EU or Japan) for a Warner Product or a Warner-
LeukoSite Product..........................$*
(v) Approval by the FDA of an NDA (or its equivalent in
EU or Japan) for a second Warner Product or
Warner-LeukoSite Product ................$*
(b) LeukoSite will pay Warner $* each time that an NDA (or its
equivalent in EU or Japan) is granted for a LeukoSite Product.
5.14 Pre-existing Milestone/Royalty Obligations. Certain research
activities to be performed hereunder and the manufacture, use or sale of
Products hereunder may require payments to unaffiliated third parties. Such
payments in respect of rights that a party hereto currently has an interest in
or could have an interest in pursuant to any currently existing agreements will
be borne by such party. All other such payments will be borne by (i) Warner in
the case of a Warner Product or a Warner-LeukoSite Product sold outside of the
Designated Co-Promotion Countries, (ii) LeukoSite in the case of a LeukoSite
Product, and (iii) as a "Cost of Goods" in the case of Warner-LeukoSite Products
sold in the Designated Co-Promotion Countries. Each party hereto will disclose
such payment obligations to the other party hereto prior to designation of the
subject compound as a Development Candidate.
*Confidential treatment requested: material has been omitted and filed
separately with the Commission.
29
29
ARTICLE VI
CO-PROMOTION OF WARNER-LEUKOSITE PRODUCTS
6.1 Marketing and Marketing Plans. Each Warner-LeukoSite Product will
be marketed in each country with one label and will bear one or more trademarks
owned by Warner. Advertising and promotional material in respect of each
Warner-LeukoSite Product in each Designated Co-Promotion Country (including any
Product labeling or packaging inserts to the extent permitted by law and
approved by the Marketing Committee) will include LeukoSite's name and address,
the size and placement of which will be determined by the Marketing Committee.
The Marketing Committee will be responsible for developing and approving
marketing plans and the advertising and other promotional materials to be used
in co-promoting each Warner-LeukoSite Product in each Designated Co-Promotion
Country. Warner will be responsible, with LeukoSite's advice in the case of
Designated Co-Promotion Countries, for seeking acceptance of each
Warner-LeukoSite Product on formularies, if applicable, and for all other
negotiations with managed care organizations and other institutional purchasers.
The Marketing Committee shall coordinate and implement the marketing
and detailing strategies, tactics, joint sales force training program and sales
forecasts, and post-approval clinical studies for Warner-LeukoSite Product, and
Budgeted Total Detail Effort for each calendar year for the Warner-LeukoSite
Product in the Designated Co-Promotion Countries (hereinafter, collectively, the
"Business Plan").
The Marketing Committee shall develop a Business Plan for each calendar
year in which Warner-LeukoSite Product will be sold in the Designated
Co-Promotion Countries.
The annual Business Plan shall contain the responsibilities of each
party and shall establish the Budgeted Detail Effort for each party for the
subsequent calendar year; provided, however, that in each calendar year
LeukoSite shall not be required to accept (without LeukoSite's consent) nor
shall it be entitled to undertake (without Warner's consent) a Budgeted Detail
Effort greater than its Selling Percentage of the Budgeted Total Detail Effort.
The Marketing Committee shall also establish a semi-annual or annual forecast of
(i) Marketing Expenses and; (ii) the number and position of Details and specific
professionals to be targeted by the Details (broken down on a monthly or
quarterly basis) to be made by each party's sales force during such calendar
year.
For each calendar year, within thirty (30) days after establishment of
the Budgeted Total Detail Effort for the calendar year, LeukoSite by written
notice and within its sole discretion, may elect a Budgeted Detail
30
30
Effort for such calendar year which is less than LeukoSite's Selling Percentage
of the Budgeted Total Detail Effort and the Budgeted Detail Effort of LeukoSite
for the calendar year shall be decreased in accordance with such election with,
at Warner's option (i) a corresponding increase in the Budgeted Detail Effort of
Warner (ii) a corresponding decrease in the Budgeted Total Detail Effort or
(iii) a combination of (i) and (ii). In addition, in the event LeukoSite elects
such a reduced Budgeted Detail Effort, LeukoSite shall pay to Warner the
increased Sales Cost incurred by Warner to the extent that the Budgeted Detail
Effort for Warner is increased to greater than Warner's percentage of the
Budgeted Total Detail Effort prior to such election by LeukoSite. Such increased
Sales Cost shall be determined by dividing the total Sales Cost of Warner by the
Detail Effort for Warner for the calendar year and multiplying such number by
the difference between the Budgeted Detail Effort of LeukoSite and the Detail
Effort of LeukoSite for the calendar year.
Either party may in any calendar year make Details in excess of the
Budgeted Detail Effort without the written agreement of the other. However,
absent such agreement, a party shall not receive compensation for such excess
Details.
Each party shall keep track of the number and position of Details by
its representatives in accordance with its normal internal reporting procedures.
Within thirty (30) days after the last day of each calendar month, each party
shall submit to the other party, a report with respect to the number of Details
performed by such party's representatives during such calendar month. At the
request of either party, but not more than once a year by such party, a special
external audit of the Detail effort of both parties with respect to
Warner-LeukoSite Product shall be performed, the cost of which shall be paid by
the requesting party; provided if such external audit reveals that in any
calendar year the non-requesting party performed less than ninety percent (90%)
(after taking into account the offset described in the immediately following
proviso) of the Details that such non-requesting party reported to the
requesting party as being performed in such calendar year such that there is a
shortfall in excess of ten percent (10%), then such non-requesting party shall
reimburse the requesting party for the full cost of such audit; provided further
that if in any calendar year the audit reveals that both parties failed to
perform one hundred percent (100%) of the Details that each such party reported
to the other party as being performed in such year, then the requesting party's
percentage point shortfall shall be subtracted from the non-requesting party's
percentage point shortfall for purposes of making the calculation in the
immediately preceding proviso.
31
31
The Marketing Committee shall develop the training program for the
respective sales forces. The parties agree to utilize such training program to
assure a consistent, focused promotional strategy and message. Under the
supervision of the Marketing Committee, each party shall train its own field
sales force. Warner shall be responsible for all costs associated with training
the field forces of both parties in accordance with such training program,
including costs of materials, expenses, launch meetings and ongoing training and
shall reimburse LeukoSite for its costs and expenses associated therewith. All
of Warner's costs associated with training the field forces of both parties
(including the amount reimbursed to LeukoSite) shall be deemed Marketing
Expenses.
In the event a decision is made by the Marketing Committee to sample
the Warner-LeukoSite Product, Warner shall supply all samples for use in
connection with the sampling of Warner-LeukoSite Product. The Marketing
Committee shall develop a sampling strategy. Such samples shall be considered
and treated as Marketing Expenses.
6.2 Promotional Materials. LeukoSite may disseminate only those
promotional and advertising materials for Warner-LeukoSite Products that have
been provided or approved for use by the Marketing Committee. Warner shall
supply LeukoSite quantities of promotional materials needed by LeukoSite to
exercise its co-promotion rights under this Agreement. LeukoSite shall not, and
shall cause its employees, representatives and agents not, to make any claims or
representations in respect of the Warner-LeukoSite Products that have not been
approved by Warner.
6.3 No Delegation. Each party may use only its own employees or the
employees of one or more of its subsidiaries in the course of marketing
Warner-LeukoSite Products in the Designated Co-Promotion Countries under this
Agreement.
6.4 Returns. Warner shall be responsible for handling all returns
relating to Warner-LeukoSite Products. Any Warner-LeukoSite Product returned to
LeukoSite shall be shipped by it to the address designated by Warner with
shipping costs authorized by Warner to be paid by Warner.
6.5 Orders. All customer orders for Warner-LeukoSite Products shall be
received and executed in each country by Warner. LeukoSite shall transmit any
such orders that it receives to Warner no later than the following business day.
32
32
6.6 Samples. Each of the parties will keep accurate records as to the
distribution of samples, and comply with all applicable laws, rules and
regulations dealing with the distribution of samples.
6.7 Completion of Sales. All sales of Warner-LeukoSite Products will be
completed, distributed, accounted for, billed and booked by Warner at prices
established by Warner, provided, however, that Warner will not grant a
preference to or otherwise favor other products of Warner over Warner-LeukoSite
Products or Warner Products based on the fact LeukoSite is entitled to royalties
or a share of Co-promotion rights.
6.8 Exchange of Marketing Information. From time-to-time Warner will
develop call lists, schedules and other appropriate information for the purpose
of determining the physicians and other persons involved in the drug purchase
decision-making process to whom LeukoSite and Warner will Detail each
Warner-LeukoSite Product in the Designated Co-Promotion Countries. The parties
agree to cooperate in finding an inexpensive and expeditious way to provide a
call list and other information indicating the identity of those physicians and
other persons involved in the decision-making process regarding the purchase of
pharmaceuticals. The parties will establish a method of confirming when Details
have been made in the Designated Co-Promotion Countries so that, among other
things, LeukoSite's and Warner's Detail Effort can be calculated.
6.9 Termination of Co-Promotion Countries. LeukoSite may, upon one
month written notice, remove one or more countries from the Designated
Co-Promotion Countries. In such event, LeukoSite will no longer have any rights
to co-promote the Warner-LeukoSite Product in such country, but instead will be
entitled to receive the royalty referred to in Section 5.6 in respect of Net
Sales in such country.
6.10 During the Term of Co-Promotion for the Designated Co-Promotion
Countries, Warner shall be responsible for:
(i) manufacturing (or having manufactured), packaging,
labeling, warehousing and distributing Warner-LeukoSite Product.
(ii) maintaining, as reasonably possible and based on the
business judgment of the Marketing Committee, such inventory and stock levels of
raw materials, packaging components and finished Warner-LeukoSite Product as are
required to maintain an appropriate customer service level.
33
33
(iii) providing adequate samples, training materials,
territory sales reports and promotional materials for both parties' field sales
forces.
(iv) providing customer service activities and medical
information services.
6.11 Warner warrants that any Warner-LeukoSite Product manufactured by
Warner or a third party (i) shall be manufactured for sale in the Designated
Co-Promotion Countries in conformance with all applicable federal, state and
local statutes, ordinances and regulations (including, without limitation, the
Federal Food, Drug, and Cosmetic Act (FD&C) and the regulations thereunder such
as current good manufacturing practices), as the same may be amended from time
to time, (ii) at the time of shipment by Warner shall not be adulterated or
misbranded within the meaning of the FD&C, and (iii) at the time of shipment by
Warner shall not be a product which would violate any section of the FD&C if
introduced into interstate commerce.
6.12 LeukoSite and Warner shall not have any right with respect to
co-promotion in a Designated Co-Promotion Country of a "generic" form of a
Warner-LeukoSite Product which is not covered by a Patent Right.
ARTICLE VII
FDA
7.1 Side Effects. Each party shall advise the other as promptly as
reasonably practical by telefax or overnight delivery service addressed to the
attention of its Vice President, International Regulatory Affairs and Drug
Safety and Surveillance (or, in LeukoSite's case, the party with similar
responsibilities), of any unexpected side effect, adverse reaction or injury
which has been brought to that party's attention at any place and which is
alleged to have been caused by a Warner-LeukoSite Product. Warner shall have all
rights and responsibility timely to report such side effects, adverse reaction
or injury to regulatory authorities and others as appropriate.
7.2 Regulatory and other Inquiries. Upon being contacted by the FDA or
any drug regulatory agency for any regulatory purpose pertaining to this
Agreement or to a Warner-LeukoSite Product, LeukoSite and Warner shall
immediately notify and consult with one another and Warner shall provide a
response as it deems appropriate. Warner shall have sole right and
responsibility for responding to all inquiries to Warner
34
34
or LeukoSite regarding the benefits, side effects and other characteristics of
Warner-LeukoSite Products.
7.3 Product Recall. In the event that Warner or LeukoSite determines
that an event, incident or circumstance has occurred which may result in the
need for a recall or other removal of any Warner-LeukoSite Product, or any lot
or lots thereof, from the market in any Designated Co-Promotion Country, it
shall advise and consult with the other party with respect thereto. Warner shall
make the final determination to recall or otherwise remove the Warner-LeukoSite
Product or any lot or lots thereof from the market. Warner and LeukoSite shall
share the costs and expenses of such recall or removal in each Designated
Co-Promotion Country, including without limitation expenses and other costs or
obligations to third parties, the cost and expense of notifying customers and
costs and expenses associated with shipment of the recalled Product from a
customer to either Warner or LeukoSite. Such costs shall be shared in proportion
to their average shares of Total Profit during the two years preceding the
giving of notice of recall to customers.
ARTICLE VIII
DETERMINATION OF CO-PROMOTION PAYMENTS
8.1 Determination of LeukoSite's Compensation. LeukoSite's share of
profit ("LeukoSite's Share of Profit") in respect of sales of each
Warner-LeukoSite Product in a Designated Co-Promotion Country will equal Total
Profit actually received in respect of sales in such country multiplied by * in
respect of such country or such lower percentage selected by LeukoSite pursuant
to Section 4.2, or such percentage as provided in Section 8.4(b).
8.2 Payment and Reporting. Within thirty (30) days after the close of
each calendar quarter, or earlier if possible, during the Term of Co-Promotion
in each Designated Co-Promotion Country (i.e. on or before the last day of each
of the months of June, September, December and March), Warner shall furnish to
LeukoSite a statement (the "Profit Statement") setting forth, on a country by
country basis, Total Profit of each Warner-LeukoSite Product, and all data on
which those figures were based and the calculations used in determining them. If
LeukoSite's Share of Profit is a positive number, Warner will submit such amount
to LeukoSite with the Profit Statement. If LeukoSite's Share of Profit is a
negative number, LeukoSite will submit such amount to Warner within 30 days of
its receipt of such Profit Statement. If the Term of Co-Promotion in a
particular Co-Promotion Country ends during an accounting quarter,
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
35
35
the amounts due hereunder shall be based upon an appropriate proration. Warner
will provide LeukoSite monthly sales reports in respect of sales of
Warner-LeukoSite Products in each relevant Co-Promotion Country if and when they
become available. Such reports may contain estimated data and will not be
binding for any purpose whatsoever.
8.3 Records. Warner and LeukoSite shall each keep accurate books and
accounts of record in connection with the manufacture, use and/or sale by or for
it of the Warner-LeukoSite Products in sufficient detail to permit accurate
determination of all figures necessary for verification of compensation
hereunder. Warner and LeukoSite shall maintain such records for a period of
three (3) years after the end of the year in which they were generated. At such
party's expense, a party, through a certified public accountant, shall have the
right to access the books and records of the other party for the sole purpose of
verifying such statements; such access shall be conducted after reasonable prior
written notice to the party, during ordinary business hours and not more
frequently than once during each calendar year.
8.4(a) In the event that in any calendar year, a party performs at
least sixty percent (60%) of its Budgeted Detail Effort for the calendar year
but does not perform at least ninety percent (90%) of its Budgeted Detail Effort
for the calendar year and the other party does perform at least ninety percent
(90%) of its Budgeted Detail Effort for the calendar year, then such party shall
pay to the other party an amount equal to the increased Sales Cost incurred by
the other party as a result of the party's shortfall in its Budgeted Detail
Effort. Such increased Sales Cost shall be determined by dividing the total
Sales Cost of the other party for the calendar year by the Detail Effort for the
other party for the calendar year and multiplying such number by the difference
between the Budgeted Detail Effort for the deficient party for the calendar year
and the Detail Effort for the deficient party for the calendar year. If both
parties perform less than ninety percent (90%) of their Budgeted Detail Effort
then the shortfall in the Detail Effort of each party shall be calculated and
the difference between them shall also be calculated. The party with the greater
shortfall shall pay the increased Sales Cost to the other party as calculated
above based on the difference between the respective shortfalls. The amount owed
under this Section shall be paid within sixty (60) days after the end of the
calendar year.
(b) In the event that in any calendar year, a party performs less than
sixty percent (60%) of its Budgeted Detail Effort for the calendar year and the
other party performs at least ninety percent (90%) of its Budgeted Detail Effort
for the calendar year, if such party is LeukoSite,
36
36
LeukoSite's Share of Profit shall be decreased and if such party is Warner,
LeukoSite's Share of Profit shall be increased, with LeukoSite's Share of Profit
(i) in the case where LeukoSite is such party being the actual Detail Effort of
LeukoSite for the calendar year divided by the Budgeted Total Detail Effort for
the calendar year multiplied by the Total Profit and (ii) in the case where
Warner is such party, being the Total Profit multiplied by a fraction where such
fraction is the difference between one (1) and a fraction having as a numerator
Warner's actual Detail Effort for the calendar year and as a denominator the
Budgeted Total Detail Effort for the calendar year.
ARTICLE IX
CONFIDENTIALITY
9.1 Confidentiality. (a) Except as specifically permitted hereunder,
each party hereby agrees to hold in confidence and not use on behalf of others
(or on behalf of itself outside the Collaboration) all data, samples, technical
and economic information (including the economic terms hereof),
commercialization, clinical and research strategies and know-how provided by the
other party (the "Disclosing Party") during the Term of this Agreement and all
data, results and information developed pursuant to the Collaboration and owned
solely by the other party (collectively the "Confidential Information"), except
that the term "Confidential Information" shall not include:
(i) Information that is or becomes part of the public domain through no
fault of the non-Disclosing Party or its Affiliates; and
(ii) Information that is obtained after the date hereof by the
non-Disclosing Party or one of its Affiliates from any third party that is
lawfully in possession of such Confidential Information and not in violation of
any contractual or legal obligation to the Disclosing Party with respect to such
Confidential Information; and
(iii) Information that is known to the non-Disclosing Party prior to
disclosure by the Disclosing Party, as evidenced by the non-Disclosing Party's
written records; and
(iv) Information that is necessary or advantageous to both parties to
be disclosed to any governmental authorities or pursuant to any regulatory
filings, provided that in such case the non-Disclosing Party notifies the
Disclosing Party reasonably in advance of such disclosure and
37
37
cooperates with the Disclosing Party to minimize the scope and content of such
disclosure; and
(v) Information that is required to be disclosed pursuant to any
relevant law or regulation or under order of a court of competent jurisdiction,
provided that in such case the non-Disclosing Party notifies the Disclosing
Party reasonably in advance of such disclosure and cooperates with the
Disclosing Party to minimize the scope and content of such disclosure.
(b) The obligations of this Section 9.1 shall survive for five years
following the expiration or termination of this Agreement except to the extent
required by any obligations of confidentiality to a third party that are
disclosed to the non-disclosing party prior to termination of this Agreement.
9.2 Publicity. All publicity, press releases and other announcements
relating to this Agreement or the transactions contemplated hereby shall be
reviewed in advance by and subject to the approval of both parties; except that
such review and approvals shall not be required for any announcement that
discloses the existence of this Agreement without disclosing any of its material
terms. Notwithstanding the foregoing, to the extent required by applicable law,
rule or regulation or in connection with filings with regulatory agencies or the
offering of securities, including but not limited to the SEC, a party may file
this Agreement and/or disclose the contents of this Agreement without the
approval of the other party, provided that the other party is provided with the
opportunity to review and comment on such disclosure and further provided that
such disclosure shall be limited to the minimum amount of information and
distribution required by such law, rule, regulation or filing.
9.3 Publication. The parties shall cooperate in appropriate publication
of the results of research and development work performed pursuant to this
Agreement, but subject to the predominating interest to obtain patent protection
for any patentable subject matter. To this end, it is agreed that prior to any
public disclosure of any such results, the party proposing disclosure shall send
the other party a copy of the information to be disclosed, and shall allow the
other party 15 days from the date of receipt in which to determine whether the
information to be disclosed contains subject matter for which patent protection
should be sought prior to disclosure. If notification is not received during the
15 day period, the party proposing disclosure shall be free to proceed with the
disclosure. If due to a valid business reason or a belief by the nondisclosing
party that
38
38
the disclosure contains subject matter for which a patentable invention should
be sought, then prior to the expiration of the 15 day period, the nondisclosing
party shall so notify the disclosing party, who shall then delay public
disclosure of the information for an additional period of up to 2 months to
permit the preparation and filing of a patent application on the subject matter
to be disclosed or other action to be taken. The party proposing disclosure
shall thereafter be free to publish or disclose the information. The
determination of authorship for any paper shall be in accordance with accepted
scientific practice. Nothing in this Section will be construed to allow either
party to disclose the Confidential Information of the other party in any
publication or other disclosure without the express written consent of such
other party.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
10.1 Legal Authority. Each party represents and warrants to the other
that it has the legal power, authority and right to enter into this Agreement
and to perform its respective obligations set forth herein.
10.2 No Conflicts. Each party represents and warrants that as of the
date of this Agreement it is not a party to any agreement or arrangement with
any third party or under any obligation or restriction, including pursuant to
its Certificate of Incorporation or By-Laws, which in any way limits or
conflicts with its ability to fulfill any of its obligations under this
Agreement.
10.3 Others Bound. Each party represents and warrants that anyone
performing services under this Agreement on its behalf shall be bound by all of
the conditions of this Agreement.
10.4 Survival. The foregoing representations and warranties shall
survive the execution, delivery and performance of this Agreement,
notwithstanding any investigation by or on behalf of either party.
10.5 Disclaimer. Except as otherwise expressly stated herein, Warner
hereby disclaims any warranty expressed or implied as to any LeukoSite Product
manufactured by or for, used, sold or placed in commerce by or on behalf of
LeukoSite. Except as otherwise expressly stated herein, LeukoSite hereby
disclaims any warranty expressed or implied as to any Warner Product and/or any
Warner-LeukoSite Product manufactured by or for, used, sold or placed in
commerce by or on behalf of Warner in a Non-Designated Co-Promotion Country.
39
39
ARTICLE XI
TERMINATION
11.1 Termination. In the event of a material breach of the provisions
of this Agreement described below, the breaching party shall have ninety days
after receipt of written notice from the non-breaching party to cure such
breach, which period shall be sixty (60) days in the case of a failure to make a
payment when due.
(a) In the event of an uncured material breach of Article I, the
non-breaching party may terminate this Agreement.
(b) In the event of an uncured material breach of Article V by Warner
in regard to a Warner Product or Warner-LeukoSite Product, LeukoSite may
immediately (i) terminate the licenses granted by it pursuant to Section 5.1 in
respect of such Product and (ii) require Warner to grant LeukoSite an exclusive
(even as to Warner), worldwide license under the Patent Rights, Background
Technology and Collaboration Technology relating to such Product and owned or
controlled by Warner to the extent necessary to make, have made, use or sell
such Product. In such event such Warner Product or Warner-LeukoSite Product
shall be a LeukoSite Product for the purposes of this Agreement.
(c) In the event of an uncured material breach of Article V by
LeukoSite in regard to a LeukoSite Product, Warner may immediately (i) terminate
the licenses granted by it pursuant to Section 5.2 in respect of such Product
and (ii) require LeukoSite to xxxxx Xxxxxx an exclusive (even as to LeukoSite),
worldwide license under the Patent Rights, Background Technology and
Collaboration Technology to the extent necessary to make, have made, use or sell
such Product. Such LeukoSite Product shall be a Warner Product for the purposes
of this Agreement.
(d) In the event of an uncured material breach of Article VI or VIII by
Warner in regard to a Warner-LeukoSite Product, LeukoSite may immediately (i)
terminate the licenses granted by it pursuant to Section 5.1 in respect of such
Product and (ii) require Warner to grant it an exclusive (even as to Warner),
worldwide license under the Patent Rights, Background Technology and
Collaboration Technology to the extent necessary to make, have made, use or sell
such Product. In such event, such Product will be a LeukoSite Product for
purposes of this Agreement.
40
40
(e) In the event of an uncured material breach of Article VI or a
payment provision of Article VIII or of Section 4.2 by Leukosite with respect to
a Warner-LeukoSite Product, Warner may immediately terminate the marketing
rights of Leukosite with respect to such Warner-Leukosite Product.
11.2 Effect of Bankruptcy. If either party files a voluntary petition
in bankruptcy, is adjudicated a bankrupt, makes a general assignment for the
benefit of creditors, admits in writing that it is insolvent or fails to
discharge within 15 days an involuntary petition in bankruptcy filed against it,
then (a) this Agreement shall immediately terminate and (b) the licenses granted
to such party hereunder shall immediately terminate.
11.3 Termination By Either Party Other Than For Cause. Either party may
terminate this Agreement at any time for any reason upon 6 months written
notice. In such event, the terminating party shall immediately pay all amounts
that are then due hereunder and the other party shall have a non-exclusive,
worldwide, license to all Collaboration Technology as well as an exclusive,
royalty-free worldwide license to the extent necessary to make, have made, use
and sell all Products.
11.4 Remedies. In the event of any breach of any provision of this
Agreement, in addition to the termination rights set forth herein, each party
shall have all other rights and remedies at law or equity to enforce this
Agreement.
ARTICLE XII
GENERAL PROVISIONS
12.1 Indemnification. Warner and LeukoSite each agrees to indemnify and
hold harmless the other party and its Affiliates and their respective employees,
agents, officers, directors and permitted assigns (such party's "Indemnified
Group") from and against any claims, judgments, expenses (including reasonable
attorneys' fees), damages and awards (collectively a "Claim") arising out of or
resulting from (i) its negligence or misconduct in regard to any Product, (ii) a
breach of any of its representations or warranties hereunder or (iii) the
manufacture, use or sale of a Warner Product or a Warner-LeukoSite Product (in
the case of Warner) or a LeukoSite Product (in the case of LeukoSite), except to
the extent that such Claim arises out of or results from the negligence or
misconduct of a party seeking to be indemnified and held harmless or the
negligence or misconduct of a member of such party's Indemnified Group. An
indemnified party shall promptly give notice to the indemnifying party
41
41
of any information from which it should reasonably conclude an incident has
occurred that could give rise to a Claim, and in the event a Claim is made or a
suit is brought, all indemnified parties shall assist the indemnifying party and
cooperate in the gathering of information with respect to the time, place, and
circumstances and in obtaining the names and addresses of any injured parties
and available witnesses. The failure to give the notice referred to in the
preceding sentence shall not relieve a party of its indemnification obligations,
except to the extent such failure prejudices the ability of the indemnifying
party to defend against such claim. No indemnified party shall, except at its
own cost, voluntarily make any payment or incur any expense in connection with
any such Claim or suit without the prior written consent of the indemnifying
party. Each indemnified party shall permit the indemnifying party to assume the
defense of any claim. The obligations set forth in this Section shall survive
the expiration or termination of this Agreement.
12.2 Assignment/Change of Control. (a) This Agreement is not assignable
by either party without the prior written consent of the other party. To the
extent that assignment is permitted this Agreement shall be binding upon and
inure to the benefit of the parties' successors, legal representatives and
assigns. Notwithstanding the foregoing, (i) Warner may assign this Agreement to
any of its subsidiaries or any entity succeeding to a majority of its
Xxxxx-Xxxxx business or substantially all of the business to which this
Agreement is related and (ii) LeukoSite may assign this Agreement to any of its
subsidiaries or to any entity succeeding to substantially all of its
pharmaceutical business or substantially all of the business to which this
Agreement is directed. In no event will any assignment relieve the assigning
party of its obligations hereunder. No assignment shall take effect until the
assignee notifies the non-assigning party of such assignment and the assignee
agrees to be bound by all the terms, conditions and obligations of this
Agreement.
(b) In the event of (i) a merger, consolidation, plan of exchange or
other reorganization of LeukoSite in which LeukoSite is not the surviving party
and the surviving party is an entity which does not presently control or is not
presently under common control with LeukoSite and such surviving entity is in
the pharmaceutical industry and has total annual sales at such time in excess of
$500 million, or any other transaction or series of transactions that result in
an entity (together with such entity's Affiliates) controlling LeukoSite and
such entity does not presently control or is not presently under common control
with LeukoSite and such surviving entity is in the pharmaceutical industry and
has total annual sales at such time in excess of $500 million or (ii) the
assignment by LeukoSite of this Agreement to any entity succeeding to
substantially all
42
42
of LeukoSite's pharmaceutical business or substantially all of the business to
which this Agreement is related and such entity is an entity which does not
presently control or is not presently under common control with LeukoSite and
such entity is in the pharmaceutical industry and has total annual sales in
excess of $500 million, then Warner may terminate LeukoSite's right to
co-promote all Warner-LeukoSite Products hereunder. In such event, LeukoSite or
the surviving entity, or the assignee, as the case may be, will be entitled to
receive (or obligated to pay) LeukoSite's Share of Profit of each
Warner-LeukoSite Product in the Designated Co-Promotion Countries, except that
in calculating Total Profit, the Selling Expenses of Warner shall also be
deducted from Net Sales.
12.3 Non-Waiver. The waiver by either of the parties of any breach of
any provision hereof by the other party shall not be construed to be a waiver of
any succeeding breach of such provision or a waiver of the provision itself.
12.4 Submission to Senior Officers for Dispute Resolution. The parties
recognize that the collaborative research program under this Agreement and the
development and commercialization of Development Candidates will require the
resolution of certain issues in the future. In the event the Management
Committee or any Marketing Committee is unable to resolve a dispute under this
Agreement or come to unanimous agreement on terms mutually acceptable to both
parties, either party may have the dispute referred to the senior officer of
Warner's pharmaceutical business for good faith resolution. Such senior officer
shall confer with LeukoSite's President prior to resolving such dispute. The
resolution of the dispute pursuant to this Section shall be final and binding on
the parties.
12.5 Governing Law. This Agreement shall be construed and interpreted
in accordance with the laws of the Commonwealth of Massachusetts, other than
those provisions governing conflicts of law.
12.6 Partial Invalidity. If and to the extent that any court or
tribunal of competent jurisdiction holds any of the terms or provisions of this
Agreement, or the application thereof to any circumstances, to be invalid or
unenforceable in a final nonappealable order, the parties shall use their best
efforts to reform the portions of this Agreement declared invalid to realize the
intent of the parties as fully as practicable, and the remainder of this
Agreement and the application of such invalid term or provision to circumstances
other than those as to which it is held invalid or unenforceable shall not be
affected thereby, and each of the remaining
43
43
terms and provisions of this Agreement shall remain valid and enforceable to the
fullest extent of the law.
12.7 Notice. Any notice to be given to a party under or in connection
with this Agreement shall be in writing and shall be (i) personally delivered,
(ii) delivered by a internationally recognized overnight courier or (iii)
delivered by certified mail, postage prepaid, return receipt requested to the
party at the address set forth below for such party:
To Warner: To LeukoSite:
Senior Vice President, Xxxxxxxxxxx X. Xxxxxxxxx, Ph.D.
Research and Development Chairman of the Board and
Xxxxx-Xxxxx Pharmaceutical Chief Executive Officer
Research, LeukoSite, Inc.
Xxxxxx-Xxxxxxx Company 000 Xxxxx Xxxxxx
0000 Xxxxxxxx Xxxx Xxxxxxxxx, XX 00000
Xxx Xxxxx, XX 00000
with a copy to: with a copy to:
Vice President and Xxxxxx Xxxxxxx, Esq.
General Counsel Carella, Byrne, Bain, Gilfillan,
Xxxxxx-Xxxxxxx Company Xxxxxx, Xxxxxxx & Olstein
000 Xxxxx Xxxx 0 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxxxx, XX 00000 Xxxxxxxx, XX 00000
or to such other address as to which the party has given notice thereof. Such
notices shall be deemed given upon receipt.
12.8 SAB Attendance. During the Term of this Agreement, Warner will be
entitled to have a representative attend (but not vote at) all meetings of
LeukoSite's Scientific Advisory Board ("SAB"). Warner will be provided notices,
meeting minutes and all material made available to SAB members generally at the
same time as such SAB members. Warner will recuse itself from that portion of
any meeting, and will not be provided material related to, confidential
information of third parties who object to Warner's inclusion. Prior to
attending any such SAB meeting, Warner will sign a confidentiality agreement by
which Warner will agree to maintain in confidence all information, data and
materials received as a result of such attendance and not to use same for any
research, development, manufacture or sale of any product or process (except to
the extent permitted by this Agreement).
44
44
12.9 Headings. The headings appearing herein have been inserted solely
for the convenience of the parties hereto and shall not affect the construction,
meaning or interpretation of this Agreement or any of its terms and conditions.
12.10 No Implied Licenses or Warranties. No right or license under any
patent application, issued patent, know-how or other proprietary information is
granted or shall be granted by implication. All such rights or licenses are or
shall be granted only as expressly provided in the terms of this Agreement.
Neither party warrants the success of any clinical or other studies undertaken
by it.
12.11 Force Majeure. No failure or omission by the parties hereto in
the performance of any obligation of this Agreement shall be deemed a breach of
this Agreement, nor shall it create any liability, if the same shall arise from
any cause or causes beyond the reasonable control of the affected party,
including, but not limited to, the following, which for purposes of this
Agreement shall be regarded as beyond the control of the party in question: acts
of god; acts or omissions of any government; any rules, regulations, or orders
issued by any governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake; accident; war;
rebellion; insurrection; riot; invasion; strikes; and lockouts or the like;
provided that the party so affected shall use its best efforts to avoid or
remove such causes or nonperformance and shall continue performance hereunder
with the utmost dispatch whenever such causes are removed.
12.12 Survival. The representations and warranties contained in this
Agreement as well as those rights and/or obligations contained in the terms of
this Agreement which by their intent or meaning have validity beyond the term of
this Agreement shall survive the termination or expiration of this Agreement.
12.13 Entire Agreement. This Agreement, together with the Preferred
Stock Purchase Agreement dated the date hereof, constitute the entire
understanding between the parties with respect to the subject matter contained
herein and supersede any and all prior agreements, understandings and
arrangements whether oral or written between the parties relating to the subject
matter hereof.
12.14 Amendments. No amendment, change, modification or alteration of
the terms and conditions of this Agreement shall be binding upon either party
unless in writing and signed by the party to be charged.
45
45
12.15 Independent Contractors. It is understood that both parties
hereto are independent contractors and engage in the operation of their own
respective businesses, and neither party hereto is to be considered the agent or
partner of the other party for any purpose whatsoever. Neither party has any
authority to enter into any contracts or assume any obligations for the other
party or make any warranties or representations on behalf of the other party.
12.16 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
12.17 In the event that there is a conflict between the text of this
Agreement and Exhibit 1, the text of this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first above written.
LEUKOSITE, INC. XXXXXX-XXXXXXX COMPANY
By: [signature appears here] By: [signature appears here]
Name: Name:
Title: Title:
