CERTAIN PORTIONS HAVE BEEN OMITTED BASED ON
A REQUEST FOR CONFIDENTIAL TREATMENT;
OMITTED PORTIONS FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION
LICENSE AND DEVELOPMENT AGREEMENT
BY AND BETWEEN
SYSTEMIC PULMONARY DELIVERY, LTD.
A BERMUDA COMPANY
AND
SHEFFIELD PHARMACEUTICAL, INC.
A DELAWARE CORPORATION
AND
ELAN CORPORATION, PLC
AN IRISH COMPANY
THIS AGREEMENT IS MADE THE 30TH DAY OF JUNE 1998
TABLE OF CONTENTS
-----------------
1. ARTICLE I : DEFINITIONS............................................1
2. ARTICLE II : THE LICENSE..........................................8
3. ARTICLE III: DEVELOPMENT OF THE PRODUCT..........................12
4. ARTICLE IV: FINANCIAL PROVISIONS.................................13
5. ARTICLE V: REGISTRATION OF THE PRODUCT...........................15
6. ARTICLE VI: WARRANTY AND INDEMNITY...............................16
7. ARTICLE VII: PATENTS............................................19
8A. ARTICLE VIII(A): REGARDING THE SHEFFIELD INTELLECTUAL PROPERTY...21
8. ARTICLE VIII: MISCELLANEOUS CLAUSES..............................22
LICENSE AND DEVELOPMENT Agreement, dated June 30, 1998, by and between Systemic
Pulmonary Delivery, Ltd., a Bermuda corporation ("Newco"), Sheffield
Pharmaceutical, Inc., a Delaware corporation ("Sheffield"), and Elan Corporation
plc., an Irish corporation ("Elan").
RECITALS
--------
A. Newco owns, controls and/or has rights in and to the Newco
Intellectual Property (capitalized terms used herein are defined below), and
B. Elan is beneficially entitled to the use of various patents,
including the Elan Patent Rights, which have been granted or are pending under
the International Convention in relation to the development and production of
drug delivery devices and processes, and
C. Elan has agreed to enter into the Elan License Agreement
provided that Sheffield and Newco enter into this Agreement, and
D. Newco is entering into this Agreement with Sheffield
pursuant to which Sheffield shall have the right to manufacture and to market
the Products in the Territory.
NOW THEREFORE, The Parties agree as follows:
1. ARTICLE I : DEFINITIONS
------------------------
1.1. In the present Agreement and any further agreements based
thereon between the Parties hereto, the following definitions shall apply:
"ADDS Technology" shall mean all of the MDI-Aeroquip
technology for all pharmaceutical, medicinal and therapeutic
applications acquired or to be acquired by Newco upon terms
and conditions approved in advance by EIS.
"Affiliate" shall mean any corporation or entity
controlling, controlled by or under the common control of
Sheffield, Newco or Elan, as the case may be. For the
purpose of this Agreement, "control" shall mean the direct
or indirect ownership of at least twenty-five (25%) percent
of the outstanding shares or other voting rights of the
subject entity to elect directors, or if not meeting the
preceding criteria, any entity owned or controlled by or
owning or controlling at the maximum control or ownership
right permitted in the country where such entity exists.
"Agreement" shall mean this agreement (which expression
shall be deemed to include the Recitals and Appendices
hereto).
1
"cGCP", "cGLP" and "cGMP" shall mean current Good Clinical
Practices, current Good Laboratory Practices and current
Good Manufacturing Practices respectively.
"Confidential Information" shall have the meaning set forth
in Article 8.1 below.
"Definitive Documents" shall mean this Agreement, the Elan
License Agreement, the Sheffield/Newco License Agreement,
and any other documents or agreements executed in connection
with the transactions contemplated hereunder and thereunder.
"EIS" shall mean Elan International Services, Ltd.
"Effective Date" shall mean June 30, 1998.
"Elan" shall mean Elan Corporation, plc and any of its
Affiliates.
"Elan Intellectual Property" shall mean the Elan Patent
Rights and/or the Elan Know-How.
"Elan Know-How" shall mean all knowledge, information, trade
secrets, data and expertise relating to the UPDAS Technology
and the Enhancing Technology (only as defined in
subparagraph "(ii)" of the definition of Enhancing
Technology), where the therapeutic mechanism of action is
local to the lung, solely and specifically for asthma,
cystic fibrosis, chronic obstructive pulmonary disease and
the use of anti-infectives for the treatment of respiratory
infection, that is owned or licensed by Elan (other than the
Excluded Technology) as of the Effective Date, including,
but not limited to, clinical data and test results, and for
the avoidance of doubt shall include the Elan Project
Know-How, whether or not covered by any patent, copyright,
design, trademark, trade secret or other industrial or
intellectual property rights, but all subject to any
contractual obligations to unaffiliated third parties that
Elan has as of the Effective Date.
"Elan License Agreement" shall mean the License and
Development Agreement, dated even date herewith, among Elan,
Newco and Sheffield pursuant to which, among other things,
Elan is licensing to Newco the Elan Know-How and the Elan
Patent Rights in accordance with the terms and conditions of
said agreement.
"Elan Patent Rights" shall mean all patents and patent
applications related to the UPDAS Technology and Enhancing
Technology (only as defined in subparagraph "(ii)" of the
definition of Enhancing Technology), where the therapeutic
mechanism of action is local to the lung, solely and
specifically for asthma, cystic fibrosis, chronic
obstructive pulmonary disease and the use of anti-infectives
for the treatment of respiratory infection, that are owned
or licensed by or on behalf of Elan, including the Elan
Project Patent Rights, (but excluding the Excluded
2
Technology), as of the Effective Date, which patents as of
the Effective Date are set forth on Appendix A attached
hereto; all subject, however, to any contractual obligations
to unaffiliated third parties that Elan has as of the
Effective Date. Elan Patent Rights shall also include Elan
Improvements and all extensions, continuations,
continuations-in-part, divisionals, patents of additions,
reexaminations, re-issues, supplementary protection
certificates and foreign counterparts of such patents and
patent applications and any patents issuing thereon and
extensions of any patents licensed hereunder.
"Elan Project Know-How" shall mean all knowledge,
information, trade secrets, data and expertise relating to
the UPDAS Technology and Enhancing Technology that is owned
or developed by or on behalf of Elan (other than with
respect to the Excluded Technology) pursuant to the Project,
including clinical data, whether or not covered by any
patent, copyright, design, trademark, trade secret or other
industrial or intellectual property rights.
"Elan Project Patent Rights" shall mean any patents or
patent applications related to the UPDAS Technology and/or
the Enhancing Technology that are owned or developed by or
on behalf of Elan (other than the Excluded Technology),
under this Agreement and pursuant to the Project.
"Enhancing Technology" shall mean (i) the use of
[text omitted] that is intended to facilitate or enhance
systemic delivery of a drug for therapeutic purposes, when
co-administered via inhalation with said drug via the
pulmonary route, and/or (ii) the use if any, of
[text omitted] that is intended to facilitate or enhance
topical delivery to the lung of a drug for therapeutic
purposes when co-administered via inhalation with said drug
via the pulmonary route.
"Excluded Technology" shall mean all knowledge, information,
trade secrets, data, discoveries, inventions, improvements,
ideas, techniques, processes, formulations, systems, designs
and/or expertise, and any and all other intellectual
property (including patents and patent applications that are
issued or that may be issued), relating to motor driven dry
powder inhalers and related powdered storage systems, and
any and all other transactions contemplated under the
License Agreement, and the Protein and Peptide Development
Agreement, each dated September 5, 1994, between [text
omitted] and Elan, as the same may be amended from time to
time.
"FDA" shall mean the United States Food and Drug
Administration or any other successor agency, whose approval
is necessary to market the Products in the United States of
America.
"Field" shall mean the Topical Pulmonary Field.
3
"In Market" shall mean the sale of the Products, whether by
Sheffield or its Affiliates, or where applicable by a
permitted sublicensee, to a third party such as a
wholesaler, distributor, managed care organization,
hospital, pharmacy and/or the like.
"Joint Intellectual Property" shall mean the Joint Know-How
and/or the Joint Patent Rights.
"Joint Know-How" shall mean all knowledge, information and
expertise developed by at least two of the three Parties
during the Term relating to the Field and in accordance with
the Project whether or not covered by any patent, copyright,
design, trademark or other industrial or intellectual
property rights..
"Joint Patent Rights" shall mean any patent and patent
applications created, developed, conceived or otherwise
invented by at least two of the three Parties pursuant to
the Agreement, relating to the Field, and in accordance with
the Project. Joint Patent Rights shall also include all
extensions, continuations, continuations-in-part,
divisionals, patents of additions, re-examinations,
re-issues, supplementary protection certificates and foreign
counterparts of such patents and patent applications and any
patents issuing thereon and extensions of any patents
licensed hereunder.
"Marketing Authorization" shall mean the procurement of
registrations and permits required by applicable government
authorities in a country in the Territory for the marketing,
sale, and distribution of a Product in such country.
"MSI Delivery System" shall mean Sheffield's Multi Dose
Nebulizer comprising a device and dosator that generally
conforms to the specifications in Annex 2 to the Siemens
Supply Agreement for use with medicines for the systemic
treatment of diseases, and improvements thereto, excluding
the use of medicines for humans in treating respiratory
disease and/or other lung disease, which exclusion includes,
but is not limited to, the use of anti-infectives.
"Newco" shall mean Systemic Pulmonary Delivery, Ltd. and any
of its Affiliates.
"Newco Improvements" shall mean any and all improvements
conceived, created, developed, and/or otherwise invented by
or on behalf of Newco relating to the Field that are made
pursuant to the Agreement only during the Project.
"Newco Intellectual Property" shall mean the Newco Know-How
and/or the Newco Patent Rights.
"Newco Know-How" shall mean all knowledge, information,
trade secrets, data and expertise relating to the UPDAS
Technology, the Enhancing Technology (only as defined in
subparagraph "(ii)" of the definition of the Enhancing
4
Technology) and ADDS Technology, where the therapeutic
mechanism of action is local to the lung, solely and
specifically for [text omitted] that is owned or licensed by
Newco as of the Effective Date, including, but not limited
to, the Newco Improvements and clinical data and test
results, whether or not covered by any patent, copyright,
design, trademark, trade secret or other industrial or
intellectual property rights, but subject to any contractual
obligations to unaffiliated third parties that Elan has as
of the Effective Date or in the future as developed pursuant
to the Project.
"Newco Patent Rights" shall mean all patents and patent
applications related to ADDS Technology, where the
therapeutic mechanism of action is local to the lung, solely
and specifically for [text omitted] that is owned or
licensed by Newco as of the Effective Date, including the
Newco Improvements, which patents as of the Effective Date
are set forth on Appendix B attached hereto. Newco Patent
Rights shall also include all extensions, continuations,
continuations-in-part, divisionals, patents of addition,
reexaminations, re-issues, supplementary protection
certificates and foreign counterparts of such patents and
patent applications and any patents issuing thereon and
extensions of any patents licensed hereunder.
"NSP" shall mean that sum determined by deducting from the
gross amount billed for the Products (including, without
limitation, any and all sums billed for the compound and/or
drug product delivered with, by and/or via the Products;
sums billed for the supply of the Products; and royalties
receivable for the sale of the Products) sold In Market, the
following:
(a) transportation charges or allowances, including
freight pick-up allowances, and packaging costs, if
any;
(b) trade, quantity or cash discounts, service
allowances and independent broker's or agent's
commissions, if any, allowed or paid;
(c) credits or allowances, if any, given or made on
account of price adjustments, returns up to ten per
cent (10%) of gross sales, off-invoice promotional
discounts, rebates, any and all national, federal,
state or local government rebates, whether in
existence now, or enacted at any time during the term
of this Agreement; and
(d) any tax (other than income or corporation tax),
excise or governmental charge upon or measured by the
production, import, export, sale, transportation,
delivery, or use of the Products.
5
If Sheffield or its permitted sublicensees shall sell any of
the Products together with other products to third parties
in a particular country and the price attributable to the
Products is less than the average price of "arms length"
sales of the Products alone in the particular country for
the reporting period in which such sales occur (such sales
to be excluded from the calculation of the average price of
"arms length" sales), NSP for any such sales shall be the
average price of "arms length" sales by Sheffield or its
Affiliates of the Products alone and in the country during
the reporting period in which such sales occur.
"Party" shall mean Newco, Sheffield or Elan as the case may
be. "Parties" shall mean any two of Newco, Sheffield and
Elan.
"Plan" shall mean the business plan and program of
development agreed to by the Parties and attached to the
Elan License Agreement as Appendix C, with respect to the
research, development, prosecution and commercialization of
the Products.
"Products" shall mean all devices and products or any parts
or components thereof (including, without limitation, any
and all compounds and/or drug products delivered with, by
and/or via the Products) that are used, developed,
manufactured, offered for sale and/or sold by or on behalf
of Sheffield and/or its permitted sublicensees, and that
utilize, incorporate, apply and/or are based on the Newco
Intellectual Property, the Sheffield Intellectual Property,
and/or the Elan Intellectual Property.
"Project" shall mean all activity as undertaken by Elan,
Sheffield and Newco in order to develop the Products in
accordance with the Plan.
"Sheffield" shall mean Sheffield Pharmaceutical, Inc., a
Delaware corporation.
"Sheffield Intellectual Property" shall mean the Sheffield
Know-How and/or the Sheffield Patent Rights.
"Sheffield Know-How" shall mean all knowledge, information,
trade secrets, data and expertise relating to the Systemic
Pulmonary Field, other than compounds, that is possessed by
Sheffield, or from time to time, developed or invented (but
not acquired) by or on behalf of Sheffield during the Term,
including without limitation, the Trademark, Sheffield
Project Know-How, and clinical data and test results,
whether or not covered by any patent, copyright, design,
trademark, trade secret or other industrial or intellectual
property rights.
"Sheffield Patent Rights" shall mean all patents and patent
applications related to the Systemic Pulmonary Field, other
than compounds, that are owned by or licensed by Sheffield.
Sheffield Patent Rights shall also include all extensions,
continuations, continuations-in-part, divisionals, patents
of addition, reexaminations, re-issues, supplementary
protection certificates and foreign
6
counterparts of such patents and patent applications and any
patents issuing thereon and extensions of any patents
licensed hereunder (and shall for the avoidance of doubt
include the Sheffield Project Patent Rights and such patent
and patent applications relating to the MSI Delivery
System).
"Sheffield/Newco License Agreement" shall mean the License
Agreement, dated even date herewith, among Sheffield, Newco
and Elan pursuant to, among other things, Sheffield is
sublicensing certain intellectual property rights and
know-how to Newco in accordance with the terms and
conditions of said agreement.
"Sheffield Project Know-How" shall mean all knowledge,
information, trade secrets, data and expertise which is not
generally known to the public owned or to be developed by or
on behalf of Sheffield in connection with the Project,
including clinical data, whether or not covered by any
patent, copyright, design, trademark, trade secret, or other
industrial or intellectual property rights.
"Sheffield Project Patent Rights" shall mean any patents or
patent applications related to the Systemic Pulmonary Field
that are owned or developed by or on behalf of Sheffield
under this Agreement and pursuant to the Project.
"Siemens" shall mean Siemens Aktiengesellsehaft, a company
organized under the laws of Germany.
"Siemens License Agreement" shall mean the license Agreement
dated February 21, 1997 between Sheffield and Siemens.
"Siemens Supply Agreement" shall mean the Basic Supply
Agreement dated March 21, 1997, between Sheffield and
Siemens.
"Steering Committee" shall have the meaning set forth in the
Newco Development Agreement, dated even date herewith,
between Sheffield and EIS.
"Systemic Pulmonary Field" shall mean the practice of
delivering therapeutic entities via the lung, with the
primary intention of making them systemically available.
"Technological Competitor" shall mean any entity (including,
if applicable, Zambon Group S.p.A) that substantially
engages or proposes to substantially engage directly or
indirectly in the areas of drug delivery, neurological
therapies, pain therapies, acute care, and/or oncology in
the pharmaceutical industry.
"Term" shall have the meaning set forth in Article 8.5
below.
"Territory" shall mean all of the countries of the world.
7
"Topical Pulmonary Field" shall mean the practice of
delivering respiratory therapeutic entities via the lung
with the primary intention of making them available for
local respiratory therapeutic effect on the lung.
"Trademark" shall mean the trademark(s) as may be selected
by Sheffield which has been or may be registered by Newco in
one or more countries in the Territory.
"UPDAS Technology" (Ultrasonic Pulmonary Drug Absorption
System) shall mean a system intended to enhance pulmonary
delivery via inhalation by applying [text omitted].
"$" shall mean United States Dollars.
1.2. INTERPRETATION. In this Agreement, the following shall
apply:
1.2.1. the singular includes the plural and vice versa,
the masculine includes the feminine and vice versa and references to natural
persons include corporate bodies, partnerships and vice versa;
1.2.2. any reference to an Article or Appendix shall,
unless otherwise specifically provided, be to a Article or Appendix of this
Agreement; and
1.2.3. the headings of this Agreement are for ease of
reference only and shall not affect its construction or interpretation.
2. ARTICLE II : THE LICENSE
-------------------------
2.1. Subject to the terms and conditions of this Agreement and
the rights of Elan under the Definitive Documents, Newco hereby grants to
Sheffield for the Term, and Sheffield hereby accepts, an exclusive, sublicense
of the Newco Intellectual Property (and a license for the ADDS Technology
component of the Newco Intellectual Property) in the Field for the Territory to
develop, make, have made, manufacture, have manufactured, package, use, import,
export, promote, distribute, market, offer for sale, and sell the Products in
the Territory.
Except for an assignment or sublicense to Elan in accordance with this Agreement
and the Definitive Documents, Sheffield may not (i) assign the licenses,
sublicenses and rights granted to it herein without the prior written approval
of Newco and Elan, which approval may be withheld for any reason whatsoever,
and/or (ii) sublicense the licenses, sublicenses and rights granted to it herein
without the prior written approval of Newco and Elan, which approval shall not
be unreasonably withheld. Sheffield shall remain responsible for all of the acts
and omissions of its permitted sublicensees. Subject to Elan's rights under the
Definitive Documents, Newco shall be entitled to use the Newco Intellectual
Property and all technical and clinical data or improvements thereto in
connection with (i) Newco's commercial arrangements for the Products in any
country
8
that ceases to be a part of the Territory, or any country in the Territory in
the event of the expiration or sooner termination of this Agreement, or (ii)
Newco's commercial arrangements for products outside of the Field. Such
commercial arrangements referred to in the immediately preceding sentence shall
include the right to research, develop, manufacture, offer for sale, sell,
license or otherwise market the Products.
2.2. Elan shall have the right to cause Newco to enforce Newco's
rights against Sheffield hereunder. This Agreement shall either terminate or
survive the termination of the Elan License Agreement as follows: (i) if
Sheffield is in default or breach of any of its obligations, representations or
warranties under the Definitive Documents beyond any applicable cure period, or
if Elan terminates the Elan License Agreement under Section 8.6.2 thereof, or if
Elan terminates this Agreement pursuant to Article 8.5.2 (B) or (C) of this
Agreement, then Elan shall have a right to immediately terminate the licenses,
sublicenses and any other rights whatsoever granted to Sheffield hereunder,
provided, however, that Elan agrees to enter into licenses with all sublicensees
of Sheffield on terms no less favorable to the sublicensees than the terms
contained in the sublicensees' agreements with Sheffield; provided such
sublicense agreements have been approved by Elan in accordance with this
Agreement (ii) if Elan acquires 100% of Newco's Common Stock, or if Elan and
Sheffield mutually agree in accordance with an orderly windup of Newco, then
Elan shall not have the right to terminate the licenses, sublicenses and any
other rights whatsoever granted to Sheffield hereunder (except as otherwise set
forth herein), and (iii) upon the occurrence of any other event not set forth in
subsections (i) and (ii) above, Sheffield and Elan shall negotiate in good faith
with respect to the survival or termination of the licenses and sublicenses
granted to Sheffield hereunder. If this Agreement shall survive the termination
of the Elan License Agreement in accordance with this Article 2.2, then
Sheffield and Elan shall enter into a License Agreement upon the same terms and
conditions as this Agreement.
2.3. Notwithstanding anything contained in this Agreement to the
contrary, Elan shall have the right of first negotiation to manufacture,
package, use, import, export, promote, distribute, market, offer for sale, and
sell all Products in the Field (including products that utilize, incorporate,
apply and/or are based on the Newco Intellectual Property and/or the Sheffield
Intellectual Property) outside of the United States. Such right of first
negotiation shall be exercised as follows:
2.3.1. (A) If Sheffield intends to develop a Product that is
subject to Elan's right of first negotiation, then Sheffield immediately shall
notify Elan in writing that Elan may elect to enter into negotiations referred
to in this Article 2.3, or (B) if Sheffield, on its own behalf (and/or together
with Newco), has developed a Product that is subject to Elan's right of first
negotiation, then at such time that Sheffield determines in good faith that it
wishes to commercialize the Product itself, with a third party or otherwise,
then, Sheffield shall notify Elan in writing that Elan may elect to enter into
negotiations referred to in this Article 2.3, subject to Elan satisfying the
reasonable requirements of Sheffield's strategic commercial plan with respect to
such Product in terms of formulation, manufacturing and marketing. Elan shall
indicate its desire to enter into such negotiations pursuant to this Article 2.3
by delivering written notice to Sheffield within forty-five (45) days of Elan's
receipt of the written notification from Sheffield to Elan. If Elan elects to
enter into such negotiations, the Parties shall negotiate in good faith the
terms of an applicable agreement.
10
2.3.2. If, despite such good faith negotiations, Elan and
Sheffield do not reach agreement on the terms of such an agreement within six
(6) months from the notification in writing by Sheffield to Elan, then Sheffield
shall be free to offer a third party (other than a Technological Competitor
unless consented to by Elan which consent shall not be unreasonably withheld,
and otherwise subject to the terms and conditions of this Agreement) terms to
develop and commercialize, as applicable, such Product in the Territory, which
terms when taken as a whole, are more favorable to Sheffield than the principal
terms of the last written proposal offered to Sheffield by Elan, or by Sheffield
to Elan, as the case may be. Prior to entering into such an agreement with a
third party, Sheffield shall promptly notify Elan, in writing and in confidence,
of the principal terms of such agreement and the identity of the third party
with whom Sheffield intends to contract. Elan shall have the right, to be
exercised within ten (10) days of receipt of such notice, to elect by written
notice to Sheffield, to enter into an agreement with Sheffield upon the same
terms and conditions contained in Sheffield's notice to Elan. In the event Elan
does not elect to enter into such agreement, Sheffield shall have the right, for
a period of sixty (60) days from the expiration of the ten (10) day period set
forth above, to enter into an agreement with the third party specified in
Sheffield's notice upon the same terms and conditions as contained in such
notice.
2.4. Sheffield shall market the Products in the Territory under a
Trademark, which Trademark will be owned by Sheffield subject to the terms and
conditions of this Agreement.
2.5. Newco hereby grants to Sheffield during the Term a
non-exclusive royalty free license in the Territory, solely for use in
connection with the sale of the Products, to use Newco's trademark or
trademarks, on the following terms: 2.5.1. Sheffield shall as soon as it becomes
aware of any infringement give to Newco in writing full particulars of any use
or proposed use by any other person, firm or company of a trade name or
trademark or promotional or advertising activity which may constitute
infringement.
2.5.2. If Sheffield becomes aware that any other person,
firm or company alleges that such trademark is invalid or that the use of such
trademark infringes any rights of another party or that the trademark is
otherwise attacked, Sheffield shall immediately give to Newco full particulars
in writing thereof and shall make no comment or admission to any third party in
respect thereof.
2.5.3. Newco shall have the right to conduct all proceedings
relating to such trademark and shall in its sole discretion decide what action,
if any, to take in respect of any infringement or alleged infringement of such
trademark or any other claim or counter-claim brought or threatened in respect
of the use or registration of such trademark. Any such proceedings shall be
conducted at Newco's expense and for its own benefit.
2.5.4. Nothing contained in this Agreement shall grant to
Sheffield any right, title, or interest in or to such trademark, whether or not
specifically recognized or perfected under applicable laws. At no time during or
after the Term shall Sheffield challenge or assist others to
10
challenge any such trademark or the registration thereof or attempt to register
any trademarks, marks, or trade names confusingly similar to any such trademark.
All displays of any such trademark that Sheffield intends to adopt shall first
be submitted to Newco for approval (which shall not be unreasonably withheld) of
design, color, and other details, or shall be exact copies of those used by
Newco. In addition, Sheffield shall fully comply with all reasonable guidelines,
if any, communicated by Newco concerning the use of any such trademark as well
as all rules and regulations of such use throughout the Territory.
2.6. When packaged, and to the extent permitted by law, a product
label shall include an acknowledgement that the Product is made under license
from Newco. Such acknowledgement shall take into consideration regulatory
requirements and Sheffield's reasonable commercial requirements. Sheffield shall
wherever possible give due acknowledgement and recognition to Newco in all
printed promotional and other material regarding the Product such as stating
that the Product is under license from Newco and that the applicable Newco
technology has been applied to the Products. Sheffield shall consult with and
obtain the written approval of Newco as to the format and content of the
promotional and other material insofar as it relates to a description of, or
other reference to, the application of the Newco Intellectual Property, such
approval not to be unreasonably withheld or delayed. The further consent of
Newco shall not be required where the format and content of such materials is
substantively similar as the materials previously furnished to and approved in
writing by Newco.
2.7. Sheffield will use reasonable best efforts to file and
obtain Marketing Authorizations in a country in the Major Markets as soon as
possible. If (i) Sheffield fails to obtain Marketing Authorization to
commercialize a Product in a country in the Major Markets within a commercially
reasonable time, in accordance with the Plan and as determined by the Steering
Committee, or (ii) Sheffield fails to effect a national commercial launch of a
Product in a country in the Major Markets within the period specified in Article
2.10 below then, in such event, Newco and Sheffield shall, at the option of
Elan, make available and transfer to Elan all of Newco's and Sheffield's
respective data, information, applications, approvals, filings and the like to
permit Elan to commercialize such Product in the applicable country or countries
in the Major Markets. In such event Elan shall be entitled to an irrevocable,
exclusive, perpetual, royalty free, license from Newco and Sheffield to the
Newco Intellectual Property, the Sheffield Intellectual Property, and the
Trademark to commercialize such Product in the applicable country in the Field
on the terms set forth in this Article 2.7. Elan may sublicense the rights
granted to it pursuant to this Article 2.7 to one or more sublicensees without
the prior consent of Newco or Sheffield. Insofar as Newco or Sheffield has
licensed or acquired third party technology, Newco and Sheffield shall use all
commercially reasonable efforts to exclude or where applicable to minimize the
extent of any limitations or restrictions on its use for such purposes, and it
is understood that no such limitations or restrictions shall be permitted as
between Sheffield and Newco. In the event that Elan acquires such a license, the
Parties shall enter into a further written license and other applicable
agreement which shall include customary and reasonable terms in accordance with
this Article 2.7, and at Elan's option, Sheffield and Newco shall use their best
efforts to assign to Elan their respective rights under any third party supply
or other agreement relating to such Product, or if Sheffield or Newco are
supplying the Product or
11
components thereof, Sheffield and Newco shall enter into good faith negotiations
with Elan to continue such supply.
2.8. Sheffield will use its reasonable best efforts to obtain
Marketing Authorizations to commercialize the Products in the other countries of
the Territory (I.E., other than the Major Markets) that it selects, having
regard to the effort and expenditure required to obtain Marketing Authorizations
for the Products and the commercial opportunities for the Products in such other
countries of the Territory.
2.9. In general, Sheffield shall employ diligent efforts to
research, develop, register, market, promote and sell and maintain sales of the
Products in the Territory and Sheffield shall employ a level of advertising,
sales, marketing, and promotion efforts in each country in the Territory where
Marketing Authorization for Product has been obtained which is: (i) commensurate
with that put forth by other pharmaceutical manufacturers for products of
similar market potential in that country in the Territory, and (ii) sufficient
with respect to the potential for that country to fully exploit the market
potential for the Product as depicted in the Plan and as determined by the
Steering Committee. Such Plan shall be reviewed and mutually agreed to by the
Parties on an annual basis.
2.10. Sheffield shall effect a national commercial launch of a
Product in a country in the Major Markets within one hundred and eighty (180)
days of Marketing Authorization thereof in such country in the Major Markets. If
Sheffield does not make a national commercial launch of such Product in one or
more countries of the Major Markets within the one hundred and eighty (180) day
period, the licenses granted to Sheffield hereunder shall with thirty (30) days
written notice from Elan terminate in the applicable country and Elan shall be
entitled to commercialize such Product in the Field and to receive a license to
the Newco Intellectual Property, the Sheffield Intellectual Property and the
Trademark in the applicable country on the terms set forth in Article 2.10.
2.11. If Sheffield indicates to Newco and Elan that it does not
intend to obtain Marketing Authorization and commercialize the Products in a
particular country or countries of the Territory, or fails to commence
commercialization in any country within one hundred and (180) days after
receiving the required Marketing Authorization therefor, Elan shall be entitled
to license from Sheffield and Newco the Newco Intellectual Property the
Sheffield Intellectual Property, and the Trademark to commercialize the Products
in such countries on the terms set forth in Article 2.7.
3. ARTICLE III: DEVELOPMENT OF THE PRODUCT
----------------------------------------
3.1. Sheffield shall be responsible for the cost of the
development, registration, manufacture and marketing of the Products, and
Sheffield shall use its reasonable best efforts to conduct the Project, as would
be deemed commensurate with the achievement by Sheffield of the business aims
for a similar product of its own.
3.2. Sheffield shall xxxx or have marked the patent number(s) on
all Products or otherwise reasonably communicate to the trade concerning the
existence of any Elan Patent
12
Rights, Sheffield Patent Rights, Newco Patent Rights or Joint Patent Rights for
the countries within the Territory in such a manner as to ensure compliance
with, and enforceability under, all applicable laws, including, without
limitation, 00 Xxxxxx Xxxxxx Code Section 287, as the same may be amended from
time to time.
4. ARTICLE IV: FINANCIAL PROVISIONS
---------------------------------
4.1. Newco hereby irrevocably assigns and transfers to Elan or
Elan's designee Newco's rights to receive any payments or compensation in
whatever form under this Agreement and, at Elan's option, Sheffield shall make
such payments directly to Elan or Elan's designee.
4.2. Royalty Payments.
-----------------
4.2.1. In consideration of the rights and licenses granted
to Sheffield to the Elan Patent Rights by virtue of this Agreement, Sheffield
shall pay to Elan or Elan's designee a single payment of $[text omitted] of a
product in the Field utilizing or based on the Elan Intellectual Property first
receives Marketing Authorization in a country in the Major Markets. Sheffield
shall immediately notify Newco and Elan in writing upon Sheffield's receipt of
such Marketing Authorization; and
4.2.2. In consideration of the rights and licenses granted
to Sheffield to the Elan Patent Rights by virtue of this Agreement, Sheffield
shall pay to EIS or EIS's designee a single payment of $[text omitted] in cash
plus a milestone payment accrued thereon at the rate of [text omitted] per annum
through the date of payment shall be payable by Sheffield upon [text omitted].
4.2.3. In consideration of the rights and licenses granted
to Sheffield to the Elan Patent Rights by virtue of this Agreement, Sheffield
shall pay to Elan or Elan's designee a royalty based on NSP generated by
Sheffield or its sublicensees, [text omitted] percent of NSP for Products that
utilize, incorporate, apply and/or are based on the UPDAS Technology in the
Field and/or the Enhancing Technology in the Field.
4.3. ROYALTIES, PAYMENTS, REPORTS AND RECORDS
----------------------------------------
4.3.1. Within forty five (45) days of the end of each
quarter, Sheffield shall notify Newco and Elan of the NSP of Products sold in
that preceding quarter. Payments shown by each calendar quarter report to have
accrued shall be due on the date such report is due and shall be payable to the
designated bank account of Elan or its designee as instructed by Elan. All
payments due under this Agreement shall be made in United States Dollars and
shall be non-refundable to Sheffield.
13
4.3.2. Sheffield shall keep and shall cause its Affiliates
and sublicensees to keep true and accurate records of gross sales of the
Product, the items deducted from the gross amount in calculating the NSP, the
NSP and the royalties payable to Elan under this Article 4. Sheffield shall
deliver to Elan a written statement thereof within forty-five (45) days
following the end of each calendar quarter (or any part thereof in the first or
last calendar quarter of this Agreement) for such calendar quarter. The said
written statements shall set forth for each Product on country-by-country basis,
the calculation of the NSP from gross revenues during that calendar quarter, the
applicable percentage rate, a computation of the sums due to Elan, and such
details of the transactions that are relevant to the calculations of NSP ("the
Statement"). The Parties' financial officers shall agree upon the precise format
of the Statement.
4.3.3. Payments due on NSP of the Product based on sales
amounts in a currency other than United States Dollars shall first be calculated
in the foreign currency and then converted to United States Dollars on the basis
of the exchange rate in effect for the purchase of United States Dollars with
such foreign currency quoted in the Wall Street Journal (or comparable
publication if not quoted in the Wall Street Journal) with respect to the sale
of currency of the country of origin of such payment for the day prior to the
date on which the payment by Sheffield is being made.
4.3.4. Any income or other taxes which Sheffield is required
by law to pay or withhold on behalf of Elan with respect to royalties and any
other monies payable to Elan under this Agreement shall be deducted from the
amount of such NSP payments, royalties and other monies due. Sheffield shall
furnish Elan with proof of such payments. Any such tax required to be paid or
withheld shall be an expense of and borne solely by Elan. Sheffield shall
promptly provide Elan with a certificate or other documentary evidence to enable
Elan to support a claim for a refund or a foreign tax credit with respect to any
such tax so withheld or deducted by Sheffield. The Parties will reasonably
cooperate in completing and filing documents required under the provisions of
any applicable tax treaty or under any other applicable law, in order to enable
Sheffield to make such payments to Elan without any deduction or withholding.
4.3.5. For the twenty four (24) month period following the
close of each calendar year during the Term, Sheffield and its sublicensees will
provide Elan's independent certified accountants (reasonably acceptable to
Sheffield) with access, during regular business hours and upon reasonable prior
request and subject to the confidentiality provisions as contained in this
Agreement, to the books and records relating to the Products, solely for the
purpose of verifying the accuracy and reasonable composition of the calculations
hereunder for the calendar year then ended, including the sums payable by
Sheffield to Elan pursuant to Article 4.
4.3.6. Any adjustment required by such inspection shall be
made within thirty (30) days of the agreement of the Parties or, if not agreed,
upon the determination of an arbitrator to whom any dispute under this Article
shall be submitted to arbitration. If the adjustment payable to Elan is greater
than [text omitted] of the amount paid for the relevant period, then the cost to
Elan for the inspection, and if applicable the arbitration, shall be paid by
Sheffield provided that the costs of the inspection shall not exceed [text
omitted]. In
14
addition, Sheffield shall pay interest to Elan at the rate publicly announced by
Xxxxxx Guaranty Trust Company of New York at its principal office as its prime
rate plus one per cent (1%) (applicable as of the date on which payment should
have been made pursuant to Article 4), from the date on which the payment should
have been made pursuant to Article 4.3.1 until the date of payment.
4.3.7. Sheffield shall pay interest to Elan at the rate
publicly announced by Xxxxxx Guaranty Trust Company of New York at its principal
office as its prime rate plus one per cent (applicable as of the date on which
payment should have been made pursuant to the applicable provisions of this
Agreement) from the date on which payment should have been made pursuant to the
applicable provision of this Agreement until the date of payment.
4.4 If Sheffield claims in good faith that one or more of its
devices, products, parts or components thereof, compounds and/or drug products
does not utilize, incorporate, apply or is not based on the Elan Intellectual
Property, the Sheffield Intellectual Property and/or Newco Intellectual
Property, then Sheffield shall immediately notify Newco and Elan in writing. If
Newco or Elan disputes Sheffield's claim, the Parties shall discuss such matter
in good faith and determine a mutually agreeable resolution.
5. ARTICLE V: REGISTRATION OF THE PRODUCT
---------------------------------------
5.1. Sheffield shall at its sole cost file, and Sheffield shall
use its reasonable best efforts to prosecute to approval, the Marketing
Authorizations for the Products in the Territory in accordance with the Plan and
subject to the direction of the Steering Committee.
5.2. Sheffield shall maintain at its own cost the Marketing
Authorizations during the period that Sheffield is marketing the Products.
Sheffield shall continue to maintain the Marketing Authorizations in the
applicable countries at Elan's request and expense, if Elan acquires the right
to a license pursuant to Article 2.7 for such term thereafter during which Elan
and/or its designees is marketing the Products, and Sheffield hereby agrees to
provide to Elan, or at Elan's option to transfer and assign to Elan, the
Marketing Authorizations (and applications for regulatory approvals) within
thirty (30) days of the submission thereof to the applicable authority.
Sheffield shall furnish to Elan all regulatory filings and other material
correspondence with the FDA and other regulatory authorities within thirty (30)
days of submission.
5.3. During the registration procedure for Marketing
Authorizations, Sheffield shall keep Newco and Elan promptly and fully advised
of Sheffield's registration activities, progress and procedures. Sheffield shall
notify Newco and Elan immediately of any inspection by the FDA or any other
regulatory authority of the manufacturing or other facilities used in the
clinical research, manufacturing, packaging, storage or handling of the
Products. Copies of all correspondence with the regulatory authority will be
provided to Newco and Elan.
5.4. Sheffield shall indemnify and hold harmless Newco and Elan,
their respective agents and employees from and against all claims, damages,
losses, liabilities and expenses to which Newco or Elan, their respective
agents, and employees may become subject related to or
arising out of Sheffield's bad faith, negligence or intentional misconduct in
connection with the filing or maintenance of the Marketing Authorizations.
6. ARTICLE VI: WARRANTY AND INDEMNITY.
------------------------------------
6.1. Newco represents and warrants to Sheffield and Elan as
follows:
6.1.1. Newco is duly and validly existing in the
jurisdiction of its incorporation and each other jurisdiction in which the
conduct of its business requires such qualification (except where such failure
to so qualify shall not have a material adverse affect on the business and
assets of Newco), and is in compliance with all applicable laws, rules,
regulations or orders relating to its business and assets;
6.1.2. Newco has full corporate authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
this Agreement has been duly executed and delivered by Newco and constitutes the
legal and valid obligations of Newco and is enforceable against Newco in
accordance with its terms; and the execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not violate or result in
a default under or creation of lien or encumbrance under Newco's memorandum and
articles of association or any material agreement or instrument binding upon or
affecting Newco or its properties or assets or any applicable laws, rules,
regulations or orders affecting Newco or its properties or assets;
6.1.3. Newco is not in material default of its memorandum
and articles of association, any applicable material laws or regulations or any
material contract or agreement binding upon or affecting it or its properties or
assets and the execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not result in any such violation;
6.1.4. Newco is the sole and exclusive owner or licensee of,
or controls all right, title and interest to the Newco Patent Rights except
those developed under Section 7.1(v) hereof; and to Newco's knowledge and
belief, Newco is the sole owner or licensee of the Newco Know-How. Newco has the
right to grant the licenses and sublicenses granted herein. The Newco Patent
Rights, and to Newco's knowledge and belief, the Newco Know-How, are free and
clear of any lien, encumbrances, security interest or restriction on the license
granted herein. Newco will not grant during the Term, any right, license or
interest in and to the Newco Intellectual Property, or any portion thereof,
inconsistent with the license and sublicense granted herein; and to the best of
Newco's knowledge there are no pending or threatened adverse actions, suits,
investigations, claims or proceedings brought by one or more third parties
related to the Newco Intellectual Property as of Effective Date;
6.1.5. Newco represents and warrants that the execution of
this Agreement will not breach or in any way be inconsistent with the terms and
conditions of any license, contract,
16
understanding or agreement, whether express, implied, written or oral between
Sheffield and any third party;
6.1.6. EXCEPT AS SET FORTH IN THIS ARTICLE 6.1, NEWCO IS
GRANTING THE LICENSES AND SUBLICENSES HEREUNDER ON AN "AS IS" BASIS WITHOUT
RECOURSE, REPRESENTATION OR WARRANTY WHETHER EXPRESS OR IMPLIED, INCLUDING
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, OR
INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY
DISCLAIMED.
6.2. Sheffield represents and warrants to Newco and Elan the
following:
6.2.1. Sheffield is duly and validly existing in good
standing in the jurisdiction of its incorporation and each other jurisdiction in
which the conduct of its business requires such qualification (except where such
failure to so qualify shall not have a material adverse affect on the business
and assets of Sheffield), and Sheffield is in compliance with all applicable
laws, rules, regulations or orders relating to its business and assets;
6.2.2. Sheffield has full corporate authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
this Agreement has been duly executed and delivered and constitutes the legal
and valid obligations of Sheffield and is enforceable against Sheffield in
accordance with its terms; and the execution, delivery and performance of this
Agreement and the transactions contemplated hereby will not violate or result in
a default under or creation of lien or encumbrance under Sheffield's certificate
of incorporation, by-laws or other organic documents, any material agreement or
instrument binding upon or affecting Sheffield, or its properties or assets or
any applicable laws, rules, regulations or orders affecting Sheffield, or its
properties or assets;
6.2.3. Sheffield is not in default of its charter or
by-laws, any applicable laws or regulations or any material contract or
agreement binding upon or affecting it or its properties or assets and the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby will not result in any such violation;
6.2.4. Sheffield has not granted any option, license, right
or interest to any third party which would conflict with the terms of this
Agreement.
6.2.5. The Products shall be developed, manufactured,
transported, stored, handled, packaged, marketed, promoted, distributed, offered
for sale and/or sold in accordance with all applicable regulations and
requirements of the FDA and foreign regulatory authorities including, without
limitation, cGCP, cGLP, cGMP regulations relating thereto. The Products shall
not be adulterated or misbranded as defined by the Federal Food, Drug and
Cosmetic Act (or applicable foreign law) and shall not be a product which would
violate any section of such Act if introduced in interstate commerce.
17
6.2.6. Sheffield is fully cognizant of all applicable
statutes, ordinances and regulations of the United States of America and
countries in the Territory with respect to the manufacture of the Products
including, but not limited to, the U.S. Federal Food, Drug and Cosmetic Act and
regulations thereunder and similar statutes in countries outside of the United
States, and cGMPs. Sheffield shall manufacture or procure the manufacture of the
Products in conformity with the Marketing Authorizations and in a manner which
fully complies with all United States of America and foreign statutes,
ordinances, regulations and practices.
6.3. Elan represents and warrants to Newco and Sheffield the
following:
6.3.1. Elan is duly and validly existing in good standing in
the jurisdiction of its incorporation and each other jurisdiction in which the
conduct of its business requires such qualification (except where such failure
to so qualify shall not have a material adverse affect on the business and
assets of Elan), and Elan is in compliance with all applicable laws, rules,
regulations or orders relating to its business and assets;
6.3.2. Elan has full corporate authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby;
this Agreement has been duly executed and delivered and constitutes the legal
and valid obligations of Elan and is enforceable against Elan in accordance with
its terms; and the execution, delivery and performance of this Agreement and the
transactions contemplated hereby will not violate or result in a default under
or creation of lien or encumbrance under Elan's certificate of incorporation,
by-laws or other organic documents, any material agreement or instrument binding
upon or affecting Elan, or its properties or assets or any applicable laws,
rules, regulations or orders affecting Elan, or its properties or assets;
6.3.3. Elan is not in default of its charter or by-laws, any
applicable laws or regulations or any material contract or agreement binding
upon or affecting it or its properties or assets and the execution, delivery and
performance of this Agreement and the transactions contemplated hereby will not
result in any such violation.
6.4. Newco shall indemnify, defend and hold harmless Sheffield,
Elan and their respective officers, directors, employees and agents from all
actions, losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys' fees) due to third party claims to which Newco or Elan is
or may become subject insofar as they arise out of or are alleged or claimed to
arise out of (i) any breach by Newco of any of its obligations under this
Agreement, (ii) any breach of a representation or warranty of Newco made in this
Agreement, and (iii) any activities conducted by Newco in connection with the
Project, except to the extent due to the negligence or willful misconduct of
Sheffield or Elan.
6.5. Sheffield shall indemnify, defend and hold harmless Newco
and Elan and their respective officers, directors, employees and agents from all
actions, losses, claims, demands, damages, costs and liabilities (including
reasonable attorneys' fees) due to third party claims to which Newco or Elan is
or may become subject insofar as they arise out of or are alleged or claimed to
arise out of (i) any breach by Sheffield of any of its obligations under this
Agreement,
18
(ii) any breach of any representation or warranty of Sheffield made in this
Agreement, (iii) any activities conducted by Sheffield in connection with the
Project, except to the extent due to the negligence or willful misconduct of
Newco or Elan (which negligence or willful misconduct of Newco or Elan, as the
case may be, shall not affect the obligations of Sheffield to the other party
hereunder), and (iv) third party claims to which Newco or Elan is or may become
subject insofar as they arise out of or are alleged or claimed to arise out of
the development, manufacture, transport, packaging, storage, handling,
distribution, promotion, marketing, offer for sale or sale of the Products,
including any product liability claim or any claim relating to any recall of a
Product.
6.6. As a condition of obtaining an indemnity in the
circumstances set out above or elsewhere in the Agreement, the Party seeking an
indemnity shall:
6.6.1. fully and promptly notify the other Party of any
claim or proceeding, or threatened claim or proceeding;
6.6.2. permit the indemnifying Party to take full care and
control of such claim or proceeding;
6.6.3. reasonably assist in the investigation and defense of
such claim or proceeding;
6.6.4. not compromise or otherwise settle any such claim or
proceeding without the prior written consent of the other Party, which consent
shall not be unreasonably withheld; and take all reasonable steps to mitigate
any loss or liability in respect of any such claim or proceeding.
6.7. Notwithstanding anything to the contrary in this Agreement,
Elan, Sheffield and Newco shall not be liable to the other for any punitive,
consequential or incidental loss or damage (whether for loss of profit or
otherwise) by reason of any representation or warranty, condition or other term
or any duty of common law, or under the express or implied terms of this
Agreement, and whether occasioned by the negligence of the respective Parties,
their employees or agents or otherwise.
7. ARTICLE VII: PATENTS
----------------------
7.1. TITLE: Subject to the terms and conditions of this
Agreement, title to the various inventions and intellectual property are set
forth below as follows:
(i) title to all inventions and other intellectual
property made solely by employees of Elan in connection with the Project shall
be owned by Elan;
(ii) title to all inventions and other intellectual
property made solely by employees of Newco in connection with the Project shall
be owned by Newco;
19
(iii) title to all inventions and other intellectual
property made solely by employees of Sheffield in connection with the Project,
other than set forth in Article 7.1(v) below, shall be owned by Newco including,
without limitation, any such inventions or intellectual property relating to the
ADDS Technology;
(iv) title to all inventions and other intellectual
property made jointly by Elan and Newco in connection with the Project shall be
owned by Newco;
(v) title to all inventions and other intellectual
property made solely by Sheffield employees or jointly by Newco and Sheffield
employees relating to the MSI Delivery System shall be owned by Sheffield; and
(vi) all other inventions and other intellectual
property made between Sheffield and Newco employees in connection with the
Project shall be owned by Newco, including, without limitation, any such
inventions or intellectual property relating to the ADDS Technology.
7.2. FILING AND PROSECUTION OF PATENTS
---------------------------------
7.2.1. Each Party shall timely inform the other in writing
of any improvement or development made by such Party relating, respectively, to
the Sheffield Intellectual Property, and/or Newco Intellectual Property so that
any patent protection that may be available for any such improvement or
development is not compromised.
7.2.2. Newco shall prepare, prosecute and maintain all
patents applications and issued patents relating to the inventions, improvements
and other intellectual property set forth in paragraphs (ii), (iii), (vi) and
(vi) in section 7.1. With respect to such preparation, prosecution and
maintenance activities, Newco shall timely apprise Sheffield and Elan of the
status of any such activity and shall inform Sheffield and Elan of the status of
such activity if such inventions have application in the Topical Pulmonary
Field. In the event Newco shall decide not to seek patent protection for any
Newco Intellectual Property or Sheffield Intellectual Property, Elan shall have
the option to take control of such prosecution. In the event that Elan shall
determine, in good faith, that patents applications and issued patents relating
to the inventions, improvements and other intellectual property set forth in
paragraphs (ii), (iii), (vi) and (vi) in section 7.1. predominantly relates to
an area other than the Field, Elan shall have the option to take control of the
preparation, prosecution and maintenance of patent protection directed to such
intellectual property. In the event that Elan does not exercise such right,
Newco shall have the option to take responsibility for the preparation,
prosecution and maintenance of patent protection directed to such Joint Patent
Rights.
7.2.3. Sheffield shall prepare, prosecute and maintain all
patents applications and issued patents relating to paragraph (v) in section 7.1
with respect to such preparation, prosecution and maintenance activities.
7.3. ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS; THIRD PARTY
INFRINGEMENT
------------------------------------------------------------
20
7.3.1. Newco and Sheffield shall promptly inform the other
in writing of any alleged infringement or unauthorized use of which it shall
become aware by a third party of Sheffield Intellectual Property, Newco
Intellectual Property, Elan Intellectual Property and/or Joint Intellectual
Property and provide such other with any available evidence of such unauthorized
activity.
7.3.2. During the Term, Sheffield shall have the right to
pursue at its own expense any enforcement activities of the Sheffield
Intellectual Property and/or the Newco Intellectual Property and/or the Joint
Intellectual Property within the Field. Newco shall agree to be named as a
necessary party in an action brought by and fully financed by Sheffield and will
reasonably co-operate with such action. Sheffield shall reimburse any out of
pocket expenses borne by Newco. Should Sheffield decide not to enforce the
Sheffield Intellectual Property and/or the Newco Intellectual Property and/or
the Joint Intellectual Property within the Field, Newco may do so at its expense
and for its own benefit, and Sheffield will reasonably co-operate with such
action. Any actual out of pocket expenses borne by Sheffield in cooperating with
such action shall be reimbursed by Newco.
7.4. INFRINGEMENT OF THIRD PARTY PATENTS
-----------------------------------
7.4.1. In the event that a claim or proceedings are brought
against Sheffield by a third party alleging that the manufacture, use, offer for
sale, sale or other activity relating to the Products constitute an unauthorized
use of an intellectual property right owned by such a third party in the
Territory, Sheffield shall promptly advise Newco and Elan of such threat or
suit.
7.4.2. Sheffield shall indemnify, defend and hold Newco and
Elan harmless against all actions, losses, claims, demands, damages, costs and
liabilities (including reasonable attorneys fees) relating directly or
indirectly to all such claims or proceedings referred to in this Article 7.4;
provided that Newco or Elan shall not acknowledge to the third party or to any
other person the validity of any claims of such a third party, and shall not
compromise or settle any claim or proceedings relating thereto without the prior
written consent of Sheffield, not to be unreasonably withheld or delayed.
8A. ARTICLE VIII(A): REGARDING THE SHEFFIELD INTELLECTUAL PROPERTY
---------------------------------------------------------------
8A.1 CONFORMANCE WITH SIEMENS AGREEMENTS
-----------------------------------
The Parties acknowledge that those Sheffield rights in and
to the Sheffield Intellectual Property which are derived from the Siemens Supply
Agreement and the Siemens License Agreement, are therefore subject to all the
terms and conditions thereof. It is the Parties' express intent that the grant
by Sheffield of any such rights be consistent with the terms and conditions
thereof and Sheffield's obligations thereunder.
8A.2 AFTER ACQUIRED KNOW HOW
-----------------------
21
If Sheffield acquires the rights to additional know how or
patents in the Systemic Pulmonary Field after the execution of this Agreement,
it agrees to negotiate in good faith with Elan and Newco a license or
sublicense, as appropriate, of such know how and patents to Newco for use in the
Systemic Pulmonary Field.
8. ARTICLE VIII: MISCELLANEOUS CLAUSES
------------------------------------
8.1. SECRECY
-------
8.1.1. Any information, whether written or oral (provided
that oral information shall be reduced to writing within one month by the party
giving the oral information and the written form shall be furnished to the other
party) pertaining to the Product that has been or will be communicated or
delivered by any Party to the other, including, without limitation, trade
secrets, business methods, and cost, supplier, manufacturing and customer
information (collectively, "Confidential Information"), shall be treated by
Newco, Sheffield and Elan, respectively, as confidential information, and shall
not be disclosed or revealed to any third party whatsoever or used in any manner
except as expressly provided for herein; provided, however, that such
confidential information shall not be subject to the restrictions and
prohibitions set forth in this Article to the extent that such Confidential
Information:
(A) is available to the public in public
literature or otherwise, or after
disclosure by one Party to the other
becomes public knowledge through no
default of the Party receiving such
Confidential Information; or
(B) was known to the Party receiving such
Confidential Information prior to the
receipt of such Confidential Information
by such Party, whether received before
or after the Effective Date; or
(C) is obtained by the Party receiving such
Confidential Information from a third
party not subject to a requirement of
confidentiality with respect to such
Confidential Information; or
(D) is required to be disclosed pursuant to:
(A) any order of a court having
jurisdiction and power to order such
information to be released or made
public; or (B) any lawful action of a
governmental or regulatory agency.
8.1.2. Each Party shall take all such precautions with
Confidential Information disclosed to it by the other Party as it normally takes
with its own confidential information to prevent any improper disclosure of the
Confidential Information disclosed to it by the other
23
Party to any third party; PROVIDED, HOWEVER, that such Confidential Information
may be disclosed within the limits required to obtain any authorization from the
FDA or any other United States of America or foreign governmental or regulatory
agency or, with the prior written consent of the other Party, which shall not be
unreasonably withheld, or as may otherwise be required in connection with the
purposes of this Agreement.
8.1.3. Notwithstanding the above, each Party hereto may use
or disclose Confidential Information disclosed to it by the other Party to the
extent such use or disclosure is reasonably necessary in filing or prosecuting
patent applications, prosecuting or defending litigation, complying with
applicable governmental regulations or otherwise submitting information to tax
or other governmental authorities, conducting clinical trials, or making a
permitted sub-license or otherwise exercising its rights hereunder, provided
that if a Party is required to make any such disclosure of the other party's
Confidential Information, other than pursuant to a confidentiality agreement, it
will given reasonable advance notice to the latter Party of such disclosure and,
except to the extent inappropriate in the case of patent applications, will use
its best efforts to secure confidential treatment of such information prior to
its disclosure (whether through protective orders or otherwise).
8.1.4. Each Party agrees that it will not use, directly or
indirectly, any Confidential Information disclosed by the other Party pursuant
to this Agreement, other than as expressly provided herein.
8.1.5. Newco and Sheffield will not publicize the existence
of this Agreement in any way without the prior written consent of the other
subject to the disclosure requirements of applicable laws and regulations. The
Parties agree that promptly following the execution of this Agreement they shall
issue an agreed press release which will not disclose the terms of this
Agreement. In the event that one of the Parties wishes to make an announcement
concerning the Agreement, that Party will seek the consent of the other Parties.
The terms of any such announcement shall be agreed in good faith.
8.2. CONFLICT. IN THE EVENT OF ANY INCONSISTENCY OR CONFLICT
BETWEEN THE PROVISIONS OF THE ELAN LICENCE AGREEMENT ON THE ONE HAND, AND THE
PROVISIONS OF THIS AGREEMENT AND THE SHEFFIELD/NEWCO LICENSE AGREEMENT ON THE
OTHER HAND, THE TERMS OF THE ELAN LICENSE AGREEMENT SHALL GOVERN AND CONTROL IN
ALL RESPECTS.
8.3. PARTIES BOUND. This Agreement shall be binding upon and
inure for the benefit of Parties hereto, their successors and permitted assigns.
8.4. SEVERABILITY. If any provision in this Agreement is agreed
by the Parties to be, or is deemed to be, or becomes invalid, illegal, void or
unenforceable under any law that is applicable hereto, (i) such provision will
be deemed amended to conform to applicable laws so as to be valid and
enforceable or, if it cannot be so amended without materially altering the
intention of the Parties, it will be deleted, with effect from the date of such
agreement or such earlier date as the Parties may agree, and (ii) the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not be impaired or affected in any way.
23
8.5. DURATION AND TERMINATION
------------------------
8.5.1. Subject to the other provisions of Article 8.5, this
Agreement shall remain in full force and effect on a Product by Product and
country by country basis, for a period commencing as of the Effective Date and
expiring [text omitted] years from the date of the first commercial sale of such
Product in such country in the Territory, or [text omitted], whichever is longer
(the "Term").
8.5.2. In addition to the rights of early or premature
termination provided for elsewhere in this Agreement, the term of this Agreement
may be terminated immediately upon written notice of termination given by:
(A) the non-defaulting party in the event that the
other party shall: (1) commit a material breach or default under a Definitive
Document, which breach or default shall not be remedied within sixty (60) days
after the receipt of written notice thereof by the party in breach or default;
or (2) have made a material misrepresentation of any representation or warranty
contained herein or any Definitive Document; or
(B) Elan, in the event that (1) a change of
"control" of Newco or Sheffield shall occur (the term "control" shall have the
meaning set forth in the definition of "Affiliate"), or (2) a Technological
Competitor acquires directly or indirectly voting stock or equivalent securities
in Sheffield or Newco representing [text omitted] or more of the stock which
carries entitlement to vote, or where [text omitted] or more of such
Technological Competitor's stock or equivalent securities is acquired by
Sheffield or Newco; provided, however, that in the case of [text omitted]
(should [text omitted] become a Technological Competitor), the [text omited]
threshold set forth in this sentence shall be deemed to be [text omitted], or
(3) if such Technological Competitor otherwise controls Sheffield 's or Newco's
respective board of directors, or either Sheffield or Newco otherwise controls
such Technological Competitor's board of directors or similar governing body.
(C) Elan on the one hand, and Sheffield and Newco
on the other hand, if Elan, Sheffield or Newco (on an individual basis), as the
case may be, shall at any time be Insolvent, dissolved, liquidated,
discontinued, or when any proceeding is filed or commenced by either Party under
bankruptcy, insolvency or debtor relief laws. For purposes of this Agreement,
"Insolvent" shall mean (1) the sum of a Party's debts exceeds its assets, (2) a
Party is unable, or has reason to believe it is unable, to pay its debts as such
debts mature, or (3) a Party does not have sufficient capital with which to
conduct its business.
8.5.3. Upon exercise of those rights of termination as set
forth in this Agreement with respect to any country or countries or the entire
Agreement as the case may be, this Agreement shall, subject to the other
provisions of the Agreement, automatically terminate forthwith in the applicable
country or countries or the entire Agreement as the case may be, and be of no
further legal force or effect.
24
8.5.4. Upon termination of this Agreement:
(A) all confidentiality provisions set out
herein shall remain in full force and
effect for a period of five (5) years;
(B) all representations, warranties, and
indemnities shall survive the
termination of this agreement and shall
remain in full force and effect;
(C) termination of this Agreement for any
reason shall not release any Party
hereto from any liability which, at the
time of such termination, has already
accrued to the other Party or which is
attributable to a period prior to such
termination nor preclude either Party
from pursuing all rights and remedies it
may have hereunder or at law or in
equity with respect to any breach of
this Agreement;
(D) except as is necessary to enable Elan to
exercise the licenses to be granted by
Newco and/or Sheffield to Elan under
this Agreement, upon any termination of
this Agreement, Newco, Sheffield and
Elan shall promptly return to the other
Party all Confidential Information
received from the other Party (except
one copy of which may be retained for
archival purposes);
(E) in the event this Agreement is
terminated for any reason, Sheffield
shall have the right for a period of six
(6) months from termination to sell or
otherwise dispose of the stock of any
Product then on hand, which such sale
shall be subject to applicable terms of
this Agreement;
(F) any sums that were due from Sheffield to
Newco and Elan prior to the exercise of
the right to terminate this Agreement
shall be paid in full within sixty (60)
days of termination of this Agreement;
(G) the rights of inspection and audit shall
continue in force for the period
referred to in the relevant provisions
of this Agreement;
(H) At Elan's option, except for the
termination of this Agreement due to the
Insolvency of Elan, or unless the Elan
License Agreement is terminated due to
the breach by Elan beyond any cure or
grace period in accordance with the
terms thereof, the Newco Intellectual
Property, the
25
Newco Improvements, all improvements
developed or invented by or on behalf of
Sheffield during the Project and all of
the rights whatsoever granted to
Sheffield hereunder shall immediately be
deemed to have been reverted, assigned
and transferred to Elan, including
rights in and to the Joint Intellectual
Property.
(H) The following Articles shall survive the
termination or expiration of this
Agreement for any reason: Article 1;
Articles 2.2., 2.7, 2.10 and 2.11;
Articles 4.3.5 and 4.3.6 and 4.3.7;
Article 5.4; Article 6; Article 7 and
Article 8.
8.6. FORCE MAJEURE. Neither Party to this Agreement shall be
liable for delay in the performance of any of its obligations hereunder if such
delay results from causes beyond its reasonable control, including, without
limitation, acts of God, fires, strikes, acts of war, or intervention of a
Government Authority, non availability of raw materials, but any such delay or
failure shall be remedied by such Party as soon as practicable.
8.7. RELATIONSHIP OF THE PARTIES. Nothing contained in this
Agreement is intended or is to be construed to constitute Elan, Newco and
Sheffield as partners or joint venturers or either Party as an employee of the
other. Neither Party hereto shall have any express or implied right or authority
to assume or create any obligations on behalf of or in the name of the other
Party or to bind the other Party to any contract, agreement or undertaking with
any third party.
8.8. AMENDMENTS. No amendment, modification or addition hereto
shall be effective or binding on any Party unless set forth in writing and
executed by a duly authorized representative of all Parties.
8.9. WAIVER. No waiver of any right under this Agreement shall be
deemed effective unless contained in a written document signed by the Party
charged with such waiver, and no waiver of any breach or failure to perform
shall be deemed to be a waiver of any future breach or failure to perform or of
any other right arising under this Agreement.
8.10. NO EFFECT ON OTHER AGREEMENTS. No provision of this
Agreement shall be construed so as to negate, modify or affect in any way the
provisions of any other agreement between the Parties unless specifically
referred to, and solely to the extent provided, in any such other agreement.
8.11. APPLICABLE LAW. This Agreement is construed under and ruled
by the laws of the State of New York. For the purpose of this Agreement the
Parties submit to the personal jurisdiction of the United States District Court
for the State of New York. The Parties each further irrevocably consent to the
service of any complaint, summons, notice or other process by delivery thereof
to it by any manner in which notices may be given pursuant to this Agreement.
26
8.12. NOTICES. Any notice to be given under this Agreement shall
be sent in writing in English by registered airmail or faxed to:
- Elan at
Elan Corporation plc.
Xxxxxxx Xxxxx,
Xxxxxxx Xxxxx,
Xxxxxx 0, Xxxxxxx.
Attention: President, Elan Pharmaceutical Technologies,
a division of Elan Corporation plc
Telefax : 353 1 662 4960
- Newco at
Systemic Pulmonary Delivery, Ltd.
c/o Elan International Services, Ltd.
000 Xx. Xxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxx XX00
Bermuda
Attention: Chief Executive Officer
- If to Sheffield, at
Sheffield Pharmaceutical, Inc.
000 Xxxxx Xxxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Chief Executive Officer
Telefax : (000) 000-0000
with a copy to
Fitzpatrick, Cella, Xxxxxx & Xxxxxx
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
Telefax: (000) 000-0000
27
or to such other address(es) and telefax numbers as may
from time to time be notified by either Party to the
other hereunder.
If a notice is sent by Sheffield to Newco or Newco to Sheffield
pursuant to any agreements relating to the transactions contemplated hereunder,
then Sheffield or Newco, as the case may be, shall send a copy of such notice to
Elan in accordance with the provisions of this Article.
Any notice sent by registered air-mail shall be deemed to have been
delivered within seven (7) working days after dispatch and any notice sent by
telefax (with confirmed answer back) shall be deemed to have been delivered
within twenty four (24) hours of the time of the dispatch. Notice of change of
address shall be effective upon receipt.
8.13. NO IMPLIED RIGHTS. No rights or licenses are granted or
deemed granted hereunder or in connection herewith, other than those rights
expressly granted in this Agreement.
8.14. FURTHER ASSURANCES. At any time or from time to time on and
after Effective Date, each party shall at the request of the other (i) deliver
such records, data or other documents consistent with the provisions of this
Agreement, (ii) execute, and deliver or cause to be delivered, all such
consents, documents or further instruments of transfer or license, and (iii)
take or cause to be taken all such actions, as the other Party may reasonably
deem necessary or desirable in order for it to obtain the full benefits of this
Agreement and the transactions contemplated hereby.
8.15. ENTIRE AGREEMENT . This Agreement including its Appendices,
together with the Definitive Documents, sets forth the entire agreement and
understanding of the Parties with respect to the subject matter hereof, and
supersedes all prior discussions, agreements and writings in relating thereto,
including the letter of agreement of June 3, 1998.
28
8.16. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and which together shall
constitute one instrument.
IN WITNESS THEREOF the Parties hereto have executed this Agreement in
duplicate.
SYSTEMIC PULMONARY DELIVERY, LTD
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chairman
SHEFFIELD PHARMACEUTICAL, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chairman
ELAN CORPORATION, PLC
By: /s/ Xxxxxx Xxxxx
--------------------------
Name: Xxxxxx Xxxxx
Title: Chief Financial Officer
APPENDIX A
ELAN PATENT RIGHTS
NONE AT PRESENT
APPENDIX B
ELAN PATENT RIGHTS
[text omitted]
APPENDIX C
THE PLAN
[text omitted]
