EXHIBIT 10.23
LICENSE AND RESEARCH AGREEMENT
LICENSE AND RESEARCH AGREEMENT (the "Agreement") dated as of May 17, 2000 (the
"Effective Date") by and between 3-DIMENSIONAL PHARMACEUTICALS, INC., a Delaware
corporation having its principal place of business at 000 Xxxxxxxx Xxxxx, Xxxxx
000, Xxxxx, XX 00000-0000, XXX (hereinafter referred to as "3DP") and SCHERING
AG, a corporation organized and existing under the laws of Germany having its
principal place of business at 00000, Xxxxxx, Xxxxxxx (hereinafter referred to
as "Schering"). 3DP and Schering are sometimes referred to herein individually
as a "Party" and collectively as the "Parties".
WHEREAS:
(A) 3DP has identified a class of non-peptidic, potent urokinase plasminogen
activator (uPA) inhibitors with potential application in various
therapeutic fields, and has the right to grant rights and licenses under
patent applications, patents and know-how relating to such class of
inhibitors.
(B) 3DP is interested in continuing to carry out research to evaluate further
uPA inhibitors and Schering is willing to fund such research on the terms
and subject to the conditions hereinafter set out.
(C) Schering is interested in obtaining from 3DP certain rights and licenses to
the patent applications, patents and know-how relating to the above-
mentioned class of uPA inhibitors already identified by 3DP and to any
compounds identified during the course of the above-mentioned research, and
3DP is willing to grant such rights and licenses to Schering under the
terms and subject to the conditions hereinafter set out.
1
(D) Schering Berlin Venture Corporation and 3DP have entered into a Stock
Purchase Agreement of even date herewith (the "Stock Purchase Agreement").
NOW THEREFORE, in consideration of the mutual covenants set forth in this
Agreement and other good and valuable consideration the sufficiency of which is
hereby acknowledged, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
The following terms, when capitalized, shall have the following meanings (such
meanings to be equally applicable to both the singular and the plural forms of
the terms defined) as used in this Agreement:
1.1 "3DP Know-How" means all Know-How, whether currently existing or developed
during the course of the Research Term or within six (6) months thereafter
that relates to the research, development, utilization, manufacture, use or
sale of a Licensed Compound or Licensed Product. Notwithstanding anything
herein to the contrary, 3DP Know-How shall exclude 3DP Patents and 3DP Non-
uPA Inhibitor Patents.
1.2 "3DP Non-uPA Inhibitor Compounds" mean compounds and data relating to such
compounds discovered during the Research Program by 3DP or an Affiliate
which do not constitute uPA Inhibitors but which the Joint Research
Committee considers have some biological activity of interest to the
Research Program or are of potential commercial interest to Schering.
1.3 "3DP Non-uPA Inhibitor Patents means Patents Controlled by 3DP which
claim Non-uPA Inhibitor Compounds.
2
1.4 "3DP Patents" means: (i) Patents in Schedule A; (ii) Patents to be filed by
3DP that claim 3DP's orally available uPA Inhibitor lead series, [**] and
derivatives thereof, as described in the Outline Research Plan; and (iii)
Patents that claim New Compounds. Notwithstanding anything herein to the
contrary, 3DP Patents shall exclude any 3DP Know-How, Improvements and 3DP
Non-uPA Inhibitor Patents.
1.5 "3DP Technology" means 3DP Know-How and 3DP Patents.
1.6 "Accept", "Accepted" or "Acceptance" as used with respect to a Lead
Candidate, Back-Up or Follow-Up means a Lead Candidate, Back-Up or Follow-
Up, respectively, that has fulfilled the Biological Criteria agreed upon by
the Parties pursuant to Section 2.3 and which Schering has decided to
develop either as an Accepted Lead Candidate or as an Accepted Back-Up or
Accepted Follow-Up thereof.
1.7 "Accepted Back-Up" means a Back-Up which has fulfilled the Biological
Criteria agreed upon by the Parties pursuant to Section 2.3 and which
Schering has decided to develop as a Back-Up to an Accepted Lead Candidate.
1.8 "Accepted Follow-Up" means a Follow-Up which has fulfilled the Biological
Criteria agreed upon by the Parties pursuant to Section 2.3 and which
Schering has decided to develop as a Follow-Up to an Accepted Lead
Candidate.
1.9 "Accepted Lead Candidate" means a Lead Candidate which has fulfilled the
Biological Criteria agreed upon by the Parties pursuant to Section 2.3 and
which Schering has decided to develop as a Licensed Product in a specified
Separate Therapeutic Area.
___________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
3
1.10 "Affiliate" means any person, corporation, partnership, firm, joint venture
or other entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with
3DP or Schering, as the case may be. As used in this definition, "control"
means the possession of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of the
outstanding voting securities or by contract or otherwise.
1.11 "Annual Worldwide Net Sales" means the total worldwide Net Sales of a
Licensed Product in a Separate Therapeutic Area in a Sales Year or in the
First Sales Year as applicable.
1.12 "Audit Disagreement" shall have the meaning set forth in Section 9.2.
1.13 "Back-Up" shall mean a Licensed Compound that is intended to be reserved as
a back-up for an Accepted Lead Candidate and is not intended to be
developed or commercialized unless development and/or commercialization of
such Accepted Lead Candidate is terminated by Schering.
1.14 "Base Compound" means a uPA Inhibitor existing at the Effective Date which:
(i) falls within the claims of the Patents referenced in Schedule A or
falls within the same Chemical Class as such compounds; or (ii) falls
within 3DP's orally available uPA Inhibitor lead series, [**] and
derivatives thereof, as described in the Outline Research Plan.
1.15 "Biological Criteria" means the criteria for acceptance of a Lead
Candidate, Back-Up or Follow-up to be agreed upon by the Parties pursuant
to Section 2.3.
____________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
4
1.16 "Chemical Class": Compounds shall be deemed to fall within the same
Chemical Class if one compound is a homolog, isomer, analog or first order
derivative of another compound. A compound is a "homolog" of another
compound if it differs from that compound by a methylene group or an
ethylene group or a similar or equivalent group that does not affect the
relationship of the functional groups in the compound that give rise to its
activity as a uPA Inhibitor. An "isomer" is a compound differing from
another compound by positional isomery, geometric isomery or stereochemical
isomery. An "analog" is a compound which differs from another compound by
the replacement of a single group within the latter compound. A compound is
a "first order derivative" of another compound if it is derived from that
compound by a single chemical reaction.
1.17 "Control" or "Controlled" means possession of the ability to grant a
license or sublicense of patent rights, know-how or other intangible rights
as provided for herein without violating the terms of any agreement or
other arrangement with any Third Party.
1.18 "Drug Approval Application" means an application for Regulatory Approval
required to be approved before commercial sale or use of a Licensed Product
as a drug in a regulatory jurisdiction, including, but not limited to, for
the purposes of Regulatory Approval in the United States, a New Drug
Application and all supplements filed pursuant to the requirements of the
FDA (including all documents, data and other information concerning a
Licensed Product which are necessary for, or included in, FDA approval to
market the Licensed Product), and, for the purposes of Regulatory Approval
in the EU, applications for Regulatory Approval to the EMEA.
1.19 "EMEA" means the European Medicines Evaluation Agency or any
successor agency.
5
1.20 "EU" means the countries which are members of the European Union as such
membership may change from time to time.
1.21 "FDA" means the United States Food and Drug Administration or any successor
agency.
1.22 "Field" means all uses of Licensed Products for the prevention, treatment,
cure or mitigation of all disease states, conditions, disorders and
indications in humans.
1.23 "First Commercial Sale" means the date on which Schering or an Affiliate or
sublicensee of Schering first sells commercially, pursuant to a Regulatory
Approval, a Licensed Product in any country, provided that if such first
commercial sale has occurred in a country for which pricing or
reimbursement approval is necessary for widespread sale and no more than a
reasonable minimal amount of Licensed Product has been sold in such country
prior to grant of such pricing or reimbursement approval, then such sale
shall not be deemed a First Commercial Sale until such pricing or
reimbursement approval has been obtained.
1.24 "First Sales Year" means the period between the date of First Commercial
Sale of a Licensed Product in a Separate Therapeutic Area in the first
country in the Territory in which such Licensed Product is sold in such
Separate Therapeutic Area and the end of the calendar year in which such
First Commercial Sale is made.
1.25 "Follow-Up" shall mean a Licensed Compound which is proposed by either
Party for Acceptance as a follow-up to an Accepted Lead Candidate to be
developed or commercialized for the same Separate Therapeutic Area for
which the Accepted Lead Candidate is then being developed or
commercialized; provided, however, that a Licensed Compound which
constitutes the Follow-Up cannot be the same
6
Licensed Compound as is already being developed or commercialized as a Lead
Candidate.
1.25 "Improvements" shall mean Patents and Know-How that are based on research
conducted by 3DP outside of the Research Program and that are specifically
and directly related to Licensed Products, to the extent that such Patents
and Know-How are Controlled by 3DP. For the avoidance of doubt, Patents and
Know-How claiming New Compounds shall be considered 3DP Patents and 3DP
Know-How rather than Improvements.
1.26 "IND" means the investigational new drug application relating to one or
more Licensed Products required to be filed with the FDA pursuant to 21 CFR
Part 312, including any amendments thereto. References herein to an IND
shall include, to the extent applicable, any comparable applications
outside the US such as, for example, the CTX in the EU.
1.27 "Joint Patents" shall have the meaning set forth in Section 7.3.
1.28 "Joint Research Committee" means the committee established pursuant
to Section 2.3.
1.29 "Know-How" means all data, technical information, know-how, experience,
inventions, discoveries, trade secrets, compositions of matter and methods,
and whether or not patentable or confidential, to the extent that such
Know-How is Controlled by a Party or its Affiliates.
1.30 "Lead Candidate" means a Licensed Compound which is proposed by either
Party for Acceptance as an Accepted Lead Candidate pursuant to Section 2.6.
1.31 "Licensed Compound" means a Base Compound or a New Compound.
7
1.32 "Licensed Product" means a product in finished dosage form containing a
Licensed Compound as active ingredient for use in the Field.
1.33 "Major Market Country" means the US, Japan and any country of the European
Union.
1.34 "Net Sales" means the amount invoiced by Schering, its Affiliates or
sublicensees for sales of a Licensed Product to Third Parties less the
following deductions applicable to the Licensed Product for:
(i) transportation charges and insurance charges paid by Schering;
(ii) sales and excise taxes or customs duties paid by Schering or any
other governmental charges imposed upon the sale of the Licensed
Product and paid by Schering;
(iii) fees paid to distributors, consignees or agents in connection with
the sale of the Licensed Product;
(iv) reasonable rebates and premiums granted or allowed in connection
with the sale of a Licensed Product;
(v) allowances or credits to customers on account of governmental
requirements, price differences, rejection, outdating, returns or
recalls of the Licensed Product;
(vi) quantity discounts, cash discounts or chargebacks granted in
connection with the sale of the Licensed Product;
(vii) provisions for price reductions; and
(viii) costs of customer programs such as cost effectiveness or patient
assistance studies or programs designed to aid in patient compliance
with medication schedules in connection with the sale of a Licensed
Product.
8
For the purpose of calculating Net Sales, the Parties recognize that (a)
Schering's customers may include persons in the chain of commerce who enter
into agreements with Schering as to price even though title to the Licensed
Product does not pass directly from Schering to such customers and even
though payment for such Licensed Product is not made by such customers
directly to Schering and (b) in such cases, chargebacks paid by Schering to
or through a Third Party (such as a wholesaler) can be deducted by Schering
from gross revenue in order to calculate Net Sales. Any deductions above
which involve a payment by Schering shall be taken as a deduction against
aggregate sales for the period in which the payment or deduction is made.
In the event a Licensed Product is sold in the form of a combination
product containing one or more active ingredients in addition to a Licensed
Product, Net Sales for such combination product will be adjusted by
multiplying actual Net Sales of such combination product by the fraction
A / (A+B) where A is the invoice price of the Licensed Product, if sold
separately, and B is the invoice price of any other active ingredient or
ingredients in the combination, if sold separately. If, on a country-by-
country basis, the other active ingredient or ingredients in the
combination are not sold separately in that country, Net Sales shall be
calculated by multiplying actual Net Sales of such combination product by
the fraction A / C where A is the invoice price of the Licensed Product if
sold separately, and C is the invoice price of the combination product. If,
on a country by country basis, neither the Licensed Product nor the other
active component or components of the combination product is sold
separately in said country, Net Sales shall be determined between the
parties in good faith.
1.35 "New Compound" means: (i) any uPA Inhibitor and members of the same
Chemical Class which is identified, discovered, created or synthesized by
3DP or an Affiliate in the course of the Research Program; (ii) any
chemical entity, and any member of the same Chemical Class as such chemical
entity, that is identified, discovered, created or synthesized by 3DP or an
Affiliate and is
9
discovered during the Research Term, but outside of the Research Program,
to be a uPA Inhibitor, to the extent that such chemical entity is
Controlled by 3DP or an Affiliate; and (iii) any chemical entity, and any
member of the same Chemical Class as such chemical entity that is
identified, discovered, created or synthesized by 3DP or an Affiliate and
is discovered to be a uPA Inhibitor after the end of the Research Term but
within six (6) months thereafter, to the extent that such chemical entity
is Controlled by 3DP or an Affiliate.
1.36 "Patents" mean all patents and patent applications and all patent
applications hereafter filed, including any continuation, continuation-in-
part, division, provisional or any substitute applications, any patent
issued with respect to any such patent applications, any reissue,
reexamination, renewal or extension (including any supplemental patent
certificate) of any such patent, and any confirmation patent or
registration patent or patent of addition based on any such patent, and all
foreign counterparts of any of the foregoing, to the extent that such
Patents are Controlled by a Party and its Affiliates.
1.37 "Patent Expenses" means the fees, expenses and disbursements and outside
counsel fees, and payments to Third Party agents incurred in connection
with the preparation, filing, prosecution and maintenance of 3DP Patents or
Joint Patents covering a Licensed Compound or Licensed Product in the
Field, including costs of patent interference and opposition proceedings
and actions at law and equity against Third Parties for patent
infringement.
1.38 "Pivotal Clinical Trial" means a clinical trial designed by Schering or an
Affiliate or sublicensee which is essential to demonstrate efficacy and
without which the relevant New Drug Application to the FDA (or equivalent
in another Major Market Country) would lack adequate and well-controlled
proof of efficacy likely to be acceptable to the regulatory authorities for
the grant of marketing approval of a Licensed Product set by the
regulatory authorities in the Major Market Country for which the clinical
trial is designed.
10
1.39 "Regulatory Approval" means any approvals (including pricing and
reimbursement approvals), product and/or establishment licenses,
registrations or authorizations of any federal, state or local regulatory
agency, department, bureau or other governmental entity, necessary for the
manufacture, use storage, importation, export, transport or sale of
Licensed Compound or Licensed Product in a regulatory jurisdiction.
1.40 "Research Plan" means the Outline Research Plan (as described in Section
2.4) for identifying, conceiving, synthesizing, structurally characterizing
and/or otherwise discovering or optimizing one or more Licensed Compounds
agreed upon by the Parties and attached to this Agreement as Part I of
Schedule B; together with the First Year Research Plan and Second Year
Research Plan to be agreed to between the Parties pursuant to Section 2.4
and to be attached to this Agreement as Part II and Part III of Schedule B,
respectively.
1.41 "Research Program" means research activities undertaken pursuant to this
Agreement as described in the Research Plan, associated with the discovery
or creation of Base Compounds and New Compounds, including in vitro studies
of Licensed Compounds, in vivo animal studies for research purposes only
and related activities.
1.42 "Research Term" means a twenty-four month period commencing on the
Effective Date.
1.43 "Research Year" means a twelve-month period during the Research Term
commencing on the Effective Date and ending on an anniversary thereof.
1.44 "Sales Year" means a full calendar year during which any Licensed Product
is sold in any country of the world in a Separate Therapeutic Area.
11
1.45 "Separate Therapeutic Area" means a broad category of disease(s),
condition(s) or disorder(s) generally regarded, by virtue of their common
pathology, area of impact or otherwise, as therapeutically/medically
distinct from other such categories. For avoidance of doubt and without
limitation, examples of Separate Therapeutic Areas are: oncology;
cardiovascular system; central and peripheral nervous systems;
endocrinology; dermatology and inflammation.
1.46 "Territory" means all countries of the world.
1.47 "Third Party" means any entity other than 3DP or Schering and their
respective Affiliates and sublicensees.
1.48 "Urokinase Plasminogen Activator (uPA) Inhibitor" means a compound that has
[**]
1.49 "US" or "United States" means the United States of America, its territories
and possessions, including the District of Columbia, the Commonwealth of
Puerto Rico, the US Virgin Islands, Guam, and all other places under the
jurisdiction of the United States of America.
________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
12
1.50 "Valid Claim" means any claim of an issued, unexpired patent which shall
not have been abandoned, withdrawn, canceled or disclaimed, nor held
invalid or unenforceable by a court of competent jurisdiction in an
unappealed or unappealable decision.
ARTICLE 2
RESEARCH PROGRAM
2.1 Commencement: The Research Program will commence on the Effective Date and
will continue (unless earlier terminated pursuant to Article 10 below) for
the Research Term. 3DP shall perform its responsibilities under the
Research Program in accordance with the terms of the Research Plan. The
objective of the Research Program is to identify Licensed Compounds which
may become Lead Candidates for development and commercialization by
Schering.
2.2 Research Funding: Schering shall fund the Research Program in the amount of
[**] for each Research Year. Payments for each Research Year will be made
quarterly in advance. In addition, Schering shall reimburse 3DP the
documented costs payable to any Third Party in connection with activities
under the Research Program where such activities and the costs therefor
have been approved in advance in writing by Schering. The Parties consider
that the performance of the Research Program as currently envisaged will
not require the payment of any such costs to Third Parties. No activities
may be delegated by 3DP under the Research Program without the prior
written consent of Schering except as agreed to by the Joint Research
Committee. All payments shall be made in US dollars to the credit of such
bank account as may be designated by 3DP in writing to Schering. Any
payments which fall due on a date which is a legal holiday in the
________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
13
State of Pennsylvania or in Berlin, Federal Republic of Germany, may be
made on the next following day which is not a legal holiday.
2.3 Joint Research Committee:
(a) Composition and Purposes: Upon the execution of this Agreement, 3DP
------------------------
and Schering will establish a Joint Research Committee which shall consist
of six members, three designated by 3DP and three designated by Schering.
The Joint Research Committee shall meet formally at least quarterly or
with such other frequency, and at such time and location, as may be
established by the Joint Research Committee, for the following purposes:
(i) To review and approve, if appropriate, revisions to the Research
Plan;
(ii) To monitor and review the progress of the Research Program and to
consider whether any amendment of the Research Program should be
recommended to the Parties;
(iii) To review Licensed Compounds proposed by either Party for further
preclinical testing;
(iv) To review and approve Biological Criteria for the Acceptance of Lead
Candidates, Back-Ups and Follow-Ups;
(v) To decide whether and how a Licensed Compound proposed by either
Party as a potential Lead Candidate, Back-Up or Follow-up should be
assessed in accordance with the Biological Criteria.
(vi) To discuss matters relating to publications and Patents.
(b) Decision Making: The objective of the Joint Research Committee shall
---------------
be to reach agreement by consensus on all matters within the scope of the
Research Plan. However, all decisions to be made under this Agreement will
be made by majority vote in the Joint Research Committee, and if the Joint
Research Committee cannot agree on any matter (a "Disputed Matter"), the
Disputed Matter shall be referred to the Chief Executive Officer of 3DP and
the President
14
of Schering's Affiliate, Berlex Biosciences, for resolution. If the
Disputed Matter is not then resolved, Schering's decision shall be final
and binding.
(c) Powers: Each Party shall retain the rights, powers and discretion
------
granted to it under this Agreement and the Joint Research Committee shall
not be delegated or vested with any such rights, powers or discretion
except as expressly provided in the Agreement. The Joint Research
Committee shall not have the power to amend or modify this Agreement, which
may only be amended or modified as provided in Section 12.11.
2.4 Research Plan: 3DP and Schering have agreed upon an outline for a two (2)
year Research Plan (the "Outline Research Plan") for identifying,
conceiving, synthesizing, structurally characterizing and/or otherwise
discovering one or more Licensed Compounds that are commercially viable
candidates for development as drugs in the Field. The Outline Research Plan
is attached hereto as Part I of Schedule B. Within forty five (45) days of
the Effective Date, the Joint Research Committee shall adopt a more
detailed research plan which describes the research activities to be
carried out in the first Research Year (the "First Year Research Plan",
such plan to be consistent with the Outline Research Plan and to be
attached hereto as Part II of Schedule B. Three months before the end of
the first Research Year, 3DP and Schering will agree upon a detailed
research plan which describes the research activities for the second
Research Year (the "Second Year Research Plan"), such plan to be consistent
with the Outline Research Plan and to be attached hereto as Part III of
Schedule B. The Joint Research Committee will be responsible for overseeing
implementation of the Research Plan. Amendments to the Research Plan shall
be effective only if agreed in writing by both Parties in accordance with
the provisions of this Agreement. The Research Plan also shall establish a
Research Project Team that shall be responsible for implementing the
Research Plan. The Parties will allocate for the performance of the
Research Plan the resources, in terms of personnel, equipment, materials
etc., necessary to perform the Research
15
Program, such resources to be at least equal to the amounts stipulated in
the Research Plan.
2.5 Biological Criteria: The Parties have agreed upon provisional biological
criteria attached hereto as part of the Outline Research Plan as the basis
for the determination of Biological Criteria under this Agreement. The
Parties shall, within forty-five (45) days of signature of this Agreement,
finalize the Biological Criteria, for the Lead Candidate.
2.6 Selection of Lead Candidates, Back-Ups and Follow-Ups:
(a) Either Party may propose a Licensed Compound for selection and
evaluation as a Lead Candidate, Back-Up or Follow-up . If the Joint
Research Committee decides that such Licensed Compound should be
evaluated, the Parties will assess whether the Biological Criteria
have been met. If a Licensed Compound is Accepted, Schering shall be
free to proceed with the development of such Licensed Compound.
(b) In the event that the Parties agree that the Biological Criteria have
not been met, 3DP shall, at Schering's request and as part of the
Research Program, carry out such optimization of the Lead Candidate,
Back-Up or Follow-Up as Schering may reasonably request with a view to
qualifying such Lead Candidate, Back-Up or Follow-Up to meet the
Biological Criteria. If the Parties disagree as to whether the
Biological Criteria have been met in any case, this dispute will be
dealt with in the same way as Disputed Matters pursuant to Section
2.3(b) above. Both Parties will use all reasonable efforts in good
faith to come to agreement on whether the Biological Criteria have
been met.
2.7 Reversion of Rights to Compounds that are Not Accepted by Schering: When a
Lead Candidate, Back-Up or Follow-Up is recommended by the Joint Research
Committee for evaluation and both Parties agree that such Lead Candidate or
Back-Up or Follow-Up meets all Biological Criteria, Schering may, at its
absolute discretion, either: (i) Accept the Lead Candidate, Back-Up or
16
Follow-Up and pay the milestone payment due pursuant to Section 4.1.1; or
(ii) decline to Accept such compound, in which case Schering agrees to
negotiate in good faith with 3DP at that time to provide a release of
rights to 3DP to pursue clinical development of such compound(s) in
Separate Therapeutic Areas designated by 3DP and which Schering confirms
are not of interest to Schering. The parties contemplate that the royalty
and milestone terms of this Agreement would be applicable to such release
of rights by Schering.
2.8 Reversion of Rights to Compounds Whose Development is Terminated by
Schering. If Schering, having Accepted a Lead Candidate, Back-Up or Follow-
Up decides, at any stage, to terminate pharmaceutical development of such
Lead Candidate, Back-Up or Follow-Up, Schering agrees to negotiate in good
faith with 3DP at such time to provide a release of rights to 3DP to pursue
development of such Licensed Compound(s) in Separate Therapeutic Areas
designated by 3DP and which Schering confirms are not of interest to
Schering. The parties contemplate that the royalty and milestone terms of
this Agreement would be applicable to such release of rights by Schering.
Any product developed by 3DP pursuant to Sections 2.7 or 2.8 of this
Agreement will be developed in such a way that it cannot be directly
substituted for off label uses for any Licensed Product being developed or
commercialized by Schering.
2.9 Designation of Separate Therapeutic Areas. If:
(i) 3DP has requested a release of rights pursuant to Sections 2.7 or 2.8
above to pursue development of a designated Licensed Compound in a
designated Separate Therapeutic Area; and
(ii) Schering has refused to release such rights on the basis that the
designated Separate Therapeutic Area is of interest to Schering; and
(iii) Schering is not, within two years of the request for release of
rights by 3DP, either developing or commercializing a Licensed
Compound or Licensed Product in such designated Separate Therapeutic
Area or
17
developing or commercializing such designated Licensed Compound in
another Separate Therapeutic Area;
then 3DP may renew its request for a release of rights to such designated
Licensed Compound in such designated Separate Therapeutic Area and Schering
shall negotiate in good faith with 3DP at such time to provide a release of
rights to 3DP to pursue development of such designated Licensed Compound in
such designated Separate Therapeutic Area.
2.10 Rights to Non-uPA Inhibitors. To the extent that 3DP or an Affiliate
Controls any Non-uPA Inhibitor Compounds, 3DP agrees to negotiate in good
faith with Schering to grant an exclusive, worldwide, sublicensable license
to Schering to pursue development and commercialization of such Non-uPA
Inhibitor Compounds in one or more Separate Therapeutic Areas in the Field.
The parties contemplate that the research funding, royalty and milestone
terms of this Agreement would be applicable to any such license to
Schering. In the event that Schering wishes to develop such Non-uPA
Inhibitors together with a Third Party partner, Schering agrees to first
negotiate in good faith with 3DP as a potential partner for the development
of Non-uPA Inhibitor Compounds. In the event that 3DP is not able to grant
to Schering a license to any Non-uPA Inhibitor Compound as provided above,
then 3DP undertakes, during the term of this Agreement, not to develop or
commercialize or permit the development or commercialization of such Non-
uPA Inhibitor Compound for any Separate Therapeutic Area for which Schering
develops or commercializes a Licensed Compound or Licensed Product.
2.11 Research Funding: 3DP will utilize the research funding provided by
Schering pursuant to Section 2.2 above exclusively for the performance of
the Research Program.
2.12 Research Exclusivity: During the Research Term, the Parties agree to
cooperate exclusively with each other in carrying out research and
development relating to uPA Inhibitors. Neither Party shall, during the
Research Term, carry
18
out any research in the Field relating to the discovery of uPA Inhibitors
except pursuant to this Agreement unless the Parties mutually agree
otherwise in writing. Neither Party shall enter into any agreement with a
Third Party which would prevent it from performing its obligations under
this Agreement.
ARTICLE 3
LICENSE RIGHTS
3.1 Grant to Schering:
(a) 3DP hereby grants to Schering an exclusive, worldwide, sublicensable
license under the 3DP Technology to research, develop, make, have
made, use, sell and import for sale Licensed Compounds and Licensed
Products in the Field. A list of the 3DP Patents identified as of the
Effective Date is attached hereto as Schedule A. Such list shall be
modified from time to time to reflect any changes to the 3DP Patents
acquired by or coming under the Control of 3DP or its Affiliates
during the term of this Agreement or within a period of six (6) months
thereafter.
(b) 3DP also hereby grants to Schering a nonexclusive, worldwide,
sublicensable license under Non-uPA Inhibitor Patents to carry out
research and development in respect of uPA Inhibitor Compounds during
the Research Program and to use any results of such research and
development for the development, manufacture or commercialization of
Licensed Compounds and Licensed Products.
(c) 3DP also hereby grants to Schering a nonexclusive, worldwide,
sublicensable license under Improvements that are Controlled by 3DP
during the term of this Agreement to research, develop, make, have
made, use, sell and import for sale Licensed Products in the Field.
19
(d) 3DP agrees not to develop or commercialize outside of the Field any
Licensed Compound or Licensed Product that is being developed or
marketed by Schering without the prior written approval of Schering,
such approval not to be unreasonably withheld by Schering.
3.2 License Following Expiration: Following the Royalty Expiration Date
specified in Section 5.1(b) below, and provided that this Agreement has not
been terminated by Schering under Section 10.2(a) or by 3DP under Section
10.2(b) or 10.2(c), Schering shall, in each country of the world, have an
exclusive (even as to 3DP), paid-up, sub-licensable license under 3DP Know-
How to research, develop, make, have made, use, sell and import for sale
Licensed Compounds and Licensed Products.
3.3 Transfer of Information: 3DP shall promptly identify and make available to
the Joint Research Committee, and to Schering upon request, all information
in 3DP's possession or coming into its possession during the course of this
Agreement relating to Licensed Compounds, Licensed Products and methods of
manufacturing the same, which appears to be reasonably necessary or useful
for exercise by Schering of the rights granted hereunder. Such information
shall include copies of all Patents, copyrights, copyright registrations
and applications therefor and all other manifestations of the intellectual
property embodied in the Licensed Compounds and Licensed Products, whether
in human or machine readable form.
ARTICLE 4
MILESTONE PAYMENTS; DILIGENCE
4.1 Schering will make the following milestone payments to 3DP within 30
(thirty) days of achievement of any of the following milestones with
respect to a Licensed Compound or Licensed Product.
20
[**]
______________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
21
[**]
______________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
22
[**]
4.2 Diligence: If a Lead Candidate or Follow-Up is Accepted by Schering,
Schering shall use reasonable commercial efforts to develop and
commercialize a
______________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
23
Licensed Product containing such Lead Candidate or Follow-Up, such efforts
to be comparable to the efforts expended by Schering on its proprietary
compounds of equivalent potential. Schering may discharge its obligations
pursuant to this Section 4.2 through a sub-licensee or Affiliate.
ARTICLE 5
ROYALTIES
5.1 Royalties
(a) General: In further consideration of the rights and licenses granted
-------
to Schering under Article III of this Agreement, Schering agrees,
subject to Sections 5.1(b) and 5.4, to pay to 3DP the following
royalties on Net Sales of Licensed Products:
[**]
(b) Royalty Term: Except where expressly provided otherwise in this
Agreement, all royalties to 3DP shall be paid, on a country-by-country
basis, from the date of the First Commercial Sale of a Licensed
Product in
_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
24
a particular country until the later (the "Royalty Expiration Date")
of (i) ten (10) years from the First Commercial Sale in such country
and (ii) the last to expire of any 3DP Patent which includes a Valid
Claim in such country; provided, however, that if a Licensed Product
is sold in any country in which 3DP does not have a Valid Claim which
would prevent the sale of a generic form of such Licensed Product, the
royalty obligations set forth in Section 5.1(a) with respect to Net
Sales attributable to the sale of the Licensed Product in such country
shall be reduced by [**] of the royalty that would otherwise be
payable with respect to Net Sales attributable to the sale of the
Licensed Product in such country.
5.2 Royalty Reports And Payments: Schering shall make royalty payments to 3DP
quarterly within sixty (60) days after the end of each calendar quarter in
which Net Sales occurred. A report summarizing the Net Sales of Licensed
Products in each Separate Therapeutic Area on a country-by-country basis
("Quarterly Report") shall be delivered to 3DP within sixty (60) days
following the end of each calendar quarter for which royalties are due. A
separate report summarizing the Annual Worldwide Net Sales of each Licensed
Product in each Separate Therapeutic Area (the "Annual Report") shall be
delivered to 3DP within sixty (60) days of the end of the First Sales Year
and each subsequent Sales Year.
5.3 Adjustment Of Royalty Rates: The royalty rate applicable to Net Sales of a
Licensed Product in a Separate Therapeutic Area in the First Sales Year
shall be deemed to be [**.] If Annual Worldwide Net Sales for such First
Sales Year are equal to or exceed [**] Schering shall, within sixty (60)
days of the end of the First Sales Year, pay to 3DP in respect of such Net
Sales an amount equal to the difference between the royalty amount paid by
Schering for such Net Sales and the amount which would have been payable if
the applicable royalty rate had been [**.] The royalty rate applicable to
Net Sales of a Licensed Product in a
_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
25
Separate Therapeutic Area in the second and all subsequent Sales Years
shall be deemed to be the rate actually applicable after adjustment for the
preceding Sales Year. Within sixty (60) days of the end of each Sales Year,
Schering shall pay to 3DP or 3DP shall pay to Schering, as the case may be,
the difference (if any) between the royalty amount paid in respect of such
Annual Worldwide Net Sales in the preceding Sales Year and the amount which
would have been payable if the royalty rate actually applicable after
adjustment had been paid in respect of such Annual Worldwide Net Sales for
such preceding Sales Year.
For example, if Annual Worldwide Net Sales of a specific Licensed Product
in a Separate Therapeutic Area in Sales Year 2 were [**,] the deemed
royalty rate for Annual Worldwide Net Sales for that Licensed Product in
Sales Year 3 will be [**.] If, in fact, Annual Worldwide Net Sales in Year
3 were [**,] Schering shall, within sixty days of the end of Sales Year 3,
pay to 3DP an extra [**] royalty on Annual Worldwide Net Sales of such
Licensed Product in Sales Year 3, and the deemed royalty rate for Annual
Worldwide Net Sales of such Licensed Product in Sales Year 4 will be [**.]
5.4 Third Party Royalty Obligations: If, as a result of a judgment in favor of
or settlement with a Third Party pursuant to Section 7.6, Schering is
required to pay monies to a Third Party in order to develop, manufacture or
sell a Licensed Product in any country, [**] of any such monies may be set
off against the royalties otherwise due to 3DP hereunder. Notwithstanding
the foregoing, the permitted set-off may not decrease the royalty otherwise
owed by Schering to 3DP by more than [**].
5.5 Payments; Interest: Any payments due under this Agreement shall be due on
such date as specified in this Agreement and, in the event such date is a
day on which commercial banks are not authorized to conduct business in
either Pennsylvania, US or Berlin, Federal Republic of Germany, then the
next
_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
26
succeeding business day, and shall be made by wire transfer to a designated
bank account of 3DP.
Any failure by Schering to make a payment within five days after the date
when due shall obligate Schering to pay interest to 3DP at a rate per annum
equal to the Prime Rate as publicly announced by Bank America on Reuters
Screen "USPRIME1" on the due date or the next business day computed on the
basis of a 356/360 year, the interest period commencing on the due date and
ending on the payment day, such interest to be due and payable upon tender
of the payment.
5.6 Taxes: 3DP shall pay any and all taxes levied on account of research
payments, milestone payments or royalties it receives under this Agreement.
If laws or regulations require that taxes be withheld, Schering will (i)
deduct those taxes from the remittable royalty, (ii) timely pay the taxes
to the proper taxing authority, and (iii) send proof of payment to 3DP
within thirty (30) days of receipt of confirmation of payment from the
relevant taxing authority.
5.7 Payments To Or Reports By Affiliates: Any payment required under any
provision of this Agreement to be made to either Party or any report
required to be made by either Party shall be made to or by an Affiliate of
that Party if designated by that Party as the appropriate recipient or
reporting entity without relieving such Party from responsibility for such
payment or report.
5.8 Payment Currency: Payments by Schering under this Agreement shall be made
in US dollars. The calculation of royalty payments is based on Euro and
converted into US dollars. Except for Net Sales in the United States, where
payments are based on Net Sales in countries other than the member states
of the European Currency Union, the amount of such Net Sales expressed in
the currency of each country shall be converted into Euros at the exchange
rate of the last date of the applicable calendar quarter. The applicable
exchange rate
27
will be the Euro foreign exchange reference spot rate published on the last
business day of the applicable calendar quarter by the European Central
Bank, Frankfurt/Main. If no Euro foreign exchange reference spot rate is
determined for the relevant currency, the Parties shall agree upon another
reference rate. Finally, the payable Euro amount shall be converted into US
dollars by the Euro foreign exchange reference spot rate published by the
European Central Bank, Frankfurt/Main, at the last business day of the
applicable calendar quarter. These Euro foreign exchange reference spot
rates are currently published by Reuters on screen "ECB37".
ARTICLE 6
CONFIDENTIALITY
6.1 Confidentiality; Exceptions: Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing, the Parties agree that the
receiving Party and its employees (who shall be bound in writing to observe
the confidentiality provisions of this Agreement) shall keep confidential
and shall not publish or otherwise disclose or use for any purpose other
than as provided for in this Agreement any Know-How and other information
and materials furnished to it by the other Party pursuant to this Agreement
or any information or Know-How developed during the course of the
collaboration hereunder, or any provisions of this Agreement that are the
subject of an effective order of the U.S Securities and Exchange Commission
granting confidential treatment pursuant to the Securities Act of 1934, as
amended (collectively, "Confidential Information"), except to the extent
that it can be established by the receiving Party that such Confidential
Information:
(i) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other
Party;
28
(ii) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party;
(iii) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
(iv) was disclosed to the receiving Party, other than under an obligation
of confidentiality, by a Third Party who had no obligation to the
disclosing Party not to disclose such information to others.
6.2 Authorized Disclosure: Each Party may disclose Confidential
Information hereunder to the extent such disclosure is reasonably necessary
in filing or prosecuting patent applications, prosecuting or defending
litigation, complying with applicable governmental regulations, or
conducting research under this Agreement provided that, if a Party is
required by law or regulation to make any such disclosures of the other
Party's Confidential Information it will, except where impracticable for
necessary disclosures, for example in the event of medical emergency, give
reasonable advance notice to the other Party of such disclosure requirement
and, except to the extent inappropriate in the case of patent applications,
will use its reasonable efforts to secure confidential treatment of such
Confidential Information required to be disclosed. In addition, and with
prior written notice to the other Party of each Third Party with whom a
confidential disclosure agreement is being entered into, each Party shall
be entitled to disclose, under a binder of confidentiality, Confidential
Information to any Third Party for the purpose of carrying out the purposes
of this Agreement and, in the case of 3DP, in connection with the seeking
of equity financing. Where materiality of disclosure requires a press
release or other disclosure pertaining to this Agreement by one Party, the
disclosing Party shall give the other Party a copy of the proposed
disclosure and afford that Party at least two (2) business days. In
addition, Schering may use and disclose Confidential Information for all
purposes related to the exercise of Schering's rights under this Agreement
provided that Schering takes the same care in respect of such
29
Confidential Information as it does in respect of its own confidential
information. Not withstanding the foregoing, each Party acknowledges that
the other may be obligated to disclose terms of this Agreement and make
public a copy of this Agreement in the event it becomes a public company as
required by applicable U.S. law; provided however, that the terms and copy
of this Agreement shall be redacted such that the extent of any such
disclosure shall be limited to that which in the reasonable opinion of the
disclosing Party's legal counsel is legally required. Each Party will
provide a copy of such disclosure to the other.
6.3 Survival: This Article 6 shall survive the termination or expiration of
this Agreement for a period of five (5) years.
6.4 Termination Of Prior Agreement: This Agreement supersedes the
Confidentiality Agreement between 3DP and Schering dated as of June 25,
1999. All information exchanged between the Parties under the said
Confidentiality Agreement shall be deemed to be Confidential Information
and shall be subject to the terms of this Article 6, and shall be included
within the definition of Confidential Information.
6.5 Publications: In consultation with 3DP, Schering shall determine the
overall strategy for publication in support of the Product in the
Territory.
6.6 Publicity Review: Subject to the other provisions of this Article 6, no
Party shall originate any written publicity, news release, or other
announcement or statement relating to this Agreement or to performance
hereunder or the existence of an arrangement between the Parties
(collectively "Written Disclosure") without the prior prompt review and
written approval of the other Party, which approval shall not be
unreasonably withheld or delayed. Notwithstanding the foregoing provisions
of this Section 6.6, any Party may make any public Written Disclosure it
believes in good faith based upon the advice of counsel is required by
applicable law or any listing or trading agreement concerning its publicly
traded
30
securities, provided that prior to making such Written Disclosure, the
disclosing Party shall provide the other Party with a copy of the materials
proposed to be disclosed and provide the receiving Party with at least two
(2) business days to review the proposed Written Disclosure. Each Party
agrees to issue press releases as soon as it reasonably can, on or after
the Effective Date, subject to expedited review and approval by the other
Party, such approval not to be unreasonably withheld.
ARTICLE 7
OWNERSHIP OF INTELLECTUAL PROPERTY AND PATENT RIGHTS
7.1 Ownership: Each Party shall solely own, and it alone shall have the right
to apply for, Patents for any inventions made solely by that Party's
employees or consultants in the course of performing work under this
Agreement. Inventions made jointly by employees or consultants of 3DP and
Schering shall be jointly owned by Schering and 3DP. All such inventions
and Joint Patents are subject to the license granted by 3DP to Schering
pursuant to Article 3 of this Agreement.
7.2 Disclosure Of Joint Inventions: Any patent application disclosing
inventions made jointly by the Parties shall be provided by one Party to
the other reasonably in advance of the intended date for submission of such
application to a governmental patent authority.
7.3 Patent Filings
(a) Each Party, at its sole discretion, cost and responsibility, shall
prepare, file, prosecute and maintain Patents to cover discoveries and
inventions made solely by its own employees or consultants relating to
Licensed Compounds or Licensed Products and use commercially reasonable
efforts to file initially all such applications in the appropriate forum
under the circumstances wherein such a Party determines it is commercially
reasonable to do so. If 3DP decides not to
31
file or, having filed, to abandon a Patent in a particular country it shall
notify Schering and, at Schering's request, assign all rights in respect to
such Patent to Schering. Schering shall file, prosecute and maintain
Patents to cover inventions relating to the discovery, evaluation,
manufacture, use or sale of the Licensed Compounds or Licensed Products
that are made jointly by personnel of 3DP and Schering in the course of the
Agreement (herein referred to as "Joint Patents"). The determination of the
countries in which to file Joint Patents shall be made by Schering. In
consultation with 3DP, and taking reasonably into account any rights
retained by 3DP under such Joint Patents, Schering shall have the right to
direct and control all material actions relating to the prosecution or
maintenance of Joint Patents in the Territory, including interference
proceedings, reexaminations, reissue opposition and revocation proceedings.
(b) The Parties agree to use commercially reasonable efforts to ensure
that any Patent filed outside the United States prior to a filing in the
United States will be in a form sufficient to establish the date of
original filing as a priority date for the purposes of a subsequent filing
in the United States. Schering shall bear all costs related to the filing
of Joint Patents. The Parties agree to use commercially reasonable efforts
to ensure that any Patent filed in the United States prior to filings
outside of the United States will be in a form sufficient to establish the
date of original filing as a priority date for the purpose of a subsequent
filing in any contracting state of the Paris Convention.
7.4 Third Party Patents: Each Party agrees to bring to the attention of the
other Party any Third Party Patent it discovers or has discovered and which
relates to the subject matter of this Agreement.
7.5 Enforcement Rights:
(a) Notification of Infringement: If either Party learns of any
----------------------------
infringement or threatened infringement by a Third Party of 3DP Patents,
Schering Patents or
32
Joint Patents in the Field, such Party shall promptly notify the other
Party and shall provide such other Party with all available evidence of
such infringement.
(b) Enforcement in the Territory: Schering shall have the right but not
----------------------------
the obligation to institute, prosecute and control at its own expense any
action or proceeding with respect to infringement of any 3DP Patents or
Joint Patents covering the research, manufacture, use, importation, sale or
offer for sale of Licensed Compounds or Licensed Products in the Field, by
counsel of its own choice. 3DP shall have the right, at its own expense, to
be represented in any action by counsel of its own choice. If Schering
fails to bring such an action or proceeding or otherwise take appropriate
action to xxxxx such infringement within a period of one hundred eighty
(180) days of notice by 3DP to Schering requesting action, 3DP will have
the right but not the obligation to bring and control any such action or
proceeding relating to 3DP Patents by counsel of its own choice and
Schering will have the right to be represented in any such action by
counsel of its own choice and at its own expense. If one Party brings any
such action or proceeding, the other Party agrees to be joined as a party
plaintiff if necessary to prosecute the action or proceeding and to give
the first Party commercially reasonable assistance and authority to file
and prosecute the suit. Any damages or other monetary awards recovered
pursuant to this Section 7.5(b) shall be allocated first to the reasonable
costs and expenses of the Party bringing suit, then to the reasonable costs
and expenses, if any, of the other Party. In the event that Schering brings
such action, any amounts remaining shall be distributed as follows:
compensatory damages shall be treated as Net Sales in the country and
calendar quarter received and punitive and exemplary damages shall be paid
equally to Schering and 3DP. In the event that 3DP brings such action, any
damages or other monetary awards recovered shall be divided equally between
the Parties.
(c) Settlement with a Third Party: The Party that controls the prosecution
-----------------------------
of a given action shall also have the right to control settlement of such
action,
33
provided however, that if one Party controls, no settlement shall be
entered into without the written consent of the other Party (which consent
shall not be unreasonably withheld) if such settlement would materially and
adversely affect the interests of the other Party.
7.6 Defense And Settlement Of Third Party Claims: If a Third Party asserts that
a patent owned by it is infringed by any Licensed Compound or any Licensed
Product or by the exercise by Schering of any of the rights licensed under
Article 3 above, Schering will have the right but not the obligation to
defend against any such assertions at its cost and expense but no
settlement may be entered into without the written consent of 3DP, which
shall not be unreasonably withheld. The costs of any such settlement
(including, without limitation, damages, expense reimbursements,
compliance, future royalties or other amounts) and of any amount awarded
against Schering shall be paid by Schering [**] under this Agreement
according to the provisions of Section 5.4.
7.7 Patent Expenses: All worldwide Patent Expenses with respect to 3DP Patents
shall be borne by 3DP and all worldwide Patent Expenses with respect to
Joint Patents shall be borne by Schering, subject in both cases to the
terms of this Agreement.
7.8 Trademarks: Schering shall be responsible for the selection, registration
and maintenance of all trademarks which it employs in connection with the
Licensed Products and shall own and control such trademarks and pay any
costs in connection therewith. 3DP recognizes the exclusive ownership by
Schering of the proprietary Schering name, logotype or trademark furnished
by Schering (including Schering's Affiliates) for use in connection with
the Licensed Product. 3DP shall not, either while this Agreement is in
effect or at any time thereafter, register, use or attempt to obtain any
right in or to any such name, logotype or
_____________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
34
trademark or in and to any name, logotype or trademark confusingly
similar thereto. Only Schering will be authorized to initiate, at its own
discretion and at its own cost, legal proceedings against any
infringement or threatened infringement of the trademarks applicable to
the Licensed Product.
7.9 Use Of Names: Neither Party shall use the name of the other Party in
relation to this transaction in any public announcement, press release or
other public document without the written consent of such other Party,
which consent shall not be unreasonably withheld or delayed, provided
however, that either Party may use the name of the other Party in any
document filed with any regulatory agency or authority, including the FDA
and the Securities and Exchange Commission, in which case Schering shall
be referred to as "Schering AG, Germany". The Parties agree not to use
the name of the other Party in relation to this transaction in any press
release, public announcement or other public document without the
approval of such other Party, which approval shall not be unreasonably
withheld or delayed.
7.10 No Trademark Rights: Except as otherwise provided herein, no right,
express or implied, is granted by the Agreement to use in any manner the
name "Schering" or "3DP" or any other trade name or trademark of the
other Party or its Affiliates in connection with the performance of the
Agreement.
ARTICLE 8
REPRESENTATIONS AND WARRANTIES
8.1 Representations And Warranties
(a) Each of the Parties hereby represents and warrants to the other Party
as follows:
35
(i) This Agreement is a legal and valid obligation binding upon
such Party and enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by such
Party does not conflict with any agreement, instrument or
understanding, oral or written, to which it is a party or by
which it is bound, nor to such Party's knowledge, violate any
law or regulation of any court, governmental body or
administrative or other agency having jurisdiction over it; and
(ii) 3DP has not granted and during the term of the Agreement will
not grant any right to any Third Party relating to the 3DP
Patents, 3DP Know-How and Joint Patents which would conflict
with the rights granted to Schering hereunder.
(b) 3DP hereby represents and warrants to Schering that 3DP:
(i) Has provided, shown or offered to Schering all material
information in its possession or control or of which it is
aware as of the Effective Date, concerning efficacy, side
effects, injury, toxicity or sensitivity, reaction and
incidents of severity thereof, associated with any clinical
use, studies, investigations or tests with the Licensed
Compounds.
(ii) Has conducted or has caused its contractors or consultants to
conduct research, and will in the future conduct, the Research
Program in accordance with applicable United States law, and
the scientific standards applicable to the conduct of research
in the US.
(iii) Has employed and will in the future employ individuals of
appropriate education, knowledge, and experience to conduct or
oversee the conduct of the Research Program.
36
(iv) As of the Effective Date, except as it may have previously
disclosed to Schering in writing: (i) 3DP has not received any
notices of infringement or any written communications from
Third Parties relating in any way to a possible infringement
with respect to any potential or actual Licensed Compounds; and
(ii) 3DP is not aware that the manufacture, use or sale of Base
Compounds or the conduct of the Research Program in accordance
with the attached outline of the Research Plan would infringe
any valid claims of any Third Party patent rights.
(v) As of the Effective Date, it is not aware of any prior act or
any fact which causes it to conclude that any 3DP Patent is
invalid or unenforceable.
(vi) As of the Effective Date, 3DP is not party to any Third Party
agreement under which a Third Party acquires rights of any kind
to the Base Compounds, or to any identified uPA Inhibitors
owned by 3DP at the Effective Date. The 3DP Technology which is
subject to the license granted pursuant to Section 3.1 is the
sole property of 3DP and is not subject to any license obtained
by 3DP from a Third Party. There are no royalties, milestones
or other financial obligations payable to any Third Party by
3DP in connection with the ownership, use or licensing of the
3DP Technology.
(vii) 3DP owns all rights to the 3DP Technology free and clear of any
liens, encumbrances or rights to repurchase.
(viii) During the term hereof, 3DP will not xxxxx x xxxx on this
Agreement or on any of 3DP's rights or obligations hereunder or
on the 3DP Technology.
(ix) The rights licensed to Schering under this Agreement are not
subject to any existing licenses from Third Parties in which
3DP is the licensee.
37
(x) During the Research Term, neither 3DP nor its Affiliates shall
enter into any agreements which have the effect of knowingly
removing from the Control of 3DP or its Affiliates any uPA
Inhibitor which, before the date of such third party agreement,
was Controlled by 3DP or an Affiliate.
8.2 Indemnification for Breaches of Representations and Warranties: Without
prejudice to any other right or remedy available to either Party arising
out of the breach by the other of any of the representations and warranties
set out at Section 8.1 above, each Party hereby agrees to indemnify, defend
and hold the other Party and its shareholders, directors, officers, agents
and employees harmless from and against any and all losses resulting
directly or indirectly from the breach of any representation or warranty
made by such Party hereunder. In the event that a Party is seeking
indemnification under this Section 8.2, it shall inform the other Party of
a claim as soon as reasonably practicable after it receives notice of the
claim, shall permit the indemnifying Party to assume direction and control
of the defense of the claim (including the right to settle the claim solely
for monetary consideration), and shall cooperate as requested (at the
expense of the indemnifying Party) in defense of the claim.
8.3 Performance by Affiliates: The Parties recognize that each Party may
perform some or all of its obligations under this Agreement through Affiliates,
provided however, that each Party shall remain responsible for and be a
guarantor of the performance by its Affiliates and shall cause its Affiliates to
comply with the provisions of this Agreement in connection with such
performance.
ARTICLE 9
ROYALTY REPORTS AND AUDITS
38
9.1 Royalty Records: Schering will maintain complete and accurate records which
are relevant to the calculation of Net Sales and royalties on a country-by-
country basis and Annual Worldwide Net Sales under this Agreement and such
records shall be open during reasonable business hours for a period of
three (3) years from creation of individual records for examination at
3DP's expense and not more often than once each year by a firm of certified
public accountants selected by 3DP and reasonably acceptable to Schering,
for the sole purpose of verifying for 3DP the correctness of calculations
and classifications of such Net Sales or royalty calculations or Annual
Worldwide Net Sales made under this Agreement. 3DP shall bear its own costs
related to such audit; provided that, for any underpayments greater than
five (5) percent by Schering, Schering shall pay 3DP the amount of
underpayment, interest as provided for in Section 5.4 from the time the
amount was due and 3DP's out-of-pocket expenses. For any underpayments less
than five (5) percent by Schering found under this Section, Schering shall
pay 3DP the amount of underpayment. Any overpayments by Schering will be
credited to future royalties. Any records or accounting information
received from the Schering shall be Confidential Information for purposes
of Article 6. Results of any such audit shall be provided to both Parties,
subject to Article 6.
9.2 If there is a dispute between the Parties following any audit performed
pursuant to Section 9.1, either Party may refer the issue (an "Audit
Disagreement") to an independent certified public accountant for
resolution. In the event an Audit Disagreement is submitted for resolution
by either Party, the Parties shall comply with the following procedures:
(i) The Party submitting the Audit Disagreement for resolution shall
provide written notice to the other that it is invoking the
procedures of this Section 9.2.
39
(ii) Within thirty (30) business days of the giving of such notice, the
Parties shall jointly select a recognized international accounting
firm to act as an independent expert to resolve such Audit
Disagreement;
(iii) The Audit Disagreement submitted for resolution shall be described
by the Parties to the independent expert, which description may be
in written or oral form, within ten (10) days of the selection of
such independent expert.
(iv) The independent expert shall render a decision on the matter as soon
as practicable.
(v) The decision of the independent expert shall be final and binding
unless such Audit Disagreement involves alleged fraud, breach of
this Agreement or construction or interpretation of any of the terms
and conditions hereof;
(vi) All fees and expenses of the independent expert, including any Third
Party support staff or other costs incurred with respect to carrying
out the procedures specified at the direction of the independent
expert in connection with such Audit Disagreement, shall be borne by
each Party in inverse proportion to the disputed amounts awarded to
the Party by the independent expert through such decision (e.g.
Party A disputes $100, the independent expert awards Party A $60,
then Party A pays forty percent (40%) and Party B pays sixty percent
(60%) of the independent expert's costs.)
ARTICLE 10
TERM AND TERMINATION
10.1 Term: This Agreement shall commence as of the Effective Date and, unless
sooner terminated as provided herein shall continue in effect until such
time as no royalties are payable under Article 5 hereunder to 3DP, provided
that the license to 3DP Know-How granted pursuant to Section 3.2 shall
survive such termination.
40
10.2 Termination
(a) Termination at Will: Schering will have the right to terminate this
--------------------
Agreement for the world or on a country-by-country basis at any time
after the expiry of the Research Term and be fully released of all
obligations hereunder (except as expressly provided for herein) by
ninety (90) days' notice given at any time, and 3DP shall thereafter
retain full rights to use any data and information generated, up to
the date of termination, by 3DP, Schering, or jointly pertaining to
the Licensed Compound and the Licensed Product.
(b) Termination for Material Breach: Failure by Schering or 3DP to comply
--------------------------------
with any of the respective material obligations and conditions
contained in this Agreement shall entitle the other Party to give the
Party in default notice requiring it to cure such default. If such
default is not cured within ninety (90) days after receipt of such
notice, the notifying Party shall be entitled (without prejudice to
any of its other rights conferred by this Agreement) to terminate this
Agreement or, in the event of an uncured material breach by 3DP
exercise the rights of Schering set forth in Section 10.2(e) by giving
a notice to take effect immediately. The right of either Party to
terminate this Agreement as hereinabove provided shall not be affected
in any way by its waiver of, or failure to take action with respect
to, any previous default.
(c) Termination for Insolvency: In the event that one of the Parties
---------------------------
hereto shall go into liquidation, a receiver or a trustee be appointed
for the property or estate of that Party and said receiver or trustee
is not removed within sixty (60) days, or the Party makes an
assignment for the benefit of creditors (collectively, a "Bankruptcy
Event"), and whether any of the aforesaid Bankruptcy Events be the
outcome of the voluntary act of that Party or otherwise, the other
Party shall be entitled to terminate this
41
Agreement (or in the event 3DP suffers such a Bankruptcy Event,
Schering may exercise its rights described in Section 10.2(e))
forthwith by giving a written notice to 3DP).
(d) Effect of Termination: In the event that this Agreement is terminated
---------------------
by Schering in one or more countries or in its entirety in accordance
with Section 10.2(a), or this Agreement is terminated by 3DP pursuant
to Sections 10.2(b) or (c) either in one country or in its entirety,
Schering will, with respect to each country to which the termination
applies:
(i) deliver to 3DP the 3DP Know-How and assign to 3DP any rights
in the 3DP Technology, if any, in either case relating solely
to the country that is the subject of the termination;
(vii) not use the 3DP Know-How as long as it has to be kept
confidential pursuant to Article 6 hereof in such country;
(viii) not infringe any of the 3DP Patents in such country; and
(ix) provide 3DP with the right to utilize and commercialize the
3DP Technology notwithstanding the existence of any Patents
that are Controlled by Schering or its Affiliates that cover
such 3DP Technology.
(e) Effect of Termination by Schering Pursuant to Sections 10.2(b) and
------------------------------------------------------------------
(c): In the event of a Bankruptcy Event or a material default
---
described in Sections 10.2(b) and (c) by 3DP, which default is not
cured as provided therein, Schering may elect, in lieu of terminating
this Agreement (and without prejudice to any claim for damages arising
out of such material default) to declare the license granted pursuant
to this Agreement to be irrevocable. From the date of receipt of
notice of such election, 3DP shall have no further rights or
obligations (except for those arising under Article 6) under this
Agreement except that 3DP's right to receive financial
42
payments by Schering pursuant to the terms of this Agreement will
remain in full force and effect.
(f) General: Except where expressly provided for otherwise in this
-------
Agreement, termination of this Agreement shall not relieve the Parties
hereto of any liability, including any obligation to make payments
hereunder, which accrued hereunder prior to the effective date of such
termination nor preclude any 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 nor prejudice any Party's right to obtain
performance of any obligation.
(g) Surviving Rights: The rights and obligations set forth in this
----------------
Agreement shall extend beyond the term or termination of the Agreement
only to the extent expressly provided for herein, or the extent that
the survival of such rights or obligations are necessary to permit
their complete fulfillment or discharge.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification: With respect to Licensed Products (determined on a
country by country basis):
(a) Except as specified below, Schering hereby agrees to save, defend and
hold 3DP and its directors, officers, agents and employees harmless
from and against any and all suits, claims, actions, demands,
liabilities, expenses and/or losses, including reasonable legal
expenses and attorneys' fees (collectively "Losses") resulting from
the development or commercial sale of the Licensed Products except to
the extent such Losses result from the
43
negligence or willful misconduct of 3DP or a breach by 3DP of any of
its material obligations under this Agreement or of any representation
or warranty under Article 8, in which case 3DP hereby agrees to save,
defend and hold Schering and its directors, officers, agents and
employees harmless from any and all such Losses.
44
(b) Each indemnified Party agrees to give the indemnifying Party prompt
written notice of any Loss or discovery of fact upon which such
indemnified Party intends to base a request for indemnification under
Section 11.1(a). Each Party shall furnish promptly to the other copies
of all papers and official documents received in respect of any Loss.
With respect to any Loss relating solely to the payment of money
damages and which will not result in the indemnified Party becoming
subject to injunctive or other relief or otherwise adversely affecting
the business of the indemnified Party in any manner, and as to which
the indemnifying Party shall have acknowledged in writing the
obligation to indemnify the indemnified Party hereunder, the
indemnifying Party shall have the sole right to defend, settle or
otherwise dispose of such Loss, on such terms as the indemnifying
Party, in its sole discretion, shall deem appropriate. The indemnifying
Party shall obtain the written consent of the indemnified Party which
shall not be unreasonably withheld or delayed, prior to ceasing to
defend, settling or otherwise disposing of any Loss if as a result
thereof the indemnified Party would become subject to injunctive or
other equitable relief, or any remedy other than the payment of money
which is the responsibility of the indemnifying Party. The indemnifying
Party shall not be liable for any settlement or other disposition of a
Loss by the indemnified Party which is reached without the written
consent of the indemnifying Party. The reasonable costs and expenses,
including reasonable fees and disbursements of counsel incurred by any
indemnified Party in connection with any Loss, shall be reimbursed on a
quarterly basis by the indemnifying Party, without prejudice to the
indemnifying Party's right to contest the indemnified Party's right to
indemnification and subject to refund in the event the indemnifying
Party is ultimately held not to be obligated to indemnify the
indemnified Party.
45
ARTICLE 12
MISCELLANEOUS
12.1 ASSIGNMENT:
(b) Either Party may assign any of its rights or obligations under this
Agreement in any country to any of its Affiliates, provided that such
assignment shall not relieve the assigning Party of its
responsibilities for performance of its obligations under this
Agreement .
(c) This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Parties. Any assignment not in
accordance with this Agreement shall be void.
12.2 RETAINED RIGHTS: Nothing in this Agreement shall limit in any respect the
right of either Party to conduct research and development and to market
products using such Party's technology other than as herein expressly
provided.
12.3 FURTHER ACTIONS: Each Party agrees to execute, acknowledge and deliver such
further instruments, and to do all such other acts as may be necessary or
appropriate in order to carry out the purposes and intent of this
Agreement.
12.4 NOTICES: All notices hereunder shall be in writing and shall be deemed
given if delivered personally or two days after mailed by registered or
certified mail (return receipt requested), postage prepaid, or sent by
express courier service to the Parties at the following addresses (or at
such other address for a Party as shall be specified by like notice;
provided that notices of a change of address shall be effective only upon
receipt thereof).
46
(a) If to 3DP
3-Dimensional Pharmaceuticals, Inc.
Eagleview Corporate Center
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
ATTN: Chief Executive Officer
with a copy to:
Xxxxxx, Xxxxx & Xxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
ATTN: Xxxxx X. Xxxx, Esq.
(a) If to Schering:
Xxxxxxxx Xxxxxxxxxxxxxxxxxx
00000 Xxxxxx
Xxxxxxx,
Attention: Legal Department
with a copy to:
Berlex Biosciences
00000 Xxx Xxxxx Xxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000-0000
Attention: President
12.5 Waiver: Except as specifically provided for herein, the waiver from time
to time by either of the Parties of any of their rights or their failure to
exercise any
47
remedy shall not operate or be construed as a continuing waiver of same or
any other of such Party's rights or remedies provided in this Agreement.
12.6 Severability: If any term, covenant or condition of this Agreement or the
application thereof to any Party or circumstances shall, to any extent or
in any country, be held to be invalid or unenforceable, then (i) the
remainder of this Agreement, or the application of such term, covenant or
condition of this Agreement shall be valid and be enforced to the fullest
extent permitted by law; and (ii) the Parties hereto covenant and agree to
renegotiate any such term, covenant or application thereof in good faith
in order to provide a reasonably acceptable alternative to the term,
covenant or condition of this Agreement or the application thereof that is
invalid or unenforceable, it being the intent of the Parties that the
basic purposes of this Agreement are to be effected.
12.7 Ambiguities: Ambiguities, if any, in this Agreement shall not be construed
against any Party, irrespective of which Party may be deemed to have
authored the ambiguous provision.
12.8 Governing Law and Jurisdiction: This Agreement shall be governed by
and interpreted under the laws of the State of New York as applied to
contracts entered into and performed entirely in New York by New York
residents. Any lawsuit concerning this Agreement shall be brought in the
state or federal courts of New York.
12.9 Headings: The sections and paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections or paragraphs.
12.10 Counterparts: This Agreement may be executed in one or more counterparts
(and by facsimile), each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
48
12.11 Entire Agreement; Amendments: This Agreement, including all Exhibits
attached hereto and thereto, and all documents delivered concurrently
herewith and therewith, set forth all the covenants, promises, agreements,
warranties, representations, conditions and understandings between the
Parties hereto and supersede and terminate all prior agreements and
understandings between the Parties. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings,
either oral or written, between the Parties other than as set forth herein
and therein. No subsequent alteration, amendment, change or addition to
this Agreement shall be binding upon the Parties hereto unless reduced to
writing and signed by the respective authorized officers of the Parties.
This Agreement, including without limitation the exhibits, schedules and
attachments thereto, are intended to define the full extent of the legally
enforceable undertakings of the Parties hereto, and no promise or
representation, written or oral, which is not set forth explicitly herein
or therein is intended by either Party to be legally binding. Both Parties
acknowledge that in deciding to enter into the Agreement and to consummate
the transaction contemplated hereby neither has relied upon any statement
or representations, written or oral, other than those explicitly set forth
herein.
12.12 Expenses: Except as otherwise specified in this Agreement, all costs and
expenses including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, travel, lodging, meals and
entertainment incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Party incurring such
costs and expenses.
12.13 Independent Contractors: The status of the parties under this Agreement
shall be that of independent contractors. Neither Party shall have the
right to enter into any agreements on behalf of the other Party, nor shall
it represent to any person that it has any such right or authority.
Nothing in this Agreement shall be construed as establishing a partnership
or joint venture relationship between the
49
Parties. This Agreement is not intended to be a partnership between 3DP
and Schering for federal, state or local income tax purposes.
IN WITNESS WHEREOF 3DP and Schering have caused this agreement to be executed as
of the date first written above by their respective officers thereunto duly
authorized.
SIGNED for and on behalf of
SCHERING AKTIENGESELLSCHAFT
/S/ G. Stock /S/ X.X. Xxxx
------------ -------------
Name: Prof. Dr. G. Stock Name: Xx. X.X. Xxxx
Title: Member of Executive Title: Head of Strategic Business
Board of Directors Unit Therapeutics
Date: Date:
SIGNED for and on behalf of
3-DIMENSIONAL PHARMACEUTICALS, INC.
/S/ Xxxxx U'Xxxxxxxx
--------------------
Name: Dr. David U'Xxxxxxxx
Title: Chief Executive Officer
Date:
50
Schedule A
Patents
Appl. No./ Filing Date/ Country Title SKGF Docket Status
Patent No. or Issue Date Number
Publication
[**]
_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
51
Schedule B
Part I
Outline Research Plan
[**]
_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
52
[**]
_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
53
[**]
_____________________________
**Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
54
[**]
_____________________________
** Certain portions of this Exhibit have been omitted based upon a request for
confidential treatment that has been filed with the Commission. The omitted
portions have been filed separately with the Commission.
55
