EXHIBIT 10.4
*** CERTAIN CONFIDENTIAL INFORMATION
CONTAINED IN THIS DOCUMENT
(INDICATED BY ASTERISKS) HAS BEEN
OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER 17
C.F.R. SECTIONS 200.80(B)(4), 200.83
AND 230.406.
CONFIDENTIAL
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (this "Agreement") is made as of June 27, 2002 (the
"Effective Date") among Santarus, Inc., a California corporation, with offices
at 00000 Xxxx Xxxxx Xxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000
("Santarus"), TAP Pharmaceutical Products Inc., with offices at 000 Xxxxx Xxxxx
Xxxxx, Xxxx Xxxxxx, Xxxxxxxx 00000 ("TAP") and Takeda Chemical Industries, Ltd.
("Takeda") ( *** ).
RECITALS
WHEREAS, certain inventions regarding pharmaceutical formulations containing
proton pump inhibitors (the "University Inventions") were made in the course of
research at the University of Missouri (the "University");
WHEREAS, Santarus received certain rights to the University Inventions pursuant
to the University License Agreement (defined below) and is in the business of
the clinical development and commercialization of drugs for the treatment of
gastrointestinal diseases and disorders;
WHEREAS, TAP is a joint venture between Takeda America Holdings Inc. (a wholly
owned subsidiary of Takeda) and Xxxxxx Laboratories ("Abbott") and has expertise
in the development, marketing and sales of pharmaceutical products, including
Prevacid(R), a successful drug for the treatment of gastrointestinal diseases
and disorders;
WHEREAS, TAP desires to receive, and Santarus desires to grant, certain licenses
to the Santarus Patent Rights (defined below) with respect to the development,
use and marketing of Licensed Products (defined below) within the Territory
(defined below), subject to the terms and conditions of this Agreement; and
WHEREAS, Santarus desires to grant to *** an option to license the
Santarus Patent Rights for the Rest of World (defined below).
NOW, THEREFORE, the Parties hereto hereby agree as follows:
SECTION 1
DEFINITIONS
Unless specifically provided otherwise, the following capitalized terms used
herein shall have the respective meanings set forth below. Certain other
capitalized terms are defined elsewhere in this Agreement.
1.1 "Affiliate" means, in the case of either Party, a corporation or other
entity which, directly or indirectly, controls, is controlled by or is
under common control with, that Party. A corporation or other entity
shall be regarded as in control of another corporation or entity if it
owns or directly or indirectly controls more than *** of
the voting stock or other ownership interest of the other corporation
or entity, or if it possesses, directly or indirectly, the power to
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direct or cause the direction of the management and policies of the
corporation or other entity. For purposes of this Agreement, and
notwithstanding the preceding two sentences and their application,
Takeda and Abbott shall each be deemed Affiliates of TAP and TAP shall
be deemed an Affiliate of both Takeda and Abbott.
1.2 "Average Sales Price" means the average per unit sales price for each
Licensed Product as derived from the Net Sales reported by TAP for the
period for which the calculation is made.
1.3 "Control" means the ability, whether by ownership or license, to grant
a license or sublicense as provided for herein without violating the
terms of any agreement or other right of any Third Party.
1.4 "Effective Date" has the meaning set forth in the preamble.
1.5 "Field of Use" means the use of ***
***
1.6 "First Commercial Sale" means - with respect to a Licensed Product -
the first bona fide (and not de minimus in terms of volume and pricing)
sale to an end-user customer in a country in the Territory after
Regulatory Approval has been granted by the appropriate governing
health authorities in such country.
1.7 "Issuance Date" has the meaning set forth in Section 3.2.
1.8 "Lansoprazole" means the proton pump inhibitor, registered under the
name lansoprazole with the Food and Drug Administration ***
***
1.9 "Lansoprazole Derivative" means any derivative of Lansoprazole ***
***
1.10 "Licensed Product" means any product for which the sale, manufacture or
use of such product would, but for the license granted herein, infringe
one or more Valid Claims of a patent included in the Santarus Patent
Rights.
1.11 "NDA" means a New Drug Application, Supplemental New Drug Application
or Abbreviated New Drug Application for a Licensed Product, as defined
in the U.S. Food, Drug and Cosmetic Act and the regulations promulgated
thereunder, or the corresponding applications for authorization for
marketing a pharmaceutical in any other country or group of countries,
as defined in the applicable laws and regulations.
1.12 "Net Sales" with respect to any Licensed Product for which royalties
are payable hereunder means the gross amount invoiced by TAP (including
an Affiliate) or any sublicensee thereof to unrelated Third Parties for
the Licensed Product in all countries in the Territory, less:
(a) ***
(b) ***
(c) ***
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(d) ***
(e) ***
(f) ***
With respect to a Licensed Product which is sold together with any
Other Products (as defined below) at one unit price, whether packaged
together or separately (a "Bundled Product"), the Net Sales of such
Bundled Product shall be calculated as set forth above and then the Net
Sales of such Licensed Product shall be determined as follows: ***
***
***
***
Such amounts shall be determined from the books and records of TAP or
its sublicensee, maintained in accordance with U.S. Generally Accepted
Accounting Principles or, in the case of sublicensees, such similar
accounting principles, consistently applied. TAP further agrees that in
determining such amounts, it will use its then-current standard
procedures and methodology, including it's then-current standard
exchange rate methodology for the translation of foreign currency sales
into U.S. Dollars or, in the case of sublicensees, such similar
methodology, consistently applied. For purposes of calculating Net
Sales, transfers to a sublicensee or Affiliate of Licensed Product
under this Agreement for end use by the sublicensee or Affiliate shall
not be treated as sales by TAP.
1.13 "Omeprazole" means the proton pump inhibitor, registered under the name
omeprazole with the Food and Drug Administration ***
1.14 "Omeprazole Derivative" means any derivative of Omeprazole, ***
***
1.15 "Party" means either Santarus or TAP as the context requires and
"Parties" means, collectively, Santarus and TAP.
1.16 PK/PD Completion Date" means the date upon which ***
***
***
***
1.17 "Prescription Volume" means the audited total prescription volume (in
individual capsules or tablets ("units") for each dosage) for the
Licensed Product for the period in question as provided by IMS, or such
other third party source as the parties may agree, ***
***
***
***
1.18 "Regulatory Approval" means any approval, license, registration or
authorization of any supranational, federal, state or local regulatory
agency or government authority necessary for the manufacture, use,
storage, import, transport or sale of a Licensed Product in a
regulatory jurisdiction.
1.19 "Rest of World" means Japan and all other countries not included in the
Territory.
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1.20 "Royalty Term" has the meaning set forth in Section 3.3.1.
1.21 "Sales Forecast" means the forecast of prescription volumes for
Lansoprazole (but not the Licensed Product) in the Territory, as agreed
upon by the Parties or, in the event they cannot agree, prepared by an
independent Third Party auditor acceptable to both Parties. The Sales
Forecast shall be prepared prior to or around the date of NDA approval
for the first Licensed Product approved. Without limiting the
generality of the foregoing and solely for the purpose of providing
guidance for the foregoing, attached as Exhibit B is TAP's good faith
estimate of total prescription volumes of Lansoprazole (but not the
Licensed Product) as of the Effective Date.
1.22 "Santarus Patent Rights" means all United States patents and patent
applications and foreign patents and patent applications (including any
relating to the University Inventions ) under the Control, during the
term of this Agreement, of Santarus, including any reissues,
re-examinations, extensions, substitutions, continuations, divisions,
and continuation-in-part applications, that are based on and include
any subject matter claimed in or covered by the United States patent
applications set forth on Exhibit A hereto, and any such patent
applications related to similar subject matter, but excluding without
limitation, *** technology.
1.23 "Takeda Option" has the meaning set forth in Section 4.1.
1.24 "Takeda Patent" means ***
***
1.25 "Territory" means the United States and Canada.
1.26 "Third Party" means any person or entity, which is not a Party or an
Affiliate of a Party to this Agreement.
1.27 "University" has the meaning set forth in the Recitals.
1.28 "University Inventions" has the meaning set forth in the Recitals.
1.29 "University License Agreement" means the Exclusive License Agreement
between the University and Santarus, dated January 26, 2001.
1.30 "Valid Claim" means a claim of an issued or granted and unexpired
patent included in Santarus Patent Rights, which claim is not, at the
time in issue, unenforceable against TAP, or has not been held invalid
under a final decision that is unappealable or unappealed, within the
time allotted for appeal, of a court or agency of competent
jurisdiction, or which has not been admitted by the patentee to be
invalid or unenforceable.
SECTION 2
SCOPE OF LICENSE
2.1 LICENSE GRANT.
2.1.1 LICENSE. Subject to the terms and conditions of this
Agreement, Santarus hereby grants to TAP, under the Santarus
Patent Rights (i) a nontransferable, sublicensable (subject to
Section 2.1.3) license (and sublicense, to the extent being
sublicensed) exclusive (subject to Section 2.1.2) with respect
to Lansoprazole and non-exclusive with respect to
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Lansoprazole Derivatives to make, have made, use, sell, offer
to sell, have sold and import Licensed Product to the extent
permitted by law solely within the Field of Use and solely
within the Territory and (ii) a nontransferable,
nonsublicensable, nonexclusive limited license to make and
have made the Licensed Product outside the Territory solely
for the purpose of supplying Licensed Product to TAP and its
distributors within the Territory and only in accordance with
all applicable laws and regulations. Subject to paragraph
2.1.2, the exclusive license granted to TAP is exclusive as to
Santarus as well as the University and, except as specifically
set forth in this Agreement, neither Santarus nor the
University retains any commercial rights to the Santarus
Patent Rights in the Field of Use and Territory.
2.1.2 RESTRICTIONS. TAP acknowledges and agrees that the license
(and sublicense) granted in Section 2.1.1 is subject to the
overriding obligations to the U.S. Government under 35 U.S.C.
Sections 200-212 and applicable governmental implementing
regulations. TAP further acknowledges and agrees that the
University reserves the right to make and to use and to grant
nonexclusive licenses to make and to use, for internal
research and educational purposes only, and not for commercial
purposes, the Santarus Patent Rights. In addition, nothing in
this Agreement will be deemed to limit the right of the
University to publish any and all technical data resulting
from any research performed by the University relating to the
Licensed Products and to make and use the Licensed Products
and associated technology solely for educational and
non-commercial research purposes.
2.1.3 SUBLICENSING. TAP agrees that any agreement for the sublicense
of any rights under Section 2.1.1 shall (i) be subject to
Santarus's prior written approval, not to be unreasonably
withheld, conditioned or delayed, (ii) contain rights and
obligations due to Santarus contained in this Agreement
(including, without limitation, audit rights) and (iii)
contain provisions at least as favorable to Santarus and the
University for the protection of Santarus's and the
University's proprietary rights and for the limitation of
Santarus's and the University's liability exposure as the
terms of this Agreement. In any event, TAP shall remain
responsible for any sublicensees of the rights granted under
Section 2.1.1 and shall promptly provide Santarus with a copy
of each sublicense granted.
2.1.4 NON-ASSERTION.
(a) Subject to the terms and conditions of this Agreement
and solely during the term of this Agreement,
Santarus agrees that it shall not assert the Santarus
Patent Rights against Takeda and its contractors with
respect to (i) the manufacture of Licensed Products
in Japan and Ireland solely for the purpose of
supplying such Licensed Products to TAP for use in
the Field of Use and (ii) the supply of such Licensed
Product to TAP in the United States and Canada. This
Section 2.1.4 shall in no way be construed to limit
Santarus's or its sublicensees' rights to conduct any
manufacturing and supply activities.
(b) Takeda and its contractors shall, at Takeda's
expense, comply with any and all regulations
applicable to such activities and Takeda shall be
responsible for procuring any required permits and
consents. TAP and Takeda agree that all provisions
that are protective of Santarus's proprietary rights
(including, without limitation, intellectual property
rights and confidentiality rights) and all provisions
that limit Santarus's liability or potential
liability in this Agreement shall apply with respect
to the conduct of such activities by Takeda and its
contractors. Takeda agrees to be responsible for and
indemnify Santarus with
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respect to any Claims (as defined in Section 9.1)
resulting directly or indirectly from the conduct of
such activities by Takeda and/or its contractors;
provided that the terms of Section 9.3 shall apply to
such indemnification obligations.
2.2 LABELING AND PROMOTIONAL MATERIALS. All Licensed Product packages will
comply with all patent marking requirements as specified in 35 USC Sec.
287.
SECTION 3
FINANCIAL TERMS
3.1 INITIAL PAYMENT. Upon the Effective Date, TAP shall pay to Santarus
Eight Million US Dollars (US $8,000,000). Such payment shall be
non-refundable.
3.2 MILESTONES. TAP shall pay Santarus, within thirty (30) days of the
completion of each event set forth below ("Event") for the first
Licensed Product to complete each Event, the payment listed opposite
that Event. If an Event does not occur and a subsequent Event (in the
order as listed below) does occur, then the payments listed opposite
both or all such Events shall be payable upon completion of such
subsequent Event. Such payments shall be non-refundable. Except as set
forth in Section 3.4.3, TAP shall be obligated to make each payment
only once regardless of the number of Licensed Products developed or
marketed by TAP.
3.2.1 ***
3.2.2 ***
3.2.3 ***
3.2.4 ***
3.2.5 ***
3.2.6 ***
3.2.7 ***
Notwithstanding the foregoing, TAP shall not be obligated to make the
milestone payments, and such milestone amounts shall accrue, until a
patent containing a Valid Claim covering a Licensed Product is issued
by the U.S. Patent and Trademark Office (the "Issuance Date"). Santarus
shall promptly notify TAP of the Issuance Date, which notice shall be
accompanied by a copy of the issue notification received from the U.S.
Patent and Trademark Office in connection with such issuance. TAP shall
pay any accrued milestone amounts within thirty (30) days of
notification from Santarus of the Issuance Date.
3.3 ROYALTY PAYMENTS.
3.3.1 NET SALES OF LICENSED PRODUCT. TAP shall pay Santarus a
royalty based on the aggregate Net Sales of Licensed Product
in all countries of the Territory. Such royalty shall be paid
with respect to each country of the Territory from the date of
the First Commercial Sale of a Licensed Product in such
country until the expiration of the last
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patent in the Santarus Patent Rights containing a Valid Claim
respecting a Licensed Product expires in such country (the
"Royalty Term").
3.3.2 ROYALTY RATE. The royalty rate for Section 3.3.1 shall be
determined as follows:
(a) In the event the First Commercial Sale of Licensed
Product in a country in the Territory occurs prior to
the date (the " *** Date") that is the
earlier of (a) *** or (b) the ***
***
***
***
*** Such royalty rate shall be in effect
until the *** ; provided,
however, that in addition to such royalty, TAP shall
pay a royalty with respect to any *** in
excess of the Sales Forecasts for each calendar year,
or portion thereof, prior to the ***
Date. Such additional royalty shall be in an amount
calculated as follows: at the end of each calendar
quarter TAP shall calculate the amount, if any, by
which total *** for the quarter, net of any
theretofore unutilized offset or credit calculated
in accordance with the proviso contained in the
immediately succeeding sentence, is in excess of the
Sales Forecast for such quarter. The number of any
excess prescriptions shall be multiplied by the
*** for Licensed Products during such
period and TAP shall pay an amount equal to ***
***
*** of the resultant product of
such calculation as additional royalty in accordance
with Section 3.3.3 provided, that if the total ***
for a quarter are below the Sales Forecast for such
quarter, then TAP may offset such shortfall against
any excess *** , calculated in accordance
with the immediately preceding sentence, for any
other quarter in the same calendar year and may take
a credit against royalty payments otherwise due
hereunder in the amount of ***
*** , of the amount of such total ***
shortfall, multiplied by the applicable *** ,
up to the amount of any additional royalty
paid and not theretofore offset in accordance with
the terms of this Section during such calendar year.
(b) From the period beginning on the *** Date in a
country, the royalty rate in such country shall be
based upon the aggregate Net Sales of all Licensed
Product in all such countries in the Territory in
each calendar year as follows:
(i) *** in Net Sales;
(ii) ***
***
(iii) ***
***
3.3.3 PAYMENT DATES FOR ROYALTIES. Royalties shall be paid on Net
Sales within forty-five (45) days after the end of each
calendar quarter in which such Net Sales are made. Such
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payments shall be accompanied by a statement showing the Net
Sales of Licensed Product or of any sublicensee on a
product-by-product basis in each country, and a calculation of
the amount of royalty payments due, including without
limitation, a description of the number of units sold, average
sales price and any amounts deducted from gross amounts
invoiced for sales of Licensed Product.
3.3.4 ACCOUNTING FOR ROYALTIES. The Net Sales used for computing the
royalties payable shall be computed in U.S. Dollars, and each
payment made pursuant to this Agreement shall be paid in U.S.
Dollars by wire transfer in immediately available funds to a
U.S. account designated by the receiving party, or by other
mutually acceptable means.
3.3.5 ROYALTY STACKING. The Parties recognize that TAP may need to
obtain additional patent rights and licenses from Third
Parties to practice the Santarus Patent Rights within the
Field of Use. In the event that it should prove necessary,
*** , for TAP or its sublicensees to license
intellectual property rights owned by a Third Party in order
to practice the Santarus Patent Rights in the Field of Use and
in accordance with the terms and conditions of this Agreement,
then TAP shall be entitled to a credit of
*** of such Third Party royalties against
amounts otherwise due to Santarus, provided, however, that in
any event, the earned royalty due to Santarus will not be less
than *** that would otherwise have been due to
Santarus.
3.4 MULTIPLE LICENSE GRANTS BY SANTARUS.
3.4.1 The Parties acknowledge that, as of the Effective Date,
Santarus intends to pursue development and commercialization
of a product utilizing the Santarus Patent Rights and
Omeprazole (the "Omeprazole Product"), and that Santarus may
conduct such activities on its own or in collaboration with
Third Parties. In the event that Santarus enters into a
collaboration with a Third Party ***
*** , such Third Party is referred to
herein as the "Franchise Partner." The Parties also
acknowledge that, as of the Effective Date and pursuant to
this Agreement, TAP intends to pursue development and
commercialization of a product utilizing the Santarus Patent
Rights and Lansoprazole (the "Lansoprazole Product").
3.4.2 Subject to Sections 3.4.3 and 3.4.4, if Santarus ***
***
***
*** , then the milestone payments (other
than payments already paid and payments due but not yet paid
to Santarus, pursuant to Section 3.2, *** and
the royalties *** set forth in Section
3.3, and subject to Sections 3.4.3 and 3.4.4, shall be reduced
as follows:
***
***
***
3.4.3 If TAP ***
***
*** , then TAP shall promptly inform
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Santarus in Writing (the "Notice") of any of such activities
on or before commencement of clinical activities and shall
elect in such Notice, at TAP's sole discretion, one of the two
following options:
(a) That TAP shall pay Santarus, within thirty (30) days
of the completion of each Event *** , ***
of the payment listed opposite that Event
in Section 3.2 unless no milestone payment had become
due and been paid for the Lansoprazole Product with
respect to such Event, in which case TAP shall pay
*** of such amount upon completion of
the Event by the *** provided, that TAP shall
not be obligated to pay more than *** of any
milestone payment set forth in Section 3.2; or
(b) That Santarus may make, distribute, market or
otherwise commercialize, in addition to the
Omeprazole Product, ***
***
***
***
*** In
addition, with respect to the licensing or
collaboration *** with a
Third Party other than the Franchise Partner, or if
Santarus markets or sells on its own any
*** , the milestone payments (other
than payments already paid and payments due but not
yet paid to Santarus, pursuant to Section 3.2, at or
prior to the date Santarus enters into such license
or collaboration) and the royalty reductions
(beginning on the date of first commercial sale of
the product under such license or collaboration) set
forth in Section 3.4.2 shall
***
***
***
For the purpose of clarity, the Parties acknowledge that the
election of clause (a) of Section 3.4.3 shall not preclude
Santarus from any activities involving a *** ,
but rather that the penalties to Santarus for such
activities will not be reduced in accordance with clause (b)
of Section 3.4.3.
3.4.4 In the event that the development or commercialization of the
Omeprazole Product becomes materially impractical or
impossible for any clinical, legal or regulatory reason, then
Santarus may make, distribute, market and otherwise
commercialize a product utilizing the Santarus Patent Rights
and a proton pump inhibitor other than Omeprazole, and such
product shall be treated as the "Omeprazole Product" for
purposes of this Section 3.4.
3.4.5 ***
***
***
*** In the event Santarus is
compelled by a final judgment or determination rendered
pursuant to legal or regulatory process to enter into a
license or other collaboration with any Third Party as
contemplated in this Section,
***
***
In the event Santarus enters into a license or other
collaboration with any Third Party for
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the purpose of resolving material legal and regulatory issues
and/or disputes, but without the compulsion of a final
judgment or determination as set forth in the preceding
sentence
***
*** The provisions of Section
3.4.2 shall apply to any reduced royalty payable by TAP as a
result of Santarus' grant of a compulsory license in the event
of any subsequent Additional Product or Additional Products.
In no event shall the operation of this Section 3.4 in
conjunction with Section 3.3.5 entirely eliminate the
requirement to pay royalties hereunder.
3.4.6 For the purpose of clarity, the Parties agree that Santarus
shall be deemed to be conducting activities "on its own" in
any collaboration with a Third Party where the Third Party
does not have primary responsibility or equal responsibility
with Santarus for the sales and marketing of a product, such
that Santarus may elect to engage Third Parties to manufacture
and/or distribute such product with such activities still
being considered "on its own."
3.5 LATE PAYMENTS. In the event that any payment due under this Agreement
is not made when due, the payment shall accrue interest from the date
due through and including the date upon which the Party has collected
immediately available funds in an account designated by the Party at a
rate equal to the sum of *** plus the prime rate of
interest quoted in the Money Rates section of The Wall Street Journal,
calculated daily on the basis of a 360-day year; provided, that in no
event shall such rate exceed the maximum applicable legal annual
interest rate. The payment of such interest shall not limit a Party
from exercising any other rights it may have as a consequence of the
lateness of any payment.
3.6 U.S. FUNDS. Each payment pursuant to this Agreement shall be paid in
U.S. currency by wire transfer in immediately available funds to an
account designated by the receiving party, or by other mutually
acceptable means. If a payment due date is not otherwise specified in
this Agreement, payment shall be made within thirty (30) days after
receipt of the relevant invoice.
3.7 RECORDS AND AUDITS. TAP shall keep for *** from the date of
each payment hereunder complete and accurate records of sales, costs
and all other information reasonably necessary to calculate and verify
the accuracy of any payments under this Section 3. Santarus shall have
the right through an independent, certified public accountant
reasonably acceptable to TAP to audit such records at the place or
places of business where such records are customarily kept in order to
verify the accuracy of the payments actually made. If requested by TAP
such independent, certified public accountant shall execute an
appropriate confidentiality agreement to conduct the audit. Such audits
may be exercised *** during normal business hours upon
fifteen (15) days' advance written notice. Santarus shall bear the full
cost of such audit unless such audit discloses that TAP has underpaid
more than *** of the amount of the payment due under this
Agreement, in which event, TAP shall bear the full cost of such audit.
Santarus and its auditors may not disclose any information concerning
such payments and reports, and all such information shall be considered
the Confidential Information of TAP, except to the extent necessary for
Santarus to reveal such information in order to enforce its rights
under this Agreement or if disclosure is required by law. Any amounts
that are determined to be due and owing by TAP following such audit
shall be paid within thirty (30) days thereafter, together with
interest thereon (as determined in accordance with Section 3.5).
3.8 WITHHOLDING TAXES. Where any sum payable to Santarus hereunder is
subject to any withholding or similar tax, the parties shall use their
best efforts to do all such acts and things and to sign all such
documents as will enable them to take advantage of any applicable
double taxation agreement or treaty. In the event there is no
applicable double
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taxation agreement or treaty, or if an applicable double taxation
agreement or treaty reduces but does not eliminate such withholding or
similar tax, TAP shall pay such withholding or similar tax to the
appropriate government authority, deduct the amount paid from the
amount due Santarus and secure and send to Santarus the best available
evidence of such payment.
SECTION 4
*** OPTION FOR LICENSE
4.1 OPTION GRANT. Provided that the payments due under Section 3 have
been made and TAP is otherwise in compliance with the provisions of
this Agreement, and subject to the terms of this Section 4, then during
the term of this Agreement, *** shall have an option (the "*** Option")
to receive a license, sole and exclusive with respect to Lansoprazole
and non-exclusive with respect to Lansoprazole Derivatives, with right
to sublicense, under the Santarus Patent Rights, to make, have made,
use, sell, offer to sell and import Licensed Product to the extent
permitted by law solely within the Field of Use and solely within the
Rest of World, which option shall be exercisable in accordance with
Section 4.2 below and Exhibit C hereto.
4.2 OPTION EXERCISE. The *** Option shall be exercisable by *** from the
Effective Date until *** from the date that is the later of (i) the ***
and (ii) ***. Santarus shall promptly notify *** of (i) the date of
issuance of a notice of allowance by *** and (ii) the date of issuance
of a decision to grant a patent pursuant to ***, which notice in each
case shall be accompanied by relevant documents, so that *** may be
informed of the dates of issuance mentioned in the preceding sentence.
In the event the *** has not occurred by ***, then the *** Option shall
be of no force and effect. If *** elects to exercise the *** Option, it
shall provide written notice to Santarus thereof, and *** and Santarus
shall enter into good faith negotiations of the terms of the license,
provided that such license agreement shall include, without limitation,
terms and conditions substantially similar to those described in
Exhibit C hereto. In the event that *** does not exercise the ***
Option in accordance with its terms, TAP will provide Santarus with all
clinical and regulatory data (except with respect to proprietary
information regarding bulk Lansoprazole and Lansoprazole other than the
Licensed Product) and marketing data in TAP's or its Affiliates' or
contractors' possession (to the extent such data were generated for or
on behalf of TAP) and relating specifically to Licensed Products that
would be reasonably useful to Santarus for development and
commercialization of products under the Santarus Patent Rights.
SECTION 5
DILIGENCE REQUIREMENTS
5.1 *** . TAP will use
*** to (a) meet the requirements set forth in Exhibit D; (b)
develop, manufacture and sell the Licensed Product and to market the
same after appropriate regulatory approvals have been achieved and (c)
pursue all necessary governmental approvals where Licensed Products are
manufactured, used or sold. Without limiting the generality of the
foregoing, TAP agrees to ***
***
***
5.2 FAILURE TO FILE NDA OR CONDUCT DILIGENCE. If TAP fails to file an NDA
for a Licensed Product by *** in the United States, then
Santarus will have the right and option, with respect to the Territory
and subject to Section 13.1, to reduce the exclusive license granted to
TAP to non-exclusive or to terminate this Agreement in accordance with
Section 5.3 below; provided, however, that TAP may ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 11
***
*** The exercise of this right and option by
Santarus supercedes the rights granted in Section 2.
5.3 TERMINATION RIGHT. In the event that TAP has materially failed to
comply with its obligations under Section 5.1 or 5.2 above and does not
remedy such failure within sixty (60) days following receipt of written
notice from Santarus, Santarus may, by delivering thirty (30) days
prior written notice to TAP (the "Default Notice") (such sixty (60) and
thirty (30) day periods to run consecutively and not concurrently),
terminate this Agreement or reduce the exclusive licenses granted to
TAP to non-exclusive in each country in the Territory; provided,
however, that if TAP disagrees that it has materially failed to comply
with such obligations, or that it has failed to remedy such failure,
TAP may initiate an alternative dispute resolution proceeding in
accordance with Section 13.1 within thirty (30) days following receipt
of the Default Notice, in which case the Default Notices shall be null
and void and this Agreement and TAP's exclusive licenses hereunder
shall remain in effect. If, in the alternative dispute resolution
proceeding to determine whether TAP has materially failed to comply
with its diligence obligations or failed to remedy such failure, the
Neutral rules that TAP has committed a material breach and has failed
to remedy such breach, (a "TAP Adverse Ruling"), such ruling shall
include a specific remedy for such breach and a time period for
compliance with such remedy, provided that the ruling may permit the
immediate termination of this Agreement or the immediate reduction of
the exclusive licenses to non-exclusive. In the event the ruling
provides some period of time for compliance by TAP and TAP fails to
comply with the terms of the TAP Adverse Ruling within the time period
specified, then Santarus may terminate this Agreement or reduce the
exclusive licenses granted to TAP to non-exclusive by giving written
notice to TAP. For the purpose of clarity, the Parties agree that in
the event Santarus reduces the exclusive license granted to TAP to
non-exclusive for any country under this Section 5.3, then the
provisions in Section 3.4 with respect to the reduction of milestone
and royalty payments for any such country shall be of no force and
effect. For the purpose of clarity, the Parties acknowledge and agree
that the filing by TAP of an NDA by *** shall not, in and of itself,
show commercially reasonable efforts to conduct diligence.
5.4 PROGRESS REPORTS. At least once every calendar quarter, and upon the
completion of any diligence milestone, TAP will submit to Santarus a
progress report covering in reasonable detail (i) activities by TAP
related to the diligence milestones, including development and testing
of Licensed Product, (ii) the obtaining of governmental approvals
necessary for marketing Licensed Product and (iii) the current sales
forecasts for Licensed Product and, to the extent of any material
changes from the prior forecasts provided, the justification and
explanation for such changes.
SECTION 6
INTELLECTUAL PROPERTY
6.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS. Santarus shall have the
right to prepare, file, prosecute and maintain in such countries as it
deems appropriate in its discretion, patent applications and patents,
and to conduct any interferences, re-examinations, reissues,
oppositions or requests for patent term extension or governmental
equivalents thereto within the Santarus Patent Rights, and TAP shall
give reasonable cooperation in connection therewith. Notwithstanding
the above, TAP shall be given reasonable opportunity to comment on
actions taken by Santarus with regard to Santarus Patent Rights in the
Field of Use and Territory, and Santarus shall reasonably consider all
such comments. TAP shall promptly reimburse Santarus for ***
of the expenses of such prosecution and maintenance actually paid by
Santarus within the Territory to the extent that Santarus has not been
reimbursed by any Third Party for such expenses. Santarus shall in good
faith use reasonable efforts to optimize the breadth of protection of
the Santarus Patent Rights in such a manner as to protect and broaden
the scope of TAP's license under Section 2.1.
6.2 ENFORCEMENT. If any Santarus Patent Right is infringed by a Third Party
in the Territory during the term of this Agreement, the Party to this
Agreement first having knowledge of such infringement shall promptly
notify the other in writing. The notice shall set forth the perceived
facts of such infringement in reasonable detail. Santarus shall have
the primary right, but not the obligation, to institute, prosecute and
control any action or proceeding by its own counsel with respect to
infringement or misappropriation of such Santarus Patent Rights and TAP
shall have the right, at its own expense, to be represented in such
action by its own counsel. If Santarus shall fail to bring such action
or proceeding within a period of one hundred twenty (120) days after
receiving written notice from TAP or otherwise having knowledge of such
infringement (or an appropriate lesser period of time if such one
hundred twenty day period would result in material harm to, or the loss
of a material right of, TAP, e.g., in the case of the filing of a
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 12
paragraph (IV) certification pursuant to 21 USC 355(j)(2)(A)(vii)(IV)
by one or more Third Parties), and the infringement relates to the
Field of Use and Territory, then TAP shall have the right to bring and
control any such action by counsel of its own choice, and Santarus
shall have the right, at its own expense, to be represented in any such
action or proceeding. In any event, each Party agrees to be joined as a
party plaintiff if required by law to maintain the action or if
reasonably requested and, in any event, to give the non-joined Party
reasonable assistance and authority to file and to prosecute such suit.
The costs and expenses of all suits brought by either Party under this
Section shall be reimbursed to both Parties out of any damages or other
monetary awards recovered therein in favor of Santarus and TAP. Any
remaining damages awarded for merits brought by Santarus shall be
provided to Santarus, unless the infringement specifically relates to
the Field of Use. Any remaining damages awarded for suits brought by
either Party when the infringement specifically relates to the Field of
Use shall be treated as Net Sales except that any damages denominated
as punitive or exemplary shall be evenly divided between the Parties.
No settlement or consent judgment or other voluntary final
disposition of a suit under this Section may be entered into without
the joint consent if TAP and Santarus (which consent shall not be
unreasonably withheld, conditioned or delayed). Notwithstanding the
above, in the event that a Licensed Product is covered only by patents
within the Santarus Patent Rights (without regard to the *** Patent),
Santarus shall not be permitted to enforce all such patents against a
Third Party, where the possibility exists that, as a result of such
enforcement, a Licensed Product could be deprived wholly of the
protection of the Santarus Patent Rights, without the prior written
consent of TAP, which consent shall not be unreasonably withheld or
delayed. For the purpose of clarity the Parties agree that Santarus
may, in each case, enforce all but one patent within the Santarus
Patent Rights covering a Licensed Product without prior written consent
of TAP.
6.3 INFRINGEMENT ACTIONS BY THIRD PARTIES. If a Party, or to its knowledge,
any of its sublicensees or customers shall be sued by a Third party for
infringement of a patent because of the development, manufacture, use
or sale of Licensed Products, such Party shall promptly notify the
other in writing of the institution of such suit. The Party sued shall
control the defense of such suit at its own expense; provided, however,
if the Party being sued is being indemnified for such claim by the
other Party, then the indemnifying Party shall have the right to
control the defense of the claim in accordance with Section 9. Each
Party shall cooperate fully in the defense of such suit and shall
furnish to the other Party all evidence and assistance in its control.
The Party sued shall make a preliminary decision to defend or not
defend its interests in such suit and shall so notify the other Party
in writing of its decision within *** days of the
institution of such a suit. If a Party after electing to defend a suit
should at any time elect to drop such defense, said Party shall
immediately notify the other Party in writing and permit such other
Party to control the suit at such other Party's expense, in the name of
the Party initiating the defense. If the Party sued notifies the other
Party in writing per the above that it shall not defend or continue the
defense of such a suit, then the other Party shall have the right, but
not the obligation, to defend its interests in such a suit, and shall
have the right to litigate, settle or otherwise dispose of such suit as
it sees fit, provided, however, that TAP may not settle such suit in a
manner that would materially impact or adversely affect the Santarus
Patent Rights. Any judgments, settlements or damages payable with
respect to legal proceedings covered by this Section 6.3 shall be paid
by the Party which controls the litigation, subject to any claims
against the other Party for breach of or indemnification under this
Agreement or otherwise available at law or in equity.
6.4 CERTIFICATION UNDER DRUG PRICE COMPETITION AND PATENT TERM RESTORATION
ACT. Each Party shall promptly give written notice to the other of any
certification of which it becomes aware filed pursuant to 21 U.S.C.
Sections 355(b)(2)(A)(iv) and 355(j)(2)(A)(vii) affecting the Santarus
Patent Rights.
6.5 PATENT TERM RESTORATION. The Parties hereto shall give reasonable
cooperation to each other in obtaining patent term restoration or
supplemental protection certificates or their equivalents in any
country in the Territory where applicable to the Licensed Products.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 13
SECTION 7
REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 REPRESENTATIONS AND WARRANTIES. Each Party represents and warrants to
the other that:
7.1.1 CORPORATE POWER: It is duly organized and validly existing
under the laws of its state of incorporation, and has full
corporate power and authority to enter into this Agreement and
to carry out the provisions hereof.
7.1.2 DUE AUTHORIZATION: It is duly authorized to execute and
deliver this Agreement and to perform its obligations
hereunder, and any person executing this Agreement on its
behalf has been duly authorized to do so by all requisite
corporate action.
7.1.3 BINDING AGREEMENT: This Agreement is legally binding upon such
Party and enforceable in accordance with its terms, subject to
the effects of bankruptcy, insolvency or other laws of general
application affecting the enforcement of creditor rights and
judicial principles affecting the availability of specific
performance and general principles of equity whether
enforceability is considered a proceeding at law or equity.
The execution, delivery and performance of this Agreement by
it does not conflict with any material agreement, instrument
or understanding, oral or written, to which it is a party or
by which it may be bound, nor violate any material law or
regulation of any court, governmental body or administrative
or other agency having jurisdiction over it.
7.1.4 INTELLECTUAL PROPERTY RIGHTS: To the best of its knowledge, it
has sufficient legal and/or beneficial title and ownership
under its intellectual property rights necessary for it to
fulfill its obligations under this Agreement.
7.2 REPRESENTATIONS AND WARRANTIES OF SANTARUS. Santarus represents and
warrants that: (a) to its knowledge, there are no suits, claims or
proceedings pending or threatened against Santarus or any of its
Affiliates or the University in any court or before any governmental
body or agency with respect to Santarus' Patent Rights or the making,
having made, using, selling, offering for sale, or importing product
using technology covered by the Santarus Patent Rights; (b) Santarus
Patent Rights have not been obtained through any fraudulent activity or
misrepresentation; (c) to its knowledge, there are no Third Party
patents that would adversely effect TAP's ability to market or sell a
Licensed Product; and (d) neither Santarus nor, to its knowledge, the
University has taken any action to permit or neglected to take any
action required in order to prevent the exercise by the U.S. Government
of any rights it may have with respect to the Santarus Patent Rights to
the detriment of TAP and Santarus will not take any action to permit or
neglect to take any action required in order to prevent such exercise.
7.3 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY TO THE
OTHER PARTY OF ANY KIND, AND HEREBY DISCLAIMS ALL WARRANTIES, EXPRESS
OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF
NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
Without limiting the generality of the foregoing, each Party expressly
does not warrant (a) the safety or usefulness for any purpose of the
Technology it provides hereunder or (b) that any patent will issue
based upon any pending patent application, or that any such patent
which issues will be valid.
Page 14
7.4 *** . Santarus agrees that TAP and its distributors may ***
***
***
***
*** TAP agrees that it shall notify all appropriate personnel in
writing that, after *** they shall not distribute to any Third
Party any written materials or provide verbal instructions regarding
***
*** and shall take other reasonable
measures to effectuate the foregoing provided, that nothing in this
Section 7.4 shall be deemed to limit TAP's right to develop and market
a Licensed Product *** TAP agrees that it shall not, and
shall not allow its Affiliates to, distribute any written materials or
provide verbal instructions in the Territory regarding ***
***
Notwithstanding anything else, the royalty rates in Section 3.3.2(b)
shall in all cases apply to Net Sales of Licensed Product ***
7.5 NOTIFICATION OF CERTAIN EVENTS. Santarus shall promptly notify TAP and
Takeda in the event that (i) Santarus's board of directors determines
to pursue discussions with respect to a bona fide written offer
received from a third party to acquire all or substantially all of the
assets or business of Santarus or the assets to which the license under
Section 2.1 relates or (ii) Santarus's board of directors determines to
pursue a Qualified Equity Financing. "Qualified Equity Financing" means
an equity financing (excluding, for the purpose of clarity, any
issuance of options or warrants to employees, directors and consultants
in the ordinary course of business) (a) in which shares of Santarus's
capital stock or evidence of indebtedness that is convertible into
Santarus's capital stock are issued or transferred and Santarus
receives at least Two Million Dollars ($2,000,000) in cash in proceeds,
or (b) in which shares of Santarus's capital stock or evidence of
indebtedness that is convertible into Santarus's capital stock are
issued or transferred and a third party acquires a majority of the
voting interests in Santarus. Notwithstanding the foregoing, this
Section 7.5 shall not apply as long as Santarus's capital stock
continues to be listed on any stock exchange or the like in the United
States following an initial public offering of Santarus's capital
stock. The provision and contents of any notice by Santarus under this
Section 7.5 shall be deemed to be the Confidential Information of
Santarus.
SECTION 8
LIMITATION OF LIABILITY
NEITHER PARTY SHALL BE ENTITLED TO RECOVER FROM THE OTHER PARTY ANY SPECIAL,
INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING WITHOUT
LIMITATION, LOST PROFITS, IN CONNECTION WITH THIS AGREEMENT OR ANY LICENSE
GRANTED HEREUNDER, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.
FOR THE PURPOSE OF CLARITY, NOTHING IN THIS SECTION IS INTENDED TO LIMIT THE
INDEMNIFICATION OBLIGATIONS OF ANY PARTY WITH RESPECT TO THE CHARACTERIZATION OF
ANY CLAIM BY A THIRD PARTY OR AFFILIATE AS SPECIAL, INDIRECT, INCIDENTAL,
CONSEQUENTIAL OR PUNITIVE DAMAGES.
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Confidential Treatment and filed separately with the Commission.
Page 15
SECTION 9
INDEMNIFICATION
9.1 INDEMNIFICATION BY TAP. TAP hereby agrees to defend, indemnify and hold
harmless Santarus and its officers, directors, employees, consultants
and agents from and against any and all suits, claims, actions,
demands, liabilities, expenses and or losses, including reasonable
attorneys' fees and other costs of defense ("Claims") (a) resulting
directly or indirectly from the manufacture, use, handling, storage,
sale or other disposition of Licensed Product by TAP, its Affiliates,
agents or sublicensees, but only to the extent such Claims do not
result from the negligence or intentional misconduct of, or material
breach of this Agreement by Santarus, (b) resulting directly from a
breach of this Agreement by TAP, or (c) resulting directly from the
negligence or intentional misconduct of TAP, its officers, directors,
employees, contractors or agents.
9.2 INDEMNIFICATION BY SANTARUS. Santarus hereby agrees to defend,
indemnify and hold harmless TAP and its officers, directors, employees,
consultants and agents from and against any and all Claims resulting
directly from a breach of this Agreement by Santarus or resulting
directly from the negligence or intentional misconduct of Santarus, its
officers, directors, employees, contractors or agents.
9.3 NOTIFICATION AND DEFENSE. In the event a Party seeks indemnification
under this Section 9, it shall inform the indemnifying Party of a Claim
as soon as reasonably practicable after it becomes aware of any Third
Party 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 the defense of
the Claim. Except with the prior written consent of the indemnified
Party, which consent shall not be unreasonably withheld, the
indemnifying Party may not enter into any settlement of such litigation
unless such settlement includes an unqualified release of the
indemnified Party.
SECTION 10
CONFIDENTIALITY
10.1 UNDERTAKING; EXCEPTIONS. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing by the Parties, the
Parties agree that, for *** after the longer of the term of this
Agreement and the term of any license entered into between Santarus and
Takeda with respect to the Santarus Patent Rights, the receiving Party
(the "Receiving Party") shall keep confidential and shall not publish
or otherwise disclose and shall not use for any purpose other than as
provided for in this Agreement any information furnished to it by the
other Party (the "Disclosing Party") pursuant to this Agreement (the
"Confidential Information") unless the Receiving Party can demonstrate
by written proof that such Confidential Information:
10.1.1 was already known to the Receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by
the Disclosing Party;
10.1.2 was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the Receiving
Party;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 16
10.1.3 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 the
Agreement;
10.1.4 was disclosed to the Receiving Party, other than under an
obligation of confidentiality to a Third Party not to disclose
such information to others; or
10.1.5 was independently discovered or developed by the Receiving
Party without the use of Confidential Information belonging to
the Disclosing Party.
10.2 AUTHORIZED DISCLOSURE. Each Party may disclose Confidential Information
belonging to the other Party to the extent such disclosure is
reasonably necessary in the following instances:
(a) filing or prosecuting patent applications under this
Agreement;
(b) regulatory filings (including filings with the SEC);
(c) prosecuting or defending litigation;
(d) complying with applicable governmental regulations;
(e) complying with the order of any court or other
governmental or regulatory body having jurisdiction;
(f) conducting preclinical or clinical trials of Licensed
Products;
(g) disclosure to Affiliates, sublicensees of TAP,
employees, consultants or agents who are bound by
similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this
Section 10;
(h) with respect to Santarus as the Receiving Party,
Santarus may disclose the terms of the Agreement to
the University as necessary to comply with
contractual obligations in place as of the Effective
Date.
Notwithstanding the foregoing, in the event a Party is required to make
a disclosure of the other Party's Confidential Information pursuant to
this Section 10.2 such Party will, except where impracticable, give
reasonable advance notice to the other Party of any disclosure required
under (e) above and use reasonable and diligent efforts to secure
confidential treatment of such information. In any event, the Parties
agree to take all reasonable action to avoid disclosure of Confidential
Information hereunder.
10.3 EXISTENCE AND TERMS OF AGREEMENT. The Parties agree that the fact of
the existence of this Agreement, the terms and conditions hereof and
all activities contemplated or performed hereunder are the Confidential
Information of the other Party and shall not be disclosed to any third
party in any manner whatsoever, including without limitation, by way of
news articles, public announcements or disclosures, except pursuant to
an authorized disclosure under Section 10.2 or 10.4 and to bona fide
potential investors, acquirers, underwriters for a financing
transaction and financial advisors.
10.4 PUBLICITY. The Parties will issue a joint press release announcing the
execution of this Agreement in substantially the form attached hereto
as Exhibit E on or shortly following the Effective Date
Page 17
and may desire or be required to issue subsequent press releases
relating to the Agreement or activities thereunder. The Parties shall
consult with each other reasonably and in good faith and agree with
respect to the text and timing of such press releases prior to the
issuance thereof, provided that a Party may not unreasonably withhold
consent to or delay of such releases.
SECTION 11
PUBLICATIONS
11.1 NOTICE OF PUBLICATION. During the term of this Agreement, each Party
acknowledges the other's interest in publishing certain of its results
to obtain recognition within the scientific community and to advance
the state of scientific knowledge and in obtaining valid patent
protection and protecting business interests. ***
***
***
***
*** In all instances, the non-publishing
Party shall have the right (a) to propose modifications to the publication for
patent or trade secret reasons and (b) to request, in writing, a reasonable
delay in or avoidance of publication in order to protect patentable information
and trade secrets, the disclosure of which would materially affect the interests
of the requesting Party.
11.2 TIMING OF PUBLICATION. If the non-publishing Party requests such a
delay or avoidance, the publishing party shall delay submission or
presentation of the publication for a period of *** or such
lesser period as may be sufficient to enable modification as provided
in Section 11.1 or file patent applications protecting each party's
rights in such information to be filed. Upon the expiry of ***
from transmission to the non-publishing Party, the publishing Party
shall be free to proceed with the written publication or the
presentation, as applicable, unless the non-publishing Party has
requested the delay or avoidance described above.
SECTION 12
TERM AND TERMINATION
12.1 TERM. This Agreement shall commence as of the Effective Date and shall
continue in each country in the Territory until the last day of the
Royalty Term with respect to such country, unless terminated earlier as
provided herein.
12.2 TERMINATION FOR CAUSE. Subject to Section 13.1, either Party may
terminate this Agreement prior to the expiration of the term of this
Agreement upon the occurrence of any of the following:
12.2.1 upon or after the bankruptcy, insolvency, dissolution or
winding up of the other Party; or
12.2.2 upon or after the breach of any material provision of this
Agreement by the other Party if the breaching Party has not
cured such breach within sixty (60) days after written notice
thereof by the non-breaching Party.
12.3 TERMINATION AT WILL. TAP may terminate this Agreement at any time after
completion of a PK/PD study in human subjects with a Licensed Product
upon sixty (60) days prior written notice to Santarus. In the event of
any such termination, TAP will provide Santarus with all clinical and
regulatory data (except with respect to proprietary information
regarding bulk Lansoprazole and Lansoprazole other than the Licensed
Product) and marketing data in TAP's, its Affiliates' or contractors'
possession (to the extent such data were generated for or on behalf of
TAP) and relating specifically to Licensed Products
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 18
that would be reasonably useful to Santarus for development and
commercialization of products under the Santarus Patent Rights.
12.4 REMEDY IN LIEU OF TERMINATION. In the event that Santarus commits a
material breach of this Agreement and fails to remedy such breach
within sixty (60) days following receipt of written notice from TAP of
such breach, TAP may, by delivering thirty (30) days prior written
notice to Santarus (the "Escrow Notice") (such sixty (60) and thirty
(30) day periods to run consecutively and not concurrently), place any
payments due to Santarus into an escrow account with a commercial bank
until such time as Santarus cures the breach; provided, however, that
if Santarus disagrees that it has committed a material breach of this
Agreement, or that it has failed to remedy such breach, Santarus may
initiate an alternative dispute resolution proceeding in accordance
with Section 13 within thirty (30) days following receipt of the Escrow
Notice, in which case the Escrow Notice shall be null and void and
TAP's payment obligations to Santarus shall remain in effect. If, in
the alternative dispute resolution proceeding to determine whether
Santarus has committed a material breach of this Agreement or whether
Santarus has failed to remedy such breach, the Neutral rules that
Santarus has committed a material breach and has failed to remedy such
breach, (a "Santarus Adverse Ruling"), which ruling shall include a
specific remedy for such breach and a time period for compliance with
such remedy, and Santarus has failed to comply with the terms of the
Santarus Adverse Ruling within the time period specified, then TAP
shall have the following rights:
12.4.1 where Santarus has failed to comply with a Santarus Adverse
Ruling and where such ruling required the payment of monetary
damages, then TAP shall have a right of set-off against any
payments due to Santarus or shall, at TAP's option, have a
right to collect such sums from Santarus; and
12.4.2 where Santarus failed to comply with a Santarus Adverse Ruling
and where such ruling required Santarus to take any action or
cease any action, then TAP may, by providing written notice to
Santarus after the expiration of the time period by which
Santarus was to comply with the Santarus Adverse Ruling, place
any payments due to Santarus into an escrow account with a
commercial bank until such time as Santarus complies with the
Santarus Adverse Ruling; provided, however, that
(a) if Santarus fails to comply with the Santarus Adverse
Ruling within sixty (60) days following the
expiration of the time period specified for
compliance, and such failure is not excused pursuant
to Section 13.4, then TAP may keep all sums in the
escrow account and shall make no further payments to
Santarus until such time as Santarus has sought and
been granted relief from this Section 12.4.2(a)
through a further alternative dispute resolution
proceeding; and
(b) if Santarus complies with the Santarus Adverse Ruling
within sixty (60) days following the expiration of
the time period specified for compliance, then
Santarus shall keep all sums in the escrow account
and TAP shall resume payments to Santarus under this
Agreement, less all costs and expenses incurred by
TAP in connection with the alternative dispute
resolution proceeding and awarded to TAP in
accordance with the terms of the dispute resolution
process.
Page 19
12.5 EFFECT OF EXPIRATION OR TERMINATION.
12.5.1 Upon termination of this Agreement pursuant to Section 12.2 or
12.3 (i) all rights under the licenses granted hereunder shall
automatically terminate, (ii) any sublicenses (but not any
liabilities accrued to date) granted hereunder by TAP to Third
Parties shall remain in effect, but shall be assigned to
Santarus and TAP shall have no further rights or obligations
(except with respect to liabilities accrued to date)
thereunder.
12.5.2 Expiration or termination of this Agreement shall not relieve
the Parties of any obligation accruing prior to such
expiration or termination. Except as set forth below or
elsewhere in this Agreement, any accrued rights to payment and
the obligations and rights of the Parties under Sections 1,
3.7, 6.2, 6.3, 8, 9, 10, 11 and 13 shall survive expiration or
termination of this Agreement.
12.5.3 Within thirty (30) days following the termination of this
Agreement, except to the extent and for so long as a Party is
entitled to retain license rights under this Agreement, each
Party shall deliver to the other Party any and all
Confidential Information, and any copies thereof, of the other
Party in its possession, except that the Party will be
entitled to retain one (1) copy of all documents in its legal
archives. In addition, within thirty (30) days following the
termination of this Agreement by Santarus pursuant to Section
12.2 or by TAP pursuant to Section 12.3, TAP shall provide
*** relating specifically to the Licensed Product
and reasonably necessary or useful to assist or enable
Santarus to comply with applicable requirements of regulatory
agencies and to assist Santarus, to the extent reasonably
possible, in obtaining regulatory clearances and permits
similar to those received by TAP and relating specifically
to the Licensed Products.
SECTION 13
MISCELLANEOUS
13.1 DISPUTE RESOLUTION PROCESS. Any disputes that arise under this
Agreement shall be resolved in accordance with the dispute resolution
process set forth in Exhibit F hereto, and no Party may terminate this
Agreement (except pursuant to Section 12.3) without the other Party
first having recourse to such alternative dispute resolution.
13.2 GOVERNING LAW, AND JURISDICTION. This Agreement shall be governed and
construed in accordance with the laws of the State of New York without
regard to the conflicts of laws provisions hereof and without regard to
the United Nations Convention on Contracts for the International Sale
of Goods. The sole jurisdiction and venue for actions to enforce
compliance with, or any ruling made in accordance with the dispute
resolution process set forth in Section 13.1 shall be the state and
federal courts of the United States. Both Parties and Takeda consent to
the jurisdiction of such courts and agree that process may be served in
the manner allowed under state or federal law. In any action or
proceeding to enforce rights under this Agreement, the prevailing party
shall be entitled to recover costs and attorneys' fees.
13.3 ASSIGNMENT. Except as expressly provided hereunder, neither this
Agreement nor any rights or obligations hereunder may be assigned or
otherwise transferred by either Party without the prior
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*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
written consent of the other Party (which consent shall not be
unreasonably withheld, conditioned or delayed); provided, however, that
either Party may assign this Agreement and its rights and obligations
hereunder without the other Party's consent in connection with the
transfer or sale of all or substantially all of the business of such
Party to which this Agreement relates to another Party, whether by
merger, sale of stock, sale of assets or otherwise; provided, that, for
purposes of clarity, intellectual property rights of a party to such
transaction other than one of the initial Parties to this Agreement
shall not be included in the technology licensed hereunder. The rights
and obligations of the Parties under 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.
13.4 FORCE MAJEURE. Neither Party shall be held liable or responsible to the
other Party nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of
this Agreement (other than non-payment) when such failure or delay is
caused by or results from causes beyond the reasonable control of the
affected Party, including, but not limited to, fire, floods, embargoes,
war, acts of war (whether war be declared or not), insurrections,
riots, civil commotions, strikes, lockouts or other labor disturbances,
acts of God or acts, omissions or delays in acting by any governmental
authority or the other Party.
13.5 SEVERABILITY. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, that provision shall be limited or eliminated
to the minimum extent necessary so that this Agreement shall otherwise
remain in full force and effect and enforceable.
13.6 NOTICE. All notices and other communications provided for hereunder
shall be in writing and shall be delivered personally, by overnight
delivery service or by facsimile, with confirmation of receipt,
addressed as follows:
If to TAP, addressed to:
TAP Pharmaceutical Products Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attn: H. Xxxxxx Xxxxxxx, President
Fax: (000) 000-0000
E-mail: xxx.xxxxxxx@xxx.xxx
with a copy to:
TAP Pharmaceutical Products Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Attn: Senior Counsel
Fax: (000) 000-0000
E-mail: xxx.xxxxxxxx@xxx.xxx
Page 21
If to Santarus, addressed to:
Santarus, Inc.
00000 Xxxx Xxxxx Xxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxxxxxx.xxx
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
00000 Xx Xxxxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn. Xxxx xx Xxxxx, Esq.
Fax: (000) 000-0000
E-mail: xxxxxxxx@xxxxxxx.xxx
If to Takeda, addressed to:
Takeda Chemical Industries, LTD.
1-1, Xxxxxxxxxx 0-Xxxxx,
Xxxx-Xx, Xxxxx 000-0000, Xxxxx
Attn: Xxxxxx Xxx, Pharmaceutical International Division
FAX: x00-0-0000-0000
E-mail: Xxx_Xxxxxx@xxxxxx.xx.xx
with a copy to:
Takeda Chemical Industries, LTD.
12-10, Xxxxxxxxxx 0-Xxxxx,
Xxxx-Xx, XXXXX 000-0000, Xxxxx
Attn: Xxxxxxxx Xxx,
Coordinator-Ethical Products Planning and Management
Dept. Pharmaceutical
Marketing Division
FAX: x00-0-0000-0000
E-mai1: Xxx_Xxxxxxxx@xxxxxx.xx.xx
with a copy to:
Takeda Chemical Industries, LTD.
1-1, Xxxxxxxxxx 0-Xxxxx,
Xxxx-Xx, Xxxxx 000-0000, Xxxxx
Attn: Senior Manager, Legal Department
FAX: x00-0-0000-0000
E-mail: Xxxxxx_Xxxxxxxx@xxxxxx.xx.xx
Page 22
Either Party and Takeda may by like notice specify or change an address
to which notices and communications shall thereafter be sent. Notices
sent by facsimile shall be effective upon confirmation of receipt;
notices sent by mail or overnight delivery service shall be effective
upon receipt; notices via e-mail shall be effective if the recipient
confirms receipt from the sender; and notices given personally shall be
effective when delivered.
13.7 INDEPENDENT CONTRACTORS. It is expressly agreed that Santarus and TAP
shall be independent contractors and that the relationship between the
two Parties shall not mean that either has the authority to make any
statement, representations or commitments of any kind on behalf of the
other, or to take any action, which shall be binding on the other
Party, without the prior written consent of the other Party.
13.8 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the exhibits
attached hereto) sets forth all of the covenants, promises, agreements,
warranties, representations, conditions and understandings between the
Parties and Takeda hereto with respect to the subject matter hereof and
supersedes and terminates all prior agreements and understandings
between the Parties and Takeda; provided, however, that any
nondisclosure agreement entered into by the Parties and Takeda shall
remain in full force and effect in accordance with its terms.
No subsequent alteration, amendment, change or addition to this
Agreement shall affect the rights of any Party hereto or of Takeda
unless reduced to writing and signed by the authorized officers of such
Party and of Takeda, as applicable.
13.9 HEADINGS. The captions to the several Sections hereof are not a part of
this Agreement, but are merely guides or labels to assist in locating
and reading the several Sections hereof.
13.10 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 remedy shall not operate or be construed as a
continuing waiver of same or of any other of such Party's rights or
remedies provided in this Agreement.
13.11 COUNTERPARTS. This Agreement may be executed triplicate, each of which
shall be deemed to be an original but all of which shall constitute one
and the same Agreement.
[Remainder of This Page Intentionally Left Blank]
Page 23
IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the
date first set forth above.
SANTARUS, INC. TAP PHARMACEUTICAL PRODUCTS INC.
By: /s/ Xxxxxx X. Xxxxxx By: /s/ H. Xxxxxx Xxxxxxx
---------------------------- -----------------------------
Printed Name: Xxxxxx X. Xxxxxx Printed Name: H. Xxxxxx Xxxxxxx
Title: President & CEO Title: President
Date: June 27, 2002 Date: June 25, 2002
TAKEDA CHEMICAL INDUSTRIES, LTD.
(with respect to the Sections specified above)
By: Signature illegible
-------------------
Printed Name: Yoshihiro Narai
Title: Managing Director
Date: June 27, 2002
Page 24
EXHIBIT A
Santarus Patent Rights
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 25
EXHIBIT B
Sales Forecast
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 26
EXHIBIT C
*** Option Terms
1. Geographic Region. *** may elect to exercise the option with
respect to either or both of *** and the Rest of World other
than *** (each, a "Geographic Region").
2. Initial Payment. With respect to the first Geographic Region,
*** shall pay to Santarus *** on the date of execution of the
license with respect to such Geographic Region; with respect
to the second Geographic Region that *** elects, *** shall pay
to Santarus *** on the date of execution of the license with
respect to such Geographic Region, provided, that
notwithstanding the foregoing, in the event that *** has
exercised its option with respect to either or both Geographic
Regions, the initial payment as set forth above with respect
to such Geographic Region or Regions shall be paid no later
than *** days after the last date upon which the option may be
exercised pursuant to Section 4.2 and, provided, further, that
if, prior to the expiration of such ***day period, *** and
Santarus agree to terminate the negotiation on the license or
if such negotiation may not be conducted or consummated for
reasons other than bad faith on the part of ***, *** shall not
be required to pay the applicable initial payment(s) and,
except for the case where such failure to conduct or
consummate the negotiations results from bad faith on the part
of Santarus, neither party will have any obligation to further
negotiate the license.
3. Milestone Payments. *** shall pay Santarus the following
milestone payments in the event *** has been granted a license
for one or both Geographic Regions:
-In the event *** has been granted a license for both
Geographic Regions, then ***
-In the event *** has been granted a license for one of the
Geographic Regions, then ***
*** ***
*** ***
*** ***
*** ***
*** ***
*** ***
***
4. Royalty Payments. In the event the First Commercial Sale of
Licensed Product in a country in a Geographic Region occurs
prior to the date of the expiration of the *** Patent for such
country (the "*** Patent Expiration Date") or of any extension
thereof, the royalty rate for sales of Licensed Product in
such country shall be ***. *** represents that the currently
effective expiration dates and any anticipated extensions for
the Lansoprazole substance patents in Europe and *** are set
forth in Section 6 below. For purposes of calculating royalty
payments subsequent to the ***Expiration Date in any country,
the royalty rate shall be based upon ***
Page 27
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
***
5. Diligence. The parties will agree upon diligence requirements,
including diligence requirements related to product
development and commercialization, and if such requirements
are not met, then Santarus may terminate the license agreement
with ***, and *** will share with Santarus all clinical and
regulatory data (except with respect to proprietary
information regarding bulk Lansoprazole and Lansoprazole other
than the Licensed Product) and marketing data in ***, its
Affiliates' or contractors' possession (to the extent such
data were generated for or on behalf of ***) and relating
specifically to licensed products under the *** license from
Santarus that would be reasonably useful to Santarus for
development and commercialization of products under the
Santarus Patent Rights.
6. Patent Expiration Dates.
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 28
EXHIBIT D
Diligence Requirements
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Page 29
EXHIBIT E
Press Release
Contacts for Santarus:
Xxxxx X. Xxxxxxxx
Vice President & CFO
000-000-0000
xxxxxxxxx@xxxxxxxx.xxx
Xxx Xxxx
Xxxxxx+Associates
000-000-0000 x000
XXXXX@XXXXXXXXXXXXXXXX.XXX
FOR IMMEDIATE RELEASE - DRAFT
SANTARUS AND TAP PHARMACEUTICAL PRODUCTS SIGN STRATEGIC LICENSE
AGREEMENT
Santarus' intellectual property targets development of next-generation therapy
for upper gastrointestinal diseases
SAN DIEGO, CA - Date, 2002 - Santarus, Inc., a specialty pharmaceutical company
developing therapies to prevent and treat gastrointestinal diseases and
disorders, announced today that it has granted a technology license to TAP
Pharmaceutical Products Inc. (TAP) for certain patent rights targeted at upper
gastrointestinal diseases.
Under the terms of the agreement, TAP has been granted North American rights to
manufacture and sell products resulting from the licensed technology. Inc1uding
the $8 million initial payment, the value of the deal to Santarus could exceed
$100 million (if multiple products are successfully developed and marketed).
Santarus will also receive royalties on any future sales of products that may be
commercialized by TAP. Santarus retained rights to use its intellectual property
to develop and commercialize related products.
"TAP is excited about the opportunity to develop improved product offerings
through the application of Santarus' intellectual property," said Xxxx
Xxxxxxxxx, Vice President of Licensing, TAP. "The signing of this agreement is
another example of TAP's continuing commitment to growing our presence in the
U.S. market through the development and commercialization of innovative,
patented products."
"We are thrilled to enter this agreement with TAP," stated Xxxxxx X. Xxxxxx,
President & CEO of Santarus. "The signing of this agreement is a significant
event for Santarus that demonstrates the potential value of our technology and
serves to better position us for future success."
Santarus is currently developing two of its own product candidates, Acitrel(TM)
and Rapinex(TM), derived from the licensed technology. Acitrel(TM) entered Phase
III clinical trials in May 2002, and Rapinex(TM) is positioned to enter Phase
III clinical trials in 2003.
Page 30
ABOUT TAP PHARMACEUTICAL PRODUCTS INC.
TAP Pharmaceutical Products Inc., located in Lake Forest, Ill., is a joint
venture between Xxxxxx Laboratories, headquartered in Abbott Park, Ill., and
Takeda American Holdings Inc., a wholly owned subsidiary of Takeda Chemical
Industries, Ltd., of Osaka, Japan. TAP markets PREVACID(R) (lansoprazole),
Lupron Depot(R) (leuprolide acetate for depot suspension) and SPECTRACEF(TM)
(cefditoren pivoxil). For more information about TAP and its products, visit the
company's Web site at xxx.xxx.xxx.
ABOUT SANTARUS, INC.
Santarus, Inc. is a privately held specialty pharmaceutical company focused on
acquiring, developing and commercializing products for the prevention and
treatment of gastrointestinal (GI) diseases and disorders. The company's primary
strategy is to develop and market proprietary products with new formulations,
enhanced delivery systems or expanded indications that are based on currently
marketed products or compounds that have clinically demonstrated safety and
efficacy. In addition to building its internal product portfolio, Santarus also
seeks out opportunities to in-license development stage and marketed GI
pharmaceutical products for clinical development and commercialization. Santarus
is based in San Diego, California. For more information, visit
xxxx://xxx.xxxxxxxx.xxx.
Page 31
EXHIBIT F
Alternative Dispute Resolution
The parties recognize that bona fide disputes as to certain matters may arise
from time to time during the term of this Agreement that relate to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution (ADR) provision, a party first must send written
notice of the dispute to the other party for attempted resolution by good faith
negotiations between their respective presidents (or their equivalents) of the
affected subsidiaries, divisions, or business units within twenty-eight (28)
days after such notice is received (all references to days in this ADR provision
are to calendar days).
If the matter has not been resolved within twenty-eight (28) days of the notice
of dispute, or if the parties fail to meet within such twenty-eight (28) days,
either party may initiate an ADR proceeding as provided herein. The parties
shall have the right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR, including the specific
provisions of the Agreement in issue. Within fourteen (14) days after
its receipt of such notice, the other party may, by written notice to
the party initiating the ADR, add additional issues to be resolved
within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to
preside in the resolution of any disputes in this ADR proceeding. If
the parties are unable to agree on a mutually acceptable neutral within
such period, either party may request the President of the CPR
Institute for Dispute Resolution (CPR), 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, to select a neutral pursuant to the following
procedures:
(a) The CPR shall submit to the parties a list of not less than
five (5) candidates within fourteen (14) days after receipt of
the request, along with a Curriculum Vitae for each candidate.
No candidate shall be an employee, director, or shareholder of
either party or any of their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
(c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference)
and shall deliver the list to the CPR within seven (7) days
following receipt of the list of candidates. If a party
believes a conflict of interest exists regarding any of the
candidates, that party shall provide a written explanation of
the conflict to the CPR along with its list showing its order
of preference for the candidates. Any party failing to return
a list of preferences on time shall be deemed to have no order
of preference.
(d) If the parties collectively have identified fewer than three
(3) candidates deemed to have conflicts, the CPR immediately
shall designate as the neutral the candidate for whom the
parties collectively have indicated the greatest preference,
excluding any candidate deemed by a party to have conflicts.
If a tie should result between two candidates, the CPR may
designate either candidate. If the parties collectively have
identified three (3) or more candidates deemed to have
conflicts, the CPR shall review the explanations
Page 32
regarding conflicts and, in its sole discretion, may either
(i) immediately designate as the neutral the candidate for
whom the parties collectively have indicated the greatest
preference, or (ii) issue a new list of not less than five (5)
candidates, in which case the procedures set forth in
subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each
of the issues identified by the parties. The ADR proceeding shall take
place at a location agreed upon by the parties. If the parties cannot
agree, the neutral shall designate a location other than the principal
place of business of either party or any of their subsidiaries or
affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in
any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of
each witness;
(c) a proposed ruling on each issue to be resolved, together with
a request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and shall not
exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20)
pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d) of this
Exhibit G and except with respect to Section 5 of the Agreement, no
discovery shall be required or permitted by any means, including
depositions, interrogatories, requests for admissions, or production of
documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing time
to present its case. The neutral shall determine whether each
party has had the five (5) hours to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony,
documents or other evidence, to cross-examine witnesses, and
to make a closing argument. Cross-examination of witnesses
shall occur immediately after their direct testimony, and
cross-examination time shall be charged against the party
conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if
it chooses to make an opening statement, shall address not
only issues it raised but also any issues raised by the
responding party. The responding party, if it chooses to make
an opening statement, also shall address all issues raised in
the ADR. Thereafter, the presentation of regular and
Page 33
rebuttal testimony and documents, other evidence, and closing
arguments shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from the
hearing until closing arguments; provided however, that each
party may have one representative who may also be a witness
and be present throughout the entire hearing.
(e) Settlement negotiations, including any statements made
therein, shall not be admissible under any circumstances.
Affidavits prepared for purposes of the ADR hearing also shall
not be admissible. As to all other matters, the neutral shall
have sole discretion regarding the admissibility of any
evidence.
6. Within seven (7) days following completion of the hearing, each party
may submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies, provided that such brief
shall not contain or discuss any new evidence and shall not exceed ten
(10) pages. This page limitation shall apply regardless of the number
of issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its
entirety the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and remedies
on some issues and the other party's proposed rulings and remedies on
other issues. The neutral shall not issue any written opinion or
otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the
fees and expenses of a court reporter, and any expenses for a hearing
room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed
issues in the ADR, the losing party shall pay 100% of such
fees and expenses.
(b) If the neutral rules in favor of one party on some issues and
the other party on other issues, the neutral shall issue with
the rulings a written determination as to how such fees and
expenses shall be allocated between the parties. The neutral
shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the
party prevailing on more issues, or on issues of greater value
or gravity, recovering a relatively larger share of its legal
fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable (except in the
case of fraud or bad faith on the part of the neutral), and may be
entered as a final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence
of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information
(except for information contained in exhibits or testimony that is
already public or later becomes public through no fault of the parties
or that is lawfully disclosed to a party through an independent third
party). The neutral shall have the authority to impose sanctions for
unauthorized disclosure of Confidential Information.
Page 34
