Exhibit 99(e)(2)
COLLABORATION AGREEMENT
BETWEEN
CHIRON CORPORATION
AND
PATHOGENESIS CORPORATION
DATED DECEMBER 15, 1999
TABLE OF CONTENTS
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ARTICLE 1 DEFINITIONS......................................................... 1
ARTICLE 2 RESEARCH PROGRAM.................................................... 10
2.1 Research Term....................................................... 10
2.2 Collaboration Management Team....................................... 10
2.3 Research Plan....................................................... 11
2.4 Exchange of Information Between Parties............................. 11
2.5 Target Selection.................................................... 11
2.5.1 Option To Abandon Selected Target........................... 11
2.5.2 Independent Research of Abandoned Target.................... 11
2.5.3 New Target or Compound Selection; Replacement Target or
Compound Selection........................................ 12
2.6 Exclusivity......................................................... 12
2.6.1 Pre-Effective Date Third Party Agreements In The Field...... 12
2.6.2 Post-Effective Date Third Party Agreements.................. 12
2.6.3 Licensing or Acquisition of Development Candidate or
Products In The Field..................................... 13
2.6.4 Future Third Party Collaboration Outside The Field.......... 13
2.7 Access to Chiron Technology, Chiron Libraries, Chiron Compounds..... 14
2.8 Limitations upon Access to Chiron Libraries and Chiron Compounds.... 14
2.9 Access to PathoGenesis Technology, PathoGenesis Libraries and
PathoGenesis Compounds............................................ 14
2.10 Limitations Upon Access to PathoGenesis Libraries and PathoGenesis
Compounds......................................................... 14
2.11 Non-Field Use of Results, Joint Compounds, Joint Compound Patents,
Joint Development Compounds, Joint Libraries and Joint
Technology........................................................ 15
2.12 Limitations Upon Use of Technology Outside the Research Program..... 15
2.13 Assay Development and Screening..................................... 15
ARTICLE 3 DEVELOPMENT PROGRAM................................................. 16
3.1 Selection of Development Candidate.................................. 16
3.2 Joint Exercise of Development Option................................ 16
3.2.1 Lead Developing Party....................................... 17
3.2.2 Joint Developing Parties.................................... 17
3.2.3 Other Indications........................................... 17
3.2.4 Multiple Indications........................................ 17
3.2.5 Development Costs Shared On 50%-50% Basis................... 18
3.2.6 Third Party Royalties....................................... 18
3.2.7 Option To Abandon After Exercise of Development Option...... 18
3.3 Independent Development of Product.................................. 18
3.3.1 Conditions for Independent Development of an Independent
Product................................................... 18
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ARTICLE 4 MARKETING AND COMMERCIALIZATION OF CO-COMMERCIALIZED PRODUCTS....... 20
4.1 The Co-Commercialization Plan....................................... 20
4.2 Governance.......................................................... 20
4.3 Sharing of Net Pretax Profits and Losses............................ 20
4.4 Development as Co-Commercialized Products or Independent Products... 20
4.5 Regulatory Approvals................................................ 21
4.6 Sales, Marketing and Distribution Rights............................ 21
4.7 Trademarks.......................................................... 22
4.8 Performance Standards............................................... 22
4.9 Subcontracts........................................................ 22
4.10 Adverse Information and Event Reporting............................. 22
ARTICLE 5 DEVELOPMENT AND COMMERCIALIZATION OF INDEPENDENT PRODUCTS........... 23
5.1 Development and Commercialization................................... 23
5.1.1 Performance Standards....................................... 23
5.1.2 Control..................................................... 23
5.1.3 Costs....................................................... 23
5.2 Third Party Royalties............................................... 23
5.3 Interaction with CMT................................................ 23
5.4 Manufacturing Rights and Profits.................................... 24
5.5 Sales, Marketing and Distribution Rights and Profits................ 24
5.6 Revenues............................................................ 24
5.7 Abandonment of Independent Products................................. 24
5.8 Development by Third Parties........................................ 24
ARTICLE 6 MANUFACTURING OF CO-COMMERCIALIZED PRODUCTS......................... 25
6.1 Clinical Scale Manufacturing........................................ 25
6.1.1 Manufacturer................................................ 25
6.1.2 Forecasts................................................... 25
6.1.3 Transfer Price.............................................. 25
6.1.4 Representation and Warranty................................. 25
6.2 Process Development Costs........................................... 26
6.3 Commercial Scale Manufacturing...................................... 26
6.4 Transition Provisions............................................... 26
ARTICLE 7 MANAGEMENT OF COLLABORATION......................................... 26
7.1 Management Outline.................................................. 26
7.2 Responsibilities of the CMT......................................... 27
7.2.1 Collaboration Management Team Meetings...................... 27
7.2.2 Standard for Decisions...................................... 27
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7.3 Limits on Jurisdiction of Appointed Teams........................... 27
7.4 Approval of Research Plans.......................................... 27
7.5 Disagreements....................................................... 28
ARTICLE 8 LICENSE GRANTS...................................................... 28
8.1 Chiron License Grant to PathoGenesis................................ 28
8.1.1 Chiron Technology for Research.............................. 28
8.1.2 Chiron Targets, Libraries, Joint Libraries and Joint
Compounds for Screening................................... 28
8.1.3 Use of Libraries............................................ 28
8.1.4 Licenses for Co-Commercialized Products and Independent
PathoGenesis Products..................................... 29
8.2 PathoGenesis License Grant to Chiron................................ 29
8.2.1 PathoGenesis Technology for Research........................ 29
8.2.2 PathoGenesis Targets, Libraries, Joint Libraries and Joint
Compounds for Screening................................... 30
8.2.3 Use of Libraries............................................ 30
8.2.4 Licenses for Co-Commercialized Products and Independent
Chiron Products........................................... 30
8.3 License to Results and Joint Work................................... 31
8.4 No Other Rights..................................................... 31
ARTICLE 9 PAYMENTS, ROYALTIES AND ACCOUNTING.................................. 31
9.1 Research Funding.................................................... 31
9.2 Responsibility for Research Costs................................... 32
9.2.1 Research Reconciliation Report.............................. 32
9.2.2 Research Reconciliation..................................... 32
9.3 Development Funding and Responsibility for Development Costs........ 32
9.4 Sharing of Net Pretax Profits and Losses............................ 32
9.5 Limitation on Reimbursement......................................... 33
9.6 Third Party Royalties............................................... 33
9.7 Independent Product Royalty......................................... 34
9.7.1 Royalty on Abandoned Targets Resulting In Independent
Products.................................................. 34
9.7.2 Royalty on Abandoned Compounds or Jointly Owned or Developed
Information Resulting In Independent Products............. 34
9.7.3 Royalty Stacking Provision.................................. 34
9.7.4 Independent Product Royalty Period.......................... 34
9.8 Fully Paid Up License For Co-Commercialized Products................ 35
9.9 Fully Paid Up License For Independent Products...................... 35
9.10 Taxes............................................................... 35
9.11 Calculation of Payments............................................. 35
9.12 Statements.......................................................... 35
9.13 Treatment of Sales in Financial Statements.......................... 35
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9.14 Accounting and Audits............................................... 35
ARTICLE 10 REPORTING AND RECORDS.............................................. 36
10.1 Progress Reports.................................................... 36
10.2 Records and Results................................................. 36
10.3 Availability of Employees........................................... 36
10.4 Visit of Facilities................................................. 36
ARTICLE 11 REPRESENTATIONS AND WARRANTIES..................................... 37
11.1 Mutual Representations and Warranties............................... 37
11.1.1 Due Organization............................................ 37
11.1.2 Due Authority............................................... 37
11.1.3 No Conflict................................................. 37
11.1.4 Binding Obligation.......................................... 37
11.1.5 No Actions.................................................. 37
11.1.6 Assignment of Inventions.................................... 37
11.2 No Additional Representations or Warranties......................... 38
ARTICLE 12 LIMITATION OF LIABILITY............................................ 38
12.1 Limitation of Liability............................................. 38
ARTICLE 13 INVENTIONS, PATENTS, LIBRARIES AND COMPOUNDS....................... 38
13.1 Ownership of New Inventions, Patent Applications and Patents........ 38
13.1.1 PathoGenesis Inventions..................................... 38
13.1.2 Chiron Inventions........................................... 38
13.1.3 Improvements to Party Technology............................ 39
13.1.4 Joint Invention............................................. 39
13.1.5 Assignment.................................................. 39
13.1.6 Determination of Inventorship............................... 39
13.1.7 Invention Disclosures....................................... 39
13.1.8 Compound Patents............................................ 39
13.2 Prosecution and Maintenance of Joint Patents........................ 39
13.2.1 Filing, Prosecution and Maintenance......................... 39
13.2.2 Cooperation................................................. 40
13.3 Prosecution and Maintenance of Patents other than Joint Patents..... 40
13.4 Enforcement of Patents.............................................. 40
13.4.1 Notice...................................................... 40
13.4.2 Maintenance of Lawsuits Involving Chiron Patents............ 40
13.4.3 Maintenance of Lawsuits Involving PathoGenesis Patents...... 41
13.4.4 Maintenance of Lawsuits Involving Joint Patents............. 42
13.5 Third Party Claim of Infringement................................... 42
13.5.1 Notice...................................................... 42
13.5.2 Infringement by Co-Commercialized Products.................. 42
13.5.3 Infringement by Independent Products........................ 42
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13.6 Ownership and Use of Libraries and Compounds........................ 42
13.6.1 Use of Chiron and PathoGenesis Libraries and Compounds
Outside the Research Program.............................. 43
13.7 Use of Joint Libraries Derived From a Party's Library Outside the
Research Program.................................................. 43
ARTICLE 14 CONFIDENTIALITY AND PUBLICATION.................................... 43
14.1 Confidential Information............................................ 43
14.2 Confidentiality and Non-Use......................................... 43
14.3 Exclusions.......................................................... 43
14.4 Confidentiality Agreements.......................................... 44
14.5 Publicity........................................................... 44
14.5.1 Results..................................................... 44
14.5.2 Press Releases.............................................. 44
14.6 Termination......................................................... 44
ARTICLE 15 INDEMNIFICATION.................................................... 44
15.1 PathoGenesis Indemnification........................................ 44
15.2 Chiron Indemnification.............................................. 45
15.3 Mutual Indemnification.............................................. 45
15.4 Procedure........................................................... 45
15.5 Product Liability Insurance......................................... 45
ARTICLE 16 TERM AND TERMINATION............................................... 46
16.1 Contract Term....................................................... 46
16.2 Early Termination of the Research Program........................... 46
16.3 Early Termination of the Agreement.................................. 46
16.4 Breach and Specific Performance..................................... 46
16.5 Survival of Obligations............................................. 46
16.6 Continuing Liability................................................ 47
16.7 Rights in Bankruptcy................................................ 47
16.8 Return of Confidential Information.................................. 47
ARTICLE 17 ALTERNATIVE DISPUTE RESOLUTION ("ADR")............................. 47
17.1 Exclusive Dispute Resolution Mechanism.............................. 47
17.2 Collaboration Management Team Mediation............................. 47
17.3 Executive Mediation................................................. 47
17.4 Mediation........................................................... 48
17.5 Initiation of Arbitration........................................... 48
17.6 Selection of Neutral................................................ 48
17.7 Hearing............................................................. 48
17.8 Procedures.......................................................... 48
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17.9 Presentations....................................................... 49
17.10 Costs and Fees...................................................... 49
17.11 Confidentiality..................................................... 49
17.12 Award............................................................... 49
17.13 Injunctive Relief................................................... 49
ARTICLE 18 MISCELLANEOUS...................................................... 50
18.1 No Solicitations.................................................... 50
18.2 Force Majeure....................................................... 50
18.3 Relationship of the Parties......................................... 50
18.4 Notices............................................................. 50
18.5 Successors and Assigns.............................................. 51
18.6 Amendments and Waivers.............................................. 51
18.7 Governing Law....................................................... 51
18.8 Attorneys' Fees..................................................... 51
18.9 Severability........................................................ 51
18.10 Use of Names........................................................ 52
18.11 Execution in Counterparts........................................... 52
18.12 Entire Agreement.................................................... 52
EXHIBIT A: RESEARCH PLAN......................................................
EXHIBIT B: LIST OF SELECTED TARGETS...........................................
EXHIBIT C: LIST OF PRE-EFFECTIVE DATE THIRD PARTY AGREEMENTS..................
EXHIBIT D: LIST OF SCIENTIFIC PERSONNEL.......................................
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COLLABORATION AGREEMENT
This Collaboration Agreement (the "Agreement") dated as of December 15, 1999
(the "Effective Date"), is entered into by and between Chiron Corporation, a
Delaware corporation ("Chiron"), and PathoGenesis Corporation, a Delaware
corporation ("PathoGenesis").
A. Chiron has experience and expertise in the utilization of
combinatorial technology to design and synthesize combinatorial libraries,
high throughput screening and in the application of this technology and such
libraries to the discovery and development of pharmaceutical products.
B. PathoGenesis has the research tools, experience and expertise to
undertake antibacterial research for the identification and prioritization
of molecular Targets for the identification of antibiotic compounds,
determination of microbiological and biological activity and evaluation of
such compounds.
C. Both Parties have experience in developing and commercializing
pharmaceutical products.
D. PathoGenesis and Chiron mutually desire to enter into an exclusive
collaboration (the "Collaboration") to research, develop, manufacture and
commercialize mutually selected novel antibacterial compounds for human use
(each a "Product" and collectively, "Products") on the terms and subject to
the conditions set forth in this Agreement.
E. In this Collaboration, Chiron will use its expertise in
combinatorial chemistry and high-throughput screening and PathoGenesis will
use its expertise in genomic target discovery and validations and
microbiology/biology evaluations. PathoGenesis and Chiron will collaborate
on target prioritization, assay development, lead compound development,
medicinal chemistry, and lead optimization during the Collaboration. Upon
achieving favorable results from the Research Program, Chiron and
PathoGenesis will determine according to the terms of this Agreement,
appropriate plans for pre-clinical testing, clinical testing, manufacturing
process development, regulatory approval, commercialization and marketing of
the Products.
NOW, THEREFORE, in consideration of the mutual agreements provided herein,
PathoGenesis and Chiron agree as follows:
ARTICLE 1
DEFINITIONS
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. "ABANDONED COMPOUND" or "ABANDONED COMPOUND SERIES" means a
Compound or Compound Series identified by the research performed under this
Agreement which: (i) has been selected in writing by a Party as suitable for
further development but which the other Party has declined in writing to
develop further; or (ii) which has been abandoned in writing by one or both
Parties pursuant to Section 3.2.7.
1.2. "ABANDONED TARGET" means a Selected Target which has been eliminated
from the Research Program through the unilateral written decision of one
Party or through the mutual written decision of both Parties in accordance
with Section 2.5.1.
1.3 "AFFILIATE" means in the case of each Party any entity that directly
or indirectly controls, is controlled by, or is under common control with
that Party. For such purpose the term "CONTROL" means ownership or control of
at least 50% of the voting interest in the entity in question.
Notwithstanding anything to the contrary contained herein, "Affiliate" shall
not include, in the case of Chiron, Novartis AG or any Affiliate of Novartis
AG (other than Chiron and any of its direct or indirect subsidiaries), as
long as Novartis A.G. is precluded, by terms of the Governance Agreement
dated as of November 20,
1
1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation and Chiron from electing a
majority of the Board of Directors of Chiron.
1.4. "ALLOCABLE OVERHEAD" means costs incurred by a Party or for its
account which are attributable to a Party's supervisory services, occupancy
costs, corporate bonus (to the extent not charged directly to the
departments) and its payroll, information systems, human relations or
purchasing functions, as allocated by the Party in accordance with generally
accepted accounting principles, as applied on a consistent basis.
1.5. "BANKRUPTCY EVENT" means, with respect to either Party, such Party
makes an assignment for the benefit of its creditors, files a voluntary petition
under federal or state bankruptcy or insolvency laws, a receiver or custodian is
appointed for such person's business, proceedings are instituted against such
person under federal or state bankruptcy or insolvency laws that have not been
stayed within thirty (30) days, all or substantially all of such person's
business or assets become subject to attachment, garnishment or other process,
or a court or other governmental authority of competent jurisdiction determines
that such person is insolvent.
1.6. "CHANGE IN CONTROL" shall mean any of the following: (i) the direct
or indirect acquisition by any person or related group of persons of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of more than 50% of the Voting Securities
of a Party, with the exception that the direct or indirect acquisition by
Novartis A.G. of more than 50% of the Voting Securities of Chiron shall not
be deemed to involve a Change in Control (ii) a merger or consolidation of a
Party with or into any other entity after which the holders of that Party's
Common Stock prior to such transaction would not hold securities possessing
more than 50% of the total combined voting power of the resulting entity; or
(iii) the sale or disposition of all or substantially all of a Party's assets.
1.7. "CHIRON COMPOUND" means a Compound designed, acquired or licensed by
Chiron (alone or with Third Parties) without reliance upon a PathoGenesis
Compound, a Joint Compound, a PathoGenesis Target or PathoGenesis Technology.
1.8. "CHIRON COMPOUND PATENT" means a Patent owned or controlled by Chiron
claiming one or more Chiron Compounds.
1.9 "CHIRON INDICATIONS" means delivery of drug through oral
administration into the human body other than by aerosol or inhalation
delivery of drug through the mouth.
1.10. "CHIRON LIBRARY" means a Library designed, acquired or licensed by
Chiron (alone or with Third Parties and available for license or sublicense to
PathoGenesis under the terms and conditions of this Agreement), prior to the
Effective Date or during the Research Term, which is based upon or modeled after
a Chiron Compound.
1.11. "CHIRON TARGETS" means Targets developed by Chiron (alone or with
Third Parties) outside this Collaboration and this Agreement and without
reliance upon PathoGenesis Targets or PathoGenesis Technology. Without
limitation, Selected Targets shall not be considered Chiron Targets.
1.12. "CHIRON TECHNOLOGY" means Chiron Technology Patents, biological
methods and Chiron Know-How useful with respect to the identification or
development pursuant to the Research Plan and the Development Plans of
antibacterial Compounds owned or controlled by Chiron, including, without
limitation: (i) expression, production and purification technology for bacterial
Targets (e.g., recombinant protein expression methods); (ii) assays; and
(iii) transfection systems for replication of bacterial Targets.
"CHIRON TECHNOLOGY" also means all inventions, Know-How, or other
proprietary information (whether patented or not), which are owned or controlled
by Chiron or its Affiliates, or their respective employees or assignors, as of
the Effective Date or during the Research Term, as to which Chiron has
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the right to grant to PathoGenesis a non-exclusive license hereunder, and
consisting of methods or materials for the production, design, synthesis,
characterization and/or use of synthetic, chemical libraries, either as
individual Compounds or mixtures thereof, using combination and/or permutation
strategies with respect to the structural components, e.g. organic scaffold or
polymeric or oligomeric backbone structures and chemistries, together with
sidechain or substituent chemistries; such libraries generated using chemical
strategies based on (i) solid-phase or solid supported systems, e.g. resins and/
or supported spatial arrays (e.g. pins), or (ii) solution chemistry.
"CHIRON TECHNOLOGY" additionally means technologies owned or controlled by
Chiron or its Affiliates used for:
(a) methods and materials for the design, synthesis and production of
chemical compounds and libraries;
(b) solid phase organic chemistry;
(c) computational chemistry;
(d) protein chemistry;
(e) assay systems;
(f) in vitro and in vivo test systems; and
(g) pharmaceutical formulations of dosage forms.
"CHIRON TECHNOLOGY" specifically excludes vaccines, diagnostics, therapeutic
monitoring tests, antisense, gene therapies and recombinant proteins. All
existing and future Chiron Targets, Chiron Libraries, Chiron Compounds or
Compound Series shall not be included within the definition of Chiron Technology
as defined in this Section 1.12, and shall be governed by this Agreement as
defined terms in their own right in accordance with the terms and conditions
provided herein. To the extent that they relate to Selected Targets, such Chiron
Technology and Chiron Libraries, Chiron Compounds and Compound Series contained
therein shall be available for use pursuant to the Research Plan, Development
Plans and separate provisions of this Agreement. To the extent that any Chiron
Technology has been acquired or licensed from Third Parties, all licenses
granted hereunder shall be subject to all of the terms and conditions imposed by
such Third Parties with respect to such acquired or licensed technology. Chiron
shall make reasonable efforts to inform PathoGenesis of such terms and
conditions prior to PathoGenesis' use of such technology hereunder.
1.13. "CHIRON TECHNOLOGY PATENTS" means Patents owned or controlled by
Chiron claiming Chiron Technology.
1.14. "CO-COMMERCIALIZED PRODUCT" means any Product arising from a Joint
Development Compound or Joint Development Compound/IV, developed or
commercialized jointly by Chiron and PathoGenesis pursuant to Article 3 and
Article 4.
1.15. "CO-COMMERCIALIZATION PLAN" means the co-commercialization plans
outlining the activities to be conducted by the Parties to develop, market and
co-commercialize the Co-Commercialized Products as set forth in Article 4.
1.16. "COLLABORATION MANAGEMENT TEAM" or "CMT" means the management team
for the Collaboration, composed of an equal number of members to be chosen by
PathoGenesis and by Chiron. CMT responsibilities shall include the review and
oversight of operational aspects of the Research Program. The CMT shall also
have responsibility for implementing and coordinating activity under the
Research Plan, the Development Plans and the Co-Commercialization Plans.
1.17. "COMPOUND" means a compound with antibacterial activity identified
and developed pursuant to this Agreement.
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1.18. "COMPOUND PATENT" means a Patent claiming an invention or discovery
arising from the Research Program which is specific to the composition or use of
a Compound or a Compound Series.
1.19. "COMPOUND SERIES" means a Compound and those Compounds reasonably
suggested by their structure to have the same or similar activity as the
Compound.
1.20. "CONTRACT TERM" means the term of this Agreement as further described
in Section 16.1.
1.21. "COSTS" means the fully burdened and fairly allocated costs and
expenses incurred by a Party pursuant to an approved plan, or otherwise approved
by the Collaboration Management Team, in connection with the research,
development and commercialization of any Product, all to the extent consistent
with GAAP.
1.22. "COSTS OF MANUFACTURING" means, with respect to each Product
manufactured by a Party, the fully burdened and fairly allocable costs
consistent with U.S. generally accepted accounting principles of the relevant
Party and its Affiliates, on a consolidated basis, of manufacturing such
Product, including: (a) depreciation or amortization of capital expenditures
related thereto and a fair charge for direct costs (including, but not
limited to, standard costs and variances from standard costs); (b) the
reasonable cost of any excess or idle capacity not otherwise employed and
incurred at a facility of such Party that is completed and licensed by the
appropriate authorities for production of such Product to the extent that
such capacity has been approved by the Parties pursuant to Section 9.4(e);
(c) normal yield losses which arise under efficient and normal production
operation conditions; (d) reasonable costs for process development and
improvement following commercialization; (e) indirect costs (including, but
not limited to, reasonable general and administrative costs associated with
manufacturing, factory and facilities overhead, quality assurance and
control, engineering, production administration and Allocable Overhead); (f)
royalties to Third Parties for technology needed for the manufacture of such
Product; and (g) costs of testing rejected or returned Products. Such costs
shall be determined by the relevant Party in accordance with its internal
accounting systems and methodologies and generally accepted accounting
principles, as applied on a consistent basis.
1.23. "DEVELOPMENT OPTION" means a Party's option to pursue or abandon a
Compound or Compound Series, once that Compound or Compound Series has been
nominated or selected as a development candidate by a Party pursuant to the
terms of this Agreement.
1.24. "DEVELOPMENT PLAN" means the development plans outlining the
activities to be conducted by the Parties to develop and obtain Regulatory
Approvals for the Products as set forth in Section 3.1.
1.25. "FDA" means the United States Food and Drug Administration.
1.26. "FIELD" means research, development and commercialization of small
molecule drugs against Selected Targets as antibacterial agents for use in
humans, specifically excluding vaccines, diagnostics, therapeutic monitoring
tests, antisense, gene therapies and recombinant proteins.
1.27. "FIRST COMMERCIAL SALE" means the first arms-length sale pursuant to
this Agreement to one or more Third Parties of a Product following receipt of
approval to market such Product from the applicable regulatory agency in the
applicable country.
1.28. "FOREIGN REGULATORY APPROVALS" means all regulatory and other
governmental approvals, clearances, registrations or permits which may be
required to sell, market or otherwise commercialize a Product in any
jurisdiction outside of the United States.
1.29. "FTE" means the full time equivalent effort, for one year, of one
person who participates directly in the research and development activities
contemplated under this Agreement, on behalf of one of the Parties hereto.
Chiron and PathoGenesis will use agreed upon standard cost accounting procedures
in determining FTE support and will fairly allocate costs among its various
programs. Participation, as such term is used herein, shall include, without
limitation, production of chemical,
4
biological and/or other materials or reagents provided for use under this
Agreement (and the resupply thereof if shelf stock is provided, as reasonably
determined by the Parties). The FTE shall initially be set at [REDACTED*].
These rates shall remain fixed and in effect for the duration of the first
three years of the Collaboration under the Research Plan. FTE rates for Third
Parties performing research for a Party and charged to the Collaboration
shall be the actual FTE rate of that Third Party and not the FTE rate of the
Party for whom the research is being performed.
1.30. "GAAP" means United States generally accepted accounting principles,
consistently applied.
1.31. "IND" means an investigational new drug application and associated
documents required to be filed with the FDA or a comparable government agency to
obtain approval to commence human clinical trials of a Product.
1.32. "INDEPENDENT CHIRON PRODUCT" means an Independent Product developed
and/or commercialized by Chiron, alone or with a Third Party to the extent
provided herein.
1.33. "INDEPENDENT DEVELOPING PARTY" or "IDP" means a Party who is
developing or commercializing an Independent Product independently or with a
Third Party in accordance with this Agreement.
1.34. "INDEPENDENT PATHOGENESIS PRODUCT" means an Independent Product
developed and/or commercialized by PathoGenesis, alone or with a Third Party to
the extent provided herein.
1.35. "INDEPENDENT PRODUCT" means a Product which is independently
developed or commercialized by either Chiron or PathoGenesis in accordance
with this Agreement.
1.36. "INDEPENDENT RESEARCHING PARTY" or "IRP" means a Party who is
continuing research on an Abandoned Target independently or with a Third Party
in accordance with this Agreement.
1.37. "JOINT COMPOUND" means a Compound (i) as to which PathoGenesis and
Chiron each perform inventive or patentable acts as determined in accordance
with United States patent law in the preparation or creation of such Compound or
(ii) that PathoGenesis and Chiron jointly acquire or license for use under this
Agreement.
1.38. "JOINT COMPOUND PATENT" means a Patent claiming one or more Joint
Compounds.
1.39. "JOINT DEVELOPING PARTY" or "JOINT DEVELOPING PARTIES" means the
Party or Parties engaged in the development or commercialization of a Joint
Development Product whose indication falls within a Joint Indication.
1.40. "JOINT DEVELOPMENT COMPOUND" means a Compound or Compound Series
which has been nominated or selected by a Party as a development candidate
and which the Parties have mutually decided to develop pursuant to the terms
of this Agreement.
1.41. "JOINT INDICATIONS" means intravenous delivery ("IV") of drug into
the human body.
1.42. "JOINT LIBRARY" means a Library, as to which PathoGenesis and Chiron
each perform inventive or patentable acts as determined in accordance with
United States patent law in designing such Library, and/or contribute
proprietary components or compositions to the Library. A Joint Library also
means a Library conceived by PathoGenesis with the use of Chiron Technology or a
Chiron Target. A Joint Library also means a Library conceived by Chiron with the
use of PathoGenesis Technology or a PathoGenesis Target. Excluded from Joint
Libraries are Chiron Libraries and PathoGenesis Libraries as defined herein.
1.43. "JOINT TECHNOLOGY" means new technology for which Chiron and
PathoGenesis have both performed patentable inventive contributions as
determined under United States patent law. Joint Technology shall not include
improvements to Chiron Technology or PathoGenesis Technology.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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1.44. "KNOW-HOW" means any knowledge, information or data which is
proprietary to that Party, including, without limitation, all pre-clinical,
clinical, chemical, biochemical, toxicological, manufacturing, formulation and
scientific research information, whether or not capable of precise separate
description relating to Chiron Technology or PathoGenesis Technology.
1.45. "LEAD DEVELOPMENT PARTY" means that Party for which a Joint
Development Compound falls within that Party's Indications or that Party
selected pursuant to Section 3.2.1 to develop a Joint Development Compound.
1.46. "LIBRARY" means a library or mixture of compounds, including without
limitation the compounds contained or proposed to be contained therein.
1.47. "LIBRARY PATENT" means a Patent claiming an invention or discovery
which is specific to a group of compounds related by structure or source but not
necessarily activity (i.e., a Library). A Library Patent may include claims to
the Library as a composition, and may also include claims to methods for making
and using a Library, as appropriate. A Library Patent may disclose one or more
Compounds identified from the Library (including compositions and methods of
making and using) without being considered a Compound Patent.
1.48. "NET PRETAX PROFITS OR LOSSES" means, as associated with a Product
for any period, the difference of Net Sales of such Product during such
period, less: (a) Sales, Marketing and Distribution Costs properly allocable
to such Product during such period; (b) the Transfer Price properly allocable
to such Product during such period; (c) other Costs properly allocable to
such Product during such period, all to the extent allowed by GAAP; and (d)
Third Party royalties to the extent not covered by the Transfer Price (except
as otherwise provided pursuant to Section 2.6.2). Costs incurred after
Product has been commercialized and properly allocable to a Development Plan
shall be reconciled by the Parties pursuant to Section 9.3.
1.49. "NET SALES" means the amount invoiced for sales or other dispositions
of a Product hereunder (other than sales or other dispositions to Affiliates
unless such Affiliate is the end user), less the following deductions (to the
extent they are not already reflected in the amount invoiced):
(a) Discounts, returns, allowances, uncollectible debts, and wholesaler
chargebacks allowed and taken in amounts customary in the trade;
(b) Import, export, excise, sales or use taxes, value added taxes, and
other taxes, tariffs or duties directly imposed and properly allocable to
particular sales;
(c) Outbound transportation prepaid or allowed; and
(d) Amounts allowed or credited for retroactive price reductions or
rebates.
If a Product is sold in physical combination with another active product or
products where one or more of such components are not Products, or with a
delivery system developed independently of this Agreement, Net Sales under such
circumstances shall be calculated by multiplying Net Sales of the combination by
the fraction A/(A+B), in which A is the invoice price of the Product, if sold
separately, and B is the total invoice price of any other active product or
products in combination, or delivery system, if sold separately. If the Product
and/or the other active product or products in the combination and/or the
delivery system are not sold separately, then the values of the individual
components shall be determined by mutual agreement of the Parties on a
reasonable basis.
1.50. "NON-DEVELOPING PARTY" or "NDP" means a Party who is not proceeding
with the development or commercialization of an Independent Product as provided
in this Agreement.
1.51. "PARTY" OR "PARTIES" means either Chiron or PathoGenesis, including
their Affiliates, or both.
6
1.52. "PATENTS" means all patents, inventors' certificates and patent
applications throughout the world, including any renewal, division,
continuation, continued prosecution application or continuation-in-part of
any of such certificates and applications, and any and all patents issuing
thereon, and any and all reissues, extensions, substitutions, confirmations,
registrations, revalidations, revisions, foreign counterparts and additions
of or to any of said patents.
1.53. "PATHOGENESIS COMPOUND" means a Compound designed, acquired or
licensed by PathoGenesis (alone or with Third Parties) without reliance upon a
Chiron Compound, a Joint Compound, a Chiron Target or Chiron Technology.
1.54. "PATHOGENESIS COMPOUND PATENT" means a Patent owned or controlled by
PathoGenesis claiming one or more PathoGenesis Compounds.
1.55. "PATHOGENESIS INDICATIONS" means inhalation or aerosolized
delivery of drug into the human body.
1.56. "PATHOGENESIS LIBRARY" means a Library designed, acquired or licensed
by PathoGenesis (alone or with Third Parties and available for license or
sublicense to Chiron under the terms and conditions of this Agreement), prior to
the Effective Date or during the Research Term, which is based upon or modeled
after a PathoGenesis Compound.
1.57. "PATHOGENESIS TARGETS" means Targets developed by PathoGenesis (alone
or with Third Parties) outside this Collaboration and this Agreement and without
reliance upon Chiron Targets or Chiron Technology. Without limitation, Selected
Targets shall not be considered PathoGenesis Targets.
1.58. "PATHOGENESIS TECHNOLOGY" means PathoGenesis Technology Patents,
biological methods or PathoGenesis Know-How useful with respect to the
identification or development pursuant to the Research Plan and the Development
Plans of antibacterial Compounds owned or controlled by PathoGenesis, including,
without limitation: (i) expression, production and purification technology for
bacterial Targets (e.g., recombinant protein expression methods); (ii) assays;
and (iii) transfection systems for replication of bacterial Targets.
"PATHOGENESIS TECHNOLOGY" also means all inventions, Know-How or other
proprietary information (whether patented or not), which are owned or controlled
by PathoGenesis or its Affiliates, or their respective employees or assignors,
as of the Effective Date or during the Research Term, as to which PathoGenesis
has the right to grant to Chiron a non-exclusive license hereunder, and
consisting of methods or materials for the production, design, synthesis,
characterization and/or use of synthetic, chemical libraries, either as
individual Compounds or mixtures thereof, using combination and/or permutation
strategies with respect to the structural components, e.g., organic scaffold or
polymeric or oligomeric backbone structures and chemistries, together with
sidechain or substituent chemistries; such libraries generated using chemical
strategies based on (i) solid-phase or solid supported systems, e.g., resins
and/or supported spatial arrays (e.g., pins), or (ii) solution chemistry.
"PATHOGENESIS TECHNOLOGY" additionally means technologies owned or
controlled by PathoGenesis or its Affiliates used for:
a. High-throughput Transposon Insertion Mapping (HTTM) screening method for
identification of essential genes;
b. Mutant libraries of bacterial organisms;
c. Informatics relating to bacterial genome analysis;
d. Micro Representational Differential Analysis (micro-RDA);
e. Animal models of infection;
7
f. Assay systems;
g. In vitro and in vivo microbiological assays; and
h. Aerosol or inhalation evaluation systems.
"PATHOGENESIS TECHNOLOGY" specifically excludes vaccines, diagnostics,
therapeutic monitoring test, antisense, gene therapies or recombinant proteins.
All existing and future PathoGenesis Targets, PathoGenesis Libraries and
PathoGenesis Compounds or Compound Series contained therein shall not be
included within the definition of PathoGenesis Technology as defined in this
Section 1.58, and shall be governed by this Agreement as defined terms in their
own right in accordance with the terms and conditions provided herein. To extent
that they relate to Selected Targets, such PathoGenesis Technology and
PathoGenesis Libraries, PathoGenesis Compounds and Compound Series contained
therein shall be available for use pursuant to the Research Plan, the
Development Plans and separate provisions of this Agreement. To the extent that
any PathoGenesis Technology has been acquired or licensed from Third Parties,
all licenses granted hereunder shall be subject to all of the terms and
conditions imposed by such Third Parties with respect to such acquired or
licensed technology. PathoGenesis shall make reasonable efforts to inform Chiron
of such terms and conditions prior to Chiron's use of such technology hereunder.
1.59. "PATHOGENESIS TECHNOLOGY PATENTS" means Patents owned or
controlled by PathoGenesis claiming PathoGenesis Technology.
1.60. "PHASE I" and "PHASE II" and "PHASE III" shall have the general
accepted meaning of a Phase I, Phase II or Phase III clinical trial as described
by the FDA in accordance with FDA regulations and their foreign equivalents.
1.61 "POST-EFFECTIVE DATE THIRD PARTY AGREEMENTS" means an agreement with a
Third Party relating to the Field and executed after the Effective Date.
1.62 "PRE-EFFECTIVE DATE THIRD PARTY AGREEMENTS" means agreements with
Third Parties entered into by Chiron or PathoGenesis prior to the Effective
Date which relate to the Field, including, without limitation, consulting or
non-royalty bearing license agreements or research and development
collaboration agreements.
1.63 "PRODUCT" means a Compound or Compound Series with antibacterial
activity identified and developed pursuant to this Agreement, and includes
Co-Commercialized Products, Independent PathoGenesis Products, and Independent
Chiron Products.
1.64 "REGULATORY APPROVALS" means, collectively, the U.S. Regulatory
Approvals and the Foreign Regulatory Approvals.
1.65 "RESEARCH PLAN" means the research plans outlining the activities
to be conducted by the Parties pursuant to the Research Program. The initial
Research Plan prepared by PathoGenesis and Chiron is attached hereto as
Exhibit A. This initial Research Plan is preliminary and shall be subject to
periodic review and approval by the Collaboration Management Team pursuant to
Section 2.4 and amendment by mutual written agreement of the Parties from
time to time. In the event of a conflict between the Research Plan and this
Agreement, this Agreement shall govern. All modifications of the initial
Research Plan approved in writing by the CMT shall be considered part of the
Research Plan as defined herein.
1.66 "RESEARCH PROGRAM" means the research and development program within
the Field conducted by the Parties pursuant to the Research Plan and Article 2
of this Agreement.
1.67 "RESEARCH RECONCILIATION REPORT" means the research expense report
referenced in Section 9.2.1 of this Agreement.
8
1.68 "RESEARCH TERM" means the term of the Research Program as further
described in Section 2.1.
1.69 "RESULTS" means all research, pre-clinical, development, testing and
clinical trial results and related data developed by Chiron or PathoGenesis in
connection with the exercise of their respective rights or the performance of
their respective obligations pursuant to the Research Program and this
Agreement, including without limitation any information, data, and structures
arising from the Collaboration and all such results and data used or developed
by either Party in support of Product regulatory applications worldwide, without
regard to whether such Product is a Co-Commercialized Product or an Independent
Product.
1.70 "SALES, MARKETING AND DISTRIBUTION COSTS" means
(a) the direct labor costs, material costs and outside services and expenses
associated with marketing, selling, and distributing a Product,
consisting of customary activities in carrying out the sale, marketing
and distribution of a pharmaceutical product, including but not limited
to detailing, training, promotional, advertising, customer service,
professional service, warehousing, shipping, invoicing and administration
of accounts receivable,
(b) overhead allocable to marketing, selling and distributing that Product
associated with the conduct of such activities, including costs of
carrying and maintaining inventory,
(c) out-of-pocket expenses actually paid to Third Parties in connection with
the conduct of such activities, and
(d) all freight and other transportation costs incurred in delivering a
Product to its final distribution point before delivery to an invoiced
customer, including transportation costs to a storage facility, storage
charges, Third Party handling fees, insurance during transport and taxes
payable for such transportation or storage services.
Direct labor costs include the costs of employees directly employed in
marketing, selling and distributing Products (allocated in accordance with the
portion of such employees' time attributable to marketing, selling and
distributing Products, as compared to time spent on all such employee's work).
Overhead allocated to sales, marketing and distribution of a Product shall
include
(ii) a reasonable allocation of the cost of employees who have a direct
relationship with Product sales, marketing, and distribution but who are not
classified as direct labor, including employees associated with warehousing,
shipping, invoicing and administration of accounts receivable, which allocation
shall be based on each such employee's time spent in Product marketing, selling,
or distributing as compared to time spent on all such employee's work, or such
other method as may be agreed by the Parties,
(iii) non-labor indirect costs normally associated with sales, marketing,
and distribution of a pharmaceutical product, together with the costs of
carrying inventory of Products, bad debts and accounts receivable related to
Product sales,
(iv) a reasonable allocation of facilities' and equipment costs properly
allocable to Product sales, marketing, and distribution, and
(v) a reasonable allocation of general and administrative costs in support
of such activities.
Distribution costs shall exclude any transportation or other charges
deducted in calculating Net Sales. The precise formula and method of determining
Sales, Marketing and Distribution Costs shall be established by the
Collaboration Management Team on a reasonable basis consistent with the above
principles and with the selling, marketing and distributing Party's internal
cost accounting system, and with each such cost calculated in accordance with
GAAP.
9
1.71. "SELECTED TARGET" means a Target selected pursuant to Section 2.5 and
identified in the Research Plan as a subject of the Research Program. Selected
Targets may be abandoned by mutual or unilateral written action by the Parties
pursuant to Section 2.5.1 of this Agreement. Selected Targets may be added to or
replaced in the Research Plan only by mutual written consent of the Parties
pursuant to Section 2.5.3 of this Agreement.
1.72. "TARGET" means any molecular entity, comprising: (i) protein or
peptide such as, but not limited to, an enzyme or receptor, together with any of
its enzyme isozymes, receptor subtypes or other molecular genetic variants; or
(ii) a nucleic acid sequence with which such protein or peptide functionally
interacts; or (iii) in certain cases, a pathogenic bacterial organism or family
of organisms.
1.73. "THIRD PARTY" means any person or entity other than Chiron,
PathoGenesis or their respective Affiliates.
1.74. "THIRD PARTY COMPOUND" means a Compound acquired from a Third Party
by Chiron or PathoGenesis, including without limitation Compounds arising from
Pre-Effective Date Third Party Agreements or Post-Effective Date Third Party
Agreements.
1.75. "THIRD PARTY TECHNOLOGY" means any technology, including without
limitation Third Party Compound(s) licensed or otherwise acquired by Chiron or
PathoGenesis with the right to sublicense.
1.76. "TRANSFER PRICE" means the price at which the Manufacturing Party
shall provide Products pursuant to Section 6.1.3.
1.77. "UNITED STATES" means the United States of America, its territories
and possessions.
1.78. "U.S. REGULATORY APPROVALS" means all regulatory and other
governmental approvals, clearances, registrations or permits required to
manufacture, sell and otherwise commercialize a Product in the United States.
1.79. "VOTING SECURITIES" shall mean those voting securities entitled
generally to vote on the election of a Party's Board of Directors.
ARTICLE 2
RESEARCH PROGRAM
The Parties will enter into a Research Program to utilize Chiron Technology
and PathoGenesis Technology, PathoGenesis Libraries, Chiron Libraries and Joint
Libraries, including Libraries designed pursuant to such Research Program in
accordance with the Research Plan within the Field, PathoGenesis Compounds or
Compound Series, Chiron Compounds or Compound Series, or Joint Compounds or
Compound Series, subject to the terms and conditions of this Article 2.
2.1 RESEARCH TERM.
The Research Program shall commence upon the Effective Date and shall
continue for three years, extendable for subsequent one-year periods under
substantially the same funding and other terms as are set forth herein, with
mutual written consent of both Parties. Six months before the end of this
three-year period, and every anniversary thereafter if the Research Program is
extended, the CMT shall determine in writing whether to further extend the
Research Program.
2.2 COLLABORATION MANAGEMENT TEAM.
The Research Program will be supervised by the Collaboration Management Team
("CMT"). The Collaboration Management Team will be responsible for the decisions
and the oversight of all aspects of the Research Program in accordance with
Article 7 of this Agreement. PathoGenesis and Chiron will have an equal number
of representatives on the CMT and will agree on the number of representatives
10
of the CMT based on the stage of the research, development and
commercialization. Each Party will have sole discretion to appoint and change
its representatives on the CMT.
2.3 RESEARCH PLAN.
An initial Research Plan is attached hereto as Exhibit A. The Research Plan
shall be updated at least annually and approved by the Collaboration Management
Team. PathoGenesis and Chiron shall conduct the Collaboration according to the
Research Plan and shall assign the appropriate qualified personnel to the
Collaboration.
2.4 EXCHANGE OF INFORMATION BETWEEN PARTIES.
The Parties shall exchange information about their respective efforts under
the Research Program on a regular basis and according to the schedule, if any,
set forth in the Research Plan. The Parties shall provide the Collaboration
Management Team with information sufficient to enable the CMT to review and
approve each year, as applicable, written Research Plans including without
limitation reasonably detailed descriptions of the tasks to be performed by each
Party and the scheduling of tasks and work, the expected resources required to
accomplish the work, the estimated Costs associated with the planned work and
any additional reporting requirements.
2.5 TARGET SELECTION.
The initial Selected Targets identified by PathoGenesis and Chiron are
referenced in the Selected Target List attached hereto as Exhibit B. The Parties
may abandon Selected Targets through a unilateral or mutual written decision to
abandon pursuant to Section 2.5.1. The Parties may add or replace Selected
Targets only by mutual written consent pursuant to Section 2.5.3.
2.5.1 OPTION TO ABANDON SELECTED TARGET.
The Parties may mutually elect to abandon a Selected Target ("Abandoned
Target"). In addition, either Party may independently elect to abandon a
Selected Target provided that the abandoning Party notify the other Party of its
decision to abandon a Selected Target in writing with sixty (60) days prior
notice. Prior to any such abandonment of a Selected Target, the CMT shall
discuss such Selected Target, and if only one Party desires to abandon a
Selected Target, such Party shall in good faith provide the other Party a
reasonably detailed explanation of the reasons(s) for the abandonment of the
Selected Target. Upon the Parties' mutual election, or at the close of this
sixty (60) day period, Abandoned Targets will be removed from the Research
Program and the Selected Target List and shall cease to be Selected Targets.
2.5.2 INDEPENDENT RESEARCH OF ABANDONED TARGET.
Either Party may elect to continue research efforts on an Abandoned
Target, provided if an abandoning Party independently elects to abandon a
Selected Target, it shall refrain from independent research on that Abandoned
Target for a period of twelve (12) months following such notice provided for
in Section 2.5.1. If the abandoning Party elects to resume efforts on a
Selected Target that it abandoned after this twelve (12) month period, the
abandoning Party must provide the other Party with notice of its intention to
resume such efforts. The Independent Researching Party ("IRP") shall bear all
further costs and expenses directed to such effort, including payment or
royalty obligations from Third Parties or other contractual obligations. In
the event the IRP's efforts on the Abandoned Target utilize Results, Joint
Compounds, Joint Compound Patents, Joint Development Compounds, Joint
Libraries or Joint Technology from the Research Program and result in an
Independent Product as discussed in Section 3.3, the royalty provisions of
Sections 9.7.1 and [REDACTED*] shall apply. An IRP shall be entitled to pursue
independently all indications of an Abandoned Target, subject to the royalty
provisions of Sections 9.7.1 and 9.7.4, provided that exclusive rights to any
Results, Joint Compounds, Joint Compound Patents, Joint Development
Compounds, Joint Libraries or Joint Technology in
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
11
connection with its efforts on an Abandoned Target will require mutual agreement
of the Parties under separately negotiated terms.
2.5.3 NEW TARGET OR COMPOUND SELECTION; REPLACEMENT TARGET OR COMPOUND
SELECTION.
The Parties may only add a new Selected Target or compound or replace an
Abandoned Target or Abandoned Compound by mutual written consent. Either Party
may, at its sole discretion, offer to include in the Research Program a
replacement Target or compound which has been obtained, evaluated or optimized
by that Party. The offering Party shall propose suitable terms to compensate the
offering Party for the value of the Target or compound to the Collaboration, and
the Parties shall, prior to acceptance of the replacement Target or compound,
negotiate in good faith mutually acceptable terms for its inclusion in the
Research Program. Unless otherwise agreed, if the offering Party's Target or
compound gives rise to a Development Option which is exercised by both Parties,
the agreed upon value shall be paid as part of the true-up process provided for
in Section 9.2.2. Unless otherwise agreed, if the offering Party's Target or
compound gives rise to a Development Option which is only exercised by one
Party, that IDP shall pay its share of the agreed upon value to the offering
Party, if different, when the IDP files its first IND arising from such Target
or Compound.
In the event that the offered Target or compound does not become a new
Selected Target or Compound, the non-offering Party shall not use the offered
Target or compound unless the non-offering Party independently develops or
acquires such Target or compound without using the information relating to the
Target or compound provided by the offering Party and subject to the other terms
and conditions of this Agreement.
2.6 EXCLUSIVITY.
During the Research Term, Chiron and PathoGenesis shall collaborate
exclusively with each other with respect to research directed to the Selected
Targets identified by this Agreement in the Field, except as provided by
Sections 2.6.1, 2.6.2, 2.6.3 and 2.6.4. During the Research Term, any Third
Party collaborations within the Field will be governed pursuant to this
Section 2.6.
2.6.1 PRE-EFFECTIVE DATE THIRD PARTY AGREEMENTS IN THE FIELD.
The Parties shall identify in Exhibit C attached hereto any Pre-Effective
Date Third Party Agreements in the Field with respect to the Research Program
as agreed upon by the Effective Date. This Collaboration shall be subject to
the existing rights and obligations imposed upon the Parties by such
agreements. [REDACTED*]. The Parties will periodically review and modify
Exhibit C as necessary to reflect changes in the Research Program.
2.6.2 POST-EFFECTIVE DATE THIRD PARTY AGREEMENTS.
(a) Except as otherwise provided herein, in the event that either Party
wishes to enter into any Post-Effective Date Third Party Agreement whereby a
Third Party would collaborate or consult in the Research Program, or whereby
such Third Party would license or otherwise provide Third Party Technology
(e.g., a Third Party Compound or Target), such Party shall be able to
propose such an arrangement to the other Party and the CMT. The Parties and
the CMT shall review the proposed Post-Effective Date Third Party Agreement,
taking into consideration relevant factors, including, without limitation,
the following: (i) the up-front fees, milestone payments, royalties and
other payments that would be associated with Products arising from such
proposed Post-Effective
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
12
Date Third Party Agreement; (ii) the allocation of responsibility for such
payments to such Third Party as a result of such proposed Post-Effective
Date Third Party Agreement between Chiron and PathoGenesis; and (iii) the
value or utility of the Third Party Technology in question. If the CMT is
unable to reach a unanimous decision on entering into a Post-Effective Date
Third Party Agreement or a Party chooses not to proceed with the Third Party
collaboration within thirty (30) days of being informed of the proposed
Third Party arrangement, then the other Party may enter into that
Post-Effective Date Third Party Agreement pursuant to this Section 2.6.2.
Notwithstanding the foregoing, neither Party shall enter into a
Post-Effective Date Third Party Agreement which would preclude the other
Party from exercising its commercialization rights hereunder without the
prior written consent of the other Party.
(b) A Party entering into a Post-Effective Date Third Party Agreement
rejected by the other Party in accordance with Section 2.6.2(a) shall bear
all Costs related to such agreement prior to the true up pursuant to
Section 9.2.2. If the Post-Effective Date Third Party Agreement results in a
Development Option for a Compound that is exercised by both Parties, then
the Party entering into such Agreement shall receive full credit for the
costs of entering into such Agreement at the time of true up pursuant to
Section 9.2.2 and the Parties shall share equally all further Costs
associated with that Agreement. If the Post-Effective Date Third Party
Agreement has not resulted in a Development Option for a Compound that is
exercised by both Parties, the CMT shall decide the extent and timing that
the Party entering into such Post-Effective Date Third Party Agreement shall
receive credit for such Costs when the Parties true up their spending
contributions pursuant to Section 9.2.2.
2.6.3 LICENSING OR ACQUISITION OF DEVELOPMENT CANDIDATE OR PRODUCTS IN THE
FIELD.
Each Party may enter into Post-Effective Date Third Party Agreements in the
Field resulting in the licensing, co-development or acquisition from Third
Parties of development candidate compounds or products (i.e., compounds in
clinical trials or undergoing IND enabling studies in preparation for clinical
trials) excluding Compounds or compounds covered by a Compound Patent. Any such
products or products resulting from such development candidate compounds shall
be outside of the scope of this Agreement.
2.6.4 FUTURE THIRD PARTY COLLABORATION OUTSIDE THE FIELD.
Both Parties acknowledge that Chiron and PathoGenesis are currently party
to, and may in the future enter into additional Target collaborations outside
the Field with Third Parties. In addition, nothing herein shall restrict the
Parties from establishing or entering into collaborative research and
development programs outside the Field on Targets other than Selected Targets.
The Parties may enter into future transactions with Third Parties involving
licenses to their own technology (e.g., Chiron Technology or PathoGenesis
Technology) or Libraries. With respect to any such arrangements, Chiron and
PathoGenesis acknowledge that:
(a) Chiron will not use and will not provide Third Parties with
PathoGenesis Technology, PathoGenesis Compounds, PathoGenesis Libraries or
PathoGenesis Targets under any circumstances for any purpose outside the
scope of this Agreement.
(b) PathoGenesis will not use and will not provide Third Parties with
Chiron Technology Chiron Compounds, Chiron Libraries or Chiron Targets under
any circumstances for any purpose outside the scope of this Agreement.
(c) Either Party may provide Third Parties with Results, Joint
Compounds, rights in or to Joint Compound Patents, Joint Development
Compounds, Joint Libraries or Joint Technology for use outside of the Field
in accordance with Section 2.11.
13
(d) Chiron will not be required to restrict existing or future Third
Party recipients of Chiron Technology or Chiron Libraries from utilizing the
transferred technology to design or synthesize libraries for use against any
Selected Target or from using Chiron Libraries to screen against any
Selected Target, subject to Section 2.6.4(b) and provided that Chiron does
not actively participate in such design or screening.
(e) PathoGenesis will not be required to restrict existing or future
Third Party recipients of PathoGenesis Technology or PathoGenesis Libraries
from utilizing the transferred technology to design or synthesize libraries
for use against any Selected Target or from using PathoGenesis Libraries to
screen against any Selected Target, subject to Section 2.6.4(a) and provided
that PathoGenesis does not actively participate in such design or screening.
(f) In the course of collaborations or licenses entered into with Third
Parties outside the Field by Chiron or PathoGenesis, compounds may be
identified against Targets other than Selected Targets, which compounds may
have utility in the Field. Neither Chiron nor PathoGenesis shall be required
to restrict the ability of any Third Party to pursue all indications of such
compounds.
2.7 ACCESS TO CHIRON TECHNOLOGY, CHIRON LIBRARIES, CHIRON COMPOUNDS.
During the Research Term, Chiron shall provide PathoGenesis access to Chiron
Technology reasonably related to the Collaboration, and, subject to
Section 2.8, Chiron Libraries and Chiron Compounds as may be useful in the
Research Program, in accordance with, and subject to, the provisions of this
Article 2, Article 14, and the license grants referenced in Article 8. For
clarity of understanding, PathoGenesis shall not have the right to use the
Chiron Technology Chiron Compounds, Chiron Libraries or Chiron Targets except:
(i) in connection with the Research Program and only during the Research Term;
or (ii) as otherwise specifically set forth in this Agreement.
2.8 LIMITATIONS UPON ACCESS TO CHIRON LIBRARIES AND CHIRON COMPOUNDS.
Chiron Libraries and Chiron Compounds developed jointly with or under
agreement with Third Parties may, at Chiron's discretion, be made available for
use in Research Program; provided that (i) Chiron has obtained any Third Party
consent which it is required to obtain with respect to the use of such Chiron
Libraries; (ii) Chiron has informed PathoGenesis of any terms and conditions as
may by imposed by the Third Party in question with respect to the use of the
Chiron Library; and (iii) the Parties agree that any use of the Chiron Library
shall be subject to such terms and conditions and the terms and conditions of
this Agreement.
2.9 ACCESS TO PATHOGENESIS TECHNOLOGY, PATHOGENESIS LIBRARIES AND PATHOGENESIS
COMPOUNDS.
During the Research Term, PathoGenesis shall provide Chiron access to
PathoGenesis Technology reasonably related to the Collaboration, and, subject to
Section 2.10, PathoGenesis Libraries and PathoGenesis Compounds as may be useful
in the Research Program, in accordance with, and subject to, the provisions of
this Article 2, Article 14, and the license grants referenced in Article 8. For
clarity of understanding, Chiron shall not have the right to use the
PathoGenesis Technology, PathoGenesis Compounds, PathoGenesis Libraries or
PathoGenesis Targets except: (i) in connection with the Research Program and
only during the Research Term; or (ii) as otherwise specifically set forth in
this Agreement.
2.10 LIMITATIONS UPON ACCESS TO PATHOGENESIS LIBRARIES AND PATHOGENESIS
COMPOUNDS.
PathoGenesis Libraries and PathoGenesis Compounds developed jointly with or
under agreement with Third Parties may, at PathoGenesis' discretion, be made
available for use in the Research Program; provided that (i) PathoGenesis has
obtained any Third Party consent which it is required to obtain with respect to
the use of such PathoGenesis Libraries; (ii) PathoGenesis has informed Chiron of
any terms and conditions as may by imposed by the Third Party in question with
respect to the use
14
of the PathoGenesis Library; and (iii) the Parties agree that any use of the
PathoGenesis Library shall be subject to such terms and conditions and the terms
and conditions of this Agreement.
2.11 NON-FIELD USE OF RESULTS, JOINT COMPOUNDS, JOINT COMPOUND PATENTS, JOINT
DEVELOPMENT COMPOUNDS, JOINT LIBRARIES AND JOINT TECHNOLOGY.
While it is understood that Chiron shall make no use of PathoGenesis
Libraries, PathoGenesis Technology, PathoGenesis Targets, PathoGenesis Compounds
or PathoGenesis Compound Patents for use outside of the Field, and PathoGenesis
shall make no use of Chiron Libraries, Chiron Technology, Chiron Targets, Chiron
Compounds or Chiron Compound Patents for use outside of the Field, either Party
shall be permitted to use Results, Joint Compounds, Joint Compound Patents,
Joint Development Compounds, Joint Libraries or Joint Technology outside of the
Field subject to licenses already granted under Sections 8.1, 8.2 and 8.3 and
the restrictions of this Section 2.11. If a Party desires to license such
Results, Joint Compounds, Joint Compound Patents, Joint Development Compounds,
Joint Libraries or Joint Technology to a Third Party for use outside the Field,
that Party shall (i) provide the other Party with the right of first negotiation
(which shall extend for ninety (90) days) for these rights and (ii) provide the
other Party with ninety (90) days written notice of its intention (such ninety
(90) days shall be concurrent with the Party's ninety (90) day right of first
negotiation). If the other Party elects not to obtain rights to the offered
Results, Joint Compounds, Joint Compound Patents, Joint Development Compounds,
Joint Libraries or Joint Technology, or the Parties are unable to arrive at
mutually agreeable terms, the offering Party shall be able to offer a license to
Third Parties to those Results, Joint Compounds, Joint Compound Patents, Joint
Development Compounds, Joint Libraries or Joint Technology, but on terms no less
favorable to the offering Party than those offered to and rejected by the other
Party. Exclusive rights to any Results, Joint Compounds, Joint Compound Patents,
Joint Development Compounds, Joint Libraries or Joint Technology will require
mutual agreement of the Parties under separately negotiated terms. A Party's use
of Results, Joint Compounds, Joint Compound Patents, Joint Development
Compounds, Joint Libraries or Joint Technology outside of the Field shall be
subject to the royalty obligations, payable to the other Party, set forth in
Sections 9.7.1 and [REDACTED*]. A Party's use of Joint Libraries shall be
further subject to Section 13.1.8 if applicable.
A Party shall not provide Results, Joint Compounds, Joint Compound Patents,
Joint Development Compounds, Joint Libraries or Joint Technology to a Third
Party if such information or technology is directly relevant to an Independent
Product being researched, developed or commercialized by the other Party. A
Party's use of Results, Joint Compounds, Joint Compound Patents, Joint
Development Compounds, Joint Libraries or Joint Technology in the Field shall be
only in accordance with this Agreement.
2.12 LIMITATIONS UPON USE OF TECHNOLOGY OUTSIDE THE RESEARCH PROGRAM.
For clarity of understanding, PathoGenesis shall not have the right to
utilize Chiron Libraries, Chiron Technology, Chiron Targets, Chiron
Compounds, Chiron Compound Patents or any other information confidential to
Chiron, and Chiron shall not have the right to utilize PathoGenesis
Libraries, PathoGenesis Technology, PathoGenesis Targets, PathoGenesis
Compounds, PathoGenesis Compound Patents or any other information
confidential to PathoGenesis: (i) outside of the Research Program; (ii) in
connection with compounds which are not within the Research Program; or (iii)
in the development or commercialization of products outside of the Field.
2.13 ASSAY DEVELOPMENT AND SCREENING.
PathoGenesis and Chiron shall cooperate in the use of assays and screening
methods developed prior to or during the Research Program by PathoGenesis and/or
Chiron for the identification or further characterization of a Compound or
Compound Series for Selected Targets.
Each Party shall not use outside the Research Program (within or outside the
Field) any assays or screening methods which have been independently developed
by the other Party outside the Research Program and provided for use in the
Research Program, and/or assays or screening methods developed under this
Agreement which comprise or use the Patents or Know-How of the other Party,
except with
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
15
the prior written consent of the providing Party and on terms to be negotiated
in good faith, including the provision of reasonable compensation, if any.
Assays or screening methods developed by either Party, or by both Parties
jointly, pursuant to the Research Program which do not comprise or use the
Patents or Know-How of the developing Party may be used by either Party outside
the Research Program without restriction and without compensation to the other
Party.
Both Parties will utilize the assays and screening methods identified in
Section 2.13 for application in high through-put screening of either Chiron
Libraries or PathoGenesis Libraries or for the creation and screening of Joint
Libraries. Compounds showing activity based on such assays and screening methods
will be utilized during the Collaboration with the intent of developing a
Compound or Compound Series. As part of the Research Program, the Compound or
Compound Series may be developed through efforts including but not limited to
medicinal chemistry, directed synthesis of compounds, directed assays, in vitro
screening, toxicology screening and animal models. Such efforts will be
determined as set forth within this Agreement according to Article 7 of this
Agreement.
ARTICLE 3
DEVELOPMENT PROGRAM
3.1 SELECTION OF DEVELOPMENT CANDIDATE.
When either Party (whether or not the Lead Developing Party) believes
that a Compound or Compound Series is ready for final toxicology studies and
suitable for development as a Joint Development Compound, such Party shall
submit a written notice of Development Option and a written proposed
Development Plan to the other Party and the Collaboration Management Team.
The proposed Development Plan shall include, without limitation, reasonably
detailed strategies and plans for: (i) pre-clinical research; (ii) clinical
testing; (iii) manufacturing development (i.e., active pharmaceutical
ingredients, formulation, stability, process, etc.); (iv) preparing and
filing INDs; (v) preparing and filing NDA's; and (vi) otherwise obtaining
Regulatory Approvals. The other Party shall have sixty (60) days to review
the proposed Development Plan and to decide whether to exercise the
Development Option with respect to such Compound or Compound Series and to
proceed with joint development of the Compound or Compound Series under the
terms of this Agreement. Regardless of the other Party's decision, the
Selected Target for the nominated Compound or Compound Series shall remain in
the Research Program until it has been abandoned through written mutual or
unilateral action of the Parties. Upon exercising a Development Option, the
Parties shall submit Research Reconciliation Reports pursuant to Section 9.2.
3.2 JOINT EXERCISE OF DEVELOPMENT OPTION.
A decision to develop jointly any Compound or Compound Series will require
the coordinated efforts of Chiron and PathoGenesis and will proceed according to
the Development Plan and upon the following terms unless the Parties agree
otherwise. Where the indication for the Joint Development Compound falls within
Chiron's Indications or PathoGenesis' Indications, the Lead Developing Party
shall take the lead in implementing the Development Plan with the cooperation of
the other Party as set forth in Section 3.2.1. Where the indication for the
Joint Development Compound falls within a Joint Indication ("Joint Development
Compound/IV"), the Parties shall coordinate efforts to implement the Development
Plan pursuant to Section 3.2.2. If the Parties choose to develop any Compound or
Compound Series jointly, the Parties shall share the rights to pursue all
indications of that Joint Development Compound or Joint Development Compound/IV,
subject to a Party's decision to abandon work on the Joint Development Compound
or Joint Development Compound/IV after exercising the Development Option
pursuant to Section 3.2.6, in which case the IDP shall have the sole right to
pursue all indications of the Abandoned Compound or Compound Series.
16
3.2.1 LEAD DEVELOPING PARTY.
Unless mutually agreed otherwise, Chiron will be the Lead Developing Party
for Chiron Indications and PathoGenesis will be the Lead Developing Party for
PathoGenesis Indications. The Parties shall in good faith endeavor to reach
mutual agreement on the Development Plan and the management and budget of
clinical development of Co-Commercialized Products. Subject to the Development
Plan and with the goal of maximizing Net Pretax Profits, the Lead Developing
Party shall have final decision making authority for manufacturing, marketing,
commercialization and FDA or foreign regulatory body decisions relating to
Co-Commercialized Products. The other Party shall have the right to participate
fully in any decision-making processes by the Lead Developing Party regarding
Co-Commercialized Products, including review of actions under this Agreement
which could materially adversely affect the other Party's ability to
commercialize Co-Commercialized Products under this Agreement.
3.2.2 JOINT DEVELOPING PARTIES.
If the indication for the Joint Development Compound falls within the Joint
Indications ("Joint Development Compound/IV"), Chiron and PathoGenesis shall
develop the Compound jointly ("Joint Developing Parties"). The Parties shall
share all decision making with respect to the Joint Development Compound/IV
including the determination of the most advantageous and effective way to
develop the Joint Development Compound/IV. The Parties' positions with respect
to such decisions and their decisions shall be made in good faith and shall use
commercially reasonable standards with the goal of maximizing Net Pretax
Profits.
3.2.3 OTHER INDICATIONS.
For Joint Development Compounds whose indications do not fall within Chiron
Indications, PathoGenesis Indications or Joint Indications, the Parties shall
mutually decide which Party will constitute the most advantageous and effective
developing Party, or whether both Parties should jointly develop such Joint
Development Compound, when exercising the Development Option. If the Parties are
unable to agree mutually on a developing Party, Chiron and PathoGenesis shall
jointly develop the Joint Development Compound.
3.2.4 MULTIPLE INDICATIONS.
If a Compound or Compound Series already in development or commercialization
under this Agreement falls within multiple indications, each indication shall be
treated separately under the terms of this Agreement, depending on whether it is
a Chiron Indication, a PathoGenesis Indication, a Joint Indication or other
indication. If the Parties identify multiple indications for a Compound or
Compound Series before a Development Option has arisen with respect to such
Compound or Compound Series, then the Parties shall mutually agree upon the
first indication to pursue, with the goal of maximizing Net Pretax Profits.
In the event a Joint Development Compound or Compound Series has in the
determination of the CMT the potential for multiple indications and a Lead
Developing Party exists for one of the multiple indications, and that LDP
desires to outsource any services with respect to the development and
commercialization of that Compound, the LDP shall reasonably consider the other
Party for such services as the other Party is willing to provide, with the goal
of maximizing Net Pretax Profits. The other Party shall have no longer than
thirty (30) days to provide a written response of their interest in the
opportunity to the LDP. If the other Party decides not to provide such services
or the Parties are unable to reach a mutual written agreement with respect to
development and commercialization of that Compound within thirty (30) days, the
LDP shall have final approval authority on the decision of whether to outsource
those services and to whom they should be outsourced.
17
3.2.5 DEVELOPMENT COSTS SHARED ON 50%-50% BASIS.
With respect to such Joint Development Compound or Joint Development
Compound/IV, Chiron and PathoGenesis will share the development costs, including
all internal costs properly allocable to the development of the Joint
Development Compound and all out-of-pocket and external costs which are
reasonable and customary for such activities, on a 50%-50% basis or as otherwise
agreed in writing by the Parties. To facilitate the sharing of development
costs, the Parties shall submit to the Collaboration Management Team quarterly
development budgets in addition to the quarterly expense reports required by
Section 9.3.
3.2.6 THIRD PARTY ROYALTIES.
Subject to Section 2.6.2, outstanding payment and/or royalty obligations
incurred from Third Party licenses or other contractual relationships relating
to Joint Development Compounds, Joint Development Compounds/IV or
Co-Commercialized Products will be shared by the Parties on a 50%-50% basis or
as otherwise agreed in writing by the Parties.
3.2.7 OPTION TO ABANDON AFTER EXERCISE OF DEVELOPMENT OPTION.
A Party may terminate its decision to proceed with a Joint Development
Compound or Joint Development Compound/IV after exercising the Development
Option provided that it supplies the other Party six (6) months notice of its
decision to terminate its development efforts. If a Party opts to terminate
its efforts on a Joint Development Compound, a Joint Development Compound/IV
or a Co-Commercialized Product, it shall receive no reimbursement for its
expenses, costs, or other obligations incurred after the last quarterly
reconciliation period prior to the abandoning Party's effective termination
date for its development efforts pursuant to Section 9.3. The other Party may
choose to continue with or to cease its development efforts. If the Party
chooses to continue with its development efforts, the provisions of Sections
3.3, 9.7.2, 9.7.3 and [REDACTED*] shall apply to any resulting Independent
Products and the IDP shall have the right to pursue all indications of the
Joint Development Compound, a Joint Development Compound/IV or a
Co-Commercialized Product abandoned pursuant to this Section 3.2.6.
3.3 INDEPENDENT DEVELOPMENT OF PRODUCT.
Subject to the other terms and conditions of this Agreement, either Party
(i.e., an Independent Developing Party or IDP) may conduct independently of
the other Party activities related to the development of an Abandoned
Compound or Abandoned Compound Series in the Field derived from the Research
Program (an "Independent Development Program") or to continue development
activities after the other Party has elected to terminate its development
efforts on a Joint Development Compound or Joint Development Compound/IV,
provided that: (i) the conditions for commencement of an Independent
Development Program referenced in Section 3.3.1 are satisfied; and (ii) the
IDP shall be obligated to pay the Non-Developing Party or NDP a royalty on
Net Sales of any Independent Product which results from the Independent
Development Program as determined in accordance with Sections 9.7.2, 9.7.3
and [REDACTED*] for an Abandoned Compound or Abandoned Compound Series
abandoned by a Party after mutual exercise of the Development Option or other
payments in accordance with this Agreement. An IDP shall have the right to
pursue independently all other indications for the Abandoned Compound or
Abandoned Compound Series.
3.3.1 CONDITIONS FOR INDEPENDENT DEVELOPMENT OF AN INDEPENDENT PRODUCT.
Either Party shall have the opportunity to exercise a Development Option
that the other Party had decided not to exercise (i.e., a "Non-Developing Party"
or "NDP"). The Parties shall endeavor to agree to an equitable division of the
intellectual property specifically relating to or covering the Abandoned
Compound or Abandoned Compound Series, including assignment of Compound Patents
directly related to the development and commercialization of such Compounds to
Products to the IDP, which maximizes the value of the assets to both Parties.
Alternatively, unless the Parties agree otherwise, such
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
18
Compound Patents will be exclusively licensed to the IDP if assigned to the NDP
or non-exclusively licensed to the NDP for research purposes only if assigned to
the IDP. The right of an IDP to initiate and conduct an Independent Development
Program with respect to an Independent Product shall be subject to the following
conditions:
(a) Either Party may pursue an Abandoned Compound or Abandoned Compound
Series whose Development Option was not exercised by the other Party
provided that the IDP will owe the NDP payments and/or royalties in
accordance with Section 9.7.1 and Section [REDACTED*] of this Agreement for
any resulting Independent Product. The IDP shall bear all costs and
expenses incurred in and properly allocable to the development of an
Independent Product after the NDP has abandoned a Compound or Compound
Series. The NDP shall not be entitled to receive any compensation or credit
for the amounts incurred by and properly allocable to the NDP as part of
the true-up process of Section 9.2.2 and shall not be responsible for
development costs and expenses incurred by the IDP after exercise of the
Development Option.
(b) Third Party payment and/or royalty obligations incurred during the
Research Program shall be shared equally. To the extent that Third Party
obligations apply to the Independent Product developed and commercialized
by the IDP and are incurred after the NDP has decided not to exercise the
Development Option or abandoned the Compound or Compound Series, such
expenses will be the responsibility of the IDP, subject to the royalty
stacking provision of Section 9.7.3.
(c) The IDP's obligation to pay its full share of costs and other
expenses associated with the Research Program and prescribed by this
Agreement shall not be abated by virtue of the IDP's conduct of its
Independent Development Program, nor shall the IDP reduce or diminish in
any way the contributions or obligations it is required to provide or
perform pursuant to this Agreement.
(d) The IDP shall be free to develop an Abandoned Compound or Abandoned
Compound Series as it sees fit, including but not limited to the right to
enter into Third Party licenses without restriction from the NDP or this
Agreement.
3.4 USE OF RESULTS, JOINT DEVELOPMENT COMPOUNDS, JOINT COMPOUND PATENTS, JOINT
TECHNOLOGY OR JOINT LIBRARIES IN THE EVENT OF TERMINATION OF THE RESEARCH
PROGRAM.
In the event the Research Program is terminated under Section 16.2,
either Party shall be free to use Results, Joint Development Compounds, Joint
Compound Patents, Joint Technology or Joint Libraries of the Research
Program, subject to the restrictions on use set forth in Section 2.11, the
licenses already granted under Article 8 and the royalty provisions of
Section 9.7.1 and Section [REDACTED*], or as otherwise agreed to in by the
writing Parties, such precise amount to be negotiated between the Parties,
taking into consideration the costs and risks undertaken by the IDP and NDP
prior to such termination and the relative contributions of each Party.
3.5 DEVELOPMENT BY THIRD PARTIES.
In certain circumstances, the Parties may agree that a particular Product
may be more advantageously pursued by one or more Third Parties. In such cases,
the Parties may, by mutual written agreement, license Third Parties to pursue
such Product opportunities, or dispose of any such Product opportunity in any
other manner that is mutually agreeable. For a Joint Development Compound, if
the LDP wishes to involve a Third Party in development and commercialization
efforts, the LDP shall first offer the opportunity to the other Party. The other
Party shall have no longer than thirty (30) days to provide a written response
of their interest in the opportunity to the LDP. If the other Party decides not
to accept the opportunity and the Parties are unable to come to a mutual written
agreement with respect to involvement by the Third Party, then the Lead
Development Party for the Product shall have final approval authority. For a
Joint Development Compound/IV, the Parties shall come to a mutual written
agreement. In any such out-licensing arrangement, any outstanding payment and/or
royalty
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
19
obligations incurred from grants, external formulation efforts, or other
contractual sources will be incorporated into the out-license agreement. Chiron
and PathoGenesis will share equally on a 50%-50% basis or as otherwise agreed in
writing by the Parties the costs of arranging for any such dispositions and the
consideration received in exchange therefor, including upfronts, milestones and
royalties, after true-up of expense consideration to date.
ARTICLE 4
MARKETING AND COMMERCIALIZATION
OF CO-COMMERCIALIZED PRODUCTS
The provisions of this Article 4 shall apply to the development and
commercialization of any Co-Commercialized Product hereunder.
4.1 THE CO-COMMERCIALIZATION PLAN.
The Co-Commercialization Plan shall include without limitation: (i) a plan
and schedule for obtaining further Regulatory Approvals; (ii) a marketing plan;
and (iii) further plans for formulation, manufacture, packaging and distribution
of the Co-Commercialized Product. For Joint Development Compounds, the other
Party shall have sixty (60) days to review the proposed Co-Commercialization
Plan and make suggestions to the Lead Developing Party. The Lead Developing
Party shall consider all such suggestions in good faith.
4.2 GOVERNANCE.
For a Joint Development Compound, the Lead Developing Party shall submit a
written Co-Commercialization Plan to the other Party and the CMT when the Lead
Developing Party believes that the Joint Development Compound is suitable for
commercialization, such submission not to take place later than the start of
Phase III clinicals. While the Lead Developing Party of a Joint Development
Compound shall have final decision-making authority for the development and
commercialization of Co-Commercialized Products, the other Party shall have the
right to participate fully in all decision-making processes. The Parties shall
in good faith endeavor to reach mutual agreement on the management and budget
for the marketing and commercialization of Co-Commercialized Products under the
Co-Commercialization Plan.
For a Joint Development Compound/IV, the Parties shall jointly submit a
written Co-Commercialization Plan to the CMT when the Parties believe that the
Joint Development Compound/IV is suitable for commercialization. When
negotiating a Co-Commercialization Plan for a Joint Development Compound/IV, the
Parties shall in good faith reach mutual agreement on the management and budget
for the marketing and commercialization of Co-Commercialized Products under the
Co-Commercialization Plan.
4.3 SHARING OF NET PRETAX PROFITS AND LOSSES.
Chiron and PathoGenesis shall share all Net Pretax Profits or Losses of each
Co-Commercialized Product, regardless of which of the two parties is the Lead
Developing Party, for activities giving rise to such Net Pretax Profits or
Losses on a 50%-50% basis or as otherwise agreed in writing by the Parties, all
to the extent allowable by GAAP.
4.4 DEVELOPMENT AS CO-COMMERCIALIZED PRODUCTS OR INDEPENDENT PRODUCTS.
Products may be developed and commercialized pursuant to this Agreement as
Co-Commercialized Products, as Independent PathoGenesis Products or as
Independent Chiron Products. The determination of whether any particular Product
will be developed and commercialized as a Co-Commercialized Product, an
Independent Chiron Product or an Independent PathoGenesis Product will be made
in accordance with the provisions of this Agreement.
20
Any Product that is Co-Commercialized shall, if practicable, be sold under a
single label for each commercially reasonable indication (by the appropriate
Party pursuant to Section 4.5) unless the laws of the country where the Product
is sold require separate labels. The Parties will mutually agree in writing upon
the appropriate label. In those countries where such Product is sold under two
or more labels, the filing and commercial launch of the different Regulatory
Registrations will be simultaneous. If the Co-Commercialized Product is not sold
under a single label, each Party shall have the right to sell, distribute and
market the Co-Commercialized Product.
4.5 REGULATORY APPROVALS.
The Collaboration Management Team, or a Project Committee if designated,
shall determine the jurisdiction or jurisdictions in which Regulatory Approvals
for any particular Co-Commercialized Product are to be sought to enable
commercialization of such Co-Commercialized Product therein.
For Co-Commercialized Products arising from Joint Development Compounds, the
Lead Developing Party shall have the responsibility to secure and maintain any
given Regulatory Approval for all commercially reasonably and appropriate
indications of Co-Commercialized Products, and the Party in whose name any such
approval is to be secured and maintained. The Lead Developing Party shall
consult with the CMT or Project Committee prior to taking any material action
with respect to any such Regulatory Approval, and shall provide the CMT with
access to all related documentation. Without limiting the generality of the
foregoing, the Lead Developing Party shall not make any written or oral contact
with the FDA or other applicable regulatory agency or make any regulatory
submission without in each case receiving the prior written approval of the CMT.
In addition, the other Party shall have the right to participate fully in the
formation and implementation of regulatory approval strategy, including, without
limitation, the right to participate in any meetings or telephone conferences
with the FDA or other applicable regulatory agencies.
For Co-Commercialized Products arising from Joint Development Compounds/IV,
the Parties shall share the responsibility to secure and maintain any given
Regulatory Approval for all commercially reasonably and appropriate indications
of Co-Commercialized Products, and the Party or Parties in whose name any such
approval is to be secured and maintained. The Parties shall consult with the CMT
or Project Committee prior to taking any material action with respect to any
such Regulatory Approval, and shall provide the CMT with access to all related
documentation. Without limiting the generality of the foregoing, the Parties
shall not make any written or oral contact with the FDA or other applicable
regulatory agency or make any regulatory submission without in each case
receiving the prior written approval of the CMT.
4.6 SALES, MARKETING AND DISTRIBUTION RIGHTS.
Subject to Section 4.2 of this Agreement, sales, marketing and distribution
rights will be allocated according to the Co-Commercialization Plan. Generally,
for Co-Commercialized Products falling solely within a Party's Indication, the
Lead Developing Party shall have the sales, marketing and distribution rights
for all such Co-Commercialized Products. Generally, the Parties shall mutually
agree upon sales, marketing and distribution decisions for all Products falling
within Joint Indications or Joint Indications/IV, with the goal of maximizing
Net Pretax Profits. Sales, marketing and distribution rights for delivery of
drugs by any means other than Chiron Indications, PathoGenesis Indications or
Joint Indications shall be decided in accordance with Section 3.2.3 and 3.2.4.
Sales, Marketing and Distribution Rights for Joint Development Products or Joint
Development Products/IV shall be set forth within the Co-Commercialization Plan
in accordance with Section 4.1 with the goal of maximizing Net Pretax Profits.
With respect to the sales, marketing and distribution of Co-Commercialized
Products under this Agreement, the Parties shall cooperate in an effort to
maximize Net Pretax Profits.
21
4.7 TRADEMARKS.
Subject to the labeling and other regulatory requirements of each country
where Co-Commercialized Products are to be sold, marketed and distributed, the
names of all Co-Commercialized Products shall be determined by the Collaboration
Management Team, and the trademarks relating to such names shall be owned
jointly by Chiron and PathoGenesis. All Co-Commercialized Products shall, in
addition, be marketed under the name "PathoGenesis" or such other PathoGenesis
name as PathoGenesis might select, and "Chiron" or such other Chiron name as
Chiron may select. Neither PathoGenesis nor Chiron shall as a consequence of
this Section 4.7 acquire any trademark or other rights to such names hereunder.
Each Party shall provide to the other Party copies of any materials bearing the
other Party's Trademarks prior to the release of any such materials and from
time to time as requested by the other Party. If the use of the other Party's
Trademarks, or material bearing such Trademarks, is deficient in quality, the
other Party will notify the first Party of any such deficiencies in writing
within seven (7) days after the other Party's receipt of such submission. If the
first Party has not received a written objection within such seven (7) day
period, the submission shall be deemed approved. If there are deficiencies
notified by the other Party in writing during such period, the first Party shall
use commercially reasonable efforts to correct promptly such deficiencies.
4.8 PERFORMANCE STANDARDS.
Each Party shall use commercially reasonable efforts to perform the
Co-Commercialized Product development and commercialization work assigned to it
in a prudent and skillful manner in accordance, in all material respects, with
the Co-Commercialization Plan then in effect and applicable laws. Each Party
shall furnish all labor, supervision, facilities, supplies and materials
necessary to perform the development and commercialization work assigned to it
in accordance with the Co-Commercialization Plan then in effect.
4.9 SUBCONTRACTS.
Neither Party may subcontract any portion of the Co-Commercialized Product
development and commercialization work to be performed by it hereunder unless:
(i) such subcontract is specifically provided for by the applicable Development
Plan or Co-Commercialization Plan in question; (ii) otherwise provided for by
this Agreement or (iii) agreed upon in writing by the Parties. In the case of
any such approved subcontract, the payments to such subcontractor shall be
included in the Net Pretax Profits or Losses to be shared by the Parties
pursuant to Section 4.3.
4.10 ADVERSE INFORMATION AND EVENT REPORTING.
Each Party shall promptly notify the other Party of any information or data
which comes to its attention that could indicate or reveal the safety or
efficacy of the Co-Commercialized Products. Each Party shall report to the other
in as much detail as possible, within forty-eight (48) hours from receipt of the
information, any experience coincident with the use of the Co-Commercialized
Products at any dose, whether or not considered drug related, that suggests a
significant hazard, contraindication, side effect or precaution. This includes,
but is not limited to, any serious adverse experience coincident with the use of
the Co-Commercialized Products. A serious adverse experience includes, at
minimum, any event coincident with the use of the Co-Commercialized Products
that results in any of the following outcomes: death, a life-threatening
experience, inpatient hospitalization, prolongation of an existing
hospitalization, a persistent or significant disability or incapacity, or a
congenital anomaly or birth defect.
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ARTICLE 5
DEVELOPMENT AND COMMERCIALIZATION
OF INDEPENDENT PRODUCTS
The provisions of this Article 5 shall apply to the development and
commercialization of any Independent Product hereunder.
5.1 DEVELOPMENT AND COMMERCIALIZATION.
5.1.1 PERFORMANCE STANDARDS.
The IDP shall use commercially reasonable efforts in connection with the
development and commercialization of Independent Products. Commercially
reasonable efforts as used herein shall be the same standard of effort used by
such Party in the sale, marketing and distribution of its other products having
a potential market size and level of importance similar to those of the relevant
Independent Product(s).
The IDP will keep the other Party informed in writing on a yearly basis or
as other significant events or milestones occur, including without limitation,
results of pre-clinical test, clinical test, and Regulatory Approvals, of its
progress in the development of its Independent Products under this Article 5 at
each meeting of the Collaboration Management Team during the Contract Term and
otherwise as dictated by commercially reasonable efforts and Section 5.3 hereof.
In the event that the IDP fails to use commercially reasonable efforts to
develop and commercialize any Independent Product, the IDP shall, at the other
Party's election, either (i) abandon such Independent Product and permit the
other Party to undertake development of such abandoned Independent Product, or
(ii) grant the other Party the right to participate in co-development or profit
sharing of such abandoned Independent Product, which shall be deemed a
Co-Commercialized Product governed by Article 4.
5.1.2 CONTROL.
Subject to Section 5.1.1, all decisions with respect to the
commercialization and development of an Independent Product, including without
limitation any decision to abandon or divest such Independent Product, shall be
made solely by the IDP in its discretion, and may be based solely on its own
economic, strategic and other other business interests.
5.1.3 COSTS.
The IDP shall bear all Costs and other expenses associated with the
development and commercialization of its Independent Products, subject to
Section 3.2.7 if applicable.
5.2 THIRD PARTY ROYALTIES.
In the event that an Independent Product incorporates Third Party
Technology, any royalties or other amounts payable by IDP to the licensor of
such technology on account of its incorporation in such Independent Product
shall be borne solely by the IDP, unless otherwise provided for in this
Agreement.
5.3 INTERACTION WITH CMT.
The IDP shall keep the Collaboration Management Team reasonably well
informed regarding the ongoing status of development and commercialization
activities of its Independent Products. At the request of the CMT, the IDP shall
report to the CMT as often as once per quarter regarding the status of such
activities.
23
5.4 MANUFACTURING RIGHTS AND PROFITS.
The IDP will have the first right to manufacture bulk product, and to
provide fill and finish, for any Independent Product.
5.5 SALES, MARKETING AND DISTRIBUTION RIGHTS AND PROFITS.
With respect to an Independent Product, and as to which the IDP desires to
outsource sales, marketing, distribution and/or promotional services, the IDP
shall reasonably consider the NDP for such services as the NDP is willing to
provide, based on the NDP's ability to maximize Net Pretax Profits from sales of
any Independent Product in any particular territory or market segment, based on
resources, personnel, facilities, experience, available capacity and other
relevant factors. The NDP will be entitled to receive reasonable compensation
for its selling, marketing, distribution and promotional activities and the
Parties will negotiate in good faith to determine such compensation.
5.6 REVENUES.
The IDP shall be entitled to retain all revenue arising from sales of the
Independent Products, subject to the royalty obligations referenced in
Section 9.7.
5.7 ABANDONMENT OF INDEPENDENT PRODUCTS.
If the IDP abandons the development and commercialization of an Independent
Product, the NDP shall have the first right to continue the development and
commercialization of such Product as its own Independent Product and the right
to pursue all indications of the Independent Product. The IDP shall notify the
NDP and the CMT in writing promptly following any decision to abandon an
Independent Product. If the NDP desires to continue the development and
commercialization of the abandoned Independent Product as its own Independent
Product, the Parties shall negotiate in good faith an agreement pursuant to
which the IDP will receive reasonable compensation for the value contributed by
it to the abandoned Independent Product prior to its abandonment thereof. For as
long as the NDP continues to devote commercially reasonable efforts to develop
and commercialize such Independent Product, the original IDP shall not, without
the prior written consent of the NDP, engage in any manner in the development or
commercialization of the Independent Product.
5.8 DEVELOPMENT BY THIRD PARTIES.
In the event that the NDP elects not to continue the development and
commercialization of the abandoned Independent Product as its own Independent
Product or does not use commercially reasonably efforts to develop or
commercialize the abandoned Independent Product, the Parties may, by mutual
written agreement, license Third Parties to pursue such Product opportunities,
or dispose of any such Product opportunity in any other manner that is mutually
agreeable. If the Parties are unable to come to a mutual written agreement, then
the IDP for the Product shall have final approval authority. In any such
out-licensing arrangement, any outstanding payment and/or royalty obligations
incurred from grants, external formulation efforts, or other contractual sources
will be incorporated into the out-license agreement. The IDP shall be solely
responsible for all Costs and expenses associated with out-licensing the
Independent Products and shall retain all payments or royalties from such third
party except the NDP shall retain its rights to a royalty pursuant to Section
5.6 and Section 9.7.
24
ARTICLE 6
MANUFACTURING OF CO-COMMERCIALIZED PRODUCTS
6.1 CLINICAL SCALE MANUFACTURING.
6.1.1 MANUFACTURER.
For Co-Commercialized Products arising from Joint Development Compounds, the
Lead Developing Party shall, with active participation from the other Party,
determine the most cost efficient provider of manufacturing services, which may
include a Third Party manufacturer (the "Manufacturing Party"). For
Co-Commercialized Products arising from Joint Development Products/IV, the
Parties shall, in good faith and using commercially reasonable standards,
together decide the most cost efficient Manufacturing Party. The Parties shall
in good faith endeavor to reach mutual agreement on the selection of the
manufacturing approach of Co-Commercialized Products for all commercially
reasonable and appropriate indications. The Manufacturing Party shall supply all
Products required for pre-clinical and clinical trials of Co-Commercialized
Products hereunder, and shall provide advance delivery of such Products in
accordance with relevant Plans approved by the Collaboration Management Team, or
a project committee if designated, in accordance with Article 7. Notwithstanding
the foregoing, the Manufacturing Party shall use commercially reasonable
efforts, but shall have no obligation, to supply at any time any such Products
in excess of the quantities set forth in the applicable forecasts.
6.1.2 FORECASTS.
The Lead Developing Party, in the case of Co-Commercialized Products arising
from a Joint Development Product, shall deliver to the Manufacturing Party
annually forecasts of the quantities of Products expected to be required for
pre-clinical and clinical trials in accordance with the relevant manufacturing
plan or manufacturing agreement. The Parties together, in the case of Co-
Commercialized Products arising from a Joint Development Product/IV, shall
deliver to the Manufacturing Party annual forecasts of the quantities of
Products expected to be required for pre-clinical and clinical trials in
accordance with the relevant manufacturing plan or manufacturing agreement. Such
quantities shall be stated on a quarterly basis for the first year in the period
and on an annual basis for the second, third and any subsequent years.
6.1.3 TRANSFER PRICE.
In the event the Manufacturing Party is either PathoGenesis or Chiron,
the Manufacturing Party shall provide such Products pursuant to a supply
agreement negotiated in good faith for preclinical and clinical trials at a
[REDACTED*]. In the event that the Manufacturing Party is a Third Party, the
Transfer Price for preclinical and clinical supplies of Co-Commercialized
Products for both Parties shall be negotiated by the Lead Developing Party
with such Third Party.
6.1.4 REPRESENTATION AND WARRANTY.
The Manufacturing Party shall represent and warrant that the Products
supplied by it for preclinical and clinical trials pursuant to Section 6.1 will
comply with the Product specifications determined by the Lead Developing Party,
or Joint Developing Parties if applicable, and included in the
Co-Commercialization Plan including manufacturing plans in effect from time to
time in accordance with applicable governmental regulations and guidelines.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
25
6.2 PROCESS DEVELOPMENT COSTS.
Unless otherwise agreed to in writing by the Parties, the Manufacturing
Party will be solely responsible for all Costs relating to manufacturing process
development incurred by it in performing its obligations under this Agreement,
subject to recovery as a component of Costs of Manufacturing.
6.3 COMMERCIAL SCALE MANUFACTURING.
Any commercial scale manufacturing by the Manufacturing Party of
Co-Commercialized Products hereunder shall be conducted pursuant to one or
more manufacturing and supply agreements to be entered into by the Parties
negotiated in good faith and containing commercially reasonable and customary
provisions, which will include provisions analogous to those set forth in
Sections 6.1.1, 6.1.2, 6.1.4, and 6.2 above. In the event the Manufacturing
Party is a Third Party, the LDP, or Joint Developing Parties if applicable,
shall negotiate the most favorable Transfer Price for both Parties. In the
event the Manufacturing Party is Chiron or PathoGenesis, the supply agreement
shall include a [REDACTED*].
6.4 TRANSITION PROVISIONS.
In the event that the Manufacturing Party elects not to manufacture any
Co-Commercialized Product from which it has withdrawn pursuant to Section
3.2.7, the Manufacturing Party shall provide the other Party with prompt
written notice of such election. If the other Party elects to continue the
development and commercialization of such Co-Commercialized Product as an
Independent Product, the Manufacturing Party shall, upon the request of the
other Party, continue to manufacture such Product on the then existing terms
for such period as is requested by the other Party, not to exceed [REDACTED*].
During such transition period, the other Party shall exercise reasonable
commercial efforts to obtain an alternate manufacturer as promptly as
possible, and the Manufacturing Party shall exercise reasonable commercial
efforts and cooperation to effectuate the transfer of manufacturing to such
alternate manufacturer.
ARTICLE 7
MANAGEMENT OF COLLABORATION
7.1 MANAGEMENT OUTLINE.
The work performed under this Agreement shall be directed and managed by
the committee structure outlined in this Article 7. Work under this Agreement
shall be managed by the Collaboration Management Team (CMT). The CMT shall
have decision making authority for the conduct of the Research Program,
Development Plan and Co-Commercialization Plan in accordance with the terms
and conditions described in this Agreement. The CMT shall perform its
obligations, including the review and approval of plans pursuant to the
Agreement, on a prompt and timely basis. It is understood that all other
Articles of this Agreement that may refer to review or decisions by any
committee shall be controlled by this Article and the committee structure
defined in this Article 7 of this Agreement. It is expected that the
composition of the CMT will change based on the stage of the research,
development and commercialization. Initially, [REDACTED*], will constitute the
CMT. Each Party will provide reasonable written notice to the other Party of
any change in its representatives on the CMT.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
26
7.2 RESPONSIBILITIES OF THE CMT.
Collaboration Management Team responsibilities shall include without
limitation project review, progress management and planning. The CMT shall
supervise and coordinate the research and development of Products, the
commercialization of Co-Commercialized Products pursuant to this Agreement, and
the commercialization of Independent Products to the extent provided in this
Agreement. The CMT shall have the authority to create teams to carry out the
research and other related activities and which shall directly report to the
CMT. The CMT may by unanimous decision, within its discretion, engage, hire or
contract with Third Parties as consultants for the CMT. The Parties shall share
on a 50%-50% basis or as otherwise agreed in writing by the Parties the costs
for all such Third Party consultants.
7.2.1 COLLABORATION MANAGEMENT TEAM MEETINGS.
The Collaboration Management Team shall meet on a quarterly basis to:
(a) approve FTE allocations from each Party, program spending and any
special expenditures;
(b) review the projects, project objectives, and Targets; and
(c) make determinations on which projects should advance in development.
Meeting location will generally alternate between PathoGenesis' facility in
Seattle, Washington and Chiron's facility in Emeryville, California unless
otherwise agreed by the Parties. The host of each meeting will serve as chair
thereof. In addition, teleconference meetings will be held on a regular basis,
as needed, to discuss data and progress of the Collaboration. The CMT will keep
meeting minutes and prepare a quarterly research report for respective internal
senior management review. Chiron and PathoGenesis each shall bear all of its own
travel, lodging, meals and other costs and expenses properly allocable to the
participation of its representatives on any Committees.
7.2.2 STANDARD FOR DECISIONS.
In exercising its research, development, marketing, commercialization and
oversight responsibilities hereunder, the CMT shall act and make decisions based
primarily on the criterion of maximizing Net Sales from sales of Products,
maximizing Net Pretax Profits and minimizing Net Pretax Losses. Such standard
shall also be applied in connection with any dispute resolution pursuant to
Article 17.
7.3 LIMITS ON JURISDICTION OF APPOINTED TEAMS.
In the event that any activity related to the development or
commercialization of Co-Commercialized Products pursuant to this Agreement is to
be handled primarily by one Party, such activity will be controlled by the
performing Party under supervision of the Collaboration Management Team.
7.4 APPROVAL OF RESEARCH PLANS.
The Collaboration Management Team shall review and approve each year, as
applicable, written Research Plans as provided for by Section 2.4, written
Development Plans as provided for by Section 3.1 and written
Co-Commercialization Plans as provided for by Article 4. Each plan shall cover a
period of time as specified by this Agreement, or as otherwise may be agreed to
by the Collaboration Management Team. In addition, upon request of either Party,
the Collaboration Management Team shall consider proposed revisions to any then
current plan.
27
7.5 DISAGREEMENTS.
(a) All disagreements arising out of the Research Program shall be
referred to the Collaboration Management Team. If the CMT is unable to
resolve such disagreement, the matter shall be resolved by the executive
officers of each Party designated in Section 17.3.
(b) All disagreements arising out of the development or
commercialization of Joint Development Compounds, Joint Development
Compounds/IV or Co-Commercialized Products shall be resolved pursuant to
Article 17.
ARTICLE 8
LICENSE GRANTS
8.1. CHIRON LICENSE GRANT TO PATHOGENESIS.
Subject to the terms and conditions of this Agreement, Chiron hereby grants
the following licenses to PathoGenesis, and, to the extent provided below, its
Affiliates:
8.1.1 CHIRON TECHNOLOGY FOR RESEARCH.
A worldwide non-exclusive license, during the Research Term only, without
right to sublicense to Third Parties except as provided by Section 2.6.2, under
the Chiron Technology, Chiron Technology Patents, and improvements to Chiron
Technology, solely to the extent related to the Selected Targets within the
Field, to conduct research with respect to the Selected Targets in accordance
with the Research Plan. Such license shall extend beyond the Research Term to
the extent necessary for PathoGenesis to continue research, development and
commercialization of Co-Commercialized Products and Independent PathoGenesis
Products.
8.1.2 CHIRON TARGETS, LIBRARIES, JOINT LIBRARIES AND JOINT COMPOUNDS FOR
SCREENING.
A worldwide non-exclusive license, during the Research Term, without right
to sublicense to Third Parties except as provided by Section 2.6.2, under
Library Patents, Compound Patents, and Chiron Know-How, to screen Chiron
Libraries, Joint Libraries, Chiron Compounds and Joint Compounds against the
Selected Targets within the Field in accordance with the Research Plan. Such
license shall continue after the conclusion of the Research Term to the extent
necessary to permit PathoGenesis to continue development and commercialization
of Products pursuant to this Agreement.
8.1.3 USE OF LIBRARIES.
The Parties acknowledge that the Chiron Libraries screened pursuant to the
Research Plan will also be screened by Chiron, its Affiliates and contractors,
and by Third Parties outside the Collaboration, provided that such Chiron
Libraries shall not be screened against Selected Targets except as permitted by
Section 2.6.4(d). The rights of the Parties with respect to Compounds or
Compound Series identified through the Research Plan will be subject to rights
arising as a result of such use of the libraries outside the Research Plan. The
determination of ownership, patent and license rights to Compounds contained in
Chiron Libraries shall be based on the first to invent the subject matter in
question, as determined under U.S. patent law. Except as expressly stated in
Section 8.1 no implied rights or licenses are granted hereunder to any
inventions or patent rights arising outside this Agreement, including without
limitation rights under dominating patent claims. The following principles shall
apply.
(a) PathoGenesis shall notify Chiron in writing as soon as practicable
following identification of any Compound hit. Chiron shall be entitled to
rely on the content and timing of receipt of notices of identification of
compounds received from all users of Chiron Libraries as evidence of which
party is first to invent and in determining whether conflicts exist.
28
(b) If, at any time, Chiron believes in good faith that a conflict
exists between PathoGenesis and Chiron and/or Third Parties who are each
entitled to exclusive rights to Compounds or Compound Series contained in
Chiron Libraries, with respect to patent applications filed or to be filed
by Chiron, Chiron shall notify each party involved of the existence of the
conflict, the claims of such party which are involved, and the identity of
(but not the specific compounds or claims of) the other party. PathoGenesis
hereby consents to such notification under Section 18.4 hereof. Chiron shall
not be required to take any action in filing new patent applications or
amending existing applications with respect to the conflicting subject
matter, except on instructions approved by both parties to the conflict.
However, Chiron shall have the right, but not the obligation, to take such
actions as Chiron believes in good faith will protect the rights of both
parties to the conflict, pending receipt of such jointly approved
instructions (e.g., filing potentially conflicting applications, combining
conflicting subject matter into a CIP application, filing continuations of
applications to prevent double patenting rejections of another application,
etc.). If there is a dispute between Chiron and PathoGenesis as to whether
Chiron is the first to invent the Compounds in question, the Parties shall
refer the matter to an independent patent attorney acceptable to both
parties for final resolution.
8.1.4 LICENSES FOR CO-COMMERCIALIZED PRODUCTS AND INDEPENDENT PATHOGENESIS
PRODUCTS.
(a) A worldwide co-exclusive license with Chiron under Chiron Compound
Patents and Chiron's interest in Joint Compound Patents arising from the
Research Program to make, have made, use, offer to sell, sell, have sold and
import Co-Commercialized Products in PathoGenesis' Indications (and as
appropriate all indications where PathoGenesis is the Lead or Joint
Developing Party) in the Field.
(b) A worldwide exclusive license to make, have made, use, offer to
sell, sell, have sold and import Independent PathoGenesis Products arising
from the Collaboration as an Independent Product under Chiron Compound
Patents and Chiron's interest in Joint Compound Patents arising from the
Research Program to make, have made, use, offer to sell, sell, have sold and
import Independent PathoGenesis Products in the Field, with the right to
sublicense.
(c) To the extent that an Independent PathoGenesis Product contains a
Compound disclosed in a Library Patent covering a Chiron Library or Joint
Library, the licenses granted under this Section 8.1.4 shall include a
license under such Chiron Library Patent(s), provided that such license
shall be no broader in scope than is necessary to permit PathoGenesis to
exercise its license to make, have made, use, offer to sell, sell, have sold
and import Co-Commercialized Products in PathoGenesis' Indications (and as
appropriate all indications where PathoGenesis is the Lead or Joint
Developing Party) and Independent PathoGenesis Products in the Field as
provided herein.
8.2 PATHOGENESIS LICENSE GRANT TO CHIRON.
Subject to the terms and conditions of this Agreement, PathoGenesis hereby
grants the following licenses to Chiron and, to the extent provided below, its
Affiliates:
8.2.1 PATHOGENESIS TECHNOLOGY FOR RESEARCH.
A worldwide non-exclusive license, during the Research Term only, without
right to sublicense to Third Parties except as provided by Section 2.6.2, under
the PathoGenesis Technology, PathoGenesis Technology Patents and improvements to
PathoGenesis Technology, solely to the extent related to the Selected Targets
within the Field, to conduct research with respect to the Selected Targets in
accordance with the Research Plan. Such license shall extend beyond the Research
Term to the extent necessary for Chiron to continue research, development and
commercialization of Co-Commercialized Products and Independent Chiron Products.
29
8.2.2 PATHOGENESIS TARGETS, LIBRARIES, JOINT LIBRARIES AND JOINT COMPOUNDS
FOR SCREENING.
A worldwide non-exclusive license, during the Research Term, without right
to sublicense to Third Parties except as provided by Section 2.6.2, under
Library Patents, Compound Patents and PathoGenesis Know-How, to screen
PathoGenesis Libraries, Joint Libraries, PathoGenesis Compounds and Joint
Compounds against the Selected Targets within the Field in accordance with the
Research Plan. Such license shall continue after the conclusion of the Research
Term on a non-exclusive basis to the extent necessary to permit Chiron to
continue development and commercialization of Products pursuant to this
Agreement.
8.2.3 USE OF LIBRARIES.
The Parties acknowledge that the PathoGenesis Libraries screened pursuant to
the Research Plan will also be screened by PathoGenesis, its Affiliates and
contractors, and by Third Parties outside the Collaboration, provided that such
PathoGenesis Libraries shall not be screened against Selected Targets except as
permitted by Section 2.6.4(e). The rights of the Parties with respect to
Compounds or Compound Series identified through the Research Plan will be
subject to rights arising as a result of such use of the libraries outside the
Research Plan. The determination of ownership, patent and license rights to
Compounds contained in PathoGenesis Libraries shall be based on the first to
invent the subject matter in question, as determined under U.S. patent law.
Except as expressly stated in Section 8.2 no implied rights or licenses are
granted hereunder to any inventions or patent rights arising outside this
Agreement, including without limitation rights under dominating patent claims.
The following principles shall apply.
(a) Chiron shall notify PathoGenesis in writing as soon as practicable
following identification of any Compound hit. PathoGenesis shall be entitled
to rely on the content and timing of receipt of notices of identification of
compounds received from all users of PathoGenesis Libraries as evidence of
which party is first to invent and in determining whether conflicts exist.
(b) If, at any time, PathoGenesis believes in good faith that a conflict
exists between Chiron and PathoGenesis and/or Third Parties who are each
entitled to exclusive rights to compounds or Compound Series contained in
PathoGenesis Libraries, with respect to patent applications filed or to be
filed by PathoGenesis, PathoGenesis shall notify each party involved of the
existence of the conflict, the claims of such party which are involved, and
the identity of (but not the specific compounds or claims of) the other
party. Chiron hereby consents to such notification under Section 18.4
hereof. PathoGenesis shall not be required to take any action in filing new
patent applications or amending existing applications with respect to the
conflicting subject matter, except on instructions approved by both parties
to the conflict. However, PathoGenesis shall have the right, but not the
obligation, to take such actions as PathoGenesis believes in good faith will
protect the rights of both parties to the conflict, pending receipt of such
jointly approved instructions (e.g., filing potentially conflicting
applications, combining conflicting subject matter into a CIP application,
filing continuations of applications to prevent double patenting rejections
of another application, etc.). If there is a dispute between PathoGenesis
and Chiron as to whether PathoGenesis is the first to invent the Compounds
in question, the Parties shall refer the matter to an independent patent
attorney acceptable to both parties for final resolution.
8.2.4 LICENSES FOR CO-COMMERCIALIZED PRODUCTS AND INDEPENDENT CHIRON
PRODUCTS.
(a) A worldwide co-exclusive license with PathoGenesis under
PathoGenesis Compound Patents and PathoGenesis' interest in Joint Compound
Patents arising from the Research Program to make, have made, use, offer to
sell, sell, have sold and import Co-Commercialized Products in Chiron's
Indications (and as appropriate all indications where Chiron is the Lead or
Joint Developing Party) in the Field.
30
(b) A worldwide exclusive license to make, have made, use, offer to
sell, sell, have sold and import Independent Chiron Products arising from
the Collaboration as an Independent Product under PathoGenesis Compound
Patents and PathoGenesis' interest in Joint Compound Patents arising from
the Research Program to make, have made, use, offer to sell, sell, have sold
and import Independent Chiron Products in the Field, with the right to
sublicense.
(c) To the extent that an Independent Chiron Product contains a Compound
disclosed in a Library Patent covering a PathoGenesis Library, the licenses
granted under this Section 8.2.4 shall include a license under such
PathoGenesis Library Patent(s), provided that such license shall be no
broader in scope or exclusivity than is necessary to permit Chiron to
exercise its license to make, have made, use, offer to sell, sell, have sold
and import Co-Commercialized Products in Chiron's Indications (and as
appropriate all indications where Chiron is the Lead or Joint Developing
Party) and Independent Chiron Products in the Field as provided herein.
8.3 LICENSE TO RESULTS AND JOINT WORK.
Each Party shall have the right to use all Results, Joint Compounds, Joint
Compound Patents, Joint Development Compounds, Joint Libraries and Joint
Technology to the extent necessary or useful to enable such Party to exercise
its rights and perform its obligations under this Agreement. Such right shall
include, without limitation, the right to refer to, use and present Results of
the other Party in any Regulatory Approval application relating to a Product,
without regard to whether such Product is a Co-Commercialized Product or an
Independent Product. In the event that a Party intends to use the Results, Joint
Compounds, Joint Compound Patents, Joint Development Compounds, Joint Libraries
and/or Joint Technology with a Third Party for a drug other than a
Co-Commercialized Product or an Independent Product, such use must be in
compliance with the restrictions set forth in Section 2.11.
8.4 NO OTHER RIGHTS.
Except as otherwise provided in this Agreement, under no circumstances shall
a Party hereto, as a result of this Agreement, obtain any ownership interest or
license or other right in any technology, trade secrets, Patents, Know-How or
patent applications of the other Party including without limitation any right or
interest in or to any Targets, products, vaccines, antibodies, cell lines or
cultures, or animals owned, controlled or developed by the other Party, or
transferred by the other Party to such Party at any time in accordance with the
terms of this Agreement.
ARTICLE 9
PAYMENTS, ROYALTIES AND ACCOUNTING
9.1 RESEARCH FUNDING.
[REDACTED*]. Instead, Chiron and PathoGenesis shall balance FTE
requirements equally on a 50%-50% basis (or as otherwise agreed in writing by
the Parties) during the Research Term for activities specified in the
Research Plan, including, without limitation, activities related to the
identification and evaluation of potential Products, additional molecular
biology and/or biochemistry research regarding Products and/or further
development of the manufacturing process for Products, all in amounts, and in
accordance with Research Plans.
[REDACTED*].
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
31
The Parties shall contribute equally to research funding during the Research
Term, such funding contributions to be based on FTE contributions times the
accepted fully-burdened FTE rate of each company. When reconciling FTE
contributions, the Parties shall only value those FTE contributions which are in
excess from one Party over the other Party. The Parties shall report to each
other on a semi-annual basis their FTE and financial contribution to the
research collaboration. Any special or unusual costs for the Research Program
(e.g., outside contracts or licenses) directly and specifically relating to the
research collaboration and which fall outside the accepted FTE rate shall be
borne solely by the Party which incurred such costs unless otherwise mutually
agreed to in writing in advance by the Parties acting through the Collaboration
Management Team.
9.2 RESPONSIBILITY FOR RESEARCH COSTS.
The Parties shall share equally the Costs of the Research Program to the
extent possible, allowing for FTE credits credited to Chiron as of the Effective
Date pursuant to Section 9.2.2. Each Party shall bear the costs for its own
research efforts during the Research Term in accordance with the Research Plan
and Section 9.1. To the extent there is an imbalance in the Costs or research
effort incurred by each Party during the Research Term, the Party incurring the
lesser expense shall compensate the other Party, according to Section 9.2.2
below. To the extent necessary as determined by the Research Plan, the Parties
intend to provide a substantially equal number of FTE's in the Research Program
of the Collaboration.
9.2.1 RESEARCH RECONCILIATION REPORT.
Commencing upon the close of the first six months following the Effective
Date, and for every six months thereafter during the Research Term, Chiron and
PathoGenesis shall each prepare and submit their own separate semiannual expense
reports describing their FTE and financial contributions under this Agreement
(the "Research Reconciliation Report") to the Collaboration Management Team.
These semiannual reports shall be provided to the CMT and the other Party within
30 days of the end of each six month period.
9.2.2 RESEARCH RECONCILIATION.
The Collaboration Management Team shall true up the Parties' spending
contributions at the time either Party (or both Parties if joint development is
selected) exercise a Development Option, upon termination of the Agreement or at
the discretion of the CMT. However, as of the Effective Date, Chiron shall have
the FTE credit as set forth in Section 9.1. In the event of independent
development, any amounts owed by the Non-Developing Party will be credited
against future payments/royalties owed by the developing Party to the
Non-Developing Party.
9.3 DEVELOPMENT FUNDING AND RESPONSIBILITY FOR DEVELOPMENT COSTS.
The Parties shall share the costs of developing Joint Development Compounds
on a 50%-50% basis or as otherwise agreed in writing by the Parties. The Parties
shall provide the Collaboration Management Team with detailed expense reports on
a quarterly basis to enable the CMT to true up spending contributions by the
Parties on a quarterly basis, including but not limited to out of pocket
expenses, FTEs and reasonably allocated costs expended on Co-Commercialized
Products.
9.4 SHARING OF NET PRETAX PROFITS AND LOSSES.
(a) Within forty five (45) days after the end of each of the first three
calendar quarters of each year and within sixty (60) days after the end of
each calendar year, each party shall provide the other with a detailed
report (a "Quarterly Report") of its Net Pretax Profits and Losses
including: (i) its Net Sales (including the number of units) arising from
sales of Co-Commercialized Products sold by it during the previous quarter;
and (ii) its Costs including the Transfer Price and Sales, Marketing and
Distribution Costs relating to the Co-Commercialized Products sold by it
during the previous quarter. Such report shall indicate all information
relevant
32
to the providing Party's calculation of its Net Sales, including, without
limitation, information regarding gross sales and Costs accrued or incurred
by such party with respect to such Net Sales.
(b) In the event both Parties have Net Pretax Profits for a quarter,
within thirty (30) days following receipt of each Quarterly Report, the
Party who has generated a greater amount of Net Pretax Profits during the
previous quarter (the "Paying Party") shall pay the other party (the
"Receiving Party"), by cash payment or offset against amounts due from the
Receiving Party, an amount equal to fifty percent (50%) of the amount by
which the Net Pretax Profits from Co-Commercialized Products sold by the
Paying Party exceed the Net Pretax Profits from Co-Commercialized Products
sold by the Receiving Party during such quarter.
(c) In the event both Parties have Net Pretax Losses for such quarter,
within thirty (30) days following receipt of each quarterly reports, the
Party who had generated a lesser amount of Net Pre-Tax Losses during the
previous quarter (the "Paying Party") shall pay the other Party (the
"Receiving Party"), by cash payment or offset against amounts due from the
Receiving Party an amount equal to fifty percent (50%) of the amount by
which the amount by which the Net Pretax Losses from Co-Commercialized
Products sold by the Paying Party are less than the Net Pretax Losses from
Co-Commercialized Products sold by the Receiving Party during such quarter.
(d) In the event that one Party has a Net Pretax Profits for such
quarter and the other Party has a Net Pretax Losses for such quarter, within
thirty (30) days following receipt of each quarterly report, the Party who
has generated the Net Pretax Profits for such quarter (the "Paying Party")
shall pay the other Party (the "Receiving Party"), by cash payment or offset
against amounts due from the Receiving Party an amount equal to fifty
percent (50%) of the amount by which the Net Pretax Profits from
Co-Commercialized Products sold by the Paying Party exceeds the Net Pretax
Losses from Co-Commercialized Products sold by the Receiving Party during
such quarter.
(e) In the event that the development and commercialization includes
extraordinary or unusual Costs or expenses including without limitation: (i)
the construction of a manufacturing facility; (ii) the purchase of
significant capital assets; or (iii) the payment of significant milestones
or license fees to Third Parties, except as provided for in Sections 2.6.1
and 2.6.2, or as otherwise warranted by the Collaboration, the Party
incurring such Costs or expenses shall first obtain the written consent of
the other Party prior to incurring or passing along such Costs or expenses.
9.5 LIMITATION ON REIMBURSEMENT.
In any case where Chiron and PathoGenesis are to share equally, or where
either Chiron or PathoGenesis is entitled to receive reimbursement of Costs
incurred in connection with the development and commercialization of
Co-Commercialized Products, such Costs will be shared or reimbursed only if and
to the extent that were contemplated by, and do not exceed the budgeted amounts
set forth in, the applicable Plan as approved by the Collaboration Management
Team, or were otherwise approved in writing by the CMT.
9.6 THIRD PARTY ROYALTIES.
In the event that a Co-Commercialized Product incorporates Third Party
Technology acquired by the Collaboration in accordance with Sections 2.6 or 3.5,
as the case may be, any royalties or other amounts payable to the Third Party
licensor of such Third Party Technology on account of its incorporation in
Co-Commercialized Products shall be shared by the Parties as previously
determined by the Parties in accordance with Sections 2.6 or 3.5.
33
9.7 INDEPENDENT PRODUCTS ROYALTY.
In the event that an IDP's Independent Development Program results in a
Independent Product, the IDP shall pay to the NDP a royalty as follows:
9.7.1 ROYALTY ON ABANDONED TARGETS RESULTING IN INDEPENDENT PRODUCTS.
For (i) Independent Products arising from Abandoned Targets, (ii)
Independent Products arising from Abandoned Compounds or Compound Series
whose Development Option was not exercised by the NDP or (iii) independent
use of Results, Joint Compound, Joint Compound Patents, Joint Development
Compounds, Joint Libraries or Joint Technology outside of the Field, the IDP
or developing Party shall pay to the NDP or non-developing Party a royalty
[REDACTED*] of Net Sales, such precise amount to be negotiated in good faith
between the Parties, taking into consideration [REDACTED*], provided any
amount owed by the NDP or non-developing Party to the IDP or developing Party
shall first be allocated to such obligation. The [REDACTED*] royalty set forth
in Sections 9.7.1(i) and 9.7.1(ii) shall include any royalty for the use of
Results, Joint Compound, Joint Compound Patents, Joint Development Compounds,
Joint Libraries or Joint Technology and shall not be increased beyond the
[REDACTED*] in the event such information or technology is used for the
development or commercialization of an Independent Product unless the Parties
decide otherwise in writing.
9.7.2 ROYALTY ON ABANDONED COMPOUNDS OR JOINTLY OWNED OR DEVELOPED
INFORMATION RESULTING IN INDEPENDENT PRODUCTS.
For Independent Products resulting from a Party's abandonment of a
Compound, a Compound Series or Product after mutual exercise of a Development
Option, the IDP shall pay to the NDP a royalty in the amount of [REDACTED*] of
Net Sales or as otherwise agreed in writing by the Parties, provided any
amount owed by the NDP to the IDP shall first be allocated to such
obligation. [REDACTED*] The [REDACTED*] royalty set forth herein shall include
any royalty for the use of Results, Joint Compound, Joint Compound Patents,
Joint Development Compounds, Joint Libraries or Joint Technology and shall
not be increased beyond the [REDACTED*] in the event such information or
technology is used for the development or commercialization of an Independent
Product unless the Parties decide otherwise in writing.
9.7.3 ROYALTY STACKING PROVISION.
In the event that the IDP is responsible for Third Party payment or
royalty obligations incurred after the IDP's exercise of the Development
Option, the royalty to the NDP shall be reduced by [REDACTED*] increment of
such Third Party royalty obligation [REDACTED*]. Notwithstanding the above,
the royalty to the NDP shall not be reduced lower than [REDACTED*].
9.7.4 INDEPENDENT PRODUCT ROYALTY PERIOD.
Such royalty obligation shall expire, on a country by country basis, upon
the longer of: (i) the expiration of the NDP's Patents (including the NDP's
interest in any Patents jointly owned by the IDP and NDP) claiming such
Independent Product in that country; or (ii) if such Patents expire or no such
Patents exist, a period of ten years from First Commercial Sale in such country
(the "Independent Product Royalty Period.").
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
34
9.8 FULLY PAID UP LICENSE FOR CO-COMMERCIALIZED PRODUCTS.
In accordance with Sections 4.3 and 9.4, Chiron and Pathogenesis will share
Net Pretax Profits and Losses with respect to each Co-Commercialized Product on
an equal basis. No other payments or royalties shall be due for
Co-Commercialized Products.
9.9 FULLY PAID UP LICENSE FOR INDEPENDENT PRODUCTS.
At the conclusion of the Independent Product Royalty Period referenced in
Section 9.7, the paying Party will have a fully paid up license to make, have
made, use, offer to sell, sell, have sold and import such Independent Product
for use in the Field.
9.10 TAXES.
Each Party shall pay any and all taxes levied on account of royalties or
other payments it receives under this Agreement. If laws or regulations require
that taxes be withheld, the paying Party shall (a) deduct these taxes from the
remittable amount, (b) pay the taxes to the proper taxing authority, and (c)
send proof of payment to the receiving Party within forty-five (45) days
following that payment.
9.11 CALCULATION OF PAYMENTS.
All payments made under this Agreement shall be in U.S. dollars. With
respect to any payment based on Net Sales made in a currency other than
U.S. dollars, a Party shall convert Net Sales to U.S. dollars in accordance with
the commercially reasonable foreign currency conversion procedures, as in effect
from time to time, then used by such Party in the ordinary course of its
business.
9.12 STATEMENTS
All payments made by either Party to the other pursuant to royalty or other
payment obligations provided herein (including payments relating to Independent
Products) shall be accompanied by a written statement setting forth in
reasonable detail the calculation of the royalty in question, including, without
limitation, an itemization of the number or amount of Products sold or disposed
of by the paying Party and the amounts of Net Sales on a country by country
basis.
9.13 TREATMENT OF SALES IN FINANCIAL STATEMENTS.
The Parties will negotiate in good faith reasonable terms for attribution of
top line sales so as to preserve such sales of both Parties.
9.14 ACCOUNTING AND AUDITS.
Each Party shall keep and maintain proper and complete records and books
of account documenting its Costs to be reimbursed or credited, Net Sales and
Net Pretax Profits and Losses with respect to all Products, including,
without limitation, records which relate to sales or other disposals of such
Products. Each Party shall permit an independent public accountant designated
by the other Party, except one to which the non-designating Party shall have
reasonable objection, to have access, at the designating Party's own expense,
no more than once in each calendar year during the term of this Agreement and
twice during the three (3) calendar years following the termination hereof,
during regular business hours and upon reasonable notice, to its records and
books for the sole purpose of determining the appropriateness of any Costs
charged or paid by such Party, Net Sales and Net Sales with respect to
Products. Such accountant shall sign a conventional confidentiality
agreement. If such examination results in a final determination that Costs or
Net Pretax Losses have been overstated and/or that Net Sales or Net Pretax
Profits have been understated, overstated Costs and payments on understated
Net Sales and Net Pretax Profits, as applicable, shall be refunded or paid
promptly. The fees and expenses of such accountant shall be paid by the
designating Party, unless the audit results in a final determination that
Costs Net Pretax Losses have been overstated, or that Net Sales or Net Pretax
Profits have been understated, [REDACTED*], in
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
35
which case the non-designating Party shall pay all reasonable costs and expenses
incurred by the designating Party in the course of making such determination,
including the fees and expenses of such accountant. In the event the
non-designating Party disputes the findings of the designating Party's
accountants, such dispute shall be resolved pursuant to Article 17.
ARTICLE 10
REPORTING AND RECORDS
10.1 PROGRESS REPORTS.
Within thirty (30) days following the end of each six month period,
beginning with the first six months after the Effective Date, the Parties shall
jointly prepare and submit to the CMT for review and approval a reasonably
detailed written report which shall: (i) describe the work performed by it
during the period in the Research Program or in a joint development program on
each Co-Commercialized Product and (ii) if appropriate, recommend any revisions
to any relevant Plan that would improve the progress of research or development
and/or commercialization of such Co-Commercialized Product. With respect to a
joint development program, the Lead Developing Party shall be responsible for
reporting of that program.
10.2 RECORDS AND RESULTS.
Each Party shall maintain records in sufficient detail and in good
scientific manner appropriate for patent and FDA purposes and so as to properly
reflect all work done and Results achieved in the performance of the development
programs. Such records shall include, without limitation, books, records,
reports, research notes, charts, graphs, comments, computations, analyses,
recordings, photographs, computer programs and documentation thereof, computer
information storage means, samples of materials and other graphic or written
data generated in connection with the development programs, including any data
required to be maintained pursuant to applicable government regulations. Each
Party shall provide the other the right to inspect records during normal
business hours and upon reasonable prior notice, and shall provide copies of all
requested records, to the extent reasonably required for the performance of the
other's obligations under this Agreement.
10.3 AVAILABILITY OF EMPLOYEES.
Each Party shall make its employees engaged in activities relating to this
Agreement and relevant nonemployee consultants reasonably available, upon
reasonable notice during normal business hours, at their respective places of
employment to consult with the other Party on issues arising during the term
hereof and in connection with any request from any regulatory agency, including
regulatory, scientific, technical and clinical testing issues.
10.4 VISIT OF FACILITIES.
Representatives of each Party may, upon reasonable notice and at times
reasonably acceptable to the other Party, (a) visit the facilities where
Co-Commercialized Products are being developed or manufactured, (b) consult
informally, during such visits and by telephone, with personnel of the other
Party performing work on the Co-Commercialized Products and (c) visit the sites
of any clinical trials or other experiments being conducted by the other Party
in connection with the development of Co-Commercialized Products, but only to
the extent in each case as such trials or other experiments relate to
Co-Commercialized Products.
36
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 MUTUAL REPRESENTATIONS AND WARRANTIES.
Each Party hereby represents and warrants to the other as follows:
11.1.1 DUE ORGANIZATION.
It is a corporation duly organized and validly existing and in good standing
under the laws of its state of incorporation, and in each state where a failure
to be in good standing would have a material adverse effect on the operations of
such party.
11.1.2 DUE AUTHORITY.
It has power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder.
11.1.3 NO CONFLICT.
The execution, delivery and performance by it of this Agreement and its
compliance with the terms and provisions hereof does not and will not conflict
with or result in a breach of any of the terms and provisions of or constitute a
default under (i) any agreement where such conflict, breach or default would
impair in any material respect the ability of such Party to perform its
obligations hereunder; (ii) the provisions of its charter document or bylaws; or
(iii) any material law, rule, regulation or any order, writ, injunction or
decree of any court or governmental authority entered against it or by which any
of its property is bound.
11.1.4 BINDING OBLIGATION.
This Agreement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation enforceable against it in
accordance with its terms subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to the availability of particular remedies under general
equity principles.
11.1.5 NO ACTIONS.
There are no actions, suits or proceedings pending or, to its knowledge,
threatened against it or its Affiliates which affect its ability to carry out
its obligations under this Agreement.
11.1.6 ASSIGNMENT OF INVENTIONS.
All employees and other persons acting on behalf of such Party in performing
its obligations under this Agreement shall be obligated under a binding written
agreement or applicable law to assign to such Party or its Affiliate all
Inventions made or developed by such employee or other person.
37
11.2 NO ADDITIONAL REPRESENTATIONS OR WARRANTIES.
EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
REPRESENTATION OR WARRANTY, AND EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL
IMPLIED WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO ANY LIBRARIES, TARGETS, COMPOUNDS OR OTHER
BIOLOGICAL OR OTHER CHEMICAL MATERIALS OR INFORMATION PROVIDED TO THE OTHER
PARTY PURSUANT TO THIS AGREEMENT. Each Party acknowledges that all libraries and
other biological or chemical materials provided by the other Party pursuant to
this agreement are experimental and shall take reasonable precautions to prevent
personal injury, illness and/or property damage with respect to its handling and
use thereof.
ARTICLE 12
LIMITATION OF LIABILITY
12.1 LIMITATION OF LIABILITY.
IN NO EVENT WILL EITHER PARTY BE LIABLE FOR ANY SPECIAL, INCIDENTAL,
CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN ANY WAY OUT OF THIS AGREEMENT,
HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY. THIS LIMITATION WILL APPLY EVEN
IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE AND
NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED WARRANTY
PROVIDED HEREIN. THIS LIMITATION SHALL NOT APPLY, HOWEVER, TO A PARTY'S
INDEMNIFICATION OBLIGATIONS PURSUANT TO Article 15.
ARTICLE 13
INVENTIONS, PATENTS, LIBRARIES AND COMPOUNDS
13.1 OWNERSHIP OF NEW INVENTIONS, PATENT APPLICATIONS AND PATENTS.
Subject to such rights as are granted under this Agreement, the entire
right, title and interest in all inventions, discoveries, improvements or other
technology directed toward Products and all processes or uses relating thereto,
whether or not patentable, and inventions, discoveries, improvements or other
technology and processes related to Chiron Technology, PathoGenesis Technology,
Chiron Libraries, PathoGenesis Libraries, and Joint Libraries (collectively, the
"Inventions"), together with all patent applications or Patents based thereon,
made during and as a result of the Collaboration shall be as follows:
13.1.1 PATHOGENESIS INVENTIONS.
Inventions made solely by employees or others acting on behalf of
PathoGenesis (the "PathoGenesis Inventions") shall be owned solely by
PathoGenesis. PathoGenesis shall have the right to file, prosecute and maintain
Patent protection for PathoGenesis Inventions, subject to Sections 13.1.3 and
13.2. Pathogenesis shall keep Chiron apprised of invention disclosures and
Patent disclosures and will coordinate Patent filing strategies to the extent
possible. Any intellectual property conceived of by PathoGenesis prior to or
external to the collaboration shall remain the sole property of PathoGenesis.
13.1.2 CHIRON INVENTIONS.
Inventions made solely by employees or others acting on behalf of Chiron
(the "Chiron Inventions") shall be owned solely by Chiron. Chiron shall have the
right to file, prosecute and maintain Patent protection for Chiron Inventions,
subject to Sections 13.1.3 and 13.2. Chiron shall keep PathoGenesis apprised of
invention disclosures and Patent disclosures and will coordinate Patent filing
38
strategies to the extent possible. Any intellectual property conceived of by
Chiron prior to or external to the collaboration shall remain the sole property
of Chiron.
13.1.3 IMPROVEMENTS TO PARTY TECHNOLOGY
Subject to the license granted pursuant to Sections 8.1 and 8.2, as between
the Parties hereto, ownership of new inventions for improvements to a Party's
Technology, whether made individually or pursuant to this Agreement, shall be
based on the principles set forth below.
(a) If the new invention is a patentable improvement to Chiron
Technology, such invention shall be assigned to Chiron.
(b) If the new invention is a patentable improvement to PathoGenesis
Technology, such invention shall be assigned to PathoGenesis.
For the avoidance of confusion, if a new invention is a new compound or
modification to an existing compound, such inventions shall be considered Joint
Compounds, provided that PathoGenesis and Chiron each perform inventive or
patentable acts as determined in accordance with United States patent law in the
preparation or creation of such compound.
13.1.4 JOINT INVENTION.
Inventions made jointly by employees or others acting on behalf of
PathoGenesis and of Chiron (the "Joint Inventions") shall be owned jointly by
PathoGenesis and Chiron. Joint Inventions shall be managed pursuant to Section
13.2.
13.1.5 ASSIGNMENT.
As a collaboration, the Parties will jointly determine how to maximize the
return of intellectual property generated, including consideration of Patent
assignment as necessary to preserve patentability.
13.1.6 DETERMINATION OF INVENTORSHIP.
Inventorship shall be determined in accordance with U.S. patent law.
13.1.7 INVENTION DISCLOSURES.
Each Party shall promptly disclose to the other Party the conception or
reduction to practice under the Collaboration of Joint Inventions or Inventions
licensed to the other Party hereunder.
13.1.8 COMPOUND PATENTS.
All Compound Patents claiming Chiron Compounds shall be owned by Chiron; all
Compound Patents claiming PathoGenesis Compounds shall be owned by PathoGenesis;
and any Compound Patents claiming both Chiron Compounds and PathoGenesis
Compounds or Joint Compound Patents claiming Joint Compounds, shall be jointly
owned by Chiron and PathoGenesis. The Collaboration Management Team, or a Patent
Team if designated, may unanimously elect to assign or reassign Compound Patents
pursuant to Section 3.3.1 based on the following principle unless otherwise
agreed between the Parties:
If the Parties determine that either Party is independently developing a
Product covered by such Compound Patent, such Compound Patent may be assigned to
that Party by mutual agreement.
13.2 PROSECUTION AND MAINTENANCE OF JOINT PATENTS.
13.2.1 FILING, PROSECUTION AND MAINTENANCE.
The Collaboration Management Team, or a Patent Team ("PT") if designated,
shall determine which Party shall have primary responsibility for filing,
prosecuting and maintaining Patent applications with respect to Joint
Inventions. Unless otherwise agreed, all reasonable costs incurred with respect
to
39
the filing, prosecution and maintenance of Patent applications and Patents
covering Joint Inventions, including fees and expenses of independent patent
counsel approved by the PT, shall be borne equally by the Parties. The
responsible Party shall consult with the PT prior to taking any material action
with respect to any such patent application or Patent. Without limiting the
generality of the foregoing, the PT must review and approve the priority patent
application covering a Joint Invention prior to filing, and the responsible
Party shall not make any written or oral contact with any U.S. or foreign patent
agency without in each case receiving the prior approval of the PT. The
responsible Party shall provide the PT with copies of all such patent
applications, correspondence to or from U.S. or foreign patent agencies, and any
other related documentation. In addition, the other Party shall have the right
to participate fully in the formation and implementation of Patent strategy,
including, without limitation, the right to participate in any meetings or
telephone conferences with U.S. and foreign patent agencies. In the event that
PathoGenesis or Chiron elects not to file a patent application on a Joint
Invention in any country, or decides to abandon any pending application or
granted patent on a Joint Invention in any country, it shall provide adequate
notice to the other Party and give the other Party the opportunity to file or
maintain such application or Patent at its own expense. In the event the other
Party shall thereupon file or maintain such application or Patent, the inventing
Party shall assign ownership thereof to the other Party.
13.2.2 COOPERATION.
Each Party shall make reasonably available to the other Party or its
authorized attorneys, agents or representatives, its employees, agents or
consultants necessary or appropriate to enable the appropriate Party to file,
prosecute and maintain patent applications and resulting Patents with respect to
all Joint Inventions, for a period of time sufficient for such Party to obtain
the assistance it needs from such personnel. All reasonable costs incurred by
either Party in providing such cooperation shall be shared equally by the
Parties.
13.3 PROSECUTION AND MAINTENANCE OF PATENTS OTHER THAN JOINT PATENTS.
The sole owner of any Patents claiming inventions arising from work
performed for the Collaboration shall be responsible for all costs for
prosecuting and maintaining such respective Patents. In the event a Party elects
to abandon any such Patent it shall first offer to assign such Patent to the
other Party at no cost. The Parties will keep each other apprised of inventions
disclosures and patent applications and will coordinate patent filing strategies
to the extent possible.
13.4 ENFORCEMENT OF PATENTS.
13.4.1 NOTICE.
Each Party shall promptly notify the other Party if it becomes aware of any
infringement or suspected infringement of any Chiron Patents or PathoGenesis
Patents by any Third Party.
13.4.2 MAINTENANCE OF LAWSUITS INVOLVING CHIRON PATENTS.
Chiron, in its sole discretion, shall have the sole right (but not the
obligation) to file and maintain actions for infringement of any Chiron Patents
by any Third Party, in its own name and/or in the name of PathoGenesis, if
necessary. Chiron shall have sole control over the prosecution of such actions.
In the event that the infringing product which is the subject of such
infringement action competes in the marketplace with an Independent PathoGenesis
Product, Chiron shall, prior to commencement of the action, or within a
reasonable time after the commencement of the action, provide PathoGenesis
written notification granting PathoGenesis the opportunity to provide financial
support for the action. PathoGenesis shall, within thirty (30) days after its
receipt of such notification, inform Chiron whether or not PathoGenesis desires
to provide such financial support. If PathoGenesis declines the opportunity to
provide financial support, Chiron may proceed with the infringement action at
its own expense, and Chiron shall retain any and all amounts recovered by reason
of such action. If PathoGenesis elects to
40
provide financial support for the action, Chiron and PathoGenesis shall discuss
and mutually agree upon the percentage of expenses related to the action which
shall be assumed each by Chiron and PathoGenesis. In such event, the right of
each Party to retain amounts recovered by reason of such lawsuit shall be in
direct proportion to the percentage of expenses related to the action borne by
each Party and the damages suffered by each Party from the infringement.
Moreover, in the event PathoGenesis elects to provide financial support for such
action, PathoGenesis shall have the right to participate in such action, subject
to Chiron's control of the action.
PathoGenesis shall provide Chiron reasonable assistance and cooperate in
any such proceedings filed by Chiron, including the entry into additional
agreements necessary to perfect Chiron's right to bring or maintain such
infringement actions. If Chiron does not exercise its right to enforce a
Patent covering an Independent PathoGenesis Product within 90 days after the
date of such notice, PathoGenesis shall have the right to file and maintain
such infringement action at its own cost and expense, provided that the Third
Party product which is the subject of such infringement action is a competing
product with respect to the Independent PathoGenesis Product. The costs
incurred by PathoGenesis in maintaining such infringement action shall be
credited against PathoGenesis' royalty obligation with respect to sales of
Independent PathoGenesis Product in such country during the pendency of such
infringement action, provided that such credit shall not exceed [REDACTED*].
Any monetary recovery in connection with any such infringement action shall
first be applied to reimburse PathoGenesis for all costs and expenses
incurred by PathoGenesis, both internal and external, including attorneys'
fees and expenses. In the event that Chiron declines to file and maintain a
lawsuit for infringement of Chiron Patents and PathoGenesis assumes the
maintenance of such claim at its own cost and expense, the remainder of any
recovery received by PathoGenesis shall first be remitted to Chiron to the
extent necessary to reimburse Chiron for the sums withheld by PathoGenesis by
virtue of the PathoGenesis Royalty Offset. Any remainder shall be retained by
PathoGenesis.
13.4.3 MAINTENANCE OF LAWSUITS INVOLVING PATHOGENESIS PATENTS.
PathoGenesis, in its sole discretion, shall have the sole right (but not the
obligation) to file and maintain actions for infringement of any PathoGenesis
Patents by any Third Party, in its own name and/or in the name of Chiron, if
necessary. PathoGenesis shall have sole control over the prosecution of such
actions. In the event that the infringing product which is the subject of such
infringement action competes in the marketplace with an Independent Chiron
Product, PathoGenesis shall, prior to commencement of the action, or within a
reasonable time after the commencement of the action, provide Chiron written
notification granting Chiron the opportunity to provide financial support for
the action. Chiron shall, within thirty (30) days after its receipt of such
notification, inform PathoGenesis whether or not Chiron desires to provide such
financial support. If Chiron declines the opportunity to provide financial
support, PathoGenesis may proceed with the infringement action at its own
expense, and PathoGenesis shall retain any and all amounts recovered by reason
of such action. If Chiron elects to provide financial support for the action,
Chiron and PathoGenesis shall discuss and mutually agree upon the percentage of
expenses related to the action which shall be assumed each by Chiron and
PathoGenesis. In such event, the right of each Party to retain amounts recovered
by reason of such lawsuit shall be in direct proportion to the percentage of
expenses related to the action borne by each Party and the damages suffered by
each Party from the infringement. Moreover, in the event Chiron elects to
provide financial support for such action, Chiron shall have the right to
participate in such action, subject to PathoGenesis' control of the action.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
41
Chiron shall provide PathoGenesis reasonable assistance and cooperate in any
such proceedings filed by PathoGenesis, including the entry into additional
agreements necessary to perfect PathoGenesis' right to bring or maintain such
infringement actions. If PathoGenesis does not exercise its right to enforce a
Patent covering a PathoGenesis Patent covering an Independent Chiron Product
within 90 days after the date of such notice, Chiron shall have the right to
file and maintain such infringement action at its own cost and expense, provided
that the Third Party product which is the subject of such infringement action is
a competing product with respect to the Independent Chiron Product. The costs
incurred by Chiron in maintaining such infringement action shall be credited
against Chiron's royalty obligation with respect to sales of Independent Chiron
Product in such country during the pendency of such infringement action provided
that such credit shall not exceed [REDACTED*]. Any monetary recovery in
connection with any such infringement action shall first be applied to reimburse
Chiron for all costs and expenses incurred by Chiron, both internal and
external, including attorneys' fees and expenses. In the event that PathoGenesis
declines to file and maintain a lawsuit for infringement of PathoGenesis Patents
and Chiron assumes the maintenance of such lawsuit at its own cost and expense,
the remainder of any recovery received by Chiron shall first be remitted to
PathoGenesis to the extent necessary to reimburse PathoGenesis for the sums
withheld by Chiron by virtue of the Chiron Royalty Offset. Any remainder shall
be retained by Chiron.
13.4.4 MAINTENANCE OF LAWSUITS INVOLVING JOINT PATENTS
PathoGenesis and Chiron shall agree upon and implement a strategy for
handling infringement of Joint Patents.
13.5 THIRD PARTY CLAIM OF INFRINGEMENT.
13.5.1 NOTICE.
Each Party shall promptly notify the other Party if any legal proceedings
are commenced against any Party or any purchaser of a Co-Commercialized Product,
an Independent Chiron Product or Independent PathoGenesis Product, as the case
may be, on the ground that the manufacture, use, offer to sell, sale or import
of such Co-Commercialized Product, Independent Chiron Product or Independent
PathoGenesis Product is an infringement of a Third Party's Patent or other
intellectual property rights.
13.5.2 INFRINGEMENT BY CO-COMMERCIALIZED PRODUCTS.
If such suit for infringement relates to Co-Commercialized Products, the
Collaboration Management Team in consultation with the Parties' Legal
Departments shall agree upon and implement a defense strategy for such suit.
13.5.3 INFRINGEMENT BY INDEPENDENT PRODUCTS.
If such suit for infringement relates solely to one or more Independent
Products, the IDP developing and/or marketing such Independent Product shall
conduct the defense of any such suit for infringement at its expense. The IDP
shall keep the other Party reasonably informed as to the status of such defense.
The IDP shall not dispose of or settle any such claim in any manner which may
materially adversely affect the other Party's rights or interests without the
other Party's prior written consent, which shall not be unreasonably withheld.
The NDP shall take reasonably appropriate or necessary actions to assist in the
defense of such claim.
13.6 OWNERSHIP AND USE OF LIBRARIES AND COMPOUNDS.
Chiron Libraries and Chiron Compounds shall be owned by Chiron. PathoGenesis
Libraries and PathoGenesis Compounds shall be owned by PathoGenesis. Joint
Libraries and Joint Compounds shall be owned jointly by Chiron and PathoGenesis.
[*] CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT
TO THE OMITTED PORTIONS.
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13.6.1 USE OF CHIRON AND PATHOGENESIS LIBRARIES AND COMPOUNDS OUTSIDE THE
RESEARCH PROGRAM.
Chiron retains the right to use Chiron Libraries and Chiron Compounds
outside the Research Program without restriction, and PathoGenesis retains the
right to use PathoGenesis Libraries and PathoGenesis Compounds outside the
Research Program without restriction. Chiron shall have no right to use
PathoGenesis Libraries or PathoGenesis Compounds outside of the Research
Program, the Field, or for the development of products outside of the Field.
PathoGenesis shall have no right to use Chiron Libraries or Chiron Compounds
outside the Research Program, the Field, or for the development of products
outside of the Field.
13.7 USE OF JOINT LIBRARIES DERIVED FROM A PARTY'S LIBRARY OUTSIDE THE RESEARCH
PROGRAM.
In the event that a Joint Library is derived from a Party's Library or a
Party's Compound from any of its combinatorial chemistry collaborations with
prior partners, and such prior partner(s) holds or retains an interest in such
Party's Library or Party's Compound (a "Chiron Prior Partner Derived Joint
Library", or "PathoGenesis Prior Partner Derived Joint Library), PathoGenesis'
use of the Chiron Prior Partner Derived Joint Library shall be subject to all
royalties and restrictions arising from Chiron's obligations to such Chiron
partner with respect to such Chiron Prior Partner Derived Joint Library and
Chiron's use of the PathoGenesis Prior Partner Derived Joint Library shall be
subject to all royalties and restrictions arising from Chiron's use of the
PathoGenesis Prior Partner Derived Joint Library. PathoGenesis shall notify
Chiron of such restrictions prior to Chiron's use of a PathoGenesis Prior
Partner Derived Joint Library and Chiron shall notify PathoGenesis of such
restrictions prior to PathoGenesis' use of a Chiron Prior Partner Derived Joint
Library.
ARTICLE 14
CONFIDENTIALITY AND PUBLICATION
14.1 CONFIDENTIAL INFORMATION.
During the course of the Collaboration, Chiron and PathoGenesis may each
provide confidential information, including but not limited to each Party's
Know-How, Invention Disclosures, Chiron Technology and PathoGenesis Technology,
Libraries, Targets, Compounds, Patents, Joint Libraries, Joint Compounds, Joint
Technology, proprietary materials and/or technologies, economic information,
business or research strategies, trade secrets and material embodiments thereof,
to the other. As used herein, "Confidential Information" of a Party means any
proprietary or confidential information disclosed by such Party to the other
Party subject to the exclusions set forth in Section 14.3. The Parties may use
or disclose Results to Third Parties as set forth in this Agreement provided
that disclosure to Third Parties shall be under appropriate confidentiality
provisions at least as restrictive as those found within this agreement.
14.2 CONFIDENTIALITY AND NON-USE.
The recipient Party shall use the providing Party's Confidential Information
solely to exercise its rights and perform its obligations under this Agreement,
unless otherwise mutually agreed in writing.
14.3 EXCLUSIONS.
Confidential Information shall not include information that: (i) is shown by
contemporaneous documentation of the recipient Party to have been in its
possession prior to receipt from the providing Party; (ii) is or becomes,
through no fault of the recipient Party, publicly known; (iii) is furnished to
the recipient Party by a Third Party without breach of a duty to the disclosing
Party; (iv) is independently developed by the recipient Party as shown by
contemporaneous documentation of the recipient party without access to the
providing Party's Confidential Information; or (v) is required to be disclosed
under applicable law, but only for the sole purpose of and solely to the extent
required by such law, and provided that the recipient Party, to the extent
possible, shall give the disclosing Party prior written
43
notice of the proposed disclosure and cooperate fully with the disclosing Party
to minimize the scope of any such required disclosure, to the extent possible
and in accordance with applicable law.
14.4 CONFIDENTIALITY AGREEMENTS.
Chiron and PathoGenesis shall use commercially reasonable efforts to obtain,
if not already in place, confidentiality agreements from its relevant employees
and agents, to protect the confidential information as herein provided.
14.5 PUBLICITY.
14.5.1 RESULTS.
During the term of this Agreement, Chiron and PathoGenesis each acknowledge
the other Party's interest in publishing certain of its Results to obtain
recognition within the scientific community and to advance the state of
scientific knowledge. Each Party also recognizes the mutual interest in
obtaining valid patent protection and protecting business interests.
Consequently, either Party, its employees or consultants wishing to make a
publication or other disclosure (including any oral disclosure made without
obligation of confidentiality) relating to work performed by such Party as part
of the research and development programs being conducted under this Agreement
(the "Publishing Party") shall transmit to the other Party (the "Reviewing
Party") a copy of the proposed written publication or disclosure or an outline
of such oral disclosure at least sixty (60) days prior to submission for
publication or oral disclosure. Such publication or disclosure shall not be made
without the prior written consent of the Reviewing Party, which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, an IDP shall be
allowed to disclose data specifically relating to an Independent Product being
developed or commercialized.
14.5.2 PRESS RELEASES.
The Parties may issue press releases, either jointly or independently,
following the execution of this Agreement, the form and substance of which shall
be approved by the Parties, provided such approval shall not be unreasonably
withheld or delayed. Any subsequent press releases regarding the Collaboration,
the progress or status thereof or any developments or other information related
thereto shall be approved in advance by the Parties, such approval not to be
unreasonably withheld or delayed.
14.6 TERMINATION.
All obligations of confidentiality and non-use imposed under this Article 14
shall expire ten (10) years following termination of this Agreement.
ARTICLE 15
INDEMNIFICATION
15.1 PATHOGENESIS INDEMNIFICATION.
PathoGenesis shall indemnify and hold Chiron, its directors, officers,
employees, agents, Affiliates and sublicensees harmless against all claims,
damages, liabilities, losses, costs and expenses including reasonable attorney
fees (collectively, "Claims") arising from: (a) any negligent or willful acts or
omissions of PathoGenesis, its contractors or permitted licensees, in connection
with the performance of any tasks to be performed by PathoGenesis under this
Agreement; (b) any failure of any Product supplied by PathoGenesis to comply
with all agreed upon written specifications and warranties and with all
applicable laws, regulations and government orders; or (c) otherwise arising
from any acts or omissions of PathoGenesis, its contractors or licensees in
connection with the sale or provision of any Product to any Third Party; or (d)
the research, development, manufacture, sale or use of Independent PathoGenesis
Products, in each case except to the extent subject to indemnification by Chiron
under Sections 15.2 or 15.3.
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15.2 CHIRON INDEMNIFICATION.
Chiron shall indemnify and hold PathoGenesis, its directors, officers,
employees, agents, Affiliates and sublicensees harmless against all Claims
arising from: (a) any negligent or willful acts or omissions of Chiron, its
contractors or permitted sublicensees, in connection with the performance of any
tasks to be performed by Chiron under this Agreement; or (b) any failure of any
Product supplied by Chiron to comply with all agreed upon written specifications
and warranties and with all applicable laws, regulations and government orders;
or (c) otherwise arising from any acts or omissions of Chiron, its contractors
or licensees in connection with the sale or provision of any Product to any
Third Party; or (d) the research, development, manufacture, sale or use of
Independent Chiron Products, in each case except to the extent subject to
indemnification by PathoGenesis under Sections 15.1 or 15.3.
15.3 MUTUAL INDEMNIFICATION.
Each Party shall indemnify and hold the other Party and its Affiliates,
officers, directors, employees, agents and shareholders harmless against any and
all losses, liabilities, damages, claims, judgments, demands, costs and expenses
(including reasonable attorneys' fees) arising out of or in connection with the
breach by the indemnifying Party of any of its representations, warranties,
covenants or obligations contained in this Agreement.
15.4 PROCEDURE.
The indemnified Party shall give prompt written notice to the indemnifying
Party of any suits, claims or demands by Third Parties or the indemnified Party
which may give rise to any loss for which indemnification may be required under
this Article 15; provided, however, that failure to give such notice shall not
impair the obligation of the indemnifying Party to provide indemnification
hereunder except if and to the extent that such failure materially impairs the
ability of the indemnifying Party to defend the applicable suit, claim or
demand. The indemnifying Party shall be entitled to assume the defense and
control of any suit, claim or demand of any Third Party at its own cost and
expense; provided, however, that the other Party shall have the right to be
represented by its own counsel at its own cost in such matters. In the event
that the indemnifying Party shall decline to assume control of any such suit,
claim or demand, the Party entitled to indemnification shall be entitled to
assume such control, conduct the defense of, and settle such suit, claim or
action, all at the sole cost and expense of the indemnifying Party. The
indemnifying Party shall not settle or dispose of any such matter in any manner
which would adversely impact the rights or interests of the indemnified Party
without the prior written consent of the indemnified Party, which shall not be
unreasonably withheld.
15.5 PRODUCT LIABILITY INSURANCE.
Each Party shall maintain product liability insurance with respect to any
clinical trials, manufacturing, sales, marketing, distribution and promotion
activities performed by it hereunder, in each case in such amounts and subject
to such deductibles as the Parties may agree based upon standards prevailing in
the industry at the time such clinical trial, manufacturing, distribution or
sale commences. Each Party shall maintain such insurance until such Product is
no longer sold (or, in the case of clinical trial insurance, for a reasonable
period of time following completion of clinical trials). Upon termination of
such insurance, each Party shall obtain tail end product liability coverage for
a five-year term in such amounts and subject to such deductibles as the Parties
may mutually agree based upon standards prevailing in the industry at the time.
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ARTICLE 16
TERM AND TERMINATION
16.1 CONTRACT TERM.
The term of this Agreement (the "Contract Term") shall commence on the
Effective Date and shall terminate on the later of (a) the expiration of the
last Compound Patent which claims any Product; or (b) the expiration of the last
to expire Patent claiming an invention arising from work performed for the
Collaboration; or (c) on a country by country basis, ten (10) years after the
First Commercial Sale of the first Product hereunder, unless earlier terminated
pursuant to Section 16.3 below. The Research Term shall be for a term of three
(3) years, subject to the Parties' option to renew as provided in Section 2.1.
16.2 EARLY TERMINATION OF THE RESEARCH PROGRAM
The Research Program may be terminated by either Party, such termination not
otherwise to affect any other rights or obligations of the Parties under this
Agreement, including without limitation commercialization rights, as follows:
(a) PathoGenesis may terminate the Research Program if Novartis
exercises its rights to control Chiron in accordance with Section 1.3 by
providing six months written notice of termination to Chiron, such notice to
be provided no sooner than six months after Novartis' exercise of its rights
to control Chiron in accordance with Section 1.3 hereof; or
(b) Either Party may terminate the Research Program after a Change In
Control of the other Party by providing six months written notice to the
other Party, such notice to be provided no sooner than six months after the
Change in Control has taken place.
16.3 EARLY TERMINATION OF THE AGREEMENT.
This Agreement may be terminated by either Party as follows:
(a) by mutual written agreement of Chiron and PathoGenesis, effective as
of the time specified in such written agreement; or
(b) by either Party, to the extent permitted by applicable law, in the
event of a Bankruptcy Event of the other Party, effective immediately upon
the occurrence of such Bankruptcy Event.
16.4 BREACH AND SPECIFIC PERFORMANCE.
(a) In the event of material breach of this Agreement by either Party,
which is not cured within sixty (60) days following receipt of the written
notice of the alleged default from the non-breaching Party, the matter shall
be submitted for resolution to the Chief Executive Officers of each company
and further dispute resolution pursuant to Article 17 herein.
(b) The Parties acknowledge that under this Agreement, each Party holds
a complex series of ongoing technology rights and licenses, development
rights and obligations, and economic rights and obligations, the breach of
which may not be adequately compensated in money damages alone. The Parties
therefore agree that each may be entitled to remedies in the nature of
specific grants of licenses or assignments from the other Party.
16.5 SURVIVAL OF OBLIGATIONS.
The provisions of Sections 2.5.2, 2.11, 3.4, 4.3, 4.10, 8.3, 10.2, 10.3,
11.2, 13.1, 13.2, 13.5, 16.5, 16.6, 16.8, 18.1 and 18.7 and Article 12, Article
14, Article 15 and Article 17 shall survive expiration or any termination of
this Agreement. In addition, any and all provisions of this Agreement, insofar
as such provisions relate to compensation to one Party based on the other
Party's independent use of Results, Joint Compounds, Joint Compound Patents,
Joint Development Compounds, Joint Libraries or Joint
46
Technology, such provisions shall survive for as long as such obligation would
have survived without termination. In the event that a Party is in default of
any of its obligations under this Agreement, said default resulting in the early
termination of this Agreement, that defaulting Party shall not be entitled to
enforce the restrictions on research, development or commercialization of
Compounds by the other Party present in Sections 2.5.2, 2.11 or 8.3. Termination
of this Agreement shall not affect the rights and obligations of the Parties
which shall have accrued prior to the date of termination.
16.6 CONTINUING LIABILITY.
Termination of this Agreement for any reason shall not release any Party
from any liability, obligation or agreement which has already accrued nor affect
the survival of any provision hereof which is expressly stated to survive such
termination. Termination of this Agreement for any reason shall not constitute a
waiver or release of, or otherwise be deemed to prejudice or adversely affect,
any rights, remedies or claims, whether for damages or otherwise, which a Party
may have hereunder or which may arise out of or in connection with such
termination.
16.7 RIGHTS IN BANKRUPTCY.
The rights granted to Chiron by PathoGenesis, and granted to PathoGenesis by
Chiron pursuant to Article 5 hereof constitute "intellectual property" within
the meaning of Articles 101 and 365(n) of the United States Bankruptcy Code.
16.8 RETURN OF CONFIDENTIAL INFORMATION.
Upon termination of this Agreement, each Party shall within ninety (90) days
of such termination return to the other all Confidential Information of such
other Party that remains in its possession, except that each Party shall be
entitled to retain one (1) copy of any such information for archival purposes
(excluding chemical and biological materials).
ARTICLE 17
ALTERNATIVE DISPUTE RESOLUTION ("ADR")
17.1 EXCLUSIVE DISPUTE RESOLUTION MECHANISM.
Except as set forth in Sections 7.5, 8.1.3(b) and 8.2.3(b) hereof, the
procedures set forth in this Article 17 shall be the exclusive mechanism for
resolving any bona fide disputes that arise from time to time pursuant to this
Agreement relating to any Party's rights and/or obligations hereunder that
cannot be resolved through good faith negotiation between the Parties.
17.2 COLLABORATION MANAGEMENT TEAM MEDIATION.
Any such dispute must first be submitted to the Collaboration Management
Team or their successors, for attempted resolution by good faith negotiations
for a period of at least thirty (30) days.
In the event the designated Collaboration Management Team is not able to
resolve such dispute within such thirty (30) day period, the dispute shall be
referred to Executive Mediation as referenced in Section 17.3 below.
17.3 EXECUTIVE MEDIATION.
In the event that the dispute can not be resolved by mediation at the
Collaboration Management Team pursuant to Section 17.2, such dispute shall be
submitted to the appropriate designated executive officers of each Party, for
attempted resolution by good faith negotiation for a period of a least thirty
(30) days. Unless otherwise agreed, such designated officers are as follows:
For PathoGenesis: Chief Executive Officer.
For Chiron: Chief Executive Officer.
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In the event the designated officers are not able to resolve such dispute
within such thirty (30) day period, any Party may invoke the provisions of
Section 17.4 below.
17.4 MEDIATION.
If the dispute cannot be resolved by the mechanism referenced in Section
17.3, the dispute shall be referred to non-binding mediation. The mediation
shall be conducted by an independent mediator acceptable to both Parties.
Subject to Section 17.2 and Section 17.3, either Party may serve upon the other
a written demand for mediation. Such mediation shall commence within thirty (30)
days following the other Party's receipt of such demand, unless otherwise agreed
in writing by the Parties. Each Party shall make available to the mediation an
authorized representative with the capacity to bind such Party, and the
mediation shall be conducted as deemed appropriate by the mediator.
17.5 INITIATION OF ARBITRATION.
In the event that a dispute is not resolved within thirty (30) days after
the matter is referred to mediation pursuant to Section 17.4, and if a Party
intends to initiate an arbitration (or another ADR mechanism) to resolve a
dispute, such Party shall provide written notice (the "ADR Request") to counsel
for the other Party informing such other Party of such intention and the issues
to be resolved. From the date of the ADR Request and until such time as any
matter has been finally settled by ADR, the running of the time periods
contained in this Agreement within which Party must cure a breach of this
Agreement shall be suspended as to the subject matter of the dispute.
17.6 SELECTION OF NEUTRAL.
Within ten (10) business days after the receipt of the ADR Request, the
other Party may, by written notice to the counsel for the Party initiating ADR,
add additional issues to be resolved. Within twenty (20) business days following
the receipt of the ADR Request a neutral familiar with the pharmaceutical
industry and competent to address disputes related to development of
pharmaceutical products shall be selected by the then-President of the Center
for Public Resources ("CPR"), 000 Xxxxx Xxx., Xxx Xxxx, Xxx Xxxx 00000. The
neutral shall be an individual who shall preside in resolution of any disputes
between the Parties. The neutral selected shall be a member of the Judicial
Panel of the CPR and shall not be a current or former employee, director or
shareholder of any Party or of an Affiliate of either Party. Either Party shall
have ten (10) business days from the date the neutral is selected to object in
good faith to the selection of that person. If any Party makes such an
objection, the then-President of the CPR shall, as soon as possible thereafter,
elect another neutral under the same conditions set forth above. This second
selection shall be final.
17.7 HEARING.
No later than ninety (90) business days after selection, the neutral shall
hold a hearing to resolve each of the issues identified by the Parties and shall
render the award as expeditiously thereafter as possible but in no event more
than thirty (30) day after the close of hearings. In making the award the
neutral shall rule on each disputed issue and shall adopt in whole or in part
the proposed ruling of one of the Parties on each disputed issue.
17.8 PROCEDURES.
It is the intention of the Parties that discovery, although permitted as
described herein, will be extremely limited except in exceptional
circumstances. The neutral shall permit such limited discovery necessary for
an understanding of any legitimate issue raised in the ADR, including the
production of documents. Each Party shall be permitted but not required to
take the deposition of not more than five (5) persons, each such deposition
not to exceed six (6) hours in length. If the neutral believes that
exceptional circumstances exist, and additional discovery is necessary for a
full and fair resolution of the issues, he or she may order such additional
discovery as he or she deems necessary. At the hearing the Parties may
present testimony (either by live witness or deposition) and documentary
evidence. The
48
hearing shall be held at such place as agreed upon by the Parties or if they are
unable to agree at a place designated by the neutral. Each Party shall have the
right to be represented by counsel. The neutral shall have sole discretion with
regard to the admissibility of any evidence and all other matters relating to
the conduct of the hearing. The neutral shall, in rendering his or her decision,
apply the substantive law of the state of incorporation of the Party which did
not initiate the ADR proceeding without giving effect to its principles of
conflicts of law, and without giving effect to any rules or laws relating to
arbitration. The decision of the neutral shall be final and not appealable,
except in cases of fraud or bad faith on the part of the neutral or any party to
the ADR proceeding in connection with the conduct of such proceedings.
17.9 PRESENTATIONS.
At least fifteen (15) business days prior to the date set for the hearing,
each party shall submit to the other Party and the neutral a list of all
documents on which such Party intends to rely in any oral or written
presentation to the neutral and a list of all witnesses, if any, such Party
intends to call at such hearing and a brief summery of each witness's testimony.
At least five (5) business days prior to the hearing, each Party must submit to
the neutral and serve on the other Party a proposed ruling on each issue to be
resolved. Such writing shall be limited to representing the proposed rulings,
shall contain no argument or analysis of the facts or issues, and shall be
limited to not more than fifty (50) pages. Not more than five (5) business days
following the close of hearings, the Parties may each submit post hearing briefs
to the neutral addressing the evidence and issues to be resolved. Such post
hearing briefs shall not be more than ten (10) pages.
17.10 COSTS AND FEES.
The neutral shall determine the proportion in which the Parties shall pay
the costs and fees of the ADR. Each Party shall pay its own costs (including,
without limitation, attorneys' fees) and expenses in connection with such ADR.
The neutral shall not award punitive damages to either Party.
17.11 CONFIDENTIALITY.
The ADR proceeding shall be confidential and the neutral shall issue
appropriate protective orders to safeguard each Party's Confidential
Information. Except as required by law, no Party shall make (or instruct the
neutral to make) any public announcement with respect to the proceedings or
decision of the neutral without the prior written consent of the other Party.
The existence of any dispute submitted to ADR, and the award of the neutral,
shall be kept in confidence by the Parties and the neutral, except as required
in connection with the enforcement of such award or as otherwise required by
applicable law.
17.12 AWARD.
Any judgment upon the award rendered by the neutral may be entered in any
court having jurisdiction thereof.
17.13 INJUNCTIVE RELIEF.
Notwithstanding the foregoing, the Parties shall have the right to seek
injunctive relief for breaches of this Agreement by one Party which have the
potential to cause irreparable injury to the other Party. Examples of such
breaches include, without limitation, breaches of confidentiality obligations,
misappropriation of trade secrets and use of technology outside the scope of the
licenses granted herein.
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ARTICLE 18
MISCELLANEOUS
18.1 NO SOLICITATIONS.
Each Party agrees that, during the Research Term of this Agreement and for
six months thereafter, neither such Party nor any of its Affiliates will solicit
to employ any of the scientific personnel of the other Party directly and
substantially involved in the Research Program, so long as they are employed by
the other Party, without obtaining the prior written consent of the other Party.
The Parties shall in good faith maintain and update a list of such personnel
identifying them by name, a current copy of which is attached hereto as Exhibit
D. The foregoing provision will not, however, prevent such first Party from
hiring any such person then listed in Exhibit D (i) who contacts such first
Party on his or her own initiative without any direct or indirect solicitation
by or encouragement from such first Party (it being understood that a bona fide
public advertisement for employment placed by such first Party in a newspaper or
periodical of general circulation and not specifically targeted at the other
Party's employees shall not constitute direct or indirect solicitation or
encouragement), (ii) who has been terminated by the other Party, or (iii) with
whom such first Party has had contact regarding possible employment by such
first Party within the three-month period prior to the Effective Date of this
Agreement.
18.2 FORCE MAJEURE.
Except for obligations relating to payment of money, each Party shall be
excused for any failure or delay in performing any of its obligations under this
Agreement, if such failure or delay is caused by Force Majeure. For purposes of
this Agreement, "Force Majeure" means any act of God, accident, explosion, fire,
storm, earthquake, flood, drought, riot, embargo, civil commotion, war, act of
war or any other circumstances or event beyond the reasonable control of the
Party relying upon such circumstance or event.
18.3 RELATIONSHIP OF THE PARTIES.
The Parties agree that each is acting as an independent contractor with
respect to the other and nothing contained in this Agreement is intended, or is
to be construed, to constitute Chiron and PathoGenesis as partners or joint
venturers or PathoGenesis or Chiron as an agent of the other. Neither Party
hereto shall have any express or implied right or authority to assume or create
any obligations on behalf of or in he name of the other Party or to bind the
other Party to any contract, agreement or undertaking.
18.4 NOTICES
Any notice or other communication hereunder shall be in writing and shall be
deemed given when so delivered in person, by overnight courier (with receipt
confirmed) or by facsimile transmission (with receipt confirmed by telephone or
by automatic transmission report) or, if given by mail, upon receipt, as follows
(or to such other persons address as may be specified in writing to the other
Party hereto):
If to PathoGenesis, to: PathoGenesis Corporation
000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Facsimile: (000) 000-0000
With a copy to: PathoGenesis Corporation
0000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
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If to Chiron, to: Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: President, Chiron Technologies
Facsimile: (000) 000-0000
With a copy to: Chiron Corporation
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
18.5 SUCCESSORS AND ASSIGNS.
The terms and provisions of this Agreement shall inure to the benefit of,
and be binding upon, Chiron, PathoGenesis, and their respective successors and
assigns; provided, however, that neither Chiron nor PathoGenesis may transfer or
assign any of its rights and obligations hereunder without the prior written
consent of the other, except that either Party may transfer or assign any of its
rights and obligations hereunder to an Affiliate or a person that acquires all
or substantially all of the assets of such Party to which this Agreement relates
or pursuant to a merger or consolidation. Each Party shall notify the other
within thirty (30) days prior to any such transfer, assignment merger or
consolidation. The Party receiving such notices shall keep such information
strictly confidential. Any purported assignment in contravention of this
Section 18.5 shall, at the option of the nonassigning Party, be null and void
and of no effect.
18.6 AMENDMENTS AND WAIVERS.
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement, nor consent to any departure by Chiron or
PathoGenesis therefrom, shall in any event be effective unless the same shall be
in writing specifically identifying this Agreement and the provision intended to
be amended, modified, waived, terminated or discharged and signed by the Party
against whom enforcement of such amendment is sought, and each amendment,
modification, waiver, termination or discharge shall be effective only in the
specific instance and for the specific purpose for which given. No provision of
this Agreement shall be varied, contradicted or explained by any oral agreement,
course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by the Party against whom enforcement of such
variance, contradiction or explanation is sought.
18.7 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware without regard for conflict of laws principles.
18.8 ATTORNEYS' FEES.
Each Party shall bear its own legal fees incurred in connection with the
transactions contemplated hereby.
18.9 SEVERABILITY.
If any provision hereof should be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then to the fullest extent permitted by law,
all other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the Parties hereto as nearly as may be possible; provided,
however, that nothing herein shall be construed so as to defeat the overall
intention expressed by the Parties.
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18.10 USE OF NAMES.
Neither Party shall use the name, trade name or trademark of the other Party
in connection with this Agreement without the express prior written consent of
the other Party, and nothing herein shall be deemed to require any Party to use
any name or xxxx of the other Party in connection with commercialization of
Products hereunder, except as set forth in this Agreement.
18.11 EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
counterpart, when so executed and delivered, shall be deemed to be an original,
and all of which counterparts, taken together, shall constitute one and the same
instrument.
18.12 ENTIRE AGREEMENT
This Agreement, together with all documents referred to herein and all
exhibits and schedules attached hereto or thereto, contains the entire agreement
and understanding of the Parties hereto, and supersedes any prior or
contemporaneous agreements or understandings between the Parties with respect to
the subject matter hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first written above.
CHIRON CORPORATION PATHOGENESIS CORPORATION
By: By:
-------------------------------------- ------------------------------------------
Name: Xxxxx X. Xxxxxxxx Name:
---------------------------------------
Title: Chief Scientific Officer, Chiron Corp., Title:
President, Chiron Technologies ----------------------------------------
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