Exhibit 10.70
CONFIDENTIAL TREATMENT REQUESTED
DEVELOPMENT AND LICENSE AGREEMENT
This Development and License Agreement (this "Agreement"), dated the 14th
day of December, 1998, by and between:
ImClone Systems Incorporated, a Delaware corporation, having an address at
000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 XXX (hereinafter referred to as
"ImClone"), and
Merck KGaA, a German corporation with general partners, having an address
at Xxxxxxxxxxx Xxxx(xxxx)x 000, X-00000 Xxxxxxxxx, Xxxxxxx Xxxxxxxx of Germany
(hereinafter referred to as "Merck").
W I T N E S S E T H :
WHEREAS, ImClone is a research-based corporation having expertise in the
area of biotechnology leading to the development of innovative biotechnological
products, including the area of cancer therapeutics;
WHEREAS, ImClone possesses certain knowledge, know-how, trade secrets,
technical information, and expertise with respect to the research and
development of cancer therapeutics;
WHEREAS, Merck possesses related know-how and trade secrets and intends to
achieve a substantial business presence in the area of biotechnological
products, including but not limited to cancer therapeutics, and possesses the
capability to evaluate, develop, manufacture and commercialize products for uses
therein;
WHEREAS, the parties desire to develop, manufacture and commercialize C225
(as described in Schedule A, attached hereto and specifically incorporated
herein);
WHEREAS, ImClone has filed or licensed certain patent applications with
respect to targeting Epidermal Growth Factor Receptors (sometimes referred to as
"EGFr") in combination with
chemotherapy and radiotherapy, respectively, as further described in Schedule B,
attached hereto and specifically incorporated herein;
WHEREAS, Merck desires to develop and commercialize cancer therapeutics as
part of its cancer therapeutics business; and
WHEREAS, ImClone desires to grant to Merck and Merck accepts certain
rights and licenses, all as set forth herein, under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
hereinafter provided, both parties agree to the following:
ARTICLE I
Definitions
The following terms, as used in this Agreement, shall have the meanings
set forth in this Article I.
1.1. The term "Acquired Non-Voting Shares" shall mean those shares of
non-voting securities of ImClone, which shall be newly issued shares of
non-voting securities of ImClone, acquired by Merck upon making certain
Milestone Payments under certain circumstances, and which shall be convertible
into shares of Common Stock as provided in Section 4.1(b) and Schedule E,
attached hereto and specifically incorporated herein.
1.2. The term "Acquired Voting Shares" shall mean those shares of Common
Stock, which shall be newly issued shares of Common Stock, acquired by Merck
upon making certain Milestone Payments, as provided in Section 4.1(a) and
Schedule E hereof.
1.3. The term "Affiliate" shall mean with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such other Person. The term "control" (and the derivative terms
"controlling" and "controlled") as used herein means the possession,
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directly or indirectly, of the power to direct or cause the direction of the
management and the policies of a Person, whether through ownership of voting
securities, or by contract or otherwise.
1.4. The term "Alternative Products" shall mean those products which, as
part of the Research and Development, may be developed and/or acquired
subsequent to the execution of this Agreement solely by ImClone or any of its
Affiliates or jointly with Merck or any of its Affiliates as an alternative to
the Compound, including but not limited to any inhibitors of EGFr or
improvements thereto that are not the Compound or an Improvement.
1.5. The term "Alternative Product Patents" shall mean any and all of
ImClone's right, title and interest in any patent application covering any
Alternative Products and/or process for the manufacture or use of such
Alternative Products, together with any divisions, reissues, continuations,
continuations-in-part, extensions, restorations, and/or additions therefor,
owned, licensed or otherwise controlled individually by ImClone or any of its
Affiliates or jointly by ImClone or any of its Affiliates and Merck or any of
its Affiliates, during the term of this Agreement and developed as part of the
Research and Development with respect to Alternative Products, and all patents
that may issue from time to time from any such patent applications.
1.6. The term "Alternative Product Technology" shall mean any and all of
ImClone's right, title and interest in any technology that is developed and/or
acquired by ImClone or any of its Affiliates, or jointly with Merck or any of
its Affiliates, subsequent to the date of this Agreement and which is reasonably
necessary to enable the making, use or sale of Alternative Products, including
but not limited to methods of manufacture, characterization and assaying
techniques, biological materials such as compounds, DNA, RNA, plasmids, vectors,
organisms, antibodies, hybridomas, fusion partners, systems for the augmentation
of the biological response, including but not limited to adjuvants and other
carriers and/or enhancers, and processes employed for producing or developing
Alternative Products, purification methods and methods for using Alternative
Products.
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1.7. The term "C225" shall mean the chimerized monoclonal antibody to EGFr
known as C225, as described in Schedule A, attached hereto and specifically
incorporated herein.
1.8. The term "Chemotherapy Patent" shall mean the patents and patent
applications specified in Schedule B as "Applications of Schlessinger et al.,
assigned to Rhone Poulenc Xxxxx."
1.9. The term "Merck Products" shall mean any and all products
incorporating the humanized antibody of Merck or any of its Affiliates to EGFr
(including any improvements to such products) which, but for the licenses
granted herein, would infringe the Chemotherapy Patent and/or the Radiotherapy
Patent.
1.10. "Merck Products Net Sales" shall mean the total invoiced amount
related to all sales in the Territory by Merck and its Affiliates of Merck
Products in any form to a Person which is not Merck or an Affiliate of Merck, a
sublicensee, or an Affiliate of a sublicensee, less the following:
(a) Customary or usual trade or quantity discounts or other
charge-backs actually taken by the customer and not already credited on an
invoice;
(b) Sales, use, value-added or other excise taxes, imposed and paid
directly with respect to the sale, and included within the invoice price,
and separately stated on the invoice;
(c) Refunds for customer returns, not already credited on an
invoice; and
(d) Customs, duties, transportation charges and other similar
expenses separately invoiced.
1.11. The term "Collateral License Agreements" shall mean certain license
agreements, both currently existing and not yet entered into with third parties,
to be negotiated and entered into by ImClone, subject to Section 11.7 hereof, as
more fully described in Schedule F, attached hereto and specifically
incorporated herein.
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1.12. The term "Collateral License Agreement Royalties" shall have the
meaning attributed to such term in Section 9.6 hereof.
1.13. The term "Common Stock" shall mean ImClone's common stock, par value
$0.001 per share.
1.14. The term "Compound" shall mean the monoclonal antibody targeting
EGFr developed by ImClone and known as C225, as more specifically described in
Schedule A, attached hereto and specifically incorporated herein.
1.15. "Conversion Notification Date" shall have the meaning set forth in
Schedule E, attached hereto and specifically incorporated herein.
1.16. The term "Conversion Triggering Date" shall have the meaning set
forth in Schedule E, attached hereto and specifically incorporated herein.
1.17. The term "Fully-Loaded Cost of Goods" shall have the meaning set
forth in Schedule C, attached hereto and specifically incorporated herein.
1.18. The term "Gross Margin" shall mean [ *** ] .
1.19. The term "Improvements" shall mean all enhancements ImClone or any
of its Affiliates may make to the Compound prior to the termination of this
Agreement, whether or not patentable, which are invented, developed, discovered
or otherwise acquired by ImClone or any of its Affiliates.
1.20. The term "Licensed Product Patents" shall mean any and all of
ImClone's right, title and interest in any non-U.S. and non-Canadian patent
application covering the Compound and/or any Improvement and/or process for the
manufacture or use of the Compound and/or such Improvement, including but not
limited to, those set forth in Schedule B, attached hereto and specifically
incorporated herein, as amended from time to time, together with any divisions,
reissues, continuations, continuations-
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in-part, extensions, restorations, and/or additions therefor, owned, licensed or
otherwise controlled by ImClone or any of its Affiliates during the term of this
Agreement, and all patents that have issued or that may issue from time to time
from any such patent applications.
1.21. The term "Licensed Products" shall mean the Compound, any and all
products incorporating the Compound and any and all products made by use of any
compound or product covered by any Licensed Product Patent, including, but not
limited to, any Improvements to the Compound.
1.22. The term "Licensed Product Technology" shall mean any and all of
ImClone's right, title and interest in any technology that is owned, licensed or
otherwise controlled by ImClone or any of its Affiliates as of the date of this
Agreement, as well as any and all technology developed and/or acquired by
ImClone or any of its Affiliates during the term of the Agreement, and which is
reasonably necessary to enable the making, use or sale of Licensed Products,
including but not limited to methods of manufacture, characterization and
assaying techniques, biological materials such as compounds, DNA, RNA, plasmids,
vectors, organisms, antibodies, hybridomas, fusion partners, systems for the
augmentation of the biological response, including but not limited to adjuvants
and other carriers and/or enhancers, and processes employed for producing or
developing the Compound and/or Licensed Products, purification methods, Licensed
Products per se, and methods for using Licensed Products.
1.23. The term "Loss" means, with respect to the indemnification
provisions set forth in Article X, any and all damages, claims, demands,
liabilities, losses, costs or expenses of any kind, including, but not limited
to, all costs and expenses of investigating or defending any claims, demands,
liabilities or losses, and reasonable attorneys' fees and litigation expenses.
1.24. The term "Manufacturing Facility Line of Credit" shall have the
meaning attributed to such term in Section 4.9.
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1.25. The term "Milestone" shall have the meaning attributed to such term
in Schedule E, attached hereto and specifically incorporated herein.
1.26. The term "Milestone Conversion Shares" shall have the meaning set
forth in Schedule E attached hereto and specifically incorporated herein.
1.27. The term "Milestone Payment" shall have the meaning attributed to
such term in Section 4.1 hereof.
1.28. The term "Milestone Payment Date" shall have the meaning attributed
to such term in Section 4.1 hereof. 1.29. The term "Net Sales" shall mean the
total invoiced amount related to all sales by Merck and its Affiliates of
Licensed Products and Alternative Products in any form to any Person which is
not Merck, an Affiliate of Merck, a sublicensee or an Affiliate of a
sublicensee, less the following:
(a) Customary or usual trade or quantity discounts or other
charge-backs actually taken by the customer and not already credited on an
invoice;
(b) Sales, use, value-added or other excise taxes, imposed and paid
directly with respect to the sale, and included within the invoice price,
and separately stated on the invoice; ]
(c) Refunds for customer returns, not already credited on an
invoice; and
(d) Customs duties, transportation charges and other similar
expenses separately invoiced.
1.30. The term "Person" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
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1.31. The term "Preferred Stock Purchase Agreement" means that certain
Preferred Stock Purchase Agreement, dated as of December 3, 1997, by and between
ImClone and Merck.
1.32. The term "Radiotherapy Patent" shall mean the patent applications
specified in Schedule B as "Applications of Waksal et al., assigned to ImClone."
1.33. The term "Research and Development" shall mean that work which
ImClone and Merck undertake to conduct in connection with Licensed Products,
and, to the extent applicable, Alternative Products, as set forth in the
Research and Development Protocol.
1.34. The term "Research and Development Protocol" shall mean the plan for
the conduct of the Research and Development during the period of Research and
Development, as set forth in Schedule D, attached hereto and specifically
incorporated herein, and as may be amended by the parties from time to time.
1.35. The term "Series A Convertible Preferred Stock" shall mean the
Series A Convertible Preferred Stock of ImClone, $1.00 par value per share.
1.36. The term "Standstill Period" shall mean the time period beginning on
the date of this Agreement and terminating on the fifth (5th) anniversary of the
Preferred Stock Purchase Agreement, i.e. December 3, 2002.
1.37. The term "Steering Committee" shall mean the committee as defined in
Section 3.1.
1.38. The term "Territory" shall mean worldwide, excluding the Dominion of
Canada and the United States of America (including all territories and
possessions thereof).
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ARTICLE II
Grant of Rights
2.1. Subject to Section 2.3, ImClone hereby grants to Merck an exclusive
license with the right to sublicense as limited by Section 2.6, to make, use and
sell Licensed Products and Alternative Products within the Territory and a
non-exclusive license to use Licensed Product Technology and Alternative Product
Technology for the manufacture of the Compound.
2.2. ImClone hereby grants to Merck an exclusive license, without the
right to sublicense other than to Merck's Affiliates or to sublicensees with
ImClone's prior written consent, which consent shall not be unreasonably
withheld, the Radiotherapy Patent and the Chemotherapy Patent, respectively, to
make, use and sell Merck Products within the Territory for a term beginning on
the date of this Agreement and continuing throughout the life of the
Radiotherapy Patent and of the Chemotherapy Patent, respectively, in each case,
as such patent may be extended or restored. In the event that the Compound fails
in the United States and Canada ("Product Failure"), then the exclusive license
granted under this Section 2.2 shall automatically become a worldwide exclusive
license granted to Merck for a term beginning on the date of the Product Failure
and continuing throughout the life of the Radiotherapy Patent and/or the
Chemotherapy Patent, as the case may be, in each case, as such patent may be
extended or restored. This Section 2.2 shall survive the termination of the
Agreement.
2.3. The parties hereby agree to use their best reasonable efforts to
reach a separate agreement within twelve (12) months of the first commercial
sale of any Licensed Product in the Territory pursuant to which Merck and
ImClone will collaboratively develop and market Licensed Products and
Alternative Products in Japan; provided, however, that if no such agreement is
reached within such twelve-month period, the parties shall have co-exclusive
rights with the right to sublicense with respect to Licensed Products and/or
Alternative Products in Japan. Notwithstanding any other provision of this
Agreement, ImClone acknowledges and agrees that ImClone shall under no
circumstances take any unilateral action
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with respect to any Licensed Products
and/or Alternative Products in Japan without Merck' prior written consent, which
consent shall not be unreasonably withheld.
2.4. Notwithstanding any other provision of this Agreement, if at any time
during the term of this Agreement ImClone determines to grant a license,
exclusive or otherwise, to make, have made, use, sell or have sold Licensed
Products or Alternative Products outside the Territory (not including a right to
distribute), it shall so notify Merck in writing. Merck shall have thirty (30)
calendar days from the receipt of such written notification to notify ImClone in
writing of its desire to negotiate for such a license. Should Merck make such a
written notification, then for a period of sixty (60) calendar days therefrom,
the parties shall negotiate in good faith the terms of such a license. Should
the parties not consummate a license in this period of sixty (60) calendar days,
the offer to Merck shall be deemed formally withdrawn and ImClone shall have the
right to negotiate and consummate a license with a third party; provided,
however, that ImClone shall not consummate such a license with such third party
unless the terms of such license offered to such third party are no more
favorable than the terms previously offered to Merck. If such terms, in the
aggregate, are more favorable than the terms previously offered to Merck, then
ImClone, by written notice, shall offer such terms to Merck and Merck shall have
fifteen (15) calendar days from ImClone's notice in which to accept such offer
and consummate such license.
2.5. To the fullest extent permitted by law, any license granted herein
shall extend for a term beginning on the date of this Agreement and, unless
terminated sooner as herein provided, shall, in the case of Licensed Products
sold under Licensed Product Patents and Alternative Products sold under
Alternative Product Patents, continue throughout the life of the last-to-expire
patent included in Licensed Product Patents or Alternative Product Patents, as
the case may be, in each case, as such Licensed Product Patents and/or
Alternative Product Patents may be extended or restored, or in the case of
Licensed Products or Alternative Products that incorporate or utilize Licensed
Product Technology or Alternative Product Technology, as the case may be,
continue as a royalty-bearing license for fifteen (15) years from the date of
first commercial sale of a Licensed Product, as the case may be, after which
time the licenses
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under Licensed Product Technology or Alternative Product Technology, as the case
may be, shall survive without further royalty payment and shall be irrevocable,
except that the licenses shall become nonexclusive.
2.6. Merck shall have the right to sublicense the manufacture and/or sale
of Licensed Products and/or Alternative Products, provided Merck notifies
ImClone in writing of any such sublicense, and continues to fulfill all of its
material obligations contained in this Agreement, including but not limited to
the payment of all royalties, keeping of records, and reporting of sales; and
further provided, however, that Merck shall not so sublicense without the
consent of ImClone and ImClone shall have the right to withhold its consent to
any such sublicensee and sublicense, which consent shall not be unreasonably
withheld. Notwithstanding any other provision of this Agreement, the respective
rates of royalties payable to ImClone on sales of Licensed Products, Alternative
Products and Merck Products in the Territory by Merck's sublicensees and their
Affiliates shall be calculated in a manner mutually agreed by the parties. Any
sublicense agreement shall contain terms obligating the sublicensee to provide
and make available its books and records pursuant to Article V hereunder and to
comply with the confidentiality provisions of Article VI and the restrictions
set forth at Section 9.7, Section 9.10 and Section 9.11.
2.7. Under no circumstances shall this Agreement be construed to grant any
right or license other than those rights or licenses expressly granted in this
Article II. Any other right or license shall be evidenced by a separate written
license agreement between Merck and ImClone, executed by both parties. ImClone
and Merck hereby specifically reserve all rights to their respective patents,
technology, products, and any other applicable information not licensed herein.
2.8. With the exception of [ *** ] for research purposes and those matters
described in Schedule 2.8, ImClone shall not for a period of [ *** ] after the
execution of this Agreement [ *** ].
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ARTICLE III
Research and Development
3.1. In order to establish a fruitful cooperation between the parties,
immediately after the execution of this Agreement, the parties shall exchange
know-how (Merck) and Licensed Product Technology (ImClone) relating to Licensed
Products. Merck and ImClone shall conduct Research and Development toward
commercialization of Licensed Products and, if applicable, Alternative Products,
in the Territory, in accordance with the Research and Development Protocol. The
Research and Development shall be reviewed and defined on a regular basis, at
least quarterly, by a committee consisting of two representatives from Merck and
two representatives from ImClone (the "Steering Committee").
3.2. Meetings of the Steering Committee shall be chaired by one
responsible person (project leader) from each of ImClone and Merck in an
alternating manner. Each party shall have one vote. The project leader of either
party shall have the power fully to represent the position of his or her company
and the decisions of his or her company's management. In case a unanimous
decision cannot be reached, the principal executive officers of ImClone and
Merck or their designees shall use reasonable efforts to resolve the dispute in
good faith.
3.3. Meetings of the Steering Committee shall be held at least quarterly
and at such times as shall be necessary or useful for the Research and
Development contemplated herein and as shall be agreed upon between the parties
hereto. Additional persons, including persons from each party representing
different developmental functions, may attend meetings of the Steering
Committee, without voting rights, at the invitation of the respective project
leaders.
3.4. The Steering Committee shall be responsible for:
(1) establishing, supplementing and modifying the Research and
Development Protocol from time to time;
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(2) defining the goals and time frames of the Research and
Development Protocol; and
(3) allocating tasks and costs and coordinating activities required
to carry out the tasks laid down in the Research and Development Protocol.
Through the Steering Committee, to the extent permitted by any applicable
law, including but not limited to antitrust and competition laws, the parties
shall consult with each other concerning commercialization strategies, including
but not limited to pricing of Licensed Products and Alternative Products within
the Territory; provided, however, that Merck shall have the right to determine
at its sole discretion all prices of Licensed Products and Alternative Products
sold within the Territory.
3.5. Both parties shall report at least semi-annually, or at such other
times as the Steering Committee shall determine, any and all Research and
Development activities to the Steering Committee in writing. Such written
reports shall contain, among other things, all information relevant to enabling
Merck to enter into and conduct human clinical studies in the Territory.
3.6. The Research and Development Protocol includes, or may include, the
conduct and management of clinical trials and the filing for appropriate
regulatory approvals for the sale of the Licensed Products and Alternative
Products, as applicable, in the Territory. Each party hereby agrees to share all
data generated in its respective territory with respect to Licensed Products and
Alternative Products for the support of any regulatory submissions related to
Licensed Products and Alternative Products to any government authority by the
other party. Each party further agrees to use its reasonable best efforts to
design studies (including design with respect to implementation of studies and
collection of data from studies) in cooperation with the other party in order to
expedite regulatory approvals in each such territory. The parties further agree
that:
(a) All such clinical trials and regulatory efforts in the Territory
shall be the sole responsibility of Merck and shall be coordinated through
the Merck regulatory group. Merck shall cause all necessary governmental
approvals to be filed in the Territory.
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(b) All such clinical trials and regulatory efforts outside the
Territory shall be the sole responsibility of ImClone and shall be
coordinated through the ImClone regulatory group. ImClone shall cause all
necessary governmental approvals to be filed outside the Territory.
(c) The respective responsibilities and costs of the parties with
respect to clinical trials, regulatory efforts and filing of applications
for necessary governmental approvals in Japan shall be negotiated in good
faith and set forth in a separate written agreement or agreements by and
between the parties as contemplated in Section 2.3 hereof.
3.7. Licensed Product Technology and Alternative Product Technology,
including, but not limited to, Licensed Products and Alternative Products,
delivery formulations for Licensed Products and Alternative Products,
experimental, pre-clinical and clinical trial data, regulatory submissions with
all back-up (including a right of reference to such submissions) in connection
with Licensed Products and Alternative Products, shall be freely available to
Merck in the Territory and ImClone outside the Territory in a manner consistent
with the rights and obligations of the parties hereunder. In the case of a
termination resulting in a reversion of rights under Section 11.8 to an original
licensor, the parties shall, to the extent permitted by applicable law,
negotiate in good faith to reach an agreement with usual and customary terms for
similar agreements under comparable circumstances providing for access and/or
transfer of ownership, as necessary to all necessary regulatory filings and
supporting documentation and data related to application for approval to sell
Licensed Products or Alternative Products.
3.8. ImClone shall supply and Merck shall purchase from ImClone
manufactured Licensed Products and Alternative Products for the conduct of
clinical trials and commercialization in the Territory. Prior to
commercialization, ImClone shall use its best reasonable commercial efforts to
supply Licensed Products or Alternative Products, as the case may be, to Merck
in the quantities reasonably requested by Merck. ImClone shall supply all such
Licensed Products and Alternative Products for use in the conduct of clinical
trials at a price equal to the Fully-Loaded Cost of Goods. The parties shall
negotiate and enter
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into separate supply agreements, with usual and customary terms for similar
agreements under comparable circumstances, which provide for (a) the supply to
Merck for the commercialization of Licensed Products at a price equal to the
Fully-Loaded Cost of Goods and (b) the supply to Merck for the commercialization
of each Alternative Product at a price equal to the Fully-Loaded Cost of Goods.
ARTICLE IV
Milestone Payments; Royalties; Line of Credit
4.1. For good and valuable consideration, including, but not limited to,
the licenses granted by ImClone to Merck herein, the research to be performed by
ImClone in connection with the Research and Development, and the technology to
be transferred in connection with those licenses and said research, ImClone
shall be compensated by means of certain milestone payments, as specified on
Schedule E, attached hereto and specifically incorporated herein (the "Milestone
Payments"). The date on which any given Milestone Payment is due and payable is
referred to in this Agreement as a "Milestone Payment Date."
(a) Subject to Section 4.1(b) hereof, upon the payment of certain
Milestone Payments, as provided in Schedule E, ImClone shall issue and
deliver to Merck, or to an Affiliate or Affiliates of Merck designated by
Merck, Acquired Voting Shares at a purchase price calculated in the manner
specified in Schedule E. The parties acknowledge and agree that
notwithstanding any other provision of this Agreement, ImClone shall not
be obligated during the Standstill Period to issue additional Acquired
Voting Shares to Merck if such issuance would cause the aggregate
beneficial ownership of Common Stock of Merck and its Affiliates
(including all shares of Common Stock that Merck and its Affiliates may
have the right to acquire as of the relevant Milestone Payment Date upon
the conversion of the Series A Convertible Preferred Stock) to exceed
19.9% of the total outstanding shares of Common Stock on a primary basis
as of the relevant Milestone Payment Date.
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(b) In the event Merck is prohibited at any time from receiving
Acquired Voting Shares due to the operation of Section 4.1(a) above, then
ImClone shall issue to Merck in the manner specified in Schedule E, in
lieu of such Acquired Voting Shares, an amount of Acquired Non-Voting
Shares equal to the number of Acquired Voting Shares that Merck would have
acquired but for the operation of this Section 4.1(b) at a purchase price
equal to the purchase price that would have been applicable to Acquired
Voting Shares delivered on such Milestone Payment Date. The Acquired
Non-Voting Shares shall have no voting rights and shall be convertible
into shares of Common Stock on a share-per-share basis, as described in
Schedule E; in all other respects, the Acquired Non-Voting Shares shall
have terms identical to those of shares of Common Stock.
(c) With respect to all Registrable Securities (as defined in
Schedule G hereof), Merck shall have the registration rights set forth in
the registration rights agreement appended hereto as Schedule G, and
specifically incorporated herein. This Section 4.1(c) and Schedule G shall
survive the termination of the Agreement.
(d) If at any time during the term of this Agreement stockholder
approval is necessary for the issuance of any Acquired Voting Shares,
Acquired Non-Voting Shares or Milestone Conversion Shares to Merck or its
Affiliates pursuant to this Agreement, ImClone shall use its best
reasonable efforts to obtain such stockholder approval as soon as
practicable.
(e) Nothing in this Section 4.1 shall require ImClone to take any
action in connection with the issuance of any of its securities that would
contravene (or subject ImClone to de-listing of any of its securities for
failure to satisfy all requirements under) the rules and regulations of
any exchange or quotation system on which ImClone's securities are listed
or quoted including, but not limited to, Section 4460(i)(1)(D) of the
Marketplace Rules of the National Association of Securities Dealers.
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4.2. Merck shall pay ImClone royalties quarterly on (i) sales in the
Territory by Merck and its Affiliates of (A) Licensed Products and (B)
Alternative Products developed and/or acquired by ImClone or any of its
Affiliates and (ii) sales in the Territory, subject to Section 2.2 hereof, by
Merck and its Affiliates of Merck Products as follows:
(a) Merck shall pay ImClone a royalty of [***] of [***] of Licensed
Products sold in the Territory on the first [***];
(b) Merck shall pay ImClone a royalty of [***] of [***] of Licensed
Products sold in the Territory in excess of [ *** ];
(c) Merck shall pay ImClone [ *** ], on sales in the Territory of
Alternative Products developed and/or acquired by ImClone or any of its
Affiliates; provided, however, that such amount shall not exceed [***] of
[ *** ]; and
(d) Merck shall pay ImClone a royalty of [***] of [ *** ].
4.3. Within thirty (30) calendar days after the first day of January,
April, July and October in each year during the term of this Agreement, Merck
shall prepare a written report setting forth for the preceding fiscal quarter,
on a country-by-country and product-by-product basis, such of the following as
may be applicable under the royalty payment provisions of this Article IV:
(i) the [ *** ] and [ *** ] of all Licensed Products and Alternative
Products sold by Merck and its Affiliates and sublicensees and their
Affiliates under this Agreement;
(ii) the Merck Products Net Sales;
(iii) the amount of royalty payments; and
(iv) any other information reasonably necessary to show the basis on
which such payment has been computed.
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4.4. Each payment report rendered shall be accompanied by the payment by
wire transfer of all royalty payments due for the fiscal quarter in question.
4.5. All payments due under this Article IV shall be paid in U.S. dollars
in immediately available funds by wire transfer to a bank account in New York,
N.Y., USA designated by ImClone. For purposes of computing the royalty payments
on products sold outside the United States, such royalty payments first shall be
determined in the currency in which such products are sold and then converted
into the equivalent in U.S. dollars at the selling rate for the last day of the
quarter as reported in The Wall Street Journal (Eastern Edition).
4.6. With regard to the royalty obligations contemplated in this Article
IV, products shall be deemed to have been sold when billed or shipped, whichever
shall first occur, in an arm's-length transaction with a buyer. If the buyer is
an Affiliate of Merck that resells products, products shall be deemed to have
been sold when billed or shipped, whichever shall first occur, by such Affiliate
and said sale shall bear the royalty. In the case of a sale of products by a
sublicensee, unless otherwise stated herein, such sale shall bear the royalty.
Only one royalty shall be payable respecting any given sale or use of any
specific product licensed hereunder.
4.7. ImClone hereby covenants and agrees that it will perform all
calculations with respect to the [ *** ] in good faith and in accordance with
generally accepted accounting principles in the United States.
4.8. Notwithstanding any other provision of this Article IV, the
obligation of Merck to pay royalties under this Agreement shall terminate upon
the expiration of the term of the license, as set forth in Section 2.5 hereof;
provided, however, that nothing hereunder shall relieve Merck of its obligation
to pay any royalties under this Agreement which have accrued prior to the
termination of this Agreement.
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4.9. Manufacturing Facility.
(a) Promptly after the execution of this Agreement, ImClone shall
use its best reasonable efforts to take the lead in developing, in
consultation with Merck, a commercially feasible production concept for a
new manufacturing facility of ImClone. Such production concept shall be
proposed to Merck as soon as practicable, but in no event later than sixty
(60) days after the date of this Agreement. Upon ImClone's proposal of a
production concept to Merck, both parties shall negotiate in good faith to
reach agreement on a commercially feasible production concept; provided,
however, that Merck shall have the right, at its sole discretion, to
reject a production concept.
(b) Subject to the parties' reaching agreement as to a production
concept, as described in Section 4.9(a) and Schedule 4.9, Merck agrees to
provide to ImClone as soon as reasonably practicable after such agreement,
a guarantee of a line of credit, or a direct credit, for the purpose of
funding the new manufacturing facility of ImClone (the "Manufacturing
Facility Line of Credit"), which guarantee or direct credit, as the case
may be, shall incorporate, among other mutually agreed terms, the terms
set forth in Schedule 4.9. The manufacturing facility shall be constructed
in accordance with the mutually agreed production concept, as described in
Section 4.9(a) and Schedule 4.9.
(c) In the event that the parties fail to agree on a commercially
feasible production concept for the manufacturing facility or Merck fails
to provide the Manufacturing Line of Credit within three months after the
date of this Agreement, either party, provided that such party has fully
performed all of its obligations under Section 4.9(a), shall have the
right to terminate this Agreement upon notice to the other party, in which
case Merck shall have no further obligations with respect to the
Manufacturing Facility Line of Credit.
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(d) Notwithstanding any other provision of this Agreement, if this
Agreement is terminated by either party pursuant to Section 4.9(c),
ImClone shall promptly repay Merck all Milestone Payments paid by Merck as
of the date of such termination.
4.10. Royalties for the sale of Licensed Products, Alternative Products
and Merck Products, as the case may be, arising out of sales in a particular
country shall be paid as provided in this Agreement but only to the fullest
extent permitted by law.
ARTICLE V
Books and Records
5.1. Merck shall keep full and true books of account and other records in
sufficient detail so that the payments to ImClone hereunder can be properly
calculated and audited.
5.2. Each party agrees, at the request and expense of the other party, to
permit an independent certified public accountant selected by such other party,
barring a reasonable objection, to have access at a single location, once each
calendar year, during ordinary business hours, to such books and records as may
be necessary, including any quantitative unit data that may be necessary for the
proper performance of the audit:
(i) to determine, in respect to any calendar year ending not more
than five (5) years prior to the date of such request, the correctness of
any report and/or payment made under this Agreement; or
(ii) to obtain information as to royalties payable for any such
period in case of failure to report and/or pay pursuant to the terms of
this Agreement.
ARTICLE VI
Confidentiality
6.1. ImClone shall disclose to Merck and Merck shall disclose to ImClone
such technology as shall be necessary or useful to assist the parties in
successfully carrying out the objectives of this
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Agreement, including, but not limited to, know-how and trade secrets, results of
the Research and Development, Licensed Product Technology and Alternative
Product Technology (hereinafter "Confidential Information"). Merck or ImClone,
as the case may be, shall not, during the term of this Agreement and for the
longer of the following: (i) such time as there continue to be royalty-bearing
sales pursuant to the terms of Section 2.5, (ii) the life of all Licensed
Product Patents and/or Alternative Product Patents, and (iii) ten years from the
execution date of this Agreement, disclose to any third party the other's
Confidential Information, without the express written permission of the other;
shall exercise the same degree of care as is exercised with respect to its own
Confidential Information to prevent disclosure of the same to any third party;
and shall not use the same for any purpose other than exercising any right or
rights granted to it herein; provided, however, that nothing herein contained
shall restrict either party with respect to the disclosure and/or use of
information which the recipient party can show by written records:
(i) was in its possession at the time of its receipt of same from
the disclosing party;
(ii) was part of the public knowledge or literature at the time of
its receipt from the disclosing party, or thereafter becomes part of the
public knowledge or literature other than as a result of an act or
omission to act on the part of the recipient; or
(iii) was received from a third party having the right to disclose
such information.
Specific technology disclosed by one party to the other hereunder shall
not be deemed to be within any of the above three (3) exclusions merely because
it is included within more general information falling within one of the
exclusions.
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6.2. Notwithstanding the provisions of Section 6.1 above, and to the
extent necessary:
(a) a party may disclose and use the other party's Confidential
Information for purposes of securing the registration of, and or
governmental approval to market pursuant to this Agreement, any Licensed
Products or Alternative Products;
(b) a party may disclose and use the other party's Confidential
Information where the disclosure and use of such will be useful or
necessary to the procurement of patent protection, pursuant to this
Agreement, for any Improvement relative to any Licensed Products or
improvements relative to any Alternative Products; and
(c) a party may disclose and use the other party's Confidential
Information to the extent that it is necessary or useful to aid in the
development and commercialization, pursuant to this Agreement, of any
Licensed Products or any Alternative Products.
ARTICLE VII
Patent Filing, Maintenance and Expenses
7.1. With respect to the filing of patent applications relating to the
Compound or any Improvement exclusively developed or acquired by ImClone,
ImClone shall be the primary filing party in the Territory and outside the
Territory. With respect to the filing of patent applications relating to the
Compound or any Improvement that are exclusively developed or acquired by Merck
or any of its Affiliates, Merck shall prepare and file a patent application in a
patent office of its choosing, and shall be the primary filing party in the
Territory and outside the Territory. The primary filing party shall cause the
applications to be filed through its attorneys. All expenses of the patent
applications and/or patent filings, prosecution and/or maintenance costs shall
be borne by the party that has the right to exploit the patent in the country in
which the application is filed.
7.2. In the case of patent applications relating to compounds jointly
developed or acquired by the parties, Merck shall be the primary filing party
for filings in the Territory and ImClone shall be the
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primary filing party for all filings outside the Territory and each party shall
inform the other of all activities with respect to filings, prosecution and
maintenance of the patent applications, and shall provide to the other party
copies of all office actions/official actions and other communications
concerning said applications within two (2) weeks after receipt thereof;
provided, however, that all applications shall first be filed internationally
under the Patent Cooperation Treaty and diligently prosecuted by a patent
attorney or patent agent mutually acceptable to the parties. Both parties shall
be apprised by such patent attorney or patent agent of all office
actions/official actions and shall be entitled for a period of thirty (30)
calendar days, or such shorter period of time as may be necessary in order not
to prejudice the parties' rights pursuant to such filings, to review and make
comments with respect to all applications to and other communications with
patent authorities prior to the delivery or communication thereof.
7.3. Either party, at its option and at its sole expense, may elect to
have the normal term of any Licensed Patent or Alternative Product Patent
extended or restored under a given country's procedure of extending life for
time lost in government regulatory approval processes. The non-filing party
shall assist the filing party and take whatever reasonable action is necessary
to obtain such extension.
ARTICLE VIII
Infringement
8.1. Each party to this Agreement shall promptly notify the other of any
material infringement of Licensed Product Patents or Alternative Product Patents
or misappropriation of Licensed Product Technology or Alternative Product
Technology of which it becomes aware within the Territory, and shall provide the
other with any available evidence thereof. ImClone shall have the right, but not
the obligation, to bring, defend and maintain any appropriate suit, action or
proceeding involving any such infringement (an "Infringement Action"). ImClone
shall give Merck notice of its intention to commence any such Infringement
Action and Merck may at any time elect to participate in such Infringement
Action in accordance with Section 8.2.
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8.2. In an Infringement Action brought in accordance with Section 8.1(a),
Merck shall, upon the reasonable request of ImClone, cooperate with and assist
ImClone by, for example, executing all papers and performing such other acts as
reasonably may be required and, at its option, may be represented by counsel of
its choice at Merck's expense. Should ImClone lack standing or jurisdiction to
bring any Infringement Action, Merck shall do so at ImClone's request, at
ImClone's expense.
8.3. Subject to the right of Merck to be represented by counsel of its
choice, ImClone shall have the exclusive right to control any Infringement
Action brought, defended or maintained by ImClone pursuant to this Section 8.3
or by Merck pursuant to the last sentence of Section 8.2; provided, however,
that ImClone may not, without the prior written consent of Merck (which consent
may not be unreasonably withheld), enter into any agreement or other arrangement
effecting a settlement of such Infringement Action.
8.4. Subject to Section 8.5 hereof, any damages collected pursuant to this
Article VIII (whether by judgment or settlement) first shall be applied to
reimburse the parties for their respective litigation expenses. If the damages
are insufficient to reimburse both parties for such litigation expenses, the
parties shall receive reimbursement pro rata. Any remaining amounts of damages
shall be justly and equitably distributed between the parties in order to
reflect the relative benefits, as reflected in the royalties provisions set
forth in Section 4.2 hereof, the parties would have received hereunder but for
the infringement or misappropriation that was the subject of the Infringement
Action.
8.5. If Merck shall have given notice of a material infringement of
Licensed Product Patents or Alternative Product Patents in accordance with
Section 8.1, and ImClone shall have failed to bring such an Infringement Action
within thirty (30) calendar days of receiving such notice, Merck, at Merck's
expense, shall have the right to bring and maintain an Infringement Action;
provided, however, that Merck may not, without the prior written consent of
ImClone, which consent shall not be unreasonably withheld, enter into any
agreement or other arrangement effecting a settlement of such Infringement
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Action. Notwithstanding any other provision in this Agreement, any damages
collected pursuant to this Section 8.5 (whether by judgment or settlement) shall
be paid in their entirety solely to Merck.
8.6. If either party institutes an Infringement Action, the other party
shall fully cooperate with and supply at its own expense all assistance
reasonably requested by the party which instituted such Infringement Action.
ARTICLE IX
Representations and Warranties; Certain Covenants
9.1. Representations and Warranties of ImClone.
ImClone hereby represents and warrants that:
(a) ImClone is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and has all
corporate powers and all governmental licenses, authorizations, consents,
permits, registrations and approvals required to carry on its business as
now conducted except for such matters as would not have a materially
adverse effect on the business, assets or results of operations of ImClone
and its subsidiaries, taken as a whole, and except any such effect
resulting from or arising in connection with (i) changes or conditions
affecting the biopharmaceuticals industry generally or (ii) changes in
economic, regulatory or political conditions generally.
(b) The execution, delivery and performance by ImClone of this
Agreement are within ImClone's corporate powers and have been duly
authorized by all necessary corporate action on the part of ImClone. This
Agreement constitutes a valid and binding agreement of ImClone,
enforceable in accordance with its terms, subject to (i) bankruptcy,
insolvency or similar laws affecting creditors' rights generally, (ii)
general equitable principles and (iii) the Exon-Xxxxxx Act, Section 721 of
Title VII of the Defense
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Production Act of 1950, as amended, and the rules and regulations
promulgated thereunder.
(c) Any Acquired Voting Shares or Milestone Conversion Shares, at
the time issued and delivered to Merck pursuant to Section 4.1 and
Schedule E of this Agreement, shall be newly issued shares of Common
Stock, validly issued, fully paid and non-assessable and free and clear of
any and all liens, encumbrances and claims of ownership of any kind of any
third party and such Acquired Voting Shares or Milestone Conversion Shares
shall be free of preemptive or similar rights. Any Acquired Non-Voting
Shares, at the time issued and delivered to Merck pursuant to Section 4.1
and Schedule E of this Agreement, shall be newly issued shares of
non-voting capital stock of ImClone, validly issued, fully paid and
non-assessable and free and clear of any and all liens, encumbrances and
claims of ownership of any kind of any third party and such Acquired
Non-Voting Shares shall be free of preemptive or similar rights. Based
only on the market price of the Common Stock as of the date of this
Agreement, ImClone represents and warrants that a sufficient number of
shares of Common Stock has been authorized and reserved for Merck's
acquisition of Acquired Voting Shares and Milestone Conversion Shares.
ImClone covenants and agrees that a sufficient number of shares of Common
Stock shall continue to be authorized and reserved for Merck' purchases of
Acquired Voting Shares and Milestone Conversion Shares hereunder.
(d) The execution, delivery and performance by ImClone of this
Agreement require no action by or in respect of, or declaration to or
filing with, any governmental body, agency, official or authority other
than compliance with (i) any applicable requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act") and state securities or
"blue sky" laws, (ii) any applicable requirements of Delaware law, (iii)
the rules and regulations of the National Association of Securities
Dealers and the Nasdaq Stock
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Market, and (iv) any applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act").
(e) The execution, delivery and performance by ImClone of this
Agreement do not and will not (i) contravene or conflict with the
certificate of incorporation or bylaws of ImClone; (ii) contravene or
conflict with or constitute a violation of any provision of any law,
regulation, judgment, injunction, order or decree binding upon or
applicable to ImClone; (iii) contravene, conflict with, constitute a
breach of or default under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of ImClone under,
any provision of any agreement, contract or other instrument binding upon
ImClone or any of its properties or (iv) result in the creation or
imposition of any lien, encumbrance of claim of ownership of any kind by
any third party on any asset, whether tangible or intangible, of ImClone.
(f) ImClone owns the Licensed Product Patents and such rights are
not subject to any lien, encumbrance or claim of ownership of any kind by
any third party.
(g) To ImClone's knowledge the Licensed Product Patents are valid
and enforceable.
(h) To ImClone's knowledge, ImClone has not engaged in any conduct,
or omitted to perform any necessary act, the result of which could
invalidate any of the Licensed Product Patents or materially adversely
affect the enforceability of any of the Licensed Product Patents.
(i) With the exception of the patents for which Collateral License
Agreements are to be obtained, ImClone is unaware of any patent or claim
by any third party upon the basis of which ImClone has any reason to
believe that Merck's practice of the Licensed Product Technology will
infringe any valid patent.
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9.2. Representations and Warranties of Merck.
Merck hereby represents and warrants that:
(a) Merck is a corporation with general partners duly incorporated,
validly existing and in good standing under the laws of the Federal
Republic of Germany, and has all corporate powers and all governmental
licenses, authorizations, consents, permits, registrations and approvals
required to carry on its business as now conducted except for such matters
as would not have a materially adverse effect on the business, assets or
results of operations of Merck and its subsidiaries, taken as a whole, and
except any such effect resulting from or arising in connection with (i)
changes or conditions affecting the biopharmaceuticals industry generally
or (ii) changes in economic, regulatory or political conditions generally.
(b) The execution, delivery and performance by Merck of this
Agreement are within Merck's corporate powers and have been duly
authorized by all necessary corporate action on the part of Merck. This
Agreement constitutes a valid and binding agreement of Merck, enforceable
in accordance with its terms, subject to (i) bankruptcy, insolvency or
similar laws affecting creditors' rights generally, (ii) general equitable
principles and (iii) the Exon-Xxxxxx Act, Section 721 of Title VII of the
Defense Production Act of 1950, as amended, and the rules and regulations
promulgated thereunder.
(c) The execution, delivery and performance by Merck of this
Agreement require no action by or in respect of, or declaration to or
filing with, any governmental body, agency, official or authority other
than compliance with any applicable requirements of the HSR Act.
(d) The execution, delivery and performance by Merck of this
Agreement do not and will not (i) contravene or conflict with the Satzung
and other constitutive documents of
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Merck; (ii) contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree
binding upon or applicable to Merck; or (iii) contravene, conflict with,
constitute a breach of or default under, or give rise to any right of
termination, cancellation or acceleration of any right or obligation of
Merck under, any provision of any agreement, contract or other instrument
binding upon Merck or any of its properties.
(e) In entering into this Agreement, Merck has relied solely on its
own scientific, marketing and distribution expertise and experience and
its analysis and evaluation of both the scientific and commercial value of
the intended Licensed Products.
(f) Merck will purchase any Acquired Voting Shares for its own
account for investment only and not with a view towards the public sale or
distribution thereof except pursuant to sales registered under the U.S.
Securities Act of 1933, as amended (the "1933 Act") or an exemption
therefrom.
(g) Merck is an "accredited investor" as that term is defined in
Rule 501(a)(3) of Regulation D under the 1933 Act.
(h) Merck understands that any Acquired Voting Shares, Acquired
Non-Voting Shares and Milestone Conversion Shares will be offered and sold
to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that
ImClone will rely upon the truth and accuracy of, and Merck's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of ImClone set forth herein in order to determine the
availability of such exemption and the eligibility of Merck to acquire any
Acquired Voting Shares, Acquired Non-Voting Shares or Milestone Conversion
Shares.
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(i) Merck and its advisors, if any, will be furnished with all
materials relating to the business, finances and operations of ImClone and
materials relating to the offer and sale of any Acquired Voting Shares,
Acquired Non-Voting Shares or Milestone Conversion Shares requested by
Merck. Merck and its advisors, if any, will be afforded the opportunity to
ask questions of ImClone and receive complete and satisfactory answers to
any such inquiries. Merck understands that its investment in any Acquired
Voting Shares, Acquired Non-Voting Shares or Milestone Conversion Shares
will involve a high degree of risk.
(j) Merck understands that no United States federal or state agency
or any other government or governmental agency will pass on or make any
recommendation or endorsement of any Acquired Voting Shares, Acquired
Non-Voting Shares or Milestone Conversion Shares.
(k) Merck understands that the Acquired Voting Shares, Acquired
Non-Voting Shares and Milestone Conversion Shares have not been, are not
being, and will not be registered under the 1933 Act or any United States
state securities laws or any other laws, and may not be transferred unless
subsequently registered thereunder or pursuant to an exemption from such
registration and, except as specified in this agreement, neither ImClone
nor any other Person is under any obligation to register such securities
under the 1933 Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder.
(l) Merck agrees (and shall cause each of its Affiliates to agree)
that in no event shall it make a disposition, directly or indirectly, of
such Acquired Non-Voting Shares other than to Merck or to an Affiliate of
Merck, unless it shall have first obtained the prior written consent of
ImClone.
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(m) Merck understands that any Acquired Voting Shares, Acquired
Non-Voting Shares and Milestone Conversion Shares may bear a restrictive
legend in substantially the following form (and a stop-transfer order may
be placed against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID ACT OR
PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION.
9.3. The parties hereby covenant and agree as follows:
(a) ImClone covenants that at no time during the term of this
Agreement or at any time thereafter, so long as Merck shall enjoy a
right originating under this Agreement, shall ImClone assign,
transfer, encumber, hypothecate or grant rights in or with respect
to any Licensed Product and/or Alternative Product to any Person,
including any Affiliate of ImClone, inconsistent with the grants and
other rights reserved to Merck under this Agreement.
(b) Merck covenants that at no time during the term of this
Agreement or at any time thereafter, so long as ImClone shall enjoy
a right originating under this Agreement shall Merck assign,
transfer, encumber, hypothecate or grant rights in or with respect
to any Licensed Product and/or Alternative Product to any Person,
including any Affiliate of Merck, inconsistent with the grants and
other rights reserved to ImClone under this Agreement.
9.4. ImClone hereby covenants and agrees that it shall not, for a period
of six months after the execution of this Agreement, without the prior written
consent of Merck, directly or indirectly, take (nor
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shall ImClone authorize or permit its officers, directors, employees,
representatives, investment bankers, attorneys, accountants or any other agent
or any Affiliate of ImClone, to take) any action to:
(a) encourage, solicit or initiate the submission of any Acquisition
Proposal (as defined below);
(b) except as permitted below, enter into any agreement with respect
to or propose any Acquisition Proposal; or
(c) except as permitted below, participate in any way in discussions
or negotiations with, or furnish any information to, any Person (other
than Merck, its Affiliates or its officers, directors, employees,
representatives, investment bankers, attorneys, accountants or other
agents of Merck) in connection with, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to, any Acquisition Proposal;
provided, however, that ImClone may participate in discussions or
negotiations or enter into an agreement (including as a part thereof making any
counter-proposal) with or furnish information to any third party (so long as it
has complied with this Section 9.4) if the Board of Directors determines in good
faith, based upon advice of outside counsel, that the failure to provide such
information or participate in such discussions or negotiations or consummate
such Acquisition Proposal would cause the directors to be subject to a
substantial risk of breach of their fiduciary duties under Delaware law. For
purposes of this Agreement, "Acquisition Proposal" shall mean any bona fide
proposal made to acquire (i) beneficial ownership (as defined under Rule 13d-3
under the 0000 Xxx) of a 10% or greater equity interest in ImClone in any single
or multi-step transaction or series of related transactions which is structured
to permit any Person to acquire beneficial ownership of a 10% or greater equity
interest in ImClone or (ii) a material part of the business or assets of
ImClone. ImClone hereby acknowledges and agrees that Merck
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has agreed to enter into this Agreement in reliance on the covenants and
agreements set forth in this Section 9.4.
9.5. As a condition to Merck's entering into this Agreement and making the
Milestone Payments, Merck shall receive, respectively, on the date of the
execution of this Agreement and on the date of the issuance of Acquired Voting
Shares, Acquired Non-Voting Shares or Milestone Conversion Shares to Merck,
opinion letters of the general counsel of ImClone, in form and substance
satisfactory to Merck, substantially in the form set forth in Schedule H,
attached hereto and specifically incorporated herein.
9.6. Subject to Section 11.7 hereof, ImClone hereby covenants and agrees
to use its best reasonable commercial efforts to negotiate and enter into, at
the earliest practicable date, all of the Collateral License Agreements, which
agreements shall be in form and substance reasonably satisfactory to Merck.
Merck hereby covenants and agrees to use its best reasonable commercial efforts
to cooperate with ImClone to take any appropriate action and/or execute any
documents of any kind which may be reasonably necessary for ImClone to fulfill
its obligations under this Section 9.6. Each party shall bear its own expenses
with respect to the negotiation of such agreements. Merck and ImClone shall
share equally the payment of royalties due under the Collateral License
Agreements in the Territory ("Collateral License Agreement Royalties").
9.7. Merck hereby covenants and agrees that all sales of Licensed
Products, Alternative Products and Merck Products pursuant to this Agreement,
other than sales to Merck's Affiliates, shall be made on an arms-length basis.
9.8. Merck shall use its best reasonable commercial efforts to develop
(including the timely and diligent pursuit of clinical trials and all applicable
regulatory approvals) and market the Licensed Products within the Territory;
provided, however, that Merck shall have the right, at its sole discretion,
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not to develop and market the Licensed Products in a given country in order to
optimize sales of Licensed Products within the Territory taken as a whole.
9.9. Standstill.
(a) During the Standstill Period Merck shall not, and shall not
permit its Affiliates to, purchase or otherwise acquire (whether through
conversion of the Series A Convertible Preferred Stock, acquisition of
Acquired Voting Shares or Acquired Non-Voting Shares or conversion
thereof, open-market purchases, privately-negotiated purchases, merger,
tender offer or otherwise), or agree or offer to purchase or otherwise
acquire (whether through conversion of the Series A Convertible Preferred
Stock, acquisition of Acquired Voting Shares or Acquired Non-Voting
Shares, open-market purchases, privately-negotiated purchases, merger,
tender offer or otherwise) beneficial ownership of any Voting Securities,
if after giving effect thereto Merck and its Affiliates would beneficially
own Voting Securities representing more than 19.9% of Total Voting Power.
As used herein, "Total Voting Power" means the aggregate number of votes
which may be cast by holders of outstanding Voting Securities and "Voting
Securities" means all securities of ImClone entitled, in the ordinary
course, to vote in the election of directors of ImClone. As used in this
Agreement, the terms "beneficial ownership" and "beneficially own" shall
be determined in accordance with Rules 13d-3 and 13d-5 under the 1934 Act;
provided, however, that for purposes of this Section 9.9(a) only, Merck
shall not be deemed to beneficially own any Common Stock which may be
issued solely upon conversion of the Series A Preferred Stock until such
time as such Series A Preferred Stock is converted into Common Stock;
provided, further, that nothing herein shall permit Merck or its
Affiliates during the Standstill Period to convert any Series A Preferred
Stock if after such conversion Merck and its Affiliates would beneficially
own Voting Securities representing more than 19.9% of Total Voting Power.
Notwithstanding
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anything in this Agreement to the contrary, beginning on the date which is
six months from the date of the execution of this Agreement and ending
upon the conclusion of the Standstill Period, Merck and its Affiliates
shall not directly or indirectly purchase or otherwise acquire beneficial
ownership of Voting Securities through open-market or privately-negotiated
transactions.
(b) During the Standstill Period Merck shall not, and shall not permit its
Affiliates to (i) make, or take any action to solicit, initiate or encourage, an
Acquisition Proposal; (ii) "solicit," or become a "participant" in any
"solicitation" of, any "proxy" (as such terms are defined in Regulation 14A
under the 0000 Xxx) from any holder of Voting Securities in connection with any
vote on any matter, or agree or announce its intention to vote with any Person
undertaking a "solicitation"; (iii) form, join or in any way participate in a
"group" (within the meaning of Section 13(d)(3) of the 0000 Xxx) with respect to
any Voting Securities; (iv) grant any proxies with respect to any Voting
Securities to any Person (other than as recommended by the Board of Directors of
ImClone) or deposit any Voting Securities in a voting trust or enter into any
other arrangement or agreement with respect to the voting thereof; or (v)
assist, advise or encourage any Person with respect to, or seek to do, any of
the foregoing.
(c) Merck agrees that any breach by it of this Section 9.9 would
irreparably injure ImClone and that money damages would be an inadequate
remedy therefor. Accordingly, Merck agrees that ImClone shall be entitled
to one or more injunctions enjoining any such breach and requiring
specific performance of this Section 9.9 and consents to the entry
thereof, in addition to any other remedy to which ImClone is entitled at
law or in equity.
(d) This Section 9.9 shall supercede Section 4(e) of the Preferred
Stock Purchase Agreement, which Section 4(e) shall be of no further
effect.
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9.10. Prohibited Transactions. Merck hereby agrees that it shall not (and
shall not permit any Affiliate or any sublicensee or its Affiliate to), directly
or indirectly, sell, export, reexport, transmit or transfer (i) any Licensed
Products, Alternative Products, Licensed Product Technology or Alternative
Product Technology or (ii) any products, technology or technical data
incorporating any of the foregoing to (a) any countries or Persons that are
subject to restrictions under the U.S. Export Administration Regulations; (b)
any end-user which Merck knows or has reason to know will utilize such Licensed
Products, Alternative Products or Licensed Product Technology in the design,
development or production of nuclear, chemical or biological weapons; or (c) any
other country or Person to which the sale, export, reexport, transmission or
transfer is restricted pursuant to U.S. economic sanctions laws and regulations,
including but not limited to the restrictions set forth at Title 31, Chapter V
of the Code of Federal Regulations; in each case of clauses (a), (b) and (c)
above without the prior written consent of the Bureau of Export Administration
of the U.S. Department of Commerce, the Office of Foreign Assets Control of the
U.S. Department of the Treasury, and/or such other governmental entity as may
have jurisdiction over such sale, export, reexport, transmission, transfer or
transactions. Merck hereby covenants and agrees that it shall not (and shall not
permit any Affiliate or any sublicensee or its Affiliate to) require ImClone or
any of its Affiliates to take any of the actions proscribed pursuant to this
Section 9.10.
9.11. Merck hereby covenants and agrees that it shall not (and shall not
permit any Affiliate or any sublicensee or its Affiliate) directly or indirectly
to sell or otherwise transfer any Licensed Products or Alternative Products (i)
outside the Territory or (ii) to any Person which Merck or any of its Affiliates
or any sublicensee or its Affiliate knows or has reason to know intends to use,
sell or transfer Licensed Products or Alternative Products in or to any location
outside of the Territory.
9.12. ImClone hereby covenants and agrees that it shall not (and shall not
permit any Affiliate or any sublicensee or its Affiliate) directly or indirectly
to sell or otherwise transfer any Licensed Products or Alternative Products (i)
within the Territory or (ii) to any Person which ImClone or any of its
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Affiliates or any sublicensee or its Affiliate knows or has reason to know
intends to use, sell or transfer Licensed Products or Alternative Products in or
to any location within of the Territory.
ARTICLE X
Indemnification
10.1. ImClone shall indemnify, hold harmless and defend Merck and its
Affiliates from and against any and all Losses resulting directly from any
claims or actions for patent infringement, or from any judgment entered therein,
which may be brought against Merck or any of its Affiliates for patent
infringement as a result of its activities under the Agreement in connection
with the development or commercialization of the Compound, except for (a)
potential claims or actions (other than potential claims or actions with respect
to the Collateral License Agreements and the related patent applications and
patents) of which Merck and its Affiliates have actual knowledge as of the date
of this Agreement and (b) potential claims or actions based on patents not yet
issued unless, as of the date of this Agreement, ImClone had or should have had
knowledge of such patents.
10.2. Prior to the commercialization of Licensed Products and Alternative
Products, respectively, in the Territory, each party shall indemnify, hold
harmless and defend (the "Indemnifying Party") the other party and its
Affiliates (each, an "Indemnified Party") against any and all Losses suffered by
an Indemnified Party arising out of, relating to, or based upon any claim by a
third party, or in any criminal or regulatory proceeding, relating or pertaining
in any way to a Licensed Product or Alternative Product, including but not
limited to claims that (a) a Licensed Product or Alternative Product was or is
unsafe, unfit or otherwise deficient in quality or condition or (b) a Licensed
Product or Alternative Product caused any death or personal injury of any kind,
including but not limited to any death or personal injury occurring during the
conduct of any clinical trial, in each case, to the extent that such Loss was
directly or indirectly caused by services performed or actions taken by an
Indemnifying Party or its employees, agents or subcontractors, including but not
limited to the manufacture, design, packaging, shipment, handling or storage of
any Licensed Product or Alternative Product, as the case may
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be. Upon the commercialization of any Licensed Product or Alternative Product,
as the case may be, the parties hereby agree that the respective supply
agreements that are to be negotiated, as described in Section 3.8 hereof, shall
include usual and customary terms of indemnification for similar agreements
under comparable circumstances.
10.3. ImClone shall indemnify, hold harmless and defend Merck and its
Affiliates against any and all Losses suffered by Merck arising out of, relating
to, or based upon
(a) the breach of any representation or warranty made by ImClone in
this Agreement, or
(b) the breach or failure to perform by ImClone of any agreement or
covenant contained in this Agreement.
10.4. Merck shall indemnify, hold harmless and defend ImClone and its
Affiliates against any and all Losses suffered by ImClone arising out of,
relating to, or based upon
(a) the breach of any representation or warranty made by Merck in
this Agreement, or
(b) the breach or failure to perform by Merck of any agreement or
covenant contained in this Agreement.
10.5. This Article X shall survive the termination of the Agreement.
ARTICLE XI
Duration and Termination
11.1. This Agreement, unless it is sooner terminated as herein provided,
shall remain in full force and effect for that period or periods set forth in
Section 2.5 hereof.
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11.2. The parties may mutually agree at any time to terminate this Agreement at
a fixed date. Prior to or at termination, as the case may be, if any portion of
any royalty payment under Article IV is due ImClone through the agreed-upon
termination date, based on a proration according to calendar time, such
portion
shall be paid by Merck to ImClone.
11.3. On each Milestone Payment Date after the execution of this
Agreement, Merck shall have the unconditional right, at its sole discretion, to
terminate this Agreement by delivering a written notice to that effect to
ImClone, in which case Merck shall have no obligation to make any payment with
respect to any Milestone Payment that otherwise would have been due and payable
on such Milestone Payment Date but for the operation of this Section 11.3.
11.4. If, within one year of the first commercial sale of the first
Licensed Product in the Territory, Merck reasonably determines that it is not
economically feasible to market Licensed Products in the Territory, then Merck
shall have the right, upon written notice delivered to ImClone, to terminate the
development and sale of Licensed Products in the Territory, in which case
ImClone shall be obligated to repay Merck 50% of all cash amounts paid by Merck
with respect to Milestone Payments as of such date; provided, however, that
ImClone shall not be obligated to repay Milestone Payments in respect of
purchases by Merck of Acquired Voting Shares or Acquired Non-Voting Shares
pursuant to Section 4.1 and Schedule E hereof; provided, further, that ImClone
only shall be required to make such repayments out of revenues received by
ImClone from the sale of Licensed Products in the United States and Canada at
the rate of [ *** ] of the [ *** ] of such sales in Canada and the United States
for the first [ *** ] and [***] of the [ *** ] of any such sales in Canada and
the United States in excess of [ *** ]; provided, further that to the extent
ImClone shall have sublicensed Licensed Products to a Person other than an
Affiliate of ImClone, ImClone only shall be required to make such payments at
the rate of [ *** ] of the fees and royalties received from such sublicensee on
account of the sale of Licensed Products in the United States and Canada.
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11.5. In the event that Merck or ImClone shall at any time default in the
performance of any of the material covenants or conditions contained herein,
Merck or ImClone, as the case may be, shall have the right to notify the other
of such default and that the notifying party intends to terminate this Agreement
unless such default is corrected. Unless such default shall be corrected by the
defaulting party within sixty (60) calendar days from receipt by it of such
notice, the notifying party shall be entitled, by notice to the other, to
terminate this Agreement at any time after the end of the sixty (60) calendar
day period if the default continues.
11.6. Either party may terminate this Agreement and the license hereunder,
by delivering a written notice to that effect to the other party, in the event
that such other party:
(a) is the subject of an order for relief by a bankruptcy court;
(b) applies for or consents to the appointment of any receiver,
trustee, custodian, conservator, liquidator, rehabilitator, or similar
officer for it or for all or substantially all of its property; or any
receiver, trustee, custodian, conservator, liquidator, rehabilitator, or
similar officer is appointed without the application or consent of such
other party and the appointment continues undischarged or unstayed for
sixty (60) calendar days; or
(c) institutes or consents to any bankruptcy, proposal in
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, custodianship, conservatorship, liquidation, rehabilitation,
or similar proceeding relating to all or substantially all of its property
under the laws of any jurisdiction.
11.7. ImClone acknowledges and agrees that the execution of all of the
necessary Collateral License Agreements is integral to the transactions
contemplated herein. If, as of the first anniversary of the date on which all
patents and patent applications referred to in the first paragraph of Schedule F
are deemed valid and no longer subject to opposition or appeal, ImClone shall
not have (i) entered into all of the Collateral License Agreements, or (ii)
demonstrated to the satisfaction of Merck that some or all of
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such agreements are either not necessary or are required to be entered into by
Merck rather than ImClone and ImClone has entered into those not so
demonstrated, then Merck shall have the right, at its sole option, upon written
notice delivered to ImClone, to terminate this Agreement, in which case ImClone
shall be obligated to repay in full all cash amounts with respect to Milestone
Payments paid by Merck as of the date of such notice of termination; provided,
however, that Merck shall retain all its rights with respect to the Chemotherapy
Patent and Radiotherapy Patent, as provided in Section 2.2 hereof, and Section
2.2 and Section 4.2(d) shall survive termination of this Agreement. The parties
acknowledge and agree that the actual amount of damages that would be suffered
by Merck if ImClone or Merck, as the case may be, fails to enter into all of the
Collateral License Agreements before the first anniversary referred to above
cannot be, or would be difficult to, determine. It is hereby agreed, therefore,
that if ImClone or Merck, as the case may be, fails to enter into all of the
Collateral License Agreements within said one-year period, then ImClone, upon
written demand from Merck, shall be obligated to pay to Merck within ten (10)
calendar days of ImClone's receipt of such written demand, $500,000 as
liquidated damages. This payment of liquidated damages shall be in addition to
the repayments of Milestone Payments described above in this Section 11.7 and to
any other rights to indemnification or damages to which Merck may be entitled
hereunder or according to any applicable law.
11.8. Upon termination of this Agreement, the license and other rights
granted herein shall terminate in accordance with the appropriate provisions,
and all rights related to the terminated portion of the license shall revert to
the party(ies) herein which are their respective original licensors.
11.9. Termination or expiration of this Agreement shall be without
prejudice to the right of any party that is not in default hereunder to receive
all payments accrued and unpaid at the effective date of such expiration or
termination, to the remedy of either party in respect to any previous breach of
any of the covenants herein contained, and to any other provisions herein which
expressly or necessarily call for performance after such expiration or
termination. Article I, Section 2.2, Section 3.7, Section 4.1(c), Section
4.2(d), Section 4.3, Section 4.4, Section 4.5, Section 4.6, Section 4.8, Section
4.9(d), Section 4.10
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(only with respect to Merck Products), paragraphs 2 and 4 of Schedule E,
Schedule G, Article V, Article VI, Section 9.2(h), (i), (j), (k), (l) and (m),
Section 9.7 (only with respect to Merck Products), Section 9.9, Section 9.10,
Section 9.11, Article X, Section 11.8, Section 11.9, Article XIII, Section 16.2,
Section 16.4, Section 16.5, Section 16.6, Section 16.7 and Section 16.8 shall
survive expiration or termination.
11.10. If Merck fails in a country in which Merck has the right to sell
Licensed Products or Alternative Products to pursue in a timely fashion and with
all due diligence regulatory approval or sale of a Licensed Product or
Alternative Product, and such failure is not remedied within one hundred twenty
(120) calendar days after written notice from ImClone specifying such failure,
ImClone may immediately, upon written notice to Merck, terminate the license
with respect to such Licensed Products and/or Alternative Products in such
country; provided, however, that Merck shall have the right, at its sole
discretion, not to pursue such regulatory approvals or sales in a given country
in order to optimize sales within the Territory taken as a whole, in which case
ImClone shall not have the right to terminate such license with respect to such
country pursuant to this Section 11.10.
ARTICLE XII
Successors and Assigns
12.1. The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns. Neither party may assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto except to the successor of all or substantially all of
the assigning party's pharmaceutical business (whether by merger, asset sale,
operation of law or otherwise).
12.2. Notwithstanding the foregoing, Merck may assign its rights, in whole
or in part, and delegate its duties and obligations, in whole or in part,
without the consent of ImClone to a directly or indirectly majority-owned
subsidiary of Merck, (the "Assignee") which Assignee shall enter into an
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assignment and assumption agreement acceptable in form and substance to ImClone.
In the event that Merck assigns its rights or delegates its duties and
obligations hereunder in accordance with this Article XII, all references to
Merck shall refer to the Assignee as well as to Merck and Merck shall remain
primarily liable for the performance of its obligations hereunder.
ARTICLE XIII
Arbitration
13.1. Any dispute between the parties, relating to the interpretation,
implementation or application of this Agreement which cannot be resolved by
negotiation shall be settled by arbitration, at the request of either party, by
written notice to the other, under the Commercial Rules of Arbitration of the
American Arbitration Association as in effect at the time such request for
arbitration is made, except that each party shall select one arbitrator, and the
two arbitrators thus selected shall thereafter select a third in accordance with
the aforesaid Rules of the American Arbitration Association. The arbitration
shall be conducted at the domicile of the defendant. All expenses and fees of
the arbitrators shall be divided equally between the parties unless otherwise
ordered by the arbitrators. The award in any such arbitration proceeding shall
be final and binding upon the parties and shall not be subject to appeal or
other legal recourse by either party. This provision shall not be construed to
preclude any action for an injunction or other equitable relief before any court
of competent jurisdiction.
ARTICLE XIV
Notices
14.1. Any notice expressly provided for under this Agreement shall be in
writing, shall be given either manually, by express courier, or by facsimile and
shall be deemed sufficiently given if and when received by the party to be
notified as follows:
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if Merck, to:
Frankfurter Stra(beta)e 250
X-00000 Xxxxxxxxx
Xxxxxxx Xxxxxxxx of Germany
Attention: Xxxxx-Xxxxx Xxxxxxx
Facsimile: 011-49-6151-72-7773,
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 XXX
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000; and
if to ImClone, to:
000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000 XXX
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000 XXX
Attention: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000.
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ARTICLE XV
Entire Agreement
15.1. This Agreement constitutes the entire agreement between Merck and
ImClone relating to the subject matter hereof. No variation or modification of
this Agreement, or waiver of any of the terms or provisions thereof, shall be
deemed valid unless in writing as an amendment hereto, signed by both parties.
ARTICLE XVI
Miscellaneous
16.1. The parties hereby represent and warrant that the persons executing
this Agreement below hold the offices designated, that they are duly authorized
to execute this Agreement and thereby bind the respective parties to its terms
and provisions, and that all required approvals of each signatory's superiors or
any committee or board have been obtained.
16.2. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to the conflicts-of-law rules
of such State.
16.3. This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
were upon the same instrument.
16.4. The captions herein are included for convenience of reference only
and shall be ignored in the construction or interpretation hereof.
16.5. After the execution of this Agreement, the parties hereto shall
cooperate with one another to take any appropriate action and/or execute any
documents of any kind which may be reasonably necessary to carry out any
provision of this Agreement, including but not limited to preparing and filing
any required notifications under the HSR Act in connection with the issuance of
Acquired Voting Shares, Acquired Non-Voting Shares or Milestone Conversion
Shares to Merck.
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16.6. No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
16.7. Force Majeure. Neither party shall be liable for delay or failure to
perform this Agreement, in whole or in part, by reason of contingencies beyond
the reasonable control of the party affected, whether herein specifically
enumerated or not, including among others, acts of God, war, acts of war,
revolution, civil commotion, riots, acts of public enemies, blockage or embargo,
delays of carriers, car shortage, fire, explosion, breakdown of equipment or
facilities, strike, lockout, labor dispute, casualty or accident, earthquake,
epidemic, flood, cyclone, tornado, hurricane or other windstorm, delays of
vendors or other contingencies interfering with production or with customary or
usual means of transportation of raw materials or products or with the supply of
coal, natural gas, oil or fuel, or by reason of any law, order, proclamation,
regulation, ordinance, demand, requisition or requirement or any other act of
any governmental authority, local, state, provincial or federal, including court
orders, judgments or decrees, or actions of any governmental authority
respecting the registration, re-registration, cancellation, suspension,
labeling, and/or ability to transport or sell products, or any other cause
whatsoever, whether similar or dissimilar to those enumerated above; provided,
that the party so affected shall within 24 hours give written notice to the
other party whenever such contingency or other act becomes reasonably
foreseeable and shall use its best efforts to overcome the effects of the
contingency as promptly as possible. Neither party shall be required to resolve
a strike, lockout or other labor problem in a manner which it alone does not
deem proper and advisable. The party affected by an event of the sort enumerated
in or contemplated by this Section may suspend performance of this Agreement for
a period of time equal to the duration of the event excusing such performance.
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16.8. Nothing contained herein shall, by virtue of this Agreement, create
a partnership, joint venture, agency or employment relationship between the
parties hereto. No agent or employee or either party hereto shall be the agent
or employee of the other party by virtue of this Agreement.
16.9. Nothing in this Agreement shall require ImClone to take any action
in connection with the issuance of any of its securities that would contravene
any federal or state securities laws applicable to ImClone.
16.10. Any notices to third parties and all other publicity concerning the
existence and terms of this Agreement and the transactions contemplated hereby
shall be jointly planned and coordinated by the parties hereto. Neither party
shall act unilaterally in this regard without the prior written consent of the
other party, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing provisions of this Section 16.10, either party may make such
announcements of, and/or provide publicity concerning, the existence and terms
of this Agreement and the transactions contemplated hereby as is reasonably
necessary or advisable, in the opinion of such party's counsel, to comply with
the provisions of any applicable law or regulation, including but not limited to
filings with the U.S. Securities and Exchange Commission or any other
governmental authority or with the National Association of Securities Dealers;
provided, however, that to the extent practical each party shall give the other
party prior notice of any such announcement or publicity.
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IN WITNESS WHEREOF, this Agreement has been executed on the date first
above written.
IMCLONE SYSTEMS INCORPORATED
By: /s/ Xx. Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xx. Xxxxxx X. Xxxxxx
Title: President
MERCK KGaA
By: /s/Prof. Xx. Xxxxxxxx Xxxxxxxx
---------------------------------
Name: Prof. Xx. Xxxxxxxx Xxxxxxxx
Title: General Partner, member of the
Executive Board, and CEO Pharma
By: /s/ Klaus Xxxxx Xxxxxxx
---------------------------------
Name: Xxxxx-Xxxxx Xxxxxxx
Title: Head of Legal Department
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SCHEDULES
SCHEDULE 2.8
Proposed License Agreement between ImClone and [ *** ] concerning exclusive
licensing by ImClone of intellectual property rights of ImClone in up to [***].
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SCHEDULE 4.9
FINANCING ASSISTANCE FOR MANUFACTURING FACILITY
PROPOSED TERMS
The Manufacturing Facility Line of Credit shall incorporate, among other
mutually agreed terms, the following terms:
Financing Assistance: Financing assistance will be provided by Merck
either in the form of (i) a credit facility
directly to ImClone ("Direct Credit") or (ii) a
guaranty of payment to a commercial bank providing
such credit facility to ImClone ("Guaranty");
provided, however, that such financing assistance
shall be subject to the prior approval by Merck of
a production concept, and such assistance shall be
exclusively for the realization of that concept.
In either case, the credit facility shall be
accessed by ImClone through the issuance of notes
(each, a "Note" and, collectively, the "Notes").
The Steering Committee may recommend an
alternative project to be undertaken to provide
for a production facility, in which case, at
Merck's sole option, Merck's obligations hereunder
shall be modified accordingly.
--------------------------------------------------------------------------------
Direct Credit If financing assistance is provided by means of a
Agreement: Direct Credit, the parties shall negotiate a
mutually satisfactory construction loan agreement
with usual and customary terms for similar
agreements under comparable circumstances.
--------------------------------------------------------------------------------
Guaranty: If financing assistance is provided by means of
the Guaranty, the parties shall negotiate a
mutually satisfactory guaranty agreement with
usual and customary terms for similar agreements
under comparable circumstances (including but not
limited to a reimbursement agreement).
--------------------------------------------------------------------------------
Amount: Up to thirty million U.S. dollars ($30 million).
--------------------------------------------------------------------------------
Maturity Date: At a date certain, between the [ *** ] and [ *** ]
anniversary of the first drawdown.
--------------------------------------------------------------------------------
Interest Rate: If financing assistance is provided by means of
Direct Credit, at an adjustable interest rate per
annum equivalent to [ *** ].
--------------------------------------------------------------------------------
Interest Payments: If financing assistance is provided by means of
Direct Credit, interest payments to Merck shall be
[ *** ] for the term of the Notes, payable in
cash; provided, however, that interest shall
accrue during the first [ *** ] quarters after the
issuance of the first Note and such interest, plus
compounded interest thereon, shall be due and
payable on the last day of the [ *** ] quarter.
--------------------------------------------------------------------------------
Principal Repayment: [ *** ].
--------------------------------------------------------------------------------
Drawdown Schedule: [ *** ] delivers written notice to Merck at least
10 days prior to any drawdown.
--------------------------------------------------------------------------------
Use of Proceeds: Planning, development and construction of a
manufacturing facility in conformity with the
production concept, including the purchase of
related
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equipment, to produce the Compound, Improvements,
Licensed Products and Alternative Licensed
Products and, subject to the prior approval of the
Steering Committee, other pharmaceutical products.
--------------------------------------------------------------------------------
Security Interest: As long as any Note shall remain outstanding and
prior to the maturity date, Merck shall retain the
senior security interest in the manufacturing
facility, including but not limited to all plant
and equipment, and a security interest in all
other assets of ImClone, including but not limited
to all of ImClone's patents, trademarks and other
intellectual property, such that Merck shall be
fully secured with respect to the total amount of
the Direct Credit or Guaranty, as the case may be.
--------------------------------------------------------------------------------
Change of Control: Upon a change of control of ImClone, (a) in the
case of a Direct Credit, the agreement with
respect to which the Direct Credit is provided to
ImClone shall terminate and all outstanding
principal and interest shall become immediately
due and payable, or (b) in the case of the
Guaranty, the Person taking control of ImClone
shall be obligated, as a condition to its taking
control, to cause the prompt release of Merck from
all of Merck's obligations under the Guaranty,
which release shall occur no later than thirty
(30) calendar days after the effective date of
such change of control.
--------------------------------------------------------------------------------
Termination Upon the termination of the Agreement pursuant to
of Agreement: Section 11.2, Section 11.5 (if such termination is
the result of a breach of the Agreement by
ImClone), Section 11.6, or Section 11.7, [ *** ].
Upon the termination of the Agreement pursuant to
Section 11.4, [ *** ]. Upon the termination of the
Agreement pursuant to Section 11.3 or Section 11.5
(if such termination is the result of a breach of
the Agreement by Merck), [ *** ].
Upon the termination of the Agreement for any
reason other than those listed in the three
paragraphs above, [ *** ].
Upon the termination of the Agreement for any
reason, in the case of a Guaranty, ImClone shall
be obligated to use its best reasonable efforts to
cause the prompt release of Merck from all of
Merck's obligations under the Guaranty.
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SCHEDULE A
DESCRIPTION OF C225
C225 - Epidermal Growth Factor Receptor (EGFr) Inhibitor
The active substance is C225 chimeric monoclonal antibody, a chimerized antibody
of the IgG1 subclass, derived from mouse hybridoma. The chimerization process
resulted in an IgG1 subclass antibody with binding affinity to EGFr and inhibits
EGF/TGF(alpha) induced activation of this tyrosine kinase receptor. C225 also
will result in the stimulation of EGFr internalization, effectively removing the
receptor from the cell surface for interaction with the ligand.
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SCHEDULE B
C225 INTERNATIONAL PATENTS AND PATENT APPLICATIONS
[ *** ]
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SCHEDULE C
DEFINITION OF "FULLY LOADED COST OF GOODS"
[ *** ]
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SCHEDULE D
RESEARCH AND DEVELOPMENT PROTOCOL
[ *** ].
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SCHEDULE E
MILESTONE PAYMENTS
1. The Milestone Payments under Section 4.1 of the Agreement, subject to Section
11.3 thereof, shall be made by Merck within thirty (30) calendar days of
ImClone's fulfillment of any given Milestone designated on the charts below
(each, a "Milestone"), in the amounts summarized therein (each, a "Milestone
Payment Date"). Such expected dates of achievement of Milestones shall be set
promptly by the Steering Committee following the execution of the Agreement, and
this Schedule E shall be amended accordingly. On the Milestone Payment Dates
designated below as "Milestone Payments with Equity Purchases" (Milestones
designated numbers 11 through 17 below), ImClone shall issue Acquired Voting
Shares or, as provided in Section 4.1(b) of the Agreement, Acquired Non-Voting
Shares to Merck, in each case at a per-share purchase price calculated in the
manner described below. The aggregate purchase price shall be the amount of the
respective Milestone Payment.
2. Conversion of Acquired Non-Voting Shares.
(a) During the Standstill Period, Acquired Non-Voting Shares shall be
convertible into shares of Common Stock, on a share-for-share basis (the
"Milestone Conversion Shares"), to the extent that the aggregate beneficial
ownership of Common Stock of Merck and its Affiliates (including for the
purposes of this calculation, all shares of Common Stock that Merck or its
Affiliates may have the right to acquire upon the conversion of the Series A
Convertible Preferred Stock but not including the Common Stock that Merck or its
Affiliates may have the right to acquire upon conversion of the Acquired
Non-Voting Shares) does not exceed 19.9% of the total outstanding shares of
Common Stock, on a primary basis on the date Merck notifies ImClone of its or
its Affiliate's intent to convert such Acquired Non-Voting Shares (the
"Conversion Notification Date"); provided, however, that the Acquired Non-Voting
Shares shall be convertible only if the Conversion Notification Date occurs
within five years of the date of the occurrence of the Milestone Payment Date to
which the Acquired Non-Voting Shares relate; and further, provided, that ImClone
shall not be obligated during the Standstill Period to issue the Milestone
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Conversion Shares if such issuance would cause the aggregate beneficial
ownership of Merck and its Affiliates of Common Stock (including for the
purposes of this calculation, all shares of Common Stock that Merck and its
Affiliates may have the right to acquire upon the conversion of the Series A
Convertible Preferred Stock but excluding the Common Stock that Merck and its
Affiliates may have the right to acquire upon the conversion of the Acquired
Non-Voting Shares) to exceed 19.9% of the total outstanding shares of Common
Stock on a primary basis as of the Conversion Notification Date.
(b) After the termination of the Standstill Period, Acquired Non-Voting
Shares shall be freely convertible into shares of Common Stock, on a
share-for-share basis; provided, however, that, with respect only to Acquired
Non-Voting Shares that were acquired by Merck during the Standstill Period, in
the event that Merck chooses to convert such Acquired Non-Voting Shares to
Milestone Conversion Shares after the termination of the Standstill Period and
Merck's beneficial ownership of Common Stock exceeds 19.9% of the total
outstanding shares of Common Stock on a primary basis as of the relevant
Conversion Notification Date, by the resolution of the ImClone Board of
Directors, Merck shall be obligated, without prejudice to Merck's registration
rights pursuant to Schedule G of the Agreement, to sell as soon as commercially
practicable the Milestone Conversion Shares it received upon such conversion.
(c) Merck agrees that in no event shall it make a disposition directly or
indirectly of any Acquired Non-Voting Shares, other than to an Affiliate of
Merck, unless it shall have first obtained the prior written consent of ImClone.
3. The purchase price of any Acquired Voting Shares or Acquired Non-Voting
Shares to be issued to Merck on any given Milestone Payment Date pursuant to
Section 4.1(a) and (b), respectively, of the Agreement and this Schedule E shall
be calculated as follows: On any given Milestone Payment Date, the purchase
price of the Acquired Voting Shares or Acquired Non-Voting Shares shall be the
sum of:
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(a) the average of the closing prices of shares of Common Stock as traded
on Nasdaq (or if the Common Stock is not then trading on Nasdaq on any
securities exchange or national automated inter-dealer stock quotation system on
which shares of Common Stock at any given time are listed or quoted) during the
preceding 30 trading days prior to such Milestone Payment Date and
(b) a premium on such 30-day average share price (the "Average Share
Price") to be calculated as follows:
(i) If ImClone achieves a Milestone on a date that is designated
"Early" on the table below, the premium shall be [ *** ]of the Average Share
Price;
(ii) If ImClone achieves a Milestone on a date that is designated
"On Time" on the table below, the premium shall be [ *** ] of the Average Share
Price; or
(iii) If ImClone achieves a Milestone on a date that is designated
"Late" on the table below, the premium shall be [ *** ] of the Average Share
Price;
provided, however, that in determining whether a Milestone is achieved on
a date that is designated "Early," "On Time" or "Late," such dates shall be
adjusted forward to take account any delays associated with activities within
Merck's sole control.
4. Notwithstanding any other provision of this Agreement, at least sixty (60)
calendar days prior to any issuance of any Acquired Voting Shares, Acquired
Non-Voting Shares or Milestone Conversion Shares to Merck hereunder, counsel for
both parties shall determine whether such issuance of shares to Merck or an
Affiliate of Merck will require any notification or any other action by either
party under the HSR Act, as then in effect. The parties hereto shall cooperate
with one another in good faith and, at their own expense, take any appropriate
actions, execute any documents, and prepare and file any required notifications
under the HSR Act prior to the issuance of any Acquired Voting Shares, Acquired
Non-Voting Shares or Milestone Conversion Shares to Merck or its Affiliates. No
Acquired Voting Shares,
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Acquired Non-Voting Shares or Milestone Conversion Shares shall be issued to
Merck or its Affiliates except in compliance with the applicable requirements of
the HSR Act.
[ *** ]
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SCHEDULE F
DESCRIPTION OF COLLATERAL LICENSE AGREEMENTS
Collateral License Agreements as follows:
License agreement to be entered into with [ *** ].
Sublicense rights in the Territory to [ *** ].
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SCHEDULE G
REGISTRATION RIGHTS
1. Demand Registration.
(a) One time during any 12-month period, Merck shall have the right to
make a written request for registration under the 1933 Act of all or part of the
Registrable Securities (a "Demand Registration"); provided, however, that
ImClone shall be obligated hereunder to make no more than four Demand
Registrations in total. A registration shall not count as a Demand Registration
until it has become effective. If Merck so elects, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of an underwritten offering. Merck shall select the book-running and other
managing underwriters in connection with such offering and any additional
underwriters or investment bankers to be used in connection with the offering;
provided, that such underwriters and investment bankers must be reasonably
satisfactory to ImClone. Upon written request of Merck in compliance with the
preceding sentence that ImClone effect registration with respect to all or a
part of the Registrable Securities, ImClone shall, as expeditiously as
reasonably possible:
(i) prepare and file within 45 days of such request for registration
with the Commission a registration statement on Form S-3 or on any form for
which ImClone then qualifies or which counsel for ImClone shall deem
appropriate, as the case may be, and which form shall be available for the sale
of the Registrable Securities; provided, that before filing with the Commission
a registration statement or prospectus or any amendments or supplements thereto,
ImClone shall (i) furnish to one counsel selected by Merck copies of all such
documents proposed to be filed, which documents shall be subject to reasonable
advance review of such counsel, and (ii) notify Merck of any stop order issued
or threatened by the Commission and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered;
(ii) keep such registration effective for a period of no longer than
two (2) years after the date of filing of such registration statement or until
Merck and/or its Affiliates have completed the distribution described in the
registration statement relating thereto, whichever first occurs;
(iii) prepare and file with the Commission such amendments and
supplements to such registration statements and the Prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement;
(iv) furnish to Merck such number of copies of such registration
statement, each amendment and supplement thereto (in each case including all
exhibits thereto), the Prospectus included in such registration statement
(including each preliminary prospectus), in conformity with the requirements of
the 1933 Act and such other documents as Merck may reasonably request in order
to facilitate the disposition of the Registrable Securities;
(v) advise Merck and the managing underwriters, if any, and, if
requested by Merck or the managing underwriters, if any, confirm such advice in
writing, when a registration statement or any amendment thereto has been filed
with the Commission and when the registration statement or any post-effective
amendment thereto has become effective;
(vi) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of any registration statement, or the lifting of
any suspension of the qualification (or
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xiv
exemption from qualification) of the Registrable Securities for sale in any
jurisdiction, at the earliest possible time;
(vii) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by ImClone are then
listed;
(viii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(ix) immediately notify Merck at any time when a Prospectus relating
thereto is required to be delivered under the 1933 Act, of the happening of any
event as a result of which the Prospectus included in such registration
statement contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and shall
promptly prepare and furnish to Merck a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of the Registrable
Securities, such Prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(x) make available for inspection by Merck, any underwriter
participating in any disposition pursuant to such registration statement, and
any attorney, accountant or other agent retained by Merck, its Affiliates or an
underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of ImClone (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause ImClone's officers, directors and employees
to supply all information reasonably requested by any such Inspectors in
connection with such registration statement; provided, however, that such
Inspectors shall first agree in writing with ImClone that any Records that are
reasonably and in good faith designated by ImClone as confidential at the time
of delivery of such Records shall be kept confidential by such Inspectors; and
in connection with underwritten offerings, use its reasonable best efforts to
obtain a comfort letter from ImClone's independent public accountants in
customary form and covering such matters of the type customarily covered by
comfort letters as Merck reasonably requests.
(b) Merck agrees that, upon receipt of any notice from ImClone of the
happening of any event of the kind described in Section 1(a)(ix) of this
Schedule G, Merck shall forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until Merck's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 1(a)(ix) of this Schedule G, and, if so
directed by ImClone, Merck shall deliver to ImClone (at ImClone's expense) all
copies, other than permanent file copies then in Merck's possession, of the
Prospectus covering such Registrable Securities current at the time of receipt
of such notice.
(c) Holdback Agreements. Merck agrees not to offer, sell, contract to sell
or otherwise dispose of any Common Stock, or any securities convertible into or
exchangeable or exercisable for such securities, during the 14 days prior to,
and during the 90-day period beginning on, the effective date of any
registration statement registering Registrable Securities other than (a) the
Registrable Securities to be sold pursuant to such registration statement, (b)
any shares of Common Stock sold upon the exercise of an option or warrant or the
conversion of a security outstanding at such date and (c) if and to the extent
permitted by applicable law, and the managing underwriter or underwriters in the
case of an underwritten public offering, in a private placement exempt from
registration under the 1933 Act.
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2. Piggyback Registration. If ImClone proposes to file a registration statement
under the 1933 Act with respect to an offering by ImClone of any class of
securities after the Closing Date (other than a registration statement on Form
S-4 or S-8 or any successor form to such Forms, or filed in connection with a
merger, exchange offer or an offering of securities solely to the existing
stockholders in connection with a rights offering or solely to employees of
ImClone), then ImClone shall give written notice of such proposed filing to
Merck at least twenty days before the anticipated filing date, and such notice
shall offer Merck the opportunity to register such amount of Registrable
Securities as Merck may request. ImClone shall use its best efforts to cause the
managing underwriter or underwriters of a proposed underwritten offering to
permit Merck to include such securities in such offering on the same terms and
conditions as any similar securities of ImClone included therein.
Notwithstanding the foregoing, (i) if the managing underwriter or underwriters
of such proposed underwritten offering delivers a written notice to Merck that
the total amount of securities which Merck and its Affiliates, ImClone and any
other Persons or entities (other than such other Persons or entities with whom
ImClone has agreements on the date hereof prohibiting reduction or limitation as
contemplated herein) having registration rights, intend to include in such
offering is sufficiently large as to materially and adversely affect the success
of such offering, then the amount of securities to be offered for the accounts
of Merck and its Affiliates and for the accounts of such other Persons or
entities shall be reduced or limited in proportion to their respective amounts
of securities to the extent necessary to reduce the total amount of securities
to be included in such offering to the amount recommended by such managing
underwriter; provided, that no reduction shall be made in the securities to be
offered for the account of ImClone; and (ii) if such proposed underwritten
offering involves only equity securities and the managing underwriter or
underwriters thereof shall have delivered a written notice to Merck that the
inclusion of any Registrable Securities in such offering will materially and
adversely affect the success of such offering, then no Registrable Securities
shall be included in such offering.
3. Expenses of Registration.
All Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 1 or Section 2 of this Schedule
G shall be borne by ImClone. All Selling Expenses relating to securities so
registered shall be borne by Merck.
4. Indemnification.
(a) Indemnification by ImClone. ImClone shall, and it hereby does, agree
to indemnify and hold harmless, to the full extent permitted by law, Merck and
its Affiliates and their respective directors and officers and each other
Person, if any, who controls Merck within the meaning of the 1933 Act or the
Exchange Act, against any and all losses, claims, damages or liabilities, joint
or several, and expenses (including any amounts Personally paid in any
settlement) to which Merck or its Affiliates or any such director or officer or
controlling Person may become subject under the 1933 Act, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) or expenses arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered under
the 1933 Act, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement thereto, or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and ImClone shall reimburse Merck or its
Affiliates and each such director, officer or controlling Person for any legal
or any other expenses reasonably incurred by them in connection with
investigating or defending such loss, claim, liability, action or proceedings;
provided, that ImClone shall not be liable in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expenses arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement or amendment or supplement thereto or in any such
preliminary, final
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or summary prospectus in reliance upon and in conformity with written
information furnished to ImClone by Merck or its Affiliates for use in the
preparation thereof; and provided, further, that ImClone shall not be liable to
Merck or its Affiliates or any other Person, if any, who controls Merck, under
the indemnity agreement in this Section 4(a) with respect to any preliminary
prospectus as amended or supplemented as the case may be, to the extent that any
such loss, claim, damage or liability of Merck, its Affiliates or controlling
Person results from the fact that Merck or its Affiliates sold Registrable
Securities to a Person to whom there was not sent or given, at or prior to the
written confirmation of such sale, a copy of the final prospectus (including any
documents incorporated by reference therein), whichever is most recent, if
ImClone has previously furnished copies thereof to Merck and its Affiliates and
such final prospectus, as then amended or supplemented, has corrected any such
misstatement or omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of Merck or its Affiliates
or any such director, officer or controlling Person and shall survive the
transfer of such securities by Merck or its Affiliates. It is agreed that the
indemnity agreement contained in this Section 4(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of ImClone (which consent has not
been unreasonably withheld).
(b) Indemnification by Merck. Merck shall, if the Registrable Securities
are included in the securities as to which such registration, qualification, or
compliance is being effected, indemnify and hold harmless (in the same manner
and to the same extent as set forth in subdivision (a) of this Section 4)
ImClone, any underwriter and their respective controlling Persons within the
meaning of the 1933 Act and the Exchange Act, and all other prospective sellers
and their respective controlling Persons with respect to any statement or
alleged statement in or omission or alleged omission from such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement, if such statement or alleged statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to ImClone by Merck or its Affiliates for use in the
preparation of such registration statement, preliminary, final or summary
prospectus or amendment or supplement, or a document incorporated by reference
into any of the foregoing. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of ImClone or any
underwriter or any of Merck or its Affiliates or any of their respective
directors, officers and controlling Persons and shall survive the transfer of
such securities by Merck or its Affiliates; provided, however, that the
obligations of Merck hereunder shall not apply to amounts paid in settlement of
any such claims, losses, damages, or liabilities (or actions in respect thereof)
if such settlement is effected without the consent of Merck (which consent shall
not be unreasonably withheld).
(c) Notices of Claims, Etc. Each party entitled to indemnification under
this Section 4 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of such
claim or any litigation resulting therefrom, provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at such party's expense, and provided, further,
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section
4, to the extent such failure is not prejudicial. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
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(d) Contribution. If the indemnification provided for in this Section 4 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statements of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
5. Miscellaneous.
(a) Rule 144. ImClone covenants that it shall file any reports required to
be filed by it under the 1933 Act and the 1934 Act and that it shall take such
further action as Merck may reasonably request, all to the extent required from
time to time, to enable Merck and its Affiliates to sell Registrable Securities
without registration under the 1933 Act within the limitation of the exemptions
provided by Rule 144 under the 1933 Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission.
Upon the request of Merck, ImClone shall deliver to Merck a written statement as
to whether it has complied with such requirements.
(b) Other Registration Rights. Except as provided hereunder, for a period
of six months from and after the date of the Agreement, ImClone shall not grant
to any other Person the right to request ImClone to register securities of
ImClone without the prior written consent of Merck, which consent shall not be
unreasonably withheld.
(c) Assignability of Registration Rights. The registration rights afforded
Merck and its Affiliates herein shall be assignable to a transferee of
Registrable Securities from Merck or any of its Affiliates so long as (i) such
transferee has acquired no fewer than 800,000 shares of Registrable Securities
(as adjusted from time to time to reflect stock splits, stock dividends and
similar changes in the capitalization of ImClone) from Merck or any of its
Affiliates, (ii) such transferee has agreed with ImClone in writing to comply
with all applicable provisions hereof and (iii) Merck has otherwise complied
with all provisions hereof that affect its right to sell, transfer or otherwise
dispose of shares of Registrable Securities; provided, however, that ImClone
shall not be required to effect more than one registration of Registrable
Securities in any 12-month period or more than a total of four Demand
Registrations under this Schedule G. For a transfer of registration rights to be
effective, Merck shall give ImClone written notice at the time of such transfer
stating the name and address of the transferee and identifying the shares with
respect to which the rights under this Section 5(c) are being assigned.
(d) This Schedule G shall supercede Sections 7, 8, 9, 10 and 11of the
Preferred Stock Purchase Agreement, which Sections 7, 8, 9, 10 and 11 shall be
of no further effect.
6. Definitions.
As used in this Schedule G:
(a) The term "Commission" shall mean the U.S. Securities and Exchange
Commission or any other federal agency at the time administering the 1933 Act or
the 1934 Act.
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(b) The term "Person" shall mean an individual, partnership, corporation,
limited liability company, trust, unincorporated organization or government or
political department or agency thereof or other entity.
(c) The term "Prospectus" shall mean the prospectus included in any
Registration Statement (including, without limitation, a prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the 1933 Act),
as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of Registrable Securities, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
(d) The term "Registrable Securities" shall mean any and all Acquired
Voting Shares, Milestone Conversion Shares, and "Conversion Shares" (as such
term is defined in Section 1 of the Preferred Stock Purchase Agreement). As to
any Registrable Securities, such securities shall cease to be Registrable
Securities when (i) a registration statement with respect to the sale of such
securities shall have become effective under the 1933 Act and such securities
shall have been disposed of pursuant to such effective registration statement,
(ii) such securities shall have been distributed pursuant to Rule 144, Rule
144A, or any similar provision then in force, under the 1933 Act, (iii) such
securities shall have been otherwise transferred, new certificates or other
evidences of ownership for them not bearing a legend restricting further
transfer and not subject to any stop transfer order or other restrictions on
transfer shall have been delivered by ImClone and subsequent disposition of such
securities shall not require registration or qualification of such securities
under the 1933 Act or any state securities laws then in force or (iv) the sale
of such securities by Merck or its Affiliates shall no longer require
registration under the 1933 Act or such securities shall cease to be
outstanding.
(e) The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act and the applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
(f) The term "Registration Expenses" shall mean all expenses incurred in
effecting any registration pursuant to this Agreement, including without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for ImClone, blue sky fees and
expenses and expenses of any regular or special audits incident to or required
by any such registration, but shall not include Selling Expenses.
(g) The term "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of the Registrable Securities and
fees and disbursements of counsel for Merck (other than the fees and
disbursements of counsel constituting a part of blue sky fees and expenses and
included in Registration Expenses).
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SCHEDULE H
FORM OF OPINIONS OF COUNSEL
1. Upon the execution of the Agreement, an opinion letter of the general counsel
of ImClone, in form and content satisfactory to Merck, shall be addressed to and
delivered to Merck and dated as of the execution date, which letter shall
provide substantially as follows:
(a) ImClone is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by ImClone of the Agreement
are within ImClone's corporate powers and have been duly authorized by all
necessary corporate action on the part of ImClone. The Agreement constitutes a
valid and binding agreement of ImClone, enforceable in accordance with its
terms, subject to (i) bankruptcy, insolvency or similar laws affecting
creditors' rights generally, (ii) general equitable principles and (iii) the
Exon-Xxxxxx Act, Section 721 of Title VII of the Defense Production Act of 1950,
as amended, and the rules and regulations promulgated thereunder.
(c) The execution, delivery and performance by ImClone of the Agreement
require no action by or in respect of, or declaration to or filing with, any
governmental body, agency, official or authority other than compliance with (i)
any applicable requirements of the Securities Exchange Act of 1934, as amended
(the "1934 Act") and state securities or "blue sky" laws, (ii) any applicable
requirements of Delaware law, (iii) the rules and regulations of the National
Association of Securities Dealers and the Nasdaq Stock Market, and (iv) any
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder (the "HSR
Act").
(d) The execution, delivery and performance by ImClone of the Agreement do
not and will not (i) contravene or conflict with the certificate of
incorporation or bylaws of ImClone; (ii) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to ImClone; (iii)
contravene, conflict with, constitute a breach of or default under, or give rise
to any right of termination, cancellation or acceleration of any right or
obligation of ImClone under, any provision of any agreement, contract or other
instrument binding upon ImClone or any of its properties or (iv) result in the
creation or imposition of any lien, encumbrance of claim of ownership of any
kind by any third party on any asset, whether tangible or intangible, of
ImClone.
2. With respect to each delivery of Acquired Voting Shares, Acquired Non-Voting
Shares or Milestone Conversion Shares to Merck, as the case may be, an opinion
letter of the general counsel of ImClone, in form and content satisfactory to
Merck, shall be addressed to and delivered to Merck and dated as of such
delivery date, which letter shall provide substantially as follows:
(a) ImClone is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
(b) The execution, delivery and performance by ImClone of the Agreement
are within ImClone's corporate powers and have been duly authorized by all
necessary corporate action on the part of ImClone. The Agreement constitutes a
valid and binding agreement of ImClone, enforceable in accordance with its
terms, subject to (i) bankruptcy, insolvency or similar laws affecting
creditors' rights
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generally, (ii) general equitable principles and (iii) the Exon-Xxxxxx Act,
Section 721 of Title VII of the Defense Production Act of 1950, as amended, and
the rules and regulations promulgated thereunder.
(c) The [Acquired Voting Shares] [Acquired Non-Voting Shares] [Milestone
Conversion Shares] are validly issued, fully paid and non-assessable and free
and clear of any and all liens, encumbrances and claims of ownership of any kind
of any third party and free of preemptive or similar rights. Based only on the
market price of the Common Stock as of the date of the Agreement, a sufficient
number of shares of Common Stock has been authorized and reserved for Merck's
acquisition of Acquired Voting Shares and Milestone Conversion Shares pursuant
to the Agreement.
(d) The execution, delivery and performance by ImClone of the Agreement
require no action by or in respect of, or declaration to or filing with, any
governmental body, agency, official or authority other than compliance with (i)
any applicable requirements of the 1934 Act and state securities or "blue sky"
laws, (ii) any applicable requirements of Delaware law, (iii) the rules and
regulations of the National Association of Securities Dealers and the Nasdaq
Stock Market, and (iv) any applicable requirements of the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act").
(e) The execution, delivery and performance by ImClone of the Agreement do
not and will not (i) contravene or conflict with the certificate of
incorporation or bylaws of ImClone; (ii) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to ImClone; (iii)
contravene, conflict with, constitute a breach of or default under, or give rise
to any right of termination, cancellation or acceleration of any right or
obligation of ImClone under, any provision of any agreement, contract or other
instrument binding upon ImClone or any of its properties or (iv) result in the
creation or imposition of any lien, encumbrance of claim of ownership of any
kind by any third party on any asset, whether tangible or intangible, of
ImClone.
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