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EXHIBIT 10.2
AMENDED AND RESTATED
AGREEMENT BETWEEN
GENENTECH, INC. AND
X. XXXXXXXX-XX XXXXX LTD
REGARDING COMMERCIALIZATION
OF GENENTECH'S PRODUCTS
OUTSIDE THE UNITED STATES
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TABLE OF CONTENTS
Whereas Clauses
Article I - Definitions
1. Affiliate...................................................3
2. Agreement...................................................3
3. Asia........................................................3
4. Canada Products.............................................3
5. Clinical Requirements.......................................3
6. Collaborative Countries.....................................3
7. Commercial Requirements.....................................4
8. DNase.......................................................4
9. Dossier.....................................................4
10. Entry into Man .............................................4
11. Financial Appendix..........................................4
12. First Commercial Introduction...............................4
13. Effective Date..............................................4
14. GENENTECH...................................................4
15. Genentech Canada Ltd........................................4
16. Genentech Europe Limited ................................4
17. Roche Territory's Fully Burdened Manufacturing Cost.........5
18. Genentech Product...........................................5
19. Governance Agreement........................................5
20. IDEC Agreement..............................................5
21. IDEC Product................................................5
22. IGF-1 ......................................................5
23. In-Licensed Product ........................................5
24. Know-How ...................................................5
25. Manufacturing Technology....................................6
26. Net Sales...................................................6
27. NGF ........................................................6
28 Party.......................................................6
29. Patents.....................................................6
30. Phase II Completion Date....................................6
31. Phase III Trial.............................................6
32. Product.....................................................6
33. Registration................................................7
34. Restated Date ..............................................7
35. ROCHE.......................................................7
36. Roche Territory.............................................7
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37. Scios Nova Agreement........................................7
38. Scios Product ..............................................7
39. Small Molecule Product......................................7
40. Trademark...................................................7
41. Valid Claim.................................................7
Article II - Licenses, Options, Know-How and Trademarks
1. Licenses for Canada Products and DNase......................7
2. Option for License for Other Products.......................8
3. Exercise of Option for License for Other Products...........9
4. License to Know-How and Option for License to
Know-How...............................................10
5. License to Trademark and Option for License to
Trademark..............................................11
6. Standard of Effort.........................................11
7. Reporting on Commercialization Progress....................11
8. License to Genentech.......................................12
9. Future In-Licenses.........................................13
10. IIbIIIa and Ras Farnesyltransferase Collaborations.........13
11. IIbIIIa Collaboration......................................13
Article III - Commercialization Committees
1. Commercialization Committee................................13
2. Management Committee.......................................14
3. Development Committee......................................14
4. Finance Committee..........................................14
Article IV - Development and Marketing
1. Development................................................14
2. Development Costs..........................................15
3. Marketing..................................................15
Article V - Production and Supply
1. Production of Product......................................15
2. Supply of Clinical Requirements........................... 15
3. Supply of Commercial Requirements..........................16
4. Supply Agreement...........................................16
5. Amendments to DNase Supply Agreement.......................16
6. Supply of Scios Product....................................18
7. Supply of IDEC Product.....................................19
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8. Supply of In-Licensed Product..............................19
9. Supply of Small Molecule Product...........................19
10. Manufacturing Process and Facilities.......................19
11. Additional Capital Requirements............................20
12. Term of Supply Obligation..................................20
Article VI - Payments, Margins and Royalties
1. Payment for Product Requirements...........................20
2. Invoices and Method of Payment of Roche Territory's
Fully Burdened Manufacturing Cost and Margin...........21
3. Royalties on Sales of DNase................................21
4. Royalties and Other Payments on Sale of Canada
Products..............................................21
5. Royalties on Sale of Genentech Products....................22
6. Royalties and Other Payments on Sale of Scios
Product...............................................22
7. Royalties and Other Payments on Sale of IDEC
Product...............................................23
8. Royalties and Other Payments on Sale of In-Licensed
Product...............................................24
9. Calculation of Aggregate Net Sales.........................24
10. Timing of Royalty Payments.................................24
11. Restrictions on Transfer of Funds..........................25
13. Records Regarding Royalties................................26
14. Royalty for Use of Trademark...............................26
15. Generic Competition........................................26
16. Royalty Term if ROCHE Becomes Minority
Shareholder................................................26
Article VII - Transaction Provisions
1. General....................................................26
2. Personnel of Genentech Canada, Inc., Genentech
Europe Limited and Genentech Ltd. (Japan)..............27
3. Records and Property Leases................................27
4. Transfer of Dossier and Registration.......................27
Article IX - Patents, Inventions and Trademarks
1. Sole Inventions............................................28
2. Joint Inventions...........................................28
3. Patent Infringement........................................29
4. Third Party Patents........................................30
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5. Reporting on Patent Status.................................30
6. Trademark..................................................31
Article X - Confidentiality and Publications
1. Confidential Information...................................31
2. Publications...............................................31
3. Restrictions on Transfer of Proprietary Materials..........32
Article XI - Liability
1. No Liability...............................................32
2. Indemnification by ROCHE...................................32
3. Indemnification By GENENTECH...............................32
Article XII - Term and Termination
1. Term.......................................................33
2. Termination By ROCHE.......................................33
3. Termination By GENENTECH...................................34
4. Termination of Development/Commercialization...............34
5. Termination for Breach.....................................35
6. Certain Proceedings........................................36
7. Termination For Change in Ownership........................36
8. Survival of Terms..........................................36
Article XIII - Miscellaneous
1. Disclaimer of Certain Warranties...........................36
2. Entire Agreement, Amendment................................36
3. Failure to Enforce.........................................37
4. Force Majeure..............................................37
5. Arbitration................................................37
6. Notices....................................................38
7. Use of Names...............................................39
8. Successors and Assigns.....................................39
9. Headings...................................................39
10. Counterparts...............................................39
11. Severability...............................................39
12. Governing Law..............................................39
13. Relationship...............................................40
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Appendix A - Financial Appendix...........................................41
Appendix B - Article II Countries.........................................42
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AMENDED AND RESTATED AGREEMENT
Effective as of the Effective Date
and
Amended and Restated as of the Restatement Date
Among
X. Xxxxxxxx-Xx Xxxxx Ltd, Xxxxxxxxxxxxxxxxx 000, XX 0000 Xxxxx, Xxxxxxxxxxx
and
Genentech, Inc., 0 XXX Xxx, Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx, XXX 00000,
Genentech Europe Limited, Xxxx House, 31 Church Street, Xxxxxxxx, Bermuda HM FXV
and Genentech Biopharmaceuticals Limited, Xxxx House, 31 Church Street,
Xxxxxxxx, Bermuda HM FXV.
WHEREAS, GENENTECH possesses rights outside the United States in and to
certain pharmaceutical products;
WHEREAS, GENENTECH wishes to have certain pharmaceutical products
developed and marketed outside the United States;
WHEREAS, ROCHE has considerable knowledge in developing, registering,
manufacturing, formulating and filling, promoting, detailing, distributing and
marketing pharmaceutical products in all of the significant countries outside
the United States that utilize pharmaceutical products, has in place in those
countries a well-experienced staff for performing these activities, and can
perform these activities in a diligent and aggressive manner for GENENTECH's
pharmaceutical products;
WHEREAS, GENENTECH and ROCHE believe that this Agreement covering the
development, registration, manufacture, supply, formulation and filling,
promotion, detailing, distribution and marketing of certain of GENENTECH's
products outside the United States will be desirable and compatible with both
GENENTECH's and ROCHE's business objectives with respect to such products;
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WHEREAS, GENENTECH believes that this Agreement would provide an
economic benefit to GENENTECH and speed up availability of unmarketed
pharmaceutical products of GENENTECH outside the United States and assist
GENENTECH in defraying the substantial costs associated with the development of
such products in the United States;
WHEREAS, GENENTECH and ROCHE intend that this Agreement should cover the
development, marketing and supply of certain GENENTECH pharmaceutical products
outside the United States and that this Agreement supersedes the following
agreements: Agreement Between X. Xxxxxxxx-Xx Xxxxx Ltd, Genentech, Inc. and
Genentech Europe Limited Regarding Commercialization of DNase in Collaborative
Countries; and Agreement Between X. Xxxxxxxx-Xx Xxxxx Ltd, Genentech, Inc., and
Genentech Europe Limited Regarding Commercialization of DNase in Rest Of World;
Agreement Among X. Xxxxxxxx-Xx Xxxxx Ltd, Nippon Xxxxx X.X., Genentech, Inc.,
and Genentech Biopharmaceuticals Limited Regarding Commercialization of DNase in
Japan;
WHEREAS, GENENTECH and ROCHE intend that this Agreement should not cover
the development, marketing and supply of certain GENENTECH or jointly developed
pharmaceutical products and that this Agreement does not supersede the following
Agreements: Supply Agreement Between X. Xxxxxxxx-Xx Xxxxx Ltd, Genentech, Inc.
and Genentech Europe Limited Regarding DNase in Collaborative Countries, Rest of
World and Japan ("DNASE SUPPLY AGREEMENT") except that the terms of such
Agreement shall be expanded to include the supply of DNase in Canada; Joint
Research and Development Agreement between X. Xxxxxxxx-Xx Xxxxx Ltd, Xxxxxxxx-Xx
Xxxxx, Inc. and Genentech, Inc. Regarding LFA/ICAM Antagonists; the TNF-Receptor
Fusion Protein Agreement between Genentech, Inc., X. Xxxxxxxx-Xx Xxxxx Ltd, and
Xxxxxxxx-Xx Xxxxx, Inc. and the Development Agreement Between Genentech, Inc.
and Xxxxxxxx-Xx Xxxxx, Inc., dated January 6, 1980 concerning interferon alpha
and beta; Joint Research and Development Agreement between X. Xxxxxxxx-Xx Xxxxx
Ltd. and Xxxxxxxx-Xx Xxxxx, Inc. and Genentech, Inc. Regarding IL-8 Molecules
(expired); Small Molecule Screening and Collaboration Agreement between X.
Xxxxxxxx-Xx Xxxxx Ltd. and Genentech, Inc.; Joint Research and Development
Agreement among X. Xxxxxxxx-Xx Xxxxx Ltd, Xxxxxxxx-Xx Xxxxx Inc. and Genentech,
Inc. regarding Anti-Coagulants effective February 10, 1995; and Agreement among
X. Xxxxxxxx-Xx Xxxxx Ltd and Genentech, Inc. regarding Anti-Her2 effective July
6, 1998;
WHEREAS, Roche Holding Ltd, a corporation organized under the laws of
Switzerland, and Genentech, Inc. concluded, effective September 8, 1990, a
Mutual Confidentiality Agreement (the "MUTUAL CONFIDENTIALITY AGREEMENT")
covering the ongoing disclosure of all confidential scientific, financial,
technical and business information of any nature in any tangible form of
expression among Genentech, Inc. on
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the one hand and Roche Holding Ltd and its subsidiaries and affiliates
throughout the world, except Genentech, Inc., on the other hand.
WHEREAS, Roche Holding Ltd and Genentech, Inc. concluded effective July
17, 1991 a Mutual Agreement for Supply of Research Material covering the ongoing
transfer of proprietary materials, substances, reagents and the like among
Genentech, Inc. on the one hand and Roche Holding Ltd and its subsidiaries and
affiliates throughout the world, except Genentech, Inc., on the other hand.
WHEREAS, GENENTECH and ROCHE amended this Agreement at a meeting in
London on May 1, 1997 and made additional amendments with respect to the
commercialization of the GP-IIbIIIa antagonist, designated Xubix, pursuant to a
letter agreement dated May 29, 1998.
NOW, THEREFORE, THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I - DEFINITIONS
1. The term "AFFILIATE" shall mean --
(a) an organization fifty (50%) percent or more of the
voting stock of which is owned and/or controlled directly or indirectly
by either Party;
(b) an organization which directly or indirectly owns and/or
controls fifty percent (50%) or more of the voting stock of either
Party;
(c) an organization which is directly or indirectly under
common control of either Party through common share holdings.
The foregoing notwithstanding, neither Party shall be considered an
Affiliate of the other Party or of any other Party's Affiliates.
2. The term "AGREEMENT" shall mean this Agreement, including all Appendices
hereto, together with any valid amendments or modifications of the
foregoing, and any agreements or plans entered into in connection with
this Agreement.
3. The term "ASIA" shall mean the countries of Japan, Bangladesh, Myanmar,
Cambodia, Indonesia, People's Republic of China, Hong Kong, Republic of
Korea, Laos, Malaysia, Papua New Guinea, Philippines, Singapore, Sri
Lanka, Republic of China (Taiwan) and Thailand and the territories and
possessions of each.
4. The term "BULK PRODUCT" shall have the definition set forth in the
definition of "Product."
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5. The term "CANADA PRODUCTS" shall mean the pharmaceutical products
Activase(R) tissue plasminogen activator, Protropin(R) and Nutropin(R)
human growth hormone, Actimmune(R) interferon gamma and Pulmozyme(R)
dornase alpha each as sold in Canada.
6. The term "CLAIMS" shall have the meaning set forth in Article XI,
Sections 2 and 3 of this Agreement.
7. The term "CLINICAL REQUIREMENTS" shall mean those quantities of a
Product reasonably required by a Party for the conduct of preclinical
and clinical studies of such Product in that Party's Territory. The term
Clinical Requirements as used herein with respect to a Party shall also
include the Clinical Requirements of that Party's licensees, if any.
8. The term "COLLABORATIVE COUNTRIES" shall mean Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Italy, Ireland, Luxembourg,
Netherlands, Norway, Portugal, Spain, Switzerland, Sweden, United
Kingdom and any additional countries that may subsequently become
members of the EU.
9. The term "COMMERCIAL REQUIREMENTS" shall mean those quantities of a
Product reasonably required by a Party for promotion and sale of such
Product in the its Territory. The term Commercial Requirements as used
herein with respect to a Party shall also include the Commercial
Requirements of that Party's licensees, if any.
10. The term "DEVELOPMENT COSTS" shall have the meaning set forth in the
Financial Appendix.
11. The term "DNASE" shall mean the protein, DNase, as defined in the DNase
Supply Agreement.
12. The term "DNASE SUPPLY AGREEMENT" shall have the meaning set forth in
the preamble of this Agreement.
13. The term "DOSSIER" shall mean the document or documents filed with and
approved by the government or health authority in a country in the Roche
Territory for purposes of registration of a Product for sale in such
country.
14. The term "EFFECTIVE DATE" shall mean the date that the Amendment and
Restatement of Article Third of the Certificate of Incorporation of
Genentech, Inc. amending the terms of the Redeemable Common Stock, par
value $0.02, of GENENTECH became effective, i.e., October 25, 1995.
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15. The term "ENTRY INTO MAN" shall mean the occurrence of Genentech's
official decision to file an Investigational New Drug exemption
application (an "IND") with the U.S. Food and Drug Administration.
16. The term "FINANCIAL APPENDIX" shall mean Appendix A to this Agreement.
17. The term "FINISHED PRODUCT" shall have the meaning set forth in the
definition of "Product."
18. The term "FIRST COMMERCIAL INTRODUCTION" shall mean the first date upon
which a Product is shipped commercially by ROCHE to an independent third
party in a country in the Roche Territory, after formal marketing
approval in that country, including any required price approval, has
been granted from the relevant authority in that country for that
Product.
19. The term "GENENTECH" shall mean Genentech, Inc. and, where appropriate,
its affiliates.
20. The term "GENENTECH CANADA, INC." shall mean that Affiliate of
Genentech, Inc. located at 0000 Xxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx,
Xxxxxxx X0X 0X0 and organized as Genentech Canada, Inc. under the laws
of Canada.
21. The term "GENENTECH EUROPE LIMITED" shall mean that Affiliate of
Genentech, Inc. located at 00 Xxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxx HM FX and
organized as Genentech Europe Limited under the laws of Bermuda.
22. The term "GENENTECH'S FULLY BURDENED MANUFACTURING COST" shall have the
meaning set forth in the Financial Appendix.
23. The term "GENENTECH PRODUCT" shall mean a Product for which GENENTECH
(i) has an ownership interest outside the United States as of April 12,
1995 or (ii) thereafter has or acquires an ownership interest during the
term of this Agreement but does not include Canada Products, DNase, IDEC
Product, Scios Product and In-Licensed Products, human growth hormone
products, tissue plasminogen activator products and interferon gamma
products.
24. The term "GLOBAL DEVELOPMENT COSTS" shall have the meaning set forth in
the Financial Appendix.
25. The term "GOVERNANCE AGREEMENT" shall mean the Governance Agreement
entered into between Roche Holdings, Inc., a Delaware corporation, and
Genentech, Inc. on September 7, 1990 as amended and restated on October
25, 1995 and as the same may be further amended by the Parties, or any
agreement which supercedes or replaces that agreement.
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26. The term "IDEC AGREEMENT" shall mean the Collaboration Agreement between
Genentech, Inc. and IDEC Pharmaceuticals Corporation, effective as of
March 16, 1995.
27. The term "IDEC PRODUCT" shall mean all of those products which are the
subject of the IDEC Agreement.
28. The term "IND" shall have the meaning set forth in the definition of
Entry Into Man.
29. The term "IIBIIIA AGREEMENT" shall mean the Joint Research and
Development Agreement, dated January 7, 1993, between X. Xxxxxxxx-Xx
Xxxxx Ltd, Xxxxxxxx Xx-Xxxxx Inc. and Genentech, Inc. regarding IIbIIIa
Antagonists.
30. The term "IN-LICENSED PRODUCT" shall mean any Product to which,
subsequent to April 12, 1995, GENENTECH acquires rights in the Roche
Territory by means of a patent and/or knowhow license from a third
party.
31. The term "KNOW-HOW" shall mean proprietary technical information,
know-how, data, test results, knowledge, techniques, discoveries,
inventions, specifications, designs, regulatory filings, and other
information (whether or not patentable) which are now and, unless
specified otherwise, hereafter during the term of this Agreement are in
the possession or control of a Party and are specifically related to a
Product or to the development, manufacture, use or sale of a Product of
that Party; provided, however, that Know-How shall not include any of
the foregoing (i) which are now or hereafter in the possession or
control of a Party as a result of a license taken from a third party and
which a Party is not free to transfer or license to the other Party or
which a Party may transfer or license but such transfer or license would
necessitate the payment of a fee or royalty to the licensor (unless
provision is made hereunder for the payment of such fee or royalty) or
(ii) which are generally ascertainable from publicly available
information.
32. The term "MUTUAL CONFIDENTIALITY AGREEMENT" shall have the meaning set
forth in the preamble of this Agreement.
33. The term "MANUFACTURING TECHNOLOGY" shall mean all Know-How of a Party
then existing which is necessary to make or have made a Product in the
manner that such Product is then manufactured by the Party to produce
Clinical Requirements or to produce Commercial Requirements, as
applicable.
34. The term "NET SALES" shall have the meaning set forth in the Financial
Appendix.
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35. The term "OPTION EXTENSION FEE" shall mean the nonrefundable amount of
$10,000,000 U.S. which is to be paid to GENENTECH by ROCHE within ten
(10) days of ROCHE's determination with respect to a Product not to
exercise its option for a right and license under Article II, Section 2
(a) after the Phase II Completion Date for that Product.
36. The term "PARTY" shall mean either GENENTECH or ROCHE, and when used in
the plural, shall mean both of them.
37. The term "PATENTS" shall mean any and all patent applications and
patents (including inventor's certificates), including any
substitutions, extensions, reissues, renewals, divisions, continuations
or continuations-in-part thereof or therefor covering a Product, its
administration, formulation or clinical use, which a Party now or
hereafter during the term of this Agreement owns or controls or with
respect to which a Party has the right to grant licenses or sublicenses
without the payment of a fee or royalty (unless provision is made
hereunder for the payment of such fee or royalty) to the licensor, but
only to the extent they specifically cover a Product or the manufacture,
use or sale of a Product.
38. The term "PHASE II COMPLETION DATE" shall mean the date by which
GENENTECH, in its reasonable judgement, has clinical trial data and
other information sufficient to undertake a Phase III Trial in the USA.
39. The term "PHASE III COMPLETION DATE" shall mean the date by which a
Phase III Trial is completed with respect to a Product, and the results
of that Phase III Trial are known, available and have been analyzed and,
in Genentech's reasonable judgement, allow filing for a Biologics
License Application or New Drug Application for that Product in the USA.
40. The term "PHASE III TRIAL" shall mean a controlled study in humans of
the efficacy and safety of a Product which is prospectively designed to
demonstrate statistically whether the Product is effective for use in a
particular indication in a manner sufficient to obtain regulatory
approval to market that Product or which is sufficient to permit a
filing with the competent authorities for a Registration in the USA.
41. The term "PRODUCT" shall mean any human pharmaceutical formulation of a
compound for which a Party has an ownership interest as of April 12,
1995 or thereafter acquires an ownership interest or rights by means of
a patent or knowhow license during the term of this Agreement. In the
case of GENENTECH, the term Product shall include Canada Products,
Genentech Products, IDEC Product, Scios Product, In-Licensed Products
and DNase. The term Product shall also include: (a) all bulk forms of a
Product ("BULK PRODUCT"); (b) Product which has been vialed but is not
finished or packaged ("VIALED
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PRODUCT"); and (c) finished, packaged final dosage units of a Product
("FINISHED PRODUCT"). The term Product shall include not only the
specific molecule involved but molecules derived from that molecule
whether by addition or deletion of other chemical subunits.
42. The term "REGISTRATION" shall mean the official approval by the
government or health authority or similar entity in one or more
countries in the Roche Territory which is required for a Product to be
offered for sale in that country or those countries, including such
authorizations as may be required for the production, importation,
pricing and sale of that Product to the extent they are needed for that
Product to be offered for sale in that country or those countries.
43. The term "RESTATEMENT DATE " shall mean ______________, 1999.
44. The term "ROCHE" shall mean X. Xxxxxxxx-Xx Xxxxx Ltd and its Affiliates
unless otherwise specified in this Agreement.
45. The term "ROCHE TERRITORY" shall mean all countries of the world except
the United States and its territories and possessions.
46. The term "SCIOS NOVA AGREEMENT " shall mean the Collaboration Agreement
between Genentech, Inc. and Scios Nova, Inc. effective as of December
30, 1994.
47. The term "SCIOS PRODUCT" shall mean all of those products which are the
subject of the Scios Nova Agreement.
48. The term "SMALL MOLECULE PRODUCT" shall mean a synthetic molecule that
is not a protein or peptide.
49. The term "TRADEMARK" shall mean the trademarks owned, registered,
maintained or used by GENENTECH in connection with a Product.
50. The term "UNITED STATES" shall mean, unless otherwise indicated, the
United States and its territories and possessions.
51. The term "VALID CLAIM" shall mean a subsisting claim of an issued and
unexpired Patent that has not been held invalid, unpatentable or
unenforceable by a decision of a governmental body or court of competent
jurisdiction, that is unappealable or unappealed within the time allowed
for appeal, and that has not been rendered unenforceable through
disclaimer or otherwise.
52. The term "VIALED PRODUCT" shall have the meaning set forth in the
definition of "Product."
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53. The term "XUBIX" shall mean the specific IIaIIIb antagonist currently
designated by the trademark Xubix, and any formulations thereof.
ARTICLE II - LICENSES, OPTIONS, KNOW-HOW AND TRADEMARKS
1. License for Canada Products and DNase.
(a) Subject to the terms and conditions of this Agreement,
GENENTECH hereby grants to ROCHE a sole and exclusive right and license
under GENENTECH's Patents, including the right to sublicense others with
GENENTECH's prior consent, which consent shall not be unreasonably
withheld, to register, use, sell and market (including the right to
detail and promote) Canada Products in Canada and DNase in the Roche
Territory.
(b) Subject to the terms and conditions of this Agreement,
GENENTECH hereby grants to ROCHE a sole and exclusive right and license
under GENENTECH's Patents, including the right to sublicense others with
GENENTECH's prior consent, which consent shall not be unreasonably
withheld, for each Canada Product in Canada and DNase in the Roche
Territory, dependent on the Parties' mutual agreement as to whether
GENENTECH will supply Vialed Product or Bulk Product (i) to make and/or
have made Finished Product from Vialed Product or (ii) to make and/or
have made Vialed Product from Bulk Product.
2. Option for License for Other Products.
(a) Subject to the terms and conditions of this Agreement,
GENENTECH hereby grants to ROCHE an option on a Product-by-Product
basis, exercisable for any Product at (i) such Product's Entry Into Man;
(ii) at the first Phase II Completion Date for such Product, or (iii) if
ROCHE has paid GENENTECH the Option Extension Fee, at the Phase III
Completion Date for such Product for a sole and exclusive (to the extent
available) right and license in the Roche Territory under GENENTECH's
Patents and, to the extent sublicensable by GENENTECH, patents of third
parties licensed to GENENTECH, including where available the right to
sublicense others with GENENTECH's prior consent, which consent shall
not be unreasonably withheld, to register, use, sell and market
(including the right to detail and promote) each Genentech Product and,
subject to the terms and conditions of the relevant license agreement,
In-Licensed Product and IDEC Product or Scios Product and shall include
the right for all indications. Such option shall be exercisable only
once for each Product. If ROCHE does not pay the Option Extension Fee
with respect to a Product, there shall be no additional option with
respect to that Product beyond that associated with the Phase II
Completion Date.
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(b) Subject to the terms and conditions of this Agreement
and contingent on ROCHE exercising its option under Section 2(a) of this
Article II, GENENTECH hereby grants to ROCHE, an option, exercisable
only once for any Product either at (i) such Product's Entry Into Man;
(ii) at the first Phase II Completion Date for such Product, or (iii) at
the Phase III Completion Date, for a sole and exclusive (to the extent
available) right and license in the Roche Territory, under GENENTECH's
Patents and, to the extent sublicensable by GENENTECH, patents of third
parties licensed to GENENTECH, including where available, the right to
sublicense others with GENENTECH's prior consent, which consent shall
not be unreasonably withheld, for Genentech Product and, subject to the
terms and conditions of the relevant license agreement, In-Licensed
Product and IDEC Product to the extent GENENTECH is contractually able
to do so under the IDEC Agreement and to Scios Product to the extent
GENENTECH is contractually able to do so under the Scios Nova Agreement,
to make Vialed Product from Bulk Product. Such option shall be
exercisable only once for each Product.
(c) The options described above may be exercised earlier
than the time periods described if the Parties mutually agree. The
options described above shall terminate on October 25, 2015 except as
follows:
(i) if Roche has paid an Option Extension Fee for a
Product, Roche shall retain an option for that Product
exercisable at the Phase III Completion Date for that Product;
(ii) for a Product for which Entry Into Man has occurred
but which has not yet reached the Phase II Completion Date,
Roche shall continue to have an option exercisable at the Phase
II Completion Date; and
(iii) for any Product for which the 60 day period to
exercise an option with respect to Entry Into Man or the Phase
II Completion Date or the Phase III Completion Date has arisen,
that option shall continue for the remaining portion of that 60
day period that is then unexpired.
(d) The foregoing notwithstanding, if at any time prior to
Entry Into Man of a Genentech Product or In-Licensed Product, GENENTECH
decides to discontinue sole development of such a Product and to license
a third party the rights to that Product, that Product shall be subject
to the provisions of Section 3.07 of the Governance Agreement and shall
no longer be subject to the provisions of this Agreement. If at any time
upon or after Entry Into Man of a Genentech Product or In-Licensed
Product, the occurrence of the first Phase II Completion Date for such a
Product, or thereafter unless ROCHE has paid the Option Extension Fee,
GENENTECH decides to discontinue sole development of such a Product and
to license a third party the rights in the Roche Territory to that
Product, that Product shall be subject to the provisions of Section 3.07
of the Governance Agreement provided, however, that if the parties do
not enter into
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an license agreement regarding such Product on the basis of Section 3.07
of the Governance Agreement, the terms of this Agreement (including but
not limited to ROCHE's option rights) with regard those rights to such
Product in the Roche Territory shall continue to remain in full force
and effect. If ROCHE has paid the Option Extension Fee, GENENTECH shall
have no rights to grant rights to third parties to that Product in the
Roche Territory. Upon receipt of notification with respect to a Product
as specified in the first sentence of Section 3 (a) of Article II, ROCHE
shall make a good faith determination as to its interest in the Product
in the Roche Territory. If ROCHE determines that it has no interest in
maintaining its future option rights it will so inform GENENTECH so that
GENENTECH may pursue other development and commercial arrangements with
others with respect to that Product in the Roche Territory so that
GENENTECH may realize the full commercial potential of such Product.
3. Exercise of Option for License for Other Products.
(a) Upon each of the occurrences of Entry Into Man, the
Phase II Completion Date and the Phase III Completion Date for a
GENENTECH Product or an In-Licensed Product for which an option
hereunder is still in effect, GENENTECH shall so notify ROCHE's primary
contact on the Commercialization Committee established in Article III.
In connection with such notice, GENENTECH shall provide ROCHE with all
relevant information regarding the Product, including results of
preclinical and clinical studies, third party rights (patent rights and
royalty obligations), and manufacturing process and cost information not
yet communicated to the Development Committee in accordance with this
Section 3, but such information shall not include marketing or other
commercial information other than market research information. At any
time, ROCHE shall have the right to request reasonable additional
non-marketing or noncommercial information. Within thirty (30) days of
such notification and the receipt by ROCHE of all information specified
herein, the Commercialization Committee shall meet to review such
information and the results of such studies and any other relevant
non-marketing or noncommercial information developed by or possessed by
GENENTECH regarding that Product which ROCHE may request. After the
notice to ROCHE's primary contact on the Commercialization Committee as
specified above, GENENTECH and ROCHE shall jointly formulate a
development plan with respect to the United States and Europe for the
Product, the terms of which shall be negotiated in good faith by the
Parties. Such plan shall address issues regarding initially envisioned
indications and additional indications to be developed and shall be
agreed upon ten (10) days prior to the expiry of the sixty (60) day
period mentioned below. If ROCHE does not exercise its option hereunder,
that development plan will not have any binding effect. Within sixty
(60) days of the notice to ROCHE's primary contact on the
Commercialization Committee as specified above and the receipt by ROCHE
of all information specified herein, ROCHE shall either exercise in
writing its option
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for a license for such Product under Section 2 of this Article II or if
ROCHE fails to so exercise, ROCHE shall be deemed to have irrevocably
waived the option with respect to that particular option exercise
period.
If ROCHE fails to exercise its option for a license for such Product
within 60 days of the notice to ROCHE of the Phase III Completion Date,
GENENTECH thereafter shall be free to develop, make, have made, use,
sell and market (including the right to promote and detail) such Product
in the Roche Territory in any manner it chooses, including by means of a
license to one or more third parties, and free of any restrictions under
Section 3.07 of the Governance Agreement.
(b) (1) Within forty-five (45) days of the Effective Date of
this Agreement, the Commercialization Committee shall meet to review
summary results of clinical data for any Genentech Product and
In-Licensed Product for which there has been a Phase II Completion Date
of the Effective Date and for IDEC Product and Scios Product. Within
ninety (90) days of the commencement of such meeting, ROCHE shall either
exercise in writing its option for a license for each such Product under
Section 2 of this Article II or if ROCHE fails to so exercise, it shall
be deemed to have irrevocably waived such option. If ROCHE waives its
option for a license for a Product under Section 2 of this Article II,
GENENTECH shall be free to develop, make, have made, use, sell and
market (including the right to detail and promote) such Product in the
Roche Territory in any manner it chooses including by means of a license
to one or more third parties and free of any restrictions of Section
3.07 of the Governance Agreement. If ROCHE waives its option for a
license for either IDEC Product or Scios Product pursuant to the
foregoing, ROCHE shall have no further rights to any IDEC Product or
Scios Product, as the case may be.
(2) The right of ROCHE to any license hereunder to IDEC
Product is subject to ROCHE's agreement to comply with all appropriate
obligations of the IDEC Agreement for IDEC Product and any required
consent of IDEC. The right of ROCHE to any license hereunder to Scios
Product is subject to ROCHE's agreement to comply with all appropriate
obligations of the Scios Nova Agreement for Scios Product and any
required consent of Scios Nova.
(c) Any information provided by GENENTECH to ROCHE for its
evaluation with respect to exercising an option under this Article shall
be returned to GENENTECH promptly if ROCHE decides not to exercise such
option and such information shall be subject to the provisions of
Article X below.
4. License to Know-How and Option for License to Know-How.
(a) Subject to the terms and conditions of this Agreement,
GENENTECH
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hereby grants to ROCHE, for the term of this Agreement, a right and
license, including the right to sublicense others with GENENTECH's prior
consent, which consent shall not be unreasonably withheld, to use in
Canada, GENENTECH Know-How specifically related to Canada Products and
to use in the Roche Territory, GENENTECH Know-How specifically related
to DNase (i) to register, use, sell and market (Including the right to
detail and promote) such Products; and dependent on the Parties' mutual
agreement as to whether GENENTECH will supply Vialed Product or Bulk
Product (ii) to make and/or have made Finished Product from Vialed
Product, or (iii) to make and/or have made Vialed Product from Bulk
Product.
(b) Subject to the terms and conditions of this Agreement
and the exercise of the option for such Product under Section 2 of this
Article II, GENENTECH hereby grants to ROCHE, for the term of this
Agreement, a right and license, including the right to sublicense others
with GENENTECH's prior consent, which consent shall not be unreasonably
withheld, to use in the Roche Territory, GENENTECH Know-How specifically
related to GENENTECH Products, In-Licensed Products, Scios Product or
IDEC Product (i) to register, use, sell and market (Including the right
to detail and promote) such Product; and dependent on the Parties mutual
agreement as to whether GENENTECH will supply Vialed Product or Bulk
Product (ii) to make and/or have made such Finished Product from such
Vialed Product or (iii) to make and/or have made such Vialed Product
from such Bulk Product.
5. License to Trademark and Option for License to Trademark.
(a) Subject to the terms and conditions of this Agreement,
GENENTECH grants to ROCHE a sole and exclusive right and license to use
the appropriate Trademarks in Canada for Canada Products and in the
Roche Territory for DNase including the right to sublicense others with
GENENTECH's prior consent, which consent shall not be unreasonably
withheld. ROCHE and its Affiliates shall use the appropriate Trademarks
for such Products in Canada in the case of Canada Products or in each
country in the Roche Territory in the case of DNase unless the Trademark
is not available in such country. If the appropriate Trademark for such
Product is not available in such country, ROCHE shall obtain GENENTECH's
prior consent before using any other trademark for such Product in such
country, which consent shall not be unreasonably withheld.
(b) Subject to the terms and conditions of this Agreement
and the exercise of the option for a Product under Section 2 of this
Article II, GENENTECH grants to ROCHE a sole and exclusive right and
license to use the Trademark for such Product in the Roche Territory
including the right to sublicense others with GENENTECH's prior consent,
which consent shall not be unreasonably withheld.
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ROCHE and its Affiliates shall use the Trademark for such Product in
each country in the Roche Territory unless the Trademark is not
available in such country. If the Trademark for such Product is not
available in such country, ROCHE shall obtain GENENTECH's prior consent
before using any other trademark for the Product in such country, which
consent shall not be unreasonably withheld.
6. Standard of Effort. ROCHE acknowledges that for those Products licensed
to ROCHE hereunder, GENENTECH's sole opportunity to receive maximum
potential revenue from sales of those Products in each country in the
Roche Territory is solely dependent on ROCHE's efforts and that a
failure to provide the level of effort specified herein is likely to
have a significant adverse effect on potential revenues to GENENTECH
which would be inimical to the purposes of this Agreement. Therefore,
the exclusive licenses granted to ROCHE under this Article shall be
conditioned on ROCHE using its "best efforts" in each country in the
Roche Territory to take all steps necessary in an expeditious fashion to
obtain regulatory approval to sell the Product and thereafter to sell
the Product in a manner so as to maximize its revenue potential. "Best
efforts" shall mean efforts, including the commitment of all necessary
personnel and financial resources, in a timeframe equivalent to that
used by ROCHE to develop, promote and sell ROCHE's major pharmaceutical
products.
7. Reporting on Commercialization Progress. ROCHE shall keep GENENTECH
informed of the progress of its efforts to develop, register, and market
the Product licensed by it hereunder in each country in the Roche
Territory. Such progress reports shall be made annually by November 30th
of each year. For each country listed on Appendix B hereto, such
progress reports shall specifically include information on --
(a) the status of, and plans for, clinical trials needed for
registration of the Product,
(b) the status of, and plans for, registering the Product
for sale, and
(c) the budgeted sales of the Product or the Net Sales of
the Product if it is registered;
(d) the Net Sales of the Product included in the business
plan for the Product; and
(e) summaries of promotional plans and market research.
In addition, GENENTECH may make reasonable requests for, and ROCHE shall
provide, specific information about efforts to register and sell the
Products in
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countries in the Roche Territory other than those set forth in Appendix
B and about the aggregate Net Sales budgeted or included in the business
plan for Products for all countries in the Roche Territory.
8. License to GENENTECH. Subject to the terms and conditions of this
Agreement, ROCHE hereby grants, and shall cause Xxxxxxxx-Xx Xxxxx, Inc.
to grant, to GENENTECH in the United States, a perpetual royalty-free,
nonexclusive right and license under ROCHE's Patents and Know-How, to
register, make, have made, use, sell and market (including the right to
promote) in the United States
(a) the Canada Products and DNase; and
(b) any Genentech Product, In-Licensed Product, IDEC Product
or Scios Product for which ROCHE exercises its option under Section 2 of
this Article II.
ROCHE shall not grant to any third party, and ROCHE shall cause
Xxxxxxxx-Xx Xxxxx, Inc. not to grant to any third party, any license
under ROCHE's Patents and Know-How in the United States to register,
make, have made, use, sell and market (including the right to promote)
any Product which is described in subsection (a) or (b) of this Section
8 without GENENTECH's prior written consent.
9. Future In-Licenses. With respect to future prospective in-licenses from
third parties where GENENTECH is the prospective licensee and the
license involves Products with rights in the Roche Territory, the
Parties shall discuss in advance the nature of reasonable terms for the
Roche Territory. Any final license agreement with respect to the Roche
Territory shall be on terms mutually acceptable to both Parties, and the
Parties shall discuss and agree to a worldwide development and
commercialization strategy with respect to such a Product.
10. Ras Farnesyltransferase Collaboration. With respect to the Parties'
current collaboration on ras farnesyltransferase inhibitors, GENENTECH
will have the sole right outside of the Roche Territory, and ROCHE shall
have the sole right in the Roche Territory to register, use, sell and
market (including the right to detail and promote) all Products
resulting from such collaboration. All research efforts and Development
Costs for these Products shall be shared in an equal manner. Neither
Party shall pay the other royalties for sales of any of these Products
in its Territory. In the event that any of the existing agreements
relating to such collaboration conflict with this Section 10 of Article
II, the terms of this Section shall govern.
11. IIbIIIa Collaborations Other than Xubix Collaboration. With respect to
the Parties' collaborations on IIbIIIa antagonists under the IIbIIIa
Agreement other than the
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collaboration on Xubix, GENENTECH will have the sole right outside of
the Roche Territory, and ROCHE shall have the sole right in the Roche
Territory to register, use, sell and market (including the right to
detail and promote) all Products resulting from such collaborations. All
research efforts and Global Development Costs for these Products shall
be shared in an equal manner. Neither Party shall pay the other
royalties for sales of any of these Products in its Territory. In the
event that any of the existing agreements relating to these
collaborations conflict with this Section 11 of Article II, the terms of
this Section shall govern.
12. GP-IIbIIIa (Xubix) Collaboration.
(a) ROCHE hereby grants to GENENTECH the option (the "OPT-IN
OPTION") to participate and share in the development and
commercialization of Xubix, exercisable at any time up to and
within thirty (30) days after NDA approval of the first
indication (acute or chronic therapy) in the United States. Such
Opt-in Option shall be exercisable with respect to Xubix for all
indications. Upon its exercise of the Opt-in Option, GENENTECH
shall reimburse ROCHE for fifty percent (50%) of ROCHE's
Development Costs for Xubix (including Phase III Development
Costs) incurred by ROCHE from and after May 1, 1997 through the
exercise date and for Phase III Development costs incurred prior
to May 1, 1997 and shall pay the additional sum of $25 million
U.S. Upon GENENTECH's exercise of the Opt-in Option, the Parties
shall negotiate in good faith and enter into a more detailed
commercialization and development agreement with respect to
Xubix based on the provisions contained herein it being
understood that any Development Costs incurred after such opt-in
date shall be equally shared.
(b) If GENENTECH exercises the Opt-in Option, GENENTECH and ROCHE
will have semi-exclusive rights in the United States, with
GENENTECH and ROCHE co-promoting Xubix and sharing net profits
on a basis of sixty percent (60%) to GENENTECH and forty percent
(40%) to ROCHE if the first indication for which marketing
approval is sought is for acute therapy or on a basis of fifty
percent (50%) to GENENTECH and fifty percent (50%) to ROCHE if
the first indication for which marketing approval is sought is
for chronic therapy. ROCHE shall have the sole right in the
Roche Territory to register, use, sell and market (including the
right to detail and promote) all Products resulting from such
collaboration.
(c) Upon ROCHE's filing of a NDA for the first indication (acute or
chronic therapy) of Xubix in the United States if GENENTECH has
not yet exercised its Opt-in Option, ROCHE shall provide
GENENTECH with all
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relevant information requested by Genentech regarding Xubix
including results of preclinical and clinical studies.
(d) Neither Party shall pay the other royalties for sales of any
Xubix provided however, that ROCHE shall pay GENENTECH a six
percent (6%) royalty on Net Sales of Xubix in any country in
which Net Sales occur, in accordance with Article VI of this
Agreement, if GENENTECH does not exercise the Opt-in Option. The
royalty shall be paid in that country for the longer of (a) a
period of ten (10) years from First Commercial Introduction of
Xubix in that country or (b) until the last expiration of a
valid claim of a Genentech Patent which the sale of Xubix would
infringe in that country without the license granted in the
IIbIIIa Agreement. If there are one or more products generically
equivalent to Xubix which directly compete with Xubix in a
country so that the generically equivalent products have a
market share in that country of at least twenty-five percent
(25%) of the market (in units) for Xubix, GENENTECH and ROCHE
shall negotiate in good faith a modification to the royalty term
or rate so that the royalty payable by ROCHE in that case is
more economically viable.
(e) In the event that any of the existing agreements relating to
this collaboration conflict with this Section 12 of Article II,
the terms of this Section shall govern.
ARTICLE III - COMMERCIALIZATION COMMITTEES
1. Joint Commercialization Committee. Within fifteen (15) days of the
Effective Date, the Parties shall form a Joint Commercialization
Committee. The Joint Commercialization Committee shall be the (a) forum
for communicating to ROCHE information about Products, including the
results for a Product as of that Product's Entry Into Man, Phase II
Completion Date and Phase III Completion Date as well as all other
information about that Product in GENENTECH's possession at the time of
such communication which is specifically relevant to ROCHE's decision
whether to exercise its option for that Product (e.g., cost information,
market research, etc.) and (b) for communicating to GENENTECH
information about Products for which ROCHE has a license. The Joint
Commercialization Committee shall meet initially with respect to a
Product upon its Entry Into Man or earlier if the Parties mutually
agree. The Joint Commercialization Committee shall also be the forum for
ROCHE's communications, pursuant to Section 7 of Article II, above about
ROCHE's development and sales and marketing efforts for each Product for
which it has a license hereunder. The Joint Commercialization Committee
shall be comprised of an equal number but not more than five nominees of
ROCHE and GENENTECH respectively, appointed by their respective
organizations. The chairman of the Joint Commercialization Committee
will be designated by
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GENENTECH. The chairman will call and chair meetings of the Joint
Commercialization Committee which will be held at GENENTECH's facilities
unless mutually agreed otherwise or by video conference where feasible.
2. Management Committee. Within ninety (90) days of the Effective Date, the
Parties shall form a Management Committee comprised of three
representatives from ROCHE, including its Chief Operating Officer or
Head of the Pharma Division and three representatives from GENENTECH,
including its Chief Executive Officer or Chief Operating Officer. The
Management Committee shall meet at least once per year to review the
development and commercialization status of all Products which are then
subject to this Agreement and any other matters brought to the
Committee's attention by the Commercialization Committee, the Finance
Committee or the Development Committee.
3. Development Committee. Within sixty (60) days of the Effective Date, the
Parties shall form a Development Committee comprised of three
representatives from ROCHE and three representatives from GENENTECH. The
Development Committee shall meet regularly but at least three (3) times
a year to discuss the development of Products for which ROCHE has
exercised its option under Article II. GENENTECH shall keep ROCHE
informed through the Development Committee on projects and products for
which an option of ROCHE is still in effect with an emphasis on those
projects which are approaching Entry Into Man (i.e. potential Entry Into
Man foreseen within the next four (4) months). The Development Committee
shall direct and coordinate development efforts on a global basis for a
Product for which ROCHE has exercised its option, consistent with the
development plan required by Section 3 of Article II. The Development
Committee shall meet initially with respect to a Product approaching its
Entry Into Man, or earlier if the Parties mutually agree, and shall be
responsible for formulating a joint development plan as required by
Section 3 of Article II. Except as otherwise specifically provided in
such plan with respect to a Product, GENENTECH will lead the planning of
world-wide development strategies for its Products. All decisions
related to GENENTECH's development efforts for a Product and GENENTECH's
filings for approval of a Registration outside the Roche Territory shall
be solely those of GENENTECH, except as otherwise specifically provided
in such plan. All decisions related to ROCHE's development efforts for a
Product for which ROCHE has exercised its option right and ROCHE's
filing for approval of a Registration in the Roche Territory shall be
solely those of ROCHE, except as otherwise specifically provided in such
plan. The activities of a party in its territory shall not negatively
impact the activities of the other party in its territory.
4. Joint Finance Committee. Within sixty (60) days of the Effective Date,
the Parties shall form a Joint Finance Committee comprised of two
representatives from ROCHE and two representatives from GENENTECH. The
Joint Finance
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Committee shall meet on an as needed basis to review and discuss
financial activities and issues relating to this Agreement.
5. Review of Status. Within six (6) months of the Restatement Date, the
Parties shall review the Committee structure and composition described
above with a view to simplifying the Committee system where feasible.
ARTICLE IV - DEVELOPMENT AND MARKETING
1. Development. Subject to the terms and conditions of this Agreement and
the joint development plan with respect to a Product agreed to pursuant
to Section 3 of Article II, GENENTECH shall be solely responsible for,
and have full autonomy with respect to, the development of its Products
outside of the Roche Territory and in the Roche Territory with respect
to Products not licensed to ROCHE hereunder, and ROCHE shall be solely
responsible for the development in the Roche Territory of those Products
for which it has been granted a license under Section 2 of Article II
and has exercised its option for a license under Section 3 of Article
II. The Parties shall each have the Additional Indication Opt-Out Option
referred to in the Financial Appendix with respect to each Product
developed hereunder.
2. Development Costs Incurred prior to Opt-In. Except as set forth below,
GENENTECH shall be reimbursed by ROCHE for fifty percent (50%) of all of
GENENTECH's Development Costs incurred in connection with a Product
prior to the date on which ROCHE has exercised its option for such
license under Sections 2 and 3 of Article II. GENENTECH shall choose the
method for reimbursement from among those set forth in the Financial
Appendix.
If ROCHE exercises its option for a license for a Product after notice
of the Phase III Completion Date for that Product, GENENTECH will be
reimbursed by ROCHE for fifty percent (50%) of all of GENENTECH's
Development Costs incurred in connection with that Product prior to the
date of GENENTECH'S notice to ROCHE of the Phase II Completion Date for
that Product and seventy-five percent (75%) of all of GENENTECH's
Development Costs incurred in connection with that Product after the
date of the notice to ROCHE of the Phase II Completion Date and prior to
the exercise of ROCHE's option for a license to the Product after
receipt of the notice of the Phase III Completion Date. If ROCHE has
paid an Option Extension Fee for a Product, $5,000,000 shall be credited
against the Development Costs reimbursable by ROCHE at the time of the
exercise of the option following receipt of notice of the Phase III
Completion Date.
3. Development Costs after Opt-In. Except as noted below, GENENTECH and
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ROCHE shall share the Global Development Costs incurred in connection
with any development of a Product and incurred on or after the date on
which ROCHE has been granted a license to such Product under Section 2
of Article II and has exercised its option for such license under
Sections 2 and 3 of Article II. If ROCHE exercises its option for such
Product during the exercise period after the date of such Product's
Entry Into Man, ROCHE shall bear fifty percent (50%) of the Global
Development Costs and GENENTECH shall bear fifty percent (50%) of the
Global Development Costs for that Product. If ROCHE exercises its option
for such Product during the exercise period after the Phase II
Completion Date for such Product, ROCHE shall bear seventy-five percent
(75%) of the Global Development Costs and GENENTECH shall bear
twenty-five percent (25%) of the Global Development Costs for that
Product. The exceptions to the foregoing are as follows:
(a) Canada Products. With respect to Canada Products, GENENTECH
shall be reimbursed by ROCHE for ten percent (10%) of all of
GENENTECH's Development Costs incurred in connection with any
development of a Canada Product and incurred on or after the
date on which ROCHE has been granted a license to such Product
under Section 1 of Article II.
(b) IGF-1 Products. With respect to IGF-1 Products, ROCHE shall
bear sixty percent (60%) of all Global Development Costs
incurred in connection with any development of an IGF-1 Product
for any diabetes indication on or after the date on which ROCHE
has exercised its option for a license under Section 3 of
Article II and GENENTECH shall bear forty percent (40%) of such
Global Development Costs.
(c) NGF Products. With respect to NGF Product, ROCHE shall bear
sixty percent (60%) of all of Global Development Costs incurred
in connection with any development of a NGF Product on or after
the date on which ROCHE has exercised its option for a license
under Section 3 of Article II and GENENTECH shall bear forty
percent (40%) of such Global Development Costs, however any
costs related to AIDS related neuropathies shall be fully borne
by GENENTECH.
(d) Additional Indications, New Formulations and New Dosing
Schedules. With respect to any additional indications or new
formulations or new dosing schedules for a Product other than
the indication or formulation or dosing schedule for which the
Product is being developed for initial Registration and where
the additional indication or new formulation or new dosing
schedule would require a separate Phase III Trial for
Registration,
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(i) if ROCHE exercises its option associated with
the Phase II Completion Date, each Party shall
bear 50% of the Global Development Costs
incurred with respect to such additional
indications and new formulations and new dosing
schedules; and
(ii) if ROCHE exercise its option associated with the
Phase III Completion Date, ROCHE shall bear
seventy-five percent (75%) and GENENTECH shall
bear twenty-five percent (25%) of the Global
Development Costs incurred with respect to such
additional indications and new formulations and
new dosing schedules.
(e) Phase III Completion Date Option. If Roche exercises its
option for a Product after notice of the Phase III Completion
Date for that Product, no Global Development Costs will be
shared for the completion of any clinical development or filing
or preparation necessary for either Party's Registration for the
indication which was the subject of the Phase III Trial related
to the Phase III Completion Date.
The determination of the amount of the Development Costs and the Global
Development Costs, and the timing and mechanism for payment thereof, is
set forth in the Financial Appendix.
4. Marketing. GENENTECH shall be solely responsible for and have full
autonomy with respect to the marketing of its products in the United
States and in the Roche Territory with respect to Products not licensed
to ROCHE hereunder. Subject to the terms and conditions of this
Agreement, ROCHE shall be solely responsible for the marketing in the
Roche Territory of those Products for which it has been granted a
license under Section 2 of Article II and has exercised its option for a
license under Section 3 of Article II and for Canada Products and DNase.
ARTICLE V - PRODUCTION AND SUPPLY
1. Production of Product. Except as provided in Sections 6, 7 and 8 of this
Article V, GENENTECH, or Genentech Biopharmaceuticals Limited in the
case of DNase as Vialed Product or Finished Product, or Genentech
International Limited in the case of Genentech Products (except DNase)
which are Vialed Product or Finished Product, shall be responsible for
the manufacture of Clinical Requirements and Commercial Requirements of
Bulk Product, Vialed Product or Finished Product, as the case may be,
for which ROCHE has a license, for the Roche Territory.
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2. Supply of Clinical Requirements. Except as provided in Sections 5, 6, 7
and 8 of this Article, GENENTECH shall use its best efforts to supply
ROCHE with ROCHE's Clinical Requirements pursuant to a mutually
agreeable and reasonable production schedule. GENENTECH shall not be
obligated to supply Clinical Requirements to ROCHE other than in
accordance with the quantities mutually agreed to and at the approximate
dates of delivery mutually agreed to. All transportation and packing and
similar costs shall be borne by ROCHE. Title and risk of loss shall pass
to ROCHE upon delivery by GENENTECH FOB origin. The Parties shall agree
on specifications for the Clinical Requirements, and the Clinical
Requirements delivered by GENENTECH shall meet those specifications.
GENENTECH shall not favor the supply of its own clinical requirements of
a Product to it or its other licensees over ROCHE's Clinical
Requirements.
3. Supply of Commercial Requirements. Except as provided in Sections 5, 6,
7 and 8 of this Article, GENENTECH, or Genentech Biopharmaceuticals
Limited in the case of DNase as Vialed Product or Finished Product, or
Genentech International Limited in the case of Genentech Products
(except DNase) which are Vialed Product or Finished Product, shall
supply ROCHE with ROCHE's Commercial Requirements pursuant to a mutually
agreeable and reasonable production schedule for ROCHE's Commercial
Requirements, and ROCHE agrees to purchase its Commercial Requirements
from those entities. Those entities shall not be obligated to supply
Commercial Requirements to ROCHE other than in accordance with the
quantities mutually agreed to and at the approximate dates of delivery
mutually agreed to. All transportation and packing and similar costs
shall be borne by ROCHE. Title and risk of loss shall pass to ROCHE upon
delivery by those entities to ROCHE, FOB origin. The Parties shall agree
on specifications and procedures for the Commercial Requirements, and
the Commercial Requirements delivered by those entities shall meet those
specifications and procedures. Those entities shall not favor the supply
of their own commercial requirements of Product to themselves or their
other licensees over ROCHE's Commercial Requirements.
4. Supply Agreement.
(a) Except as provided in Sections 5, 6, 7 and 8 of this
Article, at the time that ROCHE exercises its option for a license for a
Product under Section 2 of Article II, the Parties agree to negotiate
and enter into a definitive Supply Agreement for such Product on a basis
consistent with this Article and the other terms and conditions of this
Agreement.
(b) For Canada Products other than DNase, the Parties will
negotiate and enter into a Supply Agreement consistent with this Article
V and the other terms and conditions of this Agreement.
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5. Amendments to DNase Supply Agreement. (a) GENENTECH's and Genentech
Biopharmaceutical Limited's obligation to supply ROCHE with ROCHE's
Clinical Requirements and Commercial Requirements of DNase in the Roche
Territory, and ROCHE's agreement to purchase such Requirements from
GENENTECH and Genentech Biopharmaceuticals Limited shall be governed by
the DNase Supply Agreement as amended by this Section 5. The DNase
Supply Agreement is amended as follows.
(a) The definition of Collaborative Countries is amended to
include Canada by striking Section 4 of Article I in its entirety and
inserting in lieu thereof:
"4. The term "COLLABORATIVE COUNTRIES" shall include those
countries listed in Appendix D of the Collaborative
Agreement and Canada.".
(b) The definition of Rest of World Countries is amended to
include Japan by striking Section 19 of Article I and inserting in lieu
thereof:
"19. The term "ROW COUNTRIES" shall include all countries
except the Collaborative Countries and the United
States.".
(c) The inclusion of Canada and Japan in the DNase Supply
Agreement and its effect on the provisions allocating DNase in the event
of a product shortfall shall be addressed by striking Section 9(c)(i) of
Article II and inserting in lieu thereof:
"(i) the United States,".
(d) In light of the changed marketing arrangement for DNase
and to provide for an arm's length margin on GENENTECH's manufacture of
DNase, Section 1 of Article III is stricken in its entirety and a new
Section 1 is inserted in lieu thereof:
"1. Payment for Clinical Requirements and Commercial
Requirements.
(a) All Vialed Product for Clinical Requirements
shall be supplied by Genentech Biopharmaceutical Limited
to ROCHE at Genentech Biopharmaceutical Limited's Fully
Burdened Manufacturing Cost.
(b) All Bulk Product for Commercial Requirements
shall be supplied by Genentech Biopharmaceutical Limited
to ROCHE at Genentech Biopharmaceutical Limited 's Fully
Burdened Manufacturing Cost plus a margin of twenty
percent (20%) on such Cost and all Vialed Product for
Commercial Requirements shall be
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supplied by Genentech Biopharmaceutical Limited to ROCHE
at Genentech Biopharmaceutical Limited's Fully Burdened
Manufacturing Cost plus a margin of twenty percent (20%)
and --
(1) in the case of Commercial
Requirements for use in a Collaborative Country,
such other amounts as specified in Section 3 of
Article VI of the Agreement Between Genentech,
Inc. and X. Xxxxxxxx-Xx Xxxxx Ltd Regarding the
Commercialization of Genentech's Products in the
Roche Territory; or
(2) in the case of Commercial
Requirements for use in a ROW country, such
other amounts as specified in Section 3 of
Article VI of the Agreement Between Genentech,
Inc. and X. Xxxxxxxx-Xx Xxxxx Ltd Regarding the
Commercialization of Genentech's Products in the
Roche Territory."
(e) In light of the changed marketing arrangement for DNase
and to extend Genentech Biopharmaceutical Limited's supply obligation to
reflect such change, Section 1 of Article IV is stricken in its entirety
and a new Section 1 is inserted in lieu thereof:
"1. Term. (a) This Agreement shall enter into force and
effect as of February 11, 1992.
(b) The term of Genentech Biopharmaceutical
Limited's obligation to supply ROCHE with Product and
ROCHE's obligation to purchase Product from Genentech
Biopharmaceutical Limited for use in each of the
Collaborative Countries and ROW Countries shall continue
only for so long as ROCHE is obligated to pay royalties
under Section 3 of Article VI of the Agreement Between
Genentech, Inc and X. Xxxxxxxx-Xx Xxxxx Ltd Regarding
the Commercialization of Genentech's Products in the
Roche Territory; provided, however, that when such term
ends with respect to a Collaborative or ROW Country,
ROCHE and Genentech Biopharmaceutical Limited shall
discuss in good faith terms and conditions for a
continuing supply of Product from Genentech
Biopharmaceutical Limited to ROCHE at a world market
price for use and sale in the Roche Territory.".
6. Supply of Scios Product. If ROCHE exercises its option for Scios Product
under Section 2 of Article II of this Agreement, Scios Product will be
supplied by Scios
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Nova (or a third party contractor of Scios Nova) to ROCHE, and ROCHE
agrees to purchase such Product from Scios Nova (or a third party
contractor of Scios Nova), under the terms and conditions specified in
the Scios Nova Agreement and such other terms and conditions as may be
agreed to by GENENTECH and Scios Nova in a supply agreement yet to be
negotiated. In the event that ROCHE has exercised its option for a
license for the Scios Product prior to the negotiation and execution of
such supply agreement, GENENTECH shall keep ROCHE fully informed of the
negotiations regarding such supply agreement and shall invite a
representative of ROCHE to participate in such discussions.
7. Supply of IDEC Product. If ROCHE exercises its option for IDEC Product
under Section 2 of Article II of this Agreement, IDEC Product will be
supplied in a manner consistent with the IDEC Agreement.
8. Supply of In-Licensed Product. If ROCHE exercises its option for a
license for an In-Licensed Product under Section 2 of Article II of this
Agreement and if the terms and conditions of the agreement between
GENENTECH and the licensor covering the manufacture and supply of such
In-Licensed Product provide that such licensor (or a third party
contractor of such licensor) will be responsible for the manufacture and
supply of such In-Licensed Product, then such In-Licensed Product will
be supplied by such licensor (or a third party contractor of such
licensor) to ROCHE, and ROCHE agrees to purchase such In-Licensed
Product from such licensor (or a third party contractor of such
licensor) under the terms and conditions specified in the agreement
between GENENTECH and the licensor. In the event that ROCHE has
exercised its option for such In-Licensed Product and a supply agreement
has yet to be negotiated between GENENTECH and the licensor of such
In-Licensed Product, GENENTECH shall keep ROCHE fully informed of the
negotiations regarding such supply agreement and shall invite a
representative of ROCHE to participate in discussions regarding a supply
agreement.
9. Supply of Small Molecule Product. If ROCHE exercises its option for a
license for a Product under Section 2 of Article II of this Agreement
and if such Product is a Small Molecule Product, ROCHE shall be
responsible for the manufacture and supply of GENENTECH's Clinical
Requirements and Commercial Requirements of such Small Molecule Product.
In such case, the terms and conditions herein applicable to GENENTECH
when it is manufacturing and supplying Product to ROCHE shall be equally
applicable to ROCHE when it is manufacturing and supplying Small
Molecule Product to GENENTECH including, without limitation, those terms
and conditions set forth in Sections 2, 3, 4, 9 and 10 of this Article
and the Section 1 of Article VI.
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10. Manufacturing Process and Facilities..
(a) Except as provided in Sections 6, 7, 8 and 9 of this
Article, GENENTECH shall be solely responsible for the development of a
manufacturing process and facilities for Products for which ROCHE has a
license except Small Molecule Products. The fully burdened costs
associated with the development of a manufacturing process specifically
for such Product shall be considered part of the Development Costs and
shall be shared as set forth in Section 3 of the Financial Appendix.
(b) ROCHE shall be solely responsible for the development of
a manufacturing process and facilities for Small Molecule Products for
which ROCHE has a license. The fully burdened costs associated with the
development of a manufacturing process specifically for such Small
Molecule Product shall be shared by the Parties in proportion to their
expected share of the worldwide market, in terms of revenues, for the
Small Molecule Product for their Territory. For example, if GENENTECH's
expected proportionate share in terms of revenues of the worldwide
market is 33%, it shall bear 33% of the expense of developing a
manufacturing process for that Small Molecule Product.
11. Additional Capital Requirements. Except as provided in Sections 6, 7 and
8 of this Article, if GENENTECH or ROCHE determines that additional
dedicated manufacturing equipment, expansion or adaption of the then
existing manufacturing facilities or manufacturing equipment, or
construction of an additional manufacturing facility is needed to
manufacture a Product to meet Clinical Requirements or Commercial
Requirements for the other Party as provided herein, the manufacturing
Party shall be solely responsible for the capital costs associated with
such project.
12. Term of Supply Obligation. Except as provided in Sections 5, 6, 7 and 8
of this Article, each Party's obligation to provide the other Party with
Product for use and sale in that Party's Territory shall continue only
for so long as that Party is obligated to pay royalties hereunder for
such Product. Thereafter ROCHE and GENENTECH shall discuss in good faith
terms and conditions for a continuing supply of such Product from the
manufacturing Party to other Party at a mutually agreeable market price
for use and sale in that Party's Territory.
13. ROCHE Right to Manufacture. Notwithstanding anything to the contrary in
this Agreement, and subject to the provisions relating to Costs of Idle
Capacity in the Financial Appendix, ROCHE shall have the right to
manufacture Bulk Product or Vialed Product (i) if ROCHE can demonstrate
that it is able to manufacture Bulk Product or Vialed Product at a lower
price than the supply price of GENENTECH, or (ii) if GENENTECH is not
able to, or it is foreseeable that GENENTECH will not be in a position
to, supply Roche's Commercial
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Requirements in the Roche Territory, or (iii) if GENENTECH intends to
have a third party toll manufacture Bulk Product or Vialed Product. In
such case and if ROCHE so requests, GENENTECH shall provide ROCHE with
all information and, at Roche' expense, support needed to enable ROCHE
to manufacture Bulk Product or Vialed Product for use and sale in the
Roche Territory and GENENTECH shall xxxxx XXXXX the respective licenses
necessary for ROCHE to effect its rights hereunder.
ARTICLE VI - PAYMENTS, MARGINS AND ROYALTIES
1. Payment for Product Requirements.
(a) Except for IDEC Product and Scios Product, unless the
terms and conditions applicable to an In-Licensed Product provide
otherwise, all Clinical Requirements shall be supplied by one Party to
the other at the manufacturing Party's Fully Burdened Manufacturing
Cost.
(b) Except for IDEC Product and Scios Product, unless the
terms and conditions applicable to an In-Licensed Product provide
otherwise, all Commercial Requirements in the form of Vialed Product
shall be supplied by GENENTECH to ROCHE at GENENTECH's Fully Burdened
Manufacturing Cost plus a margin of twenty (20%) on such Cost. Except
for IDEC Product and Scios Product, unless the terms and conditions
applicable to an In-Licensed Product provide otherwise, if ROCHE is
producing Vialed Product pursuant to the licenses granted in Sections 1
and 3 of Article II, then Bulk Product, necessary for the manufacture of
Vialed Product and Finished Product for Commercial Requirements outside
the United States, shall be supplied by GENENTECH to ROCHE at
GENENTECH's Fully Burdened Manufacturing Cost plus a margin of twenty
(20%) on such Cost.
2. Invoices and Method of Payment of GENENTECH's Fully Burdened
Manufacturing Cost and Margin. GENENTECH shall invoice ROCHE for each
shipment of Bulk Product or Vialed Product, as the case may be, and
ROCHE shall pay such invoice on the terms and conditions set forth in
the Financial Appendix.
3. Royalties on Sale of DNase.
(a) ROCHE shall pay GENENTECH a royalty of twenty percent
(20%) on Net Sales of DNase in each of the Collaborative Countries and
Canada.
(b) ROCHE shall pay GENENTECH a royalty of twelve and
one-half percent (12.5%) on the first $100 million in aggregate Net
Sales of DNase in
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countries other than the Collaborative Countries and Canada and
thereafter a royalty of fifteen percent (15%) on aggregate Net Sales of
DNase in such countries in excess of $100 million.
(c) The payment of royalties on DNase Net Sales in each
country of the Roche Territory in (a) and (b) above shall continue until
the latter to occur of (i) the last expiration of a Valid Claim of a
GENENTECH Patent which the sale of that Product would infringe in that
country but for the license granted herein or (ii) for a period of 25
years from the date of First Commercial Introduction in that country.
4. Royalties and Other Payments on Sale of Canada Products.
(a) ROCHE shall pay GENENTECH a royalty of twenty percent
(20%) on Net Sales of each Canada Product. The payment of royalties on
each Canada Product's Net Sales shall continue until the latter to occur
of (i) the last expiration of a Valid Claim of a GENENTECH Patent which
the sale of that Product would infringe in that country but for the
license granted herein or (ii) a period of 25 years from the Effective
Date.
(b) For each annual increase in Net Sales of Activase in
Canada in excess of 110% of 1994 Net Sales of Activase in Canada, ROCHE
agrees to make an additional payment to GENENTECH of ten percent (10%)
of Net Sales of Activase in Canada for that year in excess of 1994 Net
Sales. In no event shall the total of such annual payments exceed $27
million.
5. Royalties on Sale of Genentech Products. Except for Genentech Products
for which ROCHE exercises its option granted under Section 2(b) of
Article II after the Phase III Completion Date, ROCHE shall pay
GENENTECH a royalty of twelve and one-half percent (12.5%) on the first
$100 million in aggregate Net Sales of each Genentech Product in the
Roche Territory and a royalty of fifteen percent (15%) on aggregate Net
Sales of such Genentech Product in excess of $100 million. For Genentech
Products for which ROCHE exercises its option granted under Section 2(b)
of Article II after the Phase III Completion Date, ROCHE shall pay
GENENTECH a royalty of fifteen percent (15%) on all Net Sales of such
Genentech Product. If ROCHE has paid an Option Extension Fee for a
Product, the amount of $5,000,000 shall be credited against royalties
payable GENENTECH by ROCHE in the first calendar year of sales by ROCHE
in which Net Sales of that product exceed $100 million U.S. The payment
of royalties on each GENENTECH Product's Net Sales in each country of
the Roche Territory shall continue until the latter to occur of (i) the
last expiration of a Valid Claim of a GENENTECH Patent which the sale of
that Product would infringe in that country but for the license granted
herein or (ii) a period of 25 years from the date of First Commercial
Introduction in that country.
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6. Royalties and Other Payments on Sale of Scios Product.
(a) ROCHE shall pay GENENTECH a royalty of twenty percent
(20%) on annual Net Sales of Scios Product in each country of the Roche
Territory for so long as GENENTECH is paying a royalty to Scios Nova
under the Scios Nova Agreement in that country. Thereafter, ROCHE shall
pay GENENTECH a royalty on Net Sales in that country of ten percent
(10%) for aggregate annual Net Sales of up to and including $150 million
in all countries in that year and of eight percent (8%) for aggregate
annual Net Sales of over $150 million in all countries in that year, and
such royalties shall be payable with respect to each country until the
latter to occur of (i) the last expiration of a Valid Claim of a
GENENTECH Patent which the sale of that Product would infringe in that
country but for the license granted herein or (ii) a period of 25 years
from the date of First Commercial Introduction in that country.
(b) If ROCHE exercises its option pursuant to Sections 2 and
3 of Article II, within thirty (30) days thereafter ROCHE shall pay
GENENTECH a one time fee of $25,000,000 in lieu of paying one-half-of
the Development Costs for Scios Product. Such amount assumes that a
second Phase III Trial will be required for Registration of Scios
Product in the United States; if only one Phase III Trial is necessary,
the Parties will negotiate a higher one time fee. GENENTECH is obligated
to make certain one time milestone payments to Scios Nova, as set forth
in the Scios Nova Agreement, upon Net Sales of $150 million in the
Licensed Territory in any 12 month period (either $15 million or $7.5
million) or upon Regulatory Approval in Japan (either $5 million or $2.5
million) as those terms are used in the Scios Nova Agreement. ROCHE
shall promptly reimburse GENENTECH for each such milestone GENENTECH
pays to Scios Nova.
(c) With respect to Canada, the Scios Nova Agreement
provides that GENENTECH and Scios Nova will copromote Scios Product as
part of a copromotion arrangement for the United States and Canada and
that GENENTECH and Scios Nova will share Operating Profits and Losses on
the sale of Scios Product as part of an arrangement to share Operating
Profits and Losses for the United States and Canada. ROCHE's rights with
respect to Scios Product are subject to such obligations regarding
copromotion in Canada and the sharing of Operating Profits and Losses
with respect to Canada.
7. Royalties and Other Payments on Sale of IDEC Product.
(a) ROCHE shall pay GENENTECH a royalty of twenty percent
(20%) on Net Sales of IDEC Product in each country of the Roche
Territory for so long as GENENTECH is paying a royalty to IDEC under the
IDEC Agreement in that country. Thereafter, ROCHE shall pay GENENTECH a
royalty on Net Sales in
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that country of ten percent (10%) for aggregate annual Net Sales of up
to and including $75 million in all countries in that year and eight
percent (8%) for aggregate annual Net Sales over $75 million in all
countries in that year, and such royalties shall be payable with respect
to each country until the latter to occur of (i) the last expiration of
a Valid Claim of a GENENTECH Patent which the sale of that Product would
infringe in that country but for the license granted herein or (ii) a
period of 25 years from the date of First Commercial Introduction in
that country.
(b) If ROCHE exercises its option pursuant to Sections 2 and
3 of Article II, within thirty (30) days thereafter ROCHE shall pay
GENENTECH a one time fee of $10 million in lieu of paying one-half of
the Development Costs for IDEC Product incurred as of the Effective
Date. Development Costs incurred after the Effective Date shall be
subject to Section 2 of Article IV. In addition, GENENTECH is obligated
to make certain one time milestone payments to IDEC, as set forth in the
IDEC Agreement, upon Regulatory Approval in the First Major European
Country ($10 million) and upon the Patent Milestone Event ($2.5 million)
as those terms are used in the IDEC Agreement. ROCHE shall promptly
reimburse GENENTECH for each such milestone which GENENTECH pays to
IDEC.
(c) GENENTECH has an option for a co-exclusive license for
rights to IDEC Product in Asia for a payment of $2.5 million if such
co-exclusive license becomes available to GENENTECH. If ROCHE exercises
its option for a license for the IDEC Product under Section 2 of Article
II and if ROCHE wishes GENENTECH to exercise the option for a
co-exclusive license to IDEC Product in Asia should such license become
available to GENENTECH, then ROCHE shall provide written notice of such
to GENENTECH at the time of exercise of its option and pay $2.5 million
to GENENTECH in conjunction therewith.
(d) With respect to Canada, the IDEC Agreement provides that
GENENTECH and IDEC will copromote IDEC Product as part of a copromotion
arrangement for the United States and Canada and that GENENTECH and IDEC
will share Operating Profits and Losses on the sale of IDEC Product as
part of an arrangement to share Operating Profits and Losses for the
United States and Canada. ROCHE's rights with respect to IDEC Product
are subject to such obligations regarding copromotion in Canada and the
sharing of Operating Profits and Losses with respect to Canada.
8. Royalties and Other Payments on Sale of In-Licensed Product.
(a) If ROCHE exercises its option under Article II for an
In-Licensed Product, the Parties will negotiate mutually agreeable
financial terms for payments by ROCHE to GENENTECH.
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(b) In general, if ROCHE exercises its option under Article
II for an In-Licensed Product, ROCHE agrees to pay to GENENTECH a
license fee or similar acquisition fee for rights in the Roche Territory
and any milestone or similar payments related to the achievement of
progress either in development, registration or sales of an In-Licensed
Product or for other achievements in the Roche Territory.
(c) The Parties acknowledge that the specific terms and
conditions related to an In-Licensed Product cannot be anticipated and
agree to negotiate in good faith the allocation of responsibility for
such terms and conditions in a fair manner reflecting the benefit to be
received by each from the In-Licensed Product.
9. Calculation of Aggregate Net Sales. The calculation of the aggregate Net
Sales for determination of the applicable royalty percentage shall be
that set forth in the Financial Appendix.
10. Timing of Royalty Payments. Payment of amounts specified in this Article
shall be made within ninety (90) days of the end of each calendar
quarter in which the sale was made except where payments are made to
GENENTECH in consideration of royalty payments to be made to Scios Nova
or IDEC in which case those payments shall be made within sixty (60)
days of the end of each calendar quarter. For purposes of determining
when a sale of a Product occurs, the sale shall be deemed to occur when
an independent third party is invoiced for the Product. Any such payment
that is not paid on or before the date such payment is due under this
Agreement shall bear interest, to the extent permitted by applicable
law, at the LIBOR rate of interest as reported by Data Stream from time
to time, calculated on the number of days such payment is delinquent.
ROCHE shall make all payments hereunder by bank wire transfer in
immediately available funds to such account as GENENTECH shall designate
before such payment is due, free and clear of any taxes, duties, levies,
fees or charges, except for withholding taxes due on behalf of GENENTECH
(to the extent applicable). ROCHE shall make any withholding payments
due on behalf of GENENTECH and shall promptly provide GENENTECH with
written documentation of any such payment sufficient to satisfy the
reasonable requirements of an appropriate tax authority with respect to
an application by GENENTECH for a foreign tax credit for such payment or
for similar treatment. At the time of remittance of each payment
described in this Article, ROCHE shall provide GENENTECH with a
statement summarizing the Net Sales of the Product in each of country
outside the United States in the reporting currency of each such country
and the rate used to convert from each such country's currency to Swiss
Francs and, in the case of the Scios Agreement and IDEC Agreement, with
such other information as those Agreements require of GENENTECH.
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11. Restrictions on Transfer of Funds.
(a) If ROCHE ships Product into a country outside the United
States for sale in that country and, at the time of shipment, such
country has legal restrictions on the transfer of funds which prevent
the prompt remittance of the part or all of the amount described in this
Article, ROCHE shall be obligated to pay such amounts in immediately
available funds to such account as GENENTECH shall designate.
(b) If ROCHE ships Product into a country outside the United
States for sale in that country and such country subsequently imposes
legal restrictions on the transfer of funds which prevents the prompt
remittance of part or all of the amount described in this Article with
respect to that shipment of the Product in that country, ROCHE shall be
obligated to --
(i) pay such portion of such amount as permitted by the
law of such country in immediately available funds to such
account as GENENTECH shall designate, and
(ii) pay the remainder of such amount to such account as
GENENTECH shall designate in a bank in such country.
In such event, the Parties shall discuss in good faith the best means of
utilizing the funds on deposit in such country. Shipments of the Product
into such country after the imposition of legal restrictions on the
transfer of funds shall be subject to subsection (a) of this Section.
13. Records Regarding Royalties. ROCHE agrees to keep for at least three (3)
years, records of all sales of Product on a country-by-country basis in
sufficient detail to permit GENENTECH to confirm the accuracy of the
ROCHE's calculations with respect to payment of the amounts described in
this Article. Once a year, at the request and the expense of GENENTECH
and upon at least five (5) days' prior written notice, ROCHE shall
permit its officially appointed world-wide auditor to examine its
records in a manner sufficient to report to GENENTECH on the accuracy of
ROCHE's calculations. Results of any such examination shall be made
available to both Parties. If such examination reveals an underpayment
of the amounts described in this Article by five percent (5%) or more,
ROCHE shall pay all costs of such examination. In the event such
examination concludes that additional amounts are owed, the additional
amounts shall be paid within thirty (30) days of the date GENENTECH
delivers to ROCHE such accountant's written report so concluding. In the
event such examination concludes that there has been an overpayment with
respect to such amounts, the excess shall be credited to ROCHE against
future payment of the amounts
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described in this Article. This Section shall survive any termination of
royalty payments for a particular country for a period of six (6) years.
14. Royalty for Use of Trademark. At the end of the term for the payment of
royalties as defined in this Article, ROCHE shall pay to GENENTECH a
royalty for the use of each Trademark in each country in the Roche
Territory at a rate of two percent (2%) of Net Sales by ROCHE in such
country of the Product represented by the Trademark for so long as the
Trademark is used.
15. Generic Competition. If there is one or more products generically
equivalent to a Product which compete with that Product in a country so
that the generically equivalent products have a market share in that
country of at least twenty-five percent (25%) of the market (in units)
for the Product, GENENTECH and ROCHE shall negotiate in good faith a
modification to the royalty term or rate so that the royalty payable by
ROCHE in that case is significantly more economically viable.
16. Royalty Term if ROCHE Becomes Minority Shareholder. Notwithstanding
anything to the contrary herein, if ROCHE's equity ownership of
GENENTECH securities is less than fifty percent (50%) of all such
securities then outstanding, the term for the payment of royalties for a
Product hereunder in each country shall be reduced to the latter to
occur of (i) the last expiration of a Valid Claim of a GENENTECH Patent
which the sale of that Product would infringe in that country but for
the license granted herein or (ii) a period of ten (10) years from the
date of First Commercial Introduction in that country. If at any time
ROCHE's equity ownership of GENENTECH securities becomes less than fifty
percent (50%) (the "Divestiture Date"), the term for the payment of
royalties specified above shall become immediately applicable. If
because of the immediate applicability of the shortened term for the
payment of royalties for a Product, royalties would no longer be payable
in a country, ROCHE shall continue to pay royalties on that Product in
that country over the following period in a decreasing manner as
follows:
Period % of applicable royalty
------ -----------------------
From Divestiture Date until 100
end of that calendar year
First full calendar year following 80
Divestiture Date
Second full calendar year following 60
Divestiture Date
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Period % of applicable royalty
------ -----------------------
Third full calendar year following 40
Divestiture Date
Fourth full calendar year following 20
Divestiture Date
` Fifth full calendar year following 0
Divestiture Date and thereafter
Thereafter, ROCHE shall have a fully paid-up license for such Product.
ARTICLE VII - TRANSITION PROVISIONS
1. General. The Parties intend to effect a transfer of the operations of
Genentech Canada Ltd, Genentech Europe Limited and Genentech Ltd.
(Japan) to ROCHE in the manner described above and in the subsequent
provisions of this Article VII. The Parties acknowledge that a number of
actions must be taken to effect such transfers in an orderly manner so
as to minimize disruption to those operations and attendant costs and
maximize revenue receipt where such operations are generating or
involved in generating revenue. The Parties acknowledge that while they
will act expeditiously to take all such appropriate actions, a
substantial period is likely to be required to complete all of such
actions. Therefore, the Parties agree to effect such a transfer as
quickly as possible but no later than January 1, 1996 and the provisions
relating to such a transfer, including license grants, supply
obligation, like relating to Canada, shall be effective when such
transfer is completed and at a date to be mutually agreed to.
2. Personnel of Genentech Canada, Inc., Genentech Europe Limited and
Genentech Ltd. (Japan). The Parties shall discuss and mutually agree
with respect to the continuing status of the employees of Genentech
Canada, Inc., Genentech Europe Limited and Genentech Ltd. (Japan).
3. Records and Property Leases.
(a) Within ninety (90) days of the Effective Date of this
Agreement, copies of the records of Genentech Canada, Inc., Genentech
Europe Limited and Genentech Ltd. (Japan) relating to their operations
and needed by ROCHE to assume those operations shall be made available
to ROCHE.
(b) Within ninety (90) days of the Effective Date of this
Agreement, information regarding the real estate property leases of
Genentech Canada, Inc., Genentech Europe Limited and Genentech Ltd.
(Japan) shall be made available
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to ROCHE and such leases shall promptly be assumed by ROCHE as well as
any other liabilities of these entities which have arisen in the
ordinary course of business except for a line of credit to Genentech
Canada, Inc. used to purchase Activase rights.
(c) Within ninety (90) days of the Effective Date of this
Agreement, information regarding office equipment and the like to ROCHE.
Within thirty (30) days after such information is made available ROCHE,
ROCHE shall advise GENENTECH whether it wishes to purchase any or all of
such equipment or the like.
4. Transfer of Dossier and Registration. The Dossiers for Canada Product,
including all data, information, results, and documents with respect to
pertinent Registrations in Canada, shall be transferred by GENENTECH to
ROCHE, and ROCHE shall be entitled to use the Dossiers and all such
data, information, results, and documents for its own purposes
consistent with the terms of this Agreement. GENENTECH shall cooperate
with ROCHE in a timely manner and in every proper way to effect the
transfer of the pertinent Registration or Registrations exclusively to
ROCHE and GENENTECH shall seek, and use its best efforts to obtain, the
necessary authorization from the pertinent governmental authorities
applicable to such transfer.
ARTICLE IX - PATENTS, INVENTIONS AND TRADEMARKS
1. Sole Inventions. The Parties recognize that either Party may
independently and separately make inventions in the course of this
Agreement relating to a Product, its administration, formulation or
clinical use. In such event, the Party making the invention shall be the
sole owner of that invention and of any patent applications and patents
thereon (including inventor's certificates) and shall be solely
responsible for the filing, prosecution and maintenance of all such
patent applications and patents and shall have sole authority to decide
what actions in that regard it shall take. If the other Party wishes to
have the Party owning the invention undertake actions which the Party
owning the invention does not routinely undertake or which it has
decided not to undertake, the other Party may request such Party to
undertake such actions and if the other Party does undertake such
actions, it shall be reimbursed for all internal and external costs it
incurs relating to such actions.
2. Joint Inventions. Any inventions relating to a Product, its
administration, formulation or clinical use arising from the Parties'
efforts under this Agreement that are jointly made by both Parties
(i.e., an invention in which one or more inventors from each Party,
including individuals normally obliged to assign an
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invention to a Party, have made an inventive contribution as determined
by United States Patent Law), and any patent applications and patents
thereon, shall be jointly owned by the Parties. With respect to any such
joint invention, the Parties intend that after consultation with each
other, the filing, prosecution and maintenance of any patent
applications thereon will be under the control of the Party from whom
the majority of the data underlying such patent application arises (the
"Controlling Party"), and the Controlling Party shall have the right
(but not the obligation) to undertake such filings, prosecutions and
maintenance at its sole expense, provided that: (a) the Controlling
Party notifies the non-Controlling Party within one (1) month after the
filing of any priority patent application by the Controlling Party; (b)
the Controlling Party informs the non-Controlling Party within eight (8)
months from the filing of the priority application whether and in which
countries it intends to file convention applications; (c) the
Controlling Party provides the non-Controlling Party promptly with
copies of all communications received from or filed in patent offices
with respect to such filings; and (d) the Controlling Party provides the
non-Controlling Party a reasonable time prior to taking or failing to
take action that would affect the scope or validity of rights under any
patent applications or patents (including but not limited to
substantially narrowing or canceling any claim, abandoning any patent or
not filing or perfecting the filing of any patent application in any
country), with notice of such proposed action or inaction so that the
non-Controlling Party has a reasonable opportunity to review and make
comments. In the event that the Controlling Party breaches the foregoing
obligations regarding updating and consultation, and such breach is not
cured with thirty (30) days of a written notice from the non-Controlling
Party to the Controlling Party describing such breach, or in the event
that the Controlling Party fails to undertake the filing of a patent
application within ninety (90) days of a written notice by the
non-Controlling Party to the Controlling Party that the non-Controlling
Party believes filing of such an application is appropriate, the
non-Controlling Party may undertake such filing, prosecution and
maintenance at its sole expense, in which case the Controlling Party
shall assign all its rights to such invention to the non-Controlling
Party, and any patent application and subsequently issued patent thereon
shall be owned solely by the non-Controlling Party.
3. Patent Infringement.
(a) In the event that GENENTECH or ROCHE become aware of any
infringement by a third party of any GENENTECH Patents in the Roche
Territory, whether solely or jointly held, each Party shall inform the
other in writing of all available evidence and details available
concerning such infringement. Before taking any action, the Parties
shall consult with each other as to the best manner in which to proceed.
Either Party which is the sole owner of a Patent shall have the sole
right but not the obligation to bring, defend, and maintain any
appropriate suit or action or to control the conduct thereof against the
infringer.
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However, if the Parties agree to equally share all expenses, they shall
also share the recoveries due to any such action. If the Parties do not
agree to share all expenses, the paying Party will receive all
recoveries due to any such action. If one Party requests the other Party
to join in such suit or action, the other Party shall cooperate and
execute all papers and perform such other acts as may be reasonably
required.
(b) In the event that GENENTECH and/or ROCHE are sued or
threatened with suit in the Roche Territory, by a third party who claims
that the manufacture, use or sale of a Product is an infringement of one
or more claims of a patent owned or controlled by the third party,
GENENTECH and ROCHE shall each pay its own costs in defending such suit
or threatened suit. If the settlement of a lawsuit or threatened lawsuit
or other action or a judgment arising out of a lawsuit requires any
payments to a third party or license from a third party in order to
manufacture, use or sell Product in a country as a result of a
dominating third party patent right, GENENTECH agrees to reduce the
royalty for that Product in that country specified in this Agreement by
one-half of the amount of any such payments, up to a maximum reduction
of two percent (2%) of the royalty due on Net Sales of that Product in
that country. In such case, there shall be no additional reduction in
royalties on Net Sales of that Product for that country because of
dominating third party patent rights.
4. Third Party Patents.
(a) If either Party becomes aware of any patent or other
appropriate intellectual property belonging to a third party which the
Party reasonably believes that without a license thereto GENENTECH would
infringe by virtue of its obligations under Article IV to manufacture
and supply both clinical and commercial needs for Bulk Product or Vialed
Product in the Roche Territory, the Party shall notify the other Party
of such. The Parties shall thereafter discuss a means of resolving such
potential infringement including taking a license to such patent or
other intellectual property. If as a result of an agreement between the
parties, GENENTECH acquires a license to such patent or other
intellectual property, the associated intellectual property acquisition
and licensing costs shall be deemed to be part of the GENENTECH's Fully
Burdened Manufacturing Cost.
(b) If GENENTECH insists that such a license is necessary
but ROCHE does not agree, or if ROCHE is not willing to agree to terms
for such a license that are acceptable to the third party patent or
intellectual property owner, then ROCHE shall defend, indemnify and hold
harmless GENENTECH from and against all third party costs, claims,
suits, expenses (including reasonable attorney's fees) and damages
arising out of or resulting from any infringement by GENENTECH of such
patent or intellectual property which covers the manufacture of the
Product. (c) If ROCHE insists that such a license is necessary but
GENENTECH does not agree, or if GENENTECH is not willing to agree to
terms for such a license that are acceptable to the third party patent
or intellectual property owner, then GENENTECH shall defend, indemnify
and hold harmless ROCHE from and against all third party costs, claims,
suits, expenses (including reasonable attorney's fees) and damages
arising out of or resulting from any infringement by ROCHE of such
patent or intellectual property which covers the manufacture of the
Product.
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(c) If ROCHE insists that such a license is necessary but
GENENTECH does not agree, or if GENENTECH is not willing to agree to
terms for such a license that are acceptable to the third party patent
or intellectual property owner, then GENENTECH shall defend, indemnify
and hold harmless ROCHE from and against all third party costs, claims,
suits, expenses (including reasonable attorney's fees) and damages
arising out of or resulting from any infringement by ROCHE of such
patent or intellectual property which covers the manufacture of the
Product.
5. Reporting on Patent Status. GENENTECH shall keep ROCHE informed of its
efforts to secure one or more Patents its owns in the Roche Territory
with one or more valid claims covering as compositions
(a) Canada Products and DNase, and
(b) Genentech Products, IDEC Product, Scios Product and
In-Licensed Product for which ROCHE has exercised its option
under Section 2 of Article II,
or its use or sale in the Roche Territory. Such reports shall be made at
the end of each year beginning in the year of execution of this
Agreement and shall include the expiration date of any such patent
which.
6. Trademark. GENENTECH will register in each major country in the Roche
Territory, at its own expense, at least one Trademark for each Product
for which ROCHE has exercised its option under Section 2 of Article II
and will maintain it in force. GENENTECH shall monitor for trademarks
that may infringe such Trademark at its sole expense. ROCHE shall inform
GENENTECH of any infringing trademarks in major countries in the Roche
Territory of which ROCHE becomes aware. GENENTECH shall hold ROCHE
harmless from all loss, expense or damage such as interruption and loss
of sales, destruction and reprinting of packaging and promotional
material, damages to the adverse party and other similar consequences if
a third party succeeds in enjoining ROCHE from distributing and
marketing a Product outside the United States to the extent that such
loss, expense or damage results from the use of GENENTECH's Trademark.
In such event, ROCHE shall make best efforts to mitigate any losses both
prospectively and subsequently.
ARTICLE X - CONFIDENTIALITY AND PUBLICATIONS
1. Confidential Information. The Parties acknowledge that during the course
of this Agreement they may receive from each other information which is
proprietary and confidential and of significant commercial value to the
disclosing Party.
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Such information shall specifically include all data provided to ROCHE
for its evaluation in connection the exercise of any option under
Section 2 of Article II. Such information as well as any Know-How, so
long as such Know-How is not generally ascertainable from publicly
available information, to the extent provided by the other Party, shall
be deemed "Information" as that term is used in the Mutual
Confidentiality Agreement entered into as of September 8, 1990 between
Roche Holding Ltd and GENENTECH, Inc. (the "Mutual Confidentiality
Agreement"), and the Parties agree that such Information shall be
subject to the terms and provisions of the Mutual Confidentiality
Agreement.
2. Publications. Notwithstanding Section 1 of this Article, ROCHE shall be
free to publish the results of the development activities hereunder to
the extent that such publication will not result in the disclosure of
Information of GENENTECH. ROCHE shall submit to GENENTECH any such
proposed publication at least thirty (30) days in advance to allow
GENENTECH to review such planned publication. GENENTECH will promptly
report any decisions regarding the existence of patentable inventions,
and should any patentable inventions be identified, ROCHE agrees to
delay disclosure for a reasonable time period to allow filing of such
patent applications. In addition, GENENTECH shall have the authority to
require deletion from any such planned publication of any Information of
GENENTECH.
3. Restrictions on Transfer of Proprietary Materials. Each Party agrees,
with respect to any proprietary materials, substances, reagents or the
like (except Product) received from the other Party ("Materials") that
such materials shall be subject to the provisions of Mutual Agreement
for Supply of Research Material entered into between GENENTECH Inc. and
Roche Holding Ltd as of July 17, 1991.
ARTICLE XI - LIABILITY
1. No Liability. Neither Party shall be liable to the other Party for
indirect, incidental or consequential damages arising out of the terms
and conditions of this Agreement or with respect to that Party's
performance hereunder or lack thereof.
2. Indemnification by ROCHE. ROCHE shall defend, indemnify and hold
harmless GENENTECH from and against all third party costs, claims,
suits, expenses (including reasonable attorneys' fees), assessments,
fines and damages (collectively "CLAIMS") arising out of or resulting
from ROCHE's manufacturing (if any), formulating (if any), filling (if
any), finishing, packaging, labeling, distributing, selling or using
after title to a Product has passed to ROCHE from GENENTECH. The
foregoing indemnification shall not extend to any claims which arise or
result from any defect in GENENTECH's manufacture, formulation
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or fill of the Product. The foregoing indemnification shall be
conditioned upon GENENTECH: (a) providing written notice to ROCHE within
twenty (20) days after GENENTECH has been given written notice of such
Claim; (b) permitting ROCHE the opportunity to assume full
responsibility (at ROCHE's expenses) for the investigation and defense
of any such Claim; and (c) not settling or compromising any such Claim
without ROCHE's prior written consent.
3. Indemnification by GENENTECH. GENENTECH shall defend and indemnify and
hold harmless ROCHE from and against all third party costs, claims,
suits, expenses (including reasonable attorney's fees) assessments,
fines and damages (collectively "Claims") arising out of or resulting
from its manufacture, formulating, filling and testing prior to passage
of title to the Product to ROCHE from GENENTECH and which gives rise to
a defect which could not normally be detected by adequate quality
control testing on the part of ROCHE. The foregoing indemnification
shall not extend to any claims which arise or result from any defect in
ROCHE's manufacture of the Product (if such manufacture occurs). The
foregoing indemnification shall be conditioned upon ROCHE: (a) providing
written notice to GENENTECH within twenty (20) days after ROCHE has been
given written notice of such Claim, (b) permitting GENENTECH the
opportunity to assume full responsibility (at GENENTECH's expenses) for
the investigation and defense of any such Claim; and (c) not settling or
compromising any such Claim without GENENTECH's prior written consent.
ARTICLE XII - TERM AND TERMINATION
1. Term. This Agreement shall enter into force and effect as of the
Effective Date. This Agreement shall expire as to a Product when
royalties are no longer payable by ROCHE to GENENTECH with respect to
such Product unless the Parties mutually agree to extend this Agreement
with respect to such Product. Thereafter, ROCHE shall have a fully
paid-up license for such Product.
2. Termination by ROCHE. (a) ROCHE shall have the right to terminate its
license for a Product in the Roche Territory hereunder at any time upon
thirty (30) days prior written notice to GENENTECH. If ROCHE terminates
its license for a Product in the Roche Territory for other than safety
reasons, ROCHE shall continue to remain liable for all of its
obligations with respect to said Product, including its obligations with
respect to payment of its portion of Global Development Costs, for a
period of twelve (12) months from the date of the termination notice or
six (6) months from the date of termination notice in the specific
circumstance where GENENTECH or ROCHE has completed at least one Phase
III Trial for that Product and the results of that Trial, either alone
or in conjunction with any other Phase III Trial involving the Product,
are insufficient to support a Registration of the Product in a country
set forth on Appendix B, or if results of other preclinical or clinical
trials establish that further development
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would not provide data sufficient to support Registration of the Product
in a country set forth on Appendix B. If GENENTECH enters in a license
agreement with a third party with respect to such Product in the Roche
Territory within twelve (12) months from the date of termination notice,
ROCHE shall be relieved of its obligations to pay its share of Global
Development Costs during that twelve month period to the extent the
third party licensee is obligated to pay those same costs. GENENTECH
shall use diligent efforts to have such costs borne by the third party
licensee where it is reasonable to do so.
(b) If ROCHE terminates its license for a Product in the
Roche Territory based on a good faith determination, after consultation
with appropriate regulatory authorities in the relevant country, that
the Product cannot be approved for sale in one or more major countries
in the Collaborative Countries because of issues related to the safety
of the Product. ROCHE shall continue to remain liable for all
obligations with respect to that Product to the extent they are incurred
primarily to support Registration of that Product, for a period not to
exceed six (6) months from the date of termination, in the Roche
Territory. The Parties agree to attempt to wind down such obligations
and the activities associated therewith as soon as possible after ROCHE
has terminated its license because of safety issues.
(c) If ROCHE terminates its license,
(i) all rights and licenses granted to ROCHE herein with
respect to such Product and supply obligations of GENENTECH
hereunder shall automatically terminate as of the date of
termination;
(ii) the transfer and assignment to GENENTECH or
GENENTECH's designee of the Dossier and the Registration and all
associated data, information, results and documents for such
Product in the Roche Territory shall be done promptly and
GENENTECH shall thereafter have an nonexclusive license thereto
as well as to all ROCHE Patents and Know-How related to such
Product and generated by ROCHE under this Agreement; and
(iii) the Parties shall discuss and agree on a transfer
of stocks of such Product held by ROCHE.
3. Termination by GENENTECH
(a) If ROCHE fails to exercise its "best efforts" to
commercialize a Product in a country in the Roche Territory, GENENTECH
shall have the right to request ROCHE to take remedial measures. If
GENENTECH makes such a request and ROCHE thereafter does not exercise
such "best efforts" within a period of six (6)
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months after GENENTECH has requested ROCHE to take remedial measures or
if ROCHE fails to meet the requirements of Article III, Section 6, then
GENENTECH shall have the right (x) to terminate ROCHE's license
hereunder with respect to such country if Registration for the Product
has not been initiated or (y) to convert the license to a nonexclusive
one if Registration has been initiated and
(i) all rights and licenses granted to ROCHE herein and
Product supply obligations of GENENTECH with respect to such
Product in such country shall automatically terminate as of the
date of termination;
(ii) the transfer and assignment to GENENTECH or
GENENTECH's designee of the Dossier and the Registration and all
associated data, information, results and documents for such
Product in such country shall be done promptly and GENENTECH
shall thereafter have an nonexclusive license thereto in such
country as well as to all ROCHE Patents and Know-how related to
such Product and developed by ROCHE under this Agreement; and
(iii) the Parties shall discuss and agree on a transfer
of stocks of such Product held by ROCHE with respect to such
country.
4. Termination of Development/Commercialization.
(a) GENENTECH may terminate at any time its development
and/or commercialization of Product for which ROCHE has exercised its
option under Article II. If GENENTECH so terminates its development
and/or commercialization of a Product and if GENENTECH decides to enter
into an agreement with a third party with respect to rights to such
Product in the United States, the provisions of Section 3.07 of the
Governance Agreement shall apply. In such event, GENENTECH's obligation
to manufacture and supply Clinical Requirements or Commercial
Requirements of that Product to ROCHE shall terminate in the following
manner:
(1) If GENENTECH terminates for reasons related to the
safety of the Product, such obligation shall terminate
immediately.
(2) If GENENTECH terminates for reasons other than
safety, e.g., efficacy or cost effectiveness or the like, such
obligation shall continue until the earlier to occur of two (2)
years from the date of GENENTECH's notice to ROCHE of such
termination or on the date ROCHE advises GENENTECH that no such
further supply is required.
ROCHE thereafter shall have the royalty-free right and license to
produce and
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supply all of ROCHE's Clinical Requirements and Commercial Requirements
for use and sale in the Roche Territory. Upon such termination by
GENENTECH, it shall promptly transfer all of the Manufacturing
Technology for that Product to ROCHE.
(b) ROCHE may terminate at any time its development and/or
commercialization of a Small Molecule Product. In such event, ROCHE's
obligation to manufacture and supply Clinical Requirements or Commercial
Requirements of that Product to GENENTECH shall terminate in the
following manner:
(1) If ROCHE terminates for reasons related to the
safety of the Product, such obligation shall terminate
immediately.
(2) If ROCHE terminates for reasons other than safety,
e.g.., efficacy or cost effectiveness or the like, such
obligation shall continue until the earlier to occur of two (2)
years from the date of ROCHE's notice to GENENTECH of such
termination or on the date GENENTECH advises ROCHE that no such
further supply is required.
GENENTECH shall thereafter have the royalty-free right and
license to produce and supply all of its Clinical Requirements and
Commercial Requirements for sale in the United States. Upon such
termination by ROCHE, it shall promptly transfer all of the
Manufacturing Technology for that Product to GENENTECH.
5. Termination for Breach. Except as provided in Section 3 of this Article,
either Party may terminate this Agreement upon the failure of the other
Party to comply with any of its material obligations contained in this
Agreement or in the Governance Agreement. Such termination shall become
effective at any time after providing sixty (60) days' written notice by
the non-breaching Party specifying the breach and its intent to
terminate the Agreement; provided that the breaching Party shall have an
opportunity to cure any defect or omission during such sixty (60) day
period. Should such cure be effected, such notice shall be null and
void. Any other provision of this Agreement notwithstanding, termination
of this Agreement for failure to comply with a material obligation shall
be without prejudice to --
(a) any remedies which either Party may then or
thereafter have hereunder or at law; and
(b) either Party's right to obtain performance of any
obligations provided for in this Agreement which survive
termination by their terms or
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by a fair interpretation of this Agreement.
6. Certain Proceedings. In the event any action or proceeding before any
court or governmental agency or other regulatory or administrative
agency or commission, by any governmental or other regulatory or
administrative agency or commission or by any other person, successfully
challenging this Agreement or the relations or actions of the Parties
contemplated hereby or otherwise materially and adversely affecting the
business or property (including the goodwill and business reputation and
character) of a Party hereto, the Parties shall discuss an appropriate
termination of this Agreement and the terms and conditions associated
with such termination.
7. Termination For Change in Ownership. If at any time during the term of
this Agreement, ROCHE's equity ownership of GENENTECH securities is less
than fifty percent (50%) of all such securities then outstanding,
ROCHE's right to exercise any unexercised options set forth in Article
II above shall terminate immediately.
8. Survival of Terms. The foregoing notwithstanding, the provisions of
Articles IX, X, XI, XII and XIII as well as any provisions which by
their specific language or context are intended to or can be fairly read
to survive termination of this Agreement, shall survive any termination
of this Agreement for any reason.
ARTICLE XIII - MISCELLANEOUS
1. Disclaimer of Certain Warranties. Information, reagents and materials
(except Product) transferred from one Party to another in the course of
this Agreement are supplied "as is" without warranties, express or
implied, including any warranty of merchantability, title, freedom from
infringement or fitness for a particular use.
2. Entire Agreement, Amendment. (a) Except as provided in subsection (b),
this Agreement, as amended, constitutes the entire agreement between the
Parties with respect to the subject matter hereof, supersedes all prior
agreements, understandings and communications, oral or written, relating
to the subject matter hereof (including but not limited to the minutes
of the meeting between ROCHE and GENENTECH in London of May 1, 1997 and
the letter agreement dated May 29, 1998, between ROCHE and GENENTECH
with respect to Xubix), and shall not be modified, altered or amended
except by mutual written agreement of the Parties.
(b) This Agreement shall not supersede the DNase Supply
Agreement except that the terms of such Agreement shall be expanded to
include the supply of DNase in Canada.
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(c) This Agreement shall not supersede any terms of the
IIbIIIa Agreement unless specifically mentioned in Section 11 and 12 of
Article II.
3. Failure to Enforce. The failure by either Party at any time or for any
period of time to enforce any term or provision of this Agreement shall
not be construed as a waiver of such term or provision or of the right
of either Party to enforce each and every such term and provision.
4. Force Majeure. If either Party shall be delayed, interrupted in or
prevented from the performance of any obligation hereunder by reason of
Force Majeure including an act of God, fire, flood, war (declared or
undeclared), public disaster, strike or labor differences, governmental
enactment, rule or regulation, or any other cause beyond such Party's
control, such Party shall not be liable to the other therefor and the
time for performance of such obligation shall be extended for a period
equal to the duration of the contingency which occasioned the delay,
interruption or prevention. The Party invoking such Force Majeure rights
must notify the other Party within a period of fifteen (15) days, from
the first and the last day of the Force Majeure unless the Force Majeure
renders such notification impossible in which case notification will be
made as soon as possible. If the delay resulting from the Force Majeure
exceeds six (6) months, both Parties shall consult each other to find an
appropriate solution.
5. Arbitration. In the event of any dispute, controversy or claim arising
out of or relating to this Agreement, the Parties shall try to settle
such disputes, controversies or claims amicably between themselves
including referring such dispute, controversy or claim to the Chief
Executive Officer of GENENTECH and a member of ROCHE's Executive
Committee. If the Parties are unable to so settle such dispute,
controversy or claim, then any such dispute, controversy or claim
arising out of or relating to any provision of this Agreement or the
interpretation, enforceability, performance, breach, termination or
validity hereof, including, without limitation, this arbitration clause
shall be solely and finally settled by arbitration in the manner
specified in this Section.
All arbitration proceedings shall be conducted in New York City. If
ROCHE requests the commencement of such proceedings, the arbitration
proceedings shall be conducted under the procedural rules of the
American Arbitration Association. If GENENTECH requests the commencement
of proceedings, arbitration proceedings shall be conducted under the
procedural rules of the International Arbitration Rules of the Zurich
Chamber of Commerce. In either case, proceedings in the arbitration
shall conducted in the English language, and all documents not in
English submitted by either party must be accompanied by a translation
into English. The Party requesting arbitration shall serve upon the
other
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Party a written demand for arbitration stating the substance of the
controversy, dispute or claim, and the contention of the Party
requesting arbitration. Within sixty (60) days after the demand, the
Parties shall select three (3) mutually acceptable arbitrators. The
arbitrators are to act as neutral arbitrators and shall have no past,
present or anticipated future affiliation with the Parties or any
relationship with the Parties which would unduly influence the
independence of an arbitrator. If the Parties are unable to agree upon
three (3) mutually acceptable arbitrators, the arbitration agent under
whose rules the arbitration is proceeding shall appoint three (3)
arbitrators. No more than two arbitrators shall be citizens and/or
residents of the United States or citizens and/or residents of
Switzerland. The decision of the arbitrators shall be in writing setting
forth the basis therefore. The arbitrators shall have the authority to
award such remedies as they believe are appropriate in the
circumstances, including, but not limited to, compensatory damages,
consequential and incidental damages, interest, tort damages (but not
punitive or similar damages) and specific performance and other
equitable relief. The Parties shall abide by the award rendered in such
arbitration proceeding, and such award may be enforced and executed upon
in any court having jurisdiction over the Party against whom enforcement
of such award is sought. The Parties shall divide equally the
administrative charges, arbitrators's fees and related expenses of
arbitration, but each Party shall pay its own attorney's fees incurred
in connection with such arbitration; provided, however, if the
arbitrators determine that one Party prevailed clearly and substantially
over the other Party, then the non-prevailing party shall also pay the
prevailing Party's reasonable attorney's fees and expert witness costs
and arbitration costs.
6. Notices. Requests, notices and reports required or permitted under this
Agreement shall be in writing and shall be sent by telefax or telecopier
(with written confirmation) or express mail to the address set forth
below or such other address as a Party may designate from time to time
in accordance with this Section:
to ROCHE: X. Xxxxxxxx-Xx Xxxxx Ltd
Corporate Law
Xxxxxxxxxxxxxxxxx 000
XX-0000 Xxxxx, Xxxxxxxxxxx
to GENENTECH: Genentech, Inc.
Corporate Secretary
0 XXX Xxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
U.S.A.
7. Use of Names. Neither Party will use or refer to this Agreement in any
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promotional activity, or use the marks of the other Party, without
express prior written permission of the other Party. Either Party shall
refrain from making any public announcement or disclosure of this
Agreement and its terms without the prior written consent of the other
Party except as required by law.
8. Successors and Assigns. Neither Party may assign this Agreement or any
rights hereunder in any manner, whether by virtue of law or otherwise,
without the prior written consent of the other Party, except that
GENENTECH may assign part or all of its responsibilities and obligations
under this Agreement to one or more wholly-owned subsidiaries of
GENENTECH.
9. Headings. The section headings of this Agreement are for convenience
only and are not a part of this Agreement.
10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11. Severability. The Parties hereby expressly state that it is not their
intention to violate any applicable rule, law or regulation. If any of
the provisions of this Agreement are held to be void or unenforceable
with regard to any particular country by a court of competent
jurisdiction, then, to the extent possible, such void or unenforceable
provision shall be replaced by a valid and enforceable provision which
will achieve as far as possible the economic business intentions of the
Parties. The provisions held to be void or unenforceable shall remain,
however, in full force and effect with regard to all other countries.
12. Governing Law. This Agreement shall be governed by and construed for all
purposes in accordance with the laws of the State of New York.
13. Relationship. Neither ROCHE or GENENTECH is in any way the legal
representative or agent of the other, nor authorized or empowered to
assume any obligation of any kind, implied or expressed, on behalf of
the other, without the express written consent of the other.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the Effective Date.
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GENENTECH, INC. X. XXXXXXXX-XX XXXXX LTD
By By
--------------------------------- --------------------------------------
Title Title
------------------------------ -----------------------------------
By
--------------------------------------
Title
-----------------------------------
GENENTECH EUROPE LIMITED
By
---------------------------------
Title
------------------------------
GENENTECH BIOPHARMACEUTICALS LIMITED
By
---------------------------------
Title
------------------------------
GENENTECH INTERNATIONAL LIMITED
By
---------------------------------
Title
------------------------------
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APPENDIX A
AMENDED AND RESTATED
FINANCIAL APPENDIX
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FINANCIAL APPENDIX TO THE AMENDED AND RESTATED AGREEMENT
This document is the Financial Appendix to the Amended and Restated Agreement
(the "License Agreement") effective as of the Effective Date, and amended and
restated as of the Restatement Date, between X. Xxxxxxxx-Xx Xxxxx Ltd (ROCHE)
and Genentech, Inc., Genentech Europe Limited, Genentech Biopharmaceuticals
Limited and Genentech International Limited (GENENTECH) and contains the
financial definitions and descriptions of their applicable to the License
Agreements.
1. DEFINITIONS
NET SALES - Shall mean the gross invoice price for sales of the product
to third parties less deductions of returns (including withdrawals and
recalls), rebates (price reductions including Medicare or similar types
of rebates), volume (quantity) discounts granted at the time of
invoicing, sales taxes and other taxes directly linked to sales, as
computed in the central ROCHE Sales Statistics (referred to as Xxxxxx)
for the countries concerned.
In addition to this above computed adjusted gross invoice price, for all
other expenses like Sales Deductions (outward freights, transportation
insurance, packing materials for dispatch of goods, custom duties),
Sales Expenses (discounts granted later than at the time for invoicing),
Cash Discounts and other direct expenses, there shall be a lump sum
deduction of three percent (3%).
COSTS OF SALES - Shall mean GENENTECH's Fully Burdened Manufacturing
Costs determined in accordance with GENENTECH accounting policy which is
based on U.S. GAAP as applied by GENENTECH.
GENENTECH'S FULLY BURDENED MANUFACTURING COST - shall mean GENENTECH's
consolidated fully burdened manufacturing costs (as defined in
GENENTECH's Accounting Policies) of Bulk Product, Vialed Product or
Finished Product, as the case may be, which in summary shall comprise
the sum of:
a) The cost of goods produced for clinical or commercial
use as determined in accordance with U.S. generally
accepted accounting principles as applied by GENENTECH
including, but not limited to, direct labor and material
and product testing costs as well as allocable overhead;
b) All of GENENTECH'S allocable intellectually property
acquisition, licensing and royalty costs paid to third
parties upon the sale of Product by ROCHE to third
parties (unless any such cost is specifically identified
as the sole cost of GENENTECH in the License Agreement);
c) Any other costs borne by GENENTECH for transport,
customs clearance and storage of product (if necessary)
at the request of ROCHE (i.e., freight, duty, insurance
and warehousing).
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DEVELOPMENT COSTS - shall mean the development costs actually
incurred by GENENTECH after the date of GENENTECH's decision to bring a
product into development through the date of marketing approval or
termination of development efforts of the final indication for which
marketing approval in any country is sought. Such costs shall comprise
those costs, both direct and indirect (i.e. fully burdened costs),
required to obtain the authorization and/or ability to manufacture,
formulate, fill, ship and/or sell the product in commercial quantities
to the third parties. Such Development Costs shall include but are not
limited to costs of development including cost of studies on the
toxicological, pharmacokinetical, metabolical or clinical aspects of the
product conducted internally or by individual investigators, or
consultants necessary for the purpose of obtaining and/or maintaining
approval in any country of the product, process development and scale up
costs, qualification lots, costs for preparing, submitting, reviewing or
developing data or information for the purpose of submission to the U.S.
Food and Drug Administration or other governmental authority to obtain
and/or maintain approval in any country. These costs shall include
expenses for data management, statistical designs and studies, document
preparation, and other administration expenses associated with the
clinical testing program. Development Costs shall include all such Costs
incurred by GENENTECH up to the product's Entry Into Man or Phase II
Completion Date, as applicable. Development Costs after the product's
Entry Into Man or Phase II Completion Date, as applicable, shall be
limited to all such Costs incurred by GENENTECH thereafter (i) to the
extent such Costs result in the development of data, information,
processes, materials or the like which are used by ROCHE in a filing for
a Registration or for the commercialization of that Product and (ii) to
the extent such costs are incurred in any development of a process or
processes used to manufacture the Product for supply to ROCHE.
In determining Development Costs, GENENTECH will use its Project Cost
System.
GLOBAL DEVELOPMENT COST - Shall mean the costs specifically
attributable to the development of a Product and actually incurred after
the date of decision to bring a Product into development (which date
shall usually be: -for a Genentech Product, the official decision of
Genentech's Executive Committee to develop a product - for Roche Product
a formal decision point which corresponds to Genentech's official
decision by the Executive Committee) through the date of marketing
approval or termination of development efforts of the final indication
for which marketing approval is sought in the USA and/or the
Collaborative Countries. For illustration purposes, Global Development
Costs for Product shall include IND enabling toxicology costs but shall
not include optimization of lead candidates.
Such costs shall comprise those costs, both direct and indirect
including Allocable Overhead (i.e. fully burdened costs), required to
obtain the authorization to manufacture, formulate, fill, ship and/or
sell a Product in commercial quantities in the USA and/or the
Collaborative Countries to third parties.
Such Global Development Costs shall include but are not limited to costs
of development including cost of studies on the toxicological,
pharmacokinetical,
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metabolical or clinical aspects of a Product conducted internally or by
individual investigators or consultants, manufacturing process
development and scale up costs, qualification lots, costs for preparing,
submitting, reviewing or developing data or information necessary for
the purpose of submission to the FDA, EMEA or other governmental
authority in order to obtain and/or maintain approval of a Product in
the USA and/or the Collaborative Countries.
These costs shall include expenses for data management, statistical
designs and studies, document preparation, and other administration
expenses associated with the clinical testing program.
These costs shall include costs incurred in geographical areas other
than USA and/or the Collaborative Countries (e.g.: Canada, South Africa
and Brazil) only to the extent that the activities related with such
costs are specifically planned (and specifically included in the
mutually approved global development plan and budget) to be incurred in
such geographical areas for the purpose of generating data or
information required to obtain the above mentioned authorization in the
USA and/or the Collaborative Countries.
These costs shall not include Patent costs, pre-registration marketing
costs (e.g. trademark costs, advertising agency selection costs,
pre-marketing studies), post-registration clinical and marketing studies
which are not conducted as part of the global development plan.
In determining Global Development Cost, each Party will use its
applicable project cost system with the purpose of tracking costs as
much as possible on a product indication- by-product indication basis.
ALLOCABLE OVERHEAD - Shall mean costs incurred by a Party or for
its account which are attributable to a Party's supervisory services,
occupancy costs, corporate bonus (to the extent not charged directly),
and its payroll, information systems, human resources or purchasing
functions and which are allocated to company departments based on a
space occupied or headcount or other activity-based method.
Allocable Overhead shall not include any costs attributable to general
corporate activities including, by way of example, executive management,
investor relations, business development, legal affairs and finance.
2. TRANSFER PRICE OF PRODUCT FROM GENENTECH TO ROCHE
Transfer Price of Product from GENENTECH to ROCHE - The total amount due
GENENTECH for the transfer of product from GENENTECH to ROCHE shall be
the amount defined below:
The first installment payment shall be GENENTECH's Cost of Sales plus a
margin of twenty (20%) of the Cost of Sales of the Product. Such margin
shall be calculated on Cost of Sale exclusive of the sum of (a)
GENENTECH's allocable intellectual property acquisition, licensing and
royalty costs paid to third parties upon the sale of product by
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ROCHE to third parties and (b) any other costs borne by GENENTECH for
transport, customs clearance and storage of product at the request of
ROCHE. Such installment will be billed to ROCHE in U.S. Dollars. Payment
of the first installment shall be made by ROCHE to GENENTECH in U.S.
Dollars within thirty (30) days after shipment.
The second installment payment to GENENTECH shall be the payment defined
in Article VI, Sections 3, 4, 5, 6, 7 and 8 of the License Agreement.
3. REIMBURSEMENT OF GENENTECH DEVELOPMENT COSTS
Development Costs incurred prior to ROCHE's exercise of its option for a
product -- Thirty days prior to the date by which ROCHE must exercise
its option for a product , GENENTECH shall choose one of the following
methods for reimbursement of Development Costs incurred prior to
exercise of such option, the choice being subject to ROCHE's consent
which shall not be unreasonably withheld:
A.) Lump sum payment equal to fifty percent (50%) of the cumulative
Development Costs incurred prior to ROCHE's exercise of such option, due
thirty days after ROCHE's exercise of such option, or
B.) Quarterly payments, due 30 days after invoicing from GENENTECH,
equal to one hundred and fifty percent (150%) of the Development Costs
incurred after ROCHE's exercise of a Product option until such the
cumulative amount paid thereunder equals fifty percent (50%) of the
cumulative Development Costs incurred prior to ROCHE's exercise of such
option plus interest at LIBOR from the date of such option exercise.
GENENTECH shall invoice ROCHE for the amount due hereunder within 30
days of the end of each quarter.
Development Costs incurred after ROCHE's exercise of a Product Option -
Quarterly payments, due 30 days after invoicing from GENENTECH, equal to
fifty percent (50%), in the event ROCHE exercised its option for such
Product within the exercise period after such Product's Entry Into Man,
or seventy-five percent (75%), in the event ROCHE exercised its option
for such Product within the allowable period after a Phase II Completion
Date for such Product, of GENENTECH's Development Costs incurred after
ROCHE's exercise of a Product option. GENENTECH shall invoice ROCHE for
the amount due hereunder within 30 days of the end of each quarter.
For products which GENENTECH can only license Canadian rights to ROCHE,
the fifty percent (50%) reimbursement of Development Costs provided in
this Section 3 of this Appendix shall be reduced to ten percent (10%).
For IGF-1 Products for any diabetes indication, the fifty percent (50%)
reimbursement of Development Costs provided in this section 3 of this
Appendix shall be increased to sixty percent (60%).
For NGF Products, the fifty percent (50%) reimbursement of Development
Costs
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provided in this section 3 of this Appendix shall be reduced to forty
percent (40%).
4. SHARING AND REIMBURSEMENT OF GLOBAL DEVELOPMENT COSTS
a) Global Development Costs incurred prior to a Party's exercise of
its option for a Product -
Unless specifically otherwise stated in Part 2 of this Appendix,
the following shall apply:
Lump sum payment equal to fifty percent (50%) of the cumulative
Global Development Cost incurred prior to the opting party's
exercise of such option, during thirty days after the opting
party's exercise of such option and receipt of an invoice from
the licensor.
b) Global Development Cost incurred after a party's exercise of its
option for a Product shall be shared as shown in Part 2 of this
Financial Appendix.
The global development plan and budget as agreed by the
Commercialization Committee for such Product shall be the
reference for sharing Global Development Cost. The parties shall
share development costs provided that they relate to activities
which have been planned for and budgeted either in a global
development plan and budget agreed between the parties before
the Option Date or in one of the subsequently jointly agreed
updates of such global development plan and budget after the
Option Date.
In the case of I) activities or costs which have not been
planned and budgeted but have actually been incurred by a Party
or ii) actual costs of planned activities which have
significantly exceeded (more than 10%) the amount budgeted, the
Commercialization Committee shall decide whether and/or how such
additional costs shall be shared between the parties.
On a quarterly calendar basis and after the opting party's
exercise of such option, within 30 days after the end of each
calendar quarter, each party shall provide the other with an
invoice for the amount of Global Development Cost it has
incurred and which is due for reimbursement by such other party
for such quarter, using the cost sharing rate as specified in
Part 2 of this Appendix for such Product. Such amount shall be
expressed in U.S. dollars and payable within 30 days from
receipt of such invoice. Such invoice shall be accompanied by a
report specifying such Global Development Costs on a product
indication-by-product indication basis and providing details per
activity as specified by the Commercialization Committee and
show in local currency and U.S. dollars in a manner consistent
with the amounts budgeted for such activities.
Whenever for the purpose of calculating conversation of Global
Development Costs from any foreign currency into U.S. dollars
shall be required, such conversion shall be made using the
average quarterly rate of exchange at the
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time for such currencies as retrieved from the Reuters System
for the countries concerned.
5. BUDGET AND BUSINESS PLAN
ROCHE shall provide GENENTECH within 30 days of availability in final
form, ROCHE's budget (prepared annually and covering a one year period)
and Business Plans (prepared annually and covering at least a three (3)
year period) for each Product for which ROCHE has exercised its option
under Article II of the Agreement.
6. AUDITS AND INTERIM REVIEWS
Audit work will be performed in the following manner.
If deemed necessary by either ROCHE or GENENTECH, an audit by
independent certified public accountants may be requested. Such audits
will be at the sole expense of the requesting Party and will be
performed by the officially appointed auditor of the Party audited. If
GENENTECH requests audit work of the ROCHE accounts, the audit will be
performed by ROCHE's appointed worldwide auditor which is currently
Price Waterhouse, LLP. If ROCHE requests audit work of the GENENTECH
accounts, the audit will be performed by the independent auditor
appointed by GENENTECH which is currently Ernst & Young, LLP.
7. STATE OF ACCOUNTING AND REIMBURSEMENT
Determination of Development Costs shall be made retroactive to the date
of GENENTECH's decision to bring each product into development for all
product other than those product indications marketed in the United
States as of June 30, 1995. There shall be no reimbursement of
Development Costs incurred prior to July 1, 1995 for any indication
marketed in the United States as of June 30, 1995 or for Pulmozyme for
COPD.
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Reimbursement of Development Costs owned to GENENTECH under section 3 of
this Appendix for Products which have reached ROCHE's product option
exercise date as of the effective date of this agreement shall be due 60
days after the exercise of such option.
Royalties due GENENTECH under the License Agreement will commence as set
forth in the Agreement.
Recognizing that ROCHE prepares complete accounts for its activities in
the GENRO collaboration only on June 30th and December 31st of each
year, the GENRO Finance Committee (as currently constituted) will agree
on an appropriate basis to settle profit sharing under the current
arrangement from July 1, 1995 to such items the operation of Genentech
Europe Ltd. are transferred to ROCHE in accordance with Article VII,
section 1, of the License Agreement.
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FINANCIAL APPENDIX
PART 2
When inconsistent with Part 1, terms and conditions of Part 2 shall
supersede those as defined in Part 1.
1) Sharing of Global Development Costs after Option
Global Development Costs shall be shared fifty percent by ROCHE and
fifty percent by GENENTECH.
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APPENDIX A
FINANCIAL APPENDIX TO THE AMENDED AND RESTATED AGREEMENT
This document is the Financial Appendix to the Amended and Restated Agreement
(the "License Agreement") effective as of the Effective Date, and amended and
restated as of the Restatement Date, between X. Xxxxxxxx-Xx Xxxxx Ltd. (XXXXX)
and Genentech, Inc., Genentech Europe Limited, Genentech Biopharmaceuticals
Limited and Genentech International Limited (GENENTECH) and contains the
financial definitions and descriptions applicable to the License Agreement.
When inconsistent with the License Agreement, terms and conditions of the
License Agreement shall prevail upon those as defined herein. Terms not defined
in this Financial Appendix shall have the meanings set forth in the License
Agreement.
1. DEFINITIONS
ADJUSTED GROSS SALES - Shall mean the gross sales amount invoiced by
either Party, their Affiliates, or sublicensees for a Product to
non-Affiliated third party purchasers in the Territory less, to the
extent such amounts are included in the amount of gross sales invoiced,
deductions of returns (including withdrawals and recalls), rebates
(price reductions including Medicaid and similar types of rebates, e.g.,
chargebacks or retroactive price reductions), volume (quantity)
discounts, discounts granted at the time of invoicing, sales taxes and
other taxes directly linked to the gross sales amount as computed on a
product-by-product basis and reported in the central ROCHE sales
statistics for the countries concerned.
NET SALES - Shall mean the amount calculated by subtracting from the
amount of Adjusted Gross Sales a lump sum deduction of three percent (3
%) for those sales related deductions which are not accounted for on a
product-by-product basis, to the extent not already included in the
determination of the Adjusted Gross Sales (such costs shall include but
are not limited to costs of outward freights, postage charges,
transportation insurance, packaging materials for dispatch of goods,
custom duties, discounts granted later than at the time of invoicing,
cash discounts and other direct sales expenses).
COSTS OF GOODS - For Bulk Product, semi-finished (e.g. Vialed Product),
or Finished Product, as the case may be, shall be the sum of :
i) Fully Burdened Manufacturing Cost (FBMC) ;
ii) Outbound Costs
Financial Appendix to the Amended and Restated Agreement 1
65
In the event Product is supplied for clinical or commercial purposes,
such Cost of Goods shall not include item i) above to the extent it has
already been considered or charged within Genentech's Development Costs
or Global Development Costs.
FULLY BURDENED MANUFACTURING COST - (FBMC) - Shall mean GENENTECH's
fully burdened manufacturing costs of Bulk Product, semi-finished, or
Finished Product, as the case may be, shipped for clinical or commercial
use and determined in accordance with generally accepted accounting
principles as applied by GENENTECH.
Such FBMC shall include direct labor, materials, product testing costs
(including QC and QA bulk testing and in-process testing e.g.
adventitious virus and mycoplasma testing), and Allocable Overhead for
manufacturing or contracting for each stage of the manufacturing process
of the product shipped. GENENTECH will discuss annually with ROCHE the
main drivers of estimated and actual FBMC such as yields and Failures.
Four years after the launch of the Product the Parties will agree on an
annual standard cost for the bulk material manufactured to be charged.
Such standard cost will consider yields, success factors (Failures) and
other pertinent data. In any case, yield losses and Failures which go
beyond what could be reasonably expected and/or justified in this area
of technology shall remain the sole costs of GENENTECH.
Such FMBC shall not include any costs associated with expired products
to the extent that the actual quantity of material purchased is at least
equal to the amount of the firm orders. (Firm orders shall be ROCHE's
latest production quantity request prior to each manufacturing campaign
of GENENTECH.) GENENTECH agrees to consider the worldwide sales and
production needs when establishing its manufacturing campaign plans. A
supply agreement to be entered between the Parties shall determine which
and when forecasts shall become firm orders.
Such FBMC shall not include any costs associated with all of GENENTECH's
allocable intellectual property acquisition, licensing and royalty costs
payable by GENENTECH to third parties in relation with the manufacturing
formulation, filling, use or sale of a Product.
Such FBMC shall not include any costs associated with process
development, scale up costs, qualification lots and any other costs if
they are included in Genentech's Development Costs or Global Development
Cost.
OUTBOUND COSTS - Shall mean any outbound costs borne by GENENTECH at the
request of ROCHE including but not limited to transport, customs
clearance and storage of Product (i.e., freight, duty, insurance and
warehousing).
ALLOCABLE OVERHEAD - Shall mean costs incurred by a Party or for its
account which are attributable to a Party's supervisory services,
occupancy costs, corporate bonus (to the extent not charged directly),
and its payroll, information systems, human resources or purchasing
functions
Financial Appendix to the Amended and Restated Agreement 2
66
and which are allocated to company departments based on a space occupied
or headcount or other activity-based method. Allocable Overhead shall
not include any costs attributable to general corporate activities
including, by way of example, executive management, investor relations,
business development, legal affairs and finance.
TRANSFER OF MANUFACTURING - In the case where ROCHE assumes
manufacturing for its supply requirements pursuant to Article V, Section
13 (i) of the License Agreement, ROCHE will reimburse GENENTECH for 100
% of the costs incurred by GENENTECH in making the transfer including
overhead and for the cost of Idle Capacity as describe in the next
section.
COST OF IDLE CAPACITY --- The principle of cost of Idle Capacity shall
only apply in the case of Article V, Section 13 (i) of the License
Agreement and for a period of four (4) years from notification by ROCHE
that it will assume manufacturing. The Cost of Idle Capacity (CIC) shall
be determined and charged to ROCHE as follows:
i) ROCHE will be charged other operating costs calculated
as follows:
(capacity utilized by ROCHE prior to ROCHE's
notification minus capacity actually used for the supply
for the ROCHE Territory)
divided by
(total capacity utilized by the Parties for the
Product(s) prior to ROCHE's notification minus capacity
actually used for the supply of Product(s) for
GENENTECH's and ROCHE's Territory)
multiplied by
depreciation, plant maintenance cost and other fixed
manufacturing cost related to the total capacity
utilized for Product(s) prior to ROCHE's notification.
The result of this method of accounting for idle capacity is to ensure
that GENENTECH charges ROCHE the share of depreciation, plant
maintenance cost and other fixed manufacturing cost related to the
capacity for the supply of the Product(s) for the ROCHE Territory
utilized prior to ROCHE's notification but actually not utilized after
ROCHE assumes manufacturing.
(ii) GENENTECH shall notify the Joint Finance
Committee (JFC) prospectively of any such charge
hereunder, including the calculation thereof, in
writing. The JFC shall review any such calculated charge
hereunder and shall be entitled to receive from
GENENTECH such financial and other information as
Financial Appendix to the Amended and Restated Agreement 3
67
the JFC shall reasonably deem necessary in order to
confirm (or correct) the calculated charge.
(iii) To the extent feasible and reasonable, GENENTECH
will make best efforts to use idle capacity for its own
products that are not Products under the Agreement, with
the effect that the idle plant cost charge to ROCHE set
forth herein is reduced dollar for dollar for the
portion of capacity actually used by GENENTECH in such
fashion.
FAILURES - Shall mean Bulk Product, semi-finished, or Finished Product,
as the case may be, that:
1. does not meet the specifications, or
2. was not manufactured or tested in accordance with the
procedures, or
3. was not manufactured in accordance with cGMPs.
Only those tests listed in the specifications may be used to determine
conformity.
THIRD PARTY ROYALTIES - Shall mean all of GENENTECH's allocable
intellectual property acquisition, licensing and royalty costs paid to
third parties upon the sale of Product by ROCHE to third parties (unless
any such cost is specifically identified as the sole cost of GENENTECH
in the License Agreement) , such royalties being payable to third
parties as a result of licenses from third parties for the manufacture,
formulation, filling, use or sale of a Product.
Each Party shall bear the full cost related to Third Party Royalties for
the units of Product sold in its Territory. Procedures for converting
from foreign currencies and paying such royalty to the other Party shall
be as described below in section 6.
GENENTECH shall provide ROCHE the details of such Third Party Royalties
obligations including but not limited to the name of the third party,
the rate, the duration and the "Net Sales" basis for calculation of such
payment. Such information shall be periodically updated for changes (as
need be) by GENENTECH or at ROCHE's request.
DEVELOPMENT COSTS - With respect to GENENTECH whether as part of
Genentech's Development Costs or as part of Global Development Costs,
shall mean the development costs actually incurred by GENENTECH after
the date of GENENTECH's decision to bring a Product into development
(for illustration purposes Development Costs for Product shall include
IND enabling toxicology costs but shall not include optimization of lead
candidates ) through the date of marketing approval or termination of
development efforts of the final indication for which marketing approval
in any country is sought. Such costs shall comprise those costs, both
direct and indirect (i.e. fully burdened costs), required to obtain the
authorization and/or ability to manufacture, formulate, fill, ship
and/or sell the Product in commercial quantities to the third parties.
Such Development Costs shall include but are not limited to costs of
development including cost of studies on the toxicological,
pharmacokinetical, metabolical or clinical aspects
Financial Appendix to the Amended and Restated Agreement 4
68
of the Product conducted internally or by individual investigators, or
consultants necessary for the purpose of obtaining and/or maintaining
approval in any country of the Product, process development and scale up
costs, qualification lots, costs for preparing, submitting, reviewing or
developing data or information for the purpose of submission to the U.S.
Food and Drug Administration or other governmental authority to obtain
and/or maintain approval in any country. These costs shall include
expenses for data management, statistical designs and studies, document
preparation, and other administration expenses associated with the
clinical testing program.
These costs shall not include Patent costs, pre-Registration marketing
costs (e.g. trademark costs, advertising agency selection costs,
pre-marketing studies), post-Registration clinical studies which are not
enabling for Registration of the Product and post-Registration marketing
studies.
GENENTECH'S DEVELOPMENT COSTS - shall include all such Costs incurred by
GENENTECH up to ROCHE's exercise of its option for a Product at Entry
Into Man or Phase II or Phase III Completion Date, as applicable. In
determining Development Costs, GENENTECH will use its Project Cost
System with the purpose of tracking costs as much as possible on a
product indication-by-product indication basis.
GLOBAL DEVELOPMENT COSTS - Shall mean the costs specifically
attributable to the development of a Product and actually incurred after
the date of ROCHE's decision to exercise its option for a GENENTECH or
an In-Licensed Product through the date of marketing approval or
termination of development efforts of the final indication or
formulation or dosing for which marketing approval is sought in the USA
and/or the Collaborative Countries.
Such costs shall comprise those costs, both direct and indirect
including Allocable Overhead (i.e. fully burdened costs), required to
obtain the authorization to manufacture, formulate, fill, ship and/or
sell a Product in commercial quantities in the USA and/or the
Collaborative Countries to third parties.
Such Global Development Costs shall include but are not limited to costs
of development including cost of studies on the toxicological,
pharmacokinetical, metabolical or clinical aspects of a Product
conducted internally or by individual investigators or consultants,
manufacturing process development and scale up costs, qualification
lots, costs for preparing, submitting, reviewing or developing data or
information necessary for the purpose of submission to the FDA, EMEA or
other governmental authority in order to obtain and/or maintain approval
of a Product in the USA and/or the Collaborative Countries.
These costs shall include expenses for data management, statistical
designs and studies, document preparation, and other administration
expenses associated with the clinical testing program.
Financial Appendix to the Amended and Restated Agreement 5
69
These costs shall include costs incurred in geographical areas other
than USA and/or the Collaborative Countries (e.g.: Canada, South Africa
and Brazil) only to the extent that the activities related with such
costs are specifically planned (and specifically included in the
mutually approved global development plan and budget) to be incurred in
such geographical areas for the purpose of generating data or
information required to obtain the above mentioned authorization in the
USA and/or the Collaborative Countries.
These costs shall not include Patent costs, pre-registration marketing
costs (e.g. trademark costs, advertising agency selection costs,
pre-marketing studies), post-registration clinical and marketing studies
which are not conducted as part of the global development plan.
In determining Global Development Costs, each Party will use its
applicable project cost system with the purpose of tracking costs as
much as possible on a product indication-by-product indication basis.
As the case may be, Global Development Costs shall exclude for a Product
development costs attributable to specific indications for which one
Party has opted out as described in the next section for such Product as
updated from time to time.
ADDITIONAL INDICATION OPT OUT I OPT BACK IN - When ROCHE opts in for a
Product, it will opt in for all indications for such Product.
Each Party has the right to opt out of the development of an additional
indication for a Product beyond the initial indication for that Product
at one of the following three decision points:
a) Executive Committee decision of GENENTECH to develop an
indication or the equivalent ROCHE decision as defined
above
b) End of Phase II
c) A formal decision point in phase III defined in the
clinical study protocol and agreed upon by the parties
Prior to such opt out decision, the Parties shall have a good faith
discussion about the reasons and consequences of the opt out
The Party electing to opt out will provide the other Party with sixty
days notice prior to its election and will be obligated to pay its share
of the cost of all ongoing clinical and preclinical studies and its
share of other development costs already committed to third parties as
of the date of such notice. Thereafter the Party electing to opt out
will not share any costs or benefits of such indication.
Financial Appendix to Amended and Restated Agreement 6
70
In the event that a Party which previously opted out of an indication
wishes to regain its rights to such indication then it may regain such
rights by electing to do so at the latest within thirty days of a formal
decision to file for approval for that indication and by paying within
thirty days, two hundred percent of the Global Development Costs it
would have otherwise incurred if it had not opted out for such
indication during the period of opt out and by thereafter assuming from
the opt back in date its ongoing obligations as if no opt out had
occurred.
2) PLANNING AND BUDGETING OF GLOBAL DEVELOPMENT COSTS
For a Product for which ROCHE has exercised its option, the Parties
shall agree on a global development plan and budget on an
indication-by-indication basis.
Such plan and budget shall i) identify activities and costs to be
incurred, by calendar quarter, ii) provide details of activities in a
manner to be specified by the Joint Development Committee and in a
manner consistent with the cost systems of each Party, iii) be updated
whenever needed, at least on a quarterly basis and when development of
indications additional to the initial indication shall be envisaged.
3. REIMBURSEMENT OF DEVELOPMENT COSTS
SHARING AND REIMBURSEMENT OF Genentech's Development Costs - Thirty days
prior to the date by which ROCHE must exercise its option for a Product,
GENENTECH shall choose one of the following methods for reimbursement of
Development Costs incurred prior to exercise of such option, the choice
being subject to ROCHE's consent which shall not be unreasonably
withheld:
A.) Lump sum payment for the appropriate percentage of the
cumulative Genentech's Development Costs incurred prior to ROCHE's
exercise of such option, due thirty days after ROCHE's exercise of such
option, or
B.) Quarterly payments, due 30 days after invoicing from GENENTECH,
equal to one hundred and fifty percent (150%) of the Global Development
Costs GENENTECH incurred after ROCHE's exercise of a Product option
until such the cumulative amount paid thereunder equals the appropriate
percentage of the cumulative Genentech's Development Costs incurred
prior to ROCHE's exercise of such option plus interest at LIBOR from the
date of such option exercise. GENENTECH shall invoice ROCHE for the
amount due hereunder within 30 days of the end of each quarter.
For products which GENENTECH can only license Canadian rights to ROCHE,
the appropriate percentage reimbursement of Genentech's Development
Costs provided in this Section 3 of this Appendix shall be reduced to
ten percent (10%).
Financial Appendix to the Amended and Restated Agreement 7
71
SHARING AND REIMBURSEMENT OF GLOBAL DEVELOPMENT COSTS - The global
development plan and budget as agreed by the JCC for such Product shall
be the reference for sharing Global Development Costs. The Parties shall
share development costs provided that they relate to activities which
have been planned for and budgeted either in a global development plan
and budget agreed between the Parties before the Option Exercise or in
one of the subsequently jointly agreed updates of such global
development plan and budget after the Option Exercise.
In the case of i) activities or costs which have not been planned and
budgeted but have actually been incurred by a Party or ii) actual costs
of planned activities which have significantly exceeded (more than 10%)
the amount budgeted, the JCC shall decide whether and/or how such
additional costs shall be shared between the Parties.
On a quarterly calendar basis, within 30 days after the end of each
calendar quarter, each Party shall provide the other with an invoice for
the amount of Global Development Costs it has incurred and which is due
for reimbursement by such other Party for such quarter. The cost sharing
shall be that provided for in the License Agreement or in this Financial
Appendix. Such amount shall be expressed in US Dollars and payable
within 30 days from receipt of such invoice. Such invoice shall be
accompanied by a report specifying such Global Development Costs on a
product indication-by-product indication basis and providing details per
activity as specified by the JCC and show in local currency and US
Dollars in a manner consistent with the amounts budgeted for such
activities.
As the case may be, development costs attributable to specific
indications for which one Party has opted out pursuant to an Additional
Indication Opt Out shall not be included in the global development plan
and budget for such Product.
Whenever for the purpose of calculating conversation of Global
Development Costs from any foreign currency into US Dollars shall be
required, such conversion shall be made using the average quarterly rate
of exchange at the time for such currencies as retrieved from the
Reuters System for the countries concerned.
4. SALES BUSINESS PLAN AND BUDGET
ROCHE shall provide GENENTECH within 30 days of availability in final
form its sales budget (prepared annually and covering a one year period,
month by month) and sales business plan (prepared annually and covering
at least a three year period) for each Product for which it has
exercised its option for commercialization in the Roche Territory under
the License Agreement.
5. SUPPLY PRICE OF PRODUCT
The total amount due for the supply of Product between the Parties shall
be the amount defined below:
Financial Appendix to the Amended and Restated Agreement 8
72
SUPPLY OF CLINICAL REQUIREMENTS - The sales price of Product for
clinical purposes shall be the FBMC for such Clinical Requirements.
Product manufactured as qualification lots and supplied for clinical
purposes shall only be charged to the extent not included in Genentech's
Development Costs or Global Development Costs.
SUPPLY OF COMMERCIAL REQUIREMENTS - The sales price of Product for
commercial purposes shall be GENENTECH's Cost of Goods plus a xxxx-up of
twenty percent (20%) on FBMC.
For the ROCHE Territory, such sales price will be billed to ROCHE and
paid as follows:
a) The amount corresponding to FBMC + 20 % xxxx-up will be
invoiced in US Dollars and paid by ROCHE in such currency within
30 days after shipment.
(b) Unless otherwise agreed upon in writing between the Parties,
the amount corresponding to Outbound Costs will be billed in US
Dollars on a quarterly basis and paid by ROCHE in such currency
within 30 days of receipt of the invoice.
Product manufactured as qualification lots and supplied for commercial
purposes shall only be charged to the extent not included in Genentech's
Development Costs or Global Development Costs.
6. TIMING AND PAYMENT OF ROYALTIES BETWEEN THE PARTIES
TIMING - Payment of Royalties due GENENTECH shall be made within ninety
(90) days of the end of each calendar quarter in which the sale was
made. For purposes of determining when a sale of a Product occurs, the
sale shall be deemed to occur when a non-Affiliated third party is
invoiced for the Product. Payment of Royalties due to third parties will
be made ten days prior to the date the royalties are due to the third
party under their respective licenses. Any royalty payment that is not
paid on or before the date such payment is due under the License
Agreement shall bear interest, to the extent permitted by applicable
law, at the LIBOR rate of interest as reported from time to time by a
qualified source that is mutually acceptable to the Parties, calculated
on the number of days such payment is delinquent.
PAYMENT --- WITHHOLDING TAXES - Unless otherwise agreed in writing
between the Parties, payments of royalties shall be made in US Dollars,
by wire transfer in immediately available funds to such account
GENENTECH shall designate before such payment is due, free and clear of
any taxes, duties, levies, fees or charges, except for withholding taxes
due on behalf of GENENTECH (to the extent applicable). ROCHE shall make
any withholding payments due on behalf of GENENTECH and shall promptly
provide GENENTECH with written documentation of any such payment
sufficient to satisfy the reasonable requirements of an appropriate tax
authority
Financial Appendix to the Amended and Restated Agreement 9
73
with respect to an application by GENENTECH for a foreign tax credit for
such payment or for similar treatment.
ROYALTY REPORTING AND ROYALTY CALCULATION - Within thirty days after the
end of each calendar quarter, ROCHE shall provide GENENTECH with a
statement summarizing the monthly Net Sales of the Product in each
country in the reporting currency of each such country as well as the
rate used to convert from each such country's currency to Swiss Francs.
Whenever for the purpose of calculating royalties conversion from any
foreign currency shall be required, the amount of such Net Sales in
foreign currencies shall be converted into Swiss Francs using the
average monthly rate of exchange at the time for such currencies as
retrieved from the Reuters System, or another qualified source that is
mutually acceptable to the Parties.
The amount of royalties due for payment to GENENTECH and calculated in
Swiss Francs shall be translated into US Dollar at the rate retrieved
from the Reuters System during the morning of the "day two" before the
value date of such payment. The corresponding amount in US Dollars will
then be communicated to the bank for payment on the value date.
7. AUDIT AND INTERIM REVIEWS
Audit work will be performed in the following manner and according to
the specifications of the Article "Records Regarding Royalties" of the
1995 Agreement:
If deemed necessary by either ROCHE or GENENTECH , an audit by
independent certified public accountants may be requested. Such audit
will be at the sole expense of the requesting Party and will be
performed by the officially appointed auditor of the Party audited. If
GENENTECH requests audit work of the ROCHE accounts, the audit will be
performed by ROCHE's appointed worldwide auditor which is currently
Price Waterhouse, LLP. If ROCHE requests audit work of the GENENTECH
accounts, the audit will be performed by the independent auditor
appointed by GENENTECH which is currently Ernst & Young LLP.
Financial Appendix to Amended and Restated Agreement 10
74
APPENDIX B
ARTICLE II COUNTRIES
Germany
Italy
France
United Kingdom
Spain
Japan
Canada
Mexico
Brazil
Argentina
People's Republic of China
Turkey
South Korea
Australia
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