Exclusive License Agreement - Sepracor Inc. and Schering-Plough Ltd.
EXCLUSIVE LICENSE AGREEMENT
BY AND BETWEEN
SEPRACOR INC.
AND
SCHERING-PLOUGH LTD.
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TABLE OF CONTENTS
EXCLUSIVE LICENSE AGREEMENT
PAGE
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ARTICLE I - DEFINITIONS........................................................1
1.1 Affiliate..................................................................1
1.2 Calendar Quarter...........................................................2
1.3 Calendar Year..............................................................2
1.4 Combination Product........................................................2
1.5 DCL........................................................................2
1.6 [**].......................................................................2
1.7 Effective Date.............................................................3
1.8 First Commercial Sale......................................................3
1.9 HRD........................................................................3
1.10 HSR Act...................................................................3
1.11 Improvement...............................................................3
1.12 Improvement Patent........................................................3
1.13 Increased Royalty Commencement Date.......................................3
1.14 Licensed Compound.........................................................4
1.15 Licensed Product(s).......................................................4
1.16 NDA.......................................................................4
1.17 Net Sales.................................................................4
1.18 Patent Rights.............................................................6
1.19 Proprietary Information...................................................6
1.20 Regulatory Approval.......................................................6
1.21 Sepracor Know-How.........................................................6
1.22 Sublicensee...............................................................7
1.23 Territory.................................................................7
1.24 Term......................................................................7
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1.25 [**]......................................................................8
1.26 Valid Claim...............................................................8
ARTICLE II - LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND
COMMERCIALIZATION..............................................................8
2.1 Exclusive License Grant....................................................8
(a) License..............................................................8
(b) Right to Sublicense..................................................8
(c) Additional License..................................................8
2.2 Non-Exclusive License Grant................................................9
2.3 Disclosure of Information..................................................9
2.4 HSR Filing and Approvals..................................................10
(a) HSR Filing..........................................................10
(b) Sepracor's Obligations..............................................10
(c) Additional Approvals................................................10
2.5 Schering's Development Obligations........................................11
(a) Schering Diligence..................................................11
(b) Opportunity to Cure.................................................12
(c) Research and Development Activities.................................12
(d) Licensed Product Registrations; Pricing Reimbursement...............12
(e) Data................................................................13
(f) Assistance by Sepracor..............................................13
2.6 Independent Discoveries by Schering.......................................14
2.7 Excused Performance.......................................................14
2.8 Other Studies.............................................................14
2.9 Reports...................................................................15
ARTICLE III - PAYMENTS; ROYALTIES AND REPORTS.................................15
3.1 Consideration for License.................................................15
3.2 Royalties.................................................................15
(a) Royalty Rates.......................................................15
(b) Royalty Where Third Party Sales of DCL..............................17
(c) Term and Scope of Royalty Obligations...............................18
(d) Third Party Licenses................................................18
(e) Compulsory Licenses.................................................20
3.3 Reports and Payment of Royalty; Payment Exchange Rate and
Currency Conversions......................................................20
(a) Royalties Paid Quarterly............................................20
(b) Method of Payment...................................................20
3.4 Maintenance of Records; Audits............................................21
(a) Record Keeping by Schering..........................................21
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(b) Underpayments/Overpayments..........................................22
(c) Record Keeping by Sublicensee.......................................22
(d) Confidentiality.....................................................22
3.5 Income Tax Withholding....................................................23
3.6 Direct Affiliate Licenses.................................................23
ARTICLE IV - PATENTS..........................................................23
4.1 Filing, Prosecution and Maintenance of Patents............................23
4.2 Option of Schering to Prosecute and Maintain Patents......................23
4.3 Enforcement...............................................................24
(a) Notice and Discontinuance of Infringement..........................24
(b) Continuance of Infringement.........................................24
4.4 Third Party Infringement Suit.............................................25
4.5 Certification Under Drug Price Competition and Patent
Restoration Act...........................................................25
4.6 Abandonment...............................................................26
4.7 Patent Term Restoration...................................................26
4.8 Notices Regarding Patents.................................................26
ARTICLE V - CONFIDENTIALITY AND PUBLICATION...................................27
5.1 Confidentiality...........................................................27
(a) Nondisclosure Obligation............................................27
(b) Disclosure to Agents................................................28
(c) Disclosure to a Third Party.........................................28
5.2 Return of Proprietary Information.........................................29
5.3 Publicity.................................................................29
5.4 Publication...............................................................32
ARTICLE VI - REPRESENTATIONS AND WARRANTIES...................................32
6.1 Representations and Warranties of Each Party..............................32
6.2 Sepracor's Representations................................................34
6.3 Schering's Representations................................................36
6.4 Continuing Representations................................................36
6.5 No Inconsistent Agreements................................................36
6.6 Representation by Legal Counsel...........................................36
ARTICLE VII - INDEMNIFICATION AND LIMITATION ON LIABILITY.....................36
7.1 Indemnification by Schering...............................................36
7.2 Indemnification by Sepracor...............................................37
7.3 Conditions to Indemnification.............................................37
7.4 Settlements...............................................................38
7.5 Limitation of Liability...................................................38
7.6 Insurance.................................................................38
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ARTICLE VIII - TERM AND TERMINATION...........................................39
8.1 Term and Expiration.......................................................39
8.2 [**]......................................................................39
8.3 Termination...............................................................39
(a) Termination for Cause...............................................39
(b) Effect of Termination for Cause on License..........................40
(i) Termination by Schering......................................40
(ii) Termination by Sepracor......................................40
(iii) Effect of Bankruptcy.........................................40
8.4 Effect of Termination.....................................................40
ARTICLE IX - MISCELLANEOUS....................................................41
9.1 Assignment................................................................41
9.2 Governing Law.............................................................41
9.3 Waiver....................................................................42
9.4 Independent Relationship..................................................42
9.5 Export Control............................................................42
9.6 Entire Agreement; Amendment...............................................42
9.7 Notices...................................................................43
9.8 Provisions for Insolvency.................................................44
(a) Effect on Licenses..................................................44
(b) Rights to Intellectual Property.....................................45
(c) Schering's Rights...................................................45
(d) Deemed Grant of Rights..............................................46
(e) Security Interests..................................................46
9.9 Force Majeure.............................................................46
9.10 Severability.............................................................47
9.11 Counterparts.............................................................47
9.12 Captions.................................................................47
9.13 Recording................................................................47
9.14 Further Actions..........................................................47
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SCHEDULES
SCHEDULE 1.18 ....................................................Patent Rights
SCHEDULE 2.8..................................Adverse Event Reporting Procedures
SCHEDULE 5.3.......................................................Press Release
SCHEDULE 6.1(d).............................................Fleet Bank Agreement
SCHEDULE 6.1(h)......................................Pending Patent Applications
SCHEDULE 6.2(c)...........................Exclusive License Agreement/Assignment
SCHEDULE 6.2(d)...........................Exclusive License Agreement/Assignment
SCHEDULE 6.2(e)................................... Third Party Patent Positions
SCHEDULE 6.2(h)................................... Third Party Patent Positions
SCHEDULE 6.2(k)...........................Exclusive License Agreement/Assignment
SCHEDULE 6.5 .............................Exclusive License Agreement/Assignment
SCHEDULE 9.2 .............................................Arbitration Provisions
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EXCLUSIVE LICENSE AGREEMENT
THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement") is made as of
December 5, 1997 by and between SEPRACOR INC., a Delaware corporation having its
principal place of business at 111 Locke Drive, Marlborough, Massachusetts
01752, (hereinafter referred to as "Sepracor") and SCHERING-PLOUGH LTD., a
corporation organized and existing under the laws of Switzerland and having its
principal place of business at Topferstrasse 5, 6004 Lucerne, Switzerland
(hereinafter referred to as "Schering"). Sepracor and Schering are sometimes
referred to herein individually as a party and collectively as the parties.
References to "Schering" and "Sepracor" shall include their respective
Affiliates (as hereinafter defined).
WHEREAS, Sepracor has developed certain Sepracor Know-How and has
rights to Patent Rights relating to the loratadine metabolite known as DCL (each
as hereinafter defined); and
WHEREAS, Schering, together with its Affiliates (as hereinafter
defined) possesses extensive capabilities in the development and
commercialization of pharmaceutical products on a worldwide basis; and
WHEREAS, Schering desires to obtain and Sepracor is willing to grant to
Schering, an exclusive license under the Patent Rights and to use the Sepracor
Know-How, upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants herein contained, Schering and Sepracor hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following initially capitalized terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:
1.1 "Affiliate" shall mean any individual or entity directly or
indirectly controlling, controlled by or under common control with, a party to
this Agreement. For purposes of this Agreement, the direct or indirect ownership
of fifty percent (50%) or more of the outstanding voting securities of an
entity, or the right to receive fifty percent (50%) or more of the profits or
earnings of an entity shall be deemed to constitute control. Such other
relationship as in fact results in actual control over the management, business
and affairs of an entity shall also be deemed to constitute control, provided,
however, that Schering shall not be deemed to exercise control over any entity
solely because such entity relies on Schering for a majority of its business.
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1.2 "Calendar Quarter" shall mean the respective periods of three (3)
consecutive calendar months ending on March 31, June 30, September 30 or
December 31, for so long as this Agreement is in effect.
1.3 "Calendar Year" shall mean each successive period of twelve (12)
months commencing on January 1 and ending on December 31, for so long as this
Agreement is in effect.
1.4 "Combination Product" shall mean a Licensed Product which comprises
two (2) or more active ingredients at least one (1) of which is Licensed
Compound.
1.5 "DCL" shall mean any form (including, without limitation, any salt,
hydrate, crystalline structure or the like) of the loratadine metabolite known
as descarboethoxyloratadine, also identified by the chemical name
8-chloro-6,11-dihydro-11-(4-piperidylidene)-5H-benzo[5, 6] cyclohepta[1,2-b]
pyridine.
1.6 [**] shall mean [**] in the Territory containing [**] (including,
without limitation, [**] (without any [**] and without any [**] (including,
without limitation, [**] (without any [**] and without any [**].
1.7 "Effective Date" shall mean the next business day following the
last to occur of (i) expiration or earlier termination of any notice and waiting
period under the HSR Act; or (ii) delivery of fully executed counterparts of
this Agreement.
1.8 "First Commercial Sale" shall mean, with respect to any Licensed
Product, the first sale by Schering to any third party, not an Affiliate or
Sublicensee, of such Licensed Product.
1.9 "HRD" shall mean a health registration dossier or its equivalent,
submitted to a national government or a supranational governmental authority,
consisting of the chemical, pharmaceutical and biological documentation; the
toxicological and pharmacological documentation; and the clinical documentation
respectively, and covering a Licensed Product which is filed in any country
outside the United States and which is analogous to a new drug application,
product license application or its equivalent filed with the United States Food
and Drug Administration seeking approval to market and sell a Licensed Product
in the Territory and including, where applicable, applications for pricing,
pricing reimbursement approval, labeling and Regulatory Approval.
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1.10 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
1.11 "Improvement" shall mean any enhancement in the formulation,
ingredients, preparation, presentation, means of delivery, dosage, packaging of,
manufacture, or any new or expanded therapeutic indications(s) for, Licensed
Product, Licensed Compound or any other loratadine metabolite, in each case
which is developed prior to or during the Term of this Agreement by or on behalf
of Sepracor.
1.12 "Improvement Patent" shall mean any patent (except DCL Formulation
Patent and Use Patent) containing claims that cover an Improvement.
1.13 "Increased Royalty Commencement Date" shall mean the following:
(i) with regard to the United States that date which is the later of:
[**]; or (B) [**].
(ii) with regard to any country in the Territory other than the United
States that date which is the later of: (A) [**] or (ii) [**].
1.14 "Licensed Compound" shall mean DCL.
1.15 "Licensed Product(s)" shall mean any form or dosage of
pharmaceutical composition or preparation in final form for sale by
prescription, over-the-counter or any other method, which contains as an active
ingredient the Licensed Compound, including, without limitation, Combination
Products.
1.16 "NDA" shall mean a New Drug Application or its equivalent filed
with the United States Food and Drug Administration seeking approval to market
and sell a Licensed Product in the United States.
1.17 "Net Sales" shall mean the invoice prices on all sales of Licensed
Product by Schering, its Affiliates or Sublicensees to an unaffiliated third
party and exclusive of intercompany transfers or inter-company sales, less
deductions from such gross amounts for: (i) normal and customary trade, cash and
quantity discounts, allowances and credits; (ii) credits or allowances actually
granted for damaged goods, returns or rejections of Licensed Product and
retroactive price reductions; (iii) sales taxes, duties or other taxes with
respect to such sales (including duties or other governmental charges levied on,
absorbed or otherwise imposed on the sale of Licensed Product including, without
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limitation, value added taxes or other governmental charges otherwise measured
by the billing amount, when included in billing but excluding income or other
taxes levied with respect to gross receipts) actually collected by Schering, its
Affiliates or Sublicensees and included in the invoice amount; (iv) insurance,
postage, customs duties and transportation costs incurred in shipping Licensed
Product(s) to unaffiliated third parties actually collected by Schering, its
Affiliates or Sublicensees separately itemized and included in the invoiced
amount; (v) charge back payments and rebates granted to managed health care
organizations or to federal, state and local governments, their agencies, and
purchasers and reimbursers or to trade customers, including but not limited to,
wholesalers and chain and pharmacy buying groups; (vi) rebates (or equivalents
thereof) granted to or charged by national, state or local governmental
authorities in countries other than the United States; and (vii) actual trade
receivables considered bad debt and deemed uncollectable, provided that (A) such
receivables have been written off the permanent books and records of Schering
and are not only reserved as uncollectable, and (B) any full or partial
settlements subsequently received shall be reinstated as Net Sales, provided,
however, that in the event any amounts described in this subsection (vi) are
applied retroactively and the result is that Net Sales differ to the extent that
the royalty due pursuant to Sections 3.2(a)(iii) and (iv) is changed, then
adjustment shall be made for such changed royalty. In the event that Licensed
Product is (A) transferred for consideration other than cash, or (B) as part of
a bundle, the Net Sales for such Licensed Product will be calculated based on
the unit price for such Licensed Product sales being equal to the average unit
price of such Licensed Product sold unbundled in a cash transaction.
In the event that Licensed Product is sold in the form of a Combination
Product containing as active ingredients only Licensed Compound and [**] then
Net Sales for such Combination Product will be calculated based on the invoice
price for such Combination Product in accordance with the preceding paragraph.
In the event that Licensed Product is sold in the form of any other Combination
Product, Net Sales for such Combination Product will be calculated by
multiplying actual Net Sales of such Combination Product by the fraction A/(A+B)
where: A is the invoice price of the Licensed Compound contained in the
Combination Product if sold separately by Schering, an Affiliate or Sublicensee
and B is the invoice price of any other active component or components in the
Combination Product if sold separately by Schering, an Affiliate or Sublicensee.
In the event that the Licensed Product is sold in the form of a Combination
Product containing one or more active ingredients other than Licensed Compound
and one or more such active ingredients of the Combination Product are not sold
separately, then the above formula shall be modified such that A shall be the
total cost to Schering, its Affiliate or Sublicensee(s) of the Licensed Compound
and B shall be the total cost to Schering, its Affiliate or Sublicensee of any
other active component or components in the combination. Notwithstanding the
previous two sentences, in no event shall Net Sales for any Combination Product
be calculated at less than the average unit price of Licensed Product, excluding
a Combination Product, sold unbundled in a cash transaction.
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1.18 "Patent Rights" shall mean Use Patent, DCL Formulation Patent, and
Improvement Patents, and patent applications in the Territory corresponding
thereto including, but not limited to, all issued patents, as set forth in
Schedule 1.18, any and all substitutions, divisions, continuations,
continuations-in-part, reissues, renewals, registrations, confirmations,
re-examinations, extensions, supplementary protection certificates or any like
filing thereof, and provisional applications of any such patents and patent
applications and any international equivalent of any of the foregoing.
1.19 "Proprietary Information" shall mean Sepracor Know-How and all
other scientific, clinical, regulatory, marketing, financial and commercial
information or data, whether communicated in writing, verbally or
electronically, which is provided by one party to the other party in connection
with this Agreement. When Propriety Information is disclosed in a manner other
than in writing, it shall be reduced to written form, marked "Confidential" and
transmitted to the receiving party within twenty (20) business days of
disclosure to the receiving party.
1.20 "Regulatory Approval" shall mean any applications or approvals,
including any NDA's, HRD's, supplements, amendments, pre- and post-approvals,
marketing authorizations based upon such approvals (including any prerequisite
manufacturing approvals or authorizations related thereto) and labeling
approval(s), technical, medical and scientific licenses, registrations or
authorizations of any national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity, necessary
for the development, manufacture, distribution, marketing, promotion, offer for
sale, use, import, export or sale of Licensed Product(s) and/or Licensed
Compound(s) in the Territory.
1.21 "Sepracor Know-How" shall mean any of Sepracor's or its
Affiliates' information and materials, except as otherwise provided in the last
sentence hereof, relating to the research, development, registration,
manufacture, marketing, use or sale of Licensed Compound and/or Licensed Product
which prior to or during the Term of this Agreement are developed by or at the
request of Sepracor or its Affiliates or in Sepracor's or its Affiliates'
possession or control through license or otherwise (provided that Sepracor is
permitted to make disclosure thereof to Schering without violating the terms of
any third party agreement), and which are not generally known. Sepracor Know-How
shall include, without limitation, discoveries, practices, methods, knowledge,
Improvements, processes, formulas, data, ideas, skill, experience, inventions,
know-how, technology, trade secrets, manufacturing procedures, purification and
isolation techniques, instructions, test data and other intellectual property,
patentable or
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otherwise, relating to Licensed Compound, Licensed Product or any loratadine
metabolite that is related to the use or administration of DCL, including
without limitation, test procedures and other new technologies derived
therefrom. Sepracor Know-How shall also include, without limitation: (i) all
biological, chemical, pharmacological, toxicological, pharmaceutical, physical
and analytical, clinical, safety, manufacturing and quality control data and
information related thereto; (ii) compositions of matter, assays and biological
materials specifically relating to development, manufacture, use or sale of any
Licensed Compound, Licensed Product and/or any [**] that is related to the use
or administration of DCL; and (iii) all applications, registrations, licenses,
authorizations, approvals and correspondence submitted to or received from any
regulatory authorities with jurisdiction in the Territory over an
investigational drug containing Licensed Compound and/or Licensed Product
(including, without limitation, minutes and meeting notes relating to any
communications with any regulatory authority with jurisdiction in the Territory
over an investigational drug containing Licensed Compound and/or Licensed
Product). Subject to the terms and conditions of Section 2.8, Sepracor Know-How
shall not include any information or materials developed by Sepracor or its
Affiliates (without use of Proprietary Information in violation of this
Agreement), using Licensed Compound or Licensed Product made commercially
available by, on behalf of, or with the consent of, Schering, its Affiliates or
Sublicensees.
1.22 "Sublicensee" shall mean any party not an Affiliate of Schering,
which party is authorized directly or indirectly by Schering or its Affiliates
through express or implied license or consent to discover, develop, make, have
made, import, export, use, distribute, market, promote, offer for sale and sell
Licensed Compound and/or Licensed Product(s) under Section 2.1(b).
1.23 "Territory" shall mean the entire world.
1.24 "Term" shall mean the period commencing on the Effective Date and
unless terminated earlier pursuant to the relevant provisions of Article VIII
shall continue until the expiration of the last to expire of the Patent Rights.
1.25 "[**]" shall mean [**]
1.26 "Valid Claim" shall mean a claim of an issued and unexpired patent
in a country in the Territory included within the Patent Rights, which (i) has
not been revoked or held unenforceable or invalid by a decision of a court or
other governmental agency of competent jurisdiction, unappealable or unappealed
within the time allowed
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for appeal; or (ii) has not been abandoned, disclaimed, or admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise.
ARTICLE II
LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION
2.1 Exclusive License Grant.
(a) License. Sepracor hereby grants to Schering, as of the
Effective Date, an exclusive license, exclusive even as to Sepracor,
and immunity from suit by Sepracor, in the Territory to discover,
develop, make, have made, import, export, use, distribute, market,
promote, offer for sale and sell Licensed Compound and/or Licensed
Product(s) under the Patent Rights and Sepracor Know-How, such
exclusivity subject to Section 2.8 hereof. Furthermore, Sepracor
retains all rights under the Patent Rights not expressly granted to
Schering by this Section 2.1, and the right to use Sepracor Know-How
pursuant to Section 5.1(c) below
(b) Right to Sublicense. The license granted to Schering under
Section 2.1(a) shall include the right to grant sublicenses to
Affiliates and/or any third party, provided that Schering remains
responsible to Sepracor under this Agreement.
(c) Additional License. If Schering develops any [**] covered
by an Improvement Patent, Sepracor hereby grants to Schering an
exclusive license, exclusive even as to Sepracor, in the Territory to
discover, develop, make, have made, import, export, use, distribute,
market, promote, offer for sale and sell such [**] on license terms
substantially similar to those set forth in this Agreement.
2.2 Non-Exclusive License Grant. In the event that the discovery,
development, making, having made, importing, exporting, use, distribution,
marketing, promotion, offering for sale or sale by Schering, its Affiliates
and/or Sublicensees of Licensed Compound and/or Licensed Product(s) in the
Territory would infringe during the Term of this Agreement a claim of an issued
letters patent, and/or any patent rights which Sepracor owns or has the rights
to license and which patents are not covered by the grant in Section 2.1,
Sepracor hereby grants to Schering and its Affiliates, to the extent Sepracor is
legally able to do so, a non-exclusive, royalty-free license and immunity from
suit by Sepracor in the Territory under such issued letters patent solely for
Schering, its Affiliates and/or Sublicensees to discover, develop, make, have
made, use, distribute,
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market, promote, offer for sale and sell Licensed Compound and/or Licensed
Product(s) in the Territory.
2.3 Disclosure of Information. Promptly after the Effective Date,
Sepracor shall, at its own cost use good faith reasonable efforts to, disclose
to Schering in writing, or via mutually acceptable electronic media, copies or
reproductions of all Sepracor Know-How not previously disclosed to Schering in
order to enable Schering to exploit its rights granted under Section 2.1 and, if
applicable, Section 2.2 of this Agreement. In addition, during the Term of this
Agreement Sepracor shall promptly disclose to Schering in writing, or via
mutually acceptable electronic media, on an ongoing basis copies or
reproductions of all new Sepracor Know-How that is reasonably necessary to
research, development, registration, manufacture, marketing, use or sale of
Licensed Compound and/or Licensed Product. Such Sepracor Know-How and other
information shall be automatically deemed to be within the scope of the licenses
granted herein without payment of any additional compensation. Upon Schering's
request but reasonably subject to Sepracor's other business requirements,
Sepracor shall provide reasonable technical assistance to enable Schering to
utilize such additional Sepracor Know-How, provided, that Schering shall
promptly reimburse Sepracor for reasonable out-of-pocket costs and expenses
incurred by Sepracor in providing such technical assistance. Sepracor shall
invoice Schering for such costs and expenses, and shall provide documentation
for the invoice. The invoice shall be payable to Sepracor or its designee(s)
[**] days after receipt by Schering of the invoice provided, however, that such
cost and out-of-pocket expenses must be identified prior to being committed to
by Sepracor and provided to Schering to determine whether Schering agrees to
have the technical assistance provided at such cost and the final amount sought
to be reimbursed shall not exceed [**] of the estimated cost without Schering's
prior written consent. Schering shall be under no obligation to reimburse
Sepracor for out-of-pocket costs and expenses incurred by Sepracor without
Schering's agreement. Schering shall have the right to use for all purposes in
connection with obtaining any Regulatory Approval for the Licensed Product(s)
all Sepracor Know-How and other information, disclosed pursuant to this Section
and under this Agreement.
2.4 HSR Filing and Approvals.
(a) HSR Filing. To the extent necessary, each of Sepracor and
Schering shall file, within ten (10) days after the date of this
Agreement, with the Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the
"Antitrust Division") any notification and report form (the "Report")
required of it in the reasonable opinion of either or both parties
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under the HSR Act with respect to the transactions as contemplated
hereby and shall cooperate with the other party to the extent necessary
to assist the other party in the preparation of its Report and to
proceed to obtain necessary approvals under the HSR Act, including but
not limited to the expiration or earlier termination of any and all
applicable waiting periods required by the HSR Act.
(b) Sepracor's Obligations. Sepracor shall use good faith
reasonable efforts to assist Schering in eliminating any concern on the
part of any court or government authority regarding the legality of the
proposed transaction, including, if required by federal or state
antitrust authorities, Schering's promptly taking all reasonable steps
to secure government antitrust clearance. Sepracor shall cooperate in
good faith at its own cost with any government investigation and
promptly produce documents and information demanded by a second request
for documents and of witnesses if requested.
(c) Additional Approvals. Sepracor and Schering will cooperate
and use respectively all reasonable efforts to make all other
registrations, filings and applications, to give all notices and to
obtain as soon as practicable all governmental or other consents,
transfers, approvals, orders, qualifications authorizations, permits
and waivers, if any, and to do all other things reasonably necessary or
desirable in Schering's opinion for the consummation of the
transactions as contemplated hereby (including, without limitation,
those act required to obtain necessary approvals under any foreign
equivalent antitrust statute to the HSR Act or regulation from any
government or regulatory authority having the requisite jurisdiction
provided, however, that Schering shall promptly reimburse Sepracor for
reasonable out-of-pocket cost and expenses incurred by Sepracor in
providing such cooperation. Sepracor shall invoice Schering for such
costs and expenses, and shall provide documentation for the invoice.
The invoice shall be payable to Sepracor or its designee(s) [**] days
after receipt by Schering of the invoice.
2.5 Schering's Development Obligations.
(a) Schering Diligence. Schering shall, at Schering's expense,
and subject to Sepracor's compliance with its obligations under
Sections 2.3 and 2.4, use [**] to develop, obtain Regulatory Approval
for, and commercialize the Licensed Product(s) in the Territory. The
parties acknowledge and agree that all business decisions including,
without limitation, decisions relating to Schering's research,
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development, registration, manufacture, sale, commercialization,
design, price, distribution, marketing and promotion of Licensed
Products covered under this Agreement, shall be within the sole
discretion of Schering. Sepracor acknowledges that Schering is in the
business of developing, manufacturing and selling pharmaceutical
products and, subject to the provisions of this Section, nothing in
this Agreement shall be construed as restricting such business or
imposing on Schering the duty to market and/or sell and exploit
Licensed Compound or Licensed Product for which royalties are payable
hereunder to the exclusion of, or in preference to, any other product,
or in any way other than in accordance with its normal commercial
practices. [**].
(b) Opportunity to Cure. If, in Sepracor's reasonable opinion,
Schering fails to comply with any of its diligence obligations under
Sections 2.5(a) and (c), then Sepracor shall have the right to give
Schering written notice thereof stating in reasonable detail the
particular failure(s). Schering shall have a period of [**] days from
the receipt of such notice to correct the failure or, in the event that
the failure cannot be reasonably cured within a [**] day period, then
Schering shall initiate actions reasonably expected to cure the failure
within[**] days of receiving notice and shall thereafter diligently
pursue such actions to cure the failure (even if requiring longer than
the [**] days specified in Section 8.3(a)(i)). In the event of a
dispute as to whether or not Schering has failed to exercise due
diligence under Sections 2.5(a) and 2.5(c) or whether Schering is
diligently pursuing actions reasonably expected to cure such failure
under this Section 2.5(b), such dispute shall be resolved through
binding arbitration in accordance with Section 9.2.
(c) Research and Development Activities. Subject to its
diligence obligations set forth in Section 2.5(a), following the
Effective Date, Schering shall be responsible, at its cost and expense,
and in its sole judgment, for all research and development activities
which are necessary to obtain Regulatory Approval for a Licensed
Product in the Territory and any post-approval studies required as a
condition of obtaining any Regulatory Approval for a Licensed Product.
In addition, Schering shall be responsible for any other studies (or
portions of studies) necessary or desirable, in its sole judgment, for
maintaining any Regulatory Approval in the Territory, as well as any
pre-marketing studies prior to Regulatory Approval and post-marketing
studies conducted following a Regulatory Approval.
(d) Licensed Product Registrations; Pricing Reimbursement
Approvals. Subject to its diligence obligations set forth in Section
2.5(a), Schering shall be
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responsible, at its cost and expense, and in its sole judgment, for
determining the appropriate regulatory strategy, for obtaining and
maintaining all Regulatory Approvals and for obtaining and maintaining
any pricing and reimbursement approvals required for the sale of
Licensed Product in the Territory. Each Regulatory Approval and each
pricing and reimbursement approval shall be placed in Schering's name
or the name of a Schering Affiliate unless applicable law requires, or
Sepracor and Schering otherwise agree, that an approval be solely or
jointly in the name of Sepracor or a designated Sepracor Affiliate.
Sepracor agrees that notwithstanding such Regulatory Approval or
pricing and reimbursement approval in its name, Schering retains the
exclusive rights to make, have made, import, export, use, distribute,
promote, offer for sale and sell Licensed Compound and/or Licensed
Product(s) as granted Schering in Section 2.1.
(e) Data. Schering shall own all data arising out of studies
performed by or on behalf of Schering under this Article II. Studies
performed pursuant to Section 2.8 shall not be deemed studies performed
by or on behalf of Schering.
(f) Assistance by Sepracor. In connection with any NDA, HRD or
other application for Regulatory Approval relating to Licensed Product,
Sepracor shall, at Schering's reasonable request but reasonably subject
to Sepracor's other business requirements, provide to Schering in a
prompt manner responses to questions which have been raised by any
regulatory authority in connection with such application for Regulatory
Approval and further provide to Schering estimates of Sepracor's
out-of-pocket costs for rendering such assistance. Sepracor shall
assist Schering from time to time, at Schering's reasonable request but
reasonably subject to Sepracor's other business requirements, in the
design and implementation of clinical studies. Sepracor shall
reasonably assist Schering to enable Schering to self-source bulk
material for the manufacture of Licensed Compound and/or Licensed
Product. Schering shall have no obligation whatsoever to purchase any
bulk material or Licensed Compound from Sepracor. Schering shall
reimburse Sepracor for its reasonable out-of-pocket costs and expenses
incurred in rendering assistance under this Section 2.5(f) (but no more
than [**] of those costs which Sepracor estimated, as provided above,
that the work would cost unless Schering provides written approval).
Sepracor shall invoice Schering for such costs and expenses, and shall
provide documentation for the invoice. The invoice shall be payable to
Sepracor or its designee(s) [**] days after receipt by Schering of the
invoice, provided, however, that Schering
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shall be under no obligation to reimburse Sepracor for out-of-pocket
costs and expenses incurred by Sepracor without Schering's agreement.
2.6 Independent Discoveries by Schering. Sepracor acknowledges that
Schering and/or its Affiliates have ongoing research programs which may now or
in the future independently discover, develop and/or acquire technologies and/or
products relating to treatment and prevention of any disease, disorder or
condition in humans or animals. Sepracor agrees that such technologies and
products, to the extent discovered without use of Sepracor Know-How, will not be
deemed to be Sepracor Know-How.
2.7 Excused Performance. In addition to the provisions of Article VIII
and Section 9.9, the obligations of Schering with respect to a Licensed Product
under Sections 2.5(a), 2.5(c) and 2.5(d) are expressly conditioned upon the
continuing absence of any adverse condition or event which warrants a delay in
commercialization of a Licensed Product including, but not limited to, an
adverse condition or event relating to the safety or efficacy of a Licensed
Product or unfavorable labeling or lack of Regulatory Approval, and the
obligation of Schering to develop or market any such Licensed Product (or, if
appropriate, all Licensed Product) shall be delayed or suspended so long as in
Schering's reasonable opinion any such condition or event exists.
2.8 Other Studies.
(a) [**] Sepracor shall conduct no studies, formulation
research or preclinical or clinical trials with Licensed Compound
without the express written consent of Schering, including the prior
written approval of any protocols to be used and any amendments
thereto. Sepracor shall request Schering's written consent by complying
with the notice provisions of Section 9.7. Schering may grant or
withhold such consent in its sole discretion and if Sepracor receives
no response within [**] from Sepracor's request for such consent,
Schering's consent is deemed to have been given. Sepracor acknowledges
that all Sepracor research results under this Section 2.8(a) shall
constitute Sepracor Know-How; accordingly, Sepracor shall provide to
Schering the results from such research and any background information
requested, at no additional royalty. Sepracor shall be permitted to
disclose such results to third parties only as provided under Section
5.1(c) below. At the option of Schering, Schering may have its
representative(s) monitor any approved preclinical, clinical or other
studies.
(b) [**] provided that [**] this Agreement. [**].
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2.9 Reports. Schering shall provide Sepracor with quarterly reports of
the status of the research and development activities and progress of any
Regulatory Approval, as applicable, in connection with Licensed Product in the
Territory. Further, Schering shall inform Sepracor of [**].
ARTICLE III
PAYMENTS; ROYALTIES AND REPORTS
3.1 Consideration for License. In partial consideration for the
licenses granted to Schering hereunder, Schering shall pay to Sepracor a license
fee ("License Fee") of five million dollars ($5,000,000), which payment shall be
due within [**] following the Effective Date. The License Fee shall be recovered
by reducing the royalty payments set forth in Section 3.2 until Schering recoups
the License Fee, provided, however, that no single royalty payment shall be
reduced by greater than [**] of the payment due to Sepracor.
3.2 Royalties.
(a) Royalty Rates. In further consideration for the licenses
granted to Schering hereunder, subject to the terms and conditions of
this Agreement, Schering shall pay to Sepracor royalties, on a
country-by-country basis as follows:
(i) For so long as the [**] in the applicable country
in the Territory contains a Valid Claim, for the period
commencing with the [**] of Licensed Product until the [**] of
all annual Net Sales of Licensed Product in such country;
(ii) For the period commencing on [**]:
(A) the [**] in the applicable country in the
Territory or
(B) the [**] containing a Valid Claim in the
applicable country in the Territory so long as
patents included in the [**] have, cumulatively,
the scope provided in both clauses (i) and (ii)
of Section 1.6,
until the [**], in addition to the royalty set
forth in Section 3.2 (a)(i), Schering shall pay
to Sepracor an additional [**] of all annual Net
Sales of Licensed Product in such country;
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(iii) For the period commencing on the applicable
[**] in each country in the Territory until the later of the
expiration date (including as the following patent(s) may be
extended pursuant to 35 U.S.C. Section 156 or other patent
extension statute) of:
(A) the [**], containing a Valid Claim, or
(B) the patents included in [**], containing a
Valid Claim in the applicable country in the
Territory, so long as patents included in the
[**] have, cumulatively, the scope provided in
both clauses (i) and (ii) of Section 1.6,
[**] of annual Net Sales of Licensed Product in
the applicable country if Net Sales in the
Territory in any Calendar Year are below [**];
(iv) For the period commencing on the applicable [**]
in each country in the Territory until the later of the
expiration date (including as such patent(s) may be extended
pursuant to 35 U.S.C. Section 156 or other patent extension
statute) of:
(A) the [**], containing a Valid Claim, or
(B) the patents included in [**], containing a
Valid Claim, in the applicable country in the
Territory, so long as patents included in the
[**] have, cumulatively, the scope provided in
both clauses (i) and (ii) of Section 1.6,
if Net Sales in the Territory in any Calendar
Year are [**] or more, [**] of annual Net Sales
of Licensed Product in the applicable country in
the Territory on the fraction of Net Sales in
the applicable country in the Territory equal to
[**] Net Sales in the Territory of Licensed
Product in U.S. dollars); and
(v) In that year of the occurrence of the [**],
should the [**] occur on a date other than January 1st, the
calculations and payments due under Sections 3.2(a)(iii) and
3.2(a)(iv) shall be based only on sales that occur subsequent
to the [**].
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(b) Third Party Sales of DCL. Notwithstanding any other
provision of this Agreement, in the event that any third party receives
approval from the FDA or the applicable regulatory authority to market
a product incorporating DCL in a country in the Territory without
Schering's consent then Sepracor shall receive the calculated royalty
provided in Section 3.2(a) (i)-(iv) for a period of [**] after such
approval. After such [**] period Schering shall have no further
obligation to pay any royalty in such country in the Territory on the
Net Sales of Licensed Compound and/or Licensed Product pursuant to
Section 3.2(a) during any period in which such third party product
incorporating DCL is being marketed in such country in the Territory
and such product achieves a market share of [**] or more of total unit
sales of all DCL product prescribed for allergic conditions and all
other indications subsequently developed by Schering, its Affiliates or
Sublicensees as reported by the "National Prescription Audit" report
compiled by IMS America. After the [**], the licenses granted to
Schering hereunder shall become non-exclusive and otherwise remain in
full force and effect in accordance with the terms hereof.
(c) Term and Scope of Royalty Obligations. Subject to Section
3.2(b) and Section 8.1 relating to term of royalty obligations,
royalties on each Licensed Product at the rate set forth in Section 3.2
(a)(i)-(iv) shall continue on a country-by-country basis until the
expiration of the last applicable Patent Right incorporating a Valid
Claim in such country. No royalties shall be due upon the sale or other
transfer among Schering, its Affiliates or Sublicensees, but in such
cases the royalty shall be due and calculated upon Schering's or its
Affiliates' or its Sublicensees' Net Sales to the first independent
third party. No royalties shall accrue on the disposition of Licensed
Product by Schering, Affiliates or its Sublicensees as samples
(promotion or otherwise) or as donations (for example, to non-profit
institutions or government agencies for a non-commercial purpose) or
for clinical studies. Such dispositions by Schering shall not be
included in the determination of Net Sales, during the period of time
in which such third party sales are occurring.
(d) Third Party Licenses. In the event that patent licenses
from third parties are required by Schering, its Affiliates or its
Sublicensees in order to discover, develop, make, have made, import,
export, use, distribute, promote, market, offer for sale or sell
Licensed Product (hereinafter "Third Party Licenses"), Schering shall
be solely responsible for acquiring such licenses at Schering's sole
discretion. Schering may reduce any royalty otherwise due Sepracor
hereunder
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to reimburse it for royalties and or license fees actually paid to such
third parties under any Third Party Licenses of patent claims covering,
in the Territory:
(i) Licensed Compound (including salts, solvates, or
other non-covalent derivatives thereof);
(ii) a use of Licensed Compound to treat a condition
recited in such patent claim [**] or to induce a biological
response [**]; or
(iii) an ingestible, non-controlled release, solid
oral dosage formulation of Licensed Compound
a license under clauses (i), (ii) or (iii) hereof being hereinafter
referred to as a "Qualifying Third Party License". Schering shall have
no right to reduce any royalty due Sepracor for any amounts paid to a
third party under any third party license to the extent it is not a
Qualifying Third Party License, including, without limitation, any
amount paid with respect to any third party patent claims covering a
non-ingestible formulation of Licensed Compound [**], or use or
manufacture of such a formulation, a controlled release formulation of
Licensed Compound, or use or manufacture of such a non-ingestible
formulation or controlled release formulation of Licensed Compound. The
amount of reduction of royalties due Sepracor and the amount of
reimbursement to Schering shall be equal to [**] of the royalties or
license fees paid to such third parties in consideration for the
Qualifying Third Party License but in no event shall the royalty due
Sepracor for any Licensed Product in any country in any Calendar
Quarter be thereby reduced to less than [**] of the royalties otherwise
due Sepracor hereunder for such Licensed Product in such country.
Notwithstanding anything to the contrary in this paragraph, in no event
shall Sepracor's royalty due under this Agreement for any Licensed
Product be reduced to less than [**] of Net Sales of such Licensed
Product in such country in the Territory.
By way of example and for avoidance of doubt, if Schering is
obligated to pay Sepracor a [**] royalty on Net Sales of a certain
Licensed Product, and is also obligated to pay a [**] royalty on the
same Net Sales of the same Licensed Product under a Qualifying Third
Party License, then the royalty rate under this Agreement would be
reduced by [**] to [**]. If the third party royalty obligation in the
above example were [**], the calculated royalty rate would not be
reduced by [**] rather the actual royalty rate would only be reduced to
[**] due to the [**] reduction provision. For further example, if
Schering is obligated to pay Sepracor
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a [**] royalty on Net Sales of certain Licensed Product, and it is also
obligated to pay a [**] royalty on the same Net Sales of the same
Licensed Product under a Qualifying Third Party License, the actual
royalty rate would not be reduced to [**] under the [**] reduction
provision; rather the actual royalty rate would be reduced to [**] due
to the final sentence of the preceding paragraph of this Section
3.2(d).
(e) Compulsory Licenses. If a compulsory license is granted
under the Patent Rights to a third party with respect to Licensed
Compound and/or Licensed Product in any country in the Territory with a
royalty rate lower than the royalty rate provided by Section 3.2(a),
then the royalty rate to be paid by Schering on Net Sales in that
country under Section 3.2(a) shall be reduced to the rate paid by the
compulsory licensee.
3.3 Reports; Payment of Royalty; Payment Exchange Rate and Currency
Conversions.
(a) Royalties Paid Quarterly. Within [**] calendar days
following the close of each Calendar Quarter, following the First
Commercial Sale of a Licensed Product, Schering shall furnish to
Sepracor a written report for the Calendar Quarter showing the Net
Sales of Licensed Product(s) sold by Schering, its Affiliates and its
Sublicensees in the Territory during such Calendar Quarter and the
royalties payable under this Agreement for such Calendar Quarter. In
addition, such written report shall include a detailed reconciliation
of gross sales to Net Sales including units sold and units sold at zero
value, donated, or otherwise disposed of, and details relating to any
overpayments and underpayments. Simultaneously with the submission of
the written report, Schering shall pay to Sepracor, for the account of
Schering or the applicable Affiliate or Sublicensee, as the case may
be, a sum equal to the aggregate royalty due for such Calendar Quarter
calculated in accordance with this Agreement (reconciled for any
previous overpayments or underpayments).
(b) Method of Payment. Payments to be made by Schering to
Sepracor under this Agreement shall be paid by bank wire transfer in
immediately available funds to such bank account as is designated in
writing by Sepracor from time to time. Royalties shall be deemed
payable by the entity making the Net Sales from the country in which
earned in local currency and subject to foreign exchange regulations
then prevailing. Royalty payments shall be made in United States
dollars to the extent that free conversions to United States dollars is
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permitted. The rate of exchange to be used in any such conversion from
the currency in the country where such Net Sales are made shall be the
rate of exchange used by Schering for reporting such sales for United
States financial statement purposes. If, due to restrictions or
prohibitions imposed by national or international authority, payments
cannot be made as aforesaid, the parties shall consult with a view to
finding a prompt and acceptable solution, and Schering will deal with
such monies as Sepracor may lawfully direct at no additional
out-of-pocket expense to Schering Notwithstanding the foregoing, if
royalties in any country cannot be remitted to Sepracor for any reason
within six (6) months after the end of the Calendar Quarter during
which they are earned, then Schering shall be obligated to deposit the
royalties in a bank account in such country in the name of Sepracor.
3.4 Maintenance of Records; Audits.
(a) Record Keeping by Schering. Schering and its Affiliates
shall keep complete and accurate records in sufficient detail to enable
the royalties payable hereunder to be determined. Upon [**] prior
written notice from Sepracor, Schering shall permit an independent
certified public accounting firm of nationally recognized standing
selected by Sepracor, at Sepracor's expense, to have access during
normal business hours to examine pertinent books and records of
Schering and/or its Affiliates as may be reasonably necessary to verify
the accuracy of the royalty reports hereunder. The examination shall be
limited to pertinent books and records for any year ending not more
than [**] prior to the date of such request. An examination under this
Section 3.4(a) shall not occur more than once in any Calendar Year.
Schering may designate competitively sensitive information, which such
auditor may not disclose to Sepracor, provided, however, that such
designation shall not encompass the auditor's conclusions. The
accounting firm shall disclose to Sepracor only whether the royalty
reports are correct or incorrect and the specific details concerning
any discrepancies. No other information shall be provided to Sepracor.
All such accounting firms shall sign a confidentiality agreement (in
form and substance reasonably acceptable to Schering) as to any of
Schering's or its Affiliate's confidential information which they are
provided, or to which they have access, while conducting any audit
pursuant to this Section 3.4(a).
(b) Underpayments/Overpayments. If such accounting firm
correctly concludes that additional royalties were owed during such
period, Schering shall pay the additional royalties within thirty (30)
days of the date Sepracor delivers
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to Schering such accounting firm's written report so correctly
concluding. If such underpayment exceeds [**] of the royalty correctly
due Sepracor then the fees charged by such accounting firm for the work
associated with the underpayment audit shall be paid by Schering. Any
overpayments by Schering will be credited against future royalty
obligations. In the event that Schering disagrees with the audit report
and the chief financial officers of Schering and Sepracor (or their
designees) fail to resolve such disagreement, the dispute will be
resolved through the dispute resolution mechanism set forth in Section
9.2.
(c) Record Keeping by Sublicensee. Schering shall include in
each sublicense granted by it pursuant to this Agreement a provision
requiring the Sublicensee to make reports to Schering, to keep and
maintain records of sales made pursuant to such sublicense and to grant
access to such records by Sepracor's independent accountant to the same
extent required of Schering under this Agreement. Upon the expiration
of [**] following the end of any year, the calculation of royalties
payable with respect to such year shall be binding and conclusive upon
Sepracor, Schering and its Sublicensees shall be released from any
liability or accountability with respect to royalties for such year.
(d) Confidentiality. Sepracor shall treat all financial
information subject to review under this Section 3.4, or under any
sublicense agreement, in accordance with the confidentiality provisions
of this Agreement, and shall cause its accounting firm to enter into an
acceptable confidentiality agreement with Schering obligating it to
retain all such financial information in confidence pursuant to such
confidentiality agreement.
3.5 Income Tax Withholding. If at any time, any jurisdiction within the
Territory requires the withholding of income taxes or other taxes imposed upon
payments set forth in this Article III, Schering shall make such withholding
payments as required and subtract such withholding payments from the payments
set forth in this Article III, or if applicable, Sepracor will promptly
reimburse Schering or its designee(s) of the amount of such payments. Schering
shall provide Sepracor with documentation of such withholding and payment in a
manner that is satisfactory for purposes of the U.S. Internal Revenue Service.
Any withholdings paid when due hereunder shall be for the account of Sepracor
and shall not be included in the calculation of Net Sales.
3.6 Direct Affiliate Licenses. Whenever Schering shall reasonably
demonstrate to Sepracor that, in order to facilitate direct royalty payments by
an Affiliate, it is desirable that a separate license agreement be entered into
between Sepracor and such
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Affiliate, Sepracor will grant such licenses directly to such Affiliate by means
of an agreement which shall be consistent with all of the provisions hereof,
provided that Schering guarantees the Affiliate's obligations thereunder.
ARTICLE IV
PATENTS
4.1 Filing, Prosecution and Maintenance of Patents. Sepracor agrees to
diligently file, prosecute and maintain in the Territory, all Patent Rights
owned in whole or in part by Sepracor and licensed to Schering under this
Agreement, including without limitation, any Improvement Patent. Sepracor shall
supply Schering with a copy of the applications as filed, together with notice
of its filing date and serial number. Sepracor shall keep Schering regularly
advised of the status of pending patent applications (including, without
limitation, the grant of any Patent Rights), and upon the written request of
Schering shall provide copies of any substantive papers related to the filing,
prosecution and maintenance of such patent filings. Schering shall treat all
information, papers, and other materials provided by Sepracor pursuant to this
Section 4.1 in accordance with the confidentiality provisions of this Agreement.
4.2 Option of Schering to Prosecute and Maintain Patents. Sepracor
shall give [**] notice to Schering of any desire to cease prosecution and/or
maintenance of a particular Patent Right and, in such case, shall permit
Schering, at its sole discretion, to continue prosecution or maintenance at its
own expense. If Schering elects to continue prosecution or maintenance, Sepracor
shall execute such documents and perform such acts, at Schering's expense, as
may be reasonably necessary to effect an assignment of such Patent Rights to
Schering. Any such assignment shall be completed in a timely manner to allow
Schering to continue such prosecution or maintenance. Any patents or patent
applications so assigned shall not be considered Patent Rights.
4.3 Enforcement.
(a) Notice and Discontinuance of Infringement. In the event
that either Schering or Sepracor becomes aware of any infringement
involving Licensed Product within the Territory of any issued patent
within the Patent Rights, it will notify the other party in writing to
that effect. Any such notice shall include evidence to support an
allegation of infringement by such third party. Sepracor shall use
reasonable efforts to obtain a discontinuance of such infringement or
bring suit against the third party infringer within [**] from the date
of said notice. Sepracor shall bear all the expenses of any suit
brought by it. Schering shall have
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the right, prior to commencement of the trial, suit or action brought
by Sepracor, to join any such suit or action, and in such event shall
pay one-half of the costs of such suit or action. In the event that
Schering has joined in the action and shared in the costs thereof as
set forth above, no settlement, consent judgment or other voluntary
final disposition of the suit may be entered into without the consent
of Schering. In the event that Schering has not joined the suit or
action, Schering will reasonably cooperate with Sepracor in any such
suit or action and shall have the right to consult with Sepracor and be
represented by its own counsel at its own expense. Any recovery or
damages derived from any suit under this Section shall be used first to
reimburse each of Sepracor and Schering for its documented
out-of-pocket legal expenses relating to the suit, shall be used second
to reimburse Sepracor for royalties lost as a result of reduced sales
of Licensed Product, shall be used third to reimburse Schering for
amounts attributed to Schering's lost profits, with any remaining
amounts, including but not limited to punitive, exemplary, or other
enhanced damages, to be shared equally by the parties.
(b) Continuance of Infringement. If Sepracor has neither
obtained a discontinuance of such infringement nor brought suit against
such infringer after the expiration of the [**] period specified in
Subsection 4.3(a), Schering shall have the right, but not the
obligation, to bring suit against such infringer under the Patent
Rights and join Sepracor as a party plaintiff, provided that Schering
shall bear all the expenses of such suit. Sepracor shall cooperate with
Schering in any such suit for infringement of a Patent Right brought by
Schering against a third party, and shall have the right to consult
with Schering and to participate in and be represented by independent
counsel in such litigation at its own expense. Schering shall
periodically reimburse Sepracor for its out of pocket costs (excluding
Sepracor's costs of retaining independent counsel) incurred in
cooperating with Schering. Schering shall incur no liability to
Sepracor as a consequence of such litigation or any unfavorable
decision resulting therefrom, including any decision holding any of the
Patent Rights invalid or unenforceable, except that Schering shall
indemnify and hold Sepracor harmless for any monetary judgment or award
against or penalty levied upon either Sepracor or Schering arising out
of Schering's acts in the enforcement of such Patent Rights. In the
event that Schering recovers any sums in such litigation by way of
damages or in settlement thereof, Schering shall retain all such sums.
4.4 Third Party Infringement Suit. In the event that a third party sues
Schering alleging that Schering's, its Affiliates' or its Sublicensees' making,
having made,
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importing, exporting, using, distributing, marketing, promoting, offering for
sale or selling Licensed Compound and/or Licensed Product under the Patent
Rights infringes or will infringe said third party's patent, then Schering may
elect to defend such suit at its sole expense and discretion. Upon Schering's
request and in connection with Schering's defense of any such third party
infringement suit, Sepracor shall cooperate with Schering for such defense
provided, that Schering shall promptly reimburse Sepracor for reasonable
out-of-pocket costs and expenses incurred by Sepracor in providing such
cooperation. Sepracor shall invoice Schering for such costs and expenses, and
shall provide documentation for the invoice. The invoice shall be payable to
Sepracor or its designee(s) [**] after receipt by Schering of the invoice.
4.5 Certification Under Drug Price Competition and Patent Restoration
Act. Sepracor and Schering each shall immediately give written notice to the
other of any certification of which they become aware filed pursuant to 21
U.S.C. Section 355(b)(2)(A) (or any amendment or successor statute thereto)
claiming that Patent Rights covering Licensed Compound and/or Licensed
Product(s) are invalid or that infringement will not arise from the manufacture,
use or sale of Licensed Compound or Licensed Product by a third party.
Notwithstanding any provision to the contrary, in the event that the Patent
Rights at issue are owned and/or controlled by Sepracor and Sepracor has failed
to bring an infringement action against such third party at least [**] prior to
expiration of the forty five (45) day period set forth in 21 U.S.C.
Section 355(c)(3)(C) (or any amendment or successor statute thereto), Schering
shall have the right to bring such an infringement action, in its sole
discretion and at its own expense, in its own name and/or in the name of
Sepracor. At Schering's request, Sepracor shall, at its own expense, provide
Schering reasonable assistance to conduct such infringement action, including,
without limitation, causing the execution of such legal documents as Schering
may deem necessary for the prosecution of such action. Schering shall
periodically reimburse Sepracor for its out-of-pocket costs (excluding any of
Sepracor's costs of retaining independent counsel) incurred in assisting
Schering. Schering shall incur no liability to Sepracor as a consequence of such
litigation or any unfavorable decision resulting therefrom, including any
decision holding any of the Patent Rights invalid or unenforceable, except that
Schering shall indemnify and hold Sepracor harmless for any monetary judgment or
award against or penalty levied upon either Sepracor or Schering arising out of
Schering's acts in the enforcement of such Patent Rights. In the event that
Schering recovers any sums in such litigation by way of damages or in settlement
thereof, Schering shall have the right to retain all such sums to offset its
costs, losses and expenses.
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4.6 Abandonment. Subject to Schering's rights pursuant to Section 4.2,
Sepracor shall at the earliest known date give notice to Schering of the grant,
lapse, revocation, surrender, invalidation or abandonment of any Patent Rights
licensed to Schering for which Sepracor is responsible for the filing,
prosecution and maintenance under this Agreement.
4.7 Patent Term Restoration. The parties hereto shall cooperate with
each other in obtaining patent term restoration or its equivalent in the
Territory where applicable to Patent Rights. In the event that elections with
respect to obtaining such patent term restoration are to be made, Schering shall
have the right to make the election and Sepracor agrees to abide by such
election.
4.8 Notices Regarding Patents. All notices, inquiries and
communications in connection with this Article IV shall be sent in the manner
set forth in Section 9.7 to the parties at the addresses and facsimile numbers
indicated below.
If to Sepracor: Sepracor Inc.
111 Locke Drive
Marlborough, Massachusetts 01752-1146
Attn.: Corporate Patent Counsel
Fax No.: (508) 357-7490
If to Schering: Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Staff Vice President - Patents and Trademarks
Fax No.: (908) 298-5388
ARTICLE V
CONFIDENTIALITY AND PUBLICATION
5.1 Confidentiality.
(a) Nondisclosure Obligation. Each of Sepracor and Schering
shall use only in accordance with this Agreement and shall not disclose
to any third party any Proprietary Information received by it from the
other party, without the prior written consent of the other party. The
foregoing obligations shall survive the expiration or termination of
this Agreement for a period of [**]. These obligations shall not apply
when and to the extent Proprietary Information:
(i) is known by the receiving party at the
time of its receipt, and not through a prior disclosure by the
disclosing party, as documented by business records;
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(ii) is at the time of disclosure or
thereafter becomes published or otherwise part of the public
domain without breach of this Agreement by the receiving
party;
(iii) is subsequently disclosed to the
receiving party by a third party that has the right to make
such disclosure;
(iv) is developed by the receiving party
independently of Proprietary Information or other information
received from the disclosing party and such independent
development can be documented by the receiving party;
(v) is disclosed to any institutional review
board of any entity conducting clinical trials or any
governmental or other regulatory agencies in order to obtain
patents or to gain approval to conduct clinical trials or to
market Licensed Compound and/or Licensed Product, but such
disclosure may be made only to the extent reasonably necessary
to obtain such patents or authorizations; or
(vi) is required by law, regulation, rule,
act or order of any governmental authority or agency to be
disclosed by a party, provided that notice is promptly
delivered to the other party in order to provide an
opportunity to seek a protective order or other similar order
with respect to such Proprietary Information and thereafter
the disclosing party discloses to the requesting entity only
the minimum Proprietary Information required to be disclosed
in order to comply with the request, whether or not a
protective order or other similar order is obtained by the
other party.
(b) Disclosure to Agents. Notwithstanding the provisions of
Section 5.1(a) and subject to the other terms of this Agreement,
Schering shall have the right to disclose Sepracor Proprietary
Information to its Sublicensees, agents, consultants, Affiliates or
other third parties (collectively "Agents") in accordance with this
Section 5.1(b). Such disclosure shall be limited only to those Agents
directly involved in the research, development, manufacturing,
marketing or promotion of Licensed Compound or Licensed Product (or for
such Agents to determine their interest in performing such activities)
in accordance with this Agreement. Any such Agents must agree in
writing to be bound by
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confidentiality and non-use obligations essentially the same as those
contained in this Agreement. The term of confidentiality and non-use
obligations for such Agents shall be no less than [**]. Schering shall
be jointly and severally liable for any disclosure of Sepracor
Proprietary Information by Agents.
(c) Disclosure to a Third Party. Sepracor shall have the right
to use and disclose any Sepracor Know-How at its sole option and
discretion for the limited purpose of filing, prosecuting, and
supporting Patent Rights. Subject to Section 5.3, either party may
publish Sepracor Know-How under the terms of Section 5.4 below.
Sepracor shall not otherwise disclose, provide or transfer any Sepracor
Know-How to any third party without the prior written approval of
Schering.
5.2 Return of Proprietary Information. Upon termination of this
Agreement the receiving party shall return all documents, and copies thereof,
(including those in the possession of Schering's Agents pursuant to Section
5.1(b)), containing the disclosing party's Proprietary Information at any time
upon request of the disclosing party. However, the receiving party may retain
one (1) copy of such documents in a secure location solely for the purpose of
determining its obligations hereunder, to comply with any applicable regulatory
requirements, or to defend against any product liability or other claims.
5.3 Publicity. Sepracor and Schering shall jointly issue a press
release concerning this Agreement promptly after the Effective Date, which press
release is appended hereto as Schedule 5.3. Following the date of execution of
this Agreement, Sepracor may also issue press releases limited substantially to
Schering's public announcements pursuant to Section 2.5. Except as provided in
Sections 2.5, 5.1 and this Section 5.3, a party may not use the name of the
other party in any publicity, advertising or in any other public way and, may
not issue press releases or otherwise publicize or disclose any information
related to the existence of this Agreement or the terms or conditions or any
information relating to the subject matter hereof, without the prior written
consent of the other party. Sepracor may use the substance of the joint press
release, Schering's public announcements, and any other materials approved by
Schering, in Sepracor's investor relations and public relations activities. [**]
Nothing in the foregoing, however, shall prohibit a party from making
disclosures to the extent deemed necessary under applicable federal or state
securities laws or any rule or regulation of any nationally recognized
securities exchange, provided same is accurate and complete. In such event,
however, the disclosing party shall use good faith efforts to consult with the
other party prior to such disclosure and, where applicable, shall request
confidential treatment to the extent available. [**] this Agreement [**] shall
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provide [**] shall have [**]. In the event that [**] shall provide [**] shall
have [**]. In the event that [**] shall provide [**] shall be [**] provided,
however, [**] only elect once to have the royalty rates provided for in Section
3.2 permanently reduced [**]; for example [**] as provided for above [**].
In addition, in the event that [**] shall provide [**]. In the event
that [**] shall provide [**] provided, however, [**] for example, [**] as
provided for above. In the event that [**] shall provide [**].
For the purposes of this Section 5.3, [**].
Nothing in this Section 5.3 and no specific remedy set forth herein
shall [**] under this Agreement, including but not limited to [**] pursuant to
the terms and conditions of Section 9.2. [**].
5.4 Publication. Schering and Sepracor each acknowledge the potential
benefit in publishing results of certain studies to obtain recognition within
the scientific community and to advance the state of scientific knowledge. Each
party also recognizes the mutual interest in obtaining valid patent protection
and in protecting business interests and trade secret information. No
publication of Sepracor Know-How or Patent Rights may be made without the prior
written consent of Sepracor. The parties agree that Schering, its Affiliates,
employees or consultants shall be free to make any publication which does not
disclose Sepracor Know-How or Patent Rights. In the event that any proposed
publication (as defined below) discloses Sepracor Know-How or Patent Rights, the
following procedure shall apply: Either party, its Affiliates, employees or
consultants wishing to make a publication shall deliver to the other party a
copy of the proposed written publication or an outline of an oral disclosure at
least [**] prior to submission for publication or presentation. For purposes of
this Agreement, the term "publication" shall include, without limitation,
abstracts and manuscripts for publication, slides and texts of oral or other
public presentations, and texts of any transmission through any electronic
media, e.g. any computer access system such as the Internet, including the World
Wide Web. The reviewing party shall have the right (i) to propose modifications
to the publication for patent reasons, trade secret reasons or business reasons
or (ii) to request delay of the publication or presentation in order to protect
patentable information. If the reviewing party requests a delay, the publishing
party shall delay submission or presentation for a period not less than [**]
from the filing date of the first patent application covering the information
contained in the proposed publication or presentation. If the reviewing party
requests modifications to the publication, the publishing party may edit such
publication to prevent disclosure or trade secret or proprietary business
information prior to submission of the publication or presentation.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of Each Party. Each of Sepracor and
Schering hereby represents, warrants and covenants to the other party hereto as
follows:
(a) it is a corporation or entity duly organized and validly
existing under the laws of the state or other jurisdiction of
incorporation or formation;
(b) the execution, delivery and performance of this Agreement
by such party has been duly authorized by all requisite corporate
action, subject only to receipt of requisite approval of its board of
directors;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(d) except as set forth in Schedule 6.1(d), the execution,
delivery and performance by such party of this Agreement and its
compliance with the terms and provisions hereof does not and will not
conflict with or result in a breach of any of the terms and provisions
of or constitute a default under (i) a loan agreement, guaranty,
financing agreement, agreement affecting a product or other agreement
or instrument binding or affecting it or its property; (ii) the
provisions of its charter or operative documents or bylaws; or (iii)
any order, writ, injunction or decree of any court or governmental
authority entered against it or by which any of its property is bound;
(e) except for the governmental and Regulatory Approvals
required to market Licensed Product in the Territory and any filings or
approvals referred to in Section 2.4, the execution, delivery and
performance of this Agreement by such party does not require the
consent, approval or authorization of, or notice, declaration, filing
or registration with, any governmental or regulatory authority and the
execution, delivery or performance of this Agreement will not violate
any law, rule or regulation applicable to such party;
(f) this Agreement has been duly authorized, executed and
delivered and constitutes such party's legal, valid and binding
obligation enforceable against it in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or
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affecting creditors' rights and to the availability of particular
remedies under general equity principles;
(g) it shall comply with all applicable material laws and
regulations relating to its activities under this Agreement; and
(h) other than as set forth in Schedule 6.1(h) to the best of
its knowledge there are no third party pending patent applications
which, if issued, may cover the development, manufacture, use or sale
of any Licensed Compound or Licensed Product.
6.2 Sepracor's Representations. Sepracor hereby represents, warrants
and covenants to Schering that:
(a) to the best of its knowledge, the Patent Rights and
Sepracor Know-How are subsisting and are not invalid or unenforceable,
in whole or in part;
(b) it has the full right, power and authority to grant all of
the right, title and interest in the licenses granted under Article II
hereof;
(c) except as set forth in Schedule 6.2(c), it has not
previously assigned, transferred, conveyed or otherwise encumbered its
right, title and interest in the Licensed Compound, Licensed Product,
the Patent Rights, or Sepracor Know-How;
(d) except as set forth in Schedule 6.2(d), it is the sole and
exclusive owner of the Patent Rights and Sepracor Know-How, all of
which are free and clear of any liens, charges and encumbrances, and no
other person, corporation or other private entity, or governmental
entity or subdivision thereof, has or shall have any claim of ownership
with respect to the Patent Rights or Sepracor Know-How, whatsoever;
(e) except as set forth in Schedule 6.2(e), to the best of its
knowledge, the Patent Rights and Sepracor Know-How, and the
development, manufacture, use, distribution, marketing, promotion and
sale of Licensed Products do not interfere or infringe on any
intellectual property rights owned or possessed by any third party;
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(f) there are no claims, judgments or settlements against or
amounts with respect thereto owed by Sepracor or pending or threatened
claims or litigation against Sepracor relating to Licensed Compound,
the Patent Rights and Sepracor Know-How;
(g) during the Term of this Agreement it will use reasonable
efforts not to diminish the rights under the Patent Rights and Sepracor
Know-How granted to Schering hereunder, including without limitation,
by not committing or permitting any actions or omissions which would
cause the breach of any agreements between itself and third parties
which provide for intellectual property rights applicable to the
development, manufacture, use or sale of Licensed Compound and/or
Licensed Product(s), that it will provide Schering promptly with notice
of any such alleged breach, and that as of the Effective Date, it is in
compliance in all material respects with any agreements with third
parties;
(h) other than as set forth in Schedule 6.2(h), to the best of
its knowledge, it has no knowledge of any circumstances that would
adversely affect the commercial utility of the use of the Licensed
Product or that would render Schering liable to a third party for
patent infringement as a consequence of Schering's sale of the Licensed
Product or use of Patent Rights or Sepracor Know-How;
(i) to the best of its knowledge, data summaries provided in
writing to Schering by Sepracor prior to the Effective Date relating to
pre-clinical and clinical studies of the Licensed Compound accurately
represent the raw data underlying such summaries;
(j) it has provided to Schering a summary of all material
adverse events known to it relating to the Licensed Compound;
(k) except as set forth in Schedule 6.2(k), there are no
collaborative, licensing, material transfer, supply, distributorship or
marketing agreements or arrangements or other similar agreements to
which it or any of its Affiliates are party relating to Licensed
Compound, Licensed Product or Patent Rights nor has it granted any
rights to any third party with respect to the Licensed Compound,
Licensed Product or Patent Rights; and
(l) there are no trademark(s) proposed, chosen, owned or
controlled by Sepracor or its Affiliates specifically in connection
with the Licensed Compound and/or the Licensed Product in the Territory
and Sepracor shall not seek or file for any such trademark in the
Territory during the Term of this Agreement.
6.3 Schering's Representations. Schering hereby represents, warrants and
covenants to Sepracor as follows:
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(a) it is the sole and exclusive owner of the Licensed
Compound in the Territory which is free and clear of any liens, charges
and encumbrances, and no other person, corporation or other private
entity, or governmental entity or subdivision thereof, has or shall
have any claim of ownership with respect to the Licensed Compound,
whatsoever;
(b) to the best of its knowledge, the Licensed Compound and
the development, manufacture, use, distribution, marketing, promotion
and sale of Licensed Compound or Licensed Product(s) does not interfere
or infringe on any intellectual property rights owned or possessed by
any third party; and
(c) there are no claims, judgments or settlements against or
amounts with respect thereto owed by Schering or pending or threatened
claims or litigation against Schering relating to Licensed Compound.
6.4 Continuing Representations. The representations and warranties of
each party contained in Sections 6.1, 6.2 and 6.3 shall survive the execution of
this Agreement.
6.5 No Inconsistent Agreements. Except as set forth in Schedule 6.5,
neither party has in effect and after the Effective Date neither party shall
enter into any oral or written agreement or arrangement that would be
inconsistent with its obligations under this Agreement.
6.6 Representation by Legal Counsel. Each party hereto represents that
it has been represented by legal counsel in connection with this Agreement and
acknowledges that it has participated in the drafting hereof. In interpreting
and applying the terms and provisions of this Agreement, the parties agree that
no presumption shall exist or be implied against the party which drafted such
terms and provisions.
ARTICLE VII
INDEMNIFICATION AND LIMITATION ON LIABILITY
7.1 Indemnification by Schering. Subject to Section 3.2(d), Schering
shall indemnify, defend and hold harmless Sepracor and its Affiliates, and each
of its and their respective employees, officers, directors and agents (each, a
"Sepracor Indemnified Party") from and against any and all claims, demands,
lawsuits, proceedings, settlement amounts, liability, loss, damage, cost, and
expense (including reasonable attorneys' fees), subject to the limitations in
Section 7.5 (collectively, a "Liability") which may be asserted against the
Sepracor Indemnified Party or which the Sepracor Indemnified Party may incur,
suffer or be required to pay resulting from or arising out of (i) the discovery,
development, manufacture, promotion, distribution, use, testing, marketing, sale
or other disposition of Licensed Compound and/or Licensed Product(s) by
Schering, its Affiliates or Sublicensees, including without limitation any
personal injury, death, or other injuries
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suffered by users of Licensed Compound or Licensed Product, or (ii) the breach
by Schering of any covenant, representation or warranty contained in this
Agreement; or (iii) the successful enforcement by a Sepracor Indemnified Party
of its rights under this Section 7.1. Notwithstanding the foregoing, Schering
shall have no obligation under this Agreement to indemnify, defend or hold
harmless any Sepracor Indemnified Party with respect to any Liability which
results from willful misconduct or negligent acts or omissions of Sepracor, its
Affiliates, or any of their respective employees, officers, directors or agents.
Schering shall also have no obligation under this Agreement to indemnify
Sepracor with respect to any Liability arising out of inaccuracy of Sepracor's
representations contained in Sections 6.2(c), 6.2(d) or 6.2(e) wherein
Schering's chief patent counsel had no knowledge, as of the Effective Date, of
material facts underlying such inaccuracy.
7.2 Indemnification by Sepracor. Sepracor shall indemnify, defend and
hold harmless Schering and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, a "Schering Indemnified Party")
from and against any Liability which the Schering Indemnified Party may incur,
suffer or be required to pay resulting from or arising out of (i) the breach by
Sepracor of any covenant, representation or warranty contained in this
Agreement; or (ii) the successful enforcement by a Schering Indemnified Party of
its rights under this Section 7.2. Notwithstanding the foregoing, Sepracor shall
have no obligation under this Agreement to indemnify, defend or hold harmless
any Schering Indemnified Party with respect to any Liability which results from
willful misconduct or negligent acts or omissions of Schering, its Affiliates,
or any of their respective employees, officers, directors or agents.
7.3 Conditions to Indemnification. Each party agrees to promptly give
the other party notice of any claim for which indemnification might be sought.
Failure of an indemnified party to provide notice of a claim to the indemnifying
party shall affect the indemnified party's right to indemnification only to the
extent that such failure has a material adverse effect on the indemnifying
party's ability to defend or the nature or the amount of the Liability. Subject
to the provisions of Article IV, the indemnifying party shall have the right to
assume the defense of any suit or claim related to the Liability if it has
assumed responsibility for the suit or claim in writing; however, if in the
reasonable judgment of the indemnified party, such suit or claim involves an
issue or matter which could have a materially adverse effect on the business
operations or assets of the indemnified party, the indemnified party may waive
its rights to indemnity under this Agreement and control the defense or
settlement thereof, but in no event shall any such waiver be construed as a
waiver of any indemnification rights such party may have at law or in equity. If
the indemnifying party defends the suit or claim, the
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indemnified party may participate in (but not control) the defense thereof at
its sole cost and expense.
7.4 Settlements. Subject to the provisions of Article IV, neither party
may settle a claim or action related to a Liability without the consent of the
other party, if such settlement would impose any monetary obligation on the
other party or require the other party to submit to an injunction or otherwise
limit the other party's rights under this Agreement; provided that such consent
shall not unreasonably be withheld or delayed. Any payment made by a party to
settle any such claim or action shall be at its own cost and expense.
7.5 Limitation of Liability. With respect to any claim by one party
against the other arising out of the performance or failure of performance of
the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a party be liable for, punitive, exemplary or consequential
damages suffered or incurred by the other party.
7.6 Insurance. Each party acknowledges and agrees that during the Term
of this Agreement it shall maintain adequate insurance and/or a self-insurance
program for contractual liability insurance to cover such party's obligations
under this Agreement. In addition, Schering shall maintain adequate products
liability insurance to cover Schering's obligations under this Agreement. Each
party shall provide the other party with evidence of such insurance and/or
self-insurance program, upon request.
ARTICLE VIII
TERM AND TERMINATION
8.1 Term and Expiration. This Agreement shall be effective as of the
Effective Date and unless terminated earlier by mutual written agreement of the
parties or pursuant to Sections 8.2 or 8.3 below, the Term of this Agreement
shall continue in effect until the expiration of the last to expire Patent Right
incorporating a Valid Claim. Upon expiration of this Agreement, Schering's
licenses pursuant to Section 2.1 and 2.2 shall become fully paid-up, perpetual
non-exclusive licenses.
8.2 [**] this Agreement [**]. In the event [**].
8.3 Termination.
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(a) Termination for Cause. This Agreement may be terminated by
notice by the terminating party at any time during the Term of this
Agreement:
(i) by either party subject to Section 9.2, if the
other party is in material breach of its material obligations
hereunder (including but not limited to Schering's diligence
obligations set forth in Section 2.5(a))and has not cured such
breach within [**] after notice requesting cure of the breach
with reasonable detail of the particulars of the alleged
breach or initiated actions reasonably expected to cure the
cited failure within [**] of receiving notice and thereafter
diligently pursued such actions to cure the failure (even if
requiring longer than the [**] set forth in this
subsection); or
(ii) by either party upon the filing or institution
of bankruptcy, reorganization, liquidation or receivership
proceedings, or upon an assignment of a substantial portion of
the assets for the benefit of creditors by the other party, or
in the event a receiver or custodian is appointed for such
party's business, or if a substantial portion of such party's
business is subject to attachment or similar process;
provided, however, that in the case of any involuntary
bankruptcy proceeding such right to terminate shall only
become effective if the proceeding is not dismissed within
sixty (60) days after the filing thereof; or
(iii) by Sepracor if an action is brought by or on
behalf of Schering, its Affiliates or Sublicensees challenging
patentability, validity, or enforceability of any Patent
Rights.
(b) Effect of Termination for Cause on License.
(i) Termination by Schering. In the event Schering
terminates this Agreement under Section 8.3(a)(i), Schering's
licenses pursuant to Sections 2.1 and 2.2 shall become fully
paid-up, perpetual licenses.
(ii) Termination by Sepracor. In the event that
Sepracor terminates this Agreement under Section 8.3(a)(i) or
8.3(a)(iii), then the rights and licenses granted to Schering
under Sections 2.1 and 2.2 shall terminate and all rights to
Sepracor Know-How, Licensed Compounds and Licensed Products
granted pursuant to this Agreement shall revert to Sepracor.
(iii) Effect of Bankruptcy. In the event Schering
terminates this Agreement under Section 8.3(a)(ii) or this
Agreement is otherwise terminated under Section 8.3(a)(ii),
the parties agree that Schering, as a licensee of rights to
intellectual property under this Agreement, shall retain
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and may fully exercise all of its rights and elections under
the Insolvency Statute, including as set forth in Section 9.8
hereof.
8.4 Effect of Termination. Expiration or termination of the Agreement
shall not relieve the parties of any obligation accruing prior to such
expiration or termination, and the provisions of Article V and VII shall survive
the expiration of the Agreement. Any expiration or early termination of this
Agreement shall be without prejudice to the rights of either party against the
other accrued or accruing under this Agreement prior to termination, including
the obligation to pay royalties for Licensed Product(s) or Licensed Compound
sold prior to such termination. In the event of termination of this Agreement,
Schering shall have the right to continue to sell its existing inventory of
Licensed Product during the six (6) month period immediately following such
termination, provided that Schering shall continue to make royalty payments with
respect to such sales.
ARTICLE IX
MISCELLANEOUS
9.1 Assignment. Neither this Agreement nor any or all of the rights and
obligations of a party hereunder shall be assigned, delegated, sold,
transferred, sublicensed (except as otherwise provided herein) or otherwise
disposed of, by operation of law or otherwise, to any third party (other than an
Affiliate of an assigning party under the condition that the assignor remain
responsible to the other party under this Agreement), without the prior written
consent of the other party, and any attempted assignment, delegation, sale,
transfer, sublicense or other disposition, by operation of law or otherwise, of
this Agreement or of any rights or obligations hereunder contrary to this
Section 9.1 shall be a material breach of this Agreement by the attempting
party, and shall be void and without force or effect; provided, however, either
party may, without such consent, assign the Agreement and its rights and
obligations hereunder to an Affiliate or in connection with the transfer or sale
of all or substantially all of its assets related to the division or the subject
business, or in the event of its merger or consolidation or change in control or
similar transaction. This Agreement shall be binding upon, and inure to the
benefit of, each party, its Affiliates, and its permitted successors and
assigns. Each party shall be responsible for the compliance by its Affiliates
with the terms and conditions of this Agreement.
9.2 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of Delaware, without giving
effect to conflict of law principles. Subject to the terms of this Agreement,
all disputes under this Agreement shall be governed by binding arbitration
pursuant to the mechanism set forth in Schedule 9.2 attached hereto and
incorporated hereby.
9.3 Waiver. Any delay or failure in enforcing a party's rights under
this Agreement or any waiver as to a particular default or other matter shall
not constitute
35
<PAGE> 41
a waiver of such party's rights to the future enforcement of its rights under
this Agreement, nor operate to bar the exercise or enforcement thereof at any
time or times thereafter, excepting only as to an express written and signed
waiver as to a particular matter for a particular period of time.
9.4 Independent Relationship. Nothing herein contained shall be deemed
to create an employment, agency, joint venture or partnership relationship
between the parties hereto or any of their agents or employees, or any other
legal arrangement that would impose liability upon one party for the act or
failure to act of the other party. Neither party shall have any power to enter
into any contracts or commitments or to incur any liabilities in the name of, or
on behalf of, the other party, or to bind the other party in any respect
whatsoever.
9.5 Export Control. This Agreement is made subject to any restrictions
concerning the export of products or technical information from the United
States of America which may be imposed upon or related to Sepracor or Schering
from time to time by the government of the United States of America.
Furthermore, Schering agrees that it will not export, directly or indirectly,
any technical information acquired from Sepracor under this Agreement or any
products using such technical information to any country for which the United
States government or any agency thereof at the time of export requires an export
license or other governmental approval, without first obtaining the written
consent to do so from the Department of Commerce or other agency of the United
States government when required by an applicable statute or regulation.
9.6 Entire Agreement; Amendment. This Agreement, including the Exhibits
and Schedules hereto and all the covenants, promises, agreements, warranties,
representations, conditions and understandings contained herein sets forth the
complete, final and exclusive agreement between the parties and supersedes and
terminates all prior and contemporaneous agreements and understandings between
the parties, whether oral or in writing. There are no covenants, promises,
agreements, warranties, representations, conditions or understandings, either
oral or written, between the parties other than as are set forth herein. No
subsequent alteration, amendment, change, waiver or addition to this Agreement
shall be binding upon the parties unless reduced to writing and signed by an
authorized officer of each party. Either party in deciding to execute this
Agreement has relied on no understanding, agreement, representation or promise,
not explicitly set forth herein.
9.7 Notices. Except as provided under Section 4.8 hereof, any notice
required or permitted to be given or sent under this Agreement shall be hand
delivered or sent by express delivery service or certified or registered mail,
postage prepaid, or by facsimile transmission (with written confirmation copy by
registered first-class mail) to the parties at the addresses and facsimile
numbers indicated below.
36
<PAGE> 42
If to Sepracor, to: Sepracor Inc.
111 Locke Drive
Marlborough, Massachusetts 01752-1146
Attn.: President, Pharmaceuticals
Fax No.: (508) 357-7490
with copies to: Sepracor Inc.
111 Locke Drive
Marlborough, Massachusetts 01752-1146
Attn.: Corporate Patent Counsel
Fax No.: (508) 357-7490
If to Schering to: Schering-Plough Ltd.
Topferstrasse 5
6004 Lucerne
Switzerland
Attn.: President
Fax No.: (41) (41) 418 16 30
With copies to: Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Vice President, Business
Development
Fax No.: (908) 298-5379
and Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attn.: Law Department - Senior Legal
Director, Licensing
Fax No.: (908) 298-2739
Any such notice shall be deemed to have been received on the date
actually received. Either party may change its address or its facsimile number
by giving the other party written notice, delivered in accordance with this
Section.
9.8 Provisions for Insolvency.
(a) Effect on Licenses. All rights and licenses granted under
or pursuant to this Agreement by Sepracor to Schering are, for all
purposes of Section 365(n) of Title 11 of the United States Code
(together with its foreign equivalent, the "Insolvency Statute"),
licenses of rights to "intellectual property"
37
<PAGE> 43
as defined in the Insolvency Statute. Sepracor agrees that Schering, as
licensee of such rights under this Agreement shall retain and may fully
exercise all of its rights and elections under the Insolvency Statute
provided that Schering makes all royalty payments under this Agreement.
Sepracor agrees during the Term of this Agreement to create and
maintain current copies or, if not amenable to copying, detailed
descriptions or other appropriate embodiments, to the extent feasible,
of all such intellectual property. If a case is commenced by or against
Sepracor under the Insolvency Statute, Sepracor (in any capacity,
including debtor-in-possession) and its successors and assigns
(including, without limitation, an Insolvency Statute Trustee) shall,
(i) as Schering may elect in a written request,
immediately upon such request:
(A) perform all of the obligations provided in this
Agreement to be performed by Sepracor including, where
applicable and without limitation, providing to Schering
portions of such intellectual property (including
embodiments thereof) held by Sepracor and such successors
and assigns or otherwise available to them; or
(B) provide to Schering all such intellectual
property (including all embodiments thereof) held by
Sepracor and such successors and assigns or otherwise
available to them; and
(ii) not interfere with the rights of Schering under this
Agreement, or any agreement supplemental hereto, to such
intellectual property (including such embodiments),
including any right to obtain such intellectual property
(or such embodiments) from another entity.
(b) Rights to Intellectual Property. If an Insolvency Statute
case is commenced by or against Sepracor, and this Agreement is
rejected as provided in the Insolvency Statute, and Schering elects to
retain its rights hereunder as provided in the Insolvency Statute, then
Sepracor (in any capacity, including debtor-in-possession) and its
successors and assigns (including, without limitation, an Insolvency
Statute Trustee) shall provide to Schering all such intellectual
property (including all embodiments thereof) held by Sepracor and such
successors and assigns, or otherwise available to them, immediately
upon Schering's written request. Whenever Sepracor or any of its
successors or assigns provides to Schering any of the intellectual
property licensed hereunder (or any embodiment thereof) pursuant to
this Section 9.8, Schering shall have the right to perform the
obligations of Sepracor hereunder with respect to such intellectual
38
<PAGE> 44
property, but neither such provision nor such performance by Schering
shall release Sepracor from any such obligation or liability for
failing to perform it.
(c) Schering's Rights. All rights, powers and remedies of
Schering provided herein are in addition to and not in substitution for
any and all other rights, powers and remedies now or hereafter existing
at law or in equity (including, without limitation, the Insolvency
Statute) in the event of the commencement of an Insolvency Statute case
by or against Sepracor. Schering, in addition to the rights, power and
remedies expressly provided herein, shall be entitled to exercise all
other such rights and powers and resort to all other such remedies as
may now or hereafter exist at law or in equity (including, without
limitation, the Insolvency Statute) in such event. The parties agree
that they intend the foregoing Schering rights to extend to the maximum
extent permitted by law, including, without limitation, for purposes of
the Insolvency Statute:
(i) the right of access to any intellectual property
(including all embodiments thereof) of Sepracor, or any third
party with whom Sepracor contracts to perform an obligation of
Sepracor under this Agreement, and, in the case of the third
party, which is necessary for the development, registration,
manufacture and marketing of Licensed Compound and/or Licensed
Product(s); and
(ii) the right to contract directly with any third
party described in (i) to complete the contracted work.
(d) Deemed Grant of Rights. In the event of any insolvency of
Sepracor and if any statute and/or regulation in any country in the
Territory requires that there be a specific grant or specific clause(s)
in order for Schering to obtain the rights and benefits as licensee
under this Agreement which are analogous to those rights under Section
365(n) of Title 11 of the United States Code, then this Agreement shall
be deemed to include any and all such required grant(s), clause(s)
and/or requirements.
(e) Security Interests. In addition to any other rights
granted to Schering hereunder, with respect to any country in the
Territory in which Schering reasonably determines that its rights set
forth in this Section 9.8 are nonexistent or inadequate to protect
Schering's interests in the licenses granted hereunder, Sepracor shall,
upon Schering's request, execute a security agreement, or any foreign
equivalent, for each country in the Territory, granting Schering a
secured interest in all intellectual property licensed to Schering
under this Agreement.
9.9 Force Majeure. Failure of any party to perform its obligations under
this Agreement (except the obligation to make payments when properly due) shall
not
39
<PAGE> 45
subject such party to any liability or place them in breach of any term or
condition of this Agreement to the other party if such failure is due to any
cause beyond the reasonable control of such non-performing party ("force
majeure"), unless conclusive evidence to the contrary is provided. Causes of
non-performance constituting force majeure shall include, without limitation,
acts of God, fire, explosion, flood, drought, war, riot, sabotage, embargo,
strikes or other labor trouble, failure in whole or in part of suppliers to
deliver on schedule materials, equipment or machinery, interruption of or delay
in transportation, a national health emergency or compliance with any order or
regulation of any government entity acting with color of right. The party
affected shall promptly notify the other party of the condition constituting
force majeure as defined herein and shall exert reasonable efforts to eliminate,
cure and overcome any such causes and to resume performance of its obligations
with all possible speed. If a condition constituting force majeure as defined
herein exists for more than ninety (90) consecutive days, the parties shall meet
to negotiate a mutually satisfactory resolution to the problem, if practicable.
9.10 Severability. If any provision of this Agreement is declared
illegal, invalid or unenforceable by a court having competent jurisdiction, it
is mutually agreed that this Agreement shall endure except for the part declared
invalid or unenforceable by order of such court, provided, however, that in the
event that the terms and conditions of this Agreement are materially altered,
the parties will, in good faith, renegotiate the terms and conditions of this
Agreement to reasonably substitute such invalid or unenforceable provisions in
light of the intent of this Agreement.
9.11 Counterparts. This Agreement shall become binding when any one or
more counterparts hereof, individually or taken together, shall bear the
signatures of each of the parties hereto. This Agreement may be executed in any
number of counterparts, each of which shall be an original as against either
party whose signature appears thereon, but all of which taken together shall
constitute but one and the same instrument.
9.12 Captions. The captions of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.
9.13 Recording. Each party shall have the right, at any time, to
record, register, or otherwise notify this Agreement in appropriate governmental
or regulatory offices anywhere in the world, and each party shall provide
reasonable assistance to the other in effecting such recording, registering or
notifying. Notwithstanding the foregoing, prior to recording, registering, or
otherwise notifying this Agreement, the party desiring to so record, register,
or notify shall provide a copy of all materials to be filed for review, comment,
and approval by the other party, such approval not unreasonably to be withheld
or delayed.
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<PAGE> 46
CONFIDENTIAL MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS
9.14 Further Actions. Each party agrees to execute, acknowledge and
deliver such further instruments, and to do all other acts, as may be necessary
or appropriate in order to carry out the purposes and intent of this Agreement
including, without limitation, any filings with any antitrust agency which may
be required.
IN WITNESS WHEREOF, this Agreement has been executed by the duly
authorized representatives of the parties as of the date set forth below.
SEPRACOR INC. SCHERING-PLOUGH LTD.
By: Timothy J. Barberich By: David [illegible]
-------------------- -----------------
Title: President Title: Prokvrist
---------------- -----------------
Date: 12/5/97 Date: 5 December 1997
---------------- -----------------
CONSENTED TO AND AGREED BY A DULY
AUTHORIZED REPRESENTATIVE OF THE
UNDERSIGNED.
IN THE EVENT OF AN INCONSISTENCY
BETWEEN THIS AGREEMENT AND THE
EXCLUSIVE LICENSE AGREEMENT BETWEEN
SEPRACOR AND THE UNIVERSITY OF
MASSACHUSETTS (THE "UMASS/SEPRACOR
AGREEMENT"), THE TERMS OF THIS AGREEMENT
SHALL CONTROL AND THE UMASS/SEPRACOR
AGREEMENT SHALL BE DEEMED TO BE AMENDED
SO THAT IT IS IN FULL COMPLIANCE WITH AND GIVES
EFFECT TO ALL OF THE TERMS AND CONDITIONS OF
THIS AGREEMENT.
UNIVERSITY OF MASSACHUSETTS
By: James FX McGuirl
----------------
Title: Executive Director, CVIP
An Authorized Signatory
------------------------
Date: 10 Dec 97
-------------
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<PAGE> 47
CONFIDENTIAL MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS
SCHEDULE 1.18
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CaseNumber Country Status ApplNumber FilDate PatNumber ISSDate Title
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
[**] AU Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] WO Published 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] CZ Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] SK Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] FI Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] US Issued 30-Dec-1994 5,595,997 21-Jan-1997 Methods and Compositions
for Treating Allergic
Rhinitis and other
Disorders using
Descarboethoxyloratadine
- ------------------------------------------------------------------------------------------------------------------------------------
[**] NO Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] MX Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] EP Published 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
42
<PAGE> 48
CONFIDENTIAL MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
CaseNumber Country Status ApplNumber FilDate PatNumber ISSDate Title
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
[**] KR Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] NZ Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] CA Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] JP Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] BR Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] SG Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] CN Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] HU Pending [**] 11-Dec-1995 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] US Allowed 13-Jan-1997 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] US Pending [**] 07-Feb-1997 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] US Pending [**] 30-Apr-1997 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] US Pending [**] 21-Jul-1997 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] US Pending [**] 28-Feb-1997 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
[**] US Pending [**] 11-Feb-1997 [**]
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
43
<PAGE> 49
SCHEDULE 2.8
ADVERSE EVENT REPORTING PROCEDURES FOR PRODUCTS
1. An Adverse Event ("AE") is defined as:
a) any experience which is adverse, including what are commonly
described as adverse or undesirable experiences, adverse
events, adverse reactions, side effects, or death due to any
cause associated with, or observed in conjunction with the use
of a drug, biological product, or device in humans, whether or
not considered related to the use of that product:
occurring in the course of the use of a drug,
biological product or device,
associated with, or observed in conjunction with
product overdose, whether accidental or intentional,
associated with, or observed in conjunction with
product abuse, and/or
associated with, or observed in conjunction with
product withdrawal
b) Any significant failure of expected pharmacological or
biologic therapeutical action (with the exception of in
clinical trials).
2. Serious or Non-Serious is defined as:
a) A serious AE is one that is life threatening or fatal,
permanently disabling, requires or prolongs in-patient
hospitalization or prolonged hospitalization, or is a
congenital anomaly, cancer or overdose. In addition, end organ
toxicity, including hematological, renal, hepatic, and central
nervous system AEs, may be considered serious. In laboratory
tests in animals, a serious AE includes any experience
suggesting significant risk for human subjects.
b) A Non-serious AE is any AE which does not meet the criteria
for a serious AE.
3. Life-threatening is defined as: the patient is at immediate risk of
death from the AE as it occurs.
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<PAGE> 50
4. End-Organ Toxicity is defined as: A medically significant event or lab
value change in which a patient may not necessarily be hospitalized or disabled,
but is clinically significant enough to warrant monitoring (e.g. seizures, blood
dyscrasias).
5. Expected or unexpected is defined as:
(a) Expected AE - An AE which is listed in the investigator's
brochure and/or protocol for clinical trials, included in
local labeling (e.g., Summary of Product Characteristics) for
marketed drugs, or in countries with no local labeling, in the
Corporate Standard Prescribing Document.
(b) Unexpected AE - An AE that does not meet the criteria for an
expected AE or an AE which is listed but differs from that
event in terms of severity or specificity.
6. Associated with or related to the use of the drug is defined as: A
reasonable possibility exists that the AE was caused by the drug.
7. Un-associated or unrelated to the use of the drug is defined as: A
reasonable possibility exists that the AE may not have been caused by the drug.
8. NDA Holder is defined as: An "Applicant" as defined in 21 CFR Part
314.3(b), for regulatory approval of a product in any regulatory jurisdiction,
including a holder of a foreign equivalent thereto.
9. IND Holder is defined as: A "Sponsor" as defined in 21 CFR Part
312.3(b) of an investigational new drug in any regulatory jurisdiction,
including a holder of a foreign equivalent thereto.
10. Capitalized terms not defined in this Schedule 2.8 shall have the
meaning assigned thereto in the Agreement.
11. With respect to all Licensed Products, the parties agree as follows:
(a) All initial reports (oral or written) for any and all Serious
AEs as defined above which become known to either party (other
than from disclosure by or on behalf of the other party) must
be communicated by telephone, telefax or electronically
directly to the other party and/or the NDA Holder, IND Holder
(individually and collectively referred to as "Holders")
within two (2) days of receipt of the information. Written
confirmation of the Serious AE received by the party should be
sent to the other party and/or the Holders as soon as it
becomes available, but in any event within two working days of
initial report of the Serious AE by such party.
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<PAGE> 51
(b) All parties and Holders should exchange Medwatch and/or CIOMS
forms and other health authority reports within two (2)
working days of submission to any regulatory agency.
(c) All initial reports and follow-up information received for all
non-serious AEs for marketed Licensed Products which become
known to a party (other than from disclosure by or on behalf
of the other party) must be communicated in writing, by
telefax or electronically to the other party and/or all
Holders on a monthly basis, on Medwatch or CIOMs forms (where
possible).
(d) Each party shall coordinate and cooperate with the other
whenever practicable to prepare a single written report
regarding all Serious AEs, provided, however, that neither
party shall be obligated to delay reporting of any AE in
violation of applicable law or regulations regarding the
reporting of adverse events.
12. The parties further agree that:
a) a written report be forwarded to the other party within two
(2) working days of receipt by the party making the report,
for AEs for animal studies which suggest a potential
significant risk for humans;
b) each party will give the other party a print-out or computer
disk of all AEs reported to it and its Affiliates relating to
Licensed Products within the last year, within 30 days of
receipt of a request from the other party;
c) upon request of a party, the other party shall make available
its AE records relating to Licensed Products (including
computer disks) for viewing and copying by the other party.
d) disclosure of information hereunder by a party to the other
party shall continue as long as either party and/or its
Affiliates continue to clinically test or market Licensed
Products.
e) all written regulatory reports, including periodic NDA, annual
IND, safety updates, or foreign equivalents thereto, etc.
should be sent by a party to the other party within two (2)
working days of submission to the appropriate regulatory
agency. The parties shall agree on a procedure for preparing
these reports.
13. Each party shall diligently undertake the following further obligations
where both parties are or will be commercializing products hereunder and/or
performing clinical trials with respect to product:
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<PAGE> 52
a) to immediately consult with the other party, with respect to
the investigation and handling of any Serious AE disclosed to
it by the other party or by a third party and to allow the
other party to review the Serious AE and to participate in the
follow-up investigation;
b) to immediately advise the other party of any Licensed Product
safety communication received from a health authority and
consult with the other party with respect to any product
warning, labeling change or change to an investigators'
brochure involving safety issues proposed by the other party,
including, without limitation, to the safety issues agreed to
by the parties;
c) to diligently handle in a timely manner the follow-up
investigation and resolution of each AE reported to it;
d) to provide the other party mutually agreed upon audit rights
of its AE reporting system and documentation, upon prior
notice, during normal business hours, at the expense of the
auditing party and under customary confidentiality
obligations;
e) to meet in a timely fashion from time to time as may be
reasonably required to implement the adverse event reporting
and consultation procedures described in this Schedule 2.8,
including identification of those individuals in each party's
Drug Safety group who will be responsible for reporting to and
receiving AE information from the other party, and the
development of a written standard operating procedure with
respect to adverse event reporting responsibilities, including
reporting responsibilities to investigators;
f) where possible, to transmit all data electronically;
g) to report to each other any addenda, revisions or changes to
this Agreement (e.g., change in territories, local
regulations, addition of new licensors/licensees to the
agreement, etc.) which might alter the adverse event reporting
responsibilities hereunder;
h) to utilize English as the language of communication and data
exchange between the parties; and
i) to develop a system of exchange of documents and information
in the event that the Agreement involves more than two
parties.
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<PAGE> 53
SCHEDULE 5.3
PRESS RELEASE
IMMEDIATELY
Schering-Plough and Sepracor Steve Galpin, Jr.
In Licensing Agreement (973) 822-7415
On CLARITIN(R) Metabolite
William O'Donnell
(973) 822-7476
MADISON, N.J., and MARLBOROUGH, Mass., Dec. 8, 1997 --Schering-Plough
Corporation (NYSE: SGP) and Sepracor Inc. (Nasdaq: SEPR) today announced a
licensing agreement giving Schering-Plough exclusive worldwide rights to
Sepracor's patents covering descarboethoxyloratadine (DCL), an active metabolite
of loratadine that in pre-clinical studies has shown the potential for greater
potency. Loratadine is the active agent in the five formulations of
Schering-Plough's CLARITIN(R) nonsedating antihistamine.
Under terms of the agreement, Sepracor has exclusively licensed its DCL
rights to Schering-Plough, which expects to develop and market the DCL product
worldwide. Schering-Plough will pay Sepracor an upfront license fee of $5
million and royalties on DCL sales beginning at first product launch. Royalties
paid to Sepracor will escalate over time and upon the achievement of sales
volume and other milestones.
"Schering-Plough is committed to expanding its portfolio of
pharmaceuticals and to exploring all opportunities to strengthen individual
product lines," said Thomas C. Lauda, executive vice president, global
marketing, Schering-Plough Pharmaceuticals. "We see development of the DCL
product as representing a potentially valuable addition to our CLARITIN
franchise."
- more -
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<PAGE> 54
"This agreement further validates Sepracor's ICE(TM) strategy as a
unique opportunity to extend the life cycle of major pharmaceutical franchises
through proprietary therapeutic advances," said Timothy J. Barberich, Sepracor's
president and chief executive officer. "We are pleased to be collaborating with
Schering-Plough on this exciting program, which we believe may provide a
platform for the evolution of the CLARITIN franchise."
Sepracor's patent portfolio for DCL includes a U.S. method-of-use
patent covering the use of DCL as a nonsedating antihistamine that expires in
2014 and U.S. patent filings covering pharmaceutical formulations and methods of
treatment. Schering-Plough holds composition-of-matter patents on DCL in the
United States, expiring in 2004, and in other countries. CLARITIN, the world's
No. 1 antihistamine, had sales of $1.2 billion in 1996; sales in the 1997 first
nine months totaled $1.3 billion.
Sepracor is a specialty pharmaceutical company dedicated to developing
and commercializing differentiated drugs for the treatment of respiratory,
urology and pain disorders. Referred to as Improved Chemical Entities, or
ICE(TM)s, these new single isomers or active metabolites may offer potential
safety and/or efficacy benefits over their parent compounds and in some cases
the opportunity for additional indications.
Schering-Plough Pharmaceuticals is the worldwide pharmaceutical
research and marketing units of Schering-Plough Corporation, a research-based
company engaged in the discovery, development, manufacturing and marketing of
pharmaceutical and health care products worldwide.
SEPRACOR FORWARD-LOOKING STATEMENT: This news release contains
forward-looking statements that involve risks and uncertainties, including
statements with respect to the safety, efficacy and potential benefits of
products under development. Among the factors tat could cause actual results to
differ materially from those indicated by such forward-looking statements are:
the results of the companies' clinical trials with respect to its products under
development; the scope of the companies' patent protection with respect to such
product candidates; the
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<PAGE> 55
availability of sufficient funds to continue research and development efforts;
and certain other factors that may affect future operating results and are
detailed in the companies' periodic reports filed with the Securities and
Exchange Commission.
SCHERING-PLOUGH FORWARD-LOOKING STATEMENT: The information in this
press release includes certain forward-looking information. Due to market
factors and the nature of the product development and regulatory approval
processes, the forward-looking statements contained in this press release are
subject to risks and uncertainties. For further details and a discussion of
these risks and uncertainties, see the company's Securities and Exchange
Commission filings, including Exhibit 99 of the company's 1996 Form 10-K.
SEPRACOR CONTACTS: David P. Southwell, Executive Vice President and Chief
financial Officer; Jean M. Devine, Director, Investor Relations; Jonae Barnes,
Manager, public Relations, all at (508) 357-7300. Sepracor press releases are
available through ann automated news fax line. To receive this or any recent
releases via fax, call (800) 211-9662.
###
III
<PAGE> 56
SCHEDULE 6.1(d)
1. REVOLVING CREDIT AND SECURITY AGREEMENT
between FLEET BANK and SEPRACOR INC.
i
<PAGE> 57
SCHEDULE 6.1(h)
Assignee:
Patent Family:
Publication No Date Application No Date
-------------- ---- -------------- ----
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<PAGE> 58
SCHEDULE 6.2(c)
1. EXCLUSIVE LICENSE AGREEMENT
by and between
the UNIVERSITY OF MASSACHUSETTS
and
SEPRACOR INC.
dated September 12, 1997
2. ASSIGNMENT
from
SEPRACOR INC.
to
the UNIVERSITY OF MASSACHUSETTS
dated September 12, 1997
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<PAGE> 59
SCHEDULE 6.2(d)
1. EXCLUSIVE LICENSE AGREEMENT
by and between
the UNIVERSITY OF MASSACHUSETTS
and
SEPRACOR INC.
dated September 12, 1997
2. ASSIGNMENT
from
SEPRACOR INC.
to
the UNIVERSITY OF MASSACHUSETTS
dated September 12, 1997
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<PAGE> 60
CONFIDENTIAL MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS
SCHEDULE 6.2(e)
Assignee: [**]
Patent Family:
Publication No Date Application No Date
-------------- ---- -------------- ----
[**]
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CONFIDENTIAL MATERIALS OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION. ASTERISKS DENOTE OMISSIONS
SCHEDULE 6.2(h)
Assignee: [**]
Patent Family:
Publication No Date Application No Date
-------------- ---- -------------- ----
[**]
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SCHEDULE 6.2(k)
1. EXCLUSIVE LICENSE AGREEMENT
by and between
the UNIVERSITY OF MASSACHUSETTS
and
SEPRACOR INC.
dated September 12, 1997
2. ASSIGNMENT
from
SEPRACOR INC.
to
the UNIVERSITY OF MASSACHUSETTS
dated September 12, 1997
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SCHEDULE 6.5
1. EXCLUSIVE LICENSE AGREEMENT
by and between
the UNIVERSITY OF MASSACHUSETTS
and
SEPRACOR INC.
dated September 12, 1997
2. ASSIGNMENT
from
SEPRACOR INC.
to
the UNIVERSITY OF MASSACHUSETTS
dated September 12, 1997
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SCHEDULE 9.2
ARBITRATION PROVISIONS
(a) Scope. Subject to and in accordance with the terms of this
Agreement and this Schedule 9.2, all differences, disputes, claims or
controversies arising out of or in any way connected or related to this
Agreement, whether arising before or after the expiration of the term of this
Agreement, and including, without limitation, its negotiation, execution,
delivery, enforceability, performance, breach, discharge, interpretation and
construction, existence, validity and any damages resulting therefrom or the
rights, privileges, duties and obligations of the parties under or in relation
to this Agreement (including any dispute as to whether an issue is arbitrable)
shall be referred to binding arbitration in accordance with the rules of the
American Arbitration Association, as in effect at the time of the arbitration.
(b) Parties to Arbitration. For the purposes of each arbitration under
this Agreement, Schering shall constitute one party to the arbitration and
Sepracor shall constitute the other party to the arbitration.
(c) Notice of Arbitration. A party requesting arbitration hereunder
shall give a notice of arbitration to the other party containing a concise
description of the matter submitted for arbitration, including references to the
relevant provisions of the Agreement and a proposed solution (a "Notice of
Arbitration"). Notice of Arbitration shall be delivered to the other party in
accordance with Section 9.7 of the Agreement.
(d) Response. The non-requesting party must respond in writing within
forty-five (45) days of receiving a Notice of Arbitration with an explanation,
including references to the relevant provisions of the Agreement and a response
to the proposed solution and suggested time frame for action.
The non-requesting party may add additional issues to be resolved.
(e) Meeting. Within fifteen (15) days of receipt of the response from
the non-requesting party pursuant to Paragraph (d), the parties shall meet and
discuss in good faith options for resolving the dispute. The requesting party
must initiate the scheduling of this resolution meeting. Each party shall make
available appropriate personnel to meet and confer with the other party during
such fifteen-(15) day period.
(f) Selection of Arbitrator. Any and all disputes that cannot be
resolved pursuant to Paragraphs (c), (d) and (e) shall be submitted to an
arbitrator (the "Arbitrator") to be selected by mutual agreement of the parties.
The Arbitrator shall be a retired judge of a state or federal court, to be
chosen from a list of such retired judges to be prepared jointly by the parties,
with each party entitled to submit the names of three such retired judges for
inclusion in the list. No Arbitrator appointed
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or selected hereunder shall be an employee, director or shareholder of, or
otherwise have any current or previous relationship with, any party or its
respective Affiliates. If the parties fail to agree on the selection of the
Arbitrator, the Arbitrator shall be designated by a judge of the Federal
District Court in New Jersey upon application by either party.
(g) Powers of Arbitrator. The Arbitrator may determine all questions of
law and jurisdiction (including questions as to whether a dispute is arbitrable)
and all matters of procedure relating to the arbitration. The Arbitrator shall
have the right to grant legal and equitable relief (including injunctive relief)
and to award costs (including reasonable legal fees and costs of arbitration)
and interest. Nothing contained herein shall be construed to permit the
Arbitrator to award punitive, exemplary or any similar damages.
(h) Arbitration Procedure. In the event that Schering is the party
requesting arbitration, the arbitration shall take place in Massachusetts unless
otherwise agreed by the parties, at such place and time as the Arbitrator may
fix for the purpose of hearing the evidence and representations that the parties
may present. In the event that Sepracor is the party requesting arbitration, the
arbitration shall take place in the State of New Jersey unless otherwise agreed
by the parties at such place and time as the Arbitrator may fix for the purpose
of hearing the evidence and representations that the parties may present. The
arbitration proceedings shall be conducted in the English language. The law
applicable to the arbitration shall be the law of the State of Delaware. No
later than twenty (20) business days after hearing the representations and
evidence of the parties, the Arbitrator shall make its determination in writing
and deliver one copy to each of the parties.
(i) Discovery and Hearing. During the meeting referred to in Paragraph
(e), the parties shall negotiate in good faith the scope and schedule of
discovery, relating to depositions, document production and other discovery
devices, taking into account the nature of the dispute submitted for resolution.
If the parties are unable to reach agreement as to the scope and schedule of
discovery, the Arbitrator may order such discovery as it deems necessary. To the
extent practicable taking into account the nature of the dispute submitted for
resolution, such discovery shall be completed within sixty (60) days from the
date of the selection of the Arbitrator. At the hearing, which shall commence
within twenty (20) days after completion of discovery unless the Arbitrator
otherwise orders, the parties may present testimony (either live witness or
deposition), subject to cross-examination, and documentary evidence. To the
extent practicable taking into account the nature of the dispute submitted for
resolution and the availability of the Arbitrator, the hearing shall be
conducted over a period not to exceed thirty (30) consecutive business days,
with each party entitled to approximately half of the allotted time unless
otherwise ordered by the Arbitrator. Each party shall have sole discretion with
regard to the
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admissibility of any evidence and all other matters relating to the conduct of
the hearing.
(j) Witness Lists. At least twenty (20) business days prior to the date
set for the hearing, each party shall submit to each other party and the
Arbitrator a list of all documents on which such party intends to rely in any
oral or written presentation to the Arbitrator and a list of all witnesses, if
any, such party intends to call at such hearing and a brief summary of each
witness' testimony. At least five (5) business days prior to the hearing, each
party must submit to the Arbitrator and serve on each other party a proposed
findings of fact and conclusions of law on each issue to be resolved. Following
the close of hearings, the parties shall each submit such post-hearing briefs to
the Arbitrator addressing the evidence and issues to be resolved as may be
required or permitted by the Arbitrator.
(k) Confidentiality. The arbitration proceedings shall be confidential
and, except as required by law, no party shall make, or instruct the Arbitrator
to make, any public announcement with respect to the proceedings or decision of
the Arbitrator without the prior written consent of the other party. The
existence of any dispute submitted to arbitration and the award of the
Arbitrator shall be kept in confidence by the parties and the Arbitrator, except
as required in connection with the enforcement of such award or as otherwise
required by law.
(l) Awards and Appeal. Subject to the provisions of this Schedule 9.2,
the decision of the Arbitrator shall be final and binding upon the parties in
respect of all matters relating to the arbitration, the conduct of the parties
during the proceedings, and the final determination of the issues in the
arbitration. There shall be no appeal from the final determination of the
Arbitrator to any court, except in the case of fraud or bad faith on the part of
the Arbitrator or any party to the arbitration proceeding in connection with the
conduct of such proceedings. Judgment upon any award rendered by the Arbitrator
may be entered in any court having jurisdiction thereof.
(m) Costs of Arbitration. The costs of any arbitration hereunder shall
be borne by the parties in the manner specified by the Arbitrator in its
determination.
(n) Performance of the Agreement. During the pendency of the
arbitration proceedings, the matter which is the subject of such arbitration
proceedings shall be performed by the parties (A) in the manner determined by
Schering in its sole discretion if it is a matter arising out of Schering's
development of Licensed Product, and (B) in the manner determined by Sepracor in
its sole discretion if it is a matter involving payment of License Fees under
Section 3.1 and royalty payments under Sections 3.2 or 3.3. Notwithstanding the
foregoing, in the event that Schering makes payments pursuant to Sections 3.1,
3.2 or 3.3 and it is subsequently determined by the Arbitrator that Schering was
not required to make such payment(s) then Sepracor shall promptly repay to
Schering all such payments. Further notwithstanding the
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foregoing, the time periods set forth in Section 2.5(b) of the Agreement shall
be suspended during the pendency of the arbitration proceedings. For purposes of
this Paragraph (n) the term "pendency of the arbitration proceeding" shall mean
the period starting on the date on which arbitration proceedings are commenced
by a party in accordance with Paragraph (c) of this Schedule 9.2 and ending on
the date on which the Arbitrator delivers its final determination in writing to
the parties.
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