EXHIBIT 2.1
COLLABORATION AGREEMENT
This Collaboration Agreement (the "Agreement") is made as of
June 2, 1999 by and between Triangle Pharmaceuticals, Inc., a Delaware
corporation ("Triangle"), with its principal offices at 4 University Place, 4611
University Drive, Durham, North Carolina 27707, and Abbott Laboratories, an
Illinois corporation ("Abbott"), with its principal offices at 100 Abbott Park
Road, Abbott Park, Illinois 60064.
WITNESSETH
WHEREAS, Triangle is developing and seeking regulatory
approval for various proprietary drugs for the prevention and treatment of HIV,
HBV and any other indications;
WHEREAS, Triangle desires to collaborate with another
pharmaceutical company with respect to the clinical development, registration,
distribution and marketing of such products throughout the world;
WHEREAS, Abbott desires to collaborate with Triangle with
respect to such products;
WHEREAS, of even date herewith, Abbott and Triangle shall
enter into three other agreements in support of their collaboration: (i) a
Co-Promotion Agreement pursuant to which Abbott will grant Triangle the right to
co-promote certain Abbott HIV drugs in the United States (the "Co-Promotion
Agreement"); (ii) a Stock Purchase Agreement pursuant to which Abbott shall
purchase an equity interest in Triangle's common stock (the "Stock Purchase
Agreement"); and (iii) a Stockholder Rights Agreement setting forth Abbott's
rights as a Triangle shareholder (the "Stockholder Rights Agreement"); and
WHEREAS, Abbott and Triangle shall in good faith negotiate a
Manufacturing and Supply Agreement (the "Supply Agreement") regarding the supply
of a portion of the bulk drug and/or finished products for the Products.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and undertakings contained herein, the parties hereto hereby
agree as follows:
ARTICLE 1
DEFINITIONS
In addition to the other terms defined elsewhere herein, the
following terms shall have the following meanings when used in this Agreement
(and any term defined in the singular shall have the same meaning when used in
the plural, and vice versa, unless stated otherwise):
1.1 "Abbott Cost of Goods" shall mean (i) with respect to
the Net Units of Product Sold in the U.S. Territory, the aggregate Transfer
Price paid by Abbott to Triangle for the Net Units of Product Sold in the
U.S. Territory during the given calendar quarter or year; (ii) with respect
to the Net Units of Product Sold in the International Territory, (A) to the
extent that the Compound or Product is sourced from the same Abbott
manufacturing facilities used under the Supply Agreement, the purchase price
established by the Supply Agreement for the sale of such goods to Triangle in
the U.S. Territory during the given calendar quarter or year, (B) to the
extent that the Compound or Product is sourced from a different Abbott
manufacturing facility than those used under the Supply Agreement, the ***
and *** of manufacturing and packaging such goods during the given calendar
quarter or year and (C) to the extent that the Compound or Product is sourced
from a Third Party manufacturer, the *** for the manufacture, supply and
packaging of such goods during the given calendar quarter or year; and (iii)
with respect to the Territories, *** of (A) damaged, returned and/or
distressed inventory during the given calendar quarter or year, (B) any ***
on the Compounds and Products during the given calendar quarter or year, and
(C) *** and *** if not included in the finished cost of the Products during
the given calendar quarter or year. Abbott's Cost of Goods shall be
calculated separately for the U.S. Territory and the International Territory.
1.2 "Abbott Distribution Expenses" shall mean (i) for the
U.S. Territory, *** of Abbott Net Sales in the U.S. Territory during the
given calendar quarter or year and (ii) for the International Territory, the
lesser of (A) *** of Abbott Net Sales in the International Territory during
the given calendar quarter or year and (B) a percentage calculated by
dividing the aggregate distribution expenses for all *** products during the
given calendar quarter or year by the *** of such products by the *** during
the given calendar quarter or year. The Abbott Distribution Expenses shall be
calculated separately for the U.S. Territory and the International Territory.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-2-
1.3 "Abbott Distribution Margin" shall mean the Abbott Net
Sales minus (i) the Abbott Cost of Goods and (ii) the Abbott Distribution
Expenses for the given calendar quarter or year. The Abbott Distribution
Margin shall be calculated separately for the U.S. Territory and the
International Territory.
1.4 "Abbott International Profit Amount" shall have the
meaning set forth in Section 6.5(c).
1.5 "Abbott Net Sales" shall mean the total gross sales of the
Products (as set forth on the invoice for such Products) by Abbott and permitted
sublicensees to Third Parties in the given calendar quarter or year, plus, if
applicable, the value of all properties and services received in consideration
of a Sale of Products by Abbott and permitted sublicensees to Third Parties
during such calendar quarter or year, less the following deductions directly
paid or incurred by Abbott or its permitted sublicensees with respect to the
Sale of the Products in such calendar quarter or year:
(i) with respect to the U.S. Territory, ***;
(ii) with respect to the International Territory,
***; and
(iii) with respect to the Territories (A)*** and (B) ***.
Abbott's Net Sales shall be calculated separately for the U.S. Territory and the
International Territory.
1.6 "Abbott Operating Margin" shall mean the Abbott
Distribution Margin minus the Abbott SG&A for the given calendar quarter or
year. The Abbott Operating Margin shall be calculated separately for the U.S.
Territory and the International Territory.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-3-
1.7 "Abbott Patents" shall mean (a) all of Abbott's rights
in any patents conceived, developed or owned by or otherwise licensed to or
controlled by Abbott ***, which include claims covering or potentially
covering the manufacture, use or sale of the Compounds or Products and (b)
all substitutions, extensions, divisionals, continuations,
continuations-in-part, reissues, reexaminations, renewals, supplementary
protection certificates or foreign counterparts of such patents and patent
applications identified in sub-part (a).
1.8 "Abbott SG&A" shall mean (i) the costs and expenses
permitted under Sections 4.2 and 4.3 which are incurred by Abbott and/or its
permitted sublicensees in the *** of the Products and, to the extent
permitted under Section 4.4, the Marketing Studies for the Products during
the given calendar quarter or year, in the categories set forth in Exhibit
1.8, (ii) reasonable *** costs and expenses incurred by Abbott in connection
with claims instituted by Abbott pursuant to Section 9.5 or 9.6 or, to the
extent reimbursed by Abbott pursuant to Section 9.8, by Triangle, (iii) the
reasonable out-of-pocket costs and expenses of *** in the International
Territory, (iv) the Triangle Third Party Royalties with respect to the
International Territory for the given calendar quarter or year and (v) such
other costs and expenses specifically included in Abbott SG&A pursuant to the
terms of this Agreement. The Abbott SG&A shall be calculated separately for
the U.S. Territory and the International Territory.
1.9 "Abbott Technology" shall mean all technical
information, inventions, discoveries, trade secrets, information, experience,
data, formulas, procedures, processes, know-how and results which are
necessary for the development, registration, manufacture, use or sale of the
Compounds or Products and which are owned by or otherwise licensed to or
controlled by Abbott *** during the Term.
1.10 "Abbott U.S. Profit Amount" shall have the meaning set
forth in Section 6.4(c).
1.11 "Affiliate" shall mean any corporation or
non-corporate business entity which controls, is controlled by, or is under
common control with a Party. A corporation or non-corporate business entity
shall be regarded as in control of another corporation or non-corporate
business entity if it owns, or directly or indirectly controls, at least
forty percent (40%) of the voting stock of the other corporation, or (a) in
the absence of the ownership of at least forty percent (40%) of the voting
stock of a corporation or (b) in the case of a non-corporate business entity,
if it possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation or non-corporate
business entity, as applicable. For purposes of this Agreement, TAP Holdings
Inc. and its subsidiaries, which
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-4-
comprise Abbott's joint venture with Takeda Chemical Industries Ltd., are not
Affiliates of Abbott; provided that neither TAP Holdings Inc. nor any of its
subsidiaries may sell, Promote or Co-Promote the Compounds or Products.
1.12 "Annual Reporting Period" shall mean a calendar year
with respect to the U.S. Territory and a fiscal year beginning December 1 and
ending November 30 for the International Territory.
1.13 "Co-Promote" or "Co-Promotion" shall mean the joint
activities of the Parties to Promote the Products under the Triangle
Trademarks in the U.S. Territory.
1.14 "Compounds" shall mean MKC-442, FTC, L-FMAU and DAPD.
1.15 "Confidential Information" shall have the meaning set
forth in Section 13.1.
1.16 "DAPD" shall mean B-D-Dioxolanyl purines of the
formula set forth on Exhibit 1.16 wherein R is OH, CI, NH(2), or H, and X is
H, alkyl, acyl, monophosphate, diphosphate or triphosphate, including all 5'
and N(6) acylated and alkylated derivatives, salts, esters, racemic mixtures
and purified enantiomers thereof. DAPD is exclusively licensed to Triangle by
Emory University and the University of Georgia Research Foundation, Inc.,
pursuant to a License Agreement dated March 31, 1996 (the "DAPD License
Agreement") for use as a pharmaceutical product in the prevention and
treatment of HIV and HBV throughout the entire world.
1.17 "Detail" shall mean a face-to-face sales presentation
by a Sales Representative during which one or more of the Products is
marketed and promoted to a licensed medical physician, but not a resident or
intern or other health care professional, unless such individual has the
authority to write prescriptions for the Products pursuant to state statutes.
Attendance at meetings with managed care entities, conventions and
participation in continuing education programs shall not constitute a Detail.
1.18 "Detailing" shall mean the act of marketing and
promoting the Products through Details.
1.19 "Detailing Commitment" shall have the meaning set
forth in Section 4.2(c).
1.20 "Discretionary Funds" shall mean the miscellaneous
costs and expenses which represent that portion of the U.S. Co-Promotion
Budget that are used by the Sales Representatives in support of their
Detailing and marketing activity for the Products.
1.21 "Dollars" and "$" means United States dollars.
1.22 "Effective Date" shall mean the date upon which this
Agreement becomes effective upon the fulfillment of the conditions set forth
in Section 16.8.
-5-
1.23 "FDA" shall mean the U.S. Food and Drug Administration
or any successor entity thereto.
1.24 "FTC" shall mean: (i) the (-) enantiomer with the
chemical name: 2R-cis)-4-amino-5-fluoro-1-[2-(hydroxymethyl)-1.3-oxathiolan
- -5-yl]-2(1H)-pyrimidinone; (ii) any mixture of the (-) enantiomer described in
Subsection 1.24(i) and the (+) enantiomer with the chemical name:
(2S-cis-)-4-amino-5-fluoro-1-[2-(hydroxymethyl)-1.3-oxathiolan-5-yl]
- -2(1H)-pyrimidinone, in which the ratio of such *** is equal to or greater
than ***; or (iii) any salts, esters, and N alkylated derivatives of any of
the foregoing. FTC is exclusively licensed to Triangle by Emory University
pursuant to a License Agreement dated April 17, 1996, as amended as of May 6,
1999 (the "FTC License Agreement") for use as a pharmaceutical product in the
prevention and treatment of HIV and HBV throughout the entire world.
1.25 "Field of Use" shall mean the following: (i) for MKC-442,
all pharmaceutical uses; (ii) for FTC and DAPD, the prevention and treatment of
HIV and HBV; (iii) for L-FMAU, all human antiviral applications and uses; and
(iv) any other uses for the Compounds to which Triangle obtains rights from the
Triangle Licensors.
1.26 "Final Payment" shall have the meaning set forth in
Section 6.6.
1.27 "Fixed-Dose Combination Collaboration" shall mean an
arrangement with a Third Party relating to the manufacture, development,
inspection, use or sale of a Fixed-Dose Combination Product.
1.28 "Fixed-Dose Combination Product" shall mean a product
which contains one or more Compounds and one or more additional active
pharmaceutical compounds which are not Compound(s).
1.29 "HBV" shall mean the hepatitis B virus.
1.30 "HIV" shall mean the human immunodeficiency virus.
1.31 "IND" shall mean, with respect to a given Compound and/or
Product, the Investigational New Drug Application filed by or on behalf of
Triangle with the FDA and all subsequent submissions thereto.
1.32 "International Adjustment Amount" shall have the meaning
set forth in Section 6.5(d).
1.33 "International Marketing Board" shall have the meaning
set forth in Section 4.3 and applies to the Promotion of the Products in the
International Territory.
1.34 "International Product Profit" shall mean the
following: (i) with respect to the first calendar quarter of each year, the
Abbott Operating Margin in the International Territory; and (ii) with
-6-
respect to the second, third and fourth calendar quarters of each year, the
total of the Abbott Operating Margins in the International Territory for such
calendar quarter and all previous calendar quarters during such year.
1.35 "International Promotional Materials" shall mean all
electronic and computer managed information (including the Internet), all
written, printed or graphic materials, brochures, sales aids and other
promotional items relating to a Product approved for use in the International
Territory.
1.36 "International Promotion Budget" shall have the meaning
set forth in Section 4.3.
1.37 "International Promotion Plan" shall have the meaning set
forth in Section 4.3.
1.38 "International Territory" shall mean all areas of the
world outside the U.S. Territory, except that the International Territory shall
not include Japan for MKC-442 and shall not include Korea for L-FMAU.
1.39 "L-FMAU" shall mean the compound known as L-FMAU, with
the chemical name: *** thereof. L-FMAU is exclusively licensed to Triangle by
Bukwang Pharm. Ind. Co., Ltd. pursuant to a License Agreement dated February
27, 1998, as amended on April 1, 1999 (the "L-FMAU License Agreement"), for
use as a pharmaceutical product in all human antiviral applications and uses
for the entire world, excluding Korea.
1.40 "Launch" shall mean the date upon which the first
commercial sale of a Product (as evidenced by the invoice date for such sale)
occurs in each of the Territories.
1.41 "Legal Requirements" shall mean any and all federal,
state, local, national, supranational laws, regulations, ordinances, orders
and requirements applicable to the Parties and their Affiliates in
performance of this Agreement, including without limitation, the Securities
Exchange Act of 1934, as amended, and the Foreign Corrupt Practices Act, as
well as such laws, regulations, ordinances, orders and requirements
applicable to the sale, marketing, promotion, Detailing, and distribution of
the Products, including without limitation, the following within the U.S.
Territory: the Prescription Drug Marketing Act of 1987, the Federal Food,
Drug and Cosmetic Act, and all regulations and other requirements of the FDA.
1.42 "Losses" shall mean any liabilities, costs, damages,
judgments, settlements and other reasonable out-of-pocket expenses (including
legal expenses).
1.43 "MKC-442" shall mean the compound known as MKC-442,
with the chemical name 6-Benzyl-1-(ethoxy methyl)-5-isopropyl uracil,
including any salts as esters thereof. MKC-442 is exclusively licensed to
Triangle by Mitsubishi Chemical Corporation pursuant to a License Agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-7-
dated June 17, 1997 (the "MKC-442 License Agreement") for use as a
pharmaceutical product in the entire world, excluding Japan.
1.44 "Major Country" shall mean the Major European Countries
*** for HIV and shall mean the Major European Countries *** for HBV.
1.45 "Major European Countries" shall mean *** .
1.46 "Marketing Studies" are those clinical trials and
studies which are performed essentially for marketing purposes and expressly
excludes all clinical studies and trials which are required to pursue,
obtain, and maintain Product Approval in the Territories.
1.47 "NDA" shall mean, in respect of each commercially
launched Product, an approved New Drug Application filed by Triangle with the
FDA and all subsequent submissions thereto.
1.48 "Net Units of Product Sold" shall mean the total
number of units of Product which are Sold by Abbott and permitted
sublicensees to Third Parties during the given calendar quarter or year less
*** or any *** for which *** has been *** . For any given period, the Net
Units of Product Sold shall equal that number of units of Product included in
the calculation of Abbott Net Sales for the same period. The Net Units of
Product Sold shall be calculated separately for the U.S. Territory and the
International Territory.
1.49 "Neutral" shall have the meaning set forth in Exhibit
20.3.
1.50 "Pan-European Submission" shall have the meaning set
forth in Section 3.6(b).
1.51 "Party" shall mean Abbott Laboratories or Triangle
Pharmaceuticals, Inc., and "Parties" shall mean Abbott Laboratories and
Triangle Pharmaceuticals, Inc., except as provided in Section 20.2.
1.52 "Person" shall mean a natural person, a corporation, a
partnership, a trust, a joint venture, any governmental authority, and any
other entity or organization.
1.53 " *** " shall mean the completion of *** of the *** of
those *** which Triangle considers reasonably necessary for the purpose of
inclusion in *** in the *** . As used in the preceding sentence, " *** "
shall mean those *** sponsored by Triangle, the primary objective of which is
to ascertain additional *** regarding the *** of a *** and *** regarding ***.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-8-
1.54 "Primary Details" shall mean a Detail in which the
Product being Detailed is the product most emphasized, and the first product
presented, during such Detail.
1.55 "Primary Enforcement Party" shall mean ***.
1.56 "Product Approval" shall mean (i) receipt of approval
from the FDA to market a Product in the United States and (ii) with respect to
the International Territory, the governmental approval required to market a
Product in a given country (including any pricing and reimbursement
authorization required in such country).
1.57 "Product Development Committee" shall have the meaning
set forth in Section 4.4.
1.58 "Product Patents" shall mean (a) the patents and patent
applications licensed to Triangle under the Triangle License Agreements; (b) any
patents and patent applications owned by or otherwise licensed to or controlled
by (to the extent sublicensing is permissible) Triangle during the Term which
contain claims covering or potentially covering the development, registration,
manufacture, use and sale of the Compounds or the Products (including any
intermediates or formulations thereof) within the Field of Use; and (c) all
substitutions, extensions, divisionals, continuations, continuations-in-part,
reissues, reexaminations, renewals, supplementary protection certificates or
foreign counterparts of such patents and patent applications identified in
sub-parts (a) and (b).
1.59 "Product Technology" shall mean the technical
information, inventions, discoveries, trade secrets, information, experience,
data, formulas, procedures, processes, know-how and results which (a) are
licensed to Triangle under the Triangle License Agreements; or (b) are owned
by or otherwise licensed to or controlled by Triangle (to the extent
sublicensing is permissible) during the Term which are necessary for the
development, registration, manufacture, use or sale of the Compounds or
Products within the Field of Use.
1.60 "Products" shall mean any pharmaceutical products
containing one or more Compounds as active ingredients, alone or in combination
with other active ingredients, within their respective Field of Use.
1.61 "Promote" or "Promotion" shall mean the act of
Detailing or otherwise advertising, marketing and promoting sales of the
Products and conducting any necessary Marketing Studies.
1.62 "Quarterly Reporting Period" shall mean a calendar
quarter with respect to the U.S. Territory and a fiscal quarter ending on the
final day of February, May, August, and November (as the case may be) for the
International Territory.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-9-
1.63 "Reasonable Best Efforts" shall mean a reasonable
level of effort which is consistent with those used by other pharmaceutical
companies with respect to other pharmaceutical products of comparable
commercial value. Each Party shall be entitled to exercise prudent and
justified business judgment in fulfilling its obligation to exercise its
Reasonable Best Efforts under this Agreement.
1.64 "Reconciliation Amount" shall have the meaning set
forth in Section 6.7.
1.65 "Reimbursement Account" shall have the meaning set
forth in Section 6.6(b).
1.66 "Sales Forecast" shall have the meaning set forth in
Section 8.2.
1.67 "Sales Representative" shall mean, with respect to
each Party, an individual: (i) who is regularly employed by such Party on a
full-time or part-time basis as a member of one of its sales forces or as a
medical liaison representative or, with the written consent of the other
Party, is retained on a contractual basis to act as a part of its sales
force; and (ii) who is appropriately qualified and experienced in
pharmaceutical product promotion to make effective sales presentations for
the Products.
1.68 "Sample Pack" shall mean a packaged and labeled
container of Product for distribution to Third Parties as samples.
1.69 "Secondary Detail" shall mean a Detail in which the
Product being Detailed is the second most emphasized product, and the second
product presented, during such Detail.
1.70 "Secondary Enforcement Party" shall mean Abbott in the
U.S. Territory and Triangle in the International Territory.
1.71 "Sold" or "Sale" shall mean the sale, transfer,
exchange or other disposition of Products whether by gift, or otherwise,
subsequent to Regulatory Approval in a given country (if such Regulatory
Approval is required) by Abbott or its permitted sublicensees. Sales of
Product shall be deemed consummated upon the first to occur of: (a) receipt
of payment from purchaser; (b) delivery of Product to the purchaser or a
common carrier; (c) release of Product from consignment; or (d) if otherwise
transferred, exchanged or disposed of by gift or otherwise, when such
transfer, exchange, gift or other disposition occurs. Notwithstanding the
foregoing definition of Sale, to the extent that, with the prior consent of
Triangle, Abbott distributes any Product in the U.S. Territory under *** (it
being understood that no such distribution will be made without Triangle's
consent), and such distribution is at a sales price which exceeds its fully
absorbed costs therefor, such amount shall be deemed part of Abbott Net
Sales; provided, however, that such distribution shall not be deemed a
Product Approval of such Product. The distribution of Sample Packs shall not
be deemed a Sale.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-10-
1.72 "Supplemental Clinical Studies" shall have the meaning
set forth in Section 3.1.
1.73 "Supply Agreement" shall have the meaning set forth in
the introductory recitals to this Agreement.
1.74 "Term" shall have the meaning set forth in Section 16.1.
1.75 "Territories" shall mean the U.S. Territory and the
International Territory.
1.76 "Third Party" shall mean any Person that is not a Party
or an Affiliate of a Party.
1.77 "Transfer Price" shall mean the price for the sale of
Product by Triangle to Abbott for the U.S. Territory as determined pursuant to
Section 8.4.
1.78 "Transfer WAC" shall mean, with respect to each Product,
the transfer price set by Triangle for such Product in the U.S. Territory
pursuant to Section 8.4.
1.79 "Triangle-Abbott Alliance Agreements" shall mean this
Agreement and the following agreements entered into between the Parties of
even date herewith: (i) the Co-Promotion Agreement; (ii) the Stock Purchase
Agreement; and (iii) the Stockholder Rights Agreement. Upon negotiation, due
execution and delivery, the Supply Agreement shall also be considered one of
the Triangle-Abbott Alliance Agreements.
1.80 "Triangle's Cash" shall have the meaning set forth in
Section 6.6(b).
1.81 "Triangle Cost of Goods" shall mean the *** of
manufacturing and packaging the Net Units of Product Sold during the given
calendar quarter or year, including the *** , if any, incurred by Triangle
during the given calendar quarter or year for (i) the *** of the Compounds
and Products; (ii) any *** on the Compounds and Products, and (iii) *** and
*** if not included in the finished cost of the Products. The Triangle Cost
of Goods shall be calculated separately for the U.S. Territory and the
International Territory. All Triangle Cost of Goods with respect to the
International Territory shall be includable in Abbott SG&A and be subject to
reimbursement as provided in Section 7.9.
1.82 "Triangle Distribution Margin" shall mean, with
respect to the U.S. Territory, the Triangle Product Sales minus the Triangle
Cost of Goods and the Triangle Third Party Royalties with respect to the
U.S. Territory for the given calendar quarter or year. The Triangle Distribution
Margin shall be calculated only for the U.S. Territory.
1.83 "Triangle International Profit Amount" shall have the
meaning set forth in Section 6.5(c).
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-11-
1.84 "Triangle License Agreements" shall mean the MKC-442
License Agreement, the FTC License Agreement, the DAPD License Agreement and the
L-FMAU License Agreement.
1.85 "Triangle Licensors" shall mean Mitsubishi Chemical
Corporation with respect to MKC-442, Emory University with respect to FTC, Emory
University and the University of Georgia Research Foundation, Inc. with respect
to DAPD, and Bukwang Pharm. Ind. Co., Ltd. with respect to L-FMAU.
1.86 "Triangle Operating Margin" shall mean, with respect
to the U.S. Territory, the Triangle Distribution Margin minus the Triangle
SG&A for the given calendar quarter or year. The Triangle Operating Margin
shall be calculated only for the U.S. Territory.
1.87 "Triangle Product Sales" shall mean, with respect to the
U.S. Territory, the total aggregate Transfer Price received by Triangle from
Abbott for the Net Units of Products Sold in the U.S. Territory during the given
calendar quarter or year. The Triangle Product Sales shall be calculated only
for the U.S. Territory.
1.88 "Triangle SG&A" shall mean, with respect to the U.S.
Territory during the given calendar quarter or year, (i) the costs and
expenses permitted under Section 4.2 which are incurred by Triangle in the
*** of the Products in the U.S. Territory and, to the extent permitted under
Section 4.4, the Marketing Studies for the Products during the given calendar
quarter or year, in the categories set forth in Exhibit 1.8, (ii) reasonable
*** costs and expenses incurred by Triangle in connection with claims
instituted by Triangle pursuant to Section 9.5 or 9.6 in the U.S. Territory,
(iii) the reasonable *** costs and expenses of *** in the U.S. Territory, and
(iv) such other costs and expenses specifically included in Triangle SG&A
pursuant to the terms of this Agreement. The Triangle SG&A shall be
calculated only for the U.S. Territory.
1.89 "Triangle Third Party Royalties" shall mean the
following royalties paid or escrowed by Triangle with respect to the Products
during a given calendar quarter or year: (i) the Third Party royalties listed
in Exhibit 1.89 which are due and payable under the Triangle License
Agreements and (ii) any *** other payments or consideration to the extent
permitted ***. The Triangle Third Party Royalties shall be calculated separately
for the U.S. Territory and the International Territory and shall be paid
directly by Triangle.
1.90 "Triangle Trademarks" shall have the meaning set forth in
Section 14.1.
1.91 "Triangle U.S. Profit Amount" shall have the meaning set
forth in Section 6.4(c).
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-12-
1.92 "U.S. Adjustment Amount" shall have the meaning set forth
in Section 6.4(d).
1.93 "U.S. Co-Promotion Budget" shall have the meaning set
forth in Section 4.2.
1.94 "U.S. Co-Promotion Plan" shall have the meaning set forth
in Section 4.2.
1.95 "U.S. Marketing Board" shall have the meaning set forth
in Section 4.2 and applies to the Co-Promotion of the Products in the U.S.
Territory.
1.96 "U.S. Product Profit" shall mean the following: (i) with
respect to the first calendar quarter of each year, the total of the Abbott
Operating Margin and the Triangle Operating Margin for such calendar quarter
and (ii) for the second, third and fourth calendar quarters of each year, the
total, for the subject calendar quarter and each previous calendar quarter
during such calendar year, of the Abbott Operating Margin and the Triangle
Operating Margin.
1.97 "U.S. Promotional Materials" shall mean all electronic
and computer managed information (including the Internet), all written, printed
or graphic materials, brochures, sales aids and other promotional items relating
to a Product approved for use in the U.S. Territory.
1.98 "U.S. Territory" shall mean the United States of America,
*** .
1.99 "Valid Claim" shall mean (a) an issued claim of any
unexpired patent including among the Product Patents, or (b) a pending claim of
any pending patent application included among the Product Patents, which has not
been held unenforceable, unpatentable or invalid by a decision of a court or
governmental body of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal, which has not been rendered unenforceable through
disclaimer or otherwise or which has not been lost through an interference
proceeding.
1.100 "WAC" shall have the meaning set forth in Section 8.4.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-13-
ARTICLE 2
DISTRIBUTION AND PROMOTION
2.1 EXCLUSIVE DISTRIBUTOR. Except as and to the extent
otherwise specified in this Agreement, Triangle hereby appoints Abbott, and
Abbott hereby accepts appointment, as the exclusive distributor of the
Products in the U.S. Territory and the International Territory, with the sole
and exclusive right to commercially sell and distribute the Products to Third
Parties within the U.S. Territory and the International Territory. Abbott
shall not appoint any sub-distributors of the Products in the U.S. Territory.
Subject to Section 2.4, Abbott may appoint sub-distributors in the
International Territory.
2.2 PROMOTION. Except as and to the extent otherwise specified
in this Agreement, Triangle hereby grants to Abbott, and Abbott hereby accepts,
(i) the exclusive right to Co-Promote the Products in the U.S. Territory jointly
with Triangle and (ii) the exclusive right to Promote the Products in the
International Territory. Neither Abbott nor Triangle shall appoint any Third
Party to act on its behalf with respect to the Detailing of the Products in the
U.S. Territory. Subject to Section 2.4, Abbott may appoint Third Parties to
Promote in the International Territory.
2.3 LICENSE.
(a) Subject to the terms of this Agreement, Triangle
hereby grants Abbott a license (including a sub-license under
the Triangle License Agreements) to utilize the Product
Patents and the Product Technology to offer to sell and sell
the Products within the Field of Use in the U.S. Territory and
to otherwise perform any duties and obligations that Abbott is
required or permitted to perform under this Agreement in the
U.S. Territory. Such license shall be co-exclusive with
Triangle except as to (i) rights retained by the Triangle
Licensors as specified in the Triangle License Agreements and by
Glaxo Wellcome pursuant to the GW License Agreement (as defined
in the first amendment to the FTC License Agreement),
(iii) rights contemplated in Sections 2.6 and 3.6, and (iv) any
rights of the U.S. Government described in the Triangle License
Agreements.
(b) Subject to the terms of this Agreement, Triangle
hereby grants Abbott a license (including a sub-license under
the Triangle License Agreements) to utilize the Product
Patents and the Product Technology to import, use, offer to
sell, sell and, subject to the negotiation and execution of
the Supply Agreement, to make and have made, the Compounds and
Products within the Field of Use in the International
Territory and to otherwise perform any duties and obligations
that Abbott is required or permitted to perform under this
Agreement in the International
-14-
Territory. Such license shall be exclusive except as to (i)
Triangle and its Third Party manufacturers so as to perform
any obligations or activities that Triangle is required or
permitted to perform under this Agreement, (ii) rights retained
by the Triangle Licensors as specified in the Triangle License
Agreements and by Glaxo Wellcome pursuant to the GW License
Agreement (as defined in the first amendment to the FTC License
Agreement), (iii) rights contemplated in Sections 2.6 and 3.6,
and (iv) any rights of the U.S. Government described in the
Triangle License Agreements.
(c) Abbott hereby grants Triangle *** a nonexclusive,
royalty free (other than *** ) right and license to utilize the
Abbott Technology and Abbott Patents to make, have made, import,
use, offer to sell and sell the Compounds and Products within
the Field of Use. In the case of the ***, such license shall
apply only to (i) countries outside of the Territories and (ii)
any country in which the applicable Triangle License Agreement
is terminated.
2.4 USE OF THIRD PARTIES. Except as provided in this
Sections 2.4 and 20.2, Abbott shall not have the right to grant sublicenses
without the prior express consent of Triangle, not to be unreasonably
withheld, and, to the extent required, the applicable Triangle Licensor, in
which event Triangle shall reasonably cooperate with Abbott in its efforts to
obtain the consent of the applicable Triangle Licensor. Notwithstanding the
prior sentence, Abbott shall have the right, without obtaining the consent of
Triangle, to enter into agreements concerning the distribution and/or
Promotion of the Products to the extent that sales or other activities by
such a Person would not be included for purposes of calculating Triangle
Third Party Royalties pursuant to the terms of the applicable Triangle
License Agreement. No sublicense granted by Abbott shall relieve it of any
obligation hereunder.
2.5 RIGHTS TO ADDITIONAL PRODUCTS. Triangle hereby grants
to Abbott, and Abbott hereby accepts, a right of first discussion with
respect to all pharmaceutical compounds, which are licensed to or developed
by Triangle (regardless of their stage of development) up until December 31,
2005. If Triangle desires to sell the rights to or out-license such compound,
such right shall include the right, as the case may be, for Abbott to
purchase, license or sublicense such compound, subject to the negotiation of
an agreement as provided in this Section 2.5. Otherwise, such right shall
include the right for Abbott to co-promote and exclusively distribute the
compound in the U.S. Territory and the right to exclusively distribute and
exclusively promote the compound in the International Territory, subject to
the negotiation of an agreement as provided in this Section 2.5. At the ***
for such compound, or earlier at Abbott's election, or from time to time at
Triangle's election (to the extent Triangle intends to solicit interest from
Third Parties.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-15-
for the same or a similar proposed transaction), Triangle shall prepare and
submit to Abbott a data package, which shall consist of all material
information reasonably available to Triangle at such time, including (to the
extent available) identification of the compound, stage of development,
therapeutic category, targeted indications, mechanism of action, safety and
toxicity profile, clinical efficacy, clinical investigator's brochures,
physical and chemical characterization, drug-drug interactions,
pharmacokinetic and ADME properties, synthetic schemes, anticipated
regulatory submission dates, development and projected cost plan,
manufacturing processes and cost and patent status. Within *** after the
receipt of the data package Abbott shall notify Triangle whether it is
interested in such compound. If Abbott notifies Triangle of Abbott's
interest, the Parties shall, in good faith, proceed to negotiate the terms of
an agreement under the general conditions set forth in this Section 2.5. In
the event that Abbott notifies Triangle that it is not interested in such
compound or fails to give Triangle timely notice of its interest, Triangle
shall be free to commercialize the compound itself or to grant rights covered
by such right of first discussion to any Third Party. If Abbott has timely
notified Triangle of its interest in the compound but the Parties are unable
to agree to the terms of such an arrangement, after good faith negotiations,
within *** from the delivery of such notice, then until *** (i) *** or (ii)
*** from the delivery of such notice, Triangle shall not enter into an
agreement which grants any rights to such compound to any Third Party, on
terms which, taken as a whole, are more favorable to such Third Party than
those offered to Abbott, without first offering such terms to Abbott. If
Triangle offers such terms to Abbott pursuant to the immediately preceding
sentence, then Abbott's period to elect such more favorable terms shall be
*** . Any information regarding any compound offered to Abbott under this
Section 2.5 shall be subject to the confidentiality and nondisclosure
obligations set forth in Article 13. *** in accordance with the provisions of
this Section 2.5. Notwithstanding Section 20.2, references in this Section
2.5 to Abbott shall be deemed to refer only to Abbott Laboratories.
2.6 COMBINATION PRODUCTS.
(a) Each Party acknowledges that there is a *** Fixed-Dose
Combination Products for the treatment of HIV, and potentially
for HBV, and it is each Party's intent to *** of Fixed-Dose
Combination Products. Triangle agrees to keep Abbott fully
apprised of its activities with any Third Party concerning the
development of Fixed-Dose Combination Products, and Abbott shall
have the right
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-16-
to provide input with respect to these activities and, to the
extent reasonably possible, the right to participate in
meetings with such Third Party regarding such activities.
(b) Triangle may enter into any Fixed-Dose Combination
Collaboration without Abbott's prior written consent if each
of the following conditions is met: (i) the relevant
Fixed-Dose Combination Product would be manufactured,
marketed, promoted, sold and distributed by the Parties *** in
accordance with the terms of the Triangle-Abbott Alliance
Agreements (except insofar as compounds (other than the
Compound(s)) contained in the Fixed-Dose Combination Product
are supplied by a Third Party); (ii) all of the consideration
received by the Parties on account of the Compound(s)
contained in the Fixed-Dose Combination Collaboration are
allocated between them in accordance with the terms of this
Agreement; and (iii) the rights set forth in clause (i) above
apply throughout the Territories or substantially all of the
Territories (i.e., *** of Triangle's good faith estimate of
the unit market for the Fixed-Dose Combination Product) in the
Territories, (iv) the U.S. Product Profit and International
Product Profit with respect to the Compound(s) contained in
the relevant Fixed-Dose Combination Product are reasonably
projected by Triangle to increase ***, all as determined in
accordance with the methodology set forth on Exhibit 2.6 and
(v) the price of the Fixed-Dose Combination Product in the
U.S. Territory is *** of the *** for all compounds contained
therein when sold separately in the U.S. Territory (or if all
compounds are not then being sold separately, the Parties'
reasonable projection of the separate price of such compounds
upon launch), all determined on a ***.
(c) Triangle may not enter into a Fixed-Dose Combination
Collaboration which does not satisfy each of the conditions
set forth in Section 2.6(b) without Abbott's prior written
consent, which consent shall not be unreasonably withheld.
(d) Nothing in this Section 2.6 shall in any way restrict
Triangle from entering into discussions with Third Parties
regarding the viability of one or more Fixed-Dose Combination
Collaborations including, but not limited to, exchanging data
and information (e.g., Product Technology) regarding the
potential Fixed-Dose Combination Product and undertaking
feasibility studies relating to the such Fixed-Dose
Combination Product. All reasonable and necessary expenses
incurred by Triangle relating to the viability of such
Fixed-Dose Combination Collaboration shall be borne
exclusively by Triangle, unless such Fixed-Dose Combination
Collaboration is entered into pursuant to Section 2.6(b) or
(c) or otherwise with Abbott's consent,
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-17-
in which case, upon the execution of the Fixed-Dose
Combination Collaboration agreement by Triangle, Abbott shall
reimburse Triangle for *** of all reasonable and necessary
expenses incurred by Triangle. All expenses incurred after any
Fixed-Dose Combination Collaboration is entered into pursuant
to Section 2.6(b) or (c) or otherwise with Abbott's consent
shall be included in the relevant Party's SG&A. Other than as
permitted pursuant to this Section 2.6, neither Party shall
have the right to enter into a Fixed-Dose Combination
Collaboration.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-18-
ARTICLE 3
CLINICAL DEVELOPMENT, PRODUCT APPROVAL AND LAUNCH
3.1 CLINICAL DEVELOPMENT. Subject to the terms of this
Agreement, Triangle shall exercise its Reasonable Best Efforts to pursue, and
shall bear the full cost and expense of, the clinical development of the
Products for the U.S. Territory and the International Territory, including
exercising its Reasonable Best Efforts to (i) perform all clinical studies
and trials, (ii) generate all safety, toxicology and efficacy data required
to pursue, obtain and maintain Product Approval in the U.S. Territory and the
International Territory and (iii) obtain, as promptly as practicable after
Product Approval in the United States, a twenty-four (24) month or greater
shelf-life for each Product in the U.S., subject, however, to limitations on
the shelf life because of the particular characteristics of each such
Product. Notwithstanding the preceding sentence, if the performance of
clinical studies or trials or the generation of safety, toxicology and
efficacy data is required to pursue, obtain and maintain Product Approval in
a country in the International Territory which is not a Major Country, which
studies, trials or data are not also required to pursue, obtain and maintain
Product Approval in the U.S. Territory or a Major Country (a "Supplemental
Clinical Study"), then, if Abbott determines to proceed with Product Approval
in such country, the costs and expenses of any such Supplemental Clinical
Study shall be borne equally by Triangle and Abbott and excluded from both
Triangle SG&A and Abbott SG&A. Triangle shall keep Abbott fully apprised with
respect to its clinical development activities and shall provide Abbott with
the opportunity for input regarding these activities, including the right to
review the protocols and Triangle's audit reports relating to all clinical
studies. Triangle shall control all decisions regarding such clinical
development activities in the Territories. Triangle shall use its Reasonable
Best Efforts to provide, on an on-going basis, appropriate primary documents
(in English) to Abbott in connection with Abbott's efforts to pursue, obtain
and maintain Product Approval in each Major Country and such other countries
within the International Territory as Abbott reasonably deems appropriate,
including providing certificates of free sale to Abbott and other legal
documents, certificates, Product samples, study reports, regulatory
overviews, statistical overviews, and other regulatory documents as prepared.
3.2 U.S. PRODUCT APPROVAL. Triangle shall exercise its
Reasonable Best Efforts to file, obtain and maintain Product Approval for the
Products in the United States, and shall bear the full cost and expense
thereof. Triangle shall keep Abbott fully apprised with respect to its
Product Approval activity in the United States. Specifically, Triangle shall
(i) provide Abbott with a copy of all filings, documents, and correspondence
with the FDA and any inspection reports relating to Third Party manufactures,
(ii) to the extent reasonably practicable, provide Abbott with advance
notice of meetings with the FDA and consider,
-19-
at Triangle's sole discretion, Abbott's request to attend or participate in
any such meeting, and (iii) allow Abbott representatives reasonable
opportunity to audit such Third Party manufacturing facilities, to the extent
permitted by the *** . Triangle shall control all decisions regarding its
regulatory activities in the United States, including, without limitation,
decisions regarding the filing, obtaining and maintaining of Product Approval
for the Products in the United States.
3.3 INTERNATIONAL PRODUCT APPROVAL. Abbott shall exercise
its Reasonable Best Efforts to file, obtain and maintain Product Approval for
the Products in the International Territory, and shall bear the full cost and
expense thereof. Abbott shall use its Reasonable Best Efforts to pursue the
filing, obtaining and maintaining of Product Approval in all Major Countries
and such other countries within the International Territory as Abbott
reasonably deems appropriate. Abbott shall keep Triangle fully apprised with
respect to its Product Approval activities in the International Territory and
shall provide Triangle with the opportunity for input with respect to such
international Product Approval activities. Specifically, Abbott shall (i)
provide Triangle with a copy of the CPMP (Committee for Proprietary Medicinal
Products) registration package, the core Latin American registration package,
and the core Pacific/Asian/African registration package and, upon Triangle's
reasonable request on a country-by-country basis, a copy of filings,
documents, and correspondence with regulatory authorities concerning the
Compounds or Products (without an obligation to translate into English, unless
otherwise available), (ii) to the extent reasonably practical, provide
Triangle with advance notice of meetings and telephone conferences with
regulatory authorities in the Major Countries in which strategies, approval
issues or major scientific issues may be reviewed concerning the Compounds or
Products and consider, at Abbott's sole discretion, Triangle's request to
attend or participate in any such meeting or conference, and (iii) for
Compounds or Products sourced from Abbott under the Supply Agreement, provide
Triangle with a copy of any inspection reports relating to Abbott's, its
Affiliates' or any Third Party's manufacture of Compound or Product and allow
Triangle representatives reasonable opportunity to audit such manufacturing
facilities, to the extent permitted by the *** . Abbott shall control all
decisions regarding such regulatory activities in the International Territory.
3.4 REASONABLE COOPERATION. Each Party shall provide the other
Party with all reasonable assistance requested by the other Party with respect
to the foregoing clinical development and regulatory activities. The Party
providing such assistance shall be reimbursed by the other Party for its
reasonable out-of-pocket costs and expenses.
3.5 LAUNCH. The Parties shall use their Reasonable Best
Efforts to Launch and Co-Promote each Product in the U.S. Territory within
*** from the date of Product Approval in the United
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-20-
States. Abbott shall use its Reasonable Best Efforts to Launch and Promote
each Product in each country of the International Territory within *** from
the date of Product Approval in such country.
3.6 TRIANGLE ASSUMPTION RIGHTS.
(a) Once a Product has been Launched in the U.S.
Territory, if Abbott determines not to Launch such Product in
a given country in the International Territory or otherwise
fails to Launch such Product within *** after receipt of
Product Approval in such country, then Triangle may elect, by
*** prior written notice to Abbott, to terminate (unless
Abbott Launches the Product in such country during such ***
notice period) Abbott's rights under this Agreement to Promote
such Product in such country (including a termination of the
license granted to Abbott hereunder with respect to such
Product in such country), in which event Triangle may itself,
or through one or more Third Parties, Launch and Promote such
Product in such country outside of the scope of this
Agreement; provided that the *** Triangle sells such Product
to Third Parties in such country may not *** (i) the *** Abbott
sells such Product to Third Parties, if any, in any country that
is now or may be in the future a member of the European Union, or
(ii) in the event that Abbott has not obtained Product
Approval in any country in the European Union, the average of the
*** in the five (5) countries with the highest net unit sales of
such Product or, if there are fewer than five countries in which
there is Product Approval for such Product, the average over all
such countries; provided, further, that if Abbott subsequently
obtains Product Approval for such Product in a country in the
European Union, Triangle shall use its Reasonable Best Efforts to
increase the *** of the Product in such country to the level
provided in clause (i) above. Notwithstanding the foregoing, if
Abbott is in the process of re-negotiating the *** with the
applicable regulatory authorities in such country, Abbott may
request, prior to the expiration of the above-referenced ***
period, an extension of up to an additional *** , subject to the
consent of Triangle, not to be unreasonably withheld, as well as
an additional ***, subject to Triangle's consent (i) at its sole
discretion if a non-Major Country or (ii) in its reasonable
discretion if a Major Country; provided that either such
extension shall automatically terminate upon the cessation of
the *** . At the request of Triangle, Abbott shall promptly
provide all *** information requested by Triangle.
(b) With respect to any Major Country in the International
Territory, Triangle will notify Abbott when Triangle reasonably
determines that Triangle has delivered to Abbott a set of primary
documents in respect of a given Product which is sufficiently
complete to enable Abbott
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-21-
to prepare a submission for Product Approval in such Major
Country. Abbott shall have *** from the date of receipt of the
Triangle notice referred to in the immediately preceding
sentence in which to determine whether such primary documents
are sufficiently complete.
(i) If Abbott determines that such primary documents
are sufficiently complete, subject to the provisions set
forth below, Abbott shall have *** within which to
prepare and make a Product Approval submission for such
Product for all Major European Countries (the
"Pan-European Submission") and *** to prepare and make
submissions in a non-European Major Country. Failure by
Abbott to notify Triangle of a deficiency within such ***
period shall be deemed to constitute notice that such
primary documents are sufficiently complete.
(ii) If Abbott determines, in good faith, within
such *** period that such primary documents are not
sufficiently complete, it shall notify Triangle to this
effect, which notice shall specify the deficiency. The
*** and *** time periods specified in clause (i) above
shall not commence until such time as Triangle cures the
deficiency. In the event the Parties disagree as to
whether a deficiency exists, they shall attempt to
resolve the dispute and any unresolved dispute shall be
subject to Section 20.3.
(iii) The periods set forth in clause (i) shall be
tolled if the applicable regulatory authority determines
there exists a material deficiency in the primary documents
or Product Approval submission, as applicable (and the
deficiency did not arise as a result of Abbott's failure to
perform its obligations hereunder), and shall be restarted
when such deficiency is cured; provided, however, that
Abbott shall be entitled to a reasonable period of time to
complete such submission, which period shall be mutually
agreed upon by the Parties. Abbott shall promptly notify
Triangle in the event Abbott receives notice of deficiency
from any regulatory authority, including the specific
details thereof.
(iv) In the event Abbott fails to make a Product
Approval submission within the time allowed therefor
pursuant to this Section 3.6(b), it shall pay Triangle an
amount equal to $200,000 per month for each month's delay in
making the Pan European Submission and $75,000 for each
month's delay in making a Product Approval submission in
each non-European Major Country. The foregoing amounts shall
double at each successive six (6) month interval during
which payments are being made to Triangle pursuant to this
Section 3.6(b).
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-22-
(c) Notwithstanding the foregoing provisions of this Section
3.6, Abbott shall not be deemed to have failed to Launch a
Product pursuant to paragraph (a) or to have failed to file for
Product Approval in paragraph (b), is such failure resulted from
an event of Force Majeure pursuant to Article 19.
3.7 EXCUSED PERFORMANCE. The Parties acknowledge and
understand that the development, registration and marketing of the Products, as
with any pharmaceutical product, is subject to certain inherent risks including
that (a) the Products will be ineffective, toxic, or will not receive Product
Approval; (b) the Products will be too expensive to manufacture or market or
will not achieve broad market acceptance; (c) Third Parties will hold
proprietary rights that will preclude the marketing and sale of the Product; or
(d) Third Parties will market equivalent or superior products. Neither Party
makes any representation or warranty that the Products (i) will be successfully
developed; (ii) will receive all necessary Product Approvals; (iii) will be
Launched; or (iv) will be commercially successful. The respective obligations of
the Parties under this Article, and Articles 4 and 5 with respect to any
Product, are expressly conditioned upon the safety, efficacy and commercial
feasibility of such Product, and a Party's obligation hereunder shall be delayed
or suspended for so long as any condition or event exists which reasonably
causes a Party to question the safety, efficacy or commercial feasibility of any
Product. Furthermore, Abbott's obligation to market and Promote the Products in
a country in the International Territory shall not apply if Abbott has not
commenced or has ceased marketing such Product in such country substantially due
to adverse business or financial conditions, including those caused by the
regulatory authorities or other governmental authorities of such country, which
would cause the marketing of such Product in such country to be contrary to the
financial best interest of the Parties, including not commencing marketing in a
country where the regulatory authorities or other governmental authorities have
price approval or reimbursement authority and the price approved or proposed or
the reimbursement granted is unacceptable to Abbott in its reasonable commercial
judgment. Each Party shall promptly notify the other Party in the event any
material issue arises as to the safety, efficacy, commercial feasibility, or
adverse business or financial conditions with respect to any Product.
-23-
ARTICLE 4
CO-PROMOTION AND PROMOTION
4.1 MARKETING EFFORT. Abbott and Triangle shall use their
Reasonable Best Efforts to Co-Promote the Products in the U.S. Territory, and
Abbott shall use its Reasonable Best Efforts to Promote the Products in the
International Territory. Triangle shall be the lead Party for implementation of,
and shall make tactical decisions with regard to, Co-Promotion in the U.S.
Territory, consistent with the terms of this Agreement, the then current U.S.
Co-Promotion Plan and U.S. Promotional Materials and any applicable direction
provided by the U.S. Marketing Board. Abbott shall use its Reasonable Best
Efforts to implement, and shall make tactical decisions with regard to,
Promotion in the International Territory, consistent with the terms of this
Agreement, the then current International Promotion Plan and International
Promotional Materials and any applicable direction provided by the International
Marketing Board.
4.2 U.S. TERRITORY
(a) U.S. MARKETING BOARD. Abbott and Triangle shall work
together to Co-Promote the Products in the U.S. Territory and
shall present their views on the Co-Promotion of each Product
through a committee (the "U.S. Marketing Board") which shall
oversee and direct the Co-Promotion of the Products in the U.S.
Territory. The U.S. Marketing Board shall review and approve
strategies for the Co-Promotion of the Products and undertake the
activities necessary to implement those strategies in accordance
with a U.S. Co-Promotion Plan and U.S. Promotional Materials
(including by coordinating the Parties' Detailing messages and
methodologies, physician, trade and managed care targeting and
call programs and efforts). The U.S. Marketing Board shall
observe the following rules:
(i) The U.S. Marketing Board, consisting of a total
of not more than ten (10) individuals, shall include an
equal number of representatives from Abbott and Triangle
and shall be permanently chaired by a Triangle
representative. Each Party's representatives on the U.S.
Marketing Board shall be full-time employees of such Party.
Each party shall be permitted to have an additional
non-voting observer from the International Marketing Board
participate in any meeting. Abbott shall designate a lead
representative on the U.S. Marketing Board, who shall be
authorized by Abbott to communicate with the Triangle
chairperson between meetings of the U.S. Marketing Board,
to make decisions as needed. Each Party shall have the
right, at any time, to
-24-
designate by written notice to the other Party, a
replacement, on a permanent or temporary basis, for any of
such Party's members on the U.S. Marketing Board, including
the chairperson.
(ii) Except for (A) the establishment of the U.S.
Co-Promotion Budget which is reserved for the mutual
agreement of the Parties, (B) the pricing of the Products to
the Third Party customers, which shall be determined
pursuant to Section 8.4, and (C) the location of the Abbott
Sales Representatives, which shall be determined by Abbott,
Triangle shall be responsible for making all final decisions
related to the Co-Promotion of the Products in the U.S.
Territory. The U.S. Marketing Board shall endeavor to work
by consensus; provided that the decisions of the chairperson
shall be deemed the final decisions of the Board in all
circumstances. Each Party shall use Reasonable Best Efforts
to implement the final decisions of the U.S. Marketing
Board.
(iii) In addition to the members of the U.S. Marketing
Board, it is understood that from time to time additional
personnel having specialized experience and training shall
be requested to assist the U.S. Marketing Board, including
finance, legal, and regulatory affairs. Such additional
personnel may be added to a U.S. Marketing Board meeting by
invitation of the chairperson; provided, however, that if
the chairperson invites one or more specialists from one
Party, it shall extend a like invitation to similar
specialists from the other Party.
(iv) The U.S. Marketing Board shall meet as
necessary, but such committee shall meet at least once
per calendar quarter. The site for such meetings shall
alternate between Durham, North Carolina, and Abbott Park,
Illinois, or such other location agreed to by the Parties.
Meetings may also take place by telephonic or video
conference. The chairperson shall send to the members of the
U.S. Marketing Board a notice of each meeting at least ten
(10) business days prior to the date of such meeting. The
chairperson shall endeavor to coordinate the timing and
place of scheduled meetings of the U.S. Marketing Board
with those of the International Marketing Board.
(v) Any member of the U.S. Marketing Board may send to
the chairperson, at least seven (7) business days before a
meeting date, proposed topics to be discussed at such
meeting. At least five (5) business days before the meeting
date, the chairperson shall prepare and distribute an Agenda
for such meeting of the topics to be discussed at such
meeting and a list of any non-member specialists who have
been invited to such
-25-
meeting. Within ten (10) business days after such meeting,
the chairperson shall prepare and distribute draft action
steps and decisions of the meeting to all members of the
U.S. Marketing Board. Within five (5) business days of the
date on which the action steps and decisions were
distributed, the members shall either note their approval or
submit proposed revisions to the draft. Not more than five
(5) business days after the receipt of all approvals or
proposed revisions, the chairperson shall issue the final
action steps and decisions of the U.S. Marketing Board.
(vi) Each Party shall bear its own costs, including
travel costs, for its personnel serving on the U.S.
Marketing Board or attending any meeting of the U.S.
Marketing Board.
(b) U.S. CO-PROMOTION BUDGET. Each year the Parties shall
reach written agreement on an annual budget for each Product
(the "U.S. Co-Promotion Budget"), which shall set forth in
appropriate detail, the costs and expenses to be incurred
pursuant to subpart (i) of Section 1.8 (Abbott SG&A) and
subpart (i) of Section 1.88 (Triangle SG&A). The initial U.S.
Co-Promotion Budget shall be approved within *** of the
Effective Date and each subsequent annual U.S. Co-Promotion
Budget shall be approved by *** for the following Annual
Reporting Period for the U.S. Territory. The U.S. Co-Promotion
Budget shall be expended consistent with the strategies
outlined in the U.S. Co-Promotion Plan, allowing for
management discretion in the implementation of specific
tactical components. The approved U.S. Co-Promotion Budget for
a Product may be adjusted at any time upon the written
agreement of the Parties.
(c) U.S. CO-PROMOTION PLAN. With input from the U.S.
Marketing Board, Triangle will use its Reasonable Best Efforts to
prepare and implement an annual plan (the "U.S. Co-Promotion
Plan") for the Co-Promotion of the Products in the U.S.
Territory. The U.S. Marketing Board shall review and approve, and
oversee the implementation of, the U.S. Co-Promotion Plan;
provided that Triangle shall be responsible for making all final
decisions relating to the implementation of the U.S. Co-Promotion
Plan. The U.S. Co-Promotion Plan shall specify for each Product
the number and type of Details (i.e., Primary Details and
Secondary Details) to be performed by each Party's Sales
Representatives which are included in such Party's SG&A account
hereunder (the "Detailing Commitment"), the sampling program for
the Products, the Discretionary Funds available to the Sales
Representatives, any Marketing Studies for the Product, medical
education programs and special marketing incentive programs;
provided, however, that,
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-26-
unless expressly agreed otherwise by the Parties, the Abbott
Sales Representatives and the Triangle Sales Representatives
shall be treated in a like and equal manner such that: (i) ***
per Sales Representative shall be the same for both Parties;
(ii) the *** (as well as the ***) per Sales Representative shall
be identical for both sales forces; (iii) the *** per Sales
Representative shall be the same for both Parties; and (iv)
the amount and type of *** per Sales Representative shall be
identical for both sales forces. In preparing the U.S.
Co-Promotion Plan, the U.S. Marketing Board shall use its
Reasonable Best Efforts to coordinate its activities with the
Co-Promotion Committee (as defined in the Co-Promotion
Agreement) with respect to its preparation of the Co-Promotion
Plan (as defined in the Co-Promotion Agreement).
(d) U.S. SALES REPRESENTATIVES.
(i) Under the U.S. Co-Promotion Budget and the U.S.
Co-Promotion Plan, Abbott shall maintain *** Sales
Representatives to Co-Promote hereunder (measured on a full
time equivalent basis), except as provided in Section
4.2(d)(ii), and Triangle shall be authorized to maintain
*** Sales Representatives to Co-Promote hereunder (measured on
a full time equivalent basis). Abbott and Triangle shall be
authorized to *** such Sales Representatives, *** full time
equivalent basis (limited to the categories set forth in Exhibit
1.8), as part of the *** respectively; provided, that to the
extent that either Party's *** do not meet or exceed such Party's
*** then such Party's *** shall be reduced on a proportionate
basis. The U.S. Marketing Board may not reduce the number
of Abbott's Sales Representatives Co-Promoting the Products
below *** full time equivalents without the written consent of
Abbott. Each Party may dedicate more than *** Sales
Representatives (measured on a full time equivalent basis) to
Co-Promote the Products in the U.S. Territory, but may not
include any of the costs and expenses attributable thereto in
the Abbott SG&A or the Triangle SG&A, except as provided in
Section 4.2(d)(ii). Each of Abbott and Triangle shall be
authorized to account for no more than *** , on a fully
allocated cost per full time equivalent basis, as part of the
Abbott SG&A and Triangle SG&A, respectively.
(ii) Following the *** full calendar year after the
Launch of the first Product in the U.S. Territory, Abbott may,
with ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-27-
written notice to Triangle prior to the commencement of
any calendar year, elect to *** its sales force commitment
below *** Sales Representatives (measured on a full time
equivalent basis) in whole increments of *** , which election
shall be effective for such calendar year; provided that
Triangle may thereafter *** from time to time the number of
its Sales Representatives Co-Promoting hereunder (measured on
a full time equivalent basis) to the extent that the aggregate
number of Triangle and Abbott Sales Representatives
Co-Promoting hereunder does not *** Sales Representatives
(measured on a full time equivalent basis). Abbott may, with
*** written notice to Triangle prior to the commencement of
any subsequent calendar year, elect to *** its sales force
commitment in whole increments of *** Sales Representatives
(measured on a full time equivalent basis); provided that such
*** shall be permitted only to the extent that the aggregate
number of Triangle and Abbott Sales Representatives
Co-Promoting hereunder does not *** Sales Representatives
(measured on a full time equivalent basis), including any ***
Sales Representatives *** by Triangle in accordance with the
prior sentence. In the event that Abbott *** the number of its
Sales Representatives Co-Promoting hereunder (measured on a
full time equivalent basis) *** , Triangle may, with *** prior
written notice to Abbott, elect to assume the exclusive right
to Promote the Products hereunder in the U.S. Territory. In
the event Triangle *** its Sales Representatives or assumes
the Promotion of the Products as provided in this Section
4.2(d)(ii), the costs and expenses of its *** Sales
Representatives (to the extent that the aggregate number of
Abbott Sales Representatives and Triangle Sales
Representatives does not *** measured on a full time
equivalent basis) shall be included in Triangle SG&A.
(iii) Each Party shall be responsible for staffing,
selling skills training, supervising, and compensating
(including incentives) its own Sales Representatives.
With respect to training, Triangle shall make available
to Abbott, at no charge , the same kinds and amounts of
Product-specific training materials that it provides for
its own Sales Representatives. Both Parties shall
re-train their personnel in the promotion of the Products
from time to time as set forth in the U.S. Co-Promotion
Plan. Each Party shall reward its Sales Representatives
(except for *** or similar positions) for promoting the
Products through an incentive-based compensation system.
For Abbott
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-28-
such system shall be reasonably comparable in extent
and manner as Abbott would use to reward its sales
representatives for the promotion of one of its own products
of comparable commercial value and required detailing
effort. For Triangle, its system shall be reasonably
comparable in extent and manner as other comparable
pharmaceutical companies with products of comparable
commercial value and required detailing effort. Each Party
shall have full control over and be responsible for the
salary, incentives, benefits and other employment matters
related to its Sales Representatives.
(e) U.S. CO-PROMOTION EFFORT. Each Party shall use its
Reasonable Best Efforts to perform those tasks and
responsibilities assigned to such Party in the U.S.
Co-Promotion Plan, including performing at least their
respective Detailing Commitments, and each Party shall use its
Reasonable Best Efforts to support the Co-Promotion of the
Products in the U.S. Territory. The Detailing of a Product
shall commence upon the Launch of such Product. Each Party may
perform Details throughout the U.S. Territory. The U.S.
Marketing Board shall coordinate the Parties' Detailing
activities so as to maximize Product sales by maximizing
geographic coverage, ensuring that the geographic disbursement
of the Details is not unduly burdensome on either Party,
eliminating unnecessary duplication, and ensuring that the
potential for a proportionate number of prescriptions shall be
generated by the respective sales forces. The U.S. Marketing
Board shall also coordinate the managed care efforts of the
Parties in the U.S. Territory as outlined in the U.S.
Co-Promotion Plan so as to maximize Product sales by
identifying promising *** targets, maximizing geographic
coverage, avoiding unnecessary duplication, and enhancing ***
penetration. In connection with the Co-Promotion of the
Products in the U.S. Territory, both Parties shall participate
in conventions, and continuing educational programs for health
care professionals, and the effort of the Parties in this regard
shall be coordinated by the U.S. Marketing Board.
(f) U.S. SAMPLING. As part of the Co-Promotion of the
Products in the U.S. Territory, each Party may distribute Sample
Packs free of charge to health care professionals on an ongoing
basis in accordance with the sampling program as outlined in the
U.S. Co-Promotion Plan and approved by the U.S. Marketing Board
and all Legal Requirements. Each Party shall maintain all records
required pursuant to the Prescription Drug Marketing Act of 1987,
including maintenance of written requests and delivery receipts
for any Sample Packs delivered to its sales force for so long as
required by such Act. Abbott shall promptly report to Triangle
any thefts of
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-29-
Sample Packs or any losses of Sample Packs. Triangle shall be
responsible for providing to both sales forces the quantities of
Sample Packs set forth in the U.S. Co-Promotion Plan.
(g) U.S. PROMOTIONAL MATERIALS. Triangle shall internally
review the U.S. Promotional Materials from a medical and legal
perspective and shall prepare and provide the quantity and types
of U.S. Promotional Materials set forth in the U.S. Co-Promotion
Plan. The Parties shall disseminate in the U.S. Territory only
those promotional and advertising materials which have been
approved for use by the U.S. Marketing Board. All such materials
shall be consistent with the U.S. Co-Promotion Plan approved by
the U.S. Marketing Board. Abbott shall not be required to use
U.S. Promotional Materials which are prohibited under applicable
FDA regulations. Abbott and Triangle shall use the same U.S.
Promotional Materials in connection with the Co-Promotion of the
Products.
(h) COMPLIANCE WITH LAW. Each Party shall cause its sales
force, and all other employees and approved agents and
representatives, to comply with all applicable laws, regulations
and guidelines in connection with the Co-Promotion of the
Products in the U.S. Territory, including, without limitation,
the Prescription Drug Marketing Act and the Federal Anti-Kickback
Statute. Each Party shall cause its sales force, in the course of
its Co-Promotion of the Products, to (i) limit its claims of
efficacy and safety for Products to those which are consistent
with the U.S. Marketing Board's then approved product circular
for the Products or as otherwise approved by the U.S. Marketing
Board consistent with Legal Requirements, (ii) not delete or
modify claims of efficacy and safety in the Co-Promotion of
Products so that they are different in any way from those which
are contained in the U.S. Marketing Board's then approved product
circular for the Products, or make any changes in promotional
materials and literature provided by the U.S. Marketing Board,
and (iii) not knowingly or recklessly do anything which will
jeopardize the goodwill or reputation of the Products or the
other Party. In addition, each Party shall exercise its
Reasonable Best Efforts to conduct the Co-Promotion of the
Products in adherence to the American Medical Association Gifts
to Physicians From Industry Guidelines.
4.3 INTERNATIONAL TERRITORY.
(a) INTERNATIONAL MARKETING BOARD. Abbott and Triangle shall
work together to develop a plan for the Promotion of the Products
by Abbott in the International Territory through a committee (the
"International Marketing Board") which shall oversee and direct
the Promotion of the Products in the International Territory. The
International Marketing Board shall review and approve strategies
for the Promotion of the Products and undertake the activities
necessary to
-30-
implement those strategies in accordance with an International
Promotion Plan and International Promotional Materials. The
International Marketing Board shall follow the rules established
by Section 4.2(a)(i) through (vi) for the U.S. Marketing Board,
except that (i) an Abbott representative shall permanently chair
the International Marketing Board, (ii) Abbott shall be
responsible for making all final decisions relating to the
implementation of the International Promotion Plan, (iii)
Triangle shall designate a lead representative on the
International Marketing Board, who shall be authorized by
Triangle to communicate with the Abbott chairperson between
meetings of the International Marketing Board, to make decisions
as needed, (iv) in all instances references to the U.S.
Co-Promotion Budget shall mean the International Promotion
Budget, and (v) in all instances references to "U.S." and
"International" shall be reversed.
(b) INTERNATIONAL PROMOTION BUDGET. Each year the Parties
shall reach written agreement on an annual budget for each
Product (the "International Promotion Budget"), which shall
set forth the costs and expenses to be incurred in the cost
categories set forth in subpart (i) of Section 1.8 (Abbott
SG&A). The initial International Promotion Budget shall be
approved within *** after the Effective Date and each
subsequent annual International Promotion Budget shall be
approved by *** for the following Annual Reporting Period for
the International Territory. The International Promotion
Budget shall be expended consistent with the strategies
outlined in the International Promotion Plan, allowing for
management discretion in the implementation of specific
tactical components. The approved International Promotion
Budget for a Product may be adjusted at any time upon the
written agreement of the Parties.
(c) INTERNATIONAL PROMOTION. Abbott shall use its Reasonable
Best Efforts to Promote the Products in the International
Territory in accordance with the International Promotion Plan
and, to the extent possible, coordinate its promotional
activities and methods in the International Territory with those
used by the Parties in the U.S. Territory. With input from the
International Marketing Board, Abbott will exercise its
Reasonable Best Efforts to prepare and implement an annual plan
(the "International Promotion Plan") for the Promotion of the
Products in the International Territory. The International
Marketing Board shall review and approve the International
Promotion Plan. Abbott shall cause its sales force, and all other
employees and approved agents and representatives, to comply with
all applicable laws, regulations and guidelines in connection
with the Promotion of the Products in the International
Territory. Abbott shall not make any claims or representations in
respect of the Products which are inconsistent with
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-31-
Legal Requirements and the core package and other regulatory
materials shall be approved pursuant to Abbott's then current
product approval procedures.
4.4 PRODUCT DEVELOPMENT COMMITTEE. The Parties shall also form
a Product Development Committee which shall be responsible for developing
worldwide strategies for Marketing Studies that build value for the Products and
shall act in an advisory capacity with respect to (i) the clinical development
and Product Approval of the Products in the Territories and (ii) potential
combination therapies using the Products, the products to be co-promoted by the
Parties under the Co-Promotion Agreement, and/or one or more other
pharmaceutical products. The Product Development Committee shall include an
equal number of representatives from Abbott and Triangle and shall be chaired by
a Triangle representative. It shall generally follow the rules established by
Section 4.2(a)(i) through (vi) for the U.S. Marketing Board, except that final
decisions with respect to Marketing Studies shall be made by Triangle with
respect to Marketing Studies proposed or requested by the U.S. Marketing Board
and by Abbott with respect to Marketing Studies proposed or requested by the
International Marketing Board, irrespective of the country or countries in which
such Marketing Studies are conducted.
4.5 NAMES. While the configuration and placement of the Abbott
name and the Triangle name shall be decided by the U.S. Marketing Board in the
U.S. Territory and by Abbott for the International Territory, it is agreed that
the Abbott name and the Triangle name shall appear and be equally prominent on
all Products, Sample Packs and U.S. Promotional Materials in the U.S. Territory.
The Product's N.D.C. number shall be in Triangle's name. The Products will
utilize an Abbott List Number in the U.S. Territory. To the extent permitted by
the local laws of the countries of the International Territory, Abbott shall
include the phrase "under license from Triangle Pharmaceuticals" on all
Products, Sample Packs and Promotional Materials in the International Territory.
4.6 INDIGENT PROGRAMS. In addition to the Promotion
activities covered under this Agreement, the U.S. Marketing Board in the U.S.
Territory and the International Marketing Board in the International
Territory may establish and operate an indigent program for distribution of
Products and/or Sample Packs to needy individuals and/or the physicians and
other providers serving such needy individuals and an expanded access
program. Without limiting the generality of Sections 4.2(b) and 4.3(b), the
costs and expenses of both the indigent program and the expanded access
program shall be included as part of Triangle SG&A and Abbott SG&A, as the
case may be.
ARTICLE 5
MILESTONE PAYMENTS FOR PAST R & D
-32-
5.1 R & D PAYMENTS. In consideration of past research and
development performed by Triangle, Abbott shall make the following milestone
payments to Triangle, which payments shall be due and payable upon the dates
specified in Subsections (a) and (b) and within thirty (30) days after the
achievement of the events specified in Subsections (c) through (m):
(a) *** Dollars ($ *** ) on or before *** ;
(b) *** Dollars ($ *** ) on or before *** ;
(c) *** Dollars ($ *** upon *** (in addition to any
other payments payable pursuant to this Section 5.1);
(d) *** Dollars ($ *** ) upon *** (in addition to
any other payments payable pursuant to this Section 5.1);
(e) *** Dollars ($ *** ) upon *** ;
(f) *** Dollars ($ *** ) upon *** ;
(g) *** Dollars ($ *** ) upon the *** ;
(h) *** Dollars ($ *** ) upon the earlier to occur of
(i) the *** or (ii) *** ;
(i) *** Dollars ($ *** ) upon *** ;
(j) *** Dollars ($ *** ) upon *** ;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-33-
(k) *** Dollars ($ *** ) upon the *** ;
(l) *** Dollars ($ *** ) upon the earlier to occur of
(i) the *** or (ii) ***;
(m) *** Dollars ($ *** ), at Triangle's election,
upon the occurrence of either: (i) *** or (ii)*** ;
provided that only *** will be payable under this
Subsection (m).
5.2 SINGLE PAYMENT OBLIGATION. Each of the foregoing
milestones shall only be paid once regardless of the number of *** with
respect to such *** including multiple *** of the same *** additional ***.
5.3 NOTICE. Triangle shall promptly notify Abbott of the
achievement of the milestones listed in Subsections 5.1(c), (d), (e), (f),
(i), (j) and (m). Abbott shall promptly notify Triangle of the achievement of
the milestones listed in Subsections 5.1(g), (h), (k) and (l).
ARTICLE 6
PROFIT SHARING
6.1 REPORTS BY ABBOTT. Within thirty (30) days from the end
of each calendar quarter starting with the first calendar quarter for which
the Parties have budgeted expenditures under Article 4, or as otherwise
necessary, Abbott shall deliver to Triangle a true and accurate written
report showing whichever of the following are applicable for such calendar
quarter:
(a) the Abbott Net Sales and Net Units of Product Sold
in: (i) the U.S. Territory; and (ii) the International
Territory (each in the aggregate and on a
Product-by-Product, country-by-country basis), a summary of
Abbott gross sales of and discounts from the Products in the
U.S. Territory, and any changes in the WAC for the U.S.
Territory;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-34-
(b) the Abbott Distribution Margin (including the
Abbott Cost of Goods and the Abbott Distribution Expenses
used to arrive at the Abbott Distribution Margin from the
Abbott Net Sales) for: (i) the U.S. Territory; and (ii) the
International Territory;
(c) the Abbott Operating Margin (including the
Abbott SG&A used to arrive at the Abbott Operating Margin
from the Abbott Distribution Margin) for: (i) the
U.S. Territory; and (ii) the International Territory;
(d) any updated information regarding Abbott Net Sales,
Abbott Distribution Margin and Abbott Operating Margin for
any prior calendar quarter(s);
(e) the exchange rates, if any, used in determining the
amount of Dollars calculated pursuant to Section 7.3;
(f) any such other information reasonably required by
Triangle to comply with its reporting obligations under the
Triangle License Agreements; and
(g) A report in electronic format showing the number of
Details performed by Abbott in the U.S. Territory, broken
down by Abbott product Detail codes and by Physicians
(including the physician name, address, AMA Education Number
and AMA specialty), during such calendar quarter and such
calendar year to date, the date of such presentation, and a
flag indicating whether such presentation was a Primary
Detail or a Secondary Detail.
The Divisional Vice President, Controller for the Pharmaceutical Products
Division of Abbott and the Divisional Vice President, Controller of the
International Division of Abbott shall jointly certify in writing the
correctness and completeness of each report submitted by Abbott pursuant to
this Section 6.1. In addition, Abbott's independent auditors shall, at the
end of each calendar year, certify (at the consolidated Abbott level) the
correctness and completeness of the reports submitted by Abbott pursuant to
this Section 6.1 for such year.
6.2 REPORTS BY TRIANGLE. Within forty-five (45) days from
the end of each calendar quarter starting with the first calendar quarter for
which the Parties have budgeted expenditures under Article 4, or as otherwise
necessary, provided that Abbott has timely delivered the report referenced in
Section 6.1, Triangle shall deliver to Abbott a true and accurate written
report showing whichever of the following are applicable for such calendar
quarter:
(a) the Triangle Product Sales in the U.S. Territory;
-35-
(b) the Triangle Distribution Margin for the U.S.
Territory (including the Triangle Cost of Goods and the
Triangle Third Party Royalties for the U.S. Territory
used to arrive at the Triangle Distribution Margin from
the Triangle Product Sales);
(c) the Triangle Operating Margin for the U.S.
Territory (including the Triangle SG&A used to arrive at
the Triangle Operating Margin from the Triangle
Distribution Margin in the U.S. Territory;
(d) the U.S. Product Profit;
(e) the International Product Profit and the Triangle
Third Party Royalties in the International Territory;
(f) the balance in the Reimbursement Account, any
accrued but unpaid interest thereon, and Triangle's Cash;
(g) the Abbott U.S. Profit Amount, the Triangle U.S.
Profit Amount, the Abbott International Profit Amount and
the Triangle International Profit Amount;
(h) the U.S. Adjustment Amounts for each Party and the
International Adjustment Amount;
(i) the Final Payment due to either Abbott or Triangle
pursuant to Section 6.6;
(j) any updated information regarding Triangle Product
Sales, Triangle Distribution Margin, Triangle Operating
Margin and Triangle Third Party Royalties for any prior
calendar quarter(s) and the U.S. Product Profit, the
International Product Profit, the Abbott U.S. Profit Amount,
the Triangle U.S. Profit Amount, the Abbott International
Profit Amount, the Triangle International Profit Amount, the
U.S. Adjustment Amount, the International Adjustment Amount
and the Final Payment for any prior calendar year(s); and
(k) a report in electronic format showing the number of
Details performed by Triangle in the U.S. Territory, broken
down by Triangle product Detail codes, and by Physician
(including the Physician name and address, AMA Educational
Number and AMA specialty) during such calendar quarter and
such calendar year to date, the date of such presentation
and a flag indicating whether such presentation was a
Primary Detail or a Secondary Detail.
The Chief Financial Officer and/or Treasurer of Triangle shall certify in
writing the correctness and completeness of each report submitted by Triangle
pursuant to this Section 6.2. In addition, Triangle's independent auditors
shall, at the end of each calendar year, certify (at the consolidated
Triangle level) the correctness and completeness of the reports submitted
by Triangle pursuant to this Section 6.2 for such year.
-36-
6.3 NET LOSS. Net losses shall be allocated between the
Parties in accordance with the allocation provisions set forth in Sections 6.4
and 6.5. The Parties understand that the U.S. Product Profit, the International
Product Profit, the Abbott U.S. Profit Amount, the Triangle U.S. Profit Amount,
the Abbott International Profit Amount and the Triangle International Profit
Amount can each be a negative number and represent a net loss.
6.4 U.S. PROFIT SPLIT. The U.S. Product Profit for each
calendar year (or portion thereof for less than a full calendar year) shall be
shared between the Parties as follows:
(a) The following table represents the percentage split of
U.S. Product Profit, the calculation of which is set forth in
Section 6.4(b):
Annual Abbott Net Sales
In the U.S. Territory Percent of Product Profit
----------------------- -------------------------
Abbott Triangle
------ --------
*** ***
*** ***
(b) The sharing of the U.S. Product Profit shall be
determined on an aggregate basis for all Products as follows:
(i) If the Abbott Net Sales in the U.S. Territory
for the given calendar year (or portion thereof for less
than a full calendar year) is less than *** Dollars ($
*** ), the U.S. Product Profit shall be split *** to
Abbott and *** to Triangle; and
(ii) If the Abbott Net Sales in the U.S. Territory
for the given calendar year (or portion thereof for less
than a full calendar year) is equal to or greater than
*** Dollars ($ *** ), the U.S. Product Profit shall be
split *** to Abbott and *** to Triangle from the first
dollar of sales.
(c) The allocation of U.S. Product Profit (whether a
positive (profit) amount or a negative (loss) amount) between
Abbott and Triangle pursuant to Sections 6.4(a) and (b) as of the
end of the applicable calendar quarter or year shall be called
the "Abbott U.S. Profit Amount" and
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-37-
the "Triangle U.S. Profit Amount," respectively, which together
shall equal the U.S. Product Profit as of the end of such period.
(d) With respect to the U.S. Territory, for the first
calendar quarter of each calendar year, the "U.S. Adjustment
Amount" shall be determined for Abbott by subtracting the
Abbott U.S. Profit Amount from the Abbott Operating Margin in
the U.S Territory and shall be determined for Triangle by
subtracting the Triangle U.S. Profit Amount from the Triangle
Operating Margin in the U.S. Territory. For the second, third
and fourth calendar quarters of each calendar year, the U.S.
Adjustment Amount shall be determined, with respect to such
calendar quarter (i) for Abbott by subtracting the Abbott U.S.
Profit Amount as of the end of such calendar quarter from the
sum of (A) the Abbott Operating Margin in the U.S. Territory
for such calendar quarter and (B) the Abbott U.S. Profit
Amount as of the end of the immediately preceding calendar
quarter and (ii) for Triangle by subtracting the Triangle U.S.
Profit Amount as of the end of such calendar quarter from the
sum of (A) the Triangle Operating Margin in the U.S. Territory
for such calendar quarter and (B) the Triangle U.S. Profit
Amount as of the end of the immediately preceding calendar
quarter. If the U.S. Adjustment Amount is positive for Abbott
and negative for Triangle, then Abbott shall owe such positive
amount to Triangle. If the U.S. Adjustment Amount is negative
for Abbott and positive for Triangle, then Triangle shall owe
such positive amount to Abbott.
(e) In the event that the *** for any Product falls below
the *** at any time during the applicable period or any prior
calendar quarter or year, the Parties shall *** in the *** the
*** was utilized to *** the Products in the United States,
based on the Net Units of Product Sold in the U.S. Territory
for such period(s).
(f) The payment of amounts identified in this Section 6.4
shall be made in accordance with Section 6.6.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-38-
6.5 INTERNATIONAL PROFIT SPLIT. The International Product
Profit for each calendar year (or portion thereof for less than a full calendar
year) shall be shared between the Parties as follows:
(a) The following table represents the percentage split of
International Product Profit, the calculation of which is set
forth in 6.5(b):
Annual Abbott Net Sales
In the International Territory Percent of Product Profit
------------------------------ ----------------------------------------------------
Abbott Triangle
------------------------ ------------------------
*** *** ***
*** *** ***
*** *** ***
(b) The sharing of the International Product Profit shall be
determined on an aggregate basis for all Products as follows:
(i) If the Abbott Net Sales in the International
Territory for the given calendar year (or portion thereof
for less than a full calendar year) is less than ***
Dollars ($ *** ), the International Product Profit shall
be split *** to Abbott and *** to Triangle;
(ii) If the Abbott Net Sales in the International
Territory for the given calendar year (or portion thereof
for less than a full calendar year) is equal to or
greater than *** Dollars ($ *** ) but is less than ***
Dollars ($ *** ), "X%" of the International Product
Profit shall be split *** to Abbott and *** to Triangle,
and "Y%" of the International Product Profit shall be
split *** to Abbott and *** to Triangle. "X%" shall be
determined by dividing *** Dollars ($ *** ) by the total
Abbott Net Sales in the International Territory for such
calendar year (or portion thereof for less than a full
calendar year), and "Y%" shall be calculated by subtracting
X% from one hundred percent (100%); and
(iii) If the Abbott Net Sales in the International
Territory for the given calendar year (or portion thereof
for less than a full calendar year) is equal to or greater
than *** Dollars ($ *** ), "X%" of the
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-39-
International Product Profit shall be split *** to Abbott
and *** to Triangle; "Y%" of the International Product
Profit shall be shared equally by the Parties; and "Z%"
of the International Product Profit shall be split *** to
Abbott and *** to Triangle. "X%" shall be determined by
dividing *** Dollars ($ *** ) by the total Abbott Net
Sales for such calendar year (or portion thereof for less
than a full calendar year). "Y%" shall be determined by
dividing *** Dollars ($ *** ) by the total Abbott Net
Sales in the International Territory for such calendar
year (or portion thereof for less than a full calendar
year). "Z%" shall be determined by subtracting the sum of
X% and Y% from one hundred percent (100%).
(c) The allocation of International Product Profit (whether
a positive (profit) amount or a negative (loss) amount) between
Abbott and Triangle pursuant to Sections 6.5(a) and (b) as of the
end of the applicable calendar quarter or year shall be called
the "Abbott International Profit Amount" and the "Triangle
International Profit Amount," respectively, which together shall
equal the International Product Profit as of the end of such
period.
(d) With respect to the International Territory, for the
first calendar quarter of each calendar year, the
"International Adjustment Amount" shall be determined by
subtracting the Abbott International Profit Amount from the
Abbott Operating Margin in the International Territory. For
the second, third and fourth calendar quarters of each
calendar year, the International Adjustment Amount shall be
determined, with respect to such calendar quarter, by
subtracting the Abbott International Profit Amount as of the
end of such calendar quarter from the sum of (A) the Abbott
Operating Margin in the International Territory for such
calendar quarter and (B) the Abbott International Profit
Amount as of the end of the immediately preceding calendar
quarter. If the International Adjustment Amount is positive,
then Abbott shall owe such amount to Triangle. If the
International Adjustment Amount is negative, then Triangle
shall owe such amount to Abbott, subject to Section 6.6(b).
(e) The payment of amounts identified in this Section 6.5
shall be made in accordance with Section 6.6.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-40-
6.6 PAYMENTS.
(a) THIRD PARTY ROYALTIES FOR THE INTERNATIONAL TERRITORY.
Abbott shall pay to Triangle the Third Party Royalties for the
International Territory, in the manner provided in Section
6.6(c).
(b) PAYMENT DEFERRAL. With respect to each calendar
quarter, if the International Adjustment Amount is negative
for such quarter (i.e. Triangle owes such amount to Abbott),
Triangle shall be permitted to defer payment of such
International Adjustment Amount to the extent, and only to the
extent, that Triangle's cash, cash equivalents, short term and
long term investments (at the end of the calendar quarter, as
defined in the footnotes to Triangle's consolidated financial
statements, hereinafter "Triangle's Cash") is or would be less
than $ *** after such payment. Any amounts deferred pursuant
to the immediately preceding sentence shall be added to a
"Reimbursement Account" maintained for Triangle, which shall
initially be zero. The Reimbursement Account shall bear simple
interest at prime (as reported in the Wall Street Journal on the
last business day of each calendar month) plus 1% per annum on
the amount, if any, from time to time in the Reimbursement
Account. With respect to each subsequent calendar quarter, if
the International Adjustment Amount is positive for such
quarter and there is a balance in the Reimbursement Account
(plus any accrued but unpaid interest), Abbott shall be
permitted to offset payment of such International Adjustment
Amount (otherwise owing to Triangle) to the extent, and only
to the extent, of the current balance in the Reimbursement
Account. If Triangle's Cash exceeds $ *** when there is a
balance in the Reimbursement Account (plus any accrued but
unpaid interest), Triangle shall apply such excess to pay down
the amount of such balance in connection with the applicable
Final Payment. In addition, if Abbott is obligated to make any
payment(s) to Triangle pursuant to Section 5 at any time when
there is a balance in the Reimbursement Account, Abbott shall
be permitted to offset a portion of such payment to the
extent, and only to the extent, that Triangle's Cash would
exceed $*** after such payment. The balance in the
Reimbursement Account (including any accrued but unpaid
interest) shall be correspondingly reduced by the amount of
any Triangle payment or Abbott offset under this Section
6.6(b). Triangle shall promptly provide to Abbott upon its
reasonable request a written report indicating Triangle's Cash
to permit Abbott to determine Triangle's obligations under
this Section 6.6(b). Triangle may at its option elect to pay
down the Reimbursement Account (including any accrued but
unpaid interest) when Triangle's Cash is less than $ ***.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-41-
(c) FINAL PAYMENT. After each calendar quarter, the U.S.
Adjustment Amount (payable pursuant to Section 6.4), the
International Adjustment Amount (payable pursuant to Section
6.5, except to the extent deferred or offset pursuant to
Section 6.6(b)), any Third Party Royalties due Triangle for
the International Territory pursuant to Section 6.6(a), and
any other payment by Triangle to Abbott pursuant to Section
6.6(b) shall be netted, and the net amount (the "Final
Payment") shall be paid by the owing Party to the other Party.
If the Final Payment for each calendar quarter is due to
Abbott from Triangle, it shall be paid upon the delivery of
the Triangle report submitted pursuant to Section 6.2. If the
Final Payment is due to Triangle from Abbott, it shall be paid
within ten (10) business days of Abbott's receipt of Triangle's
report under Section 6.2.
6.7 YEAR-END RECONCILIATION. Within forty-five (45) days
after the end of each calendar year starting with the first calendar year for
which the Parties have budgeted expenditures under Article 4, or as otherwise
necessary, the Product Profit split between the Parties pursuant to Sections
6.4 and 6.5, as well as the Reimbursement Account, for such calendar year
shall be recalculated (the "Reconciliation Amount") to reflect any amended
information (such as amended sales data, product returns or chargebacks)
relevant to the calculation of the Reconciliation Amount for such calendar
year. Within ten (10) business days after any such recalculation, Abbott
shall pay to Triangle, or Triangle shall pay to Abbott, as the case may be,
an amount equal to the difference between the most recent prior calculation
of the Final Payment or the Reconciliation Amount and the latest
Reconciliation Amount.
6.8 PERFORMANCE ADJUSTMENTS.
(a) FAILURE TO ACHIEVE U.S. *** . If for any calendar
year, either Party fails to achieve at least ninety percent
(90%) of such Party's *** for such calendar year in the U.S.
Territory, such Party's share of the split of U.S. Product
Profits pursuant to Sections 6.4(a) and (b) for such calendar
year shall be *** for each *** from the *** . For example, if
a Party fulfills only *** of its *** and it is entitled to ***
of the U.S. Product Profits, such Party's share of the U.S.
Product Profits for such calendar year shall be reduced to ***
and the other Party's share of the U.S. Product Profit shall
be *** . In no event shall the adjustment to U.S. Product
Profits exceed *** . For example, if a Party would otherwise
be entitled to a *** profit split, such Party's profit split
could not fall below *** as a result of this Section 6.8(a).
Notwithstanding the foregoing, neither Party shall
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-42-
be deemed to have failed to achieve the required percentage of
its *** if such failure resulted from an event of Force
Majeure pursuant to Article 19. The calculations in this
Section 6.8(a) of a Party's achievement of its *** shall be
made on an aggregate basis across all Products and any
reduction in the split of U.S. Product Profit shall apply to
all Products for such calendar year.
(b) FAILURE TO ACHIEVE INTERNATIONAL PERFORMANCE
COMMITMENT. If for any calendar year, Abbott fails to *** of
the *** for such calendar year with respect to the
International Territory, Abbott's share of the split of
International Product Profits pursuant to Sections 6.5(a) and
(b) shall be reduced by *** for each *** from the ***
commitment level. For example, if Abbott has outlays equal to
only *** of *** and it is entitled to *** of the International
Product Profits, Abbott's share of the International Product
Profits shall be reduced to *** and Triangle's share of the
International Product Profit shall be increased to *** . In no
event shall the adjustment to International Product Profits
exceed *** . For example, if Abbott would otherwise be
entitled to a *** profit split, Abbott's profit split could not
fall below *** as a result of this Section 6.8(b).
Notwithstanding the foregoing, Abbott shall not be deemed to have
failed to achieve the required percentage of its commitment if
such failure resulted from an event of Force Majeure pursuant to
Article 19.
6.9 EXAMPLES. Exhibit 6.9 sets forth various examples of the
calculations of the profit split required by this Article 6.
ARTICLE 7
METHOD OF PAYMENTS
7.1 PAYMENT PROCEDURE. All payments due under this Agreement
shall be paid in Dollars by wire transfer or by such other means agreed upon by
the Parties, in each case at the expense of the payor, for value no later than
the due date thereof (with twenty four 24 hours advance notice of each wire
transfer) to the following bank accounts or such other bank accounts as the
payee shall designate in writing within a reasonable period of time prior to
such due date:
If to Abbott:
Account Name: Abbott Laboratories
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-43-
Account Number: ***
Bank: ***.
***
ABA Number: ***
If to Triangle:
Account Name: Triangle Pharmaceuticals, Inc.
Account Number: ***
Bank: ***
Reference: ***
ABA Number: ***
7.2 INTEREST CHARGE. Without limiting either Party's rights
to pursue any other remedies at law or in equity, if any Party underpays or
otherwise fails to pay any payment required under this Agreement within ten
(10) business days of the due date thereof, then, unless such discrepancy
resulted from the failure of the other Party to supply accurate or complete
information, such other Party shall pay annually *** until the date such payment
is paid in full.
7.3 FOREIGN CURRENCY EXCHANGE. All payments and reports
shall be made in Dollars. With respect to (i) sales of Products invoiced in a
currency other than Dollars; (ii) costs and expenses paid or incurred in a
currency other than Dollars; or (iii) any other instance when an item
required to be accounted for under this Agreement is expressed in a currency
other than Dollars, such amounts shall first be determined in the currency of
the country in which they are earned, paid or incurred and then converted
into Dollars using the *** ; provided, however, that in the event of rapidly
changing exchange rates, Abbott shall consult with Triangle and the Parties
shall agree on a mechanism to assure that exchange rates are calculated to
reflect fair market values on an ongoing basis. In the event that Abbott Net
Sales are accrued in a country where the local currency is blocked and cannot
be removed from the country, Abbott shall not be relieved from its obligation
to make payments hereunder or, subject to applicable Legal Requirements, the
timing of such payments.
7.4 REPORTING PERIOD. Whenever in this Agreement Abbott is
required to report or account for any financial matter on a calendar quarter or
calendar year basis, such reference shall be deemed to be a reference to a
Quarterly Reporting Period or Annual Reporting Period, unless Abbott switches
its financial
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-44-
reporting in the International Territory to a calendar year basis, in which case
all reporting and accounting shall be on a calendar quarter or calendar year
basis.
7.5 TAXES. Where any sum due to be paid to either Party
hereunder is subject to any withholding or similar tax, the Parties shall use
their best efforts to do all such acts and things and to sign all such documents
as will enable them to take advantage of any applicable double taxation
agreement or treaty. In the event there is no applicable double taxation
agreement or treaty, or if an applicable double taxation agreement or treaty
reduces but does not eliminate such withholding or similar tax, the payor shall
pay such withholding or similar tax to the appropriate government authority,
deduct the amount paid from the amount due the payee and secure and send to the
payor the best available evidence of such payment.
7.6 NO DOUBLE COUNTING OF COSTS. For the purpose of
determining any cost or expense which is shared by the Parties under this
Agreement or otherwise invoiced by one Party to another under this Agreement,
any cost or expense allocated by either Party to a particular cost category
shall be consistent with the terms of this Agreement and shall not also be
allocated to another category. In the event a cost or expense might arguably
fall into more than one category, the Parties shall mutually determine which
category such cost or expense most appropriately falls into.
7.7 SALES BY PERMITTED SUBLICENSEES. In the event Abbott
enters into an agreement with a Third Party to distribute or sell the Products
as an Abbott sublicensee in accordance with Section 2.4, such arrangements shall
include an obligation for the sublicensee to account for and report its net
sales of such Products on the same basis as if such sales were net sales by
Abbott.
7.8 BOOKS AND RECORDS. Each Party shall keep full, true and
accurate books of account and records in accordance with generally accepted
United States accounting principles, consistently applied, containing all
particulars and reasonable supporting documentation as may be necessary for
the purpose of (i) determining the payments required by Article 6 and (ii)
such Party's compliance in other respects with its obligations under this
Agreement, including the number and types of Details performed by each party
in the U.S. Territory. All such books of account, records and supporting
documentation shall be open for inspection at a time mutually acceptable to
the Parties, during normal business hours no more frequently than *** once
each by the other Party and each Triangle Licensor, for *** following the end
of each calendar year to which they apply, by any independent certified public
accountant retained by the other Party (or by a Triangle Licensor)
(reasonably acceptable to the Party to be audited) on behalf of such other
Party (or by a Triangle Licensor) for the purpose of verifying the audited
Party's reports and/or compliance in other respects with obligations under
this Agreement. If such audit discloses an underpayment or overpayment, the
owing Party shall promptly pay to the other Party the amount of such
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-45-
underpayment or refund the amount of any overpayment, as the case may be,
plus interest charges calculated in accordance with Section 7.2. The costs
and expenses of performing such audits shall be borne by the auditing Party
and excluded from the auditing Party's SG&A; provided, however, that if the
amount of an underpayment by the audited Party is *** or more of the amount
actually due, then the reasonable out-of-pocket costs of such audit shall be
borne solely by the audited Party and excluded from such Party's SG&A.
7.9 INTERNATIONAL EXPENSES INCLUDABLE IN SG&A. Triangle
shall invoice Abbott for costs and expenses incurred by Triangle with respect
to the International Territory which, pursuant to the terms of this
Agreement, are includable in Abbott SG&A (other than Triangle Third Party
Royalties which shall be reimbursed pursuant to Section 6.6), and Abbott
shall pay to Triangle the amount invoiced within thirty (30) days of the invoice
date.
ARTICLE 8
PRODUCT SUPPLY AND DISTRIBUTION
8.1 PRODUCT DISTRIBUTION. Except as and to the extent
provided in this Agreement, Abbott shall exclusively distribute the Products
in the Territories to Third Party customers, including all activities
ancillary thereto (including, without limitation, warehousing and shipping).
Abbott shall use efforts at least commensurate with that used to distribute
its own pharmaceutical products of equivalent commercial value to distribute
Products in the Territories. Abbott shall keep Triangle fully apprised with
respect to its distribution activities and shall provide Triangle with the
input regarding these activities. Subject to the terms of this Agreement,
Abbott shall control all final decisions regarding such distribution
activities.
8.2 PRODUCT SUPPLY. In the U.S. Territory, Abbott shall
exclusively purchase from Triangle or from its designated Third Party
manufacturers, and Triangle or its designated Third Party manufacturers shall
exclusively supply to Abbott, Abbott's requirements for the Products in the
U.S. Territory. Product supply with respect to the International Territory
shall be dictated as provided in the Supply Agreement. To the extent that any
Product is sourced from Triangle or its designated Third Party manufacturers,
the sales forecast procedures set forth in this Sections 8.2 and 8.3 shall
apply thereto, except as otherwise provided in the Supply Agreement. The
Parties will cooperate to determine manufacturing strategy and objectives for
the supply of Compounds and Products, consistent with the terms of this
Agreement and any Third Party manufacture and supply chain agreements.
(a) SALES FORECAST. Within *** prior to the Launch of any
Product in the U.S. Territory (except for MKC-442 such period
shall be *** ), the U.S. Marketing
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-46-
Board shall establish a Sales Forecast for such Product
specifying anticipated requirements of each Product in the
U.S. Territory for the *** period commencing approximately ***
prior to the anticipated date of Launch (the "Sales
Forecast"). The U.S. Marketing Board shall be responsible for
establishing, preparing and updating the Sales Forecast for
the U.S. Territory.
(b) ROLLING FORECASTS. Such Sales Forecasts for the U.S.
Territory shall be updated on a quarterly basis intervals so
that at the beginning of each such calendar year, Triangle
shall have been provided with a rolling Sales Forecast for the
*** period commencing with the *** calendar quarter after the
date on which such Sales Forecast is submitted (i.e.
approximately ***). By way of example only, at the end of the
*** quarter of a calendar year (assuming a Product has been
Launched), the U.S. Marketing Board shall provide Triangle with
a Sales Forecast of the anticipated requirements of Product for
the *** consisting of the *** calendar year.
(c) COMMERCIAL SCALE-UP AND DEVELOPMENT. Except as and to
the extent otherwise specified in this Agreement, Triangle
shall exercise its Reasonable Best Efforts to pursue the
process development of the Products. The Parties will
cooperate to determine process development strategy and
objectives for the production of Products, consistent with the
terms of this Agreement and any Third Party manufacture and
supply agreements; provided that Triangle shall have control
of all final decisions regarding process development. Triangle
shall bear the full costs and expenses of such process
development, provided that the costs and expenses of producing
validation batches of the Products shall be included in Abbott
Cost of Goods and/or Triangle Cost of Goods, as applicable, to
the extent that the Product from such validation batches are
ultimately Sold.
(d) TRIANGLE THIRD PARTY MANUFACTURERS. In the event that
Triangle is subject to *** with Third Party Compound or Product
manufacturers ***.
8.3 PRODUCT ORDERING AND DELIVERY. Abbott shall purchase the
Products and Triangle will deliver the Products in accordance with the following
procedures:
(a) Abbott shall purchase Products at the applicable
Transfer Price by means of purchase orders submitted to Triangle
at least *** in advance of the requested
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-47-
delivery date. Each purchase order shall be governed by the terms
of this Agreement and none of the terms or conditions of Abbott's
purchase orders, Triangle's acknowledgment forms or any other
forms exchanged by the parties shall be applicable, except those,
to the extent consistent with the terms set forth herein,
specifying quantity ordered, delivery locations and delivery
schedule and invoice information;
(b) All purchase orders for delivery during a calendar
month that do not exceed *** of the latest Sales Forecast
covering such month (excluding any amendments subsequent to
the original date of such Sales Forecast) shall be deemed
accepted by Triangle. Triangle shall use its Reasonable Best
Efforts to supply Abbott with any Product in excess of *** of
such Sales Forecast. All other purchase orders must be
accepted or rejected by Triangle, in writing, by facsimile or
air courier, within fifteen (15) business days after receipt
from Abbott. If Triangle does not provide such notice of
acceptance or rejection within fifteen (15) business days, it
shall be deemed to have accepted such purchase orders in full.
(c) All Products shall be delivered *** as identified by
Triangle;
(d) Abbott shall arrange and pay for shipping from the
*** point to Abbott's distribution centers (with such costs
and expenses being part of Abbott's Distribution Expense), and
the risk of loss shall pass from Triangle to Abbott when the
Products are delivered to the carrier at the *** ; and
(e) Triangle shall invoice Abbott at the Transfer Prices for
all Products delivered, and Abbott shall pay to Triangle the
amount invoiced within thirty (30) days of the invoice date.
8.4 PRICING
(a) U.S. TERRITORY. *** shall establish the wholesale
acquisition cost in the U.S. Territory ("WAC") for each
Product sold by Abbott to wholesalers and other Third Party
customers, provided that in no event shall the *** .
(b) TRANSFER PRICING IN THE U.S. TERRITORY. With respect
to products to be sold for use in the U.S. Territory, Triangle
agrees to sell each Product to Abbott and Abbott agrees to
purchase each Product from Triangle at ***
(the "Transfer Price"). The "Transfer WAC" for each Product in
the U.S. Territory shall be established by *** and may be
modified by *** at any time; provided that (i) ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-48-
shall consult with *** a minimum of fifteen (15) days prior to
*** the Transfer WAC and (ii) if *** notifies *** during such
fifteen (15) day period that it believes that the Transfer WAC
*** that proposed by *** (and the matter is not resolved
pursuant to Section 20.3 (b) within such fifteen (15) day
period) the *** shall be promptly *** mutually acceptable to the
Parties. If the Parties are unable to promptly resolve such
matter, either Party may elect to refer *** of such *** to the
President of the Center for Public Resources, 366 Madison
Avenue, New York, New York 10017. The decision of the
independent marketing consultant shall be the final decision
with respect to such matter; provided, that such decision
shall not affect the right of *** to subsequently modify the
*** pursuant to the notice and other provisions set forth
above in the Section 8.4(b). Triangle shall deliver a letter
to First Databank informing First Databank that Abbott shall
be solely authorized to utilize the N.D.C. numbers for the
Products to establish *** for such Products. In the event that
the *** for any Product falls below the ***, the Parties shall
*** .
(c) INTERNATIONAL TERRITORY. *** shall determine the
pricing for each Product sold by Abbott to wholesalers and
other Third Party customers for use in the International
Territory; provided, however, that *** or its Affiliate, as
applicable, shall establish such prices in a given country
consistent with the practices and methodologies it uses in
establishing such prices for other pharmaceutical products
in the same therapeutic category in such country having
comparable commercial value.
8.5 INVENTORIES.
(a) Subject to the receipt of Product from Triangle in
accordance with this Article 8, Abbott shall use its Reasonable
Best Efforts to maintain adequate inventories of the Products in
the Territories to meet the needs of its customers on a timely
basis based upon, among other factors, the Sales Forecast,
previous demand histories and seasonal trends, and any customers'
contractual commitments.
(b) In the event of Product shortages, available supplies
shall be allocated first to permit any ongoing pre-clinical or
clinical trials or other product development activities to
continue on schedule. Supplies remaining available after that
initial allocation shall be allocated on a country-by-country
basis, pro rata based upon historical demand or some other
mechanism to be mutually agreed upon by the Parties.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-49-
8.7 CUSTOMER RELATIONS. With respect to customer complaints
relating to the Promotion or distribution of the Products, each Party shall act
promptly to remedy such complaints. All Product-related inquiries and Product
complaints shall be addressed as provided in Section 10.3. Without limiting the
generality of the foregoing, in the U.S. Territory, each Party shall be
responsible for responding to all customer complaints relating to such Party's
Co-Promotion and distribution of the Products under this Agreement and, in the
International Territory, Abbott shall respond to all such customer complaints,
with Triangle providing reasonable assistance requested by Abbott. Each Party
shall keep the other Party fully and promptly apprised of its receipt of any
such significant complaints in the Territories.
8.8 QUALITY CONTROLS. Both Parties shall institute quality
controls in accordance with generally accepted industry standards for the
storage, shipment, handling and distribution of the Products and shall define
responsibilities for key quality systems and a quality manual agreed to by both
Parties (including without limitation, Sample Packs) and shall comply with all
Legal Requirements relating to the storage, shipment, handling and distribution
of the Products. Triangle and Abbott shall institute quality controls in
accordance with generally accepted industry standards for the manufacture of
Products. Each Party shall have the right to audit all facilities used by the
other Party to fulfill their obligations under this Agreement (including any
Third Party manufacturing facilities, in accordance with the terms of the
underlying manufacturing agreement).
8.9 U.S. PRODUCT CHARACTERISTICS.
(a) Abbott shall not be obligated to accept from Triangle
any Product with less than the greater of (i) *** of approved
shelf life for such Product in the United States or (ii) ***
of remaining shelf life; provided, however, that a Product may
be shipped with a shorter shelf life of not less than *** if
that is the limit approved by the FDA upon Launch.
(b) Triangle shall provide Abbott with a certificate of
analysis with respect to each shipment of the Products to Abbott.
Full batch documentation, including batch production records, and
manufacturing and analytical records shall be available for
review by Abbott on site at the manufacturing facility used by
Triangle, during regular business hours and upon reasonable
advance written notice from Abbott.
(c) Abbott shall notify Triangle in writing of any
shortage in the quantity of any shipment of Product no later
than ten (10) business days following receipt of the Product. In
the event of any such shortage, Triangle shall make up the
shortage if replacement stock is available
-50-
in the next shipment of Product, but in any case no later than
twenty (20) days or, if no such replacement stock is available,
as soon as reasonably practical after receiving such notice, at
no additional cost to Abbott.
(d) Abbott recognizes that, except for that portion of the
Product supply manufactured by Abbott or its permitted
sublicensees, all Product supply will be manufactured by Third
Parties under agreement with Triangle, and that, while Triangle
will use its Reasonable Best Efforts, there can be no assurance
that the Product supplied by such Third Parties will be
sufficient to meet demand.
(e) With respect to all Triangle Third Party
manufacturers of finished Product, Triangle shall provide
Abbott with a continuing FDA guarantee in the format as set forth
in 21 C.F.R. Section 7.13(A)(2). With respect to Product
manufactured by Abbott or its permitted sublicensees, Abbott
shall provide Triangle with a continuing FDA guarantee in the
format as set forth in 21 C.F.R Section 7.13(A)(2).
(f) Abbott shall be entitled to a full refund of the
Transfer Price for any Product that Abbott returns or rejects
because such Product does not conform to the Product
specifications or the Product characteristics referenced in this
Section 8.9.
ARTICLE 9
LICENSE AND PATENT MATTERS
9.1 ADDITIONAL TRIANGLE THIRD PARTY ROYALTY. In the event
that, as a result of intellectual property rights in any of the Compounds
held by a Third Party, Triangle becomes or is, as of the Effective Date,
obligated to pay, with respect to such Compound, royalties (including
milestone payments, minimum royalties or other license fees) or any
judgments, damages, awards or any other form of compensation with respect to
such Compound in addition to those set forth in Exhibit 1.89, Triangle shall
be entitled to include such compensation as a Triangle Third Party Royalty,
allocated against the appropriate Products from time to time in its sole
discretion; provided, however, that Triangle shall only be permitted to
include as a Triangle Third Party Royalty in any period that amount of any
such compensation which would result in an aggregate net increase measured in
net additional royalty percentage points as a percentage of 'net sales' as
defined in the applicable Triangle License Agreement in Triangle Third Party
Royalties with respect to such Compound as follows:
-51-
MAXIMUM NET ADDITIONAL
'ROYALTY' PERCENTAGE POINTS
COMPOUND PER ANNUAL REPORTING PERIOD
-------- ---------------------------
FTC and/or DAPD 15% (basket
MKC-442 5%
L-FMAU 5%
By way of example only, if the current running royalty rate on MKC-442 were
8%, and a court subsequently mandates that an additional 7% royalty is
payable to a Third Party, then Triangle, at its discretion, would be able to
include up to 5% of the 7% mandated royalty, resulting in total Triangle
Third Party Royalties for MKC-442 of 13%. The balance of any excess
compensation not includable in Third Party Royalties in a given Annual
Reporting Year may be carried forward to subsequent Annual Reporting Years,
subject to the applicable limitation for such periods. Again, by way of
example only, if a $5 million judgment were awarded against Triangle for
infringement of patent rights in MKC-442 held by a Third Party, Triangle
would be able, at its discretion, to amortize in any current or future period
only that dollar amount of the judgment which equals 5% of the net sales of
products containing MKC-442 (as 'net sales' is defined in the MKC License
Agreement), but would be able to carry forward any excess/unamortized amounts
into subsequent periods, subject to the applicable limitation for such
periods. Triangle shall be permitted to include within the above-referenced
basket Triangle Third Party Royalty pursuant to this Section 9.1, (i) up to
15% in net additional percentage points collectively for FTC and DAPD,
allocated by Triangle from time to time between the Compounds in Triangle's
sole discretion (including net additional royalties payable in accordance
with the 'GW License Agreement' as defined in the first amendment to the FTC
License Agreement) and (ii) with respect to L-FMAU, the 'Marketing Milestone
Payment' as defined in section 3.2(a)(vii) of the L-FMAU License Agreement.
Nothing in this Agreement shall be deemed to be an admission by Triangle of
any infringement of any Third Party rights or to impose an affirmative
obligation on Triangle to enter into any additional license agreements or
arrangements, or to agree to any settlements, in connection with any of the
Compounds.
9.2 CONSENTS. Triangle shall use its Reasonable Best
Efforts to obtain the consent or approval from each of the Triangle Licensors
(excluding Bukwang Pharm. Ind. Co., Ltd.) to enter into and perform this
Agreement and the Triangle-Abbott Alliance Agreements. Such consent or
approval shall be in substantially the form attached hereto as Exhibit 9.2.
9.3 TRIANGLE COVENANTS. Triangle covenants that during the
Term, it will:
(a) fulfill all of its obligations under each of the
Triangle License Agreements, including, but not limited to, any
royalty, milestone or other monetary obligations set forth
-52-
therein, except for any obligations which Abbott or its
Affiliates assumes hereunder as a Triangle sublicensee;
(b) take no action or omit to take any action which would
cause it to be in breach of any provision of any of the Triangle
License Agreements which would or could otherwise trigger
termination of any such Agreements (e.g., bankruptcy, change of
control in whole or with respect to any part of the Territories)
or which would or could cause the conversion of any Triangle
License Agreement from an exclusive to nonexclusive agreement, in
whole or with respect to any part of the Territories;
(c) notify Abbott in the event that, and within ***
after, Triangle receives notice from any Triangle Licensor
that Triangle is in default under any Triangle License
Agreement or that any Triangle Licensor has terminated or
intends to terminate any Triangle License Agreement in whole
or with respect to any part of the Territories or convert any
Triangle License Agreement from an exclusive to non-exclusive
agreement in whole or with respect to any part of the
Territories. In the event of any default of the type described
in this Section 9.3(c), Triangle agrees that if it fails or
does not intend to cure such default, Abbott may, at Abbott's
option and to the extent permitted under the applicable
license agreement, do so and may offset against Triangle's
share of the U.S. Product Profit and the International Product
Profit, as applicable, any reasonable expenses Abbott incurs
in curing such default; provided, however, that if any portion
of such expenses would have otherwise been included as part of
Third Party Royalties, Abbott and Triangle shall account for
such portion of expense as a Triangle Third Party Royalty; and
provided, further, that if such default relates to any
activity which, as between the Parties, Abbott is obligated to
perform independently with Triangle under this Agreement,
Abbott's cost of curing such default shall not be deducted
from Triangle's share of the U.S. Product Profit and the
International Product Profit but shall be accounted for as
otherwise permitted by this Agreement;
(d) notify Abbott in the event that, and within ***
after, Triangle receives any notice required under Section
3.13(iii) of the FTC License Agreement. In the event of any
default of the type described in Section 3.13(iii) of the FTC
License Agreement, Triangle agrees that if it and the Triangle
Licensor under the FTC License Agreement fail or do not intend
to cure such default, Abbott may, at Abbott's option and to
the extent permitted under the applicable license
agreement(s), do so and may offset against Triangle's share of
the U.S. Product Profit and the International Product Profit any
reasonable expenses Abbott incurs in curing such
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-53-
default; provided, however, that if any portion of such
expenses would have otherwise been part of Third Party
Royalties or act as a credit against Third Party Royalties,
Abbott and Triangle shall account for such portion of that
expense as part of Third Party Royalties; and provided,
further, that if such default relates to any activity which,
as between the Parties, Abbott is obligated to perform
independently with Triangle under this Agreement, Abbott's
cost of curing such default shall not be deducted from
Triangle's share of the Product Profits but shall be
accounted for as otherwise permitted by this Agreement;
(e) notify Abbott in the event that, and within ***
after, Triangle receives any notice from a Triangle Licensor
required under Section 2.6 of the FTC License Agreement or
Section 2.6 of the DAPD License Agreement. Triangle shall
consult with Abbott prior to making its decision regarding the
acquisition of any sublicense pursuant to such sections.
(f) provide Abbott with a copy of any reports,
correspondence or notice within *** from the submission to or
receipt from any Triangle Licensor under or relating to any
Triangle License Agreement, Compound or Product;
(g) notify Abbott if and when ( *** ) it decides to
abandon or allow to lapse any patent application or patent or
not to initiate or take any other patent prosecution activity
that it has under the Triangle License Agreements or with
respect to any Product Patent. In such event, Triangle agrees
that Abbott may assume any such patent prosecution activity in
connection therewith, and Triangle shall reasonably cooperate
with Abbott in connection with any such patent prosecution
activity and, if requested by Abbott, shall reasonably seek
the cooperation of the applicable Triangle Licensor; and
(h) take no action or omit to take any action which would
result in derogation of the Product Patents in any existing or
future litigation or interference with any Third Parties or
future oppositions to foreign patents of any Third Parties.
9.4 ABBOTT COVENANTS.
(a) Abbott covenants and agrees that during the Term, on its
behalf and on behalf of each of its permitted sublicensees, to:
(i) take no action or omit to take any action which
would result in derogation of the Product Patents in any
existing or future litigation or interference with any Third
Parties or future oppositions to foreign patents of any
Third Parties;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-54-
(ii) abide by all of the applicable terms and
conditions of the Triangle License Agreements which apply to
it in its capacity as a sublicensee pursuant to Section 2.3
of this Agreement; and
(iii) process all communications with any Triangle
Licensor through a Triangle representative to be identified
by Triangle after the Effective Date, except for those
communications specifically contemplated herein.
(b) Abbott hereby covenants and agrees to the extent that
there is a conflict between the Triangle-Abbott Alliance
Agreements and the applicable Triangle License Agreement, the
terms and provisions of the Triangle License Agreement shall
control.
(c) To the extent that Abbott incurs out-of-pocket costs in
connection with its obligation(s) to abide by the applicable
terms of the Triangle License Agreements, which costs are not
otherwise included in Abbott SG&A and which do not result from
Abbott's performance of its other obligations or exercise of its
rights identified elsewhere in this Agreement or reasonably
ancillary thereto, such costs shall be included in Abbott SG&A in
the appropriate territory; provided, that if either Party
determines or believes that such a cost may be incurred, such
Party shall provide reasonable advance notice, to the extent
possible, to the other and the Parties shall meet at a mutually
agreed time and place to discuss the obligations leading to such
costs.
9.5 THIRD PARTY INFRINGEMENT. If Abbott or Triangle become
aware of any activity that such Party believes infringes a Valid Claim of a
Product Patent, such Party shall promptly notify the other Party of all
relevant facts and circumstances pertaining to the potential infringement.
The Primary Enforcement Party shall have the right to enforce any rights
within the Product Patents against such infringement, at its own cost and
expense; provided, however, with respect to *** alternative provisions
apply, as specified in the applicable Triangle License Agreement or the GW
License Agreement (as defined in the first amendment to the FTC License
Agreement), as applicable, and the Parties recognize that only if such
Triangle Licensor fails or declines to enforce such patent rights shall the
Parties, to the extent permitted by the terms of the applicable Triangle
License Agreement, have enforcement rights provided by this Section 9.5 and
Section 9.6. The other Party, at its own expense, shall cooperate with the
Primary Enforcement Party in such effort, including being joined as a party
to such action if necessary, and Triangle shall reasonably seek the
cooperation of the applicable Triangle Licensor. Any damage award or
settlement in excess of the cost and expense of prosecuting such infringement
action *** of any such award and settlement shall be added to the U.S.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-55-
Product Profit and/or the International Product Profit, as the case may be, and
split between the Parties as set forth in this Agreement.
9.6 SECONDARY ENFORCEMENT PARTY'S RIGHT TO PURSUE THIRD
PARTY INFRINGERS. If the Primary Enforcement Party shall fail, within the
lesser of (i) *** of the notice of infringement required by Section 9.5 or
(ii) *** under the applicable Triangle License Agreement, to either (A)
terminate such infringement or (B) institute an action seeking to prevent
continuation thereof, and thereafter to diligently prosecute such action, or
if the Primary Enforcement Party sooner notifies the other Party that it does
not plan to terminate the infringement or institute such action, then the
Secondary Enforcement Party shall have the right to do so at its own expense.
The other Party, at its own expense, shall cooperate in such effort,
including being joined as a party to such action, and Triangle shall
reasonably seek the cooperation of the applicable Triangle Licensor. Any
damage award or settlement in excess of the cost and expense of prosecuting
such infringement action shall *** of any such award and settlement shall be
added to the U.S. Product Profit and/or the International Product Profit, as
the case may be, and split between the Parties as set forth in this Agreement.
9.7 TRIANGLE'S LICENSOR'S RIGHT TO PURSUE THIRD PARTY
INFRINGEMENT. If both Triangle and Abbott shall fail within *** of the notice
of infringement required by Section 9.5 or such shorter period of time
prescribed by the applicable Triangle License Agreement, to either (i)
terminate such infringement or (ii) institute an action to prevent
continuation thereof, and diligently prosecute such action, or if Triangle
sooner notifies such Triangle Licensor that Triangle and Abbott do not plan
to terminate the infringement or institute such action, then the Parties
recognize that the Triangle Licensor of such Product or Compound will have
the right to do so under the Triangle License Agreement. The Parties, at
their respective expense, shall cooperate with the Triangle Licensor in such
effort, including being joined as a party to such action. The portion, if
any, of a damage award or settlement which is shared by the Triangle Licensor
with Triangle shall be added to U.S. Product Profit and/or the International
Product Profit, as the case may be, and split between the Parties as set
forth in this Agreement.
9.8 INTERNATIONAL PATENT ENFORCEMENT COSTS AND EXPENSES ***
. Abbott shall reimburse Triangle for patent enforcement costs and expenses
incurred with respect to the International Territory by Triangle pursuant to
Sections 9.5 and 9.6 which, pursuant to the terms of this Agreement, are ***
and subject to reimbursement as provided in Section 7.9.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-56-
ARTICLE 10
ADVERSE EVENTS, RECALLS AND OTHER REGULATORY MATTERS
10.1 ADVERSE REACTION REPORTING. Each Party shall keep the other Party
informed of information in or coming into its possession or control
concerning side effects, injury, toxicity or sensitivity reaction and
incidents of severity thereof associated with commercial and clinical uses,
studies, investigations or tests of each Product in the Territories, whether
or not determined to be attributable to the Product. Triangle shall be
responsible for filing with the FDA, as required, any adverse reaction
reports that it receives. Abbott shall be responsible for filing with the
appropriate regulatory authorities in the International Territory ***, as
required, adverse reaction reports that it receives. The responsibilities of
the Parties with respect to (i) notification of adverse events from the
receiving Party to the other Party and (ii) the reporting of adverse drug
experiences to the regulatory authorities shall all be performed in
accordance with a procedure to be mutually agreed by the Parties after the
Effective Date, giving due consideration to the applicable regulatory
requirements in the Territories.
10.2 SAFETY ISSUES. In order to ensure that both Parties are provided
with an adequate opportunity to review safety matters, the Parties shall
mutually agree after the Effective Date on procedures with respect to (i)
regulatory reporting requirements, (ii) the review of Product labeling, (iii)
maintenance of a safety database and (iv) other safety issues.
10.3 PRODUCT COMPLAINTS AND INQUIRIES.
(a) Any medical or technical Product-related inquiries from
consumers, physicians or other Third Party customers who reside in the
(i) U.S. Territory shall be handled by Triangle and (ii) International
Territory shall be handled by Abbott. Triangle shall supply Abbott with
copies of its standard response information for the Products as well as
any updates thereto. Abbott shall use such information to respond to any
such inquiries from the International Territory. Information concerning
any such inquiries in the U.S. Territory received by Abbott's
Pharmacovigilance Department shall be forwarded to Triangle's Regulatory
Affairs Department within one business day of Abbott's receipt of the
request. Information concerning any such inquiries in the International
Territory received by Triangle shall be forwarded to Abbott's
Pharmacovigilance Department within one business day of Triangle's
receipt of the request. Each Party shall prepare and maintain a database
containing responses to such inquiries from consumers, physicians or
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-57-
other Third Party customers who reside in the territory for which it is
responsible, and shall make the contents available to the other Party
promptly from time to time upon request.
(b) Each Party shall maintain a record of all complaints or
reports of an actual or potential failure of any Product to meet the
standards set forth in regulatory filings or in agreements among the
Parties. Such failure may involve the finished Product or one of its
intermediate stages. The responsibilities of the Parties with respect to
(a) notification of the Product Complaint from the receiving Party to the
other Party and (b) the handling of Product Complaints shall all be
performed in accordance with a procedure to be mutually agreed by the
Parties after the Effective Date.
10.4 PRODUCT RECALL. In the event that either Party determines that an
event, incident or circumstance has occurred which may result in the need for
a recall or other removal of any Product, or any lot or lots thereof, from
the market, such Party shall advise the other and the Parties shall consult
with respect thereto. Triangle shall have the sole authority to decide
whether to commence, and the sole responsibility for the handling and
disposition of, a recall or other removal of such Product in the U.S.
Territory, and Abbott shall have the sole authority to decide whether to
commence, and the sole responsibility for the handling and disposition of, a
recall or other removal of such Product in the International Territory. Any
such recall or other removal, by either Party, shall occur pursuant to a
procedure to be mutually agreed by the Parties after the Effective Date.
Except as provided below, if a Product (or any lot or lots thereof) is
recalled or otherwise removed from the market, the costs and expenses of such
recall or removal, including, without limitation, expenses and other costs or
obligations to Third Parties, the cost and expense of notifying customers and
the costs and expenses associated with shipment of the recalled Product and
the cost and expense of destroying the Product removed from the market, if
necessary, except as provided below shall be (i) *** and (ii) ***. In the
event that such recall or removal costs, expenses or obligations result from
one Party's: (i) improper or negligent manufacturing, distribution, storage
or shipment of the Product; (ii) improper sampling practices or mishandling
of Sample Packs; (iii) Co-Promotion or Promotion of the Product in a manner
inconsistent with the Product's labeling; or (iv) violation of this
Agreement, such costs, expenses and obligations ***. In the event of a
recall, each Party shall promptly meet and discuss in good faith whether the
Parties' Detailing obligations should be reduced or redirected to another
Product.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-58-
10.5 PROCEDURES. Within (30) days after the Effective Date,
representatives of each Party shall meet to establish procedures to
accomplish the obligations set forth in Sections 10.1, 10.2, 10.3, 10.4 and
10.6.
10.6 GOVERNMENTAL CONTACT REPORTING. Each Party shall promptly notify the
other Party upon being contacted by the FDA or any other federal, state or local
governmental agency in the Territories for any material regulatory purpose
pertaining to this Agreement or to the Products. Neither Party shall respond to
the FDA or such governmental agency before consulting with the other Party,
unless under the circumstances pursuant to which FDA or such other federal,
state, local, national or supranational governmental agency contacts such Party,
it is not practical or lawful for the contacted Party to give the other Party
advance notice, in which event the contacted Party shall inform the other Party
of such contact as soon as practical and lawful. In addition, each Party shall
keep the other Party advised with respect to information concerning the safety
or efficacy of the Products. On the other Party's written request with respect
to any Product, each Party shall supply detailed information regarding such
safety, efficacy and medical information issues, including, if requested, copies
of safety reports filed with the FDA or any other governmental agency.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
11.1 ABBOTT REPRESENTATIONS AND WARRANTIES. Abbott hereby represents and
warrants to Triangle as follows:
(a) Abbott is a corporation duly organized and validly existing in
good standing under the laws of its state of incorporation, with all
requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted
and as proposed to be conducted;
(b) Abbott has all requisite corporate right, power and authority
to enter into this Agreement and the other Triangle-Abbott Alliance
Agreements and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the other
Triangle-Abbott Alliance Agreements by Abbott and the consummation by
Abbott of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on Abbott's behalf. This
Agreement and the other Triangle-Abbott Alliance Agreements constitute
legal, valid and binding obligations of Abbott, enforceable against
Abbott in accordance with the terms hereof and thereof;
-59-
(c) subject to compliance with the HSR Act and such filings as may
be required pursuant to federal and state securities laws, the execution,
delivery and performance by Abbott of this Agreement and each of the
other Triangle-Abbott Alliance Agreements and Abbott's compliance with
the terms and provisions hereof and thereof will not, result in any
violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or
acceleration of any obligation pursuant to, or a loss of benefits under,
any provision of Abbott's Articles of Incorporation or By-laws, or any
mortgage, indenture, lease or other agreement or instrument, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Abbott, its properties or assets; and
(d) no consent, approval or authorization of, or designation,
declaration or filing with any governmental authority is required in
connection with the valid execution, delivery or performance of this
Agreement and the other Triangle-Abbott Alliance Agreements by Abbott or
the consummation by Abbott of the transactions contemplated hereby or
thereby, except the filing of such forms with the United States
Department of Justice and the Federal Trade Commission as shall be
required by the HSR Act and the expiration or termination of any waiting
periods thereunder and such filings, as may be required to be made with
the SEC, any national securities exchange and any state securities
commission. Upon their execution and delivery, and assuming the valid
execution thereof by Triangle, this Agreement and the other
Triangle-Abbott Alliance Agreements will constitute valid and binding
obligations of Abbott, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or
at law) and except to the extent that the indemnification agreements of
in Section 15 hereof may be legally unenforceable.
11.2 TRIANGLE REPRESENTATIONS AND WARRANTIES. Triangle hereby represents
and warrants to Abbott as follows:
(a) Triangle is a corporation duly organized and validly existing
in good standing under the laws of its state of incorporation, with all
requisite corporate power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted
and as proposed to be conducted;
-60-
(b) Triangle has all requisite corporate right, power and
authority to enter into this Agreement and the other Triangle-Abbott
Alliance Agreements and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the
other Triangle-Abbott Alliance Agreements by Triangle and the
consummation by Triangle of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on
Triangle's behalf. This Agreement and the other Triangle-Abbott Alliance
Agreements constitute legal, valid and binding obligations of Triangle,
enforceable against Triangle in accordance with the terms hereof and
thereof;
(c) subject to compliance with the HSR Act and such filings as may
be required pursuant to federal and state securities laws and except for
the consents from the Triangle Licensors required by Section 9.2, the
execution, delivery and performance by Triangle of this Agreement and
each of the other Triangle-Abbott Alliance Agreements and Triangle's
compliance with the terms and provisions hereof and thereof will not,
result in any violation of, or default under (with or without notice or
lapse of time, or both), or give rise to a right of termination,
cancellation or acceleration of any obligation pursuant to, or a loss of
benefits under, any provision of its Certificate of Incorporation or
By-laws, or any mortgage, indenture, lease or other agreement or
instrument, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Triangle or Triangle's properties or
assets;
(d) no consent, approval or authorization of, or designation,
declaration or filing with any governmental authority is required in
connection with the valid execution, delivery or performance of this
Agreement and the other Triangle-Abbott Alliance Agreements by Triangle
or the consummation by Triangle of the transactions contemplated hereby
or thereby, except the filing of such forms with the United States
Department of Justice and the Federal Trade Commission as shall be
required by the HSR Act and the expiration or termination of any waiting
periods thereunder and such filings, as may be required to be made with
the SEC, the NASD, any national securities exchange and any state
securities commission. Upon their execution and delivery, and assuming
the valid execution thereof by Triangle, this Agreement and the other
Triangle-Abbott Alliance Agreements will constitute valid and binding
obligations of Triangle, enforceable in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
-61-
equity or at law) and except to the extent that the indemnification
agreements of in Section 15 hereof may be legally unenforceable;
(e) Except as specifically disclosed in Exhibit 11.2(e), in
Triangle's Annual Report on Form 10-K for the year ending December 31,
1998 or in Triangle's Quarterly Report on Form 10-Q for the period ending
March 31, 1999:
(i) to its knowledge and information, there are no patents,
trademarks or other proprietary rights which are valid and which
would be infringed by making, having made, using, selling,
offering for sale or importing Products in the Territories in
accordance with the terms of this Agreement;
(ii) Triangle is not aware of sales of any products
containing one or more Compounds that would constitute an
infringement by a Third Party of the Product Patents; and
(iii) Triangle is aware of no pending interference or
opposition proceeding or litigation or any communication which
threatens an interference or opposition proceeding or litigation
before any patent and trademark office, court, or any other
governmental entity or court in any jurisdiction in regard to the
Product Patents;
(f) The execution, delivery and performance of this Agreement and
the other Triangle-Abbott Alliance Agreements is not required to be
submitted for a vote or other approval of the stockholders of Triangle
under Section 271 of the Delaware General Corporation Law. The issuance
and sale by Triangle of the Minimum Shares (as defined in the Stock
Purchase Agreement) does not require approval of the stockholders of
Triangle under any applicable federal or state laws or regulations or
under the rules and regulations of the National Association of Securities
Dealers (including the designation or maintenance criteria of the Nasdaq
National Market) or any other self-regulatory organization applicable to
Triangle;
(g) Triangle has provided to Abbott a complete and accurate copy
of each of the Triangle License Agreements;
(h) to its knowledge, there are no material facts which Triangle
has not disclosed to Abbott regarding the manufacture, use or sale of any
Product or the practice of any inventions included in the Product Patents
or the use of the Product Technology by Abbott, including without
limitation any material facts regarding the possibility that such
manufacture, use, sale or
-62-
practice might infringe any Third Party's know-how, patent rights or
other intellectual property in the Territories;
(i) at no time during the Term shall Triangle enter into any
transaction providing for debt financing which by its terms (A) imposes a
lien, license, security interest or other encumbrance upon or (B)
transfers any of the Product Patents or the Product Technology, except to
the extent permitted by this Agreement; and
(j) With respect to each of the Compounds, (A) Triangle has
obtained and is in substantial compliance with all applicable
registrations, applications, licenses, requests for exemption, permits or
other regulatory authorizations with the FDA, or any state or local
regulatory body necessary to conduct its business activities to date; and
(B) to the extent any Compound is intended for export from the United
States, and to the extent applicable, the Company is in compliance in all
material respects with either all FDA requirements for marketing or as
set forth in 21 U.S.C. ss.381(e) or 382; (ii) to the knowledge of
Triangle, all manufacturing operations performed by or on behalf of
Triangle have been and are being conducted in substantial compliance with
the current good manufacturing practices issued by the FDA to the extent
applicable; (iii) to the knowledge of Triangle, all nonclinical
laboratory studies, as described in 21 C.F.R. ss.58.3(d), sponsored by
Triangle have been and are being conducted in substantial compliance with
the good laboratory practice regulations set forth in C.F.R. Part 58;
except, in the preceding clauses (i) through (iii), where such failures
to obtain or noncompliance, individually or in the aggregate, would not
have a material adverse effect on Triangle's business activities with
respect to such Compound.
(k) Notwithstanding anything to the contrary in this Section 11.2
or anything in any of the other Triangle-Abbott Alliance Agreements,
Triangle makes no representation or warranty (and shall have no
liability) arising from any requirement to obtain stockholder approval
pursuant to the Nasdaq National Market Issuer Designation Requirements,
including Rule 4460 thereunder, with respect to the issuance and sale of
the Maximum Shares (as defined in the Stock Purchase Agreement).
11.3 NO OTHER WARRANTIES. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, EACH PARTY MAKES NO OTHER WARRANTIES OR REPRESENTATIONS, INCLUDING
FITNESS FOR PURPOSE INTENDED OR MERCHANTABILITY, WHETHER EXPRESS OR IMPLIED.
-63-
ARTICLE 12
LIMITATION ON LIABILITY
EXCEPT AS OTHERWISE PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR ANY SPECIAL,
INCIDENTAL, INDIRECT OR CONSEQUENTIAL LOSSES ARISING OUT OF OR RELATING TO THIS
AGREEMENT; PROVIDED HOWEVER, THIS LIMITATION SHALL NOT APPLY TO LOSSES ARISING
FROM THIRD PARTY CLAIMS FOR WHICH A PARTY IS INDEMNIFIED UNDER THE TERMS OF THIS
AGREEMENT.
ARTICLE 13
CONFIDENTIALITY AND NONDISCLOSURE
13.1 CONFIDENTIALITY OBLIGATION. Each of Abbott and Triangle (the
"Receiving Party") shall keep strictly confidential any information disclosed in
writing, orally, visually or in any other manner by the other Party (the
"Disclosing Party") or otherwise made available to the Receiving Party which the
Disclosing Party considers to be and treats as proprietary or confidential
("Confidential Information"). Without limiting the generality of the foregoing,
all proprietary information concerning the Disclosing Party's business,
operations, suppliers, products, product manufacture, sale, marketing or
distribution, trade secrets and intellectual property shall be considered
Confidential Information by the Receiving Party. Any data or other information
relating to or resulting from the clinical trials of the Products shall be
deemed to be Confidential Information of Triangle. The Disclosing Party shall
use commercially reasonable efforts to designate any written Confidential
Information disclosed to the other Party as Confidential Information by
prominently marking it "confidential", "proprietary" or the like, provided, that
the failure to so mark shall not exclude such written information from the
provisions of this Section 13. "Confidential Information" shall not include
information:
(a) which is or becomes generally available to the public other
than as a result of disclosure thereof by the Receiving Party;
(b) which is lawfully received by the Receiving Party on a
nonconfidential basis from a Third Party that is not itself under any
obligation of confidentiality or nondisclosure to the Disclosing Party or
any other Person with respect to such information;
(c) which by written evidence can be shown by the Receiving Party
to have been independently developed by or for the Receiving Party; or
-64-
(d) which the Receiving Party establishes by competent proof was
in its possession at the time of disclosure by the other Party and was
not acquired, directly or indirectly from the other Party.
All information, data and other materials disclosed by one Party to the other
pursuant to the Confidentiality Agreement, dated October 28, 1998, shall be
deemed to have been disclosed by the disclosing Party under this Agreement.
13.2 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Receiving Party shall
use Confidential Information solely for the purposes of this Agreement and shall
not disclose or disseminate any Confidential Information to any Third Party at
any time without the Disclosing Party's prior written consent, except for
disclosure to those of its directors, officers, employees, accountants,
attorneys, advisers, permitted sublicensees, and agents whose duties reasonably
require them to have access to such Confidential Information and, in the case of
Triangle, disclosure to the Triangle Licensors, provided that such directors,
officers, employees, accountants, attorneys, advisers, agents and Triangle
Licensors are required to use the Confidential Information solely for purposes
of this Agreement and maintain the confidentiality of such Confidential
Information to the same extent as if they were Parties hereto.
13.3 EXCEPTION. The foregoing confidentiality and nondisclosure
obligations shall not apply to information which is required to be disclosed by
law or by regulation; provided, that (i) the Receiving Party gives the
Disclosing Party reasonable advance notice of the disclosure, to the extent
reasonably practicable and legally permissible; (ii) the Receiving Party uses
reasonable efforts to resist disclosing the Confidential Information; (iii) the
Receiving Party reasonably cooperates with the Disclosing Party on request to
obtain a protective order or otherwise limit the disclosure; and (iv) upon the
reasonable request of the Disclosing Party, the Receiving Party shall provide a
letter from its counsel confirming that the Confidential Information is, in
fact, required to be disclosed.
13.4 INJUNCTIVE RELIEF. The Parties acknowledge that either Party's
breach of this Article 13 may cause the other Party irreparable injury for which
it would not have an adequate remedy at law. In the event of a breach, the
non-breaching Party shall be entitled to injunctive relief in addition to any
other remedies it may have at law or in equity.
13.5 SCIENTIFIC AND OTHER PUBLICATIONS. Notwithstanding anything herein
to the contrary, it is the understanding of each Party that scientific,
scholarly and other related publications or presentations concerning the
development of the Compounds and the Products, including their pre-clinical and
clinical development, shall emanate solely from Triangle and the trials and
studies sponsored by Triangle and that,
-65-
as against Abbott, Triangle shall have full control over the preparation, review
and approval of such publications and presentations, which publications and
presentations shall not be restricted hereunder; provided that, with respect to
joint Marketing Studies, as well as Supplemental Clinical Studies conducted by
Abbott or any studies involving any Abbott pharmaceutical products, any
resulting publication or presentation of data therefrom shall be jointly
reviewed and approved by Triangle and Abbott.
13.6 SURVIVAL. The confidentiality and nondisclosure obligations of
this Article 13 shall survive the expiration or termination of this Agreement
and remain in effect for a period of ten (10) years following the expiration or
termination of this Agreement.
ARTICLE 14
TRADEMARKS
14.1 TRIANGLE TRADEMARKS. Triangle shall be solely responsible for the
selection, filing, registration and maintenance of the trademark for each
Product in the Territories (the "Triangle Trademarks"). Triangle shall keep
Abbott fully apprised with respect to its trademark activities and shall
consult with Abbott through the U.S. Marketing Board and/or the International
Marketing Board, as applicable, regarding the selection of trademarks for the
Territories. Triangle shall control all final decisions regarding its
trademark activities. All reasonable out-of-pocket costs and expenses
associated with the selection, filing, registration and maintenance of the
trademarks for Products (i) in the U.S. Territory shall be included in ***
and (ii) in the International Territory shall be included in ***. With
respect to the International Territory, Triangle shall invoice Abbott for all
such costs and expenses, and Abbott shall pay to Triangle the amount invoiced
within thirty (30) days of the invoice date.
14.2 LIMITED TRADEMARK LICENSE.
(a) GRANT TO ABBOTT. Subject to the terms of this Agreement,
Triangle hereby grants to Abbott (i) a nonexclusive limited license in
the Territories to use Triangle's name and logo, (ii) a nonexclusive
limited license in the U.S. Territory to use the Triangle Trademarks and
(iii) an exclusive license in the International Territory to use the
Triangle Trademarks, in each instance solely for the purpose of promoting
distributing and selling the Products in the Territories in accordance
with the terms and conditions of this Agreement. Abbott shall promote the
Products in the Territories only under the Triangle Trademarks.
(b) GRANT TO TRIANGLE. Abbott hereby grants to Triangle a
nonexclusive limited license to use the Abbott name and logo solely for
the purpose of promoting, distributing
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-66-
and selling each Product in the Territories in accordance with the terms
and conditions of this Agreement. Triangle shall promote the Products in
the Territories only under the Triangle Trademarks.
14.3 USE OF TRADE NAMES AND TRADEMARKS. Each Party recognizes that the
name and logo of each of the Parties and the Triangle Trademarks represents a
valuable asset of such entity and that substantial recognition and goodwill are
associated with each Party's name and logo and the Triangle Trademarks. Each
Party hereby agrees that, without prior written authorization of the other
Party, it shall not use the name and logo of the other Party for any purpose
other than the promotion, distribution and sale of the Products solely to the
extent required to fulfill its obligations under this Agreement. Abbott hereby
agrees that, without prior written authorization of Triangle, it shall not use
the Triangle Trademarks for any purpose other than the promotion, distribution
and sale of the Products solely to the extent required to fulfill its
obligations under this Agreement. In addition, Triangle shall only use the
Abbott name and logo in the form, manner and logotype approved in writing by
Abbott, and Abbott shall only use the Triangle name and logo and the Triangle
Trademarks in the form, manner and logotype approved in writing by Triangle.
Except for the limited licenses granted in Section 14.2, nothing in this
Agreement shall be construed as an assignment by Triangle to Abbott of any
right, title or interest in or to the Triangle name or logo or the Triangle
Trademarks, or an assignment by Abbott to Triangle of any right, title or
interest in or to the Abbott name or logo; it being understood that all right,
title and interest (including the goodwill associated therewith) in and to the
Triangle name and logo and the Triangle Trademarks is expressly reserved by
Triangle, and all right, title and interest (including the goodwill associated
therewith) in and to the Abbott name and logo is expressly reserved by Abbott.
14.4 QUALITY MAINTENANCE. Each Party (a "licensed Party") agrees to
cooperate with the other Party (the "licensing Party") in facilitating the
licensing Party's quality assurance responsibilities by permitting reasonable
inspection of the licensed Party's operations as they pertain to the
licensing Party's trademarks and supplying licensing Party with specimens of
use of such trademarks upon reasonable request, but in any case no more often
than twice each calendar year. Each Party agrees to comply with all
applicable laws and regulations and obtain all government approvals
pertaining to the sale, distribution and advertising of Products offered in
the Territories under the Triangle Trademarks and covered by this Agreement.
14.5 INJUNCTIVE RELIEF. Each Party acknowledges that a violation of this
Article 14 would cause irreparable harm to the other Party for which no adequate
remedy at law exists, and each Party therefore agrees that, in addition to any
other remedies available, and notwithstanding any other provision
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-67-
in this Agreement, the aggrieved Party shall be entitled to injunctive relief to
enforce the terms of this Article 14. If either Party prevails in any such
action, it shall be entitled to recover all costs and expenses, including
reasonable attorney's fees incurred because of any legal action arising in
relation to this Article 14.
14.6 NOTIFICATION OF INFRINGEMENT AND ENFORCEMENT. Each Party shall
notify the other Party of any infringement or misuse of Triangle's Trademarks of
which such Party becomes aware. Triangle shall be solely responsible to
prosecute any infringement of the Triangle Trademarks. Any damage award or
settlement, in excess of Triangle's cost and expenses of enforcement, shall be
added to the U.S. Product Profit and/or the International Product Profit, as the
case may be, and shared between the Parties as set forth in this Agreement.
14.7 TERMINATION OF TRADEMARK LICENSE. In the event that, pursuant to the
terms of this Agreement, Abbott forfeits its rights to Promote a Product in any
country, then its license under Section 14.2(a) shall automatically and
immediately terminate with respect to such country.
ARTICLE 15
INDEMNIFICATION
15.1 INDEMNIFICATION
(a) INDEMNIFICATION BY TRIANGLE. Except as may be otherwise
provided herein, Triangle shall defend, indemnify and hold Abbott, all of
its directors, officers and employees, and Abbott Sales Representatives
(collectively the "Abbott Indemnitees") harmless from and against all
Losses incurred in connection with any Third Party suits, claims or
causes of action arising out of or resulting from:
(i) Triangle's breach of any representation, warranty,
covenant, or other obligation provided for in this Agreement;
(ii) An infringement claim arising from Abbott's use of the
Triangle name or logo or a Triangle Trademark in connection with
the promotion or sale of the Products, provided Abbott's use is in
compliance with the terms of this Agreement;
(iii) The negligence, recklessness or willful misconduct
of Triangle and its directors, officers or employees or
Triangle Sales Representatives, including, but not limited to,
*** claims arising out of *** by Triangle, its directors, officers
or employees, or Triangle Sales Representatives; or
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-68-
(v) Any patent infringement claim arising from the
manufacture, importation, use or sale of a Product, to the extent
losses exceed amounts permitted to be included as ***.
Provided, however, that Triangle shall not be required to indemnify the
Abbott Indemnitees to the extent that any Losses arise out of or result
from: (A) the negligence, recklessness or willful misconduct of any of
the Abbott Indemnitees, including, but not limited to, out-of label
promotion of the Products, (B) utilization of process technology for the
manufacture of Products which has not been approved by Triangle, (C)
continued Promotion in a country after receipt of notice from Triangle
indicating that the sale or Promotion of such Product in such country
should be terminated because such further sale or Promotion would
constitute willful infringement of a valid and issued patent in such
country and/or (D) any breach by Abbott of this Agreement. Abbott shall
not be considered negligent for purposes of this Section 15.1 if such
claim arises solely with respect to the content of the Promotional
Materials, Product labeling or other materials provided to Abbott by
Triangle as long as Abbott has distributed or employed such Promotional
Materials or other such materials as directed herein.
(b) INDEMNIFICATION BY ABBOTT. Except as may be otherwise provided
herein, Abbott shall defend, indemnify and hold Triangle, its directors,
officers and employees, and Triangle Sales Representatives and the
Triangle Licensors (collectively the "Triangle Indemnitees") harmless
from and against all Losses incurred in connection with any Third Party
suits, claims or causes of action arising out of or resulting from:
(i) Abbott's breach of any representation, warranty,
covenant, or other obligation provided for in this Agreement;
(ii) An infringement claim arising from Triangle's use of
the Abbott name or logo in connection with the promotion or sale
of the Products, provided Triangle's use is in compliance with the
terms of this Agreement;
(iii) The gross negligence, recklessness or willful
misconduct of Abbott, its directors, officers or employees or
Abbott Sales Representatives, including, but not limited to,
*** claims arising out of *** by Abbott, its Affiliates, their
directors, officers or employees, or Abbott Sales Representatives;
or
(iv) Any patent infringement claim arising from Abbott's or
its Affiliates or permitted sublicensee's (A) utilization of
process technology for the manufacture of
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-69-
Products which has not been approved by Triangle or (B) continued
Promotion in a country after receipt of notice from Triangle
indicating that the sale or Promotion of such Product in such
country should be terminated because such further sale or
Promotion would constitute willful infringement of a valid and
issued patent in such country.
Provided, however, that Abbott shall not be required to indemnify the
Triangle Indemnitees to the extent that any Losses arise out of or
result from: (A) the negligence, recklessness or willful misconduct of
any Triangle Indemnitee including, but not limited to, out-of label
promotion of the Products; and/or (B) any breach by Triangle of this
Agreement.
15.2 INDEMNIFICATION PROCEDURE. Any Abbott Indemnitee or Triangle
Indemnitee, as the case may be, shall notify Triangle or Abbott (the
"Indemnifying Party") promptly in writing of an indemnifiable claim or cause of
action under Section 15.1(a) or 15.1(b) upon receiving notice or being informed
of the existence thereof. The Indemnifying Party shall assume, at its cost and
expense, the sole defense of such claim or cause of action through counsel
selected by the Indemnifying Party and reasonably acceptable to the other Party.
The Indemnifying Party shall maintain control of such defense, including any
decision as to settlement; provided that, in the event that the Indemnifying
Party does not diligently defend such claim or cause of action on a timely
basis, then, without prejudice to any other rights and remedies available to the
other Party under this Agreement, the other Party may take over such defense
with counsel of its choosing at the Indemnifying Party's cost and expense. The
other Party may, at its option and expense, participate in the Indemnifying
Party's defense, and if the other Party so participates, the Parties shall
cooperate with one another in such defense. The Indemnifying Party shall bear
the total costs of any court award or settlement of such claim or cause of
action and all other costs, fees and expenses related to the resolution thereof
(including reasonable attorneys' fees except for attorneys' fees for which the
other Party is responsible in the event that the other Party participates in the
Indemnifying Party's defense of such claim or cause of action). The
indemnification obligations herein shall apply on a first dollar basis without
limitation or reduction due to any deductible or self-insured retention which
Triangle or Abbott respectively may have under their respective insurance
coverage.
15.3 PRODUCT LIABILITY. In the event of a product liability claim with
respect to a Product which is not covered by the foregoing indemnity provisions
in this Article 15, the Parties shall bear equally the amount of any awards or
other losses and costs attributable directly thereto. Abbott shall maintain
control of the defense of any such product liability claim with respect to the
International Territory and Triangle shall maintain control of the defense of
any such product liability claim with respect to the U.S. Territory.
-70-
ARTICLE 16
TERM AND TERMINATION
16.1 TERM. The term of this Agreement shall commence on the Effective
Date and shall continue, unless terminated sooner in accordance with this
Article 16, until December 31, 2030 (the "Term").
16.2 TERMINATION UPON PATENT EXPIRATION. Unless sooner terminated in
accordance with this Article 16, upon ninety (90) days prior written notice,
Abbott may terminate this Agreement on a Product-by-Product basis upon the
expiration of the last to expire patent covering such Product.
16.3 TERMINATION FOR MATERIAL BREACH. It is the Parties' express
intent that consideration shall first and foremost be given to remedying any
breach of this Agreement through the payment of monetary damages or such
other legal or equitable remedies as shall be appropriate under the
circumstances and that there shall only be a limited right to terminate this
Agreement under the following circumstances as a matter of last resort. In
the event that the Neutral, in accordance with the procedures set forth in
Exhibit 20.3, has rendered a ruling that a Party has materially breached this
Agreement, which ruling specified the remedies imposed on such breaching
Party for such breach (the "Adverse Ruling"), and the breaching Party has
failed to comply with the terms of the Adverse Ruling within the time period
specified therein for compliance, or if such compliance cannot be fully
achieved by such date, the breaching Party has failed to commence compliance
and/or has failed to use diligent efforts to achieve full compliance as soon
thereafter as is reasonably possible (but in any event within 60 days), then
the non-breaching Party shall have the following rights:
(a) where Abbott is the breaching Party that failed to comply with
the Adverse Ruling and where the basis for such breach is Abbott's
failure to abide by a material obligation under this Agreement, Triangle
may terminate this Agreement and/or Abbott's license rights hereunder by
delivering written notice to Abbott after the expiration of the period to
comply; and
(b) where Triangle is the breaching party that failed to comply
with the Adverse Ruling and where the basis for such breach is Triangle's
failure to abide by a material obligation under this Agreement, Abbott
may terminate this Agreement and/or Triangle's license rights hereunder
by delivering written notice to Triangle after the expiration of the
period to comply.
16.4 EFFECT OF EXPIRATION UNDER SECTION 16.1 OR TERMINATION UNDER SECTION
16.2. Upon the expiration of this Agreement under Section 16.1 or the
termination of this Agreement with respect to a particular Product or Products
under Section 16.2, unless instructed otherwise by Triangle in writing,
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-71-
Abbott shall continue to distribute such Product or Products for a period of
*** (the "Phase-Out Period"), unless such period is terminated earlier in
writing by Triangle. During such Phase-Out Period, Abbott shall continue to
fill all outstanding orders for the terminated Product or Products and refer
any new orders for such Product or Products to Triangle. During the Phase-Out
Period, Abbott shall not be required to perform any Details for the
terminated Product or Products and Abbott shall receive its share of the
Product Profits for the terminated Product or Products, unless Abbott was
terminated hereunder for its material breach of this Agreement. Abbott shall
promptly return all Promotional Materials and Sample Packs for the terminated
Product or Products to Triangle and shall delete the terminated Product or
Products from its catalogues and price lists as soon as reasonably practical.
In the event of any problems relating to the terminated Product or Products
or customer relations issue during the Phase-Out Period, Abbott shall
cooperate fully with Triangle to ensure customer satisfaction and compliance
with all Legal Requirements. Triangle shall be allowed to continue to
distribute Promotional materials and Sample Packs with the Abbott name in
accordance with Article 14 for up to *** after the termination or expiration
of this Agreement.
16.5 EFFECT OF TERMINATION UNDER SECTION 16.3.
(a) If this Agreement is terminated as a result of Abbott's breach
(i) Abbott shall use its best efforts to destroy all data, writings and
other documents and tangible materials supplied to Abbott by Triangle or
the Triangle Licensors; and (ii) Abbott shall further, upon Triangle's
request and with no need for additional consideration, grant Triangle a
nonexclusive, royalty free (other than subject to royalty obligations
payable to Third Parties) license (with the right to sublicense) to all
Abbott Patents and Abbott Technology. Abbott shall further provide
Triangle with full and complete copies of all toxicity, efficacy, and
other data generated by Abbott or its permitted sublicensees, contractors
or agents in the course of Abbott's efforts to obtain governmental
approval for the sale of the Products, including but not limited to any
registration filings or other documents filed with any government
authority. Triangle and the Triangle Licensors shall be authorized to
cross-reference any such registration filings made in the International
Territory where permitted by law. Triangle and the Triangle Licensees
shall be authorized to provide data pertaining to such patents and
technology to any Third Party with a bona fide interest in licensing such
technology. Such data shall be provided on a confidential basis;
provided, however, that if such Third Party enters into a license with
Triangle and the Triangle Licensees, such Third Party shall be free to
use such data for all purposes, including to obtain government approvals
to sell Products containing any Compound. Abbott shall cooperate
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-72-
reasonably (at no unreimbursed expense to Abbott) with any Third Party
licensee of Triangle or the Triangle Licensors in pursuing governmental
approval to sell any Product containing any Compound, including but not
limited to, permitting such Third Parties to cross-reference any
regulatory filings filed with or any Product Approval obtained in any
foreign countries; provided that any expenses incurred at the request of
Triangle are reimbursed).
(b) If this Agreement is terminated as a result of Abbott's
breach, Triangle shall have the right, in its sole option, to
terminate each or any of (i) the Co-Promotion Agreement; (ii) the
Stock Purchase Agreement, to the extent that there are any
continuing obligations thereunder; (iii) the Stockholder Rights
Agreement (provided that the provisions contained in sections 3 and 5
thereof shall survive such termination); and (iv) subject to its
negotiation and due execution and delivery, the Supply Agreement.
(c) If this Agreement is terminated as a result of Triangle's
breach, Abbott shall have the right, in its sole option, to
terminate each or any of (i) the Co-Promotion Agreement; (ii) the
provisions of sections 3 and 5 of the Stockholder Rights Agreement; and
(iii) subject to its negotiation and due execution and delivery, the
Supply Agreement.
16.6 SURVIVAL. All rights granted and obligations undertaken by the
Parties hereunder shall terminate immediately upon the event of any termination
or expiration of this Agreement, except for the following which shall survive
according to their terms:
(a) The obligation of each Party to pay to the other Party any and
all payments accrued under this Agreement prior to such termination or
expiration;
(b) The provisions of Sections 6.1 and 6.2, which shall survive
with respect to any reports required after the Term and any accrued or
continuing payment obligations;
(c) The limitations on liability of Article 12;
(d) The confidentiality and nondisclosure obligations of Article
13;
(e) The indemnification obligations of Article 15 with respect to
events occurring during the term of the Agreement;
(f) The insurance obligations of Article 18; and
(g) The provisions of Sections 4.2(f) (as well as Section 4.3 as
its relates to Section 4.2(f) with respect to the International
Territory), 7.5, 7.8, 16.4 through 16.7, 20.12, 20.3 and Section 20.11.
-73-
Any termination of rights with respect to a particular Product shall only result
in the termination of rights and obligations hereunder as they relate to that
Product. In addition, expiration or termination of this Agreement shall not
affect the remedies of the Parties otherwise available at law or in equity in
relation to any rights accrued under this Agreement prior to expiration or
termination.
16.7 NONEXCLUSIVE RIGHTS AND REMEDIES. Except as otherwise set forth in
this Agreement, all rights and remedies of the Parties provided under this
Agreement are not exclusive and are in addition to any other rights and remedies
provided by law or under this Agreement.
16.8 CONDITIONS TO EFFECTIVENESS. The Effective Date shall be the date on
which the following conditions have been satisfied:
(a) The obligations of Abbott and Triangle shall be subject to the
satisfaction of the following conditions:
(i) No order, statute, rule, regulation, executive order,
injunction, stay, decree or restraining order shall have been
enacted, entered, promulgated or enforced by any court of
competent jurisdiction or governmental or regulatory authority
that prohibits the execution, delivery or performance of any of
the Triangle-Abbott Alliance Agreements, and no proceeding by any
governmental or regulatory authority or instrumentality shall be
pending or threatened, which seeks to prohibit or declare illegal
the execution, delivery or performance of any of the
Triangle-Abbott Alliance Agreements;
(ii) All filings under the HSR Act and other laws of any
jurisdiction applicable to the transactions contemplated in the
Triangle-Abbott Alliance Agreements shall have been made and any
required waiting period under such laws shall have expired or been
earlier terminated;
(iii) The "Closing" as such term is defined in the Stock
Purchase Agreement shall have occurred or shall be occurring
simultaneously; and
(iv) The Supply Agreement shall be duly executed and
delivered prior to or contemporaneously with the Closing.
(b) CONDITIONS TO OBLIGATIONS OF ABBOTT. The obligations of Abbott
shall be further subject to the satisfaction of the following conditions:
-74-
(i) All corporate and other proceedings taken or to be
taken in conjunction with the transactions contemplated in the
Triangle-Abbott Alliance Agreements, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to
Abbott;
(ii) Triangle shall have obtained the consents
identified in Section 9.2;
(iii) The representations and warranties of Triangle
contained herein and in the other Triangle-Abbott Alliance
Agreements that are qualified as to materiality shall be true and
correct at and as of the Effective Date as though restated on and
as of the Effective Date and the representations and warranties of
Triangle contained herein and in the other Triangle-Abbott
Alliance Agreements that are not qualified as to materiality shall
be true and correct in all material respects at and as of the
Effective Date as though restated on and as of the Effective Date;
(iv) Abbott shall have received from Triangle's counsel,
Brobeck Phleger & Harrison LLP, an opinion addressed to Abbott
substantially in the form of Exhibit 16.8(b)(iv) dated the
Effective Date; and
(v) Abbott shall have received from Triangle a copy of the
executed consent identified in Section 9.2 and a certificate
signed by an appropriate officer as to Triangle's compliance with
the conditions set forth in clauses (i) and (iii) of this Section
16.8(b).
(c) CONDITIONS TO OBLIGATIONS OF TRIANGLE. The obligations of
Triangle shall be further subject to the satisfaction of the following
conditions:
(i) All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated in the
Triangle-Abbott Alliance Agreements, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to
Triangle;
(ii) The representations and warranties of Abbott contained
herein and in the other Triangle-Abbott Alliance Agreements that
are qualified as to materiality shall be true and correct at and
as of the Effective Date as though restated on and as of the
Effective Date and the representations and warranties of Abbott
contained herein and in the other Triangle-Abbott Alliance
Agreements that are not qualified as to materiality shall be true
and correct in all material respects at and as of the Effective
Date as though restated on and as of the Effective Date;
-75-
(iii) Triangle shall have received from Abbott's
Divisional Vice President and Assistant Secretary an opinion
addressed to Triangle substantially in the form of Exhibit
16.8(c)(iii) dated the Effective Date;
(iv) Triangle shall have received from Abbott's counsel,
Mayer Brown & Platt, an opinion addressed to Triangle
substantially in the form of Exhibit 16.8(c)(iv) dated the
Effective Date;
(v) Triangle shall have obtained the consents identified
in Section 9.2; and
(vi) Triangle shall have received from Abbott a certificate
signed by an appropriate officer as to Abbott's compliance with
the conditions set forth in clauses (i) and (ii) of this Section
16.8(c).
(d) NON-FULFILLMENT OF CONDITIONS. The non-fulfillment of any of
the conditions described in this Section 16.8 (whether or not the
Effective Date occurs) shall not result in any liability to any Party
unless such non-fulfillment is a result of a breach of this Agreement or
any of the other Triangle-Abbott Alliance Agreements by such Party.
(e) OUTSIDE DATE. If the Effective Date has not occurred within
ninety (90) days from the execution date hereof (other than through the
failure of the Party seeking to terminate this Agreement to comply fully
with its obligations under this Agreement or any of the other
Triangle-Abbott Alliance Agreements) or such later date as the Parties
may agree, either Party may terminate this Agreement by written notice to
the other Party.
ARTICLE 17
TRANSFER OF TECHNOLOGY
17.1 TRANSFER BY TRIANGLE. Within ninety (90) days following the
Effective Date and as far as it has not previously done so, Triangle shall
supply Abbott with all Product Technology necessary for the manufacture of
the Products in Triangle's possession. With respect to any Product Technology
subsequently developed or obtained by Triangle during the Term of this
Agreement, such disclosure will be made at least on a quarterly basis or
sooner, if practicable.
17.2 TECHNICAL ASSISTANCE.
(a) Triangle shall, upon request by Abbott, provide Abbott with
reasonable cooperation and assistance, consistent with the other
provisions hereof, in connection with the transfer of Product Technology.
Such assistance may include, but is not limited to, development
-76-
of the formulations of the Products; procurement of supplies and raw
materials; initial development and production batch manufacturing runs;
process, specification and analytical methodology design and improvement;
and, in general, such other reasonable assistance as may contribute to
the efficient application by Abbott of the Product Technology. In this
regard, Triangle agrees to make appropriate employees of Triangle
reasonably available to assist Abbott, and Triangle agrees to provide
reasonable numbers of appropriate Abbott personnel with access during
normal business hours to the appropriate personnel and operations of
Triangle for such periods of time as may be reasonable in order to
familiarize Abbott personnel with the Product Technology as applied by
Triangle. At Abbott's reasonable request, such assistance shall be
furnished at Abbott's or its subcontractors' or permitted sublicensees'
facilities in the Territories, subject to a mutually agreed upon
schedule. Such technical assistance shall include but not be limited to
the following:
(i) Triangle shall: (A) provide Abbott with access to any
and all Drug Master File(s) or counterparts thereof in any
countries of the Territories ("DMF") of Triangle relating to the
manufacture of the Compounds existing as of the Effective Date;
(B) provide Triangle with letters of authorization to the FDA and
other applicable government authorities in other countries of the
Territories to refer to Triangle's DMF's; and (C) reasonably
cooperate with Abbott in obtaining access to and letters of
authorization to refer to the DMF's of Triangle's subcontractors
which are, or will be, supplying any Compounds or Products; and
(ii) Within forty five (45) days after the Effective
Date, Triangle shall provide Abbott with copies of all
documentation in Triangle's possession, including all
correspondence between Triangle and its subcontractors, regarding
the manufacture of the Compounds or Products which would be
necessary or useful to assist Abbott in the commercial production
of the Compounds or Products or to support Product Approval.
(b) During the period prior to the *** of the Effective Date;
(i) Triangle shall provide up to *** of such technical assistance
during each year of such period at Triangle's sole expense and (ii)
subsequent to such *** of technical assistance, Triangle shall provide
such additional technical assistance as may be reasonably requested by
Abbott; provided, that all reasonable out-of-pocket travel costs and
expenses incurred by Triangle in rendering technical assistance
pursuant to this Section 17.2(b) in excess of such *** per year
shall be reimbursed to Triangle by Abbott. Technical
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-77-
assistance furnished pursuant to this Section 17.2(b) shall continue
only until the *** of the Effective Date of this Agreement.
17.3 TRANSFER BY ABBOTT. Abbott shall supply Triangle with any Abbott
Technology as developed during the Term on at least a quarterly basis or sooner,
if practicable.
17.4 LANGUAGE OF DISCLOSURES. All disclosure pursuant to this Agreement
will be in English.
ARTICLE 18
INSURANCE
On or before the Execution Date, each Party shall obtain, and each
Party shall maintain throughout the Term and each Phase-Out Period and for a
period of *** thereafter, insurance issued by independent insurers reasonably
selected by such Party providing the coverage and limits described in Exhibit
18. Each of the insurance policies for the types of coverage listed in
Exhibit 18, except statutory workers' compensation coverage, shall provide
that it may not be terminated, canceled or significantly modified unless the
other Party is given thirty (30) days prior written notice by the insurance
carrier. Each Party's insurance coverage must be primary coverage without
right of contribution from any insurance of the other Party. On or before the
date(s) set forth in Exhibit 18, and each year thereafter for as long as this
Agreement, or any Phase-Out Period, is in effect, each Party shall provide
the other Party certificates of insurance evidencing the coverage and limits
required by this Article 18.
ARTICLE 19
FORCE MAJEURE
If any circumstance beyond the reasonable control of either Party
occurs which delays or renders impossible the performance of certain of that
Party's obligations under this Agreement on the dates herein provided (a
"Force Majeure"), such obligations shall be postponed for such time as such
performance necessarily has had to be suspended or delayed on account
thereof, provided such Party shall notify the other Party in writing as soon
as practicable, but in no event more than ten (10) business days after the
occurrence of such event of Force Majeure, which notice shall reasonably
attempt to identify such obligations under this Agreement and the extent to
which performance thereof will be affected. In such event, the Parties shall
meet promptly to determine an equitable solution to the effects of any such
event, provided that such Party who fails because of an event of Force
Majeure to perform its obligations hereunder shall upon the cessation of the
Force Majeure event take all reasonable steps within its power to resume with
the least possible delay compliance with its obligations. Events of Force
Majeure shall include, without limitation, war, revolution, invasion,
insurrection, riots, mob violence, sabotage or other
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-78-
civil disorders, acts of God, limitations imposed by exchange control
regulations or foreign investment regulations or similar regulations, laws,
regulations or rules of any government or governmental agency, any inordinate
and unanticipated delays in the regulatory review or governmental approval
process that are within the sole control of such government or governmental
agency, any delay or failure in manufacture, production or supply by Third
Parties of any goods or services, any withdrawal or recall of a Product at the
direction of any governmental authority and any failure of a computer system.
ARTICLE 20
MISCELLANEOUS
20.1 RELATIONSHIP OF THE PARTIES. Each of the Parties shall be furnishing
its services hereunder as an independent contractor, and nothing herein shall
create any association, partnership or joint venture between the Parties or any
employer-employee relationship. No agent, employee or servant of either Party
shall be or shall be deemed to be the employee, agent or servant of the other
Party, and each Party shall be solely and entirely responsible for its acts and
the acts of its employees.
20.2 RELATIONSHIP WITH AFFILIATES. Unless the context otherwise
indicates, (i) any reference to a Party herein shall include the Affiliates of
such Party (including, without limitation, references to Abbott in Sections 1.5,
1.7, 1.9, 1.48 and 2.3(c) and references to Triangle in Sections 1.58, 1.59,
2.1, 2.2, 2.3(a), 2.3(b) and 2.5) and (ii) each Party may utilize the services
of its Affiliates to perform services, activities and/or obligations permitted
or required under this Agreement to the same extent as if such Affiliate were a
party to this Agreement; provided that any such services, activities or
obligations under this Agreement permitted or required to be performed by such
Party relating to the U.S. Territory will be performed only by such Party or a
wholly-owned U.S. subsidiary of such Party. Any Affiliates so utilized shall be
subject to all the terms and conditions applicable to such Party under this
Agreement, including but not limited to provisions establishing standards for
performance. With respect to the International Territory, Abbott may use its
Affiliates as set forth in this Section 20.2; provided that Abbott shall make
all payments required and provide all reports required under this Agreement. The
use of any Affiliates as set forth in this Section 20.2 shall in no way relieve
the applicable Party of any of its obligations or liabilities hereunder and each
Party shall be liable for the actions of its Affiliates under this Agreement and
the indemnification provisions of Article 15 shall apply with respect to all
actions of a Party's Affiliates under this Agreement.
20.3 DISPUTE RESOLUTION.
-79-
(a) GENERAL. The parties recognize that a bona fide dispute as to
certain matters may arise from time to time during the term of this
Agreement which may relate to either Party's rights and/or obligations
hereunder. The Parties agree that they shall use all reasonable efforts
to resolve any dispute which may arise in an amicable manner.
(b) MANAGEMENT RESOLUTION. If the Parties are unable to resolve
such a dispute within ***, either Party may, by notice to the other
Party, have such dispute referred to the respective officers of the
Parties designated below. Such officers shall attempt to resolve the
referred dispute by good faith negotiations within *** after such
notice is received. The said designated officers are as follows: For
Abbott, Senior Vice President, Pharmaceutical Operations, for the U.S.
Territory and Senior Vice President, International Operations for the
International Territory, and for Triangle, Chief Executive Officer.
(c) ALTERNATIVE DISPUTE RESOLUTION. The Parties agree that any
dispute that arises in connection with this Agreement, which cannot be
amicably resolved by such management discussions shall be resolved by
binding Alternative Dispute Resolution ("ADR") in the manner described in
Exhibit 20.3; provided, however, that the resolution of matters for which
one Party to the exclusion of the other has the authority, under the
terms of this Agreement, to control the decisions or the final decisions
shall not be determined by ADR; provided, further, that either Party may
seek judicial relief or enforcement to pursue a claim of fraudulent or
otherwise inequitable treatment under the ADR proceedings or to otherwise
enforce a judgment under the ADR proceedings (including without
limitation a judgment for specific performance or injunctive relief).
20.4 COUNTERPARTS. The Agreement may be executed simultaneously in any
number of counterparts and may be executed by facsimile. All counterparts shall
collectively constitute one and the same Agreement.
20.5 NOTICES. In any case where any notice or other communication is
required or permitted to be given hereunder, such notice or communication shall
be in writing, and sent by overnight express or registered or certified mail
(with return receipt requested) and shall be sent to the following address (or
such other address as either Party may designate from time to time in writing):
If to Triangle:
Triangle Pharmaceuticals, Inc.
4 University Place
4611 University Drive
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-80-
Durham, North Carolina 27707
Telephone: (919) 493-5980
Telefax: (919) 493-5925
Attention: Chief Executive Officer
Copy to: General Counsel
If to Abbott:
Abbott Laboratories
Dept. 309; Bldg. AP30
200 Abbott Park Road
Abbott Park, IL 60064
Telephone: (847) 938-6863
Telefax: (847) 938-5383
Attention: Senior Vice President, Pharmaceutical Operations
and Senior Vice President, International
Operations
Copy to:
General Counsel
Abbott Laboratories
Dept. 364; Bldg. AP6D
100 Abbott Park Road
Abbott Park, IL 60064
Telephone: (847) 937-8906
Telefax: (847) 938-6277
20.6 BINDING EFFECT; ASSIGNMENT. This Agreement may not be assigned, in
whole or in part, by either Party without the prior written consent of the other
Party, and any attempted assignment without such consent shall be null and void;
provided that no prior written consent shall be required in the event that a
Third Party acquires substantially all of the assets or outstanding shares of,
or merges with, the assigning Party, but only so long as such Third Party agrees
to be bound by all of the assigning Party's responsibilities and obligations
hereunder. No assignment of this Agreement or of any rights hereunder shall
relieve the assigning party of any of its obligations or liability hereunder.
This Agreement shall inure to the benefit of and be binding upon each of the
Parties hereto and their respective successors and permitted assigns.
20.7 ENTIRE AGREEMENT. The terms and conditions contained herein and in
the other Triangle-Abbott Alliance Agreements constitute the entire agreement
between the Parties relating to the subject matter of hereof and thereof and
shall supersede all previous communications between the Parties with respect to
the subject matter hereof and thereof, respectively. Neither Party has entered
into this Agreement in reliance upon any representation, warranty, covenant or
undertaking of the other Party that
-81-
is not set out or referred to in this Agreement. In addition, upon the request
of either Party, the Parties will discuss whether they desire to enter into an
agreement regarding the tax treatment of their activities under this Agreement.
If the Parties mutually agree that such an agreement is necessary or desirable,
they will each bear their own expenses incurred in connection with the
preparation of such an agreement, and (unless the Parties otherwise agree in the
future), any mutually agreed out-of-pocket costs incurred in connection with the
development of tax information pursuant to such an agreement shall be shared
equally. If only one Party believes that such an agreement is necessary or
desirable, that Party shall bear the costs of preparing such an agreement, and
shall bear the out-of-pocket costs of developing tax information pursuant to
such an agreement. In any event, each Party shall bear its own internal expenses
in connection with the negotiation and preparation of any such tax agreement and
the preparation of its own tax returns.
20.8 AMENDMENT. The Agreement may be varied, amended or extended only by
the written agreement of the Parties through their duly authorized officers or
representatives, specifically referring to this Agreement.
20.9 SEVERABILITY. In case any one or more of the provisions contained
herein shall, for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement, but this Agreement shall be construed as
if such invalid, illegal or unenforceable provision or provisions had never been
contained herein unless the deletion of such provision or provisions would
result in such a material change as to cause completion of the transactions
contemplated herein to be impossible and provided that the performance required
by this Agreement with such clause deleted remains substantially consistent with
the intent of the Parties.
20.10 COMPANY EMPLOYEES. Each Party shall not, directly or indirectly
solicit for employment, any employee of the other Party who has been directly
involved in the performance of this Agreement during the Term and for one year
after the earlier of the termination or expiration of this Agreement or the
termination of such individual's employment, with the other Party. It shall not
be a violation of this provision if any employee responds to a Party's general
advertisement of an open position.
20.11 PUBLICITY. Except as otherwise provided herein, each Party shall
maintain the confidentiality of all provisions of this Agreement and this
Agreement itself and, without the prior written consent of both Parties, neither
Party shall make any press release or other public announcement of or otherwise
disclose to any Third Party this Agreement or any of its provisions except: (i)
for disclosure to those of its directors, officers, employees, accountants,
attorneys, advisers and agents whose duties
-82-
reasonably require them to have access to the Agreement and, in the case of
Triangle, disclosure to the Triangle Licensors, provided that such directors,
officers, employees, accountants, attorneys, advisers, agents and licensors are
required to maintain the confidentiality of the Agreement to the same extent as
if they were Parties hereto, and (ii) except for such disclosures as may be
required by Legal Requirements, in which case the disclosing Party shall provide
the nondisclosing Party with prompt advance notice of such disclosure so that
the nondisclosing Party shall have the opportunity if it so desires to seek a
protective order or other appropriate remedy and, in connection with any
disclosure to the Securities and Exchange Commission, the disclosing Party shall
use reasonable efforts to obtain confidential treatment for such disclosure.
Promptly following the execution of each of the Triangle-Abbott Alliance
Agreements, the Parties shall issue a mutually acceptable press release, a copy
of which is attached hereto as Exhibit 20.11.
20.12 APPLICABLE LAW. The Agreement shall be governed by the laws of the
State of Delaware applicable to contracts made and to be performed entirely
within such jurisdiction and without giving effect to its choice or conflict of
laws rules or principles. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements, in
addition to any other relief to which the party may be entitled.
20.13 MILLENNIAL COMPLIANCE. Each Party hereby covenants and agrees that
it will use Reasonable Best Efforts to ensure that there will be no failure or
erroneous receipt, storage, processing or production of data as a consequence of
the inability to receive, store, process or output date information regardless
of the date(s) utilized (including, without limitation, relating to the change
of century) in any computer software, computer hardware, automation systems or
other devices owned, licensed or otherwise used by such Party, its permitted
sublicensees or suppliers that would result in the inability of such Party to
either (i) comply with its obligations hereunder with respect to any
Confidential Information or any other data or information of other Party, or
(ii) successfully perform its obligations hereunder. At either Party's request,
the other Party agrees to disclose in reasonable detail its millennial
compliance plan and procedures, including but not limited to the applicable
testing results concerning its hardware and software systems.
20.14 HEADINGS. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement.
20.15 INTERPRETATION.
-83-
(a) Wherever any provision of this Agreement uses the term
"including" (or "includes"), such term shall be deemed to mean "including
without limitation" and "including but not limited to" (or "includes
without limitation" and "includes but is not limited to") regardless of
whether the words "without limitation" or "but not limited to" actually
follow the term "including" (or "includes").
(b) Wherever any provision of this Agreement provides that a
Party's consent shall not be unreasonably withheld, such provision shall
be deemed to provide that such consent shall in addition not be
unreasonably delayed.
(c) The recitals set forth at the start of this Agreement, along
with the Exhibits to this Agreement, and the terms and conditions
incorporated in such recitals and Exhibits shall be deemed integral parts
of this Agreement and all references in this Agreement to this Agreement
shall encompass such recitals and Exhibits and the terms and conditions
incorporated in such recitals and Exhibits.
(d) In the event of any conflict between the terms and conditions
of this Agreement and any terms and conditions that may be set forth on
any order, invoice, verbal agreement or otherwise, the terms and
conditions of this Agreement shall govern.
(e) Unless otherwise explicitly stated, in the event of any
conflict between the terms of this Agreement and the terms and conditions
of any of the Exhibits hereto, the terms of this Agreement shall prevail.
(f) The Agreement shall be construed as if both Parties drafted it
jointly, and shall not be construed against either Party as principal
drafter.
(g) Unless otherwise provided, all references to Sections,
Articles and Exhibits in this Agreement are to Sections, Articles and
Exhibits of and to this Agreement.
20.16 NO WAIVER OF RIGHTS. No failure or delay on the part of either
Party in the exercise of any power or right hereunder shall operate as a waiver
thereof. No single or partial exercise of any right or power hereunder shall
operate as a waiver of such right or of any other right or power. The waiver by
either Party of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any other or subsequent breach hereunder.
-84-
[Signatures appear on the following page]
-85-
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
TRIANGLE PHARMACEUTICALS, INC.
By: /S/ DAVID W. BARRY
----------------------------------------------
Name: DAVID W. BARRY
----------------------------------------------
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
----------------------------------------------
ABBOTT LABORATORIES
By: /S/ ARTHUR HIGGINS
----------------------------------------------
Name: ARTHUR HIGGINS
----------------------------------------------
Title: SENIOR VICE PRESIDENT
PHARMACEUTICAL OPERATIONS
----------------------------------------------
EXHIBIT 1.8A
U.S. SG&A - EXPENSE DEFINITIONS
1. Product Samples *** and *** cost of samples
2. *** ***
3. Continuing Education Programs Costs to provide development programs for Sales Representatives.
4. *** ***
5. *** ***
- ----- ------------------------------------- ------------------------------------------------------------------------------------
6. Sales Aids Printed reference materials for reps. Usually a glossy multi-page booklet
highlighting a product's key attributes.
7. MD/Pharmacist Kits Brochures, pamphlets and other information distributed to doctors, excluding
reprints.
8. Product Training Any sales rep training cost including: materials at the training classes along with
the meeting itself.
9. *** ***
- ----- ------------------------------------- ------------------------------------------------------------------------------------
10. Convention - Exhibiting Costs of exhibiting at major conventions, including booth displays (not
construction).
11. Convention - Symposia Costs of satellite symposia/meeting conducted at a major convention for MD's and
ancillary health professionals.
12. Faculty/Advisory Board ***
13. Clinical Experience Trials All costs related to conducting a clinical experience trial including: set-up costs,
doctor recruitment and tracking costs.
14. Fellowships - Tutorials All costs to supports doctors/other third party participation in fellowships,
tutorials and preceptorships.
- ----- ------------------------------------- ------------------------------------------------------------------------------------
15. Journal Ads Costs to run journal ads.
16. Public Relations Services provided by a public relations firm including: monthly fees, out-of-pocket
expenses and other fees.
17. Ad Agency Fees Services provided by an ad agency including : monthly fees, out-of-pocket expenses
and other fees.
18. Market Research/Statistics/Reports Costs of primary market research.
19. Marketing Related Clinical Studies PhaseIIIb/IV studies which support growth of products through data creation.
- ----- -------------------------------------- ------------------------------------------------------------------------------------
20. Indigent Care Program Operation costs, management and drug, to support uninsured and low-income segment
for limited duration.
21. Expanded Access Program Pre-approval clinical program, including drug and operating costs.
22. Direct Mail Mailings (including postage, AMA royalties, and database expenses) to physicians,
pharmacists and other customers.
23. Reprints/Publication Planning Costs of reprinting journal articles. Costs of planning and preparing journal
articles and abstracts.
24. Direct to Consumer Advertising Cost to run electronic print, television, or radio advertising intended to reach
the public.
- ----- -------------------------------------- ------------------------------------------------------------------------------------
25. Community Advocacy Cost of programs to establish and maintain relationships with relevant community
groups.
26. Patient Education Costs of materials to educate patients on disease and treatment.
27. Website Costs of establishing and maintaining an electronic website.
28. Sales Force Expense See attached sheet. (Exhibit 1.8B)
29. *** Actual costs*
- ----- -------------------------------------- ------------------------------------------------------------------------------------
30. *** Actual costs*
31. *** Actual costs*
32. Additional costs pursuant to Section Actual costs*
9.4(c)
33. Additional costs specifically included Actual costs*
in SG&A pursuant to the terms of the
Agreement
- -----------
* Not included in budget pursuant to ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 1.8B
U.S. TERRITORY - SG&A * - VARIABLE SALES FORCE EXPENSE
VARIABLE SALES FORCE EXPENSE
Base expense shall be set at $***/Representative adjusted
with an annual cost of living index using the Consumer Price Index (CPI). Such
expense may be reviewed and adjusted as necessary by ***.
This expense includes the following items:
o ***
o ***
o ***
o ***
o ***
o ***
o ***
o ***
NOTES:
(a) ***
***
***
(b) *** Expense includes: ***
(c) *** includes: ***
* SG&A definition for this contract only. Party's definition for external
reporting may be different.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 1.8C
INTERNATIONAL TERRITORY - SG&A CREDIT ANALYSIS (1)
(A) MARKETING/SALES/ADMIN (PURSUANT TO SECTION 1.8(i))
Maximum costs (per product) excluding B&C below. These costs will
reflect similar expenses as outlined in Exhibit 1.8A, but will be
provided in aggregate not by line item. Expenses will also be
identified for Marketing Studies (permitted under Section 4.4) and
Expanded Access / Indigent Care (permitted under Section 4.6)
HIV PRODUCTS (2)(3)
*** prelaunch year
*** launch year
*** first year after launch
*** second year after launch
*** every year thereafter
HBV PRODUCTS (2)(3)
*** prelaunch year
*** launch year
*** first year after launch
*** second year after launch
*** every year thereafter
(B) R&D / REGULATORY:
*** fees & *** preparation actual costs
*** actual costs
(C) OTHER:
*** actual costs
*** actual costs
*** actual costs
*** actual costs
Triangle Third Party Royalty with Actual costs
respect to sales in the International
Territory
Additional costs pursuant to Section 9.4(c) Actual costs
Additional costs specifically included in Actual costs
SG & A pursuant to the terms of the
Agreement
(1) SG&A definition for this contract only. The Parties' definition for
external reporting may be different.
(2) Amounts indexed for inflation. 1999 is the base year for the inflation
calculation.
(3) The amounts included are for illustrative purposes. Actual amounts will be
determined pursuant to Section 4.3(b). Expenses are Abbott's best
estimates. These estimates are subject to change based on clinical date
and final lunch plans.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 1.16
DAPD FORMULA
[CHART]
EXHIBIT 1.89
(PAGE 1 OF 4)
MKC-442 LICENSE AGREEMENT
EARNED ROYALTIES
o *** Net Sales(1) of Licensed Products(1)
ANNUAL Minimum Royalties
Full Calendar Year Following First
FDA Approval of Licensed Products Annual Minimum
- ---------------------------------- --------------------------------
*** ***
*** ***
*** ***
*** ***
*** ***
(1) As defined in the MKC-442 License Agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 1.89
(PAGE 2 OF 4)
DAPD LICENSE AGREEMENT
Cumulative Net Selling Price of
Earned Royalties Licensed Products (1) for
(% of Net Selling Price(1)) the HIV Indication
*** % ***
*** % ***
*** % ***
ANNUAL MINIMUM ROYALTIES FOR THE HIV INDICATION
Calendar Year from First FDA Approval Annual Minimum
Of a Licensed Product for HIV Indication AMOUNT
*** ***
*** ***
*** ***
Cumulative Net Selling Price of
Earned Royalties Licensed Products(1) for
(% of Net Selling Price(1)) the HBV Indication
- ------------------------- ----------------------------------
*** % ***
*** % ***
*** % ***
ANNUAL MINIMUM ROYALTIES FOR THE HBV INDICATION
Calendar Year from First FDA Approval Annual Minimum
Of a Licensed Product for HBV Indication AMOUNT
*** ***
*** ***
*** ***
(1) As defined in the DAPD License Agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 1.89
(PAGE 3 OF 4)
FTC LICENSE AGREEMENT
Annual Aggregate Net Selling Price
Earned Royalties of Licensed Products(1)
(% of Net Selling Price(1)) for HIV Indication
*** % ***
*** % ***
*** % ***
ANNUAL MINIMUM ROYALTIES FOR THE HIV INDICATION
Calendar Year from First FDA Approval Annual Minimum
Of a Licensed Product for HIV Indication AMOUNT
*** ***
*** ***
*** ***
Annual Aggregate Net Selling Price
Earned Royalties of Licensed Products(1)
(% of Net Selling Price(1)) for HBV Indication
*** % ***
*** % ***
*** % ***
ANNUAL MINIMUM ROYALTIES FOR THE HBV INDICATION
Calendar Year for First FDA Approval Annual Minimum
Of a Licensed Product for HBV Indication AMOUNT
*** ***
*** ***
*** ***
(1) As defined in the FTC License Agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 1.89
(PAGE 4 OF 4)
L-FMAU LICENSE AGREEMENT
Earned Royalties
*** % of Net Sales(1) of Licensed Products(1)
Annual Minimum Royalties
Full Calendar Year following First
FDA Approval of a Licensed Product Annual Minimum
*** ***
*** ***
*** ***
(1) As defined in the L-FMAU License Agreement
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 2.6
COLLABORATION AGREEMENT
COMBINATION PRODUCTS
FINANCIAL ANALYSIS OF LONG-TERM FINANCIAL PLAN
Assumes satisfaction of all conditions required by Section 2.6(b) including the
Abbott and Triangle market on an exclusive basis in accordance with the terms of
the Triangle-Abbott Alliance Agreements.
ANALYSIS WITH COMBINATION PRODUCT:
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Cost of Goods
Gross Profit
Third party license expence (1)
Operating expenses ***
Net profit before tax
Tax expense
Net income
Adjustments to Convert Cash Flow Basis:
Add: Depreciation expense
Working capital adjustments ***
Net cash flow
***
***
ANALYSIS WITHOUT COMBINATION PRODUCT (2):
Year 1 Year 2 Year 3 Year 4 Year 5
Sales
Cost of Goods
Gross Profit
Operating expenses ***
Net profit before tax
Tax expense
Net income
Adjustments to Convert Cash Flow Basis:
Add: Depreciation expense
Working capital adjustments ***
Net cash flow
***
***
(1) ***
(2) ***
CONCLUSION:
Based on the above analysis the project would have an additive economic impact
and would satisfy the requirements of Section 2.6.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
U.S. PROFIT SHARING
1ST QUARTER
(MILLIONS)
U.S. PROFIT SPLIT: ABBOTT TRIANGLE
- ------------------ ------ --------
Abbott Net Sales - Triangle Product Sales -
Abbott Cost of Goods - Triangle Cost of Goods -
Abbott Distribution Expenses - Triangle Third Party Royalties -
---------- -------------
Abbott Distribution Margin *** Triangle Distribution Margin ***
---------- -------------
Abbott SG&A Triangle SG&A ***
-------------
--------- -------------
U.S. Product Profit or U.S. Net *** Abbott Operating Margin *** Triangle Operating Margin ***
Loss ------------ ---------- -------------
U.S. Adjustment Amount *** U.S. Adjustment Amount ***
---------- -------------
Abbott U.S. Profit Amount *** Triangle U.S. Profit Amount ***
---------- -------------
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
(2) U.S. PROFIT ALLOCATION: ASSUMPTIONS:
Abbott U.S. Profit Amount ***
------------
Triangle U.S. Profit Amount *** * Triangle sells at *** to Abbott (1)
------------ * 3rd party royalties are *** of Abbott Net
Sales and recorded and paid by Triangle
U.S. Product Profit or U.S. Net *** * Cost of goods sold is *** of Triangle's
Loss ------------ sales to Abbott
* Triangle sells *** to Abbott
* Abbott sells nothing, no sales would be
U.S. PROFIT ADJUSTMENT AMOUNT: reported for profit sharing calculation
since there were no sales to a third
Abbott Triangle party from Abbott
------------------------------- * Triangle's SG&A = ***
* Abbott's SG&A = ***
Respective Operating Margin *** ***
Less: Respective U.S. Profit Amount *** ***
-------------------------------
-------------------------------
U.S. Adjustment Amount (**) *** ***
-------------------------------
** Postive amount repesents payment to other party, negative amount represents
receipt.
(1) Abbott will purchase from Triangle at a price of *** as outlined in Section
8.4 of the Collaboration Agreement thus Triangle Product Sales could differ
slightly. *** is utilized in this example for illustrative purposes only.
(2) Loss allocation is based on a percentage of Product Profit/Loss as defined
in Section 6.3 and 6.4
ASSUMPTIONS:
***
***
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
U.S. PROFIT SHARING
2ND QUARTER
(MILLIONS)
U.S. PROFIT SPLIT: ABBOTT TRIANGLE
Abbott Net Sales *** Triangle Product Sales ***
---------- --------
Abbott Cost of Goods *** Triangle Cost of Goods ***
---------- --------
Abbott Distribution Expenses *** Triangle Third Party Royalties ***
---------- --------
Abbott Distribution Margin *** Triangle Distribution Margin ***
---------- --------
Abbott SG&A *** Triangle SG&A ***
---------- --------
Quarterly U.S. Product Profit *** Abbott Operating Margin *** Triangle Operating Margin ***
or U.S. Net Loss ------------- ---------- --------
U.S. Adjustment Amount *** U.S. Adjustment Amount ***
---------- --------
Abbott U.S. Profit Amount *** Triangle U.S. Profit Amount ***
---------- --------
---------- --------
YTD U.S. Product Profit *** YTD Abbott U.S. Profit Amount *** YTD Triangle U.S. Profit Amount ***
or U.S. Net Loss ------------ ---------- --------
------------ ---------- --------
- ------------------------------------------------------------------------------------------------------------------------------
U.S. PROFIT ALLOCATION: ASSUMPTIONS:
YTD Abbott U.S. Profit Amount ***
----------
YTD Triangle U.S. Profit Amount *** * Triangle sells at *** to Abbott (1)
----------
YTD U.S. Product Profit or *** * 3rd party royalties are *** of Abbott
U.S. Net Loss ---------- Net Sales and recorded and paid by
---------- Triangle
U.S. PROFIT ADJUSTMENT AMOUNT: * Cost of goods sold is *** of Triangle's
sales to Abbott
* Triangle sells nothing to Abbott
* Abbott sells ***
Abbott Triangle * Triangle's SG&A = ***
-----------------------------
Respective Operating Margin - above *** *** * Abbott's SG&A = ***
Respective U.S. Profit Amount (preceding *** ***
calendar quarter)
Less: Respective YTD U.S. Profit Amount *** ***
-----------------------------
-----------------------------
-----------------------------
U.S. Adjustment Amount (**) *** ***
-----------------------------
-----------------------------
Check total
** Positive amount represents payment to other party, negative amount represents
receipt.
(1) Abbott will purchase from Triangle at a price of *** as outlined in Section
8.4 of the Collaboration Agreement thus Triangle Product Sales could differ
slightly. *** is utilized in this example for illustrative purposes only.
EXHIBIT 6.9
U.S. PROFIT SHARING
3rd Quarter
(Millions)
U.S. PROFIT SPLIT: ABBOTT TRIANGLE
Abbott Net Sales *** Triangle Product Sales ***
---------- ---------
Abbott Cost of Goods *** Triangle Cost of Goods ***
----------- ----------
Abbott Distribution Expenses *** Triangle Third Party Royalties ***
----------- ----------
Abbott Distribution Margin *** Triangle Distribution Margin ***
----------- ----------
Abbott SG&A *** Triangle SG&A ***
----------- ----------
Quarterly U.S. Product Profit *** Abbott Operating Margin *** Triangle Operating Margin ***
or U.S. Net Loss ------------ ----------- ----------
------------
U.S. Adjustment Amount *** U.S. Adjustment Amount ***
----------- ----------
Abbott U.S. Profit Amount *** Triangle U.S. Profit Amount ***
----------- ----------
----------- ----------
YTD U.S. Product Profit or *** YTD Abbott U.S. Profit *** YTD Triangle U.S. Profit ***
U.S. Net Loss ------------- Amount ----------- Amount ----------
------------- ----------- ----------
- --------------------------------------------------------------------------------------------------------------------------------
U.S. PROFIT ALLOCATION: ASSUMPTIONS:
YTD Abbott U.S. Profit Amount *** (YTD Sales)
------------
YTD Triangle U.S. Profit *** * Triangle sells at *** to Abbott (1)
Amount ------------
YTD U.S. Product Profit or *** * 3rd party royalties are *** of Abbott Net
U.S. Net Loss ------------ Sales and recorded and paid by Triangle
------------ * Cost of goods sold is *** of Triangle's
sales to Abbott
U.S. PROFIT ADJUSTMENT AMOUNT: * Triangle sells *** to Abbott
* Abbott sells ***
Abbott Triangle * Triangle's SG&A ***
----------------------------- * Abbott's SG&A ***
Respective Operating Margin - above *** ***
Respective U.S. Profit Amount (preceding *** ***
calendar quarter)
Less: Respective YTD U.S. Profit Amount *** ***
-----------------------------
-----------------------------
U.S. Adjustment Amount (**) *** ***
-----------------------------
-----------------------------
Check total
** Positive amount represents payment to other party, negative amount represents
receipt.
(1) Abbott will purchase from Triangle at a price of *** as outlined in Section
8.4 of the Collaboration Agreement thus Triangle Product Sales could differ
slightly. *** is utilized in this example for illustrative purposes only.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
U.S. PROFIT SHARING
4th Quarter
(Millions)
U.S. PROFIT SPLIT: ABBOTT TRIANGLE
Abbott Net Sales *** Triangle Product Sales ***
--------- --------
Abbott Cost of Goods *** Triangle Cost of Goods ***
--------- --------
Abbott Distribution Expenses *** Triangle Third Party Royalties ***
-------- --------
-------- --------
Abbott Distribution Margin *** Triangle Distribution Margin ***
--------- --------
Abbott SG&A *** Triangle SG&A ***
--------- --------
Quarterly U.S. Product Profit *** Abbott Operating Margin *** Triangle Operating Margin ***
or U.S. Net Loss ---------- --------- ---------
----------
U.S. Adjustment Amount *** U.S. Adjustment Amount ***
--------- ---------
Abbott U.S. Profit Amount *** Triangle U.S. Profit Amount ***
--------- ---------
--------- ---------
YTD U.S. Product Profit or *** YTD Abbott U.S. Profit *** YTD Triangle U.S. Profit ***
U.S. Net Loss ----------- Amount --------- Amount ---------
----------- --------- ---------
- -------------------------------------------------------------------------------------------------------------------------------
U.S. PROFIT ALLOCATION: ASSUMPTIONS:
YTD Abbott U.S. Profit Amount *** (YTD Sales)
----------
YTD Triangle U.S. Profit Amount *** * Triangle sells at *** to Abbott (1)
---------- * 3rd party royalties are *** of Abbott
YTD U.S. Product Profit or U.S. *** Net Sales and recorded and paid by
Net Loss ---------- Triangle
---------- * Cost of goods sold is *** of Triangle's
sales to Abbott
* Triangle sells nothing to Abbott
U.S. PROFIT ADJUSTMENT AMOUNT: * Abbott sells ***
* Triangle's SG&A ***
Abbott Triangle * Abbott's SG&A ***
-----------------------
Respective Operating Margin - above *** ***
Respective U.S. Profit Amount *** ***
(preceding calendar quarter)
Less: Respective YTD U.S. Profit Amount *** ***
-----------------------
-----------------------
-----------------------
U.S. Adjustment Amount (**) *** ***
-----------------------
-----------------------
Check total
** Positive amount represents payment to other party, negative amount represents
receipt.
(1) Abbott will purchase from Triangle at a price of *** as outlined in Section
8.4 of the Collaboration Agreement thus Triangle Product Sales could differ
slightly. *** is utilized in this example for illustrative purposes only.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
INTERNATIONAL PROFIT SHARING
1ST QUARTER
(MILLIONS)
INTERNATIONAL PROFIT SPLIT: ABBOTT TRIANGLE
Abbott Net Sales - Triangle Product Sales -
Abbott Cost of Goods - Triangle Cost of Goods -
Abbott Distribution Expenses - Triangle Third Party Royalties -
------ -------
Abbott Distribution Margin *** Triangle Distribution Margin ***
------ -------
Abbott SG&A Triangle SG&A ***
-------
-------
------ -------
Int. Profit Amount or Net Loss *** Abbott Operating Margin *** Triangle Operating Margin ***
------- ------ -------
Int. Adjustment Amount *** Int. Adjustment Amount ***
------ -------
Abbott Int. Profit Amount *** Triangle Int. Profit Amount ***
------ -------
- -----------------------------------------------------------------------------------------------------------------------------------
INT. PROFIT ALLOCATION:
Abbott Int. Profit Amount ***
---------------
Triangle Int. Profit Amount ***
---------------
Int. Product Profit or Int. Net Loss ***
---------------
INT. PROFIT ADJUSTMENT AMOUNT:
Abbott Triangle
---------------------------------
Respective Operating Margin *** ***
Less: Respective Int. Profit Amount *** ***
---------------------------------
---------------------------------
Int. Adjustment Amount (**) *** ***
---------------------------------
** Postive amount repesents payment to other party, negative amount represents
receipt.
ASSUMPTIONS:
* For the purpose of this international profit split example it is assumed that
Triangle's Cash is in excess of *** as defined in Section 6.6(b) of the
Collaboration Agreement
* There were no third party international sales
* Abbott's SG&A = ***
* Cost of Goods is *** of Net Sales
* International Distribution expense = *** of Net Sales
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
INTERNATIONAL PROFIT SHARING
2ND QUARTER
(MILLIONS)
INTERNATIONAL PROFIT SPLIT: ABBOTT TRIANGLE
Abbott Net Sales - Triangle Product Sales -
Abbott Cost of Goods - Triangle Cost of Goods -
Abbott Distribution Expenses - Third Party Royalties -
------ -------
Abbott Distribution Margin *** Triangle Distribution Margin ***
------ -------
Abbott SG&A (1) Triangle SG&A ***
------ -------
Quarterly Int. Product Profit *** Abbott Operating Margin - Int. *** Triangle Operating Margin ***
or U.S. Net Loss ----- ------ -------
Int. Adjustment Amount *** Int. Adjustment Amount ***
------ -------
Abbott Int. Profit Amount *** Triangle Int. Profit Amount ***
------ -------
YTD Int. Product Profit or Net Loss *** YTD Abbott Int. Profit Amount *** YTD Triangle Int. Profit Amount ***
----- ------ -------
- --------------------------------------------------------------------------------------------------------------------------------
INT. PROFIT ALLOCATION:
YTD Abbott Int. Profit Amount *** (YTD Sales)
-------
YTD Triangle Int. Profit Amount ***
-------
YTD Int. Product Profit or Net Loss ***
-------
SALES:
Q1 Q2
-----------------------
Abbott Sales by Quarter ***
Cumulative Abbott Sales ***
INT. PROFIT ADJUSTMENT AMOUNT:
Abbott Triangle
-----------------------------------
Respective Operating Margin - above ***
Respective Int. Profit Amount
(preceding calendar quarter) *** ***
Less: Respective YTD Int. Profit Amount *** ***
-----------------------------------
-----------------------------------
Int. Adjustment Amount (**) *** ***
-----------------------------------
Check total
INT. PROFIT ALLOCATION:
% of Sales Abbott Triangle
- ----------------------------------------------
***
*** ***
***
Check total
ASSUMPTIONS:
* For the purpose of this international profit split example it is
assumed that Triangle's Cash is in excess of *** as defined in
Section 6.6(b) of the Collaboration Agreement
* Abbott Net Sales ***
* Abbott's SG&A = ***
* Cost of Goods is *** of Net Sales
* International Distribution expense = *** of Net Sales
** Positive amount repesents payment to other party, negative amount represents
receipt.
(1) Triangle will pay International Third Party Royalties and Abbott will
reimburse Triangle for such amounts. The International Third Party
Royalties are included in Abbott's International SG&A.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
INTERNATIONAL PROFIT SHARING
3RD QUARTER
(MILLIONS)
INTERNATIONAL PROFIT SPLIT: ABBOTT TRIANGLE
Abbott Net Sales - Triangle Product Sales -
Abbott Cost of Goods - Triangle Cost of Goods -
Abbott Distribution Expenses - Third Party Royalties (in ABT SG&A) -
------ ------
Abbott Distribution Margin *** Triangle Distribution Margin ***
------ ------
Abbott SG&A (1) Triangle SG&A ***
------
------ ------
Quarterly Int. Product Profit *** Abbott Operating Margin - Int. *** Triangle Operating Margin ***
or U.S. Net Loss ------- ------ ------
Int. Adjustment Amount *** Int. Adjustment Amount ***
------ ------
Abbott Int. Profit Amount *** Triangle Int. Profit Amount ***
------ ------
YTD Int. Product Profit or Net Loss ** YTD Abbott Int. Profit Amount *** YTD Triangle Int. Profit Amount ***
------- ------ ------
- -----------------------------------------------------------------------------------------------------------------------------------
INT. PROFIT ALLOCATION:
YTD Abbott Int. Profit Amount *** (YTD Sales)
---------------
YTD Triangle Int. Profit Amount ***
---------------
YTD Int. Product Profit or Net Loss ***
---------------
Check total
SALES:
Q1 Q2 Q3
-------------------------------------
Third Party Sales by Quarter *** ***
Cumulative Third Party Sales *** ***
INT. PROFIT ADJUSTMENT AMOUNT:
Abbott Triangle
--------------------------
Respective Operating Margin - above ***
Respective Int. Profit Amount (preceding
calendar quarter) *** ***
Less: Respective Int. Profit Amount *** ***
---------------------------
---------------------------
Int. Adjustment Amount (**) *** ***
---------------------------
Check total
INT. PROFIT ALLOCATION:
% of Sales Abbott Triangle
--------------------------------------------
***
*** ***
***
Check total
ASSUMPTIONS:
* For the purpose of this international profit split example it is assumed that
Triangle's Cash is in excess of *** as defined in Section 6.6(b) of the
Collaboration Agreement
* Abbott Net Sales ***
* Abbott's SG&A = ***
* Cost of Goods is *** of Net Sales
* International Distribution expense = *** of Net Sales
** Postive amount repesents payment to other party, negative amount represents
receipt.
(1) Triangle will pay International Third Party Royalties and Abbott will
reimburse Triangle for such amounts. The International Third Party
Royalties are included in Abbott's International SG&A.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
INTERNATIONAL PROFIT SHARING
4TH QUARTER
(MILLIONS)
INTERNATIONAL PROFIT SPLIT: ABBOTT TRIANGLE
Abbott Net Sales - Triangle Product Sales -
Abbott Cost of Goods - Triangle Cost of Goods -
Abbott Distribution Expenses - Third Party Royalties (In ABT SG&A) -
------ ----
Abbott Distribution Margin *** Triangle Distribution Margin ***
------ ----
Abbott SG&A (1) Triangle SG&A ***
----
------ ----
Quarterly Int. Product Profit *** Abbott Operating Margin *** Triangle Operating Margin ***
or U.S. Net Loss ------- ------ ----
Int. Adjustment Amount *** Int. Adjustment Amount ***
Abbott Int. Profit Amount ** Triangle Int. Profit Amount ***
------ ----
YTD Int. Product Profit or Net Loss *** YTD Abbott Int. Profit Amount *** YTD Triangle Int. Profit Amount ***
------- ------ ----
- -----------------------------------------------------------------------------------------------------------------------------------
INT. PROFIT ALLOCATION:
YTD Abbott Int. Profit Amount *** (YTD Sales)
------
YTD Triangle Int. Profit Amount ***
------
YTD Int. Product Profit or Net Loss ***
------ Check total
SALES:
Q1 Q2 Q3 Q4
---------------------------------------------------------
Third Party Sales by Quarter ***
Cumulative Third Party Sales ***
INT. PROFIT ADJUSTMENT AMOUNT:
Abbott Triangle
----------------------------
Respective Operating Margin--above ***
Respective Int. Profit Amount
(preceding calendar quarter)
Less: Respective YTD Int. Profit Amount *** ***
----------------------------
----------------------------
Int. Adjustment Amount (**) *** ***
----------------------------
Check total
INT. PROFIT ALLOCATION:
% of Sales Abbott Triangle
-----------------------------------------
***
*** ***
***
Check total
ASSUMPTIONS:
* For the purpose of this international profit split example it is assumed
that Triangle's Cash is in excess of *** as defined in Section 6.6(b) of
the Collaboration Agreement
* Abbott Net Sales ***
* Abbott's SG&A = ***
* Cost of Goods is *** of Net Sales
* International Distribution expense = *** of Net Sales
** Postive amount repesents payment to other party, negative amount represents
receipt.
(1) Triangle will pay International Third Party Royalties and Abbott will
reimburse Triangle for such amounts. The International Third Party
Royalties are included in Abbott's International SG&A.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 6.9
INTERNATIONAL REIMBURSEMENT ACCOUNT EXAMPLE
Q1 Q2 Q3 Q4
----------------------------------------------------------
Quarterly International Net Sales *** *** *** ***
Quarterly International Operating Margin/Product Profit *** *** *** ***
YTD International Operating Margin/Product Profit *** *** *** ***
R&D Payment from Abbott *** *** *** ***
ABBOTT
Abbott YTD International Profit Amount *** *** *** ***
TRIANGLE
Triangle YTD International Profit Amount *** *** *** ***
TRIANGLE REIMBURSEMENT ACCOUNT
Carryover *** *** *** ***
Increases (I) International Adjustment Amount *** *** *** ***
(ii) Interest to Abbott *** *** *** ***
(iii)
Decreases (I) Payment received from Abbott *** *** *** ***
(ii) Offset by Abbott *** *** *** ***
(iii)
----------------------------------------------------------
Total *** *** *** ***
Cash payment from Abbott not impacting reimbursement account. *** *** *** ***
ABBOTT INTERNATIONAL REIMBURSEMENT AMOUNT
Abbott Operating Margin *** *** *** ***
Abbott International Profit Amount (preceding quarters) *** *** *** ***
Less Abbott YTD International Profit Amount *** *** *** ***
International Adjustment Amount *** *** *** ***
TRIANGLE CASH BALANCE
Triangle's beg. cash balance *** *** *** ***
Payments (to)/from Abbott *** *** *** ***
Quarterly operating expenses *** *** *** ***
Triangle's ending cash balance *** *** *** ***
Notes:
Qtr 1 - Based on the International Adjustment Amount.
Triangle owes Abbott ***; however, since Triangle Cash is
less than *** Triangle defers payment and adds this
amount to the Reimbursement Account.
Qtr 2 - Based on the International Adjustment Amount, Abbott
owes Triangle ***; however, Abbott is able to offset
*** against the Reimbursement Account and pay ***
Qtr 3 - Based on the International Adjustment Amount,
Triangle owes Abbott ***; however, since Triangle Cash is
less than *** (before any payment from Abbott) Triangle
defers payment and adds this amount to the Reimbursement
Account. Abbott owes Triangle a *** R&D payment of which
they are able to offset *** against the Reimbursement
Account, but must pay Triangle *** such that Triangle
Cash is ***
Qtr 4 - Based on the International Adjustment Amount, Abbott owes
Triangle ***; however, Abbott is able to offset *** against
the Reimbursement Account and pay ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
EXHIBIT 9.2
FORM OF
CONSENT AND AGREEMENT
This Consent and Agreement is made as of the date written
below, by and among [Licensor] ("Licensor"), Triangle Pharmaceuticals, Inc.,
a Delaware corporation ("Triangle") and Abbott Laboratories, an Illinois
corporation ("Abbott").
WHEREAS, Licensor and Triangle are parties to a certain License
Agreement dated ___________ [as amended __________] (the "License
Agreement"); and
WHEREAS, Triangle desires to grant and Abbott desires to accept
a sublicense of certain rights under the License Agreement, with respect to a
collaboration (the "Collaboration") between Abbott and Triangle;
NOW, THEREFORE, the parties hereby agree as follows:
1. BRIEF DESCRIPTION
As part of the Collaboration, Triangle will sublicense to
Abbott and its affiliates (the "Abbott Parties") certain rights ("Rights") to
utilize certain patents and technology relating to the distribution,
promotion, manufacturing and sale of pharmaceutical products containing the
Compound (as defined in the License Agreement), including but not limited to:
o the exclusive right to commercially sell and distribute the
Compound and pharmaceutical products containing the Compound
throughout the world, [except for _______];
o the exclusive right to co-promote the Compound and pharmaceutical
products containing the Compound, along with Triangle, in the
United States;
o the exclusive right to promote the Compound and pharmaceutical
products containing the Compound outside the United States,
[except for _________]; and
o the exclusive right outside the United States, [except for
________, to utilize certain patents and technology to import,
use, offer to sell, sell, make and have made the Compounds and
pharmaceutical products containing the Compound within the [Field
of Use], with respect to which Abbott intends to use its
affiliates.
Triangle will retain control of and responsibility for the
clinical development of the Compound and pharmaceutical products containing
the Compound. Triangle will retain responsibility for the filing, obtaining
and maintaining of governmental approval of the Compound and pharmaceutical
products containing the Compound in the United States, and the Abbott Parties
will have responsibility for the filing, obtaining and maintaining of
governmental approval of the Compound and the pharmaceutical products
containing the Compound outside of the United States, [except for ________].
2. COVENANTS/UNDERTAKINGS
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
3. CONSENT AND AGREEMENT
Licensor hereby consents to the Collaboration, including the
grant to the Abbott Parties of a sublicense under the License Agreement
pursuant to the Collaboration.
Licensor agrees that the Abbott Parties, in their capacity as
sublicensees, shall have the right to perform Triangle's rights and
obligations under the License Agreement in the Abbott Parties' capacity as
sublicensees.
4. CONFIDENTIALITY
Licensor acknowledges that the information contained herein and
all of the terms of the Collaboration are deemed confidential and proprietary
information under the License Agreement.
Dated:
LICENSOR
- -----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
TRIANGLE PHARMACEUTICALS, INC. ABBOTT LABORATORIES
By: By:
------------------------------ ----------------------------
Name: Name:
---------------------------- --------------------------
Title: Title:
--------------------------- -------------------------
Collaboration Agreement
Exhibit 11.2(e)
Page 1 of 3
TRIANGLE PATENTS AND PATENT APPLICATIONS
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Collaboration Agreement
Exhibit 11.2(e)
Page 2 of 3
TRIANGLE PATENTS AND PATENT APPLICATIONS
INTER PARTIES PROCEEDINGS
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Collaboration Agreement
Exhibit 11.2(e)
Pages 3 of 3
TRADEMARK ISSUES
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Collaboration Agreement
Schedule 16.8(b)(iv)
DRAFT
____________, 1999
Abbott Laboratories
Department 309; Building AP30
200 Abbott Park Road
Abbot Park, Illinois 60064
Ladies and Gentlemen:
We have acted as counsel for Triangle Pharmaceuticals,
Inc., a Delaware corporation (the "Company"), in connection with the
Company's collaboration with Abbott Laboratories, an Illinois corporation
("Abbott") pursuant to the Collaboration Agreement made as of June 2, 1999 by
and between the Company and Abbott (the "Collaboration Agreement"). This
opinion letter is being rendered to you pursuant to Section 16.8(b)(iv) of
the Collaboration Agreement. Capitalized terms not otherwise defined in this
opinion letter have the meanings given them in the Collaboration Agreement.
In connection with the opinions expressed herein, we have
made such examination of matters of law and of fact as we considered
appropriate or advisable for purposes hereof. As to matters of fact material
to the opinions expressed herein, we have relied upon the representations and
warranties as to factual matters contained in and made by the Company
pursuant to the Collaboration Agreement, the Common Stock Purchase Agreement,
made as of June 2, 1999 by and between the Company and Abbott, the
Stockholder Rights Agreement, made as of June 2, 1999 by and between the
Company and Abbott, and the Co-Promotion Agreement, made as of June 2, 1999
by and between the Company and Abbott (collectively the "Transaction
Agreements") and upon certificates and statements of government officials and
of officers of the Company. We have also examined originals or copies of such
corporate documents or records of the Company as we have considered
appropriate for the opinions expressed herein. We have assumed for the
purposes of this opinion letter the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of the documents submitted to
us as originals, the conformity to the original documents of all documents
submitted to us as certified, facsimile or photostatic copies, and the
authenticity of the originals of such copies.
In rendering this opinion letter, we have also assumed,
that the Transaction Agreements have been duly and validly executed and
delivered by you or on your behalf, and that you have the power to enter into
and perform all your obligations thereunder.
____________, 1999
Page 2
As used in this opinion letter, the phrase "to our
knowledge" means as to matters of fact that, based on the actual knowledge of
individual attorneys within the firm principally responsible for handling
current matters for the Company (and not including any constructive or
imputed notice of any information), and after an examination of documents
referred to herein and after inquiries of certain officers of the Company, no
facts have been disclosed to us that have caused us to conclude that the
opinions expressed are factually incorrect; but beyond that we have made no
factual investigation for the purposes of rendering this opinion letter.
Specifically, but without limitation, we have not searched the dockets of any
courts and we have made no inquiries of securities holders or employees of
the Company, other than such officers.
This opinion letter relates solely to the General
Corporation Law of the State of Delaware and the federal law of the United
States and we express no opinion with respect to the effect or application of
any other laws. To the extent that our opinion in paragraph 2 below relates
to any requirement to obtain stockholder approval under Section 271 of the
Delaware General Corporation Law, we have relied solely on an opinion letter
of Morris, Nichols, Arsht & Tunnell, dated the date hereof. Special rulings
of authorities administering such laws or opinions of other counsel have not
been sought or obtained, except as noted.
Based upon our examination of and reliance upon the
foregoing and subject to the limitations, exceptions, qualifications and
assumptions set forth below, we are of the opinion that as of the date hereof:
1. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
2. The Company has the requisite corporate power and
authority to execute, deliver and perform the Transaction Agreements. Each of
the Transaction Agreements has been duly and validly authorized by the
Company, and duly executed and delivered by an authorized officer of the
Company.
Our opinions expressed above are specifically subject to
the following limitations, exceptions, qualifications and assumptions:
(A) We express no opinion as to the enforceability of the
Company's obligations under the Transaction Agreements.
(B) We express no opinion as to the Company's compliance
or noncompliance with applicable federal or state antifraud or antitrust
statutes, laws, rules and regulations.
(C) We express no opinion as to your compliance with any
Federal or state law relating to your legal or regulatory status or the
nature of your business.
(D) We express no opinion as to the requirement of the
Company to obtain stockholder approval under the Nasdaq National Market
Non-Quantitative Designation Criteria for Issuers, including, without
limitation, the requirements of Rule 4460 thereto.
____________, 1999
Page 3
This opinion letter is rendered as of the date first
written above solely for your benefit in connection with the Collaboration
Agreement and may not be delivered to, quoted or relied upon by any person
other than you, or for any other purpose, without our prior written consent.
Our opinion is expressly limited to the matters set forth above and we render
no opinion, whether by implication or otherwise, as to any other matters
relating to the Company. We assume no obligation to advise you of facts,
circumstances, events or developments which hereafter may be brought to our
attention and which may alter, affect or modify the opinions expressed herein.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Exhibit 16.8(c)(iii)
Brian J. Smith
Assistant Secretary and Divisional Vice President-
Domestics Legal Operations
Abbott Laboratories
100 Abbott Park Road
Abbott Park, Illinois 60064
______________, 1999
Triangle Pharmaceuticals, Inc.
4 University Place
4611 University Drive
Durham, North Carolina 27707
Ladies and Gentlemen:
I have acted as counsel for Abbott Laboratories, an Illinois
corporation (the "Company"), in connection with the Company's collaboration
with Triangle Pharmaceuticals, Inc., a Delaware corporation ("Triangle")
pursuant to the Collaboration Agreement made as of June 2, 1999. This opinion
is being rendered to you pursuant to Section 16.8(c)(iii) of the
Collaboration Agreement. Capitalized terms used herein without definition
have the meanings assigned to them in the Collaboration Agreement.
In connection with the opinions expressed herein, I have made such
examination of matters of law and of fact as I considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, I have relied on certificates and statements of
governmental officials and of officers of the Company. I have also examined
originals or copies of such corporate documents or records of the Company as
I have considered appropriate for the opinions expressed herein. I have
assumed for the purposes of this opinion the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of the documents
submitted to me as originals, the conformity to the original documents of all
documents submitted to me as certified, facsimile or photostatic copies, and
the authenticity of the originals of such copies.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, I am of the opinion that the Company has the
requisite corporate power and authority to execute, deliver and perform the
Collaboration Agreement, the Common Stock Purchase Agreement, made as of June
2, 1999 by and between the Company and Triangle, the Stockholder Rights
Agreement, made as of June 2, 1999 by and between the Company and Triangle,
and the Co-Promotion Agreement, made as of June 2, 1999 by and between the
Company and Triangle (collectively the "Transaction Agreements"). Each of the
Transaction Agreements has been duly
and validly authorized by the Company, and duly executed and delivered by an
authorized officer of the Company.
The opinion expressed above is specifically subject to the following
limitations, exceptions, qualifications and assumptions:
(A) I express no opinion as to the enforceability of the Company's
obligations under the Transaction Agreements.
(B) I express no opinion as to the Company's compliance or
noncompliance with the applicable federal or state antifraud or antitrust
statutes, laws, rules and regulations.
(C) I express no opinion as to the Company's compliance with
any federal or state law relating to the Company's legal or regulatory status
or the nature of the Company's business.
My opinion expressed above is limited to the law of the State of
Illinois and the federal law of the United States, and I do not express any
opinion herein concerning any other law.
Insofar as the Transaction Agreements are governed by Delaware law,
I have assumed with your permission that the law of the State of Delaware is
identical to the law of the State of Illinois.
The opinion set forth herein is rendered only to you and solely for
your benefit in connection with the above described transactions. This
opinion may not be relied upon by you for any other purpose, or relied upon
by any other person for any purpose, without our prior written consent.
Very truly yours,
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Exhibit 16.8(c)(iv)
______________, 1999
Triangle Pharmaceuticals, Inc.
4 University Place
4611 University Drive
Durham, North Carolina 27707
Ladies and Gentlemen:
We have acted as counsel for Abbott Laboratories, an Illinois
corporation (the "Company"), in connection with the Company's collaboration
with Triangle Pharmaceuticals, Inc., a Delaware corporation ("Triangle")
pursuant to the Collaboration Agreement made as of June 2, 1999. This opinion
is being rendered to you pursuant to Section 16.8(c)(iii) of the
Collaboration Agreement. Capitalized terms used herein without definition
have the meanings assigned to them in the Collaboration Agreement.
In connection with the opinions expressed herein, we have made such
examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied on the representations and warranties as to
factual matters contained in and made by the Company pursuant to the
Collaboration Agreement, the Common Stock Purchase Agreement, made as of June
2, 1999 by and between the Company and Triangle, the Stockholder Rights
Agreement, made as of June 2, 1999 by and between the Company and Triangle,
and the Co-Promotion Agreement, made as of June 2, 1999 by and between the
Company and Triangle (collectively the "Transaction Agreements") and upon
certificates and statements of governmental officials and of officers of the
Company. We have also examined originals or copies of such corporate
documents or records of the Company as we have considered appropriate for the
opinions expressed herein. We have assumed for the purposes of this opinion
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity of the documents submitted to us as originals, the conformity to
the original documents of all documents submitted to us as certified,
facsimile or photostatic copies, and the authenticity of the originals of
such copies.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that the Company is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Illinois.
Triangle Pharmaceuticals, Inc.
___________________, 1999
Page 2
Our opinion expressed above is limited to the law of the State of
Illinois and the federal law of the United States, and we do not express any
opinion herein concerning any other law.
The opinion set forth herein is rendered only to you and solely for
your benefit in connection with the above described transactions. This
opinion may not be relied upon by you for any other purpose, or relied upon
by any other person for any purpose, without our prior written consent.
Very truly yours,
MAYER, BROWN & PLATT
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
Collaboration Agreement
Exhibit 18
INSURANCE
to be delivered ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
COLLABORATION AGREEMENT
EXHIBIT 20.3
ALTERNATIVE DISPUTE RESOLUTION
The parties recognize that a bona fide dispute as to certain matters
may arise from time to time during the term of this Agreement which relates
to either party's rights and/or obligations. To have such a dispute resolved
by this Alternative Dispute Resolution ("ADR") provision, a party first must
send written notice of the dispute to the other party for attempted
resolution by good faith negotiations between their respective presidents (or
their equivalents) of the affected subsidiaries, divisions, or business units
within *** after such notice is received (all references to "days" in this
ADR provision is to calendar days).
Any negotiations regarding a dispute shall be treated as settlement
negotiations for purposes of the Federal Rules of Evidence and any similar
state rules of evidence. Such negotiations shall not be admissible in any
subsequent ADR hearing.
If the matter has not been resolved within *** of the notice of
dispute, or if the parties fail to meet within such *** either party may
initiate an ADR proceeding as provided herein. The parties shall have the
right to be represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to
the other party of the issues to be resolved by ADR. Within ***
after its receipt of such notice, the other party may, by written
notice to the party initiating the ADR, add additional issues to be
resolved within the same ADR.
2. Within *** following receipt of the original ADR notice, the parties
shall select a mutually acceptable neutral (the "Neutral") to
preside in the resolution of any disputes in this ADR proceeding. If
the parties are unable to agree on a mutually acceptable neutral
within such period, the parties shall request the *** to select a
neutral pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less than ***
candidates within *** after receipt of the request from the
parties, along with a Curriculum Vitae for each candidate. No
candidate shall be an employee, director, or shareholder of
either party or any of their subsidiaries or affiliates.
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
(c) Each party shall number the candidates in order of preference
(with the number one (1) signifying the greatest preference)
and shall deliver the list to the CPR within *** following
receipt of the list of candidates. If a party believes a
conflict of interest exists regarding any of the candidates,
that party shall provide a written explanation of the conflict
to the CPR along with its list showing its order of preference
for the candidates. Any party failing to return a list of
preferences on time shall be deemed to have no order of
preference.
(d) If the parties collectively have identified fewer than ***
candidates deemed to have conflicts, the CPR immediately shall
designate as the neutral the candidate for whom the parties
collectively have indicated the greatest preference. If a tie
should result between two candidates, the CPR may designate
either candidate. If the parties collectively have identified
*** or *** candidates deemed to have conflicts, the CPR shall
review the explanations regarding conflicts and, in its sole
discretion, may either (i) immediately designate as the neutral
the candidate for whom the parties collectively have indicated
the greatest preference, or (ii) issue a new list of not less
than five (5) candidates, in which case the procedures set
forth in subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than *** or later than *** after selection, the neutral
shall hold a hearing to resolve each of the issues identified by the
parties. The ADR proceeding shall take place at a location agreed
upon by the parties. If the parties cannot agree, the neutral shall
designate a location other than the principal place of business of
either party or any of their subsidiaries or affiliates.
4. At least *** prior to the hearing, each party shall submit the
following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely in any
oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the hearing,
and a short summary of the anticipated testimony of each witness;
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-2-
(c) a proposed ruling on each issue to be resolved, together with a
request for a specific damage award or other remedy for each
issue. The proposed rulings and remedies shall not contain any
recitation of the facts or any legal arguments and shall not
exceed one (1) page per issue.
(d) a brief in support of such party's proposed rulings and remedies,
provided that the brief shall not exceed twenty (20) pages. This
page limitation shall apply regardless of the number of issues
raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall
be required or permitted by any means, including depositions, interrogatories,
requests for admissions, or production of documents.
5. The hearing shall be conducted on *** and shall be governed by the
following rules:
(a) Each party shall be entitled to *** of hearing time to present
its case. The neutral shall determine whether each party has
had the *** to which it is entitled.
(b) Each party shall be entitled, but not required, to make an opening
statement, to present regular and rebuttal testimony, documents or
other evidence, to cross-examine witnesses, and to make a closing
argument. Cross-examination of witnesses shall occur immediately
after their direct testimony, and cross-examination time shall be
charged against the party conducting the cross-examination.
(c) The party initiating the ADR shall begin the hearing and, if it
chooses to make an opening statement, shall address not only
issues it raised but also any issues raised by the responding
party. The responding party, if it chooses to make an opening
statement, also shall address all issues raised in the ADR.
Thereafter, the presentation of regular and rebuttal testimony and
documents, other evidence, and closing arguments shall proceed in
the same sequence.
(d) Except when testifying, witnesses shall be excluded from the
hearing until closing arguments.
(e) Settlement negotiations shall not be admissible under any
circumstances. Affidavits prepared for purposes of the ADR hearing
also shall not be
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-3-
admissible. As to all other matters, the neutral shall have sole
discretion regarding the admissibility of any evidence.
6. Within *** following completion of the hearing, each party may
submit to the other party and the neutral a post-hearing brief in
support of its proposed rulings and remedies (which may include
specific performance and/or injunctive relief), provided that such
brief shall not contain or discuss any new evidence and shall not
***. This page limitation shall apply regardless of the number of
issues raised in the ADR proceeding.
7. The neutral shall rule on each disputed issue within *** following
completion of the hearing. Such ruling shall adopt in its entirety
the proposed ruling and remedy of one of the parties on each
disputed issue but may adopt one party's proposed rulings and
remedies on some issues and the other party's proposed rulings and
remedies on other issues. The neutral shall not issue any written
opinion or otherwise explain the basis of the ruling.
8. The neutral shall be paid a reasonable fee plus expenses. These fees
and expenses, along with the reasonable legal fees and expenses of the
prevailing party (including all expert witness fees and expenses), the
fees and expenses of a court reporter, and any expenses for a hearing
room, shall be paid as follows:
(a) If the neutral rules in favor of one party on all disputed issues
in the ADR, the losing party shall pay 100% of such fees and
expenses.
(b) If the neutral rules in favor of one party on some issues and the
other party on other issues, the neutral shall issue with the
rulings a written determination as to how such fees and expenses
shall be allocated between the parties. The neutral shall allocate
fees and expenses in a way that bears a reasonable relationship to
the outcome of the ADR, with the party prevailing on more issues,
or on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses
shall be binding, non-reviewable, and non-appealable, and may be
entered as a final judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence
of the dispute, any settlement negotiations, the ADR hearing, any
submissions (including exhibits, testimony, proposed rulings, and
briefs), and the rulings shall be deemed Confidential Information. The
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
-4-
neutral shall have the authority to impose sanctions for unauthorized
disclosure of Confidential Information.
-5-
Exhibit 20.11
FOR IMMEDIATE RELEASE
Contact:
ABBOTT LABORATORIES TRIANGLE PHARMACEUTICALS, INC.
Melissa Brotz Nick Ellis
U.S. Media President and COO
(847) 935-3456 (919) 493-5980
Laureen Cassidy Carolyn Underwood
Media Outside the U.S VP, Commerical Operations
(847) 938-7743 (919) 493-5980
John Thomas Douglas MacDougall/
Investment Community Priscilla Harlan
(847) 938-2655 Feinstein Kean Partners, Inc.
(617) 577-8110
ABBOTT LABORATORIES AND TRIANGLE PHARMACEUTICALS
ANNOUNCE $335 MILLION WORLDWIDE ALLIANCE
TO MARKET SIX ANTIVIRAL PRODUCTS
ABBOTT PARK, Ill. and DURHAM, N.C. -- (June 3, 1999) -- Abbott
Laboratories (NYSE: ABT) and Triangle Pharmaceuticals Inc. (Nasdaq: VIRS)
today announced a worldwide strategic alliance for six antiviral products. In
the United States, Abbott and Triangle will co-promote the four Triangle
products currently in development for HIV and hepatitis B (HBV), and Abbott's
two HIV protease inhibitors (PIs). Outside the U.S., Abbott will have
exclusive sales and marketing rights for the four Triangle antivirals.
The agreement significantly expands Abbott's antiviral pharmaceutical
product portfolio -- which currently includes two HIV PIs: Norvir-Registered
Trademark- (ritonavir), approved in 1996, and ABT-378, currently in Phase III
development -- to include three nucleoside reverse transcriptase inhibitors
(NRTIs) and one non-nucleoside reverse transcriptase inhibitor (NNRTI),
medications commonly used for the treatment of HIV and HBV. The agreement
provides Abbott and Triangle with an unequaled development portfolio of all
marketed classes of HIV treatments.
"This alliance is a prime example of Abbott's strategy to partner with
top-quality companies, such as Triangle, whose products fit strategically
with our worldwide pharmaceutical business," said Arthur Higgins, Senior Vice
President, Pharmaceutical Operations at Abbott. "One of our goals is to be
the leading healthcare company in the HIV arena, and this agreement
strengthens our position worldwide by giving us access to every segment of
pharmaceutical intervention in HIV."
Abbott's HIV franchise is unique in that it offers a broad portfolio
across pharmaceutical, diagnostic, and nutritional products for people living
with HIV and AIDS.
"Our success in bringing a number of HIV and HBV drug candidates forward
in development provided us with a unique situation to make a portfolio deal,"
said Dr. David Barry, Chairman and Chief Executive Officer at Triangle.
"Along the way, we resisted licensing away any of our global rights to the
drug candidates, thus increasing the opportunity for a deal with a single
strong partner rather than having to make numerous country-by-country deals
with multiple partners. Our strategic alliance with Abbott introduces a
strong international presence, additional strength in the U.S. market, and
the financial support to provide added stability to our development and
commercialization goals."
"This alliance positions the two companies to potentially launch at
least one new antiviral each year over the next four years," said Higgins.
In 1998 in the United States, NRTIs accounted for an estimated $885
million in antiviral sales, PIs accounted for $865 million, and NNRTIs
accounted for approximately $100 million. Outside the U.S., the market for
anti-viral HIV treatment, which includes three categories, is estimated at $2
billion.
2
According to the Centers for Disease Control, HIV affects approximately
33 million worldwide and approximately 650,000 to 950,000 Americans.
Hepatitis B is the ninth leading cause of death worldwide and affects
approximately 350 million people. Currently, only two treatments have been
approved for the treatment of chronic hepatitis B.
Among the four Triangle products Abbott will co-promote is
Coactinon-TM-(emivirine), formerly known as MKC-442, an NNRTI, currently in
Phase III clinical trials. Triangle expects to file a New Drug Application
(NDA) for Coactinon by the end of this year, while Abbott expects to submit a
European application in mid-2000.
Coviracil-TM- (emtricitabine), formerly known as FTC, an NRTI, is also
in Phase III clinical trials for the treatment of HIV and in phase I/II for
HBV. An NDA for Coviracil for the treatment of HIV is expected to be filed in
2000 with a European filing expected in 2001. Abbott also expects to file an
NDA for its investigational PI, ABT-378, in 2000.
The other two NRTIs included in the agreement are in earlier development
stages. DAPD, an NRTI, is in Phase I/II for the treatment of HIV. Triangle
plans to begin Phase I/II trials in HBV later this year. Phase I/II trials
with L-FMAU, a compound under investigation for the treatment of HBV, are
also planned for late 1999.
Under the terms of the agreement, Abbott will purchase approximately
6.57 million shares of Triangle's Common Stock at $18 per share.
Additionally, the agreement provides for non-contingent research funding of
$31.7 million, up to $185 million of contingent development milestone
payments, and the sharing of future commercialization costs.
In addition, the partners plan to execute a manufacturing agreement
before closing that will allow Abbott to manufacture certain Triangle
products worldwide.
3
Triangle and Abbott will share profits and losses for all Triangle drug
candidates. Triangle will receive detailing fees and commissions on
incremental sales they generate for Abbott's protease inhibitors. In
addition, Abbott will have the right of first discussion to market future
Triangle compounds. Warburg Dillon Read acted as financial advisors to
Triangle in this alliance. Goldman Sachs acted as financial advisors to
Abbott in this alliance.
The closing of the agreement is subject to the satisfaction of several
conditions, including Hart-Scott-Rodino antitrust clearance and the
negotiation of the manufacturing agreement between the parties.
Triangle Pharmaceuticals, Inc., based in Durham, North Carolina, is
engaged in the development of new drug candidates primarily in the antiviral
area, with a particular focus on therapies for the human immunodeficiency
virus, including the acquired immunodeficiency syndrome, and the hepatitis B
virus. Prior to their employment with Triangle, members of Triangle's
management team played instrumental roles in the identification, clinical
development and commercialization of several leading antiviral therapies.
More information about Triangle's portfolio, management and product
development strategy is available on Triangle's website at
HTTP://WWW.TRIPHARM.COM.
Abbott Laboratories has been a leader in AIDS research since the early
years of the epidemic. In 1985, the company developed the first licensed test
to detect HIV in the blood, and remains the leader in HIV diagnostics. Abbott
retroviral and hepatitis tests are used to screen more than half of the
world's donated blood supply. In addition, Abbott development the HIV
protease inhibitor Norvir, and Advera, a nutritional supplement to meet the
unique dietary needs of people living with HIV. Abbott continues to conduct
aggressive research on new treatments to fight HIV and AIDS.
4
Abbott is committed to supporting HIV/AIDS awareness programs, including the
development of its Positive Partnership Program with POZ magazine and HEALTH
INSIGHTS & VIEWS patient newsletter. In addition, Abbott supports numerous
programs of AIDS Service Organizations (ASOs).
Abbott Laboratories is a global, diversified healthcare company devoted
to the discovery, development, manufacture and marketing of pharmaceutical,
diagnostic, nutritional and hospital products. The company employs 56,000
people and markets its products in more than 130 countries.
ABBOTT'S NEWS RELEASES AND OTHER INFORMATION ARE AVAILABLE ON THE COMPANY'S
WEBSITE AT WWW.ABBOTT.COM.
TRIANGLE PHARMACEUTICALS, INC. FORWARD LOOKING STATEMENT: STATEMENTS IN THIS
PRESS RELEASE MAY CONSTITUTE FORWARD-LOOKING STATEMENTS AND ARE SUBJECT TO
NUMEROUS RISKS AND UNCERTAINTIES, INCLUDING THE FAILURE OF THE CLOSING TO
TAKE PLACE DUE TO THE FAILURE OF CLOSING CONDITIONS, THE FAILURE TO
SUCCESSFULLY COMPLETE PIVOTAL CLINICAL TRIALS, TRIANGLE'S FUTURE CAPITAL
NEEDS, THE INABILITY TO COMMERCIALIZE COVIRACIL (EMTRICITABINE) AND DAPD DUE
TO PATENT RIGHTS HELD BY THIRD PARTIES, TRIANGLE'S ABILITY TO OBTAIN
ADDITIONAL FUNDING, PATENT PROTECTION, AND REQUIRED REGULATORY APPROVALS FOR
ITS DRUG CANDIDATES, THE DEVELOPMENT OF COMPETITIVE PRODUCTS BY OTHERS, THE
COSTS OF COACTIVE THERAPY AND THE EXTENT TO WHICH COACTIVE THERAPY ACHIEVES
MARKET ACCEPTANCE, TRIANGLE'S SUCCESS IN IDENTIFYING NEW DRUG CANDIDATES,
ACQUIRING RIGHTS TO THE CANDIDATES ON FAVORABLE TERMS AND DEVELOPING ANY
CANDIDATES TO WHICH TRIANGLE ACQUIRES ANY RIGHTS, AND THESE AND OTHER RISKS
DETAILED FROM TIME TO TIME IN TRIANGLE'S FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION. THE ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
PROJECTED IN THIS PRESS RELEASE. TRIANGLE DISCLAIMS ANY OBLIGATION TO UPDATE
STATEMENTS IN THIS PRESS RELEASE.
###
5