EXHIBIT 10.8
COLLABORATIVE RESEARCH, LICENSE AND CO-PROMOTION AGREEMENT
dated as of October 5, 1998
by and between
SCHERING AKTIENGESELLSCHAFT
And
MYRIAD GENETICS, INC
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.......................................................................... 1
SECTION 1.1 Definitions.......................................................................... 1
SECTION 1.2 Accounting........................................................................... 9
ARTICLE II RESEARCH PROGRAM..................................................................... 9
SECTION 2.1 Joint Research Steering Committee.................................................... 9
SECTION 2.2 Research Program..................................................................... 10
SECTION 2.3 Access to ProNet; Pathway Options.................................................... 11
SECTION 2.4 Research Term........................................................................ 11
SECTION 2.5 Quarterly Reports.................................................................... 12
ARTICLE III DRUG DISCOVERY AND EARLY DEVELOPMENT; DEVELOPMENT.................................... 12
SECTION 3.1 Drug Discovery and Management Committee.............................................. 12
SECTION 3.2 Drug Discovery and Early Development Program......................................... 12
SECTION 3.3 Development Program.................................................................. 13
SECTION 3.4 MYRIAD Participation................................................................. 13
SECTION 3.5 Reporting............................................................................ 13
SECTION 3.6 Right to Engage Third Parties in Drug Discovery and Early
Development and Development.......................................................... 13
SECTION 3.7 Drug Approval Applications........................................................... 13
SECTION 3.8 Manufacturing........................................................................ 13
ARTICLE IV LICENSES............................................................................. 14
SECTION 4.1 License to SCHERING to Conduct Research.............................................. 14
SECTION 4.2 License to MYRIAD to Conduct Research................................................ 14
SECTION 4.3 License to SCHERING to Conduct Development........................................... 14
SECTION 4.4 License to MYRIAD to Conduct Development............................................. 14
SECTION 4.5 License to SCHERING to Conduct Commercialization..................................... 14
SECTION 4.6 Rights and Licenses to MYRIAD to Conduct Commercialization........................... 14
SECTION 4.7 Sublicensing......................................................................... 15
SECTION 4.8 Third Party Technology............................................................... 15
SECTION 4.9 Abandonment.......................................................................... 15
SECTION 4.10 Diagnostic Product Rights............................................................ 15
SECTION 4.11 No Other Rights...................................................................... 16
ARTICLE V COMMERCIALIZATION.................................................................... 16
SECTION 5.1 Joint Marketing Committee............................................................ 16
SECTION 5.2 MYRIAD Option to Co-Promote.......................................................... 17
SECTION 5.3 SCHERING as Lead Marketing Party..................................................... 17
SECTION 5.4 Right to Engage Third Parties in Commercialization................................... 18
SECTION 5.5 Commercialization Efforts............................................................ 18
SECTION 5.6 Commercialization Plan and Budget.................................................... 18
SECTION 5.7 Commercialization of Royalty Bearing Product......................................... 19
i.
SECTION 5.8 Control Over Advertising and Detailing............................................... 19
SECTION 5.9 Sales Efforts in the Co-Promotion Territory.......................................... 19
SECTION 5.10 Training Program..................................................................... 19
SECTION 5.11 Trademarks........................................................................... 20
SECTION 5.12 Manufacturing and Supply in Commercialization........................................ 20
SECTION 5.13 Product Recalls...................................................................... 20
SECTION 5.14 Tax Considerations................................................................... 20
SECTION 5.15 Co-Promotion Mechanism............................................................... 20
SECTION 5.16 Termination of Co-Promotion.......................................................... 21
ARTICLE VI PROFIT SHARING AND ROYALTIES......................................................... 21
SECTION 6.1 Calculation of Co-Promotion Exercise Payment......................................... 21
SECTION 6.2 Share of Operating Profits or Losses................................................. 22
SECTION 6.3 Co-Promotion Reports and Payments.................................................... 23
SECTION 6.4 Term................................................................................. 23
SECTION 6.5 Royalties............................................................................ 24
SECTION 6.6 Sales by Sublicensees................................................................ 25
SECTION 6.7 Royalty Reports and Payments......................................................... 25
SECTION 6.8 Payments............................................................................. 25
SECTION 6.9 Taxes................................................................................ 25
SECTION 6.10 Form of Payment...................................................................... 25
SECTION 6.11 Payments to or Reports by Affiliates................................................. 26
SECTION 6.12 No Overlapping Royalties............................................................. 26
ARTICLE VII TREATMENT OF CONFIDENTIAL INFORMATION................................................ 26
SECTION 7.1 Confidentiality...................................................................... 26
SECTION 7.2 Publication.......................................................................... 26
SECTION 7.3 Publicity Review..................................................................... 27
SECTION 7.4 Disclosure of Inventions............................................................. 27
SECTION 7.5 Termination of Prior Agreement....................................................... 27
SECTION 7.6 Use of Names......................................................................... 27
ARTICLE VIII OWNERSHIP OF PATENT RIGHTS........................................................... 27
SECTION 8.1 Ownership............................................................................ 28
SECTION 8.2 Patent Prosecution................................................................... 28
SECTION 8.3 Third Party Patent Rights............................................................ 28
SECTION 8.4 Enforcement Rights................................................................... 28
SECTION 8.5 Defense and Settlement of Third Party Claims......................................... 29
ARTICLE IX INFORMATION AND REPORTS.............................................................. 29
SECTION 9.1 Information and Reports During Development and Commercialization..................... 29
SECTION 9.2 Complaints........................................................................... 29
SECTION 9.3 Adverse Drug Experiences............................................................. 30
SECTION 9.4 Records of Revenues and Expenses; Resolution of Audit Disputes....................... 30
ARTICLE X TERM AND TERMINATION................................................................. 31
SECTION 10.1 Term................................................................................. 31
SECTION 10.2 Reasons for Termination.............................................................. 31
ii.
SECTION 10.3 Effect of Termination by MYRIAD...................................................... 32
SECTION 10.4 Remedies............................................................................. 32
SECTION 10.5 Survival............................................................................. 32
ARTICLE XI REPRESENTATIONS AND WARRANTIES....................................................... 32
SECTION 11.1 Representations and Warranties....................................................... 32
ARTICLE XII INDEMNIFICATION...................................................................... 33
SECTION 12.1 Indemnification of MYRIAD by SCHERING................................................ 33
SECTION 12.2 Indemnification of SCHERING by MYRIAD................................................ 33
SECTION 12.3 Notice, Etc.......................................................................... 34
ARTICLE XIII DISPUTE RESOLUTION................................................................... 34
SECTION 13.1 Senior Officials..................................................................... 34
SECTION 13.2 Arbitration.......................................................................... 34
ARTICLE XIV MISCELLANEOUS........................................................................ 35
SECTION 14.1 No Agency............................................................................ 35
SECTION 14.2 Expenses............................................................................. 35
SECTION 14.3 Binding Effect....................................................................... 35
SECTION 14.4 Notices.............................................................................. 35
SECTION 14.5 Severability......................................................................... 36
SECTION 14.6 Cooperation.......................................................................... 36
SECTION 14.7 Amendments and Waivers............................................................... 36
SECTION 14.8 Counterparts......................................................................... 36
SECTION 14.9 Entire Agreement..................................................................... 37
SECTION 14.10 Headings............................................................................. 37
SECTION 14.11 Assignment and Successors............................................................ 37
SECTION 14.12 Force Majeure........................................................................ 37
SECTION 14.13 Parties in Interest.................................................................. 37
SECTION 14.14 Governing Law........................................................................ 37
SECTION 14.15 Further Assurances................................................................... 37
SECTION 14.16 Bankruptcy........................................................................... 37
SECTION 14.17 Ambiguities.......................................................................... 37
Exhibit A-1 Schering Credits
Exhibit A-2 Myriad Credits
iii.
COLLABORATIVE RESEARCH, LICENSE
AND CO-PROMOTION AGREEMENT
This COLLABORATIVE RESEARCH, LICENSE AND CO-PROMOTION AGREEMENT (this
"Agreement"), made as of the 5th day of October, 1998 (the "Effective Date"), by
and between SCHERING AKTIENGESELLSCHAFT, a German corporation (hereinafter
"SCHERING"), and MYRIAD GENETICS, INC., a Delaware corporation (hereinafter
"MYRIAD"). SCHERING and MYRIAD are sometimes referred to herein individually as
a "Party" and collectively as the "Parties."
W I T N E S S E T H:
WHEREAS, MYRIAD has expertise in the discovery and characterization of
genes related to major common diseases and in the development and marketing of
human diagnostic products and services derived from disease genes, and has
developed a proprietary ProNet Technology to identify and compile protein-
protein Interactions with potential application in the development of human
diagnostic and therapeutic products;
WHEREAS, SCHERING has expertise in discovering, developing,
manufacturing, distributing and marketing human therapeutic products;
WHEREAS, MYRIAD and SCHERING are interested in entering into an
agreement whereby MYRIAD and SCHERING will jointly perform research using
MYRIAD's proprietary ProNet Technology to identify Genes and Interactive
Proteins and whereby SCHERING shall have the option to obtain from MYRIAD a
license to the results of such research for the discovery, development,
manufacture and marketing of Human Therapeutic Products derived from such Genes
and Interactive Proteins; and
WHEREAS, SCHERING desires to grant to MYRIAD, and MYRIAD desires to
obtain, rights to Co-Promote Human Therapeutic Products derived from such Genes
and Interactive Proteins in the Co-Promotion Territory.
NOW THEREFORE, in consideration of the premises, and the
representations, covenants and agreements hereinafter set forth, and for other
good and valuable consideration, the adequacy and sufficiency of which is hereby
acknowledged, the Parties hereto, intending to be legally bound, do hereby agree
as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 Definitions. As used in this Agreement, the following
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terms, when capitalized, shall have the meanings ascribed to them below.
"Abandoned Product" has the meaning set forth in Section 4.9.
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"Acquiring Party" means any Third Party (including a "group" within
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the meaning of Section 13(d) of the Securities Exchange Act of 1934, as amended)
that, together with its affiliates, has annual worldwide pharmaceutical revenues
of $500 million or greater, or that is then adverse to SCHERING or MYRIAD, as
the case may be, in material litigation matters or has been at any time in the
three (3) years prior to the time in question.
"Advertising" means the promotion of the Co-Promotion Products in the
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Co-Promotion Territory incurred by a Party through any means, including, without
limitation, (i) television and radio advertisements; (ii) advertisements
appearing in journals, newspapers, magazines or other media; (iii) seminars and
conventions; (iv) packaging design; (v) professional education programs; (vi)
samples (including related costs for manufacturing, shipping, and use taxes),
visual aids and other selling materials; (vii) hospital formulary committee
presentations; and (viii) presentations to state and other governmental
formulary committees; provided, however, that Advertising shall exclude
Detailing and General Public Relations.
1.
"Affiliate" means any person, corporation, partnership, firm, joint
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venture or other entity which, directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
SCHERING or MYRIAD, as the case may be. As used in this definition, "control"
means the possession of the power to direct or cause the direction of the
management and policies of an entity, whether through the ownership of the
outstanding voting securities or by contract or otherwise.
"Allocated Administration Expenses" means the administration expenses
---------------------------------
incurred by any Operating Unit that is actually directly engaged in the Drug
Discovery and Early Development, Development or Commercialization of Co-
Promotion Products in the Co-Promotion Territory. Administrative expenses of a
Party or Operating Units not engaged in the Development or Commercialization of
Co-Promotion Products in the Co-Promotion Territory shall not be recoverable as
an Allocated Administrative Expense or otherwise.
"Annual Research Plan" means the written plan describing the research
--------------------
in the Field to be carried out during each year of the Research Program by
MYRIAD and SCHERING pursuant to this Agreement. Each Annual Research Plan will
be set forth in a written document adopted by the JRSC.
"Bait" means initial DNA, RNA, expressed sequence tags and proteins
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that are used in the ProNet Technology pursuant to the Research Program to
identify and select the Interactive Proteins that bind to or interact with any
Bait.
"Business Day" means a day other than a Saturday, Sunday or other day
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on which banking institutions in the State of New Jersey are authorized or
required by law to close.
"Change of Control" means the occurrence of any of the following with
-----------------
respect to MYRIAD or SCHERING, as the case may be, at any time after the date
hereof:
(a) any Acquiring Party shall have acquired or become the beneficial
owner of securities representing forty percent (40%) or more of the aggregate
voting power of the then outstanding voting securities of MYRIAD or SCHERING, as
the case may be, or the surviving entity of any merger transaction, whether by
merger, consolidation, tender offer, reorganization or similar means; or
(b) any sale by MYRIAD of all or substantially all of MYRIAD's
pharmaceutical and/or ProNet Technology-related assets, or any sale by SCHERING
of all or substantially of all SCHERING's pharmaceutical assets, in each case to
any Acquiring Party.
"Commercialization" and "Commercialize" refers to all activities
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undertaken pursuant to an approved Commercialization Plan relating to the
manufacture, marketing and sale of a Co-Promotion Product.
"Commercialization Budget" has the meaning set forth in Section 5.6.
------------------------
"Commercialization Costs" means those expenses incurred by a Party for
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a Co-Promotion Product which are generally consistent with a Commercialization
Plan and Commercialization Budget and are specifically attributable to such Co-
Promotion Product in the Co-Promotion Territory, and shall consist of (i) Cost
of Goods Sold, (ii) Marketing expenses, (iii) Distribution expenses, (iv) Post-
Launch Product R&D expenses, (v) Allocated Administration Expenses, and (vi) a
Cost of Capital Allowance.
"Commercialization Plan" has the meaning set forth in Section 5.6.
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"Completion of Pivotal Clinical Trials" means the end of the first
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clinical trial which, when completed, will have demonstrated to the DDMC's
reasonable satisfaction that a Human Therapeutic Product (i) is
2.
safe and efficacious, (ii) has an established dose, (iii) has an established
route of administration and (iv) has a treatment schedule in the target
population, all sufficient for the purpose of supporting a Drug Approval
Application.
"Confidential Information" means all confidential information
------------------------
(including but not limited to confidential information about any element of
Technology) which is disclosed by one Party to the other hereunder or under the
Confidentiality Agreement referred to in Section 7.5 to the extent that such
information (i) as of the date of disclosure is not demonstrably known to the
Party receiving such disclosure or its Affiliates as shown by written
documentation other than by virtue of a prior confidential disclosure to such
Party or its Affiliates; or (ii) as of the date of disclosure or thereafter is
not disclosed in published literature or not otherwise generally known to the
public through no fault or omission of the Party receiving such disclosure; or
(iii) as of the date of disclosure or thereafter is not obtained from a Third
Party free from any obligation of confidentiality to the disclosing Party and
having the lawful right to disclose it.
"Control" or "Controlled" refers to possession of the ability to grant
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a license or sublicense of patent rights, know-how or other intangible rights as
provided for herein without violating the terms of any agreement or other
arrangement with any Third Party.
"Co-Promotion," "Co-Promote" or "Co-Promoting" means the Detailing by
------------ ---------- ------------
different entities, using their own separate sales forces, of a Co-Promotion
Product with the same trade dress, under the same trademark, using the same
Advertising, and with SCHERING designated to handle distribution and to record
sales.
"Co-Promotion Exercise Notice" has the meaning set forth in Section
----------------------------
5.2(a).
"Co-Promotion Exercise Payment" has the meaning set forth in Section
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6.1.
"Co-Promotion Option" means MYRIAD's option pursuant to Section 5.2
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hereof to designate a Potential Co-Promotion Product as a Co-Promotion Product.
"Co-Promotion Product" means a Human Therapeutic Product with respect
--------------------
to which MYRIAD shall have exercised its option to Co-Promote pursuant to
Section 5.2 and marketed by the Parties in the Co-Promotion Territory.
"Co-Promotion Territory" means the United States and Canada.
----------------------
"Cost of Capital Allowance" means the amount recoverable by either
-------------------------
Party under this Agreement for the use of its Utilized Capital allocated to the
business of this collaboration related to Co-Promotion Products in the Co-
Promotion Territory after SCHERING's receipt of MYRIAD's Co-Promotion Exercise
Notice for such Co-Promotion Product in the Co-Promotion Territory. Each
Party's cost of capital shall be determined by reference to its weighted average
cost of capital for the relevant period determined in accordance with objective
and customary financial formulas. There shall be no Cost of Capital Allowance
for time periods prior to the first commercial sale of a Co-Promotion Product in
the Co-Promotion Territory.
"Cost of Goods Sold" means the cost of producing a Co-Promotion
------------------
Product sold as computed by SCHERING in accordance with International Accounting
Standards applied on a consistent basis. Such costs shall include, but not be
limited to, the fully-burdened cost of all raw materials, labor and overhead for
formulation, filling, finishing, labeling, packaging and quality assurance, and
shall also include any value added taxes or transportation charges and any
royalties paid to Third Parties in connection with the manufacturing process or
materials used.
"Current Filing Date" has the meaning set forth in Section 6.1.
-------------------
"Current SCHERING Credits" has the meaning set forth in Section 6.1.
------------------------
"Current MYRIAD Credits" has the meaning set forth in Section 6.1.
----------------------
3.
"DDMC" means the Drug Discovery and Management Committee established
----
pursuant to Section 3.1 hereof.
"Deferred Payment" has the meaning set forth in Section 6.2.
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"Detailing" means a personal, in-office visit by a sales
---------
representative to a physician, hospital, health maintenance organization, drug
wholesaler or other pharmaceutical purchaser located within the Co-Promotion
Territory during which the sales representative promotes the use of a Co-
Promotion Product in at least the first or second position (according to the
standards generally recognized in the U.S. pharmaceutical industry).
"Development" and "Develop" refers to all activities relating to
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obtaining Regulatory Approval of a Human Therapeutic Product, and all activities
relating to developing the ability to manufacture the same. This includes
ongoing preclinical testing, GLP Toxicity Studies or equivalent non-U.S.
studies, toxicology, formulation, bulk production, fill/finish, manufacturing
process development, manufacturing, quality assurance and quality control
technical support, clinical studies, regulatory affairs and outside counsel
regulatory legal services.
"Development Program" means that phase of SCHERING's clinical
-------------------
Development activities with respect to a Human Therapeutic Product commencing
after SCHERING shall have filed an IND with respect to such Human Therapeutic
Product, which constitutes a program in SCHERING to obtain Regulatory Approval
of such Human Therapeutic Product, and concluding with the receipt of Regulatory
Approval of such Human Therapeutic Product.
"Diagnostic Product" means all in vivo or in vitro human diagnostic
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products and services derived from a Gene or Interactive Protein discovered
under the Research Program, including, without limitation, products or services
utilized to identify predisposition to disease, confirm disease, predict
therapeutic effectiveness, monitor disease progression, determine prognosis or
stratify patient groups, other than any Excluded Diagnostic Product.
"Distribution" means activity performed by a Party or for its account,
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specifically attributable to the distribution of a Co-Promotion Product in the
Co-Promotion Territory. Such activities will ordinarily include warehousing,
order processing, customer service and shipping.
"Drug Approval Application" means an application for Regulatory
-------------------------
Approval required to be approved prior to any commercial sale or use of a Human
Therapeutic Product as a drug or biologic in the related regulatory
jurisdiction.
"Drug Discovery and Early Development" means the activities performed
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by a Party or for its account which are approved by the DDMC and are
specifically attributable to the Drug Discovery and Early Development Program.
Drug Discovery and Early Development shall include, but is not limited to,
preclinical studies on the toxicological, pharmacokinetics, metabolic,
formulation, process development or clinical aspects of a potential Human
Therapeutic Product conducted internally or by individual investigators or
consultants.
"Drug Discovery and Early Development Program" means that phase of
--------------------------------------------
SCHERING's drug discovery and preclinical Development activities with respect to
Genes and Interactive Proteins commencing after SCHERING shall have obtained an
Exclusive License with respect to such Genes and Interactive Proteins, which
constitutes a program in SCHERING to discover a Human Therapeutic Product which
consists of, comprises, is comprised of or derived from any such Genes and
Interactive Proteins, and concluding with the filing of an IND with respect to
any such Human Therapeutic Product.
"Effective Date" has the meaning specified in the Recitals to this
--------------
Agreement.
"Equalization Credit" has the meaning set forth in Section 6.3.
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"Equalization Payment" means the amount payable by one Party to the
--------------------
other to share the Operating Profits or Losses between the Parties in accordance
with Section 6.2. By way of example, in a total Operating Profits situation, if
MYRIAD is entitled to share equally with SCHERING in Operating Profits or Losses
and if SCHERING has an Operating Profit of 40 and MYRIAD has an Operating Loss
of 10, then the Equalizing Payment made by SCHERING to MYRIAD will be 25. In a
total Operating Losses situation, if MYRIAD is entitled to 40% of Operating
Profits or Losses and if SCHERING has an Operating Loss of 40 and MYRIAD has an
Operating Loss of 10, the Equalization Payment owed by MYRIAD to SCHERING will
be 10.
"Excess Royalty Amounts" has the meaning set forth in Section 5.16.
----------------------
"Excluded Diagnostic Product" means all in vivo or in vitro human
---------------------------
diagnostic products and
4.
services derived from a Gene or Interactive Protein discovered under the
Research Program, including, without limitation, products or services utilized
to identify predisposition to disease, confirm disease, predict therapeutic
effectiveness, monitor disease progression, determine prognosis or stratify
patient groups, that consists of, comprises, is comprised of or is derived from
a Gene or Interactive Protein that (i) targets the same biochemical pathway as
any Human Therapeutic Product; and (ii) includes or incorporates, in whole or in
part, an active drug substance that is the same chemical entity as the active
drug substance included or incorporated in any Human Therapeutic Product;
provided, however, that Excluded Diagnostic Products shall not include any
- -------- -------
diagnostic products specified in any notice delivered pursuant to Section
4.10(b) hereof.
"Exclusive License" has the meaning set forth in Section 4.3.
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"Exclusive Pathway Option" has the meaning set forth in Section
------------------------
2.3(b).
"FDA" means the United States Food and Drug Administration or any
---
successor agency.
"Field" means all human therapeutic and prophylactic uses of products
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for the prevention, treatment, cure or mitigation of any clinical indications in
humans, including, but not limited to, small molecules, protein replacement,
antisense, ribozymes, and cell or gene therapy for any clinical indication.
"Gene" means a human gene which is useful in the Field and which has
----
been identified by means of the ProNet Technology pursuant to the Research
Program which encodes for an Interactive Protein.
"General Public Relations" means any public relations activity
------------------------
(including a press release or image piece) which (i) promotes generally the
business of a company or deals in a general manner with the activities of such
company in a general pharmaceutical market; and (ii) mentions in an incidental
manner the fact that such company or its Affiliates markets or sells one or more
of the Co-Promotion Products or provides other incidental information concerning
one or more of the Co-Promotion Products. Announcements related to this
Agreement or that concern primarily the relationship of either Party to each
other are not General Public Relations and must be agreed upon by both Parties
in writing prior to release.
"GLP Toxicity Studies" means toxicology studies conducted in
--------------------
accordance with the FDA's current Good Laboratory Practices pursuant to 21
C.F.R. Part 58.
"Human Therapeutic Product" means any product for prophylactic or
-------------------------
therapeutic use in the prevention, treatment, cure or mitigation of any clinical
indications in humans which consists of, comprises, is comprised of or is
derived from:
(a) a Gene or Interactive Protein that is licensed by SCHERING
hereunder;
(b) any fragment or mutation of (a);
(c) an RNA or a DNA sequence corresponding, complementary to, or an
antisense sequence to a Gene in (a) or (b);
(d) a protein encoded by any of (a), (b) or (c) or any fragment of
such protein;
(e) an antibody to a protein described in (d);
(f) a gene therapy or cell therapy product incorporating any of (a),
(b), (c), (d) or (e); or
(g) a molecule or compound, regardless of its function or utility,
other than diagnostic uses, that is discovered or whose function or utility is
discovered on or prior to the tenth anniversary of the last day of the Research
Term utilizing any of the Technology or information relating to (a).
The entities listed in (b) through (g) are sometimes referred to
herein as "derived" from the Gene or Interactive Protein in (a).
5.
"IND" means an investigational new drug application required to be
---
filed with the FDA pursuant to 21 C.F.R. (S) 312, as such regulations may be
amended from time to time, to test drug products in humans, or any foreign
equivalent.
"Interaction" or "Interact" means contact between proteins that is
----------- --------
sufficiently stable to allow the ProNet Technology to function, resulting in the
identification of Interactive Proteins.
"Interactive Protein" means a human protein or portion of a human
-------------------
protein which is useful in the Field and which has been identified by means of
the ProNet Technology pursuant to the Research Program as a protein which
directly, or indirectly through a series of Interactions, interacts with a
protein or portion of a protein which was used as a Bait in the ProNet
Technology.
"JMC" means a Joint Marketing Committee established pursuant to
---
Section 5.1 hereof.
"JRSC" means the Joint Research Steering Committee established
----
pursuant to Section 2.1 hereof.
"Live Claim" means a claim of a Patent which has not been held
----------
unenforceable, unpatentable or invalid by a decision of a court, or a
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed to appeal, and which has not been admitted to be invalid or
unenforceable through re-issue, re-examination, disclaimer or otherwise.
"Marketing" means those activities that are generally consistent with
---------
a Commercialization Plan and are specifically attributable to the sale,
promotion, and marketing of such Co-Promotion Product in the Co-Promotion
Territory. Marketing shall include, but is not limited to, medical symposia and
conventions, scientific exhibits, opinion leader programs, medical education
programs, grand rounds, sponsoring of publications, weekend seminars, fees to
managed care organizations, programs which support the prophylactic use of Co-
Promotion Products, public relations, market research and other tasks
specifically attributable to the sale, promotion and marketing of such Co-
Promotion Product in the Co-Promotion Territory.
"Manufacturing Cost" means the cost to prepare a Co-Promotion Product
------------------
for use in research or development studies, or marketing programs as computed by
SCHERING in accordance with its standard accounting procedures applied on a
consistent basis. Such costs shall include, but not be limited to, the fully-
burdened costs of all raw materials, labor and overhead for formulation,
filling, finishing, labeling, packaging and quality assurance, and shall also
include any value added taxes or transportation charges and any royalties paid
to Third Parties in connection with the manufacturing process or materials used.
Additionally, all costs to prepare placebo or product variations in research or
development studies shall be included as a Manufacturing Cost.
"Material Breach" has the meaning set forth in Section 10.2.
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"Milestone Credits" has the meaning set forth on Exhibit A-2 hereto.
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"MYRIAD Patent" means a Patent which covers the research, development,
-------------
manufacture, use, importation, sale or offer for sale of a Gene or Interactive
Protein and antibodies thereto licensed to SCHERING hereunder, which Patent is
Controlled, in whole or in part, by MYRIAD.
"MYRIAD Product" means a Human Therapeutic Product or Royalty Bearing
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Product to which rights have reverted to MYRIAD in a particular country
following the abandonment by SCHERING of Development or commercialization
activities with respect thereto in such country pursuant to Section 4.9, but
only in the country in which such abandonment shall have occurred.
"MYRIAD Technology" means all Technology Controlled by MYRIAD,
-----------------
including the ProNet Technology, and Technology claimed or described in a MYRIAD
Patent.
"Net Sales" means the amount invoiced by a Party, an Affiliate or a
---------
permitted sublicensee for sales of Co-Promotion Products, Royalty Bearing
Products or MYRIAD Products, as the case may be, to a Third Party less
deductions for: (i) shipping or freight charges prepaid or allowed, and other
charges, such as insurance,
6.
relating thereto; (ii) sales and excise taxes or customs duties paid by the
selling party and any other governmental charges imposed upon the sale of such
Co-Promotion Products, Royalty Bearing Products or MYRIAD Products, as the case
may be; (iii) distributors fees, rebates, non-cash rebates or allowances
actually granted, allowed or incurred; (iv) quantity discounts, cash discounts
or chargebacks actually granted, allowed or incurred in the ordinary course of
business in connection with the sale of such Co-Promotion Products, Royalty
Bearing Products or MYRIAD Products, as the case may be; (v) allowances or
credits to customers, not in excess of the selling price of such Co-Promotion
Products, Royalty Bearing Products or MYRIAD Products, as the case may be, on
account of governmental requirements, rejection, outdating recalls or for value
of returned trade goods of such Co-Promotion Products, Royalty Bearing Products
or MYRIAD Products, as the case may be; (vi) costs of customer programs such as
patient assistance programs designed to aid in patient compliance to maintain
medication schedules; and (vii) an estimate for bad debts determined in
accordance with such Party's normal accounting procedures consistently applied
within and across its pharmaceutical Operating Units, whether or not invoiced to
the customer. For the purpose of calculating a Party's Net Sales, the Parties
recognize that (a) a Party's customers may include persons in the chain of
commerce who enter into agreements with a Party as to price even though title to
the Co-Promotion Product, Royalty Bearing Product or MYRIAD Product, as the case
may be, does not pass directly from a Party to such customers, and even though
payment for such Co-Promotion Product, Royalty Bearing Product or MYRIAD
Product, as the case may be, is not made by such customers directly to a Party
and (b) in such cases chargebacks paid by a Party to or through a Third Party
(such as a wholesaler) can be deducted by a Party from gross revenue in order to
calculate a Party's Net Sales. Any deductions listed above which involve a
payment by a Party shall be taken as a deduction against aggregate sales for the
period in which the payment is made. Sales of Co-Promotion Products, Royalty
Bearing Products or MYRIAD Products, as the case may be, between a Party and its
Affiliates solely for research or clinical testing purposes shall be excluded
from the computation of Net Sales.
"Net Sublicense Revenues" means all revenues or other consideration
-----------------------
received from Third Parties as consideration for sublicensing of the
manufacture, distribution, use or sale of Co-Promotion Products in the Co-
Promotion Territory, less the expenses directly attributable to supplying goods
and services to such sublicensees to enable their performance of the
sublicenses.
"Operating Profits or Losses" means the profits ("Operating Profits")
--------------------------- -----------------
or losses ("Operating Losses") resulting from the Commercialization of Co-
----------------
Promotion Products in the Co-Promotion Territory and shall be equal to (i) Net
Sales plus (ii) Net Sublicense Revenues less (iii) Commercialization Costs. A
separate determination of Net Sales and Operating Profits or Losses shall be
made for each Co-Promotion Product. In the event multiple Co-Promotion Products
are being marketed under this Agreement, the individual statements of Operating
Profits or Losses shall then be combined into a single statement of Operating
Profits or Losses in a format to be mutually agreed to by the Parties for
purposes of overall accounting between the Parties.
"Operating Unit" means, with respect to each Party, the smallest
--------------
operating unit in which a cost center statement is prepared for management
accounting purposes in such Party's normal accounting procedures, consistently
applied within and across its operating units.
"Option Extension Fee" has the meaning set forth in Section 2.3(b).
--------------------
"Option Period" has the meaning set forth in Section 2.3(b).
-------------
"Patent" means United States and foreign patents, applications and
------
provisional applications for United States and foreign patents, and all
reexaminations, reissues, extensions, term restorations, divisionals,
continuations and continuations-in-part thereof.
"Pathway" means a series comprising up to ten (10) Genes that code for
-------
Interactive Proteins that interact with one another as defined by the ProNet
Technology and includes the related Interactions.
"Pathway Option Fee" has the meaning set forth in Section 2.3(b).
------------------
"Phase IV Clinical Trials" means product support clinical trials of a
------------------------
Co-Promotion Product commenced after receipt of Regulatory Approval in the
country where such trial is being conducted. These trials shall be considered a
part of Commercialization.
7.
"Post-Launch Product R&D" means Phase IV Clinical Trials and ongoing
-----------------------
product support (including manufacturing and quality assurance, technical
support, and laboratory and clinical efforts in each case directed toward the
further understanding of product safety and efficacy), professional services
(including adverse event reporting and responding to inquiries from physicians
regarding Co-Promotion Products) and medical affairs (including regulatory
support necessary for product maintenance) which are specifically attributable
to a Co-Promotion Product in the countries of the Co-Promotion Territory where
such Co-Promotion Product has been launched.
"Potential Co-Promotion Product" means a Human Therapeutic Product
------------------------------
following the Completion of Pivotal Clinical Trials for such product prior to
the designation of such Human Therapeutic Product as a Co-Promotion Product or a
Royalty Bearing Product pursuant to Section 5.2.
"ProNet" shall mean the database of Interactive Proteins resulting
------
from use of the ProNet Technology.
"ProNet Technology" means the proprietary tools (robotics, plastics,
-----------------
software, etc.), proprietary methods (protocols, processes, etc.) and
proprietary reagents (vectors, strains, buffers and solutions, etc.) used by
MYRIAD to carry out yeast two hybrid protein-protein Interaction studies,
including MYRIAD's proprietary compilation of protein-protein Interaction data
for the human genome which is generally accessible to MYRIAD's ProNet
collaborators.
"Regulatory Approval" means any approvals (including pricing and
-------------------
reimbursement approvals), product and/or establishment licenses, registrations
or authorizations of any federal, state or local regulatory agency, department,
bureau or other governmental entity, or foreign equivalents thereof, necessary
for the manufacture, use, storage, importation, export, transport or sale of
Human Therapeutic Products in a regulatory jurisdiction.
"Research Program" means the collaborative research program in the
----------------
Field to be conducted by MYRIAD and SCHERING under the JRSC pursuant to Section
2.2 and reflected in the Annual Research Plans in effect during the Research
Term, including any assay development and other related activities.
"Research Term" means the period beginning on the Effective Date and
-------------
ending on the date on which the Research Program terminates or expires as set
forth in Section 2.4 below (including for all or any portion of the Research
Program which is extended pursuant to Section 2.4, the period the Research Term
is extended with respect thereto).
"Royalty Bearing Product" means a Human Therapeutic Product (a)
-----------------------
marketed directly or indirectly by SCHERING in the Royalty Bearing Territory
pursuant to Section 5.7 or (b) with respect to which MYRIAD shall have failed to
exercise its option to Co-Promote pursuant to Section 5.2 within the applicable
time period (other than a MYRIAD Product).
"Royalty Bearing Territory" means the world.
-------------------------
"SCHERING Patent" means a Patent which covers the research,
---------------
development, manufacture, use, importation, sale or offer for sale of a Human
Therapeutic Product, which Patent is Controlled, in whole or in part, by
SCHERING.
"SCHERING Technology" means all Technology Controlled by SCHERING,
-------------------
including Technology claimed or described in a SCHERING Patent.
"Tangible Advertising" shall mean (a) all Advertising described in
--------------------
clause (i) or (ii) of the definition of the term "Advertising" and (b) all
Advertising embodied in a writing or other tangible material.
"Technology" means and includes all proprietary information and
----------
materials related to the Field, including but not limited to nucleic acid
constructs, Genes, Interactive Proteins, DNA fragments and primers, procedures,
processes, technical information, know-how, data, expertise and trade secrets.
8.
"Term" refers to the term of this Agreement as provided in Section
----
10.1.
"Third Party" means any entity other than SCHERING, MYRIAD and their
-----------
respective Affiliates.
"Utilized Capital" means the amount of the Parties' capital
----------------
specifically attributable to the support of a particular Co-Promotion Product in
the Co-Promotion Territory following SCHERING's receipt of MYRIAD's Co-Promotion
Exercise Notice for such Co-Promotion Product in the Co-Promotion Territory, and
shall consist of the consolidated net working capital specifically attributable
to such support activities, defined as both Parties' (a) accounts receivable,
inventory and prepaid expenses less (b) accounts payable and accrued
liabilities.
SECTION 1.2 Accounting.
-----------
(a) For the purposes of determining all costs and expenses hereunder,
any cost or expense allocated to such category in good faith by either Party to
a particular category for a particular Human Therapeutic Product shall not also
be allocated to another category for such Human Therapeutic Product, and any
cost or expense allocated to a particular Human Therapeutic Product in a
particular country shall not also be allocated to another Human Therapeutic
Product of such Party or the same Human Therapeutic Product in a different
country.
(b) MYRIAD agrees to determine all costs and expenses hereunder with
respect to Human Therapeutic Products consistent with the definitions thereof
contained herein and using its standard accounting procedures, consistent with
U.S. Generally Accepted Accounting Principles consistently applied ("U.S.
GAAP"), to the extent practical as if such Human Therapeutic Products were
solely owned products of MYRIAD, except as specifically provided in this
Agreement. SCHERING agrees to determine all costs and expenses hereunder with
respect to Human Therapeutic Products consistent with the definitions thereof
contained herein and using its standard accounting procedures, consistent with
International Accounting Standards ("IAS"), to the extent practical as if such
Human Therapeutic Products were solely owned products of SCHERING, except as
specifically provided in this Agreement. Each Party shall keep reasonably
detailed records of the foregoing from which the material components of such
items can be derived. The Parties agree that if changes in U.S. GAAP or IAS
after the date hereof result in economically material differences between U.S.
GAAP and IAS with respect to expenses which are not explicitly defined to be
accounted for in accordance with U.S. GAAP or IAS, as the case may be, in this
Agreement, the Parties will attempt to reach an equitable resolution of such
differences through good faith negotiations.
ARTICLE II
RESEARCH PROGRAM
----------------
SECTION 2.1 Joint Research Steering Committee.
---------------------------------
(a) Establishment and Functions. Within five (5) days of the
---------------------------
Effective Date, MYRIAD and SCHERING shall establish a Joint Research Steering
Committee (the "JRSC"). The JRSC shall plan, administer and monitor the
Research Program. In particular, the JRSC shall prepare an Annual Research Plan
(including the selection of any Baits to be used in conjunction with the ProNet
Technology), review progress in the Research Program and recommend necessary
adjustments to the Research Program as the research takes place.
(b) Membership. MYRIAD and SCHERING each shall appoint, in its sole
----------
discretion, three (3) members to the JRSC. Substitutes or alternates may be
appointed at any time by notice in writing to the other Party.
The members of the JRSC initially shall be:
MYRIAD Appointees:
9.
[
]
SCHERING Appointees:
[
]
(c) Chairs. Two co-chairpersons shall chair the JRSC, one appointed
------
by MYRIAD and the other appointed by SCHERING from the JRSC members.
(d) Meetings. The JRSC shall meet at least quarterly, at places and
--------
on dates selected by each Party in turn, unless the Parties agree otherwise.
Representatives of each Party or its Affiliates, in addition to the members of
the JRSC, may attend such meetings at the invitation of either Party.
(e) Minutes. The JRSC shall keep accurate minutes of its
-------
deliberations that record all proposed decisions and all actions recommended or
taken. Drafts of the minutes shall be delivered to all JRSC members at least
ten (10) days prior to the next meeting of the JRSC. The Party hosting the
meeting shall be responsible for the preparation and circulation of the draft
minutes. Draft minutes shall be edited by the co-chairpersons and shall be
issued in final form only with their approval and agreement as evidenced by
their signatures on the minutes.
(f) Quorum; Voting; Decisions. At each JRSC meeting, at least two
-------------------------
representatives of each Party shall constitute a quorum. The JRSC
representatives of each Party shall collectively have one vote on all matters
before the JRSC. All decisions of the JRSC shall be made by unanimous vote of
both Parties. In the event that the JRSC is unable to resolve any matter before
it, such matter shall be referred at the request of either Party to the
President of MYRIAD and the President of Berlex Biosciences, a division of
Berlex Laboratories, Inc., an Affiliate of SCHERING, for attempted resolution by
good faith negotiations, which negotiations shall continue for a period not to
exceed ninety (90) days. In the event that such dispute is not resolved in such
manner, within such period or any mutually agreed extension thereof, either
Party may terminate the Research Program upon written notice to the other Party.
(g) Expenses. MYRIAD and SCHERING shall each bear all expenses of
--------
their respective JRSC members related to their participation on the JRSC and
attendance at JRSC meetings.
SECTION 2.2 Research Program.
----------------
(a) Purpose of Research Program. Under the Research Program, MYRIAD
---------------------------
will use commercially reasonable efforts to utilize the ProNet Technology to
identify Genes and Interactive Proteins, including without limitation through
the use of Baits selected and prioritized by the JRSC, as further set forth in
each Annual Research Plan. In carrying out the Research Program, each Party
agrees to undertake the research activities described in and pursuant to the
time schedules established by each Annual Research Plan unless otherwise agreed
by the JRSC. Each Party shall be responsible for the administrative management
of the research activities performed by such Party in support of the Research
Program, subject to compliance with the applicable Annual Research Plan and to
the provisions of this Article II generally, and shall bear all of its own
expenses incurred in the performance of such research activities.
(b) Annual Research Plans. For each year of the Research Program
---------------------
commencing with the second year, the Annual Research Plan shall be prepared and
approved in preliminary form by the JRSC no later than ninety (90) days before
the end of the prior year and approved by the JRSC in final form no later than
thirty (30) days before the end of the prior year. The Annual Research Plan for
the first year shall be prepared and approved by the JRSC in final form by no
later than October 31, 1998. Each Annual Research Plan shall be in writing and
shall set forth with reasonable specificity research objectives, milestones and
any Baits selected for use in the ProNet Technology for the period covered by
the Annual Research Plan. The JRSC may make adjustments in the Annual Research
Plan at its quarterly meetings or otherwise as it may determine.
10.
SECTION 2.3 Access to ProNet; Pathway Options.
---------------------------------
(a) Stage I - Non-Exclusive Access to ProNet. MYRIAD and SCHERING
----------------------------------------
shall (i) evaluate the current Interactive Proteins and Genes in ProNet and,
(ii) using Baits selected by the JRSC in conjunction with the ProNet Technology,
evaluate the subset of Interactive Proteins that Interact with such Baits, in
each case pursuant to the Research Program. Upon the identification of any
Interactive Protein which is not subject to an option or license in favor of any
Third Party or the subject of an internal MYRIAD program as can be documented by
written records, SCHERING shall have the option set forth in Section 2.3(b)
below to obtain an exclusive option to a specified Pathway containing such
Interactive Protein and the Genes which code for such Interactive Protein.
(b) Stage II - Exclusive Option to Pathway. At any time during the
--------------------------------------
Research Term, SCHERING may acquire an option (an "Exclusive Pathway Option") to
obtain an Exclusive License with respect to the Interactive Protein(s) and
related Gene(s) included in any Pathway which are available for license as set
forth in Section 2.3(a) and specified in a written notice to MYRIAD on or prior
to the acquisition of such option. Any such specified Pathway shall not include
the continuation of any "branch" of the Pathway with respect to which MYRIAD
shall be unable to grant a license to SCHERING due to agreements with Third
Parties in the Field relating to the "next" Interactive Protein or Gene coding
for such Interactive Protein in the Pathway. SCHERING may elect to expand a
specified Pathway initially including less than ten (10) Interactive Proteins or
Genes coding for such Interactive Proteins during the relevant Option Period to
include up to ten (10) Interactive Proteins or Genes coding for such Interactive
Proteins; provided, however, that no Pathway shall be expanded to the extent
that such expansion would violate the criteria set forth above. In order to
acquire an Exclusive Pathway Option, SCHERING shall make a payment to MYRIAD
equal to [ ] per Pathway (the "Pathway Option Fee"). Each Exclusive
Pathway Option shall be exercisable at any time in the nine (9) month period
(the "Option Period") following the acquisition of such Exclusive Pathway
Option, which such Option Period may be extended by SCHERING for one additional
nine (9) month period upon the payment of an additional [ ] (the
"Option Extension Fee"). During any Option Period, MYRIAD shall not (i) assign,
license or grant any option to any Third Party with respect to any of its rights
in the Field to, or (ii) commence or conduct any internal program relating to,
any Interactive Proteins or Genes included in the specified Pathway that is the
subject of such Exclusive Pathway Option. If SCHERING shall not have acquired
an Exclusive Pathway Option as set forth above, MYRIAD shall be free to utilize
or to assign, license or grant any option with respect to its rights to any
Interactive Proteins or Genes included in such specified Pathway at MYRIAD's
sole discretion.
(c) Stage III - Exclusive License. At any time prior to the end of
-----------------------------
the Option Period with respect to any Exclusive Pathway Option, SCHERING may
exercise such Exclusive Pathway Option by the delivery of written notice of such
election to MYRIAD, which notice shall specify the Interactive Proteins and
related Genes included in the relevant Pathway to be the subject of the
Exclusive License. If SCHERING shall not have exercised its Exclusive Pathway
Option prior to the end of the Option Period, MYRIAD shall retain all rights to
the relevant specified Pathway including Interactive Proteins and related Genes.
Thereafter, SCHERING will have the right to seek an Exclusive License with
respect to any Interactive Protein or related Gene which was previously the
subject of an Exclusive Pathway Option from MYRIAD at any time provided that
MYRIAD has not licensed the rights to such Interactive Protein or related Gene
to a Third Party and has not commenced an internal program relating to such
Interactive Protein or related Gene, as can be documented by written records.
(d) No Limit to Number of Option Rights. During the Research Term,
-----------------------------------
SCHERING can exercise an Exclusive Pathway Option on an unlimited number of
Genes and Interactive Proteins and their Pathways identified through the use of
the ProNet Technology, whether during or prior to the Research Term, subject to
the foregoing provisions.
(e) Other Collaborations. The Parties acknowledge that MYRIAD will be
---------------------
and is utilizing ProNet itself and in collaborations with Third Parties during
the Term of this Agreement and that the licenses and options to Genes and
Interactive Proteins to be granted pursuant to this Agreement to SCHERING shall
only be available on a first-come, first-served basis as set forth in this
Agreement.
SECTION 2.4 Research Term. The Research Term shall commence upon
-------------
the Effective Date and terminate five (5) years after the Effective Date unless
extended by mutual agreement of the Parties or unless the Research Term is
earlier terminated by either Party pursuant to Section 2.1(f) hereof or by
SCHERING at each anniversary of the Research Term on sixty (60) days prior
written notice to MYRIAD or this Agreement is earlier
11.
terminated by either Party pursuant to Article X hereof.
SECTION 2.5 Quarterly Reports. MYRIAD shall keep SCHERING fully
-----------------
informed about the status of the Research Program. MYRIAD shall furnish a
quarterly written report, describing the progress of the Research Program in
reasonable detail, to SCHERING at least ten (10) days prior to each quarterly
meeting of the JRSC.
ARTICLE III
DRUG DISCOVERY AND EARLY DEVELOPMENT; DEVELOPMENT
-------------------------------------------------
SECTION 3.1 Drug Discovery and Management Committee.
---------------------------------------
(a) Establishment and Function. Within thirty (30) days after
--------------------------
SCHERING shall have exercised its first Exclusive Pathway Option, SCHERING and
MYRIAD shall establish a Drug Development and Management Committee (the "DDMC").
The DDMC shall plan, administer and monitor the Drug Discovery and Early
Development Program with respect to Genes and Interactive Proteins within such
Pathway and each subsequent Pathway with respect to which SCHERING shall have
exercised an Exclusive Pathway Option.
(b) Membership. SCHERING shall appoint, in its sole discretion, three
----------
(3) majority members to the DDMC, and MYRIAD shall appoint, in its sole
discretion, two (2) minority members to the DDMC. Substitutes or alternates may
be appointed at any time by notice in writing to the other Party.
(c) Chair. A chairperson appointed by SCHERING from the DDMC members
-----
shall chair the DDMC.
(d) Meetings. The DDMC shall meet at least once every six (6) months,
--------
with such semi-annual meetings and any additional meetings to be held at places
and on dates selected by the chairperson of the DDMC. Representatives of each
Party or its Affiliates, in addition to the members of the DDMC, may attend such
meetings at the invitation of either Party.
(e) Minutes. The DDMC shall keep accurate minutes of its
-------
deliberations that record all proposed decisions and all actions recommended or
taken. Drafts of the minutes shall be delivered to all DDMC members at least
ten (10) days prior to the next meeting of the DDMC. SCHERING shall be
responsible for the preparation and circulation of the draft minutes. Draft
minutes shall be edited by the chairperson and shall be issued in final form
only with his approval and agreement as evidenced by his signature on the
minutes.
(f) Quorum; Voting; Decisions. At each DDMC meeting, at least a
-------------------------
majority of the members of the DDMC shall constitute a quorum, provided that at
least one member of each Party is present. Each Party of the DDMC shall have
one vote on all matters before the DDMC. All decisions shall be made by
unanimous vote of both Parties. In the event that the DDMC is unable to resolve
any matter before it, such matter shall be referred at the request of either
Party to the President of Myriad and the President of Berlex Biosciences, a
division of Berlex Laboratories, Inc., an Affiliate of SCHERING, for attempted
good faith resolution by negotiations, which negotiations shall continue for a
period not to exceed ninety (90) days. In the event such dispute is not
resolved in such manner the final decision on such matter shall be made by
SCHERING.
(g) Expenses. MYRIAD and SCHERING shall each bear all expenses of
---------
their respective DDMC members related to their participation on the DDMC and
attendance at DDMC meetings.
SECTION 3.2 Drug Discovery and Early Development Program. Under the
--------------------------------------------
Drug Discovery and Early Development Program, SCHERING will conduct activities
relating to research and/or preclinical Development performed with respect to
(i) identifying, discovering, screening, creating, optimizing and/or
synthesizing potential Human Therapeutic Products which consist of, comprise,
are comprised of or derived from any Genes or Interactive Proteins within the
Pathways that are the subject of the Drug Discovery and Early Development
Program and (ii) performing in vivo efficacy and preliminary acute safety
studies and GLP Toxicity
12.
Studies or equivalent non-U.S. studies with respect to such potential Human
Therapeutic Products in preparation for filing an IND. In carrying out the Drug
Discovery and Early Development Program, SCHERING agrees to use commercially
reasonable efforts to undertake the activities under the Drug Discovery and
Early Development Program. SCHERING shall calculate and maintain records of Drug
Discovery and Early Development expenses incurred by it in accordance with
procedures to be agreed upon between the Parties. Except as otherwise provided
herein, all expenses incurred in connection with the Drug Discovery and Early
Development Program shall be borne solely by SCHERING.
SECTION 3.3 Development Program. SCHERING shall be solely
-------------------
responsible for the worldwide clinical Development of all Human Therapeutic
Products following the filing of an IND for each such Human Therapeutic Product,
and agrees to use commercially reasonable efforts to Develop and bring Human
Therapeutic Products to market in all countries wherein SCHERING determines it
is commercially reasonable to do so. SCHERING, at its own expense, shall be
responsible for preparing and filing all Drug Approval Applications and seeking
Regulatory Approvals for Human Therapeutic Products in connection with such
clinical Development. SCHERING shall calculate and maintain records of
Development expenses incurred by it in accordance with its customary procedures.
Except as otherwise provided herein, all expenses incurred in connection with
the Development Program shall be borne solely by SCHERING.
SECTION 3.4 MYRIAD Participation. MYRIAD agrees to apply its
--------------------
expertise to assist SCHERING in all aspects of the Drug Discovery and Early
Development Program and the Development Program, and agrees to carry out such
tasks under the Drug Discovery and Early Development Program and Development
Program as are reasonably requested by the DDMC, in the case of the Drug
Discovery and Early Development Program, and by SCHERING, in the case of the
Development Program, to the extent that such tasks are accepted by MYRIAD in its
sole discretion. Any such assistance by MYRIAD shall be performed on terms and
conditions (including terms relating to the ownership of intellectual property
rights) to be agreed upon by the Parties.
SECTION 3.5 Reporting. SCHERING shall keep MYRIAD fully informed
---------
about the status of the Drug Discovery and Early Development Program and the
Development Program. SCHERING shall furnish a written report with respect to
each potential Human Therapeutic Product that has been identified by SCHERING,
describing the progress of the Drug Discovery and Early Development Program or
the Development Program, as applicable, with respect to each such potential
Human Therapeutic Product in reasonable detail, to MYRIAD no less frequently
than twice per calendar year.
SECTION 3.6 Right to Engage Third Parties in Drug Discovery and Early
---------------------------------------------------------
Development and Development. In the course of its business, SCHERING regularly
- ---------------------------
uses Third Parties to perform certain activities. SCHERING may continue to do so
in carrying out the Drug Discovery and Early Development Program and the
Development Program during the course of this Agreement at its own expense.
SECTION 3.7 Drug Approval Applications. SCHERING shall be solely
--------------------------
responsible for preparing and filing Drug Approval Applications and seeking
Regulatory Approvals for Human Therapeutic Products in the Co-Promotion
Territory and the Royalty Bearing Territory, including preparing all reports
necessary as part of a Drug Approval Application. All such Drug Approval
Applications shall be filed in the name of SCHERING. SCHERING shall be solely
responsible for prosecuting such Drug Approval Applications. In the event that
any regulatory agency threatens or initiates any action which could have a
material impact on the marketing or sale of a Human Therapeutic Product,
anywhere in the world, SCHERING shall notify MYRIAD of such communication within
three (3) Business Days of receipt by SCHERING.
SECTION 3.8 Manufacturing.
-------------
(a) Manufacture and Supply in Drug Discovery and Early Development and
------------------------------------------------------------------
Development. SCHERING shall be responsible for the manufacture and supply of
- -----------
each Human Therapeutic Product for use during the Drug Discovery and Early
Development Program and the Development Program, and shall use commercially
reasonable efforts to manufacture, or arrange for the manufacture of, such Human
Therapeutic Products in bulk form for use during the Drug Discovery and Early
Development Program and the Development Program. SCHERING's actual
Manufacturing Cost of such Human Therapeutic Products for such programs, plus a
mark-up of [ ], shall be a Drug Discovery and Early
Development expense or a Development expense, as the case may be.
13.
(b) Process Development, Manufacturing Approvals. SCHERING will use
--------------------------------------------
commercially reasonable efforts to develop or have developed a process for the
manufacture of Human Therapeutic Products and to scale up that process to a
scale sufficient to manufacture and supply the anticipated demand for Human
Therapeutic Products. The costs associated with the continued development of
the process for the manufacture of Human Therapeutic Products as well as the
scale up of that process and all material issues incident to the development of
Human Therapeutic Products for commercial purposes will be a Development
expense. SCHERING will use commercially reasonable efforts to make necessary
filings to obtain, or to cause a Third Party manufacturer of Human Therapeutic
Products to make necessary filings to obtain Regulatory Approval for the
manufacture of Human Therapeutic Products as part of the approval of a Drug
Approval Application for each Co-Promotion Product in the Co-Promotion
Territory.
ARTICLE IV
LICENSES
--------
SECTION 4.1 License to SCHERING to Conduct Research. MYRIAD grants
---------------------------------------
to SCHERING a paid-up, non-exclusive, worldwide license, with a right to
sublicense as described in Section 4.7, under the MYRIAD Technology to make,
have made and use Genes, Interactive Proteins and entities derived therefrom,
solely in the course of performance of the Research Program during the Research
Term in accordance with the terms of this Agreement.
SECTION 4.2 License to MYRIAD to Conduct Research. SCHERING grants
-------------------------------------
to MYRIAD a paid-up, non-exclusive license in the Co-Promotion Territory, with a
right to sublicense as described in Section 4.7, under the SCHERING Technology
to make, have made and use SCHERING's proprietary Baits solely as directed by
the JRSC in the course of performance of the Research Program during the
Research Term in accordance with the terms of this Agreement.
SECTION 4.3 License to SCHERING to Conduct Development. Upon the
------------------------------------------
exercise by SCHERING of an Exclusive Pathway Option with respect to any
specified Gene or Interactive Protein, MYRIAD grants to SCHERING a paid-up,
exclusive (even as to MYRIAD) worldwide license (an "Exclusive License"), with a
right to sublicense as described in Section 4.7, under the MYRIAD Technology to
make, have made and use the specified Interactive Protein(s) and related Gene(s)
to Develop Human Therapeutic Products in accordance with the terms of this
Agreement.
SECTION 4.4 License to MYRIAD to Conduct Development. SCHERING
----------------------------------------
grants to MYRIAD a paid-up, exclusive (even as to SCHERING) license, with a
right to sublicense as described in Section 4.7, under the SCHERING Technology
to make, have made and use MYRIAD Products in accordance with the terms of this
Agreement in the countries in which such products shall constitute MYRIAD
Products.
SECTION 4.5 License to SCHERING to Conduct Commercialization. Upon
------------------------------------------------
the exercise by SCHERING of an Exclusive Pathway Option with respect to any
specified Gene or Interactive Protein, MYRIAD grants to SCHERING an exclusive
(except as to MYRIAD as provided in Section 5.2) worldwide license, with a right
to sublicense as described in Section 4.7, under the MYRIAD Technology to make,
have made, use, sell, offer to sell, have sold and import Human Therapeutic
Products which consist of, comprise, are comprised of or are derived from the
specified Interactive Protein(s) and related Gene(s). Such license shall be
subject to profit sharing or royalty payments as provided herein.
SECTION 4.6 Rights and Licenses to MYRIAD to Conduct
----------------------------------------
Commercialization.
- -----------------
(a) Co-Promotion Products. SCHERING grants to MYRIAD an exclusive
---------------------
(except as to SCHERING) right in the Co-Promotion Territory under the SCHERING
Technology solely for the purpose of Co-Promoting Co-Promotion Products in
accordance with the terms of this Agreement.
(b) MYRIAD Products. SCHERING grants to MYRIAD an exclusive (even as
---------------
to SCHERING) license, with a right to sublicense as described in Section 4.7,
under the SCHERING Technology to make, have made, use, sell, offer to sell, have
sold and import MYRIAD Products, to the extent included in
14.
SCHERING Technology, in accordance with the terms of this Agreement in the
countries in which such products shall constitute MYRIAD Products. Such license
shall be subject to royalty payments as provided herein.
SECTION 4.7 Sublicensing. Neither Party may grant sublicenses under
------------
Sections 4.1 through 4.6 except (i) to Affiliates of such Party or (ii) with the
express prior written approval of the Party that solely Controls the subject
Technology (which consent will not be unreasonably withheld or delayed);
provided, however, that SCHERING may grant sublicenses with respect to Royalty
Bearing Products and MYRIAD may grant sublicenses to MYRIAD Products and
Diagnostic Products, in each case subject to compliance with Section 6.6 and,
with respect to MYRIAD Products, only in the countries in which such products
shall constitute MYRIAD Products.
SECTION 4.8 Third Party Technology. The licenses granted under
----------------------
Sections 4.1 through 4.6 include sublicenses of Third Party technology to the
extent that such licensed rights can be so sublicensed and are necessary or
useful for the manufacture, use, importation, sale or offer for sale of the
relevant licensed product. The licenses granted under Sections 4.1 through 4.6,
to the extent they include sublicenses of Third Party technology shall be
subject to the terms and conditions of the license agreement pursuant to which
the sublicense is granted.
SECTION 4.9 Abandonment. In the event that SCHERING, in its sole
-----------
discretion, shall determine to stop Development of a Human Therapeutic Product
in any country or determine that commercialization of a Royalty Bearing Product
in any country is not commercially viable, SCHERING may at any time by delivery
of written notice to MYRIAD elect to abandon its Development activities with
respect to such Human Therapeutic Product, or abandon its commercialization
activities with respect to such Royalty Bearing Product, in such country (such
Human Therapeutic Product or Royalty Bearing Product, as the case may be, being
referred to with respect to such country as an "Abandoned Product"). Upon such
abandonment or cessation in such country, (i) such Abandoned Product shall
constitute a MYRIAD Product hereunder with respect to such country, (ii) MYRIAD
may thereafter proceed with the development and commercialization of such MYRIAD
Product in such country, either alone or in conjunction with Third Parties,
(iii) all licenses granted by MYRIAD to SCHERING solely with respect to such
Abandoned Product shall terminate in such country, (iv) SCHERING shall grant to
MYRIAD an exclusive license pursuant to Sections 4.4 and 4.6(b), with respect to
such Abandoned Product in such country, (v) SCHERING shall transfer or license
to MYRIAD any related Drug Approval Applications or Regulatory Approvals
(including transfer or license of all relevant data and information relevant to
regulatory authorities) in such country, and otherwise cooperate to enable
MYRIAD to continue said development and commercialization in such country, and
(vi) SCHERING shall have no further obligation to conduct Development or
commercialization as applicable, of such Abandoned Product in such country. Any
abandonment pursuant to this Section 4.9 shall not constitute a Material Breach
under this Agreement. In the event SCHERING shall abandon its Development or
commercialization activities, as applicable, with respect to any Abandoned
Product in any country under this Section 4.9, such MYRIAD Product shall
thereafter bear a royalty equal to that payable for MYRIAD Products under
Section 6.5(b). Notwithstanding the foregoing, SCHERING shall not be deemed to
have so abandoned any such Development or commercialization activities in any
country if (i) SCHERING shall have sublicensed such Human Therapeutic Product or
Royalty Bearing Product to a Third Party that has agreed to use commercially
reasonable efforts to Develop such Human Therapeutic Products in such country in
a manner consistent with Section 3.3 hereof or to commercialize such Royalty
Bearing Products in such country in a manner consistent with Section 5.7 hereof,
as the case may be, (ii) SCHERING shall be Developing a Human Therapeutic
Product or commercializing a Royalty Bearing Product in such country that
consists of, comprises, is comprised of or is derived from the same Gene or
Interactive Protein or Genes or Interactive Proteins in the same Pathway as the
Gene or Interactive Protein from which such Human Therapeutic Product or Royalty
Bearing Product, as the case may be, consists, comprises, is comprised of or is
derived from, or (iii) SCHERING shall be Developing a Human Therapeutic Product
or commercializing a Royalty Bearing Product in such country for the prevention
or treatment of the same disease, state or condition having substantially the
same biological effect achieved through substantially the same mechanism of
action as such discontinued Human Therapeutic Product or Royalty Bearing
Product, as the case may be.
SECTION 4.10 Diagnostic Product Rights.
-------------------------
(a) Diagnostic Products. The Parties recognize that Genes and
-------------------
Interactive Proteins licensed to SCHERING hereunder may also have concomitant
diagnostic applications. MYRIAD shall have the sole and exclusive right
worldwide to, make, have made, use, sell, offer to sell, have sold and import
Diagnostic Products.
15.
(b) Excluded Diagnostic Products. Neither Party shall have any right
----------------------------
to make, have made, use, sell, offer to sell, have sold or import Excluded
Diagnostic Products without the prior written agreement of the other Party.
MYRIAD may, at any time prior to the exercise by SCHERING of an Exclusive
Pathway Option with respect to any Pathway, notify SCHERING in writing that
MYRIAD is then actively conducting significant internal research and development
activities with respect to any diagnostic product(s) derived from any Genes or
Interactive Proteins included in such Pathway, which notice shall be accompanied
by written evidence reasonably acceptable to SCHERING setting forth in
reasonable detail the scope of such research and development activities, and any
such diagnostic product(s) shall not constitute Excluded Diagnostic Products
hereunder.
SECTION 4.11 No Other Rights. No other rights of either Party are
licensed hereunder except as expressly provided herein.
ARTICLE V
COMMERCIALIZATION
-----------------
SECTION 5.1 Joint Marketing Committee.
-------------------------
(a) Establishment and Function. The Parties shall establish a Joint
--------------------------
Marketing Committee (the "JMC") with respect to each Potential Co-Promotion
Product within thirty (30) days after the Completion of Pivotal Clinical Trials
for such Potential Co-Promotion Product. The purpose of the JMC shall be to (i)
oversee the Commercialization of Potential Co-Promotion Products and Co-
Promotion Products in the Co-Promotion Territory, including the annual budgeting
and forecasting, commercial manufacturing, marketing, sales and distribution of
Potential Co-Promotion Products and Co-Promotion Products, (ii) monitor, review
and comment on costs incurred by the Parties in the commercial manufacture,
marketing, sale and distribution of Potential Co-Promotion Products and Co-
Promotion Products in the Co-Promotion Territory, (iii) review and comment on
the Commercialization Plans for Potential Co-Promotion Products and Co-Promotion
Products in the Co-Promotion Territory, (iv) receive and provide to the Parties
all sales, pricing, and financial reports pertaining to Commercialization of
Potential Co-Promotion Products and Co-Promotion Products, (v) review and
comment on SCHERING's pricing recommendations for Potential Co-Promotion
Products and Co-Promotion Products in the Co-Promotion Territory, (vi) budget
annually (and update appropriately) each Party's expected Detailing effort for
each calendar year, and (vi) facilitate the flow of information with respect to
the Commercialization of each Potential Co-Promotion Products and Co-Promotion
Product. The JMC shall not be involved with the commercialization of Royalty
Bearing Products, MYRIAD Products or Diagnostic Products
(b) Membership. SCHERING shall appoint, in its sole discretion, three
----------
(3) members to the JMC. Prior to the effectiveness of MYRIAD's exercise of its
Co-Promotion Option with respect to any Potential Co-Promotion Product, MYRIAD
shall be entitled to appoint, in its sole discretion, three (3) non-voting
observers to the JMC. Upon the effectiveness of MYRIAD's exercise of its Co-
Promotion Option with respect to any Potential Co-Promotion Product, MYRIAD's
non-voting observers shall become members of the JMC. Substitutes or alternates
may be appointed at any time by notice in writing to the other Party.
(c) Chair. A chairperson appointed by SCHERING from the JMC members
-----
shall chair the JMC.
(d) Meetings. The JMC shall meet at least once every six (6) months,
--------
with such semi-annual meetings and any additional meetings to be held at places
and on dates selected by the chairperson of the JMC. Representatives of each
Party or its Affiliates, in addition to the members of the JMC, may attend such
meetings at the invitation of either Party.
(e) Minutes. The JMC shall keep accurate minutes of its deliberations
-------
that record all proposed decisions and all actions recommended or taken. Drafts
of the minutes shall be delivered to all JMC members and non-voting observers,
at least ten (10) days prior to the next meeting of the JMC. SCHERING shall be
responsible for the preparation and circulation of the draft minutes. Draft
minutes shall be edited by the chairperson and shall be issued in final form
only with his approval and agreement as evidenced by his signature on the
minutes.
16.
(f) Quorum; Voting; Decisions. At each JMC meeting, at least a
-------------------------
majority of the members of the JMC shall constitute a quorum, provided that at
least one member of each Party is present. Each Party shall have one vote on
all matters before the JMC. All decisions of the JMC shall be made by unanimous
vote of both Parties. In the event that the JMC is unable to resolve any matter
before it, such matter shall be referred at the request of either Party to the
President of Myriad and the Chairman of Berlex Laboratories, Inc., an Affiliate
of SCHERING, for attempted good faith resolution by negotiations, which
negotiations shall continue for a period not to exceed ninety (90) days. In
the event such dispute is not resolved in such manner, then the final decision
on such matters shall be made by SCHERING, after giving due respect to the
opinions of MYRIAD.
(g) Expenses. MYRIAD and SCHERING shall each bear all expenses of
--------
their respective JMC members and non-voting observers related to their
participation on the JMC and attendance at JMC meetings.
SECTION 5.2 MYRIAD Option to Co-Promote.
---------------------------
(a) MYRIAD may, at any time following the creation of the JMC with
respect to each Potential Co-Promotion Product and prior to the date that is one
hundred twenty (120) days after notice is given by SCHERING to MYRIAD of
SCHERING having filed a Drug Approval Application with the FDA for such
Potential Co-Promotion Product, elect to Co-Promote such Potential Co-Promotion
Product hereunder by delivery of written notice of such election (a "Co-
Promotion Exercise Notice") to SCHERING, which election shall become effective
at the beginning of next succeeding calendar quarter; provided, however, that
-------- -------
MYRIAD shall share with SCHERING in Operating Profits and Losses recognized from
and after the applicable Current Filing Date in the manner set forth in Section
6.2. Upon effectiveness of such election, such Potential Co-Promotion Product
shall constitute a Co-Promotion Product hereunder and the Commercialization of
such Co-Promotion Product shall be conducted under the purview of the JMC. In
the event that MYRIAD shall have (i) notified SCHERING in writing of its
election not to Co-Promote such Potential Co-Promotion Product or (ii) failed to
make such election with respect to such Potential Co-Promotion Product within
the applicable time period, MYRIAD shall be deemed to have irrevocably waived
any right to Co-Promote such Potential Co-Promotion Product, such product shall
constitute a Royalty Bearing Product hereunder, the commercialization of such
Royalty Bearing Product shall be conducted independently by SCHERING, and
SCHERING shall pay to MYRIAD a royalty on all Net Sales of such Royalty Bearing
Product pursuant to Section 6.5 hereof.
(b) In the event that a Potential Co-Promotion Product shall become a
Royalty-Bearing Product pursuant to Section 5.2(a) hereof, SCHERING shall pay to
MYRIAD an amount equal to the total of the Milestone Credits solely applicable
to such Potential Co-Promotion Product (but not to any product that constitutes
an Abandoned Product in the Co-Promotion Territory) included in the Current
MYRIAD Credits but not the ProNet access fee or the Research cost per year of
the Research Term, as set forth in the calculation of Current MYRIAD Credits
provided by MYRIAD pursuant to Section 6.1(b) with respect to such Potential Co-
Promotion Product, not more than ten (10) Business Days after the effectiveness
of MYRIAD's waiver of its right to Co-Promote such Potential Co-Promotion
Product. In addition, SCHERING shall pay to MYRIAD an amount equal to Milestone
Credit (vi) with respect to such Potential Co-Promotion Product (unless such
amount was included in the payment made pursuant to the preceding sentence) not
later than ten (10) Business Days after the first Regulatory Approval for such
Potential Co-Promotion Product in the Co-Promotion Territory. This Section
5.2(b) shall not apply to any Co-Promotion Product that shall become a Royalty-
Bearing Product, whether pursuant to Sections 5.16 or 6.2(a)(iii) or otherwise.
SECTION 5.3 SCHERING as Lead Marketing Party.
--------------------------------
(a) SCHERING will be the lead marketing Party with respect to all
Potential Co-Promotion Products and Co-Promotion Products in the Co-Promotion
Territory, and as a result, shall be obligated and responsible for carrying out
Commercialization in the Co-Promotion Territory pursuant to each
Commercialization Plan. SCHERING shall obtain for Co-Promotion Products pricing
approvals as may be required and arrange for distribution of each Co-Promotion
Product in each applicable country of the Co-Promotion Territory. SCHERING will
assemble its product team and commence reporting to the JMC within five (5) days
following the establishment of the JMC with respect to such Co-Promotion
Product. MYRIAD will assemble its product team and commence reporting to the
JMC within five (5) days after effectiveness of MYRIAD's exercise of its Co-
Promotion Option. MYRIAD agrees to carry out the Commercialization
responsibilities referred to in Section 5.3(b) and such other Commercialization
responsibilities reasonably requested by the JMC.
17.
(b) The object of Co-Promotion is to reach a broader customer audience
and avoid confusion and redundancy of the marketing message. It is recognized
that the Parties bring particular strengths to the ongoing Commercialization of
Co-Promotion Products, and MYRIAD and SCHERING will co-participate in the sale
of all Co-Promotion Products in the Co-Promotion Territory. With respect to
each Co-Promotion Product, the JMC will assign to MYRIAD a role in
Commercialization functions and activities as the JMC considers to be reasonably
appropriate for the successful Commercialization of such Co-Promotion Product.
(c) The MYRIAD field sales force shall be under MYRIAD's direction and
control, pursuant to review by the JMC and subject to the Commercialization Plan
and Budget, and shall be compensated by MYRIAD. MYRIAD activities will be
performed in accordance with each approved Commercialization Plan and
Commercialization Budget. All marketing activities that have not been assigned
to MYRIAD will be the responsibility of SCHERING unless determined otherwise by
the JMC. The hiring by MYRIAD of field force personnel for carrying out a
Commercialization Plan shall be subject to the approval of the JMC, which
approval shall not be unreasonably withheld or delayed.
SECTION 5.4 Right to Engage Third Parties in Commercialization.
--------------------------------------------------
(a) Subject to the following sentence, to the extent either Party
engages a Third Party to fulfill its expected Detailing efforts it must first
communicate this intent to the JMC, which must approve such Third Party (such
approval not to be unreasonably withheld or delayed). If SCHERING determines
that it needs promotion support in the Co-Promotion Territory and MYRIAD does
not or is not capable of providing it, then SCHERING may contract for additional
promotion support from a Third Party. In such event, the Parties will consult
prior to the engagement of a Third Party. If either Party engages a Third
Party, the Detailing calls performed by such Third Party will be included in
such Party's actual Detailing effort. MYRIAD shall not engage any Third Party
hereunder for an initial term of less than three (3) years without the prior
written approval of the JMC. Any other use of a Third Party, such as the
sublicensing of a Third Party with respect to co-marketing and/or co-promotion
in the Co-Promotion Territory, must be approved by the JMC, except to the extent
such arrangements either directly or indirectly also involve the marketing,
promotion, co-marketing and/or co-promotion of products other than Co-Promotion
Products. Any Third Party engaged hereunder shall be a qualified and reputable
Detailing professional reasonably satisfactory to the JMC.
(b) The JMC shall be entitled to retain Third Parties inside and
outside the Co-Promotion Territory to conduct Post-Launch Product R&D activities
with respect to any Co-Promotion Product, and the expenses incurred in
connection with such activities shall be included in Commercialization Costs;
provided, however, that in the event that any such Third Party is an Affiliate
- -------- -------
of SCHERING, the JMC must first communicate such proposed retention to MYRIAD,
which must approve the terms upon which such SCHERING Affiliate shall be
retained (such approval not to be unreasonably withheld or delayed).
SECTION 5.5 Commercialization Efforts. With respect to the Co-
-------------------------
Promotion Territory, SCHERING agrees to use commercially reasonable and diligent
efforts to prepare the Commercialization Plans and Commercialization Budgets
hereunder. Each Party agrees to exert the efforts necessary and reasonable to
execute and substantially carry out the Commercialization Plans within the
Commercialization Budgets and to cooperate diligently with each other in
carrying out the Commercialization Plans.
SECTION 5.6 Commercialization Plan and Budget. SCHERING, after
---------------------------------
taking into consideration MYRIAD's and the JMC's comments, shall develop and the
JMC shall review, to the extent reasonably practical given the stage of
development of each Co-Promotion Product and consistent with SCHERING's
reasonable business practice, a commercialization plan ("Commercialization
Plan") and a commercialization budget ("Commercialization Budget") for each Co-
Promotion Product for the Co-Promotion Territory, including the Third Parties to
be utilized and the arrangements with them that have been or are proposed to be
agreed upon. Each Commercialization Budget shall include a budget of the
expenses expected to be incurred in connection with performing the
Commercialization Plan in each applicable country of the Co-Promotion Territory.
Each Commercialization Plan and Commercialization Budget shall be submitted to
the JMC for review and approval by a date to be established by the JMC taking
into account SCHERING's and MYRIAD's annual budget planning calendars. The
Commercialization Plan and Commercialization Budget shall be approved by the JMC
no later than December 31 of each preceding year.
18.
Any significant change in a Commercialization Plan or
Commercialization Budget during the course of the year will be communicated
promptly to the JMC. In addition, SCHERING shall provide an update on each
Commercialization Plan and Commercialization Budget to the JMC in a manner
consistent (with respect to timing and content) with such updates as are
reported internally by SCHERING's pharmaceutical Affiliates on their existing
products at such time.
SECTION 5.7 Commercialization of Royalty Bearing Product. The
commercialization of Royalty Bearing Products shall be conducted independently
by SCHERING. SCHERING agrees to use commercially reasonable efforts to
commercialize Royalty Bearing Products to market in all countries wherein
SCHERING determines in its reasonable judgement that it is commercially
reasonable to do so.
SECTION 5.8 Control Over Advertising and Detailing.
--------------------------------------
(a) Neither Party shall engage in any Tangible Advertising or use any
label, package, literature or other written material (other than General Public
Relations) in connection with a Co-Promotion Product in the Co-Promotion
Territory unless the specific form and content thereof is approved by the JMC.
(b) General Public Relations on the part of either Party need not be
approved by the JMC, but all representations and statements pertaining to Co-
Promotion Products which appear in General Public Relations of MYRIAD or
SCHERING which include subject matter not previously approved by the JMC shall
be subject to the approval of the JMC.
(c) All Advertising and Detailing undertaken by either Party hereto
shall be undertaken in good faith with a view towards maximizing the sales of
the applicable Co-Promotion Product.
(d) Except with the specific written consent of the other Party to
this Agreement, neither Party shall use the name of the other Party or any
Affiliate of the other Party in Advertising, Detailing or General Public
Relations.
SECTION 5.9 Sales Efforts in the Co-Promotion Territory. As part of
-------------------------------------------
the Commercialization Plan for the Co-Promotion Territory for each year, the JMC
shall determine the targeted level of gross sales of the applicable Co-Promotion
Product for the calendar year covered by such Commercialization Plan and the
targeted level of gross sales for each potential market or account. Each
Commercialization Plan shall provide each Party the opportunity to perform a
percentage of the Detailing calls each calendar year as the JMC reasonably
considers to be appropriate for the successful Commercialization of such Co-
Promotion Product. The JMC shall also include in the Commercialization Plan each
Party's sales target for such markets, based on each Party's agreed level of
sales target as previously determined by the JMC. The Parties agree to allocate
such markets and accounts in an unbiased manner based on objective, quantifiable
information and market research data with the objectives of allocating to each
Party markets and accounts from which each such Party will have the opportunity
to attain its sales target and of maximizing Operating Profits. Notwithstanding
the commercially reasonable and diligent efforts of the Parties to effect an
objective allocation of individual accounts and markets between the Parties, the
Parties recognize that it may be necessary from time to time to reassign
individual accounts and markets between the Parties in order to give each Party
responsibility for a set of accounts or markets that in the aggregate represent
the targeted market opportunity for each Party, and the JMC shall be entitled to
review the allocation of accounts as it reasonably determines to be appropriate.
SECTION 5.10 Training Program. SCHERING will ensure that adequate
----------------
training programs are developed for personnel involved in the Commercialization
of Co-Promotion Products in the Co-Promotion Territory. Following the
effectiveness of MYRIAD's exercise of its Co-Promotion Option with respect to
any Co-Promotion Product, MYRIAD shall play an appropriate role, as reasonably
determined by the JMC, in the preparation of such training materials and conduct
of training. SCHERING shall submit to the JMC for its review all training
materials. The Parties agree to utilize such training programs on an ongoing
basis to assure a consistent, focused promotional strategy. Training shall be
carried out at a time which is mutually acceptable to the Parties. Except as
provided herein, it is agreed that the costs of such training programs shall be
borne by each Party respectively. In the event that MYRIAD utilizes SCHERING
personnel to provide training to its sales force, SCHERING shall be entitled to
recover its direct labor and other out-of-pocket costs associated therewith, and
MYRIAD shall reimburse SCHERING for such costs within thirty (30) days after
receipt of an appropriate invoice
19.
therefor.
SECTION 5.11 Trademarks. SCHERING shall select the trademark under
----------
which each Co-Promotion Product shall be marketed. The Parties shall market each
Co-Promotion Product in the Co-Promotion Territory exclusively under the
trademark selected pursuant to the preceding sentence (all such trademarks being
hereinafter referred to as the "Trademarks" and SCHERING hereby grants MYRIAD a
paid-up, non-exclusive license in the Co-Promotion Territory to use such
Trademarks solely for such Co-Promotion. SCHERING shall register the Trademarks
in the Co-Promotion Territory and shall take all such actions as are required to
continue and maintain in full force and effect in the Co-Promotion Territory the
Trademarks and the registrations thereof, and shall be solely responsible for
all expenses incurred in connection therewith. As between the Parties, SCHERING
shall be the exclusive owner (or as applicable exclusive licensee) of the
Trademarks in the Co-Promotion Territory. In connection with MYRIAD's use of the
Trademarks in the Co-Promotion Territory pursuant to this Section 5.11, MYRIAD
shall not in any manner represent that it has any ownership interest in the
Trademarks or registrations thereof, and MYRIAD acknowledges that its use of the
Trademarks shall not create in its favor any rights therein, but all uses of the
Trademarks by MYRIAD shall inure to the benefit of SCHERING except as otherwise
provided herein.
SECTION 5.12 Manufacturing and Supply in Commercialization. SCHERING
---------------------------------------------
shall be responsible for the commercial manufacture and supply of Human
Therapeutic Products other than MYRIAD Products and shall use commercially
reasonable efforts to manufacture, or arrange for the manufacture of, the
intermediate, drug substance and/or drug product for Human Therapeutic Products
for use during the Commercialization of Co-Promotion Products and
commercialization of Royalty Bearing Products. SCHERING's Cost of Goods Sold of
Co-Promotion Products, plus a mark-up of [ ], shall be included in
Commercialization Costs; provided, that such mark-up shall be reduced to [ ]
with respect to any Co-Promotion Products that are distributed as promotional
samples.
SECTION 5.13 Product Recalls. If either Party commences an internal
---------------
product quality investigation with respect to a Co-Promotion Product, it shall
promptly notify and consult with the other Party regarding such investigation.
Further, if either Party believes that a recall of a Co-Promotion Product is
necessary, such Party shall notify and consult with the other Party within one
working day of such determination, and both Parties shall cooperate to allow
such recall to occur under the direction of the JMC; provided, however, that in
the event that any regulatory agency threatens or initiates any action to
conduct a recall or market withdrawal of a Co-Promotion Product in any country
in the Co-Promotion Territory, SCHERING shall be entitled to act unilaterally to
effect such recall or market withdrawal, subject to SCHERING's obligation to
provide notice to MYRIAD pursuant to Section 3.7. In the event of a dispute
about whether to recall a Co-Promotion Product or conduct a market withdrawal,
the final decision on such matter shall be made by SCHERING. In the event that
MYRIAD disagrees in good faith with any such decision for reasons related to the
safety of such Co-Promotion Product, MYRIAD may elect to terminate its Co-
Promotion of such Co-Promotion Product pursuant to Section 5.16(b).
SECTION 5.14 Tax Considerations. Either Party may take advantage of
------------------
tax considerations which benefit it and not the other Party. In the event that a
Party takes advantage of a tax consideration which benefits it and not the other
Party, no compensation to the other Party is required unless such action affects
Operating Profits or Losses negatively, in which case compensation shall be
provided to the other Party to make it whole.
SECTION 5.15 Co-Promotion Mechanism.
----------------------
(a) Sales by SCHERING. All sales of Co-Promotion Products in the Co-
-----------------
Promotion Territory shall be booked by SCHERING. SCHERING and MYRIAD shall
conduct Advertising and Detailing of each Co-Promotion Product in the Co-
Promotion Territory as contemplated by this Agreement. If, during the Term of
this Agreement, MYRIAD receives orders from customers for a Co-Promotion
Product, it shall refer such orders to SCHERING.
(b) Processing of Orders for Co-Promotion Products.
----------------------------------------------
(i) All orders for Co-Promotion Products received and accepted by
SCHERING during the Term of this Agreement shall be executed by SCHERING in
a reasonably timely manner
20.
consistent with the general practices applied by it in executing orders for
other pharmaceutical products sold by it.
(ii) SCHERING shall have the discretion to reject any order
received by it for a Co-Promotion Product; provided, however, that SCHERING
shall not reject such orders on an arbitrary basis, but only with
reasonable justification and consistent with the general policies applied
by it with respect to orders for other pharmaceutical products sold by it.
(iii) Each Party shall comply with all laws applicable to the
sale of a Co-Promotion Product by it.
SECTION 5.16 Termination of Co-Promotion.
---------------------------
(a) At the end of any calendar quarter prior to the fifth anniversary
of the first commercial sale of a Co-Promotion Product in the Co-Promotion
Territory, MYRIAD shall have the right, exercisable upon three (3) calendar
quarters prior written notice (the "Co-Promotion Termination Notice Period") to
SCHERING, to convert a Co-Promotion Product into a Royalty Bearing Product.
Upon the effectiveness of such conversion, such Co-Promotion Product shall
thereafter be treated as a Royalty Bearing Product for all purposes under this
Agreement, and any outstanding amount of any Deferred Payments with respect to
such Co-Promotion Product shall be forgiven as of such date. Not later than
thirty (30) days after the end of the Co-Promotion Termination Notice Period
(sixty (60) days if such date is the last day of the fourth calendar quarter of
any calendar year), SCHERING shall provide MYRIAD with a report summarizing what
the pro forma royalties payable with respect to sales of such Co-Promotion
Product in the Co-Promotion Territory would have been under this Agreement
during the Co-Promotion Termination Notice Period if such Co-Promotion Product
were a Royalty Bearing Product for such period. In the event that such pro
forma royalties are greater than the aggregate of the Equalization Payments paid
or payable by SCHERING during the Co-Promotion Termination Notice Period (before
giving effect to any reduction in any Equalization Payment for any Deferred
Payment amounts paid or deemed paid pursuant to the last sentence of Section
6.3) (the amount of such excess being referred to herein as the "Excess Royalty
Amount"), the Equalization Payment payable for the third quarter of the Co-
Promotion Termination Notice Period shall be accompanied by an amount equal to
the Excess Royalty Amount. Any payment to MYRIAD of any Excess Royalty Amount
shall be reduced (but not below zero) by the outstanding amount of any accrued
Equalization Credit.
(b) Upon ten (10) days notice to SCHERING, in the event of any good
faith disagreement regarding the safety of any Co-Promotion Product as set forth
in Section 5.13, MYRIAD shall have the right to convert such a Co-Promotion
Product into a Royalty Bearing Product. Upon the effectiveness of any such
conversion, such Co-Promotion Product shall thereafter be treated as a Royalty
Bearing Product for all purposes under this Agreement. Any dispute among the
Parties regarding any such conversion shall be subject to arbitration pursuant
to Section 13.2 hereof.
ARTICLE VI
PROFIT SHARING AND ROYALTIES
----------------------------
SECTION 6.1 Calculation of Co-Promotion Exercise Payment.
--------------------------------------------
(a) SCHERING Credits. SCHERING shall calculate and maintain records
----------------
of SCHERING Credits incurred by it in accordance with Exhibit A-1. Within thirty
(30) days of the date of the filing of the first Drug Approval Application for
each Potential Co-Promotion Product in any country in the Co-Promotion Territory
(the "Current Filing Date"), SCHERING shall provide MYRIAD with a calculation of
SCHERING Credits incurred over the period commencing on the Effective Date and
ending on the Current Filing Date, excluding any SCHERING Credits that were
included in the calculation of Current SCHERING Credits in connection with any
prior election by MYRIAD of a Co-Promotion Option hereunder ("Current SCHERING
Credits"), together with reasonably detailed supporting documentation. Such
Current SCHERING Credits shall not include any previously paid SCHERING Credits.
21.
(b) MYRIAD Credits. MYRIAD shall calculate and maintain records of
--------------
MYRIAD Credits incurred by it in accordance with Exhibit A-2. Within thirty (30)
days of the Current Filing Date, MYRIAD shall provide SCHERING with a
calculation of MYRIAD Credits incurred over the period commencing on the
Effective Date and ending on the Current Filing Date, excluding any MYRIAD
Credits that were included in the calculation of Current MYRIAD Credits in
connection with any prior exercise by MYRIAD of a Co-Promotion Option hereunder
("Current MYRIAD Credits"), together with reasonably detailed supporting
documentation. Such Current MYRIAD Credits shall not include any previously
paid MYRIAD Credits.
(c) Co-Promotion Exercise Payment. The Co-Promotion Exercise Payment
-----------------------------
with respect to each Co-Promotion Product shall be calculated as follows:
[ ]
SECTION 6.2 Share of Operating Profits or Losses.
------------------------------------
(a) Equal Sharing.
-------------
(i) Upon any election to Co-Promote a Potential Co-Promotion
Product made pursuant to Section 5.2, MYRIAD shall be entitled to share
equally with SCHERING in Operating Profits or Losses recognized from and
after the applicable Current Filing Date from sales of each Co-Promotion
Product in the Co-Promotion Territory. In order to exercise such option
with respect to any Co-Promotion Product, MYRIAD shall pay to SCHERING an
amount equal to the Co-Promotion Exercise Payment with respect to such Co-
Promotion Product not later than ten (10) Business Days following the date
that MYRIAD shall deliver a Co-Promotion Exercise Notice with respect to
such Co-Promotion Product. In the event that MYRIAD shall have failed to
make such payment with respect to such Co-Promotion Product within the
applicable time period, MYRIAD shall be deemed to have irrevocably waived
any right to share equally with SCHERING in Operating Profits or Losses
from sales of such Co-Promotion Product and shall share Operating Profits
or Losses from sales of such Co-Promotion Product pursuant to paragraph (b)
below.
(ii) The Co-Promotion Exercise Payment shall be payable in cash;
provided, however, that upon written notice to SCHERING given in
-------- -------
conjunction with MYRIAD's Co-Promotion Exercise Notice as set forth above,
MYRIAD shall have the option of paying up to fifty percent (50%) of the Co-
Promotion Exercise Payment (a "Deferred Payment") over a five (5) year
period as set forth below. Any such Deferred Payment shall initially bear
interest at a rate per annum equal to the "prime rate" as published in "The
Wall Street Journal" on the Business Day immediately preceding the date of
MYRIAD's Co-Promotion Exercise Notice plus one percent (1.0%). The
applicable interest rate with respect to any Deferred Payment shall be
reset on each anniversary of the date of MYRIAD's Co-Promotion Exercise
Notice to a rate per annum equal to the "prime rate" as published in "The
Wall Street Journal" on the Business Day immediately preceding such
anniversary date. Any such Deferred Payment, plus accrued and unpaid
interest thereon to the date of payment, shall be deducted (but not below
zero) from the Equalization Payments payable by SCHERING pursuant to
Section 6.3.
(iii) In the event that MYRIAD shall have failed to pay
(including any amounts deducted from Equalization Payments and deemed to
have been paid), the entire outstanding amount of any such Deferred
Payment, plus accrued and unpaid interest thereon to the date of payment,
by the end of such five (5) year period such Co-Promotion Product shall
thereafter constitute a Royalty Bearing Product for all purposes under this
Agreement, and all Deferred Payments shall be forgiven.
(b) Weighted Sharing. If MYRIAD shall have exercised its Co-Promotion
----------------
Option with respect to any Co-Promotion Product but shall not be entitled to
share equally with SCHERING in Operating Profits or Losses from sales of such
Co-Promotion Product pursuant to paragraph (a) above, MYRIAD's share of
Operating Profits or Losses from sales of such Co-Promotion Product shall be
calculated as follows:
[ ]
22.
Where "Additional MYRIAD Payment" shall mean any sum less than the Co-Promotion
Exercise Payment designated as an Additional MYRIAD Payment and paid to SCHERING
not later than the tenth (10th) Business Day following the date that MYRIAD
shall have delivered a Co-Promotion Exercise Notice with respect to such Co-
Promotion Product to SCHERING pursuant to Section 5.2.
(c) Adjustments. In the event that MYRIAD shall have failed (and
-----------
SCHERING not failed) in any calendar year to meet its expected Detailing effort
with respect to any Co-Promotion Product as set forth in the applicable
Commercialization Plan for such calendar year by more than five percent (5%),
MYRIAD's share of Operating Profits or Losses from sales of such Co-Promotion
Product shall be reduced as follows:
[ ]
Such reduction shall become effective at the beginning of the quarter
immediately following the end of such calendar year, and shall remain in effect
until the later to occur of (i) the end of the calendar year in which such
reduction shall have gone into effect and (ii) the JMC shall have determined,
after considering MYRIAD's Detailing effort in the preceding calendar year and
any other relevant considerations that MYRIAD may bring to the attention of the
JMC, to restore MYRIAD's share of Operating Profits or Losses to the share
determined pursuant to Section 6.2(a) or (b), as applicable.
SECTION 6.3 Co-Promotion Reports and Payments. Within thirty (30)
---------------------------------
days of the end of each calendar quarter and sixty (60) days of the end of the
fourth quarter of each full calendar year, commencing with the calendar quarter
in which the exercise of MYRIAD's Co-Promotion Option with respect to the
applicable Co-Promotion Product became effective, each Party shall report to
SCHERING and the JMC in a format to be mutually agreed to by the Parties, its
revenues and individual expense items (with appropriate supporting information)
involved in the computation of Operating Profits or Losses and recognized during
such quarter with respect to each such Co-Promotion Product; provided, however,
-------- -------
that the computation of Operating Profits or Losses for the quarter in which the
exercise of MYRIAD's Co-Promotion Option with respect to the applicable Co-
Promotion Product became effective shall include all Operating Profits or Losses
recognized with respect to such Co-Promotion Product from the applicable Current
Filing Date to the end of such quarter, whether or not such Operating Profits or
Losses were actually recognized in such quarter. Within fifteen (15) days after
receipt of such reports, SCHERING shall provide for each Co-Promotion Product
one financial statement in a format mutually agreed to by the Parties for the
Co-Promotion Territory to the JMC, and the JMC shall promptly direct the payment
to MYRIAD of any Equalization Payment due to MYRIAD with respect to each Co-
Promotion Product, or the booking of a credit to SCHERING in the event that any
Equalization Payment is due to SCHERING ("Equalization Credit"), which
-------------------
Equalization Credit shall be deducted from subsequent Equalization Payments
until the amount of accrued Equalization Credits shall be reduced to zero. In
the event that this Agreement shall terminate for any reason when there are
outstanding any accrued and unpaid Equalization Credits, the entire amount of
such outstanding accrued and unpaid Equalization Credits shall be due and
payable in cash ninety (90) days following receipt of notice by MYRIAD from
SCHERING of any such outstanding amounts. The reports and Equalization Payments
or Equalization Credits for each of the first three quarters of each fiscal year
may be based on estimated Operating Profits or Losses for such quarters to the
extent such estimates are included in such Party's books and records. The
reports and Equalization Payments or Equalization Credits for the fourth quarter
of each fiscal year may include reconciliation and year-end adjustments with
respect to previous quarters. Any payment to MYRIAD required by this Section
6.3 shall be made in any event within forty-five (45) days of the due date of
the receipt described in the first sentence of this paragraph. Any past due
amounts (with respect to overdue payments by SCHERING) and all accrued
Equalization Credits shall bear interest at a rate per annum equal to the
applicable interest rate then in effect with respect to any Deferred Payment in
respect of such Co-Promotion Product (or, if there shall at such date be no such
outstanding Deferred Payment, at the rate of interest that would then be in
effect pursuant to Section 6.2(a)(ii) had there been any outstanding Deferred
Payment in respect of such Co-Promotion Product as of such date), adjusted
annually as set forth in Section 6.2(a)(ii), until such amount is repaid. Any
payment to MYRIAD pursuant to this Section 6.3 shall be reduced (but not below
zero) by the outstanding amount of any accrued Equalization Credits and any
Deferred Payments plus, in each case, accrued and unpaid interest thereon to the
date of such payment.
SECTION 6.4 Term. The Parties shall share Operating Profits or
Losses hereunder with respect to each Co-Promotion Product in the Co-Promotion
Territory until each such Co-Promotion Product is permanently withdrawn from and
is no longer being sold in the Co-Promotion Territory or until either Party
ceases Co-Promotion activities as provided in Section 5.16 or 10.2 hereof.
23.
SECTION 6.5 Royalties.
---------
(a) (i) SCHERING shall pay to MYRIAD a royalty equal [ ]
subject to the following:
(ii) If a Royalty Bearing Product is sold in any country in which
MYRIAD does not have a valid MYRIAD Patent solely Controlled by MYRIAD,
providing coverage which would prevent the sale or development of such
Royalty Bearing Product by a Third Party, the royalty obligation set forth
in Section 6.5(a)(i) above with respect to [ ] in such country
shall be reduced to [ ], until MYRIAD is granted such valid and
enforceable Patent coverage of such Royalty Bearing Product in such
country.
(iii) If a Royalty Bearing Product is being sold in any country
in which MYRIAD has a valid MYRIAD Patent solely Controlled by MYRIAD,
providing coverage which would prevent the sale or development of such
Royalty Bearing Product by a Third Party, but with respect to which a Third
Party is entitled to receive royalties pursuant to Section 4.8 hereof, then
the royalty obligation set forth in Section 6.5(a)(i) above with respect to
[ ] in such country shall be reduced by [ ] of the
amount of the royalty payable to such Third Party, but not below [ ],
until such Third Party is no longer entitled to receive a royalty with
respect to such Royalty Bearing product in such country.
(b) (i) MYRIAD shall pay to SCHERING a royalty equal to [ ]
subject to the following:
(ii) If a MYRIAD Product is sold in any country in which SCHERING
does not have a valid SCHERING Patent solely Controlled by SCHERING,
providing coverage which would prevent the sale or development of such
Royalty Bearing Product by a Third Party, the royalty set forth in Section
6.5(b)(i) above with respect to [ ] in such country shall be
reduced to [ ], until SCHERING is granted such valid and
enforceable Patent coverage of such MYRIAD Product in such country.
(iii) If a Royalty Bearing Product is being sold in any country
in which SCHERING has a valid SCHERING Patent solely Controlled by
SCHERING, providing coverage which would prevent the sale or development of
such Royalty Bearing Product by a Third Party, but with respect to which a
Third Party is entitled to receive royalties pursuant to Section 4.8
hereof, then the royalty obligation set forth in Section 6.5(b)(i) above
with respect to [ ] in such country shall be reduced by [ ],
until such Third Party is no longer entitled to receive a royalty with
respect to such MYRIAD Product in such country.
(c) In the event a Party is receiving royalties under this Agreement
from any Royalty Bearing Product or MYRIAD Product sold in the form of a
combination product containing one or more active ingredients in addition to the
Royalty Bearing Product or MYRIAD Product, as the case may be, and if the full
composition of said combination product is not covered by a Patent Controlled by
the Party receiving royalties, Net Sales for such combination product will be
calculated by multiplying actual Net Sales of such combination product by the
fraction A/(A+B), where A is the invoice price of the Royalty Bearing Product or
MYRIAD Product if sold separately, and B is the total invoice price of any other
active component or components in the combination, if sold separately. If, on a
country-by-country basis, the other active component or components in the
combination are not sold separately in said country, Net Sales for the purpose
of determining royalties of the combination product shall be calculated by
multiplying actual Net Sales of such combination product by the fraction A/C,
where A is the invoice price of the Royalty Bearing Product or MYRIAD Product if
sold separately, and C is the invoice price of the combination product. If, on
a country-by-country basis, neither the Royalty Bearing Product or MYRIAD
Product nor the other active component or components of the combination product
are sold separately in said country, Net Sales for the purposes of determining
royalties of the combination product shall be determined by the Parties in good
faith on the basis of respective fair market values. If the full composition of
the combination product is itself covered by a Patent Controlled by the Party
receiving royalties (other than a Patent covering the manufacture, use,
importation, sale or offer for sale of said Human Therapeutic Product), the
provisions of this paragraph shall not apply to sales of said combination
product.
24.
(d) Except where expressly provided otherwise in this Agreement, all
royalties to a Party shall be paid, on a country-by-country basis, from the date
of the first commercial sale of each Royalty Bearing Product or MYRIAD Product,
as the case may be, in a particular country until the later of (i) ten (10)
years from the first commercial sale in such country and (ii) (A) with respect
to Royalty Bearing Products, the last to expire of any valid and enforceable
MYRIAD Patents or SCHERING Patents which has one or more Live Claims (to the
extent that, in the case of SCHERING Patents, such Live Claims claim inventions
made through the use of MYRIAD Technology, Genes or Interactive Proteins)
covering the manufacture, use, importation, sale or offer for sale of the
Royalty Bearing Product in such country, or (B) with respect to MYRIAD Products,
the last to expire of any valid and enforceable SCHERING Patents or MYRIAD
Patents which has one or more Live Claims (to the extent that, in the case of
MYRIAD Patents, such Live Claims claim inventions made through the use of
SCHERING Technology) covering the manufacture, use, importation, sale or offer
for sale of the MYRIAD Product in such country.
(e) Upon expiration of the royalty term for a Royalty Bearing Product
in a country as described above, SCHERING shall thereafter have an exclusive,
paid-up license to make, have made, use, sell, have sold offer to sell, and
import that Royalty Bearing Product in that country, and upon expiration of the
royalty term for a MYRIAD Product in a country as described above, MYRIAD shall
thereafter have an exclusive, paid-up license to make, have made, use, sell,
offer to sell, have sold and import that MYRIAD Product in that country.
SECTION 6.6 Sales by Sublicensees. In the event either Party,
---------------------
subject to the provisions of this Agreement, grants licenses or sublicenses to
others to make or sell Royalty Bearing Products or MYRIAD Products, such
licenses or sublicenses shall include an obligation for the licensee or the
sublicensee to account for and report its Net Sales of such Royalty Bearing
Products or MYRIAD Products on the same basis as if such sales were Net Sales by
the Party, and such Party shall pay royalties to the other Party at the
percentage rates specified in Section 6.5 on any and all compensation received
from such Sublicensees.
SECTION 6.7 Royalty Reports and Payments. A report summarizing the
----------------------------
Net Sales of any Royalty Bearing Products during the relevant quarter on a
country-by-country basis shall be delivered to the receiving Party within ninety
(90) days following the end of each calendar quarter for which royalties are due
from the selling Party. Such royalty report shall be in a format agreed to by
the Parties. Royalty payments under this Agreement shall be made to the
receiving Party or its designee quarterly within fifteen (15) days following the
date for the report in the first sentence of this paragraph.
SECTION 6.8 Payments. Any payments due under this Agreement shall be
--------
in U.S. dollars and made by check sent to the address of the receiving Party set
forth in Section 14.4 or by wire transfer to a designated bank account of the
receiving Party.
SECTION 6.9 Taxes. The Party receiving royalties shall pay any and
-----
all taxes levied on account of royalties it receives under this Agreement. Each
Party agrees to provide the other with all forms required under applicable laws
and regulations (including, in the case of royalty payments made from the United
States, an IRS Form 1001) in order that royalties received or paid under this
Agreement are covered by the benefits of the United States-Germany Income Tax
Treaty. Provided that each Party receives such forms and complies with any other
requirements for treaty protection and exemption from withholding under
applicable laws and regulations, each Party agrees not to withhold taxes on
royalties except to the extent required by subsequent laws or regulations. If
laws or regulations require that taxes be withheld, the selling Party will (i)
deduct those taxes from the remittable royalty, (ii) timely pay the taxes to the
proper taxing authority, and (iii) send proof of payment to the other Party
within thirty (30) days of receipt of confirmation of payment from the relevant
taxing authority. The selling Party agrees to take all lawful and reasonable
efforts to minimize such taxes to the other Party.
SECTION 6.10 Form of Payment. All payments due MYRIAD hereunder
shall be made in United States dollars, for MYRIAD's account, by wire transfer
to a bank in the United States designated in writing by MYRIAD; provided, that
--------
where payments in respect of Net Sales are based on Net Sales in non-U.S.
currencies, the amount of Net Sales and any deductions used to calculate Net
Sales, if any, shall be converted by SCHERING based on the average "bid" and
"asked" exchange rates provided by Reuters (or a different independent wire
service providing, if applicable, international spot exchange rates agreed to by
the Parties) prevailing in Frankfurt at 1:00 p.m., Frankfurt time, on the last
Business Day of each calendar quarter into Deutsche Marks (after January 1, 1999
into EUROs, if applicable) and then into United States dollars for the
applicable quarter.
25.
SECTION 6.11 Payments to or Reports by Affiliates. Any payment
------------------------------------
required under any provision of this Agreement to be made to either Party or any
report required to be made by any Party shall be made to or by an Affiliate of
that Party if designated in writing by that Party as the appropriate recipient
or reporting entity.
SECTION 6.12 No Overlapping Royalties. Notwithstanding any other
------------------------
provision of this Agreement, in no event shall any royalty provided for under
any Section of this Agreement be paid with respect to any sale of a Royalty
Bearing Product or MYRIAD Product to the extent a royalty has been paid pursuant
to any other Section of this Agreement with respect to such sale.
ARTICLE VII
TREATMENT OF CONFIDENTIAL INFORMATION
-------------------------------------
SECTION 7.1 Confidentiality.
---------------
(a) MYRIAD and SCHERING each recognize that the other's Confidential
Information constitutes highly valuable and proprietary confidential
information. Subject to the terms and conditions of Article IV with respect to
licenses and subject to the publication provisions in Section 7.2, MYRIAD and
SCHERING each agree that during the Term of this Agreement and for seven (7)
years thereafter, it will keep confidential, and will cause its Affiliates to
keep confidential, all Confidential Information of the other Party that is
disclosed to it, or to any of its Affiliates, pursuant to or in connection with
this Agreement. Neither MYRIAD nor SCHERING nor any of their respective
Affiliates shall use Confidential Information of the other Party for any purpose
whatsoever except as expressly permitted in this Agreement.
(b) MYRIAD and SCHERING each agree that any disclosure of the other's
Confidential Information to any officer, employee, consultant or agent of the
other Party or of any of its Affiliates shall be made only if and to the extent
necessary to carry out its responsibilities under this Agreement and shall be
limited to the maximum extent possible consistent with such responsibilities.
MYRIAD and SCHERING each agree not to disclose the other's Confidential
Information to any Third Parties under any circumstance without written
permission from the other Party, except as required in any patent application or
patent prosecution, prosecuting or defending litigation, conducting pre-clinical
or clinical trials, in any Drug Approval Application with respect to a Human
Therapeutic Product, Diagnostic Product or an Excluded Diagnostic Product, or as
otherwise required by law, and except as otherwise expressly permitted by this
Agreement. Each Party shall take such action, and shall cause its Affiliates to
take such action to preserve the confidentiality of each other's Confidential
Information as it would customarily take to preserve the confidentiality of its
own Confidential Information. Each Party, upon the other's request, will return
all the Confidential Information disclosed to it by the other Party pursuant to
this Agreement, including all copies and extracts of documents, within sixty
(60) days of the request upon the termination of this Agreement; provided, that
a Party may retain Confidential Information of the other Party relating to any
license or right to use Technology which survives such termination and one copy
of all other Confidential Information may be retained in inactive archives
solely for the purpose of establishing the contents thereof. Nothing in this
Article VII shall restrict any Party from using for any purpose any Confidential
Information independently developed by it during the course of the collaboration
hereunder, or from using Confidential Information that is specifically derived
from pre-clinical or clinical trials to carry out marketing, sales or
professional services support functions as is customary in the pharmaceutical
industry.
(c) MYRIAD and SCHERING each warrant that all of its employees, and
any consultants to such Party, participating in the Research Program, the Drug
Discovery and Early Development Program and the Development Program, or in the
Commercialization of Human Therapeutic Products, who shall have access to
Confidential Information of the other Party shall be bound by agreements to
maintain such information in confidence and not to use such information except
as allowed herein.
SECTION 7.2 Publication.
-----------
(a) Results obtained in the course of the Research Program, the Drug
Discovery and Early Development Program and, subject to subsection 7.2(b) below,
the Development Program may be submitted for
26.
publication by either Party hereto or its investigators, consultants or
contractors only following full protection of all intellectual property rights
in the results to the satisfaction of the JRSC, with respect to the Research
Program, DDMC, with respect to the Drug Discovery and Early Development Program,
and SCHERING, with respect to the Development Program. Each Party hereto shall
be responsible for the compliance of its investigators, consultants and
contractors with the provisions of this Section 7.2(a). After full protection of
such intellectual property rights, the JRSC, DDMC and SCHERING, as applicable,
shall determine the appropriate timing and content of any publication concerning
the results of the Research Program, the Drug Discovery and Early Development
Program and, subject to subsection 7.2(b) below, the Development Program, as the
case may be.
(b) Clinical trial results obtained in the course of the Development
Program may be published by either Party hereto or its investigators,
consultants or contractors only upon the prior prompt review and written
approval of SCHERING, which approval shall not be unreasonably withheld or
delayed. Each Party hereto shall be responsible for the compliance of its
investigators, consultants and contractors with the provisions of this Section
7.2(b).
SECTION 7.3 Publicity Review. Subject to the further provisions of
----------------
this Section 7.3, no Party shall originate any written publicity, news release,
or other announcement relating to this Agreement or to performance hereunder or
the existence of an arrangement between the Parties (collectively, "Written
Disclosure"), without the prior prompt review and written approval of the other,
which approval shall not be unreasonably withheld or delayed. Notwithstanding
the foregoing provisions of this Section 7.3, any Party may make any public
Written Disclosure it believes in good faith based upon the advice of counsel is
required by applicable law or any listing or trading agreement concerning its
publicly traded securities, provided that prior to making such Written
Disclosure, the disclosing Party shall provide the other Party with a copy of
the materials proposed to be disclosed and provide the receiving Party with an
opportunity to promptly review the proposed Written Disclosure. To the extent
that the receiving Party reasonably requests that any information in the
materials proposed to be disclosed be deleted, the disclosing Party shall
request confidential treatment of such information pursuant to Rule 406 of the
Securities Act of 1933 or Rule 26b-2 of the Securities Exchange Act of 1934, as
applicable (or any other applicable regulation relating to the confidential
treatment of information) so that there be omitted from the materials that are
publicly filed any information that the receiving Party reasonably requests to
be deleted. The terms of this Agreement and the may also be disclosed to (i)
government agencies where required by law, or (ii) Third Parties with the prior
written consent of the other Party, which consent shall not be unreasonably
withheld or delayed, so long as such disclosure is made under a binder of
confidentiality. Once a Written Disclosure is approved pursuant to this Section
7.3, either Party may publish all or a portion of such Written Disclosure
without requiring any further approval from the other Party hereunder.
SECTION 7.4 Disclosure of Inventions. Each Party shall promptly
------------------------
inform the other about all inventions in the Field that are conceived, made or
developed in the course of carrying out the Research Program by employees of, or
consultants to, either of them solely, or jointly with employees of, or
consultants to the other.
SECTION 7.5 Termination of Prior Agreement. This Agreement
------------------------------
supersedes the Confidentiality Agreement between Berlex Laboratories, Inc. and
MYRIAD dated as of April 15, 1996. All information exchanged between the Parties
under that Agreement shall be deemed Confidential Information and shall be
subject to the terms of this Article VII, and shall be included within the
definition of Technology.
SECTION 7.6 Use of Names. Neither Party shall use the name of the
------------
other Party in relation to this transaction in any public announcement, press
release or other public document without the written consent of such other
Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that either Party may use the name of the other Party in any document
filed with any regulatory agency or authority, including the FDA and the
Securities and Exchange Commission. MYRIAD agrees not to use the name "Schering"
in relation to this transaction in any press release, public announcement or
other public document without the approval of SCHERING, which approval shall not
be unreasonably withheld or delayed.
ARTICLE VIII
OWNERSHIP OF PATENT RIGHTS
--------------------------
27.
SECTION 8.1 Ownership. MYRIAD shall own all inventions made solely
by MYRIAD during the course of performance of the Research Program. SCHERING
shall own all inventions made solely by SCHERING during the course of
performance of the Research Program. The Parties shall jointly own all
inventions made jointly by the Parties during the course of performance of the
Research Program.
SECTION 8.2 Patent Prosecution.
------------------
(a) At its sole expense, MYRIAD shall be responsible, after due
consultation with SCHERING, for the filing, prosecution and maintenance of all
U.S. Patents relating to solely and jointly invented Genes and Interactive
Proteins and antibodies thereto exclusively licensed to SCHERING hereunder.
SCHERING shall reasonably cooperate with and assist MYRIAD, at MYRIAD's expense,
in connection with such activities at MYRIAD's request.
(b) At its sole expense, SCHERING shall be responsible, after due
consultation with MYRIAD, for the filing, prosecution and maintenance of all
Patents exclusively licensed by SCHERING hereunder, other than as set forth
above, and of all Patents relating to Human Therapeutic Products Developed by
SCHERING. MYRIAD shall reasonably cooperate with and assist SCHERING, at
SCHERING's expense, in connection with such activities at SCHERING's request.
SECTION 8.3 Third Party Patent Rights. (i) Except as expressly
provided in Section 11.1, neither Party makes any warranty with respect to the
validity, perfection or dominance of any Patent or other proprietary right or
with respect to the absence of rights in Third Parties which may be infringed by
the manufacture or sale of any Human Therapeutic Product. Each Party agrees to
bring to the attention of the other Party any Patent or Patent application it
discovers, or has discovered, and which relates to the rights of either Party
pursuant to this Agreement.
SECTION 8.4 Enforcement Rights.
------------------
(a) Notification of Infringement. If either Party learns of any
----------------------------
infringement or threatened infringement by a Third Party of the SCHERING Patents
or MYRIAD Patents, such Party shall promptly give written notice to the other
Party and shall provide such other Party with all available evidence of such
infringement.
(b) Enforcement.
-----------
(i) The Parties shall jointly determine the appropriate course of
action to pursue with respect to infringement of any of the MYRIAD Patents
covering the development, manufacture, use, importation, sale or offer for
sale of Human Therapeutic Products exclusively licensed to SCHERING
hereunder. The costs of such Patent enforcement shall be borne by
SCHERING. MYRIAD shall reasonably cooperate with and assist SCHERING, at
SCHERING's expense, in connection with such activities at SCHERING's
request. MYRIAD shall also have the right to join as a party plaintiff in
any suit prosecuted by SCHERING hereunder at MYRIAD's expense.
(ii) MYRIAD shall solely determine the appropriate course of
action to pursue with respect to infringement of any of the SCHERING
Patents exclusively licensed to MYRIAD hereunder pursuant to Section 4.9.
The costs of such Patent enforcement shall be borne by MYRIAD and MYRIAD
shall be entitled to retain any recoveries relating thereto. SCHERING
shall reasonably cooperate with and assist MYRIAD, at MYRIAD's expense, in
connection with such activities at MYRIAD's request. SCHERING shall also
have the right to join as a party plaintiff in any suit prosecuted by
MYRIAD hereunder at SCHERING's expense.
(iii) Each Party shall execute all necessary and proper
documents and take such actions as shall be appropriate to allow the other
Party to institute and prosecute infringement actions in accordance with
this Section at the expense of the Party instituting any such action.
(c) Recoveries. Any recoveries with respect to Patent infringement
----------
actions undertaken pursuant to Section 8.4(b)(i) shall be divided as follows:
28.
(i) SCHERING shall recover its expenses;
(ii) MYRIAD shall recover its expenses, if any;
(iii) MYRIAD shall receive a royalty percentage as specified in
Section 6.5(a) of this Agreement on any recovery received if such
infringement is related to a Royalty Bearing Product; and
(iv) SCHERING shall retain any remaining amount as revenue,
subject to any profit sharing arrangement with MYRIAD on any related Co-
Promotion Product(s).
(d) Settlement with a Third Party. The Party that is pursuing any
-----------------------------
action hereunder shall have the exclusive right to control settlement of a such
action; provided, however, that no settlement shall be entered into without the
written consent of the other Party if such settlement would materially and
adversely affect the interests of the other Party hereunder.
SECTION 8.5 Defense and Settlement of Third Party Claims.
--------------------------------------------
(a) Defense. If a Third Party asserts that a patent, trademark or
-------
other intangible right owned by it is infringed by the manufacture, use,
importation, sale or offer for sale of any Co-Promotion Product or Royalty
Bearing Product, SCHERING will be solely responsible for defending against any
such assertions at its cost and expense. MYRIAD shall have the right to give
SCHERING reasonable assistance in the defense of any such Third Party action or
proceeding, at its own expense.
(b) Damages. Any and all expenses, damages or payments, including any
-------
royalties, owed to a Third Party with respect to a claim defended under this
Section 8.5 shall be the responsibility of SCHERING; provided, however, that
such expenses, damages or claims shall be creditable as Commercialization Costs
to the extent incurred with respect to Co-Promotion Products in the Co-Promotion
Territory.
(c) Settlement with a Third Party. SCHERING shall have the right to
-----------------------------
control settlement of a Third Party claim; provided, however, no settlement may
be entered into without the written consent of the other Party if such
settlement would materially and adversely affect that other Party's interests
pursuant to this Agreement, which consent shall not be unreasonably withheld or
delayed.
ARTICLE IX
INFORMATION AND REPORTS
-----------------------
SECTION 9.1 Information and Reports During Development and
----------------------------------------------
Commercialization. In addition to the reports required under Sections 2.5 and
- -----------------
3.5, SCHERING and MYRIAD will disclose and make available to each other without
charge (other than reasonable duplicating, postage and related out-of-pocket
costs) all preclinical, clinical, regulatory, commercial, marketing, promotion,
pricing, sales and other significant information known by SCHERING or MYRIAD
directly concerning Genes, Interactive Proteins, Pathways or Human Therapeutic
Products (other than with respect to Royalty Bearing Products and MYRIAD
Products) at any time during the Term of this Agreement. Each Party will use
commercially reasonable efforts to disclose to the other Party all significant
information promptly after it is learned or its significance is appreciated.
Each Party shall own and maintain its own database of clinical trial data
accumulated from all clinical trials of products for which it was responsible
pursuant to this Agreement and of adverse drug event information for all such
products.
SECTION 9.2 Complaints. Each Party shall maintain a record of all
----------
complaints it receives with respect to any Human Therapeutic Product (other than
a MYRIAD Product). MYRIAD shall notify SCHERING of any complaint received by it
in sufficient detail and within five (5) Business Days after the event, and in
any event in sufficient time to allow SCHERING to comply with any and all
regulatory requirements imposed upon it in any country; provided, however, that
notice of any complaint involving a potential field alert report shall be
transmitted within one (1) Business Day.
29.
SECTION 9.3 Adverse Drug Experiences. The Parties recognize that
------------------------
SCHERING as the owner and holder of Drug Approval Applications may be required
to submit information and file reports to various governmental agencies on Human
Therapeutic Products under clinical investigation, Human Therapeutic Products
proposed for marketing or marketed Human Therapeutic Products. Information must
be submitted at the time of IND filing and at the time of a request for
Regulatory Approval of a new Human Therapeutic Product. In addition,
supplemental information must be provided on Human Therapeutic Products at
periodic intervals and adverse drug experiences must be reported at more
frequent intervals depending on the severity of the experience and whether or
not the event is unexpected. Consequently, MYRIAD agrees that, except with
respect to MYRIAD Products, it will:
(a) Provide to SCHERING for initial and/or periodic submission to
government agencies significant information on Human Therapeutic Products from
preclinical laboratory, animal toxicology and pharmacology studies, as well as
adverse drug experience reports from clinical trials and commercial experiences
with the Human Therapeutic Product;
(b) In connection with investigational Human Therapeutic Products,
report to SCHERING within three (3) days of the initial receipt of a report of
any unexpected or serious experience with the drug, if required for SCHERING to
comply with regulatory requirements; and
(c) In connection with marketed Human Therapeutic Products, report to
SCHERING within five (5) Business Days of the initial receipt of a report of any
adverse experience with the drug that is serious and unexpected or sooner if
required for SCHERING to comply with regulatory requirements. Serious adverse
experiences mean any experience that suggests a significant hazard,
contraindication, side effect or precaution, or any experience that is fatal or
life threatening, is permanently disabling, requires or prolongs impatient
hospitalization, or is a congenital anomaly, cancer, or overdose. An unexpected
adverse experience is one not identified in nature, specificity, severity or
frequency in the U.S. labeling for the drug.
MYRIAD also agrees that if it contracts with a Third Party for
research to be performed by such Third Party on the drug, MYRIAD agrees to
require such Third Party to report to SCHERING the information set forth in
subparagraph (a), (b), and (c) above.
SECTION 9.4 Records of Revenues and Expenses; Resolution of Audit
-----------------------------------------------------
Disputes.
- --------
(a) Each Party will maintain complete and accurate records which are
relevant to revenues, costs, expenses and payments under this Agreement and such
records shall be open during reasonable business hours for a period of three (3)
years from creation of individual records for examination at the other Party's
expense and not more often than once each year by an independent auditor, which
shall be a certified public accountant acceptable to both Parties, for the sole
purpose of verifying for the inspecting Party the correctness of calculations
and classifications of such revenues, costs, expenses or payments made under
this Agreement. In the absence of "Material Discrepancies" (defined as
discrepancies in excess of one percent of Operating Profits or Losses) in any
request for reimbursement resulting from such audit, the accounting expense
shall be paid by the Party requesting the audit. If Material Discrepancies do
result, the audited Party shall bear the accounting expense (up to the amount of
such discrepancy). Any records or accounting information received from the
other Party shall be Confidential Information for purposes of Article VII.
Results of any such audit shall be provided to both Parties, subject to Article
VII.
(b) If there is a dispute between the Parties following any audit
performed pursuant to Section 9.4(a), either Party may refer the issue (an
"Audit Disagreement") to an independent certified public accountant for
resolution. In the event an Audit Disagreement is submitted for resolution by
either Party, the Parties shall comply with the following procedures:
(i) The Party submitting the Audit Disagreement for resolution
shall provide written notice to the other Party that it is invoking the
procedures of this Section 9.4(b).
(ii) Within fifteen (15) Business Days of the giving of such
notice, the Parties shall jointly select a recognized international
accounting firm to act as an independent expert to resolve such
30.
Audit Disagreement.
(iii) The Audit Disagreement submitted for resolution shall be
described by the Parties to the independent expert, which description may
be in written or oral form, within ten (10) Business Days of the selection
of such independent expert.
(iv) The independent expert shall render a decision on the
matter as soon as practicable.
(v) The decision of the independent expert shall be final and
binding unless such Audit Disagreement involves alleged fraud, breach of
this Agreement or construction or interpretation of any of the terms and
conditions hereof.
(vi) All fees and expenses of the independent expert, including
any Third Party support staff or other costs incurred with respect to
carrying out the procedures specified at the direction of the independent
expert in connection with such Audit Disagreement, shall be borne equally
by the Parties, unless the independent expert shall find a Material
Discrepancy in excess of five percent of Operating Profits or Losses in the
applicable period, in which case the losing Party shall be solely
responsible for such fees and expenses.
ARTICLE X
TERM AND TERMINATION
--------------------
SECTION 10.1 Term. This Agreement shall commence as of the Effective
----
Date and, unless sooner terminated as provided herein and except as provided in
Section 10.2, the remaining provisions of this Agreement shall continue in
effect until the later of (a) the end of the Research Term and any surviving
Exclusive Pathway Options, (b) the date on which the Parties are no longer
entitled to receive a share of Operating Profits or Losses on any Human
Therapeutic Product or (c) the date on which neither Party is obligated to pay a
royalty to the other Party, as the case may be. Those provisions shall govern
the term of the rights and obligations specifically covered thereby.
SECTION 10.2 Reasons for Termination.
-----------------------
(a) Termination for Material Breach. Subject to the provisions of
-------------------------------
this Section 10.2, if either Party (the "Breaching Party") shall have committed
a Material Breach and such Material Breach shall remain uncured and shall be
continuing for a period of sixty (60) days following receipt of notice thereof
by the other Party (the "Non-Breaching Party"), then, in addition to any and all
other rights and remedies that may be available, the Non-Breaching Party shall
have the right to terminate this Agreement and/or the relevant licenses
hereunder effective upon the expiration of such sixty (60) day period. Any such
notice of alleged Material Breach by the Non-Breaching Party shall include a
reasonably detailed description of all relevant facts and circumstances
demonstrating, supporting and/or relating to each such alleged Material Breach
by the Breaching Party. Any good faith dispute among the Parties as to whether
a Material Breach shall have occurred or been cured shall be subject to
arbitration pursuant to Section 13.2 hereof. For purposes of this Agreement,
"Material Breach" shall mean the breach of or failure to perform, in a material
respect, a Party's material obligations under this Agreement. Without limiting
the foregoing and by way of example only, the term "Material Breach" shall be
deemed to include the failure of any Party in a material respect to meet such
Party's payment obligations hereunder and the unlicensed development or
commercialization of a Human Therapeutic Product. In the event of a Material
Breach which is specific to any product being developed or commercialized by a
Party hereunder, this Agreement may only be terminated with respect to the
specific Human Therapeutic Product or MYRIAD Product relevant to such Material
Breach. In no event shall the failure to gain Regulatory Approval for a Human
Therapeutic Product, in and of itself, be deemed to constitute a Material
Breach, unless such failure is a result of acts and events or conduct that is
otherwise a Material Breach. The Parties acknowledge and agree that failure to
exercise any right or option with respect to any Gene or Interactive Protein or
Human Therapeutic Product or to take any action expressly within the discretion
of a Party hereunder shall not be deemed to constitute a Material Breach
hereunder. Any dispute with respect to the existence of a Material Breach shall
be resolved in accordance with the provisions of Article XIII.
31.
(b) Termination Upon a Change of Control. In the event of a Change of
------------------------------------
Control of either Party (the "Changed Party"), the Changed Party shall deliver
promptly to the other Party (the "Non-Changed Party") written notice setting
forth the date and circumstances of the Change of Control and the identity of
the Acquiring Party. Upon receipt of such notice, or upon delivery to the
Changed Party of written notice that the Non-Changed Party has otherwise
determined that a Change of Control has occurred, and for a period of ninety
(90) days thereafter, the Non-Changed Party shall have the right to terminate
this Agreement in its entirety or with respect to one or more particular Genes
or Interactive Proteins effective upon the expiration of such ninety (90) day
period.
(c) Termination Upon Certain Events of Bankruptcy. In the event that
---------------------------------------------
either Party (the "Bankrupt Party") files for protection under United States
bankruptcy laws, makes an assignment for the benefit of creditors, appoints or
suffers appointment of a receiver or trustee over its property, files a petition
under any bankruptcy or insolvency act or has any such petition filed against it
which is not discharged within sixty (60) days of the filing thereof, then the
other Party (the "Non-Bankrupt Party") shall have the right to terminate this
Agreement effective upon the delivery of notice of such termination to the
Bankrupt Party.
SECTION 10.3 Effect of Termination by MYRIAD. In the event of a
termination of this Agreement by MYRIAD pursuant to Section 10.2(a) any
license(s) granted hereunder by MYRIAD pursuant with respect to such Co-
Promotion Product, Royalty Bearing Product or Human Therapeutic Product shall
cease.
SECTION 10.4 Remedies. If either Party shall fail to perform or
observe or otherwise breaches any of its material obligations under this
Agreement, in addition to any right to terminate all or any portion of this
Agreement, the non-defaulting Party may elect to obtain other relief and
remedies available under law.
SECTION 10.5 Survival. Each Party shall remain liable for all
obligations accruing prior to any termination of this Agreement but neither
Party shall have any obligation to make any milestone, royalty or other payment
that has not accrued prior to the effective date of such termination. In
addition, the rights and obligations of the Parties pursuant to Article I (to
the extent applicable to the interpretation of other surviving claims), Sections
4.6(b), 4.7, 4.8, 4.9, 4.10, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.11, 6.12, 7.1,
7.6, 8.1, 8.2, 8.4, 9.4, 10.2, 10.3, 10.4 and Articles XII, XIII and XIV hereof
shall survive any termination of this Agreement.
ARTICLE XI
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 11.1 Representations and Warranties.
------------------------------
(a) Each Party represents and warrants to the other Party that:
(i) Organization. It is a corporation duly organized, validly
------------
existing and in good standing under the laws of its jurisdiction of
incorporation.
(ii) Authority. It has full corporate power and authority to
---------
execute and deliver this Agreement and any other agreements and instruments
to be executed and delivered by such Party pursuant hereto and to
consummate the transactions contemplated hereby and thereby. All corporate
acts and other proceedings required to be taken to authorize such
execution, delivery and consummation have been duly and properly taken and
obtained.
(iii) Enforceability. This Agreement has been duly executed and
--------------
delivered by such Party and constitutes, and such other agreements and
instruments when duly executed and delivered by such Party will constitute,
legal, valid and binding obligations of such Party enforceable against such
Party in accordance with their respective terms.
(iv) Approvals, Consents, Etc. No approval, authorization,
------------------------
consent or other order or action of or filing with any court,
administrative agency or other governmental authority is required for the
execution and delivery by such Party of
32.
this Agreement and the execution and delivery by such Party of such other
agreements and instruments or the consummation by such Party of the
transactions contemplated hereby or thereby (other than contemplated
Regulatory Approvals).
(v) No Conflicts. None of the execution, delivery or
------------
performance of this Agreement or the other agreements and
instruments to be executed and delivered by such Party (A)
conflict with (or will conflict with) or result in a breach
under (or will result in a breach under) the charter
documents or any material contractual undertaking of such
Party or its Affiliates; or (B) conflict with (or will
conflict with) or result in a violation of (or will result
in a violation of) any of the laws of the jurisdiction of
incorporation of such Party.
(vi) Title. It has good and marketable title to or valid leases
-----
or licenses for, all of its properties, rights and assets necessary for the
fulfillment of its responsibilities under this Agreement, subject to no
claim of any Third Party other than the relevant lessors or licensors.
(b) MYRIAD represents and warrants to SCHERING that as of the date of
this Agreement:
(i) to the best of MYRIAD's knowledge, MYRIAD is the sole owner
of, or the exclusive worldwide licensee for, the MYRIAD Patents licensed to
SCHERING under this Agreement, free and clear of any liens or encumbrances
which would prevent or impair the grant of such license.
(ii) MYRIAD has the right and power to enter into this Agreement
and grant the licenses granted to SCHERING under this Agreement in the
manner set forth in this Agreement.
(iii) MYRIAD Patents sublicensed to SCHERING under this
Agreement are licensed to MYRIAD in a manner sufficient to permit MYRIAD to
grant the sublicenses to SCHERING hereunder.
(iv) MYRIAD has not assigned or conveyed any interest in the
MYRIAD Patents licensed to SCHERING under this Agreement, or entered into
any agreement or made any commitment, which is inconsistent with or in
derogation of the licenses granted to SCHERING hereunder.
(v) The execution, delivery and performance by MYRIAD of this
Agreement does not require the consent of any Third Party.
ARTICLE XII
INDEMNIFICATION
---------------
SECTION 12.1 Indemnification of MYRIAD by SCHERING. SCHERING shall
-------------------------------------
indemnify, defend and hold harmless MYRIAD and its Affiliates, and its
directors, officers, and employees, and their respective successors, heirs and
assigns (the "MYRIAD Indemnitees"), against any liability, damage, loss,
------------------
settlement, cost or expense (including reasonable attorneys' fees and expenses
of litigation) ("Losses") incurred by or imposed upon the MYRIAD Indemnitees, or
------
any one of them, in connection with any claims, suits, actions, administrative
proceedings, demands or judgments of Third Parties ("Claims"), including without
------
limitation personal injury and product liability matters (except in cases where
such Claims result from a Material Breach of this Agreement, gross negligence or
willful misconduct on the part of MYRIAD) arising out of the, manufacture,
promotion, sale or use by any person of any Human Therapeutic Product (other
than a MYRIAD Product) which is manufactured or sold by SCHERING or by an
Affiliate, sublicensee, distributor or agent of SCHERING.
SECTION 12.2 Indemnification of SCHERING by MYRIAD. MYRIAD shall
-------------------------------------
indemnify, defend and hold harmless SCHERING and its Affiliates and its
respective directors, officers, and employees, and their respective successors,
heirs and assigns (the "SCHERING Indemnitees"), against any losses incurred by
--------------------
or imposed upon the SCHERING Indemnitees, or any one of them, in connection with
any Claims, including without limitation claims of suppliers and MYRIAD
employees in the case of clause (a) below and personal injury and product
liability matters in the case of clause (b) below (except in cases where such
Claims result from a Material Breach of this Agreement, gross negligence or
willful misconduct on the part of SCHERING), arising out of (a) any actions of
MYRIAD and its directors, officers, employees and agents and their respective
successors, heirs and
33.
assigns in the performance of the Research Program, or (b) the manufacture,
promotion, sale or use by any person of any Diagnostic Product or MYRIAD Product
which is manufactured or sold by MYRIAD or an Affiliate, sublicensee,
distributor or agent of MYRIAD (other than SCHERING or any Affiliate of
SCHERING).
SECTION 12.3 Notice, Etc. Each MYRIAD Indemnitee and SCHERING
Indemnitee (each, an "Indemnitee") agrees to give the indemnifying Party prompt
written notice of any Claim, for which such Indemnitee intends to assert a right
to indemnification under this Agreement; provided, however, that failure to give
such notification shall not affect the Indemnitee's entitlement to
indemnification hereunder except to the extent that the indemnifying Party shall
have been prejudiced as a result of such failure. The indemnifying Party shall
have the sole right (but not the obligation) to defend, settle or otherwise
dispose of any Claim for which the Indemnitee intends to assert a right to
indemnification under this Agreement as contemplated in the preceding sentence
on such terms as the indemnifying Party, in its sole discretion, shall deem
appropriate if and so long as the indemnifying Party has recognized in a written
notice to the Indemnitee its obligation to indemnify the Indemnitee for any
Losses relating to such Claim; providing, however, that the indemnifying Party
shall obtain the written consent of the Indemnitee prior to ceasing to defend,
settling or otherwise disposing of any Claim if as a result thereof the
Indemnitee would become subject to injunctive or other equitable relief that
could reasonably be expected to have a material adverse effect on the business
of the Indemnitee in any nonmonetary manner.
ARTICLE XIII
DISPUTE RESOLUTION
------------------
SECTION 13.1 Senior Officials. The Parties recognize that a bona
fide dispute as to certain matters may from time to time arise during the Term
of this Agreement which relate to either Party's rights and/or obligations
hereunder. It is the objective of the Parties to establish procedures to
facilitate the resolution of disputes arising under this Agreement in an
expedient manner by mutual cooperation. To accomplish this objective, the
Parties agree to follow the procedures set forth in this Article XIII if and
when a dispute arises under this Agreement. In the event of the occurrence of
such a dispute, either Party may, by notice to the other Party, have such
dispute referred to their respective senior officials designated below or their
successors, for attempted resolution by good faith negotiations within thirty
(30) days after such notice is received. Said designated senior officials are as
follows:
For SCHERING: President, Berlex Biosciences,
a division of Berlex Laboratories, Inc.,
an Affiliate of SCHERING
For MYRIAD: President, Myriad Genetics, Inc.
In the event the designated senior officials are not able to resolve
such dispute within the thirty (30) day period.
SECTION 13.2 Arbitration. In the event that the Parties cannot
resolve any dispute hereunder as set forth above, other than as provided in
Section 2.1(f), the Parties shall submit the matter to arbitration as provided
herein. Binding arbitration shall be conducted in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The arbitration panel
shall be composed of three arbitrators, one of whom shall be chosen by SCHERING,
one by MYRIAD and the third by the two arbitrators so chosen. If both or either
of MYRIAD or SCHERING fails to choose an arbitrator or arbitrators within
fourteen (14) days after receiving notice of commencement of arbitration or if
the two arbitrators fail to choose a third arbitrator within fourteen (14) days
after their appointment, then the President of the New York office of the
American Arbitration Association shall, upon the request of both or either of
the Parties to the arbitration, appoint the arbitrator or arbitrators required
to complete the board.
(a) Exchange of Proposals. Within ten (10) days of the appointment of
---------------------
the full arbitration panel, the Parties shall exchange documents setting forth
their final detailed proposals for resolution of the matter in dispute, together
with a brief or other written memorandum supporting the merits of their final
proposal. The arbitration panel shall promptly convene a hearing in New York,
New York, at which time each Party shall have an
34.
agreed upon time to argue and present witnesses in support of its final
proposal.
(b) Selection of Final Proposal. The arbitration panel shall select
---------------------------
the proposal which most closely reflects a commercially reasonable
interpretation of the terms of this Agreement as the way to resolve the matter.
In making their selection, the arbitrators shall not modify the terms or
conditions of either Party's final proposal nor shall the arbitrators combine
provisions from both final proposals. In making their selection, the
arbitrators shall consider the terms and conditions of this Agreement, the
relative merits of the final proposals, and the written and oral arguments of
the Parties. In the event the arbitrators seek the guidance of the law of any
jurisdiction, the law of the State of New York shall govern.
(c) Arbitration Regarding Material Breach. In the event any
-------------------------------------
arbitration shall be conducted hereunder pursuant to Section 10.2(a) with
respect to whether a Material Breach shall have occurred or been cured, the
authority of the arbitration panel shall be limited to the specific question of
determining whether such Material Breach shall have occurred or been cured, and,
notwithstanding any additional matters that may be set forth in either Party's
proposal, the arbitration panel shall not be empowered to make any other
decision or award any relief or remedy. In the event that the arbitration panel
shall determine that such Material Breach shall have occurred the Breaching
Party shall be entitled to cure such Material Breach within sixty (60) days
following the arbitration panel's decision and if not so cured within the
applicable time period, the Non-Breaching Party shall be entitled to terminate
this Agreement and/or the relevant license hereunder pursuant to Section
10.2(a).
(d) Notification of Decision. The arbitrators shall make their
------------------------
decision known to both Parties as quickly as possible by delivering written
notice of their decision to both Parties. The Parties shall agree in writing to
comply with the proposal selected by the arbitration panel within five (5) days
of receipt of such selection. The decision of the arbitrators shall be final
and binding on the Parties, and specific performance may be ordered by any court
of competent jurisdiction.
(e) Costs. The Parties shall bear their own costs in preparing for
-----
the arbitration. The costs of the arbitrators shall be equally divided between
the Parties.
ARTICLE XIV
MISCELLANEOUS
-------------
SECTION 14.1 No Agency. Nothing contained in this Agreement or the
---------
other agreements and instruments to be executed and delivered by the Parties
hereto shall be deemed to constitute MYRIAD or any of its Affiliates as agent or
representative of SCHERING for any purpose, or constitute SCHERING or any of its
Affiliates as agent or representative of MYRIAD for any purpose. The status of
each of the Parties hereto with respect to the transactions contemplated by this
Agreement is that of an independent contracting party acting for its own
account.
SECTION 14.2 Expenses. Except as otherwise specifically provided in
--------
this Agreement, each Party will pay its own expenses incident to this Agreement
and the transactions contemplated hereby, including legal and other fees and
disbursements.
SECTION 14.3 Binding Effect. This Agreement shall be binding upon
--------------
and inure to the benefit of each Party and its successors and permitted assigns
upon the execution thereof by the Parties.
SECTION 14.4 Notices. Notices hereunder shall be in writing and
-------
shall be delivered by telecopier, telex, international cable, air courier or air
mail, postage prepaid, as follows:
To SCHERING: Schering Aktiengesellschaft
13342 Berlin, Germany
Telecopier: 011-49-30-4681-4086
Attention: Legal Department
35.
With copies to: Berlex Laboratories, Inc.
340 Changebridge Road
Montville, NJ 07045-1000
Telecopier: (973) 276-2000
Attention: Vice President, Law
and
Berlex Biosciences
Division of Berlex Laboratories, Inc.
15049 San Pablo Avenue
P.O. Box 4099
Richmond, CA 94804-0099
Telecopier: (510) 262-7095
Attention: General Counsel
To MYRIAD:
Myriad Genetics, Inc.
320 Wakara Way
Salt Lake City, UT 84108
Telecopier: (801) 584-3640
Attention: President
With a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C.
One Financial Center
Boston, MA 02111
Telecopier: (617) 542-2241
Attention: Jonathan Kravetz, Esq.
Either Party may designate any other address for notices hereunder by
written notice to the other Party given in accordance with this Section 14.4 at
least ten (10) days prior to the effective date of such change. Notices shall
be deemed given: (i) when delivered, in the case of personal delivery; or (ii)
on the date transmitted, in the case of a telecopy, as evidenced by a dated
confirmation report generated by the sending telecopy machine indicating
successful transmission to the recipient's telecopier number.
SECTION 14.5 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to either Party. Upon such determination that any term or other
provision hereof is invalid, illegal or incapable of being enforced, the Parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in an acceptable
manner to the extent that the transactions contemplated hereby are fulfilled to
the extent possible.
SECTION 14.6 Cooperation. The Parties shall cooperate with one
-----------
another in signing such documents and instruments and taking such other
reasonable and lawful action as may be necessary or appropriate in performing
and carrying out the terms of this Agreement.
SECTION 14.7 Amendments and Waivers. The Parties hereto may, by
----------------------
written agreement signed by each Party, modify any of the covenants or
agreements or extend the time for the performance of any of the obligations
contained in this Agreement. Any Party hereto may waive, by written instrument
signed by such Party, any inaccuracies in the representations and warranties of
the other Party or compliance by another Party with any of its obligations
contained in this Agreement. This Agreement may be amended only by written
instrument signed by the Parties hereto and any waiver relating to this
Agreement must be in writing signed by the Party granting such waiver.
SECTION 14.8 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
36.
SECTION 14.9 Entire Agreement. This Agreement, together with the
----------------
exhibits hereto, and the agreements and instruments delivered pursuant hereto,
contain the entire agreement between the Parties hereto, and supersede all prior
agreements and undertakings between the Parties hereto relating to the subject
matter hereof or to any other subject or proposed transaction. No representation
or warranty shall be deemed to have been made herein except for those
representations and warranties expressly made herein.
SECTION 14.10 Headings. The section headings contained in this
--------
Agreement are included for convenience only and form no part of the agreement
between the Parties.
SECTION 14.11 Assignment and Successors. This Agreement may not be
-------------------------
assigned by either Party, except that each Party may assign this Agreement and
the rights, obligations and interests of such Party, in whole or in part, to any
of its Affiliates which are more than 50% owned by such Party or which own more
than 50% of the voting stock of such Party, or to any purchaser of all or
substantially all of its assets or to any successor corporation resulting from
any merger or consolidation of such Party with or into such corporations.
SECTION 14.12 Force Majeure. Neither SCHERING nor MYRIAD shall be
-------------
liable for failure of or delay in performing obligations set forth in this
Agreement, and neither shall be deemed in breach of its obligations, if such
failure or delay is due to natural disasters or any causes beyond the reasonable
control of SCHERING or MYRIAD. In event of such force majeure, the Party
affected thereby shall use reasonable efforts to cure or overcome the same and
resume performance of its obligations hereunder.
SECTION 14.13 Parties in Interest. Except as provided in Article
-------------------
XII, nothing in this Agreement, express or implied, is intended to confer on any
person or entity other than the Parties hereto and their respective permitted
sublicensees and assignees any rights or remedies under or by virtue of this
Agreement, and no person or entity shall assert any rights as a Third Party
beneficiary hereunder.
SECTION 14.14 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of New York without regard to
New York's choice of law provisions other than those directing the application
of New York law.
SECTION 14.15 Further Assurances. The Parties agree to duly execute
------------------
and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including,
without limitation, the filing of such additional assignments, agreements,
documents and instruments, that may be necessary or as any other Party hereto
may at any time and from time to time reasonably request in connection with this
Agreement to carry out more effectively the provisions and purposes of, or to
better assure and confirm unto such other Party its rights and remedies under,
this Agreement.
SECTION 14.16 Bankruptcy. All rights and licenses granted under or
----------
pursuant to this Agreement are, and shall otherwise be, deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101(52) of the U.S. Bankruptcy
Code. The Parties to this Agreement shall retain and may fully exercise all of
their respective rights and elections under the U.S. Bankruptcy Code. The
Parties further agree that, in the event of the commencement of bankruptcy
proceeding by or against a party licensor under the U.S. Bankruptcy Code, the
licensee shall be entitled to a complete duplicate of (or complete access to, as
appropriate) any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession, shall be
promptly delivered to the licensee (a) upon any such commencement of a
bankruptcy proceeding upon written request therefor by the licensee, unless the
licensor elects to continue to perform all of its obligations under this
Agreement, or (b) if not delivered under (a) above, upon the rejection of the
Agreement by or on behalf of the licensor upon written request therefor by the
licensee, provided, however, that upon the licensor's (or its successor's)
written notification to the licensee that it is again willing and able to
perform all of its obligations under this Agreement, the licensee shall promptly
return all such tangible materials to the licensor, but only to the extent that
the licensee does not require continued access to such materials to enable the
licensee to perform its obligations under this Agreement.
SECTION 14.17 Ambiguities. Ambiguities, if any, in this Agreement
-----------
shall not be construed against any Party, irrespective of which Party may be
deemed to have authored the ambiguous provision.
37.
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed on its behalf by its duly authorized representative.
SCHERING AKTIENGESELLSCHAFT
By: /s/ Professor Stock
-----------------------------------------------
Name: Prof. Stock
Title: Member of Executive Board of Directors
By: /s/ Dr. Kapp
-----------------------------------------------
Name: Dr. Kapp
Title: Head of Strategic Business
Unit-Therapeutics
MYRIAD GENETICS, INC.
By: /s/ Peter D. Meldrum
-----------------------------------------------
Name: Peter D. Meldrum
Title: President & C.E.O.
By:
-----------------------------------------------
Name:
Title:
38.
EXHIBIT A-1
-----------
SCHERING CREDITS
[
].
A-1-1
EXHIBIT A-2
-----------
MYRIAD CREDITS
[
].
A-2-1