CONFORMED COPY
GLOBAL PRINCIPLES AGREEMENT
between
WARNER-LAMBERT COMPANY
and
GLAXO HOLDINGS p.l.c.
______________________________
Dated as of December 10, 1993
______________________________
TABLE OF CONTENTS
PRELIMINARY STATEMENT
ARTICLE I
Definitions
Page
----
SECTION 1.01. Definitions. . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions. . . . . . . . . . 10
SECTION 1.03. Statutory Provisions . . . . . . . . 11
SECTION 1.04. Schedules. . . . . . . . . . . . . . 11
ARTICLE II
Closing
SECTION 2.01. Closing. . . . . . . . . . . . . . . 11
SECTION 2.02. Action at the Closing of This
Agreement. . . . . . . . . . . . . 12
SECTION 2.03. Other Action in Respect of
U.S. Partnership . . . . . . . . . 12
SECTION 2.04. Subsequent Closings. . . . . . . . . 13
ARTICLE III
Management of JV Entities; Funding
SECTION 3.01. General Manager. . . . . . . . . . . 13
SECTION 3.02. Governing Boards; Membership . . . . 13
SECTION 3.03. Responsibility of the Governing
Boards . . . . . . . . . . . . . . 14
SECTION 3.04. Actions of the Governing Boards. . . 15
SECTION 3.05. Meetings of the Governing
Boards; Notice; Quorum . . . . . . 15
SECTION 3.06. Deadlock . . . . . . . . . . . . . . 15
SECTION 3.07. Subcommittees of the Governing
Boards . . . . . . . . . . . . . . 16
SECTION 3.08. Development Committees . . . . . . . 16
SECTION 3.09. Removal of Representatives . . . . . 17
SECTION 3.10. No Remuneration. . . . . . . . . . . 17
SECTION 3.11. Other Positions of Representatives . 17
SECTION 3.12. Annual Operating Plan. . . . . . . . 17
SECTION 3.13. Funding. . . . . . . . . . . . . . . 18
SECTION 3.14. Deliberations. . . . . . . . . . . . 18
SECTION 3.15. Reserved Matters . . . . . . . . . . 18
ARTICLE IV
Operations; JV Entities
SECTION 4.01. General. . . . . . . . . . . . . . . 18
SECTION 4.02. Establishment of Other
JV Entities. . . . . . . . . . . . 19
SECTION 4.03. Form and Structure of JV Entities. . 19
SECTION 4.04. Management of JV Entities. . . . . . 20
SECTION 4.05. Operations To Be Conducted in
Accordance with Annual Operating
Plan and Direction of Governing
Board. . . . . . . . . . . . . . . 20
ARTICLE V
JV Products
SECTION 5.01. General. . . . . . . . . . . . . . . 21
SECTION 5.02. Ranitidine Products in the
United States . . . . . . . . . . 21
SECTION 5.03. Other Products and/or
Other Countries. . . . . . . . . . 22
SECTION 5.04. Right of First Refusal . . . . . . . 25
SECTION 5.05. Glaxo Marketing Rights . . . . . . . 27
SECTION 5.06. Licenses and Services . . . . . . . 29
SECTION 5.07. Representations and Warranties . . . 32
SECTION 5.08. Non-Compete . . . . . . . . . . . . 33
SECTION 5.09. Japan . . . . . . . . . . . . . . . 34
ARTICLE VI
Related Transactions
SECTION 6.01. Development. . . . . . . . . . . . . 34
SECTION 6.02. Ranitidine OTC; Ownership of NDA;
Milestone Payments . . . . . . . . 35
SECTION 6.03. Services To Be Provided by W-L to
U.S. Partnership in Respect of
Ranitidine OTC Products. . . . . . 35
SECTION 6.04. Other Services To Be Provided
by W-L . . . . . . . . . . . . . . 35
SECTION 6.05. Supply . . . . . . . . . . . . . . . 36
SECTION 6.06. Manufacture of JV Products . . . . . 36
SECTION 6.07. Financial Information; Audit . . . . 37
SECTION 6.08. U.S. Export Controls/
International Boycott. . . . . . . 37
SECTION 6.09. Technology . . . . . . . . . . . . . 38
ARTICLE VII
Further Covenants of W-L
SECTION 7.01. Allocation of Resources. . . . . . . 38
SECTION 7.02. W-L Affiliates . . . . . . . . . . . 38
SECTION 7.03. Safety Information . . . . . . . . . 38
SECTION 7.04. Approvals and Consents . . . . . . . 39
SECTION 7.05. Use of JV Regulatory Documentation . 39
SECTION 7.06. Tax Matters. . . . . . . . . . . . . 39
SECTION 7.07. Further Assurances . . . . . . . . . 39
ARTICLE VIII
Further Covenants of Glaxo
SECTION 8.01. Information Relating to Potential
JV Products . . . . . . . . . . . 40
SECTION 8.02. Regulatory. . . . . . . . . . . . . 40
SECTION 8.03. Glaxo Affiliates. . . . . . . . . . 40
SECTION 8.04. Safety Information. . . . . . . . . 40
SECTION 8.05. Approvals and Consents. . . . . . . 41
SECTION 8.06. Use of JV Regulatory Documentation. 41
SECTION 8.07. Tax Matters . . . . . . . . . . . . 41
SECTION 8.08. Further Assurances. . . . . . . . . 42
ARTICLE IX
Representations and Warranties of W-L
SECTION 9.01. Organization; Good Standing . . . . 42
SECTION 9.02. Authority; No Violation . . . . . . 42
SECTION 9.03. Certificate of Incorporation
and By-Laws . . . . . . . . . . . 43
SECTION 9.04. Certain Litigation. . . . . . . . . 43
SECTION 9.05. Compliance. . . . . . . . . . . . . 43
SECTION 9.06. Finder. . . . . . . . . . . . . . . 44
SECTION 9.07. Transactions Contemplated by W-L
Relevant Agreements . . . . . . . 44
ARTICLE X
Representations and Warranties of Glaxo
SECTION 10.01. Organization; Good Standing . . . . 44
SECTION 10.02. Authority; No Violation . . . . . . 45
SECTION 10.03. Certificate of Incorporation and
Memorandum and Articles of
Association . . . . . . . . . . . 46
SECTION 10.04. Intellectual Property Rights. . . . 46
SECTION 10.05. Certain Litigation. . . . . . . . . 47
SECTION 10.06. Product Liability . . . . . . . . . 47
SECTION 10.07. Compliance. . . . . . . . . . . . . 48
SECTION 10.08. Finder. . . . . . . . . . . . . . . 48
SECTION 10.09. Glaxo Regulatory Documentation. . . 48
SECTION 10.10. Transactions Contemplated by Glaxo
Relevant Agreements . . . . . . . 48
ARTICLE XI
Conditions to Closing
SECTION 11.01. Certain Action. . . . . . . . . . . 49
SECTION 11.02. Governmental Approvals and
Consents. . . . . . . . . . . . . 49
SECTION 11.03. Representations and Warranties. . . 49
SECTION 11.04. Performance of Covenants. . . . . . 50
SECTION 11.05. Authorization of Agreements . . . . 50
SECTION 11.06. Operative Documents . . . . . . . . 51
SECTION 11.07. Certificate of Compliance . . . . . 51
ARTICLE XII
Transfer of JV Interest;
Permitted Transfers
SECTION 12.01. Limitation on Right To Transfer
Parties' Interests. . . . . . . . 51
SECTION 12.02. Permitted Transfers . . . . . . . . 51
SECTION 12.03. Change of Control . . . . . . . . . 53
ARTICLE XIII
Indemnification
SECTION 13.01. Indemnification by the JV
Entities. . . . . . . . . . . . . 55
SECTION 13.02. Indemnification by W-L. . . . . . . 56
SECTION 13.03. Indemnification by Glaxo. . . . . . 56
SECTION 13.04. Indemnification Generally . . . . . 57
SECTION 13.05. Survival of Representations and
Warranties. . . . . . . . . . . . 58
ARTICLE XIV
Term and Termination
SECTION 14.01. Term of Agreement . . . . . . . . . 59
SECTION 14.02. Ranitidine OTC Not Approved . . . . 59
SECTION 14.03. Liquidation; Breach; Optional
Termination . . . . . . . . . . . 61
SECTION 14.04. Continued Arrangements. . . . . . . 63
SECTION 14.05. Winding Up and Liquidation. . . . . 64
SECTION 14.06. Survival of Rights. . . . . . . . . 64
ARTICLE XV
General
SECTION 15.01. Expenses. . . . . . . . . . . . . . 64
SECTION 15.02. Assignment and Binding Effect . . . 65
SECTION 15.03. Inability To Agree upon Value . . . 65
SECTION 15.04. Corporate Names . . . . . . . . . . 65
SECTION 15.05. Governing Law; Jurisdiction;
Consent to Service of
Process; Agent for Service. . . . 65
SECTION 15.06. Notices . . . . . . . . . . . . . . 67
SECTION 15.07. Parties in Interest . . . . . . . . 68
SECTION 15.08. Press Releases. . . . . . . . . . . 68
SECTION 15.09. Headings. . . . . . . . . . . . . . 68
SECTION 15.10. Entire Agreement; Amendment;
Severability; Termination
of Existing Arrangements. . . . . 68
SECTION 15.11. Waiver and Compliance . . . . . . . 69
SECTION 15.12. Confidentiality . . . . . . . . . . 69
SECTION 15.13. Specific Enforcement. . . . . . . . 70
SECTION 15.14. Counterparts. . . . . . . . . . . . 70
GLOBAL PRINCIPLES AGREEMENT dated as of December 10, 1993 (the
'Agreement'), by and between WARNER-LAMBERT COMPANY, a Delaware corporation
('W-L') and GLAXO HOLDINGS p.l.c., a company incorporated in England and Wales
('Glaxo').
PRELIMINARY STATEMENT
W-L is engaged in the non-prescription consumer health care products
business. Glaxo or its Affiliates own certain rights in respect of the
pharmaceutical compound Ranitidine, which is currently marketed in prescription
form under the trademark Zantac'r'. W-L and Glaxo desire to agree upon certain
principles for the development and marketing of Ranitidine Products and the
development and marketing of certain other consumer health care products,
initially in the United States and at future dates in other countries throughout
the world. While the specific form of the joint ventures to be implemented may
vary in different countries, it is the intention of the Parties by this
Agreement to agree upon certain principles which will govern the worldwide
strategic development and marketing of all such products.
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties herein contained, and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The following capitalized terms shall have the
following definitions:
'Affiliate' with respect to any Person, shall mean any other Person
controlling, controlled by or under direct or indirect common control with such
Person. A Person shall be deemed, for the purposes of this Agreement, to control
a corporation (or other entity) if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation (or other entity), whether through the ownership of
voting securities, by contract or otherwise. For the purposes of this Agreement,
a JV Entity shall not be deemed to be an Affiliate of W-L or Glaxo.
'Business Day' shall mean a day of the year in which banks are not required
or authorized to close in New York City or in the City of London.
'Closing Documents' shall mean this Agreement, the Development Agreement,
the Partnership Agreement, the Ranitidine OTC License Agreement, the Ranitidine
Rights Agreement, the Standstill Agreement and the W-L Services Agreement.
'Development Agreement' shall mean the Development Agreement to be executed
at the Closing of this Agreement among Glaxo Inc., W-L and the U.S. Partnership
as the same may be amended or modified from time to time.
'FDA' shall mean the United States Federal Food and Drug Administration or
any successor agency of the United States.
'FDCA' shall mean the United States Federal Food, Drug and Cosmetic Act
approved on June 25, 1938, as amended and supplemented.
'Fully Allocated Cost' shall mean all costs, including materials, direct
and indirect labor, services and an appropriate allocation of fixed and variable
overhead expenses, but excluding any intercompany profits relating thereto, the
determination of which shall, in respect of manufacturing, be in accordance with
Schedule 1.01(a), and shall otherwise be as agreed between the Parties or their
Affiliates in the relevant Operative Document or otherwise.
'Glaxo Inc.' shall mean Glaxo Inc., a North Carolina corporation, which is
an indirect wholly owned Affiliate of Glaxo.
'Glaxo OTC' shall mean Glaxo OTC Inc., a Delaware corporation, which is an
indirect wholly owned Affiliate of Glaxo.
'Glaxo Participant' shall mean, in respect of each JV Entity, Glaxo or such
direct or indirect wholly owned Affiliate of Glaxo as may from time to time be
the partner or other equity participant in such JV Entity in accordance with
this Agreement.
'Glaxo Products' shall mean, as at the Closing of this Agreement, Zantac in
the United States, and shall also have the meanings set forth in Section 5.07.
'Glaxo Regulatory Documentation' shall mean all regulatory documents,
clinical studies and tests in the possession or control of Glaxo or any of its
Affiliates relating to a particular product or compound including, without
limitation, all new drug applications, abbreviated new drug applications, drug
master files, correspondence with appropriate regulatory agencies (registrations
and licenses, regulatory drug lists, advertising and promotion documents)
adverse event files, complaint files and manufacturing records but excluding
proprietary chemical data.
'Glaxo Services' shall mean Glaxo Services Inc., a Nevada corporation,
which is an indirect wholly owned Affiliate of Glaxo.
'Going Concern Value' shall mean the value of a non-prescription consumer
health care product business, or an interest therein as the case may be, as if
such business were freely tradeable in the open market (and, for the avoidance
of doubt, taking into consideration any continuing arrangements pursuant to
Section 14.04 hereof). Such valuation will not reflect either a premium for
control or a discount for lack of marketability. The primary basis for arriving
at such valuation will be commonly employed valuation multiples of selected
non-prescription consumer health care product businesses generally deemed
comparable to such business.
'Governing Board' shall mean, in respect of any JV Entity, the Governing
Board established pursuant to Section 3.02 of this Agreement and the relevant
JV Implementation Agreements to oversee the management of that JV Entity.
'JV Business' shall mean, with respect to any JV Entity in any country, the
business of such JV Entity.
'JV Entity' shall mean, in respect of the United States, the U.S.
Partnership and in respect of any other country, such Person as the Parties may
establish for the purpose of conducting the JV Business in that country and
shall also mean such other Person as the Parties may otherwise establish in
connection with the relevant JV Business.
'JV Implementation Agreement' shall mean, in respect of any JV Entity, the
agreement (or agreements) that establish the structure of the JV Entity and
provide for the JV Business to be conducted in the relevant country, as the same
may be amended or modified from time to time.
'JV Products' shall mean all products developed, marketed, sold or
distributed by any JV Entity pursuant to the arrangements contemplated by this
Agreement and the other Operative Documents.
'JV Regulatory Documentation' shall mean all regulatory documents, clinical
studies and tests in the possession or control of any JV Entity, relating to a
particular product or compound, including without limitation all new drug
applications, abbreviated new drug applications, drug master files,
correspondence with appropriate regulatory agencies (registrations and licenses,
regulatory drug lists, advertising and promotion documents) adverse event files,
complaint files and manufacturing records.
'Launch Date' shall mean, in respect of any JV Product, the date of first
sale of that product by the relevant JV Entity for use or consumption by the
general public (other than sales resulting from regional test marketing);
provided, that if such date is not the first day of a calendar month, the Launch
Date shall mean the first day of the next following calendar month.
'License Agreements' shall mean the license agreements among the Parties,
their Affiliates and the JV Entities or any of them relating to the JV
Businesses, including the Ranitidine OTC License Agreement, as the same may be
amended or modified from time to time.
'Lien' shall mean any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including, without limitation, any conditional sales or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
2
'Net Sales' shall mean gross invoice amounts on sales of products to
customers less the following deductions: off invoice (i.e., non-performance
discounts), quantity (including bracket pricing) and cash discount and any other
adjustments, including but not limited to those granted on account of price
adjustments, billing errors, rejected goods, damaged goods, recalls, returns,
rebates, charge-backs and prime vendor rebates, reimbursements or similar
payments granted or given to wholesalers or other distributors, buying groups,
health care insurance carriers or other institutions, freight and insurance
charges billed to the customer, custom or excise duties, sales tax and other
taxes (except income taxes) or duties relating to sales of products, and any
bona fide payment made in respect of sale of products to any governmental or
quasi-governmental body or agency.
'NDA' shall mean a New Drug Application including any amendments or
supplements thereto filed with the FDA pursuant to 21 U.S.C. 355 (1970) or any
regulation thereunder.
'NDA Approval' shall mean the receipt of final approval from the FDA of an
NDA with labeling mutually acceptable to the Parties to make, use and sell in
the United States a subject product.
'Non-U.S. Country' shall mean any country other than the United States.
'Operating Profit or Loss' shall mean, with respect to any JV Entity, (i)
the Net Sales of such JV Entity and any other income of such JV Entity less (ii)
the sum of (x) the Fully Allocated Cost of goods sold by such JV Entity, (y) the
charges to such JV Entity provided for in Sections 5.06, 6.01, 6.03 and 6.04 and
(z) the Fully Allocated Cost of any other expenses of such JV Entity.
'Operative Documents' shall mean the Closing Documents, the JV
Implementation Agreements, the License Agreements, the Supply Agreements and
all ancillary documents referred to herein or therein.
'OTC Classification' shall mean, in respect of any version of a drug
product in any country, all classifications, approvals, permits and consents
necessary to enable such version of a drug product to be sold to consumers
without the necessity of prescription in that country.
'OTC Switch Product' shall mean, in respect of any country, a version of a
Prescription Product which may be sold to consumers without the necessity of
prescription other than a Ranitidine Product.
'Other Ranitidine Products' shall mean, in respect of any country, any
version of a drug product which contains Ranitidine, which may be sold to
consumers without a prescription in that country (other than Ranitidine OTC
Products).
'Partnership Agreement' shall mean the Partnership Agreement to be executed
at the Closing of this Agreement between W-L and Glaxo OTC as the same may be
amended or modified from time to time.
'Party' shall mean W-L or Glaxo or any other Person which becomes a party
to this Agreement.
'Permitted Liens' shall mean (i) any Lien for current taxes not delinquent
or taxes being contested in good faith by appropriate proceedings and (ii) other
Liens incidental to the conduct of the business or the ownership of the property
and assets which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit, and which do not in the aggregate
materially detract from the value of the property or assets or materially impair
the use thereof in the operation of the business.
'Permitted Transfer' shall mean a transfer of all or part of a Party's or
its Affiliates' individual interest in this Agreement, any of the Operative
Documents, any JV Business or any JV Entity or in any entity which holds an
interest therein, made pursuant to and in accordance with Article XII of this
Agreement.
'Person' shall mean any individual or corporation, company, partnership,
trust, incorporated or unincorporated association, joint venture or other entity
of any kind.
'Prescription Product' shall mean, in respect of any country, any product
which is dispensed to consumers only against prescription and which has not been
given an OTC Classification in such country.
'Prescription Ranitidine Products' shall mean, in respect of any country,
any Prescription Product making use of Ranitidine.
3
'Ranitidine' shall mean, the pharmaceutical compound N-[2-[[[5-
[(dimethylamino)methyl]-2-furanyl]methyl]thio]ethyl]-N'-methyl-2-nitro-1,
1-ethenediamine and its hydrochloride salt; provided, however, that for the
avoidance of doubt, this definition shall not encompass Ranitidine Bismuth
Citrate.
'Ranitidine Bismuth Citrate' shall mean N-[2-[[[5-[(dimethylamino)methyl]
- -2-furanyl]methylthio]ethyl]-N'-methyl-2-nitro-1, 1-ethenediamine
2-hydroxy-1,2,3-propanetricarboxylate bismuth (3+) complex.
'Ranitidine OTC' shall mean, in the case of a tablet, a formulation
containing less than 150 milligrams of Ranitidine or, in the case of other
presentations, a formulation containing less than the equivalent strength, in
either case in which Ranitidine alone is the active ingredient and having an
initial indication different from the principal indications of the Prescription
Ranitidine Product available in the United States as of the date of this
Agreement (e.g., healing of ulcers).
'Ranitidine OTC License Agreement' shall mean the Agreement to be executed
at the Closing of this Agreement between Glaxo Services and the U.S.
Partnership, as the same may be amended or modified from time to time.
'Ranitidine OTC Products' shall mean, in respect of any country, any drug
product which has been given an OTC Classification in such country and which
contains Ranitidine OTC.
'Ranitidine Products' shall mean Ranitidine OTC Products and Other
Ranitidine Products.
'Ranitidine Rights' shall mean all data, information and other results of
research and studies conducted for the purpose of securing NDA Approval of
Ranitidine OTC Products but excluding proprietary chemical data owned by Glaxo
or any of its Affiliates.
'Ranitidine Rights Agreement' shall mean the Agreement to be executed at
the Closing of this Agreement between W-L, Glaxo Inc., Glaxo OTC and the U.S.
Partnership, as the same may be amended or modified from time to time.
'Ranitidine Supply Agreement' shall mean the Ranitidine supply agreement to
be entered into in accordance with Section 2.03.
'Regulatory Approval' shall mean the receipt of final approval from all
relevant governmental and other authorities to make, use and sell in a relevant
territory a subject product together with all appropriate pricing approvals.
'Sandoz Agreement' shall mean the Amended and Restated Ranitidine License
Agreement between Glaxo Services and Sandoz Pharmaceuticals Corporation, a
Delaware corporation, dated as of October 1, 1991, and the Amended and Restated
Ranitidine Supply Agreement between Glaxo Supply Inc. and Sandoz Pharmaceuticals
Corporation, dated as of October 1, 1991.
'Standstill Agreement' shall mean the Standstill Agreement to be executed
at the Closing of this Agreement between W-L and Glaxo, in the form identified
as Exhibit A in the Supplemental Document Package as the same may be amended or
modified from time to time.
'Supplemental Document Package' shall mean those Schedules and Exhibits the
form of which has been agreed upon and marked for identification by the Parties.
'Supply Agreements' shall mean the bulk ingredient and finished product
supply agreements among the Parties, their Affiliates and, including the
Ranitidine Supply Agreement, the JV Entities or any of them relating to the JV
Businesses as the same may be amended or modified from time to time.
'Taxes' shall mean taxes or other levies and assessments including income,
excise, sales, use, transfer, registration, value added, franchise, capital,
withholding, property, payroll or other governmental levies, including any
penalties or interest thereon.
'Third Party' shall mean any Person other than a Party or an Affiliate
thereof but shall not include any JV Entity.
'United States' or 'U.S.' shall mean the fifty states of the United States
of America, the District of Columbia, Puerto Rico, and any territory thereof and
U.S. military bases worldwide.
'U.S. Partnership' shall mean Glaxo Warner-Lambert OTC G.P., a New York
general partnership to be established at the Closing of this Agreement pursuant
to the terms of the Partnership Agreement.
4
'Valid Claim' means a claim which, but for licenses to be granted under the
Ranitidine OTC License Agreement, would be infringed by the U.S. Partnership's
manufacture, use or sale of Ranitidine OTC in any form, and which is in an
unexpired issued patent included within the Patent Rights (as defined in the
Ranitidine OTC License Agreement) which has not been held invalid or
unenforceable by a decision of a court of competent jurisdiction, unappealable
or unappealed within the time allowed for appeal, and which has not been
admitted to be invalid by the owner through reissue or disclaimer. If there
should be two or more decisions which are conflicting with respect to the
invalidity of the same claim, the decision of the higher or highest tribunal
shall thereafter control; however, should the tribunals be of equal dignity,
then the decision or decisions holding the claim valid shall prevail where the
conflicting decisions are equal in number, and the majority of decisions shall
prevail where the conflicting decisions are unequal in number.
'W-L CPR&D' shall mean W-L Consumer Products Research & Development, a
division of W-L, or any successor or additional research and development
division of W-L.
'W-L Participant' shall mean, in respect of each JV Entity, W-L or such of
W-L's direct or indirect wholly owned Affiliates, or W-WCHP, as may from time to
time be the partner or other equity participant in such JV Entity in accordance
with this Agreement.
'W-L Services Agreement' shall mean the Services Agreement to be executed
at the Closing of this Agreement between W-L and the U.S. Partnership, as the
same may be amended or modified from time to time.
'W-WCHP' shall mean any joint venture established in a particular country
pursuant to the W-WCHP Global Principles Agreement.
'W-WCHP Global Principles Agreement' shall mean the Global Principles
Agreement to be entered into between W-L and Wellcome plc, a company
incorporated under the laws of England, a copy of which shall be delivered by
W-L to Glaxo following execution thereof.
'Zantac' shall mean the product containing Ranitidine as sold by Glaxo or
its Affiliates under the Zantac Trademark.
'Zantac Trademark' shall mean (i) the trademark Zantac'r' and the
registrations thereof, (ii) in respect of the United States and the United
Kingdom, the distinctive five-sided form and the colors of the prescription
product sold by Glaxo and its Affiliates under the Zantac'r' trademark in the
United States or the United Kingdom, as the case may be, and (iii) to the extent
that Glaxo, at its sole discretion, agrees to license the same to the relevant
JV Entity or Entities, such other trade dress, brand marks, brand names and
logos relating thereto and such unregistered rights as may exist through use.
5
SECTION 1.02. Other Definitions. The following terms are defined in the
Sections indicated:
TERM SECTION
- --------------------------------------------------------------------------------------- -------------
Acquisition Notice..................................................................... 12.03(a)
Affected Party......................................................................... 12.03(a)
Alternate Representative............................................................... 3.02
Annual Operating Plan.................................................................. 3.12
Change of Control...................................................................... 12.03(a)
Claim.................................................................................. 13.01
Closing................................................................................ 2.01
Closing Date........................................................................... 2.01
Comparable Product..................................................................... 5.05(a)(iii)
Continuation........................................................................... 14.04
Deadlock............................................................................... 3.06
Development Committee.................................................................. 3.08
Effective Date......................................................................... 14.03(a)(iv)
Entitled Party......................................................................... 14.03(b)
Existing Products...................................................................... 14.03(e)
Exited Party........................................................................... 15.04
Expiry Date............................................................................ 5.06(c)(ii)
General Manager........................................................................ 4.04
Glaxo Notice........................................................................... 5.04(a)
Glaxo Offer............................................................................ 5.03(b)
Glaxo Relevant Agreements.............................................................. 10.02
Glaxo Relevant Country................................................................. 5.05(a)(i)
Glaxo Rights........................................................................... 10.04
Identified Party....................................................................... 14.03(a)(i)
Indemnified Party...................................................................... 13.04(a)
Indemnifying Party..................................................................... 13.04(a)
JV Election............................................................................ 5.04(b)
JV Equity.............................................................................. 12.03(a)(x)
Legal Requirements..................................................................... 9.05
Management Fee......................................................................... 6.03
Marketing Notice....................................................................... 5.05(a)(i)
Mass Media............................................................................. 5.05(a)(ii)
NDA Notice............................................................................. 14.02(d)
Non-Affected Party..................................................................... 12.03(a)
Occurrence............................................................................. 10.06(b)
Permits................................................................................ 9.05
Permitted Affiliates................................................................... 5.05(a)
Potential JV Product................................................................... 8.01
Proceedings............................................................................ 9.04
Relevant Country....................................................................... 5.04(a)
Relevant Matters....................................................................... 6.07
Relevant Party......................................................................... 14.03(a)(ii)
Relevant Prescription Product.......................................................... 5.05(b)
Relevant Product....................................................................... 5.05(a)
Representative......................................................................... 3.02
Specified Country...................................................................... 5.03(b)(i)
W-L Relevant Agreements................................................................ 9.02
SECTION 1.03. Statutory Provisions. References in this Agreement to any
provision of any enactment, statute or any other legislation or to any rules or
regulations promulgated thereunder or other subordinate legislation include any
modification, amendment or re-enactment of that provision for the time being in
force.
6
SECTION 1.04. Schedules. References in this Agreement to any Schedule
shall, unless the context otherwise requires, mean the relevant Schedule
contained in the Supplemental Document Package.
ARTICLE II
SECTION 2.01. Closing. The execution of this Agreement, and the subsequent
closing or closings of the transactions contemplated by this Agreement (each
being a 'Closing') shall take place at the offices of either Cravath, Swaine &
Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York or McKenna & Co.,
Mitre House, 160 Aldersgate Street, London, England or at such other place as
the Parties may agree on a date or dates to be agreed upon by the Parties and,
in the case of such subsequent closing or closings, as promptly as practicable
following the satisfaction or waiver of all of the conditions set forth in
Article XI hereof, but in no event later than 10 Business Days thereafter, or
such later date as the Parties may agree (in respect of each Closing, the
'Closing Date').
SECTION 2.02. Action at the Closing of This Agreement. The Closing of this
Agreement shall take place immediately following the execution and delivery of
this Agreement whereupon:
(a) each of the Parties shall execute and deliver those of the other
Closing Documents to which it is specified to be a party and shall cause
each of their Affiliates and the U.S. Partnership to execute and deliver
the same to the extent that they are specified to be parties thereto;
(b) the U.S. Partnership shall be established by and on the terms set
forth in the Partnership Agreement;
(c) the Governing Board of the U.S. Partnership shall be established
by and on the terms set forth in this Agreement and the Partnership
Agreement;
(d) the Development Committee of the U.S. Partnership shall be
established by and on the terms set forth in this Agreement and the
Partnership Agreement; and
(e) W-L shall, and Glaxo shall cause Glaxo Inc. and Glaxo OTC to,
execute and deliver, and W-L and Glaxo OTC shall cause the U.S. Partnership
to execute and deliver, the Ranitidine Rights Agreement pursuant to which
each of W-L and Glaxo OTC shall acquire a 50% interest in the Ranitidine
Rights and shall contribute their respective 50% interests in the
Ranitidine Rights to the U.S. Partnership.
SECTION 2.03. Other Action in Respect of U.S. Partnership. Prior to the
marketing, sale or distribution of any Ranitidine OTC Product in the United
States and promptly upon the request of W-L the Parties shall, and shall cause
such of their Affiliates and the U.S. Partnership to the extent they are
specified to be parties thereto to, execute and deliver a Ranitidine supply
agreement to be in accordance with the principles set forth in Section 6.05 and
otherwise in such form as shall be negotiated between the Parties.
SECTION 2.04. Subsequent Closings. Subsequent Closings to establish,
pursuant to the terms hereof, additional JV Entities and the Governing Boards
and Development Committees thereof, and to contribute new products to existing
JV Entities, will be held, in accordance with Section 2.01, following
satisfaction of the closing conditions set forth in Article XI hereof in respect
of the relevant JV Entity and/or the relevant product.
ARTICLE III
MANAGEMENT OF JV ENTITIES; FUNDING
SECTION 3.01. General Manager. Subject to the oversight responsibilities of
each Governing Board set forth in Section 3.03, to the requirements of local law
and the rights reserved to the Parties pursuant to Section 3.15, the day-to-day
operations of each JV Entity shall be managed by a General Manager in accordance
with Section 4.04.
SECTION 3.02. Governing Boards; Membership. Each Governing Board shall
consist of six members. In respect of each Governing Board, each of the W-L
Participant and the Glaxo Participant shall, by written notice to the other,
designate three individuals to serve as members (being, in respect
7
of that JV Entity, the 'Representatives') of that Governing Board and may from
time to time, by like notice, designate one or more alternate representatives to
act in the absence of any Representative (being, in respect of that JV Entity,
the 'Alternate Representatives'). Notwithstanding any Permitted Transfer
pursuant to Section 12.02(a), all such individuals appointed by the W-L
Participant or the Glaxo Participant shall be directors, officers or senior
employees of W-L or Glaxo, as the case may be, or their respective Affiliates
(excluding, in the case of W-L, W-WCHP). The participation and acts (including,
without limitation, the execution of any document) by any Alternate
Representative shall, for all purposes, be deemed to be the act of the
Representative for which the Alternate Representative is acting and references
herein to 'Representative' shall be construed accordingly. In the event of the
removal, resignation or death of any Representative or Alternate Representative,
the vacancy thereby created shall be filled, by written notice to the W-L
Participant, or the Glaxo Participant as the case may be, by the participant
which designated the Representative or Alternate Representative so removed,
resigning or deceased.
SECTION 3.03. Responsibility of the Governing Boards. Subject to the rights
reserved to the Parties pursuant to Section 3.15, the Governing Board of each JV
Entity shall be responsible for overseeing the JV Business and the operations of
that JV Entity and shall, in particular, have sole jurisdiction to approve the
following matters:
(a) the Annual Operating Plan for the JV Entity;
(b) material transactions between the JV Entity and W-L, Glaxo, or any
of their respective Affiliates, other than any transaction contemplated by
this Agreement, the relevant JV Implementation Agreements or any other
Operative Document;
(c) material changes in accounting practices or tax procedures
relating to the JV Entity;
(d) material acquisitions or divestitures by the JV Entity;
(e) appointments and removals of the General Manager and the other
senior officers or managers of the JV Entity and the scope of their
responsibilities;
(f) material capital expenditures by the JV Entity;
(g) subject to Section 3.13 and the terms of the relevant JV
Implementation Agreement, all proposals for the continuing financing of the
JV Entities;
(h) any distributions by the JV Entity;
(i) any license to be granted by any JV Entity to a Third Party or by
a Third Party to any JV Entity or the appointment by any JV Entity of any
distributor (other than W-WCHP); and
(j) such other matters as may be mutually agreed between the Parties
or which are specified in any Operative Document to be subject to such
approval.
SECTION 3.04. Actions of the Governing Boards. Each Governing Board shall
act only upon the unanimous written consent of the Representatives without a
meeting or upon the majority vote of the Representatives present at a duly
convened meeting thereof at which at least a quorum of the Representatives is
present and in respect of which at least one Representative appointed by each of
the W-L Participant and the Glaxo Participant voted in favor of the matter under
consideration.
SECTION 3.05. Meetings of the Governing Boards; Notice; Quorum. Meetings of
each Governing Board shall, unless otherwise determined by it, be held at least
quarterly on such dates as the relevant Governing Board may determine. In
addition, any Representative may call a meeting of the Governing Board of which
it is a member by giving written notice of such meeting (which may be waived by
the Persons who would otherwise receive such notice) to each of the other
Representatives (to the address of the W-L Participant or the Glaxo Participant
appointing such Representative) at least ten Business Days prior to the meeting
or such lesser period as to which all the Representatives may agree. Meetings
of each Governing Board may consist of a conference between Representatives who
are not all in one place, but in which each is able (directly or by telephonic
communication) to speak to the others, and to be heard by each of the others.
The presence of not less than four Representatives shall be necessary to
constitute a quorum for the transaction of business at any meeting of a
Governing Board.
8
SECTION 3.06. Deadlock. If any Governing Board is unable to agree on a
course of action at a duly convened meeting at which at least a quorum of
Representatives is present (the 'Deadlock'), then the Chief Executive Officers
of W-L and Glaxo shall meet to attempt to resolve the Deadlock. If the Deadlock
is not resolved within 45 calendar days of the Governing Board meeting at which
such Deadlock arose, then, unless the relevant Governing Board otherwise agrees,
no action will be taken with respect to the matter which is the subject of the
Deadlock. In the event that the Deadlock relates to any proposed Annual
Operating Plan, then the relevant JV Business will continue to be operated on
the basis of the Annual Operating Plan last approved by the relevant Governing
Board.
SECTION 3.07. Subcommittees of the Governing Boards. Each Governing Board
may establish one or more subcommittees to advise it on such specific projects
or matters as shall be requested by the relevant Governing Board or to act on
such projects or matters as shall be delegated by action of the relevant
Governing Board to such subcommittees; provided, however, that representation of
each of the W-L Participant and the Glaxo Participant on each subcommittee shall
be equal. Subcommittees shall conduct their business on such terms as the
relevant Governing Board may determine.
SECTION 3.08. Development Committees. (a) Each JV Entity may establish a
committee to coordinate the development activities undertaken by the W-L
Participant, the Glaxo Participant or their respective Affiliates in connection
with the business of the JV Entity (each a 'Development Committee'). Each
Development Committee shall consist of eight members. In respect of each
Development Committee, the W-L Participant and the Glaxo Participant shall, by
written notice to the other, designate four individuals each to serve as members
on that committee. Notwithstanding any Permitted Transfer pursuant to Section
12.02(a), all such individuals appointed by the W-L Participant or the Glaxo
Participant shall be directors, officers or senior employees of W-L or Glaxo, as
the case may be, or their respective Affiliates (excluding, in the case of W-L,
W-WCHP). In the event of the removal, resignation or death of any member, the
vacancy thereby created shall be filled, by written notice to the W-L
Participant or the Glaxo Participant, as the case may be, by the participant who
designated the member so removed, resigning or deceased. Each Development
Committee shall conduct its business as it sees fit and shall report to the
relevant Governing Board on a regular basis or as that Governing Board may
direct. Each Development Committee shall have only those powers to bind the
relevant JV Entity as the Governing Board of that JV Entity may grant it, and
such Governing Board shall have absolute discretion as to whether to accept and
follow any reports or recommendations submitted by the Development Committee.
(b) At reasonable intervals, and in any event at least once in each
calendar year, each Development Committee shall meet to discuss and identify
potential Glaxo OTC Switch Products or Ranitidine Products for the relevant
country and shall prepare and present to the relevant Governing Board a report
thereon, and the Parties shall consult and cooperate fully with each Development
Committee in respect of such process; provided, however, that Glaxo shall not be
required to offer any OTC Switch Product or Ranitidine Product to any JV Entity
except pursuant to the provisions of Article V.
SECTION 3.09. Removal of Representatives. In respect of any JV Entity, the
W-L Participant and the Glaxo Participant may at any time, by written notice to
the other, remove (with or without cause) one or more of the members of the
Governing Board, any subcommittee thereof or the Development Committee
designated by it and may, by like notice, designate new members to serve in
their place.
SECTION 3.10. No Remuneration. Unless the Parties otherwise agree, no
Person shall be entitled to any fee, remuneration or compensation from any JV
Entity in connection with their serving as a member of any Governing Board, any
subcommittee thereof or any Development Committee.
SECTION 3.11. Other Positions of Representatives. Any Person may act in one
or more of the capacities of Representative, Alternate Representative, member of
any subcommittee or of any Development Committee or officer, director, manager
or employee of any JV Entity or any Party or any Affiliate of any Party,
notwithstanding that they act in any other such capacity.
SECTION 3.12. Annual Operating Plan. The W-L Participant in each JV Entity
shall cause to be submitted to the Governing Board of that JV Entity, not later
than December 1 (or such other date as the Parties may agree) in each year, for
review and approval, an annual operating plan for the forthcoming calendar year
covering, among other things, projections and budgets with respect to sales,
9
operating and capital expenditures, financing, development and marketing (in
respect of each JV Entity, as so reviewed and approved, the 'Annual Operating
Plan'); provided, however, that Glaxo shall cause the proposed Annual Operating
Plan in respect of the U.S. Partnership for the calendar year ending on December
31, 1994, an outline draft of which is identified as Exhibit B in the
Supplemental Document Package, to be submitted by Glaxo OTC to the Governing
Board of the U.S. Partnership as promptly as practicable after the Closing of
this Agreement.
SECTION 3.13. Funding. W-L and Glaxo hereby agree to contribute, or to
cause the W-L Participant or the Glaxo Participant, as the case may be, to
contribute, in accordance with and subject to sound commercial principles,
equally (or as the Parties or such participants may otherwise agree), such funds
as may be necessary for the conduct of the relevant JV Business whether for
working capital or capital expenditures. All such funds shall, unless the
Parties otherwise agree, be contributed to the relevant JV Entity as additional
equity.
SECTION 3.14. Deliberations. The deliberations of each Governing Board,
Development Committee and each subcommittee thereof shall not extend to any
business activity of the Parties other than as may be necessary to perform their
responsibilities in connection with the relevant JV Business.
SECTION 3.15. Reserved Matters. Notwithstanding any other provision of this
Agreement or the other Operative Documents, and without prejudice to any other
such provision requiring the consent or agreement of both Parties, the following
matters shall be subject to the agreement of both Parties:
(a) expansion of the JV Business into any new country; and
(b) all prices for the sale of products between, or the provision of
services by either of, the Parties (or their Affiliates), on the one hand,
and any JV Entity, on the other hand, or between any two or more JV
Entities, with respect to the JV Businesses.
ARTICLE IV
OPERATIONS; JV ENTITIES
SECTION 4.01. General. The businesses contemplated by this Agreement and
by the other Operative Documents shall be implemented by JV Entities to be
established from time to time by the Parties in accordance with this Agreement.
SECTION 4.02. Establishment of Other JV Entities. Following (i) acceptance
by W-L, on behalf of the relevant JV Entity (formed or to be formed), of a Glaxo
Offer pursuant to Section 5.03, or (ii) the making by W-L of a JV Election
pursuant to Section 5.04(b), the Parties shall, if necessary, promptly establish
a JV Entity in the relevant Non-U.S. Country in order to conduct the JV Business
which is the subject of such acceptance or election in accordance with this
Article IV (unless, taking into account all relevant matters including those
set forth in Section 4.03(a), the Parties agree that a JV Entity in another
country should conduct such business).
SECTION 4.03. Form and Structure of JV Entities. The Parties agree that:
(a) the nature of the entity constituting each JV Entity shall be
determined by the Parties taking into consideration relevant tax,
accounting and legal issues;
(b) subject to Article XII, the equity of the U.S. Partnership shall
be owned by W-L and Glaxo OTC in the proportions provided in the
Partnership Agreement;
(c) subject to Article XII, the equity of each other JV Entity shall
be owned equally by W-L (or such of its direct or indirect wholly owned
Affiliates, or W-WCHP provided the requirements set forth in Section
12.02(b) are satisfied, as W-L may nominate) and Glaxo (or such of its
direct or indirect wholly owned Affiliates as Glaxo may nominate) and,
subject to such principle, the Parties shall use their reasonable efforts
to organize each such entity in such manner as will permit it to be
classified for U.S. Federal income tax purposes as a partnership or
otherwise permit it to avoid being classified as an 'uncontrolled Section
902 corporation' with respect to W-L within the meaning of Section
904(d)(2)(E)(i) of the Internal Revenue Code of 1986, as amended; provided,
however, that such action shall not, in Glaxo's reasonable judgment, have
an adverse financial effect on Glaxo or any of its Affiliates;
10
(d) the Operating Profit and Loss with respect to each JV Entity shall
be shared equally by the Parties, and, to the extent necessary or
appropriate to achieve that objective, adjustments shall be made to the
interests of the W-L Participant and the Glaxo Participant in the profit or
loss of the JV Entity so as to take into account any amounts in excess of
Fully Allocated Cost realized by either Party (or any of its Affiliates)
from the supply of goods or services to, or use of property by, the JV
Entity, other than the charges provided for in Sections 5.06, 6.01, 6.02,
6.03 and 6.04, and after off setting such amounts by any fees, commissions,
allowances or other payments made pursuant to Section 6.05 in respect of
such supply of goods or services, or use of property, by such Party (or any
of its Affiliates). In addition, to the extent necessary to fully achieve
this objective, such adjustments as are necessary shall be made to such
amounts, fees, commissions, allowances or other payments;
(e) the amounts to be charged by the Parties and their Affiliates to
each JV Entity in respect of management fees and royalty payments shall be
determined in accordance with Sections 5.06(d) and 6.04 except that such
amounts, with respect to the U.S. Partnership, shall be determined in
accordance with Sections 5.06(c) and 6.03; and
(f) the membership of all statutory or legal governing bodies of each
JV Entity shall be kept to the minimum permitted by all applicable laws (or
as the relevant Governing Board may otherwise determine); provided,
however, that the relevant W-L Participant and Glaxo Participant shall be
equally represented on each such governing body.
SECTION 4.04. Management of JV Entities. The W-L Participant shall
nominate, subject to the approval of the relevant Governing Board pursuant to
Section 3.03(e), a General Manager of each JV Entity who will have day-to-day
operational responsibility for such JV Entity (each a 'General Manager').
SECTION 4.05. Operations To Be Conducted in Accordance with Annual
Operating Plan and Direction of Governing Board. The day-to-day operations of
each JV Entity shall be conducted by its General Manager in accordance with the
Annual Operating Plan and otherwise in accordance with the directions of the
relevant Governing Board. For the avoidance of doubt, the Parties agree that
none of the actions and matters referred to in Sections 3.03 and 3.15 shall be
taken without the prior consent of the relevant Governing Board or the Parties,
as the case may be, and the Parties shall ensure that the General Manager of
each JV Entity is fully aware of the actions which require such prior consent
and that his or her authority does not extend to such transactions or matters
and shall ensure that the General Manager does not take any such actions.
ARTICLE V
JV PRODUCTS
SECTION 5.01. General. Except as provided by this Article V, Glaxo and its
Affiliates shall be free to develop, manufacture, market, sell or distribute any
products in any country.
SECTION 5.02. Ranitidine Products in the United States. (a) At the Closing
of this Agreement W-L shall, and Glaxo shall cause Glaxo OTC to, establish,
pursuant to the Partnership Agreement, the U.S. Partnership for the purposes of
developing, manufacturing, marketing, selling and distributing Ranitidine OTC
Products in the United States.
(b) Glaxo may, in its sole discretion, from time to time offer to grant to
W-L on behalf of the U.S. Partnership the marketing, selling and distribution
rights (and, if the Parties agree, the development and manufacturing rights)
with respect to Other Ranitidine Products in the United States. In the event
that Glaxo decides, in its sole discretion, to offer to the U.S. Partnership the
rights to any such product, Glaxo shall offer, by written notice to W-L, to
grant to the U.S. Partnership the exclusive right (subject to Section 5.05(a)
and as provided by the Sandoz Agreement) to market, sell and distribute such
product in the United States (and, if the Parties agree, to develop and
manufacture such product therefor) and to grant the U.S. Partnership a license
in accordance with Section 5.06(a) and (b) in respect thereof, in each case in
consideration for the royalties payable in respect of the license to be
negotiated in accordance with Section 5.06(d) and it shall be a term of such
offer that W-L shall be
11
entitled to provide the U.S. Partnership with services, and to be reimbursed
therefor, in each case in accordance with Section 6.04.
(c) Following the making of an offer in accordance with Section 5.02(b),
W-L shall as soon as reasonably practicable and in any event within six months
either accept or decline such offer on behalf of the U.S. Partnership by written
notice to Glaxo, and:
(i) Glaxo shall, during such six month period, provide W-L with such
further information relating to the matters which are the subject of such
offer (including copies of all Glaxo Regulatory Documentation relating to
the relevant product which is the subject of such offer) as W-L may
reasonably request and shall update such information promptly from time to
time;
(ii) in the event of such offer being accepted by W-L, W-L, on behalf
of the U.S. Partnership, and Glaxo shall use their best efforts to
negotiate and execute as soon as reasonably practicable and in any event
within three months the relevant Operative Documents (to be in accordance
with the principles referred to in Section 5.03(b), Article VI and
otherwise as the Parties may agree); and
(iii) in the event of such offer being declined by W-L, W-L on behalf
of the U.S. Partnership, shall at the time the offer is declined provide
Glaxo with a full statement of reasons for declining such offer and shall
afford Glaxo the opportunity of discussing fully such reasons for refusal.
(d) Except as provided by Section 5.05(a) or as provided by the Sandoz
Agreement, Glaxo shall not, and shall ensure that its Affiliates do not, market,
sell or distribute or grant any license or other similar right to any Third
Party to market, sell or distribute any Ranitidine Product in the United States.
SECTION 5.03. Other Products and/or Other Countries. (a) General. Glaxo
may, in its sole discretion, from time to time offer to W-L to grant to a JV
Entity or Entities (formed or to be formed) in a particular country the
marketing, selling and distribution rights (and, if the Parties agree, the
development and manufacturing rights) with respect to a particular Ranitidine
Product in a Non-U.S. Country or any OTC Switch Product.
(b) The Glaxo Offer. If Glaxo desires to grant to any Third Party any right
to market, sell or distribute:
(i) any Ranitidine Product in any Non-U.S. Country other than the
countries set forth on Schedule 5.03(b)(i) (the 'Specified Countries') or
under the terms, as at the date of this Agreement, of the agreements set
forth on Schedule 5.03(d); or
(ii) any OTC Switch Product in any country other than the Specified
Countries;
Glaxo shall offer, by written notice to W-L (the 'Glaxo Offer'), to grant to a
JV Entity or Entities (formed or to be formed) the exclusive right (subject to
Section 5.05(a)) to market, sell and distribute such product in the relevant
country (and, if the Parties agree, to develop and manufacture such product
therefor) and to grant such JV Entity or Entities a license in accordance with
Section 5.06(a) and (b) in respect thereof, in each case in consideration for
the royalties payable in respect of the license to be negotiated in accordance
with Sections 5.06(d) and it shall be a term of such offer that W-L shall be
entitled to provide the relevant JV Entity or Entities with services, and to be
reimbursed therefor, in each case in accordance with Section 6.04; provided,
however, that no Glaxo Offer shall be required to be made, and the restrictions
in Sections 5.03(d) and 5.04 hereof shall not apply, if:
(x) at the time that a Glaxo Offer would be required to be made (or,
if Section 5.04(a)(ii) is applicable, at the time that a Glaxo Notice would
be required to be made) W-L or any of its Affiliates or any Third Party on
their behalf (other than pursuant to a license under which W-L or its
Affiliates are only entitled to receive royalties and otherwise only have
rights consistent with passive license arrangements) are developing,
manufacturing, marketing, selling or distributing (or have entered into any
agreement, other than such a license, to do the same with respect to) any
non-prescription product in such country which would in the reasonable
opinion of Glaxo directly compete with the Ranitidine Product or OTC Switch
Product which is the subject of the Glaxo Offer or the Glaxo Notice as the
case may be, it being agreed by the Parties that a non-prescription product
will directly compete with a Ranitidine OTC Product only if it contains an
H2 antagonist or a proton pump inhibitor and except as aforesaid, if the
Parties cannot agree whether any such
12
non-prescription product will directly compete with a Ranitidine Product or
an OTC Switch Product the Parties shall seek to resolve the issue by
negotiation; and
(y) Glaxo shall have notified W-L in writing that a Glaxo Offer (or,
if Section 5.04(a)(ii) is applicable, a Glaxo Notice) would be made but for
the terms of paragraph (x) of this proviso and W-L shall not have
undertaken in writing to Glaxo, within three months of receipt of such
written notice, to terminate the development, manufacturing, marketing,
sale or distribution of any such competing product prior to the Launch Date
for the relevant Ranitidine Product or OTC Switch Product.
(c) Acceptance of Glaxo Offer. Following the making of a Glaxo Offer, W-L
shall as soon as reasonably practicable, and in any event within six months,
either accept or decline such offer on behalf of the relevant JV Entity or
Entities by written notice to Glaxo, and:
(i) Glaxo shall, during such six-month period, provide W-L with such
further information relating to the matters which are the subject of the
Glaxo Offer (including copies of all Glaxo Regulatory Documentation
relating to the relevant product which is the subject of the Glaxo Offer)
as W-L may reasonably request and shall update such information promptly
from time to time; and
(ii) in the event of the Glaxo Offer being accepted by W-L, W-L and
Glaxo shall use their best efforts to negotiate and execute as soon as
reasonably practicable, and in any event within three months, the relevant
Operative Documents (to be in accordance with the principles referred to in
Section 5.03(b), Article VI and otherwise as the Parties may agree); or
(iii) in the event of the Glaxo Offer being declined, or not being
accepted by W-L within six months of the Glaxo Offer, Glaxo or its
Affiliates shall then, and only then, be entitled to grant a license, on
terms no more favorable than those last offered to W-L pursuant to this
Section 5.03, to a Third Party to develop, manufacture, market, sell or
distribute the product which is the subject of the Glaxo Offer in the
country referred to therein.
(d) Restrictions on Glaxo and Glaxo Affiliates. Except as provided in
Section 5.05(a) or under the terms, as at the date of this Agreement, of the
agreements set forth on Schedule 5.03(d), Glaxo shall not and shall ensure that
its Affiliates do not themselves market, sell or distribute without the prior
written consent of W-L, and, except as further provided in Section 5.03(c)(iii)
and Section 5.04, Glaxo shall not and shall ensure that its Affiliates do not
grant any license or other similar right to any Third Party any rights to
market, sell or distribute:
(i) any Ranitidine Product in any Non-U.S. Country other than the
Specified Countries; or
(ii) any OTC Switch Product in any country other than the Specified
Countries;
SECTION 5.04. Right of First Refusal. (a) The Glaxo Notice. If:
(i) following the making of a Glaxo Offer which is not accepted by W-L
pursuant to Section 5.03(c), Glaxo desires to grant pursuant to Section
5.03(c)(iii) to any Third Party the right to market, sell or distribute the
products which are the subject of the Glaxo Offer in the country referred
to in the Glaxo Offer on terms more favorable than those last offered to
W-L pursuant to Section 5.03; or
(ii) Glaxo desires to grant a license to any Third Party to market,
sell or distribute any Ranitidine Product or OTC Switch Product in any
Specified Country;
Glaxo shall first give written notice (the 'Glaxo Notice') to W-L specifying the
relevant country ('Relevant Country'), a description of the products intended to
be marketed in such country and in respect of which such license is intended to
be granted and the principal terms on which such license is proposed to be
granted and Glaxo shall, and shall ensure that its Affiliates, only grant such a
license if permitted to do so by Section 5.04(d).
(b) The JV Election. W-L shall as soon as reasonably practicable, and in
any event within one month of receipt of a Glaxo Notice (if the Glaxo Notice is
given pursuant to Section 5.04(a)(i)) or three months of receipt of a Glaxo
Notice (if the Glaxo Notice is given pursuant to Section 5.04(a)(ii)), by notice
in writing to Glaxo, either elect that the marketing, sale and distribution of
the products specified in the Glaxo Notice in the Relevant Country shall be
exclusively conducted by a JV Entity (the 'JV
13
Election') or waive its right to make such an election. Following the making of
a JV Election, the Parties shall use their best efforts to negotiate and execute
as soon as reasonably practicable, and in any event within three months,
Operative Documents having the same principal terms as those proposed in the
Glaxo Notice and otherwise as W-L and Glaxo shall agree.
(c) Information. Following the giving of a Glaxo Notice, Glaxo shall,
during the period in which W-L may make a JV Election pursuant to Section
5.04(b) but has not done so or waived its right to do so, provide W-L with such
further information relating to the matters required to be included therein
(including copies of all Glaxo Regulatory Documentation relating to the relevant
product which is the subject of the Glaxo Notice) as W-L may reasonably request
and shall update such information promptly from time to time.
(d) Glaxo's Rights If No JV Election. If W-L shall waive its right to make
a JV Election in accordance with Section 5.04(b) or, in any event, if following
the expiry of the one or three month period referred to in Section 5.04(b) W-L
shall not have made a JV Election, Glaxo and its Affiliates shall then, and only
then, be free to license (on terms no more favorable than those set forth in the
Glaxo Notice) the marketing, sale and distribution rights to the products
specified in the Glaxo Notice in the Relevant Country; provided, however, that
such marketing, selling or distribution commences within two years of (x) such
waiver or (y) the expiry of such one or three month period, as the case may be,
or such longer period as may be necessary solely because of any regulatory
delays not attributable to any omission, negligence or otherwise due to a lack
of reasonable diligence by Glaxo or the proposed licensee.
SECTION 5.05. Glaxo Marketing Rights. (a) Notwithstanding anything in this
Article V to the contrary, Glaxo, any direct or indirect wholly owned Affiliate
of Glaxo, any Affiliate set forth on Schedule 5.05(a) hereof and any future
Affiliate of Glaxo which is not a wholly owned Affiliate of Glaxo and which has
not been established and is not being used for the purpose of circumventing the
restrictions of this Agreement on the grant of licenses by Glaxo and its
Affiliates to Third Parties (all such Affiliates being 'Permitted Affiliates')
shall each be free to itself market, sell or distribute in the United States or
in any Non-U.S. Country, a version of a drug product (the 'Relevant Product')
having the same indications or dosage strength as a then existing Prescription
Product of Glaxo or its Affiliates marketed in the relevant country (the
'Relevant Prescription Product') if the Relevant Product is given an OTC
Classification in the relevant country and provided, however, that:
(i) Glaxo shall first have given written notice (a 'Marketing Notice')
to W-L of its intention so to market, sell or distribute the Relevant
Product, giving details of the Relevant Product including its indications,
dosage strength, brand names, tradenames and trademarks and the relevant
country (the 'Glaxo Relevant Country') not less than 90 calendar days prior
to the commencement of such marketing, selling or distribution;
(ii) such marketing, sale or distribution shall not involve the use of
Mass Media directed to consumers unless, in the Glaxo Relevant Country, use
of Mass Media with respect to the Relevant Prescription Product has been
lawfully carried out by Glaxo or its Affiliates prior to the Relevant
Product being given an OTC Classification in that country and such use of
Mass Media was not carried out with the purpose of avoiding the
restrictions of this paragraph (ii); for the purposes of this Section
5.05(a)(ii) and Section 5.05(b), 'Mass Media' shall mean television, radio,
outdoor advertising, direct mail or lay newspapers, magazines or journals;
(iii) in the event that a JV Entity has begun developing a Ranitidine
Product (if the Relevant Product is a Ranitidine Product) or (in any other
case) a product containing the same principal active ingredients as the
Relevant Product ('Comparable Products') for marketing, sale or
distribution in the Glaxo Relevant Country but has not begun marketing,
selling or distributing the Comparable Product in such country:
(A) W-L and Glaxo shall discuss in good faith the viability of
developing or continuing to develop a Ranitidine Product or a Comparable
Product, as the case may be, for marketing, sale or distribution by a JV
Entity in the Glaxo Relevant Country and/or the establishment of a
co-promotion or co-marketing arrangement with respect to the marketing,
sale or distribution of the Relevant Product in the Glaxo Relevant
Country,
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(B) if the Parties fail to agree on satisfactory arrangements for
such development of a Ranitidine Product or a Comparable Product or such
a co-promotion or co-marketing arrangement with respect to the Relevant
Product, Glaxo shall first have reimbursed, on an after-tax basis, (X)
all relevant JV Entities and/or W-L and the W-L Participant (with the
principle being that W-L and the W-L Participant be made whole) for all
costs (including reimbursement costs) expended or incurred by them or
for which they are, or will with the passage of time become, liable in
connection with the development of Ranitidine Products or Comparable
Products, as the case may be, specifically for marketing, sale or
distribution in the Glaxo Relevant Country and (Y) if the Marketing
Notice relates to Ranitidine Products in the United States, W-L for all
milestone payments made by W-L to Glaxo Inc. pursuant to the Ranitidine
Rights Agreement, and
(C) immediately following the reimbursement of development costs
and, if relevant, milestone payments in respect of any product pursuant
to clause (B) above, any license granted to any JV Entity in respect of
such product shall terminate without further action of the Parties;
(iv) in the event that a JV Entity shall have commenced marketing,
selling or distributing Ranitidine Products (if the Relevant Product is a
Ranitidine Product) or a Comparable Product (in any other case) in the
Glaxo Relevant Country, and without prejudice to Glaxo's and its Permitted
Affiliates' rights to market, sell or distribute the Relevant Product in
the Relevant Country, W-L and Glaxo shall discuss and negotiate in good
faith arrangements with respect to the marketing, sale and distribution of
the Relevant Product and the relevant Ranitidine Product or the Comparable
Product, as the case may be, in the Glaxo Relevant Country including the
establishment of co-promotion or co-marketing arrangements with respect to
such products; and
(v) in the event that a JV Entity shall have commenced marketing,
selling or distributing Ranitidine Products (if the Relevant Product is a
Ranitidine Product) or Comparable Products (in any other case), the
Relevant Product shall only be marketed, sold or distributed (by Glaxo or
its Permitted Affiliates) under trademarks, trade dress, brand marks, brand
names and logos being used by Glaxo or its Affiliates in respect of their
prescription business in the Relevant Country as it relates to the Relevant
Prescription Product or such other trademarks, trade dress, brand marks,
brand names or logos which are different than, and not confusingly similar
to, those granted to the JV Entity.
(b) In the event that Glaxo intends that it or any Permitted Affiliate will
market, sell or distribute any Relevant Product pursuant to Section 5.05(a) and
such product would be suitable for promotion by Mass Media but is not permitted
to be so promoted by Section 5.05(a)(ii), W-L and Glaxo shall discuss in good
faith the desirability of establishing a co-promotion or co-marketing
arrangement in respect of that product.
(c) For the avoidance of doubt, the provisions of this Section 5.05 do not
in any way apply to or restrict the marketing, selling or distribution by Glaxo
or any of its Affiliates on or after the date of this Agreement in any Specified
Country except to the extent that a JV Entity is developing, marketing, selling
or distributing an OTC version of the Relevant Prescription Product in any such
Specified Country.
SECTION 5.06. Licenses and Services. (a) Grant of License. In respect of
each country where any products are to be developed, manufactured, marketed,
sold or distributed by a JV Entity, Glaxo shall promptly on request by W-L
grant, or cause its Affiliates to grant, to the relevant JV Entity or JV
Entities an exclusive license (even as to Glaxo and its Affiliates, but in any
event subject to Section 5.05(a) but subject to the rights, if any, granted by
the terms, as at the date hereof, of the Agreements set forth on Schedule
5.03(d) or the Sandoz Agreement):
(i) to use, in the non-prescription health care market, all patent and
other intellectual property rights owned by Glaxo or any of its Affiliates
as may be necessary for the development, manufacture, marketing, sale and
distribution of such products by or on behalf of the relevant JV Entity or
JV Entities; and
15
(ii) where any such product is a Ranitidine Product, to use the Zantac
Trademark (or, if the Zantac Trademark is not used in that country, the
prescription trademark so used in that country) in connection with
Ranitidine Products in the non-prescription health care market in the
relevant country; provided, however, that Glaxo shall not be required so to
grant or to cause the grant of an exclusive license to use in the
non-prescription health care market the Zantac Trademark (or such other
prescription trademark) in respect of any Non-U.S. Country if it can
demonstrate, to the reasonable satisfaction of W-L on behalf of the
relevant JV Entity (formed or to be formed), a compelling commercial reason
why such trademark should not be used in such Non-U.S. Country, in which
case, Glaxo shall not itself use the Zantac Trademark and shall not grant
to any Person a license to use the Zantac Trademark in connection with the
marketing, sale or distribution of any Ranitidine Product in the relevant
Non-U.S. Country.
(b) Terms of License. Each license shall provide for the payment by the
relevant JV Entities of royalties to be determined in accordance with Sections
5.06(c) and (d), shall continue until terminated in accordance with this
Agreement (under Section 5.05(a)(iii)(C) or Article XIV) and shall otherwise be
on such terms as Glaxo may in good faith offer to W-L or otherwise as the
Parties may agree; and provided, however, that unless Glaxo otherwise agrees, no
JV Entity shall promote, sample or sell JV Products through marketing channels
principally targeted at physicians, other medical practitioners or pharmacists
in the relevant country.
(c) Royalties Payable by the U.S. Partnership in Respect of Ranitidine OTC.
The Parties agree that in consideration for the grant, in accordance with
Sections 5.06(a) and (b), of a license by Glaxo Services to use patents and the
Zantac Trademark in connection with the development, manufacture, marketing,
sale and distribution of Ranitidine OTC and Ranitidine OTC Products in or in
respect of the United States, the U.S. Partnership and/or any other relevant JV
Entities shall pay to Glaxo Services a royalty at the following rates:
(i) in respect of the period beginning on the Launch Date of a
Ranitidine OTC Product to (but not including) the first anniversary
thereof, 15% of the U.S. Partnership's Net Sales of Ranitidine OTC
Products;
(ii) in respect of the period beginning on the date of the first
anniversary of such Launch Date to (but not including) the date upon which
both of Glaxo's U.S. patents (including all divisions, extensions,
reissues, renewals, continuations and continuations in part thereof) listed
on Schedule 5.06(c)(ii) shall have expired or shall cease to contain a
Valid Claim (the 'Expiry Date'), 20% of the U.S. Partnership's Net Sales of
Ranitidine OTC Products; and
(iii) in respect of the period beginning on the Expiry Date, 15% of
the U.S. Partnership's Net Sales of Ranitidine OTC Products;
provided, however, that the Parties shall renegotiate, in good faith, such
royalty in the event that such royalty when aggregated with the Fully Allocated
Cost of manufacturing (determined in accordance with Schedule 1.01(a)) bulk
Ranitidine supplied to any JV Entity in respect of the business of the U.S.
Partnership plus the Fully Allocated Cost incurred in manufacturing and
finishing Ranitidine OTC Products exceed, in respect of any twelve month period,
the amount representing the percentage of the U.S. Partnership's Net Sales of
Ranitidine OTC Products as follows: (i) in respect of the twelve month period
ending on the day preceding the first anniversary of the Launch Date of a
Ranitidine OTC Product by the U.S. Partnership, 26% of Net Sales; (ii) in
respect of each following twelve month period, or part thereof, prior to the
Expiry Date, 30% of Net Sales; and (iii) in respect of each following twelve
month period ending on the day prior to the anniversary of the Launch Date of a
Ranitidine OTC Product by the U.S. Partnership, 26% of Net Sales; and provided,
further, that if (following adjustments, if any, made in accordance with the
foregoing proviso) the U.S. Partnership incurs a loss (by reference to profit
before tax as calculated in accordance with United States generally accepted
accounting principles) in the twelve month period ending on the day preceding
the second anniversary of such Launch Date, the Parties shall discuss, in good
faith, an adjustment to the royalty and the Management Fee.
(d) Other Royalties. (i) The royalties to be charged to the relevant JV
Entities in respect of sales of Ranitidine OTC Products in Non-U.S. Countries
shall, with regard to the trademarks and patents
16
licensed by Glaxo or its Affiliates to the relevant JV Entity or Entities,
be broadly similar to the trademark and patent royalties payable in
respect of sales of such products in the United States in accordance with
Section 5.06(c), subject only to such changes or modifications as Glaxo
and W-L may agree are necessary to reflect the relative value of the
rights being granted to the JV Entity or Entities and local market
conditions.
(ii) The royalties to be charged to all JV Entities (including the U.S.
Partnership) in respect of Other Ranitidine Products and OTC Switch
Products shall with regard to the trademarks and patents licensed by
Glaxo to the relevant JV Entity or Entities, be such royalties as Glaxo
may in good faith offer to W-L or otherwise as the Parties may agree.
(e) Services. W-L shall be entitled to provide each JV Entity with services
and shall be entitled to be reimbursed therefor in accordance with Sections 6.03
and 6.04.
SECTION 5.07. Representations and Warranties. With respect to any Ranitidine
Product or OTC Switch Product to be developed, marketed, sold or distributed by
any JV Entity pursuant to this Article V (other than Ranitidine OTC Products to
be developed, marketed, sold or distributed by the U.S. Partnership pursuant to
Section 5.02(a)), Glaxo shall deliver to W-L and the relevant JV Entity on the
date of execution of the relevant JV Implementation Agreement (if a new JV
Entity is being established) or the relevant License Agreement (in any other
case), a certificate confirming that the representations and warranties set
forth in Sections 10.02(b), 10.04 to 10.07 and 10.09 are true and correct as at
the date of such certificate subject only to such exceptions thereto as Glaxo
may detail in such certificate (such exceptions to be limited to specific
factual matters); provided, however, that:
(a) for the purposes of such certificate and the representations and
warranties made therein, references to 'Glaxo Products' as used in Sections
10.02(b), 10.04 to 10.07 and 10.09 shall mean the relevant Ranitidine
Product or OTC Switch Product to be developed, manufactured, marketed, sold
or distributed by the relevant JV Entity in the relevant country;
(b) where the participant in the relevant JV Entity is not a Party but
is an Affiliate of a Party, such representations and warranties shall, for
the purposes of this Section 5.07, be construed as if references therein to
such Party were references to both that Party and the Affiliate of such
Party which is the participant in the relevant JV Entity; and
(c) references therein to the 'Glaxo Relevant Agreements' shall mean
the JV Implementation Agreement (if a new JV Entity is being established)
or the relevant License Agreement (in any other case) in connection with
which such representations and warranties are being confirmed pursuant to
this Section 5.07, and all other Operative Documents being entered into in
connection therewith, in each case to which Glaxo or any of its Affiliates
is a party.
SECTION 5.08. Non-Compete. Except as expressly permitted by Article V, each
of W-L and Glaxo agrees that it will not, and will cause its Affiliates not to
introduce, or participate in the introduction of, any product in the
non-prescription consumer health care market (other than a JV Product pursuant
to the terms of this Agreement) in any country if such product would, in the
reasonable opinion of the other Party, directly compete with any JV Product
being marketed, sold or distributed in that country, or which is being developed
for marketing, sale or distribution, by a JV Entity in such country. The Parties
agree that a product will directly compete with a Ranitidine OTC Product only if
it contains an H2 antagonist or a proton pump inhibitor. Except as aforesaid, if
the Parties cannot agree whether any product will directly compete with a JV
Product they shall seek to resolve the issue by negotiation.
SECTION 5.09. Japan. The provisions of this Agreement do not in any way
apply to or restrict the development, marketing, selling or distribution by
either Party (or their respective Affiliates) of any product in Japan.
ARTICLE VI
RELATED TRANSACTIONS
SECTION 6.01. Development. The Parties agree (in respect of Ranitidine OTC
and Ranitidine OTC Products, subject to and as set forth in the Development
Agreement) that:
17
(a) development costs in the United States shall be funded as set
forth in the Partnership Agreement;
(b) subject to clause (a) above, the relevant JV Entity shall
reimburse the Parties' and their Affiliates Fully Allocated Costs incurred
after the date of this Agreement in respect of the development of
Ranitidine Products and the development of OTC Switch Products which the
Parties have determined to develop in connection with the business of any
JV Entity;
(c) all development work in respect of Ranitidine Products and OTC
Switch Products which the Parties have determined to develop in connection
with the business of any JV Entity shall, following the grant of NDA
Approval, in the case of the United States, or Regulatory Approval, in the
case of any Non-U.S. Country, in respect thereof, be conducted by W-L
CPR&D, and W-L CPR&D shall be reimbursed by the relevant JV Entities its
Fully Allocated Costs incurred in such development; and
(d) amounts charged to any JV Entity in respect of the development of
JV Products shall be charged to the relevant JV Entity pursuant to this
Section 6.01 taking into account any special credits or any special tax
benefits in excess of a deduction for 100% of the expenditure to which the
Party making such charge is entitled (other than by flow-through of such
credit or tax benefit to such Party as a partner or owner of such JV
Entity) by virtue of the nature of the expenditure.
SECTION 6.02. Ranitidine OTC; Ownership of NDA; Milestone Payments. Subject
to and as set forth in the Ranitidine Rights Agreement, the Parties agree that:
(a) no NDA in respect of Ranitidine OTC shall be submitted by any of
the Parties or any of their Affiliates or by any JV Entity to the FDA
without the prior approval of the Governing Board of the U.S. Partnership;
(b) at the Closing of this Agreement W-L shall acquire a 50%
beneficial interest in the Ranitidine Rights owned by Glaxo Inc., in
consideration of which W-L shall pay to Glaxo Inc. upon each of (i) the
first submission of an NDA in respect of Ranitidine OTC to the FDA in
accordance with Section 6.02(a) and (ii) NDA Approval thereof, a milestone
payment in each case in the amount of $2.666 million; and
(c) following the acquisition referred to in clause (b) above, W-L
shall contribute its interests in the Ranitidine Rights to the U.S.
Partnership and Glaxo Inc. shall transfer its interest in the Ranitidine
Rights to Glaxo OTC, which shall contribute such interest to the U.S.
Partnership.
SECTION 6.03. Services To Be Provided by W-L to the U.S. Partnership in
Respect of Ranitidine OTC Products. Subject to and as set forth in the W-L
Services Agreement the Parties agree that in respect of the development,
marketing, selling and distribution by the U.S. Partnership of Ranitidine OTC
Products, W-L shall provide the U.S. Partnership with the services set forth on
Schedule 6.03(a) in consideration for the Fully Allocated Costs of such
services, other than the services marked with an asterisk on such Schedule, and
an additional fee to be calculated as set forth on Schedule 6.03(b) (the
aggregate of such Fully Allocated Costs and such fee being called the
'Management Fee'); provided, however, that in respect of the provision by W-L to
the U.S. Partnership of the services referenced on Schedule 6.03(a) under
'General Administration' and 'Corporate Allocations' prior to the Launch Date of
a Ranitidine OTC Product in the United States, W-L shall only be reimbursed its
Fully Allocated Costs to the extent such costs are direct and readily
identifiable.
SECTION 6.04. Other Services To Be Provided by W-L. With respect to the
development, marketing, selling and distribution by the U.S. Partnership of JV
Products (other than Ranitidine OTC Products) and with respect to the
development, marketing, selling and distribution of all JV Products by JV
Entities (other than the U.S. Partnership), the Parties shall negotiate in good
faith the services to be provided by W-L to the U.S. Partnership or the relevant
JV Entity and any costs to be reimbursed, and fees to be paid, to W-L in respect
thereof. The Parties agree that such services and related costs and fees shall
be broadly similar to the services provided by W-L, and the related costs and
fees receivable by W-L, pursuant to the W-L Services Agreement, subject to such
changes as W-L and Glaxo agree are appropriate to reflect the cost to W-L of the
services to be provided by it and local market conditions.
18
SECTION 6.05. Supply. (a) In order to protect their respective interests in
the License Agreements and to assure the uniform quality of Ranitidine Products,
the Parties agree that, except in the circumstances set forth in Section
6.05(b), all Ranitidine required for the manufacture of Ranitidine Products to
be marketed, sold or distributed by any JV Entity in accordance with this
Agreement and the Operative Documents shall be supplied by Glaxo or its
Affiliates to the relevant JV Entity or JV Entities at prices to be agreed by
the Parties and, in consideration thereof, Glaxo or its Affiliates shall pay to
such JV Entity or JV Entities or to W-L or its Affiliates such fees,
commissions, allowances or similar payments as the Parties shall determine. All
other compounds and/or related finished products to be supplied by the Parties
or any of their Affiliates required for the manufacture of JV Products shall be
supplied to the relevant JV Entity on terms to be negotiated.
(b) It shall be a term of all License Agreements relating to Ranitidine
that, in the event that Glaxo or its Affiliates fail to supply Ranitidine in
accordance with Section 6.05(a) or the relevant Supply Agreement for a period of
three months, and for so long as such failure by Glaxo or its Affiliates
continues unbroken (except for periods of four weeks or less), the relevant JV
Entity or Entities shall be entitled to conduct bulk manufacturing of
Ranitidine.
SECTION 6.06. Manufacture of JV Products. Secondary manufacture from base
compounds (including tableting, labeling and packaging) of JV Products to be
marketed, sold or distributed by a JV Entity shall take place at such sites and
facilities (including, without limitation, facilities of the Parties or their
Affiliates) as the Governing Board of the relevant JV Entity may determine.
SECTION 6.07. Financial Information; Audit. In respect of any matters for
which the Parties, or their Affiliates, shall, under the terms of this Agreement
or any of the other Operative Documents, be entitled to any payment from any JV
Entity ('Relevant Matters'), (i) the Parties shall and shall cause their
Affiliates and the JV Entities to maintain such books, accounts and records as
may be necessary to determine rights to such payment, (ii) the JV Entities shall
give the other Party, its Affiliates, any relevant JV Entity and each of their
respective independent accountants, and the Parties and their respective
Affiliates shall give the independent accountants of the other Party, its
respective Affiliates and any relevant JV Entity, reasonable access thereto
(after written notice not in any event to be less than five Business Days, and
in the case of independent accountants, after execution of a confidentiality
agreement between the Party permitting such access and such independent
accountants) during normal business hours and allow such Person to audit such
books, accounts and records as the same relate to the Relevant Matters, at the
sole expense of the Party, Affiliate or JV Entity requesting such audit. Each
Party shall and shall cause its Affiliates and any relevant JV Entity to provide
information on a timely basis as required by each JV Entity to meet the
requirements of Section 4.03(d).
SECTION 6.08. U.S. Export Controls/International Boycott. The Parties
understand that the products to be sold by a JV Entity may be subject to export
controls to permit resales and/or transfers to other countries and parties,
including authorizations required from the appropriate U.S. government agency
under the laws and regulations of the United States. No JV Entity is, or shall
be, authorized to act in violation of Part 769 of the Export Administration
Regulations of the U.S. Department of Commerce and/or agree to engage in boycott
participation as defined in Section 999 of the U.S. Internal Revenue Code of
1986, as amended. Each of the Parties and their appropriate Affiliates will
assist the JV Entity, as requested and where practicable, in seeking U.S.
government authorizations for transactions subject to U.S. export control
regulations.
SECTION 6.09. Technology. Neither Party nor any of their Affiliates shall
be obligated to make available to any JV Entity any technology, data, patents or
other intellectual property rights owned by the relevant Party or its Affiliates
in connection with, and for the purposes of, the business of the relevant JV
Entity unless satisfactory terms therefor have been agreed between the relevant
Party or Affiliate and the relevant JV Entity.
ARTICLE VII
FURTHER COVENANTS OF W-L
SECTION 7.01. (a) Allocation of Resources. W-L agrees that, notwithstanding
any other commitments it may have under additional joint venture or other
arrangements relating to consumer
19
health products, it will, in accordance with sound commercial principles, devote
sufficient resources to each JV Entity to maximize each JV Entity's potential in
accordance with its obligations hereunder and under the Operative Documents and
in accordance with its Annual Operating Plan and the determinations of the
relevant Governing Board.
(b) W-L shall use all reasonable efforts consistent with sound commercial
principles to assist the JV Entities in obtaining all Regulatory Approvals
required to market and sell Ranitidine OTC in the United States at the earliest
possible time.
SECTION 7.02. W-L Affiliates. Subject to Article XII, W-L shall, during the
term of this Agreement and for so long as any Affiliate of W-L (other than
W-WCHP) shall own equity in any JV Entity, own and continue to own, legally and
beneficially, directly or indirectly, a majority of the issued and outstanding
share capital or other equity interest of such Affiliate, and shall not permit
any Lien, other than Permitted Liens, to be created, granted or to arise in
respect of such share capital or equity interest and shall otherwise continue to
be able to exercise the direction of the management and policies of such
Affiliate.
SECTION 7.03. Safety Information. W-L shall cause the JV Entities to
promptly disclose in writing to Glaxo any information which they acquire which
relates to the safety of any JV Product or any constituent compounds including,
inter alia, all side effects, injury, toxicity or sensitivity reactions
including unexpected or increased incidence and severity thereof associated with
commercial or clinical uses, studies, investigations or tests with any such JV
Product or any such constituent compound. The Parties shall agree upon standard
operating procedures for reporting such information to each other and the
Development Committee of the relevant JV Entity.
SECTION 7.04. Approvals and Consents. W-L shall use its reasonable efforts
to (i) obtain all governmental approvals and consents (including all Regulatory
Approvals), if any, necessary or desirable for the consummation of the
transactions contemplated by this Agreement, the Partnership Agreement and the
other Operative Documents, and (ii) make or cause to be made any and all
declarations, filings and registrations with governmental authorities, which
approvals, consents, declarations, filings and registrations are necessary or
desirable for the consummation of the transactions contemplated hereby or
thereby.
SECTION 7.05. Use of JV Regulatory Documentation. W-L hereby agrees that it
and its Affiliates shall not be entitled to use for themselves or any Third
Party, for any purpose, any JV Regulatory Documentation unless and to the extent
Glaxo shall have agreed to allow the use of such JV Regulatory Documentation; it
being anticipated that the appropriate JV Entity shall be reasonably compensated
for any such use upon terms to be negotiated between Glaxo and W-L.
SECTION 7.06. Tax Matters. W-L will, and will cause each of its Affiliates
to, cooperate fully with and assist Glaxo, its Affiliates and each JV Entity (a)
in obtaining all desirable rulings or consents of the relevant and appropriate
tax authorities in order to obtain all appropriate tax benefits, exemptions or
exclusions for the Parties and the respective JV Entities as contemplated herein
and in the other Operative Documents; and (b) by doing all things necessary to
make all tax elections which would be beneficial to the respective JV Entities;
provided, however, that such actions described in (a) or (b) above do not in the
reasonable judgment of W-L have adverse tax consequences for W-L or its
Affiliates.
SECTION 7.07. Further Assurances. W-L shall use all reasonable efforts to
take or cause to be taken any appropriate action and to do or cause to be done
all things necessary, proper and advisable to consummate and make effective the
transactions contemplated hereby and by the Operative Documents and shall, in
particular, cause its Affiliates and the Persons designated by it to be
Representatives or Alternate Representatives on each Governing Board or
representatives on any subcommittee thereof or on any Development Committee to
take all such actions and to do all such things.
20
ARTICLE VIII
FURTHER COVENANTS OF GLAXO
SECTION 8.01. Information Relating to Potential JV Products. In connection
with any Ranitidine Product or OTC Switch Product being considered for
development, marketing, sale or distribution by any JV Entity, or in respect of
which a Glaxo Offer or Glaxo Notice is served pursuant to Article V (a
'Potential JV Product') Glaxo shall promptly on request provide W-L with such
information as W-L may reasonably request in respect of the Potential JV
Product, including (without limitation) copies of all Glaxo Regulatory
Documentation relating thereto.
SECTION 8.02. Regulatory. (a) Glaxo shall use all reasonable efforts
consistent with sound commercial principles to assist the JV Entities in
obtaining all Regulatory Approvals required to market and sell Ranitidine OTC in
the United States at the earliest possible time.
(b) Glaxo shall give the relevant JV Entity access to, and the right to
reference, all of the Glaxo Regulatory Documentation in respect of the JV
Products.
SECTION 8.03. Glaxo Affiliates. Subject to Article XII Glaxo shall, during
the term of this Agreement, and for so long as any Affiliate of Glaxo shall own
equity in any JV Entity, own and continue to own, legally and beneficially,
directly or indirectly, a majority of the issued and outstanding share capital
or other equity interest of such Affiliate and shall not permit any Lien, other
than a Permitted Lien, to be created, granted or to arise in respect of such
share capital or equity interest and shall otherwise continue to be able to
exercise the direction of the management and policies of such Affiliate.
SECTION 8.04. Safety Information. Glaxo shall promptly disclose in writing
to W-L any information it, or its Affiliates, acquires which relates to the
safety of any prescription product sold by Glaxo and/or its Affiliates, a
version of which is a JV Product or is being developed by any JV Entity, or any
constituent compound including, inter alia, all side effects, injury, toxicity
or sensitivity reactions including unexpected or increased incidence and
severity thereof associated with commercial or clinical uses, studies,
investigations or tests with any such product or any constituent compounds. The
Parties shall agree upon standard operating procedures for reporting such
information to each other and the Development Committee of the relevant JV
Entity.
SECTION 8.05. Approvals and Consents. Glaxo shall use its reasonable
efforts to (i) obtain all governmental approvals and consents including all
Regulatory Approvals, if any, necessary or desirable for the consummation of the
transactions contemplated by this Agreement, the Partnership Agreement and the
other Operative Documents, and (ii) make or cause to be made any and all
declarations, filings and registrations with governmental authorities, which
approvals, consents, declarations, filings and registrations are necessary or
desirable for the consummation of the transactions contemplated hereby or
thereby.
SECTION 8.06. Use of JV Regulatory Documentation. Glaxo and its Affiliates
shall be entitled to use JV Regulatory Documentation for support of their
Prescription Products without compensation to the relevant JV Entity. Glaxo and
its Affiliates shall also be entitled to use for themselves any JV Regulatory
Documentation for the purpose of developing any product other than a
Prescription Product provided, however that, prior to the Launch Date of such
product, the appropriate JV Entity shall be reasonably compensated by Glaxo or
its Affiliates for any such use upon terms to be negotiated between Glaxo and
W-L; and provided, further, that this Section 8.06 shall not restrict the use by
Glaxo and its Affiliates of any Glaxo Regulatory Documentation other than any
such documentation which has been purchased by W-L or any JV Entity or which has
been contributed to any JV Entity pursuant to the Ranitidine Rights Agreement or
otherwise.
SECTION 8.07. Tax Matters. Glaxo will, and will cause each of its
Affiliates to, cooperate fully with and assist W-L, its Affiliates and each JV
Entity (a) in obtaining all desirable rulings or consents of the relevant and
appropriate tax authorities in order to obtain all appropriate tax benefits,
exemptions or exclusions for the Parties and the respective JV Entities as
contemplated herein and in the other Operative Documents; and (b) by doing all
things necessary to make all tax elections which would be beneficial to the
respective JV Entities; provided, however that such actions described in (a) or
(b)
21
above do not in the reasonable judgment of Glaxo have adverse tax consequences
for Glaxo or its Affiliates.
SECTION 8.08. Further Assurances. Glaxo shall use all reasonable efforts to
take or cause to be taken any appropriate action and to do or cause to be done
all things necessary, proper and advisable to consummate and make effective the
transactions contemplated hereby and by the Operative Documents and shall, in
particular, cause its Affiliates and the Persons designated by it to be
Representatives or Alternate Representatives on each Governing Board or
representatives on any subcommittee thereof or on any Development Committee to
take all such actions and to do all such things.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF W-L
W-L hereby represents and warrants to Glaxo as follows:
SECTION 9.01. Organization; Good Standing. W-L is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. No order has been made or petition presented or
resolution passed for the winding up of W-L and no distress, execution or
other process has been levied on any of its assets.
SECTION 9.02. Authority; No Violation. (a) Each of W-L and its
Affiliates has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and each of the other
Operative Documents to which it is party (this Agreement and all such
Operative Documents being the 'W-L Relevant Agreements') and the execution
and delivery of each of the W-L Relevant Agreements and the consummation of
the transactions contemplated thereby have been duly and validly approved
by the Board of Directors of W-L or such of its Affiliates which is a party
thereto, as the case may be, and no other corporate proceedings on the part
of W-L, or any such Affiliate, are necessary in connection with the
consummation of the transactions contemplated hereby and thereby. Each of
the W-L Relevant Agreements has been duly and validly executed and
delivered by W-L or such of its Affiliates which is a party thereto, as the
case may be, and, assuming due authorization, execution and delivery by
each of the other parties thereto, constitutes a valid and binding
obligation of W-L or such Affiliate, as the case may be, enforceable
against W-L or such Affiliate, as the case may be, in accordance with its
terms.
(b) Neither the execution and delivery of the W-L Relevant Agreements
by W-L, or such of its Affiliates which is a party thereto, nor the
consummation by W-L, or such Affiliate, of the transactions contemplated
thereby, nor compliance by W-L, or such Affiliate, with any of the terms or
provisions thereof, will (i) violate any provision of its certificate of
incorporation or by-laws or (ii) violate any material statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to W-L or such Affiliate.
SECTION 9.03. Certificate of Incorporation and By-laws. A complete and
correct copy of W-L's certificate of incorporation and by-laws in effect as
of the date of this Agreement are attached hereto as Schedule 9.03.
SECTION 9.04. Certain Litigation. Except as set forth on Schedule 9.04
there is no claim, action, suit, proceeding, arbitration, investigation,
inquiry, or hearing or notice of hearing (collectively, the 'Proceedings')
which is existing, pending or, to the best knowledge of W-L, threatened,
before any court, arbitrator, panel, agency or other governmental,
administrative or judicial authority or private arbitration tribunal
against or relating to the transactions contemplated by the W-L Relevant
Agreements which could materially adversely affect the transactions
contemplated thereby.
SECTION 9.05. Compliance. Except as set forth in Schedule 9.05, W-L
and its Affiliates possess all franchises, licenses, permits, waivers,
registrations, certificates, consents, approvals or authorizations
(collectively, 'Permits') required by any applicable laws, ordinances,
codes, rules, statutes, policy, guidelines, regulations, standards,
judgments, decrees, writs, rulings, injunctions, orders or any other
requirements of any governmental, administrative or judicial entities
('Legal Requirements') relating in any way or applicable in any manner to
the execution and delivery of
22
the W-L Relevant Agreements or the performance by W-L and its Affiliates of
their obligations thereunder, and W-L has no reason to believe that it or
its Affiliates will be unable to obtain any Permits which are required for
the performance of their future obligations thereunder except, in each
case, where the failure to do so would not have a materially adverse effect
on the transactions contemplated by the W-L Relevant Agreements.
SECTION 9.06. Finder. Except for Bear Stearns & Co., Inc., neither
W-L, its Affiliates nor any of their respective officers or directors has
employed any broker or finder or other firm, corporation, agency or other
Person that is entitled to a finder's fee or any type of brokerage
commission or fee in relation to or in connection with the transactions
contemplated by the W-L Relevant Agreements.
SECTION 9.07. Transactions Contemplated by W-L Relevant Agreements. In
connection with the Closing of this Agreement only, references in this
Article IX to transactions contemplated by, or the performance of
obligations under, the W-L Relevant Agreements or this Agreement, or
similar references, shall be construed to mean all transactions or
obligations contemplated by this Agreement (other than transactions or
obligations contemplated by this Agreement which will arise under Operative
Documents other than the Closing Documents), each of the other Closing
Documents, and the Ranitidine Supply Agreement.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF GLAXO
Glaxo hereby represents and warrants to W-L as follows:
SECTION 10.01. Organization; Good Standing. Glaxo is a corporation
duly organized and validly existing under the laws of England and Wales and
has complied, in all material respects, with the provisions of the United
Kingdom's Companies Acts 1985 and 1989 and all returns, particulars,
resolutions and other documents required to be filed with or delivered to
the registrar of companies or to any other authority whatsoever by Glaxo
have been correctly and properly prepared and so filed or delivered. No
order has been made or petition presented or resolution passed for the
winding up of Glaxo and no distress, execution or other process has been
levied on any of its assets.
SECTION 10.02. Authority; No Violation. (a) Each of Glaxo and its
Affiliates has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and each of the other
Operative Documents to which it is party (this Agreement and all such
Operative Documents being together the 'Glaxo Relevant Agreements') and the
execution and delivery of each of the Glaxo Relevant Agreements and the
consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of Glaxo or such of its
Affiliates which is a party thereto, as the case may be, and no other
corporate proceedings on the part of Glaxo, or any such Affiliate, are
necessary in connection with the consummation of the transactions
contemplated thereby. Each of the Glaxo Relevant Agreements has been duly
and validly executed and delivered by Glaxo or such of its Affiliates which
is a party thereto, as the case may be, and, assuming due authorization,
execution and delivery by each of the other parties thereto, constitutes a
valid and binding obligation of Glaxo or such Affiliate, as the case may
be, enforceable against Glaxo or such Affiliate, as the case may be, in
accordance with its terms.
(b) Neither the execution and delivery of the Glaxo Relevant
Agreements by Glaxo, or such of its Affiliates which is a party thereto,
nor the consummation by Glaxo, or such Affiliate, of the transactions
contemplated thereby, nor compliance by Glaxo, or such Affiliate, with any
of the terms or provisions thereof, will (i) violate any provision of its
memorandum of association, articles of association or other organizational
documents; (ii) violate any material statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to
Glaxo, or such Affiliate, any of the Glaxo Products or the Glaxo Rights; or
(iii) violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required
23
by, or result in the creation of any Lien upon the Glaxo Products or the
Glaxo Rights or any of them under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, collective bargaining agreement, agreement or other instrument or
obligation or by which the Glaxo Products or the Glaxo Rights or any of
them may be bound or affected.
SECTION 10.03. Certificate of Incorporation and Memorandum and
Articles of Association. A complete and correct copy of Glaxo's certificate
of incorporation, memorandum of association and articles of association in
effect as of the date of this Agreement is attached hereto as Schedule
10.03.
SECTION 10.04. Intellectual Property Rights. (a) Schedule 10.04
contains a complete and correct list of all patents, patent applications,
licenses, trademarks, trade names, and similar rights currently owned, used
or proposed to be used in connection with the Glaxo Products (collectively,
'Glaxo Rights') indicating the registered and beneficial owner, the
registration number and the expiration date thereof. Except as set forth in
Schedule 10.04, Glaxo or its Affiliates owns or possesses exclusive
licenses and all other valid rights to use (without the making of any
payment to any Person or the obligation to grant rights to any Person) all
Glaxo Rights and the Glaxo Rights constitute all such rights which are
presently used in, or necessary to the conduct of Glaxo's or its
Affiliates' business relating to the Glaxo Products; neither the validity
of such items nor the use thereof by Glaxo or its Affiliates is the subject
of any litigation to which Glaxo or an Affiliate is a party; nor, to the
best knowledge of Glaxo, is any such litigation threatened nor do any facts
exist which may have any material adverse effect on the use of, or the
validity of, the Glaxo Rights; the use by Glaxo or its Affiliates of the
Glaxo Rights does not conflict with valid rights of others in any way which
materially adversely effects or could materially adversely effect the Glaxo
Products or any of them or the transactions contemplated by the Glaxo
Relevant Agreements.
(b) Except as set forth on Schedule 10.04, Glaxo does not know of any
use that has been or is now being made of any Glaxo Rights, except by Glaxo
and by its Affiliates.
(c) Except as set forth on Schedule 10.04, none of the Glaxo Rights
are subject to any Liens.
(d) Except as set forth on Schedule 10.04, to the best knowledge of
Glaxo, none of the Glaxo Rights are under threat of cancellation or
suspension for any reason nor is there any basis for cancellation or
suspension. The Glaxo Rights and the consummation of the transactions
contemplated by the Glaxo Relevant Agreements do not infringe any
trademark, patent, trade name, copyright or other right of any Third Party.
There are no unexpired patents owned by a Third Party having claims
covering any Glaxo Products or covering any method employed by Glaxo in
developing or manufacturing the Glaxo Products or which could materially
adversely effect the Glaxo Products or the transactions contemplated by the
Glaxo Relevant Agreements.
SECTION 10.05. Certain Litigation. Except as set forth on Schedule
10.05, are no Proceedings which are existing, pending or, to the best
knowledge of Glaxo, threatened, before any court, arbitrator, panel, agency
or other governmental, administrative or judicial authority or private
arbitration tribunal against or relating to the Glaxo Rights, the Glaxo
Products or the transactions contemplated by the Glaxo Relevant Agreements
which could materially adversely affect the Glaxo Products or the
transactions contemplated by the Glaxo Relevant Agreements.
SECTION 10.06. Product Liability. (a) Except as set forth on Schedule
10.06, (i) there is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature by or before any court or governmental or
other regulatory or administrative agency, commission or authority against
or involving Glaxo or any of its Affiliates (past or present) concerning
any Glaxo Product which is pending or, to the best knowledge of Glaxo,
threatened, relating to or resulting from an alleged defect in design,
manufacture, materials, or workmanship of any Glaxo Product, or any alleged
failure to warn, or from an alleged breach of express or implied warranties
or representations; (ii) there has not been any Occurrence (as hereinafter
defined), which could materially adversely affect the Glaxo Products; and
(iii) there has not been any Glaxo Product recall, rework, retrofit or
post-sale
24
warning by Glaxo or any of its Affiliates (past or present), or, to the
best of Glaxo's knowledge, any investigation or consideration relating
thereto.
(b) For purposes of this Section 10.06 the term 'Occurrence' shall
mean any accident, happening or event which is caused or allegedly caused
by any alleged hazard or alleged defect in manufacture, design, materials
or workmanship including, without limitation, any alleged failure to warn
or any breach of express or implied warranties or representations with
respect to, or any such accident, happening or event otherwise involving, a
Glaxo Product which results or is alleged to have resulted in injury or
death to any person or damage to or destruction of property, or other
consequential damages, at any time.
SECTION 10.07. Compliance. (a) Except as set forth on Schedule 10.07,
Glaxo and its Affiliates possess all Permits required by any Legal
Requirements relating in any way or applicable in any manner to the
execution and delivery of the Glaxo Relevant Agreements or the performance
by Glaxo and its Affiliates of their obligations thereunder contemplated to
be performed at the date these representations and warranties are given,
and Glaxo has no reason to believe that it or its Affiliates will be unable
to obtain any Permits which are required for the performance of their
future obligations thereunder except, in each case, where the failure to do
so would not have a materially adverse effect on the transactions
contemplated by the Glaxo Relevant Agreements.
(b) Except as set forth on Schedule 10.07, all of the Glaxo Products,
all of the formulae and ingredients processes, and know-how used in
connection with the manufacture by Glaxo and its Affiliates of any of the
Glaxo Products conform in all material respects to all Legal Requirements.
SECTION 10.08. Finder. Neither Glaxo, its Affiliates nor any of their
respective officers or directors has employed any broker or finder or other
firm, corporation, agency or other Person that is entitled to a finder's
fee or any type of brokerage commission or fee in relation to or in
connection with the transactions contemplated by the Glaxo Relevant
Agreements.
SECTION 10.09. Glaxo Regulatory Documentation. Glaxo has afforded W-L
full access to all Glaxo Regulatory Documentation relating to the Glaxo
Products.
SECTION 10.10. Transactions Contemplated by Glaxo Relevant Agreements.
In connection with the Closing of this Agreement only, references in this
Article X to transactions contemplated by, or the performance of
obligations under, the Glaxo Relevant Agreements or this Agreement, or
similar references, shall be construed to mean all transactions or
obligations contemplated by this Agreement (other than transactions or
obligations contemplated by this Agreement which will arise under Operative
Documents other than the Closing Documents), each of the other Closing
Documents and the Ranitidine Supply Agreement.
ARTICLE XI
CONDITIONS TO CLOSING
Closing of the transactions contemplated by this Agreement and by each JV
Implementation Agreement or other Operative Document shall be subject to the
satisfaction at or prior to such Closing of the following conditions:
SECTION 11.01. Certain Action. At the Closing Date, no suit, action,
investigation or other proceeding will have been instituted by any
governmental agency of any country or any Person in which it is sought to
restrain, prohibit, invalidate or set aside the transaction contemplated by
the relevant JV Implementation Agreement and/or other Operative Documents.
SECTION 11.02. Governmental Approvals and Consents. At the Closing
Date, all necessary notifications and filings, if any, required to be made
in or with respect to any relevant country will have been made and all
necessary governmental approvals, if any, shall have been received and the
prescribed waiting periods will have expired or been terminated. No
government entity shall have indicated its objection to, or its intent to
challenge as violative of any federal, state or foreign laws, any of the
transactions contemplated by the relevant JV Implementation Agreement
and/or other Operative Documents. In the event a government entity places a
condition on its approval of the
25
transactions as contemplated by any of the Operative Documents which has a
material effect on the proposed business of the relevant JV Entity or the
transactions contemplated by the Operative Documents, the Parties shall
attempt to negotiate a mutually agreeable modification to the appropriate
Operative Documents.
SECTION 11.03. Representations and Warranties. As of the relevant
Closing Date, the representations and warranties of the Parties contained
in this Agreement shall (subject to the schedules referred to in Articles
IX and X as the relevant Party may deliver to the other Party prior to such
Closing under cover of a notice specifying that such delivery is made with
reference to such Closing and pursuant to this Section 11.03) be true and
correct in all material respects and the W-L Participant and the Glaxo
Participant shall represent and warrant in writing to the other to the
effect set forth in Articles IX and X; provided, however, that:
(a) references to 'Glaxo Products' as used in Article X shall mean
the relevant Ranitidine Product or OTC Switch Product to be developed,
manufactured, marketed, sold or distributed by the relevant JV Entity in
the relevant country;
(b) where the participant in the relevant JV Entity is not a Party
but is an Affiliate of a Party, such representations and warranties
shall, for the purposes of this Section 11.03, be construed as if
references therein to such Party were references to both that Party and
the Affiliate of such Party which is the participant in the relevant JV
Entity; and
(c) references in Articles IX and X to 'W-L Relevant Agreements' or
'Glaxo Relevant Agreements' shall mean the Operative Documents to which
W-L or Glaxo, as the case may be, or its Affiliates is a party which are
being entered into in connection with the relevant Closing.
SECTION 11.04. Performance of Covenants. Each Party, and each of their
respective Affiliates, shall have performed and complied in all material
respects with each and every covenant, agreement and condition contemplated
by the relevant JV Implementation Agreement and/or other Operative
Documents to be performed or complied with by it prior to or on the Closing
Date.
SECTION 11.05. Authorization of Agreements. All action on the part of
each Party and their respective Affiliates necessary to authorize the
execution, delivery and performance of the relevant JV Implementation
Agreement and/or other Operative Documents, and the consummation of the
transactions contemplated therein, shall have been duly and validly taken
by each of W-L and Glaxo and their respective Affiliates and each Party
shall have been furnished with a certificate of the Secretary or an
Assistant Secretary of the other Party, setting forth copies of the
resolutions or other instruments authorizing the relevant JV Implementation
Agreements and the Operative Documents and the transactions contemplated
therein.
SECTION 11.06. Operative Documents. All Operative Documents required
in order to permit the appropriate JV Entity to conduct JV Business in the
relevant country shall have been executed and delivered and shall be fully
effective in all respects.
SECTION 11.07. Certificate of Compliance. Each of the Parties shall
have delivered to the other Party a certificate signed by an authorized
officer of such Party, representing, warranting and certifying compliance
with the conditions set forth in Sections 11.03, 11.04 and 11.05.
ARTICLE XII
TRANSFER OF JV INTEREST;
PERMITTED TRANSFERS
SECTION 12.01. Limitation on Right To Transfer Parties' Interests. No Party
or any Affiliate may sell, assign, pledge, hypothecate or otherwise transfer in
any manner, all or any part of its individual interest in this Agreement, any of
the Operative Documents, any JV Business, or any JV Entity or in any entity
which holds an interest therein unless such transfer (i) is consented to in
writing by each of the other Parties (in their sole discretion), with specific
reference to this Section 12.01 or (ii) is
26
otherwise permitted under this Article XII or Article XIV of this Agreement. For
the avoidance of doubt, in this Article XII, references to 'transfer' shall not
include the appointment of any distributor.
SECTION 12.02. Permitted Transfers. (a) Nothing in this Article XII shall
prevent the transfer:
(i) by any Party of all of its individual interest in this Agreement,
any of the Operative Documents, any JV Business or any JV Entity if such
individual interest is transferred to, and for so long as such transferee
is, a direct or indirect wholly owned Affiliate of W-L or Glaxo, as the
case may be, (or, in the case of W-L, if such transferee is W-WCHP and the
requirements set forth in clause (b) below are satisfied); or
(ii) by any Person to whom a transfer is made pursuant to clause (i)
above to W-L or Glaxo, as the case may be, or to, and for so long as such
Person is, a direct or indirect wholly owned Affiliate of W-L or Glaxo, as
the case may be, (or, in the case of W-L, if such Person is W-WCHP and the
requirements set forth in clause (b) below are satisfied);
provided, however, that:
(v) notwithstanding the provisions of clause (x) below, following any
transfer permitted by this Section 12.02(a), the references in clauses (i)
and (ii) above to W-L and to Glaxo shall not be construed as being
references to any Person other than the respective parties to this
Agreement at the date hereof;
(w) no transfer may be made pursuant to this Section 12.02(a) unless
the proposed transferee shall have agreed to assume, by express written
agreement with the other Parties (in form and substance satisfactory to
them), all of the obligations of the transferor in respect of the interest
being transferred, and no such transfer shall relieve the transferor of its
obligations under this Agreement or the Operative Documents or otherwise in
respect of the JV Businesses and the JV Entities;
(x) any Person to whom a transfer is made pursuant to and in
accordance with this Section 12.02(a) shall be joined as an additional
party hereto and to the relevant Operative Documents and shall be deemed to
have irrevocably covenanted with the other Parties hereto to transfer to a
Person who is a permitted transferee under clauses (i) and (ii) of this
Section 12.02(a) all of its interest in this Agreement, the Operative
Documents, all JV Businesses and all JV Entities immediately prior to such
Person ceasing to be such a permitted transferee;
(y) not less than all of a Party's interest in any particular JV
Entity may be transferred pursuant to this Section 12.02(a); and
(z) the Parties may agree to restrict such transfers to the extent
they deem necessary or appropriate to allow a JV Entity to be classified as
a partnership for U.S. Federal income tax purposes.
(b) W-L shall only be able to exercise its rights with respect to W-WCHP
under Section 4.03(c) and Section 12.02(a)(i) and (ii) if, (x) W-L holds or
controls a majority of the votes exercisable on the Governing Board of W-WCHP,
(y) W-L has sole authority to exercise the rights to be exercised hereunder or
under the Operative Documents or in relation hereto or thereto and (z) no Person
other than W-L, Wellcome plc or their respective Affiliates holds any equity
interest in W-WCHP.
(c) Notwithstanding the terms of this Section 12.02 and the ability of the
Parties to make Permitted Transfers hereunder, the Parties hereby agree that, if
the terms of this Section 12.02 have disadvantageous tax consequences to one or
both of the Parties in respect of its or their interest in any JV Entity, the
Parties shall negotiate with each other in good faith modifications to this
Section 12.02 insofar as it applies to such JV Entity.
SECTION 12.03. Change of Control. (a) In the event that (i) a Third Party
acquires beneficial ownership (as defined below) of 30% or more of the voting
capital of either Glaxo on the one hand or W-L on the other hand (the 'Affected
Party') or, in the event that all or any part of W-L's JV Interest is held by
W-WCHP, either (ii) W-L ceases at any time to hold or control a majority of the
votes exercisable on the governing board of W-WCHP, or (iii) W-L ceases to have
sole authority to exercise the rights to be exercised hereunder or under the
Operative Documents or in relation hereto or thereto or (iv) any Person other
than W-L, Wellcome plc or their respective Affiliates holds any equity interest
27
in W-WCHP ('Change of Control'), then W-L or Glaxo (as the case may be) (the
'Non-Affected Party') shall, if it believes in good faith that such Change of
Control is prejudicial to such Affected Party's JV Interest, have the right
within 30 calendar days following receipt of written notice of, or public
announcement of, the occurrence of the Change in Control at its option and in
its sole and absolute discretion by written notice (the 'Acquisition Notice')
either:
(x) to require the Affected Party to, and to cause its Affiliates to,
sell, transfer and convey the whole of the Affected Party's and such
Affiliates' equity interest in all JV Entities (together the 'JV Equity')
(or if the change of control arises under clause (ii), (iii) or (iv) of
Section 12.03(a), such of its JV Equity as was held by W-WCHP immediately
prior to the Change of Control and which was not subsequently transferred
to W-L or a direct or indirect wholly owned Affiliate of W-L) to the
Non-Affected Party, or as it may direct, at a price to be agreed between
Glaxo and W-L or, if they are unable to agree upon such price within 90
calendar days, at the Going Concern Value of the relevant JV Equity
determined in accordance with Section 15.03 and taking into account the
arrangements contemplated by Section 12.03(b) provided, however, that for
the purposes of calculating such Going Concern Value, each Operative
Document shall be deemed to continue for a period of 5 years from the
acquisition pursuant to this clause (x); or
(y) to require the Affected Party to purchase and accept conveyance
from the Non-Affected Party and its Affiliates of the whole of their JV
Equity at a price to be agreed between Glaxo and W-L or, if they are unable
to agree upon such price within 90 calendar days, at the Going Concern
Value of the relevant JV Equity determined in accordance with Section 15.03
and taking into account the arrangements contemplated by Section 12.03(b)
and Section 14.04.
For the purposes of this Section 12.03(a), a Person shall be deemed to have
'beneficial ownership' of, and shall be deemed to 'beneficially own', any
securities which such Person or any of its Affiliates is deemed to 'beneficially
own' within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934
and the rules and regulations thereunder.
(b) In the event that the Non-Affected Party elects to exercise its option
under either clause (x) or clause (y) of Section 12.03(a) then:
(i) subject to Section 14.04 hereof, the Parties shall negotiate in
good faith such arrangements as may be required to ensure the continued
operation of the JV Businesses;
(ii) the Affected Party shall, as the case may be, be bound either (A)
to, and to cause its Affiliates to, sell, transfer and convey the Affected
Party's, and such Affiliates', JV Equity (or if the change of control
arises under clause (ii) or (iii) of Section 12.03(a), such of its JV
Equity as was held by W-WCHP immediately prior to the Change of Control and
which was not subsequently transferred to W-L or a direct or indirect
wholly owned Affiliate of W-L) to the Non-Affected Party, or as it may
direct, pursuant to clause (x) above or (B) to purchase and accept
conveyance from the Non-Affected Party and its Affiliates of their JV
Equity pursuant to the terms of clause (y) above;
(iii) each of the Operative Documents (other than this Agreement)
shall, to the extent they relate to any Ranitidine Product or OTC Switch
Product which is then being marketed by any JV Entity or is being developed
therefor, continue in full force and effect and shall be binding upon each
of the Parties or their respective Affiliates, as the case may be, subject
only to the provisions of Section 14.04; and
(iv) this Agreement, and (save as provided in clause (iii) above) the
other Operative Documents, and the Parties rights and obligations hereunder
and thereunder shall, save as provided by Sections 14.06 and 15.12,
immediately be terminated.
(c) Without prejudice to the generality of Section 15.12 of this Agreement
but in accordance with the terms thereof, the Parties agree to keep confidential
the terms of this Section 12.03. Each Party further agrees (i) not to give any
indication to any Third Party as to whether any action, or what circumstances,
would give rise to a Change of Control, (ii) not to inform, directly or
indirectly, any Third Party of what action such Party would or would not take in
the event of a Change of Control, until such time as such Change of Control has
occurred and (iii) to inform the other Party immediately
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of any request by any Third Party for information which it would be prohibited
by this Section from divulging.
ARTICLE XIII
INDEMNIFICATION
SECTION 13.01. Indemnification by the JV Entities. W-L and Glaxo shall be
indemnified and held harmless by each JV Entity in respect of all claims,
liabilities, damages, losses, expenses (including, without limitation, legal
fees), obligations, liens, assessments, judgments and fines (all of the
foregoing being a 'Claim') made by or owed to any Person to the extent any of
the foregoing are for bodily injuries or damages suffered, or for obligations or
liabilities, which arose out of the conduct of the JV Business of the relevant
JV Entity. Such Claims shall also include, but not be limited to, all Taxes of
any kind, interest, penalties, fines due by any JV Entity in relation to which
W-L or Glaxo may be jointly liable for payment with such JV Entity and it shall
be a term of each JV Implementation Agreement that the relevant JV Entity agrees
to indemnify the Parties under the terms of this Section 13.01.
SECTION 13.02. Indemnification by W-L. (a) W-L agrees to indemnify and hold
Glaxo harmless from all Claims suffered or paid as a result of (i) the failure
of any of the representations or warranties made by W-L in this Agreement, any
other Operative Document or pursuant to Section 11.07 to be true and correct in
all material respects as of the relevant Closing Date, (ii) any breach by W-L or
any of its Affiliates of the terms of this Agreement or any of the Operative
Documents, or (iii) Claims made by a Third Party which, if successful, would
constitute a breach of a representation, warranty, covenant or agreement made by
W-L or any of its Affiliates in this Agreement, any Operative Document or
pursuant to Section 11.07.
(b) W-L agrees to indemnify and hold Glaxo and each of the JV Entities
harmless in respect of Claims made by or owed to any Person to the extent such
Claims are for bodily injuries or damages suffered, or for obligations or
liabilities which arose, in connection with products developed, marketed, sold
or distributed by W-L or any of its Affiliates (other than products so
developed, marketed, sold or distributed as part of the JV Businesses) except to
the extent that any JV Entity is liable to indemnify the Parties in respect
thereof pursuant to Section 13.01.
SECTION 13.03. Indemnification by Glaxo. (a) Glaxo agrees to indemnify and
hold W-L harmless from all Claims suffered or paid as a result of (i) the
failure of any of the representations or warranties made by Glaxo in this
Agreement, any other Operative Document or pursuant to Sections 5.07 or 11.07 to
be true and correct in all material respects as of the relevant Closing Date,
(ii) any breach by Glaxo or any of its Affiliates of any terms of this Agreement
or any of the Operative Documents, and (iii) Claims made by a Third Party which,
if successful, would constitute a breach of a representation, warranty, covenant
or agreement made by Glaxo or any of its Affiliates in this Agreement or any
Operative Document or pursuant to Sections 5.07 or 11.07.
(b) Glaxo agrees to indemnify and hold W-L and each of the JV Entities
harmless in respect of Claims made by or owed to any Person to the extent such
Claims are for bodily injuries or damages suffered, or for obligations or
liabilities which arose, in connection with products developed, marketed, sold
or distributed by Glaxo or any of its Affiliates (other than products so
developed, marketed, sold or distributed as part of the JV Businesses) except to
the extent that any JV Entity is liable to indemnify the Parties in respect
thereof pursuant to Section 13.01.
SECTION 13.04. Indemnification Generally. (a) Any indemnification of W-L,
Glaxo, the JV Entities or their Affiliates hereunder or under any other
Operative Document, shall include and extend to the benefit of their respective
Affiliates and their respective directors and employees. Any Person that may be
entitled to indemnification under this Agreement or under any other Operative
Document (an 'Indemnified Party') shall give notice to the Person obligated to
indemnify it (an 'Indemnifying Party') with reasonable promptness upon becoming
aware of the claim or other facts upon which a claim for indemnification will be
based; the notice shall set forth such information with respect thereto as is
then reasonably available to the Indemnified Party. The Indemnifying Party
shall, upon agreeing irrevocably in a form and substance reasonably satisfactory
to the Indemnified Party to be liable for all Claims in respect thereof, have
the right to undertake the defense of any such Claim asserted by a Third
29
Party with counsel satisfactory to the Indemnified Party and the Indemnified
Party shall cooperate in such defense and make available all records and
materials requested by the Indemnifying Party in connection therewith at the
Indemnifying Party's expense. If the Indemnifying Party shall have assumed the
defense of the claim with counsel reasonably satisfactory to the Indemnified
Party, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses (other than for reasonable costs of investigation)
subsequently incurred by the Indemnified Party in connection with the defense
thereof. The Indemnifying Party shall not be liable for any Claim settled
without its consent, which consent may not be unreasonably withheld or delayed.
(b) Where any indemnity is claimed by a Party hereunder, or under any other
Operative Document, and the indemnity is in respect of any claim, loss,
liability or obligation owed by one Party to the other, the Party claiming such
indemnity shall take all reasonable steps (the cost of which shall be borne by
the Indemnifying Party) to mitigate such claim, loss, liability or obligation.
(c) Any indemnification hereunder, or under any other Operative Document,
shall be made on an after tax basis and net of any insurance proceeds recovered
by the relevant Indemnified Party; provided, however, that if, following the
payment to an Indemnified Party of any amount under this Article XIII, or under
any other Operative Document, such Indemnified Party recovers any insurance
proceeds in respect of the Claim for which such indemnification payment was
made, the Indemnified Party shall promptly pay an amount equal to the amount of
such proceeds (but not exceeding the amount of such indemnification payment) to
the Indemnifying Party.
SECTION 13.05. Survival of Representations and Warranties. The
representations and warranties contained herein shall survive (i) in respect of
the representations and warranties set forth in Sections 10.02(b), 10.04, 10.05,
10.06, 10.07 and 10.09, to the extent such representations and warranties relate
to Glaxo Products or Glaxo Rights, one year from the relevant Launch Date or, if
development work in respect of that Ranitidine Product or OTC Switch Product in
connection with which such representations and warranties were given is
terminated prior to any such sale, one year from such termination or (ii) in
respect of all other representations and warranties two years from the date of
this Agreement; provided, however, that a claim may be brought in respect of any
breach of representation or warranty after the date which is one year from the
date of such commercial sale or termination or two years from the date of this
Agreement, as the case may be, if the Person seeking to make such claim shall
have given written notice to the person against whom such claim is sought to be
made prior to such date specifying the breach complained of.
ARTICLE XIV
TERM AND TERMINATION
SECTION 14.01. Term of Agreement. Except in those circumstances referred to
in Sections 12.03(b)(iv), 14.02 and 14.03 it is understood and agreed by each of
the Parties that this Agreement is intended to continue without interruption
until specifically terminated by unanimous consent of the Parties, and that upon
termination the rights and obligations of the Parties hereunder shall continue
to be in effect until the final distribution of the assets of all JV Entities to
the Parties.
SECTION 14.02. Ranitidine OTC Not Approved. (a) In the event:
(i) an NDA Approval for Ranitidine OTC is not received from the FDA by
the earlier of (x) five years from the date of submission of such NDA or
(y) January 1, 1998, if such NDA has not then been filed; or
(ii) W-L and Glaxo agree in writing, with specific reference to this
Section 14.02(a)(ii), that there is no reasonable likelihood that an NDA
Approval for Ranitidine OTC will be received from the FDA within the period
specified in clause (i);
then either Party may give written notice to the other of its intention to
terminate this Agreement, such notice if given pursuant to clause (i) above to
be given within six months of the fifth anniversary of the date of submission of
such NDA or January 1, 1998, as the case may be, or if given pursuant to clause
(ii) above, such notice to be given within six months of such written agreement.
30
(b) If notice is given pursuant to Section 14.02(a) and no Ranitidine Product or
OTC Switch Product is then under development (other than Ranitidine OTC being
developed for the purposes of the Ranitidine NDA) or being marketed by any JV
Entity:
(i) all Ranitidine Rights and any NDA filed with respect to a
Ranitidine OTC Product shall revert to Glaxo; and
(ii) following the winding up of the JV Entities pursuant to Section
14.05 this Agreement and the relevant Operative Documents shall immediately
be terminated subject only to Sections 14.02(d), 14.06 and 15.12.
(c) If notice is given pursuant to Section 14.02(a) and any Ranitidine
Product or OTC Switch Product is then being marketed by any JV Entity or is
being developed therefor:
(i) the JV Entities, the JV Businesses, this Agreement and the other
Operative Documents shall continue (subject to Section 14.04) in respect of
all such products until such time as the arrangements or agreements are
terminated pursuant to this Agreement or until such time as both Parties
agree otherwise and this Agreement shall in all other respects immediately
be terminated; and
(ii) the Parties shall negotiate in good faith such arrangements as
may be required to ensure the continued operation of the JV Businesses with
respect to such products.
(d) Should Glaxo or any Affiliate of Glaxo receive NDA Approval for an NDA
for Ranitidine OTC prior to the third anniversary of the termination of this
Agreement (in whole or in part) pursuant to this Section 14.02 Glaxo shall
promptly notify W-L of receipt of the NDA Approval for Ranitidine OTC (the 'NDA
Notice') and W-L shall have the option exercisable, by notice in writing to
Glaxo, at any time during the 90 calendar day period following W-L's receipt of
the NDA Notice to reconstitute this Agreement and the JV Entities, as of, and on
the terms existing as of, the date of termination, and in the event of W-L's
exercise of such option, each of the Parties shall be deemed to be parties to a
global principles agreement identical to this Agreement as of the date of its
termination without any further action on the part of any party hereto or
thereto.
(e) Without prejudice to the requirements and provisions of Section
14.02(d), prior to the third anniversary of the termination of this Agreement
(in whole or in part) pursuant to this Section 14.02 neither Party shall enter
into any arrangements which would be inconsistent with, or which would obstruct
or prevent, the exercise of, or the consummation of W-L's rights under, the
option set forth in Section 14.02(d).
SECTION 14.03. Liquidation; Breach; Optional Termination. (a) W-L or Glaxo
may terminate this Agreement by written notice to the other:
(i) if proceedings shall be commenced or a petition shall be filed in
a court of competent jurisdiction seeking (x) relief in respect of Glaxo
(in the case of a notice given by W-L) or W-L (in the case of a notice
given by Glaxo) as the case may be (in this clause (i) the 'Identified
Party'), or of a substantial part of the property or assets of the
Identified Party, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other provision of Federal or
state bankruptcy, insolvency, receivership or similar law in any
jurisdiction (including Part II of the United Kingdom's Insolvency Act
1986), (y) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official of the Identified Party, or a substantial
part of its property or assets or (z) the winding-up or liquidation of the
Identified Party; and such proceedings or petition shall continue
undismissed for 60 days, or an order or decree approving or ordering any of
the foregoing shall be entered;
(ii) if a Party (in this clause (ii) and Section 14.03(b) the
'Relevant Party') shall be in breach or default in the performance of any
obligation under this Agreement or any of the Operative Agreements and such
breach is not remedied within six months of receipt by the Relevant Party
of written notice specifying, in reasonable detail, the breach or default
complained of, referring specifically to this Section 14.03 and requiring
that such breach or default be remedied within six months of receipt;
provided, however, that such notice is given within 60 calendar days of the
date on which the Party giving such notice first knew, or should, in all
the circumstances, reasonably
31
have known of the relevant breach; and provided, further, that failure to
remedy such breach or default would have a materially adverse affect on the
JV Businesses as a whole;
(iii) effective on the 20th anniversary of the Launch Date of a
Ranitidine Product by the U.S. Partnership or any subsequent fifth
anniversary thereof; provided, however, that such written notice of
termination shall have been provided not less than 5 years and not more
than 6 years prior to the effective date of such termination; or
(iv) effective on the 25th anniversary of the Launch Date of a
Ranitidine Product by the U.S. Partnership or any subsequent fifth
anniversary thereof (the 'Effective Date'); provided however that such
written notice of termination shall have been provided not less than 5
years and not more than 6 years prior to the Effective Date.
(b) In the event that a Party is entitled to terminate this Agreement
pursuant to Section 14.03(a)(ii) and, at that time, any Ranitidine Product or
OTC Switch Product is then being marketed by any JV Entity or is being developed
therefore, such Party (the 'Entitled Party') shall be entitled to elect, in the
written notice given pursuant to Section 14.03(a), that the JV Entities and the
JV Businesses in respect of such products and this Agreement and the other
Operative Documents shall continue (subject to Section 14.04) only in respect of
such products and this Agreement and the other Operative Documents shall
otherwise immediately be terminated.
(c) In connection with the making of an election pursuant to Section
14.03(b), the Parties shall negotiate in good faith such arrangements as may be
required to ensure the continued operation of the JV Businesses.
(d) If notice is given pursuant to Section 14.03(a)(iii) and any Ranitidine
Product or OTC Switch Product is then being marketed by any JV Entity or is
being developed therefor:
(i) the JV Entities and the JV Businesses, this Agreement and the
other Operative Documents shall continue in respect of all such products
until such time as the arrangements or agreements are terminated pursuant
to this Agreement or until such time as both Parties may agree otherwise
and this Agreement shall in all other respects immediately be terminated;
and
(ii) the Parties shall negotiate in good faith such arrangements to
ensure the continued operation of the JV Businesses with respect to such
products.
(e) if notice is given pursuant to Section 14.03(a)(iv) by Glaxo and any
Ranitidine Product or OTC Switch Product (the 'Existing Product') is then being
marketed by any JV Entity or is being developed therefor, Glaxo shall, on the
Effective Date, purchase and accept conveyance from W-L and its Affiliates of
the whole of Glaxo's and its Affiliates' JV Equity at a price to be agreed
between the Parties or, if they are unable to agree upon such price within 90
calendar days, at the Going Concern Value of the relevant JV Equity as of the
Effective Date determined in accordance with Section 15.03, provided, however,
that for the purposes of calculating such Going Concern Value, each Operating
Document relating to the Existing Product or Products and the JV Business
relating thereto shall be deemed to continue for a period of 15 years from the
Effective Date.
(f) if notice is given pursuant to Section 14.03(a)(iv) by W-L, all JV
Entities, JV Businesses and all Operative Documents shall immediately terminate
and W-L shall not be entitled to any compensation therefor.
SECTION 14.04. Continued Arrangements. If any JV Entities or JV Businesses,
and the provisions of any Operative Documents, are to continue in accordance
with Sections 12.03(b), 14.02(c) or 14.03(b) (a 'Continuation') the then
existing Operative Documents relating to the Ranitidine Products and OTC Switch
Products then being marketed by any JV Entity or being developed therefor shall
continue as set forth in those Sections except as may otherwise be agreed by the
relevant Parties and except that:
(a) in the case of any Continuation pursuant to Section 12.03(b) or
14.03(b), each existing license agreement, services agreement, supply
agreement or other Operative Document which is so to continue shall only
continue, for a period of 5 years from the date of the Acquisition Notice
or the notice given pursuant to Section 14.03(a) provided, however, that
any such Operative Documents may be terminated by the Non-Affected Party or
the Entitled Party, as the case may be, at any time on reasonable notice
(not to be less than 3 months); and
32
(b) in the case of any continuation pursuant to Section 14.02(c), all
Operative Documents which are so to continue shall terminate 10 years from
the date of the notice given pursuant to Section 14.02(c).
SECTION 14.05. Winding Up and Liquidation. During the six-month period
following receipt of a notice of termination pursuant to Sections 14.02 or
14.03, and pending the distribution and payments required by the relevant
Section and subject to any continuing business under Sections 12.03(b),
14.02(c), 14.03(b) and the other rights of the Parties under those Sections, the
JV Entities shall continue solely for the purposes of winding up their affairs
in an orderly manner, liquidating such JV Entities and their respective assets,
and satisfying the claims of their creditors and no Party shall take any action
that is inconsistent with, unnecessary to or inappropriate for such purposes.
During the period of winding up, the rights and obligations set forth in this
Agreement with respect to the management of the JV Entities will continue and
the Governing Board of each JV Entity shall continue to make all decisions
relating to the conduct of any business or operations, including, without
limitation, any decisions relating to the sale or other disposition of that JV
Entity's assets.
SECTION 14.06. Survival of Rights. For the avoidance of doubt any exercise
by any of the Parties of their rights to terminate this Agreement and/or the
Operative Documents under Article XII or this Article XIV shall be without
prejudice to any other rights (including, without limitation, any of the
remedies set forth in Section 15.13) the Parties may have in respect of any
breach or default by the other Party or any of its Affiliates of its obligations
hereunder or under the Operative Documents, or otherwise.
ARTICLE XV
GENERAL
SECTION 15.01. Expenses. Except as expressly provided herein, each Party
shall bear its own expenses, fees, costs and disbursements, and those of its
Affiliates, incurred in connection with this Agreement and the Operative
Documents and the consummation of the transactions contemplated hereby and
thereby and preparation therefor including:
(a) in respect of W-L all expenses, fees, costs and disbursements of
Bear Stearns & Co. Inc. arising in connection with the transactions
contemplated by this Agreement; and
(b) all Taxes incurred in connection with the assignment and transfer
of assets to any JV Entity; provided, however, that, to the extent legally
able to do so, each Party shall, and shall cause its Affiliates and the JV
Entities to, deliver to any other Party or any Affiliate of any Party or JV
Entity that is required by law to collect any Taxes exemption certificates
in form and substance satisfactory to such Party, Affiliate or JV Entity,
as the case may be, with respect to such Taxes.
SECTION 15.02. Assignment and Binding Effect. Except as provided in Article
XII or 14.03(e) and any of the rights or obligations hereunder shall not be
assignable by any Party without the prior written consent of the other Parties.
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective permitted successors and assigns.
SECTION 15.03. Inability To Agree upon Value. In the event the Parties
cannot agree on any determination of compensation or value required by Section
12.03(a) or 14.03(e) within such period as this Agreement may provide for such
agreement to be reached by the Parties, each of W-L and Glaxo shall choose an
investment banker to determine such compensation or value, which value shall be
the average of the two values determined by such investment bankers, unless such
values vary by more than ten percent, in which case the compensation or value
shall be one or the other of such values as decided by an investment banker
selected by the first two investment bankers.
SECTION 15.04. Corporate Names. In the event of the transfer by any Party
(the 'Exited Party') of the whole of its and its Affiliates' JV Interest to any
Third Party or to the other Party or its Affiliates pursuant to Section 12.02 or
to the other Party or its Affiliates pursuant to Article XIV, the successor to
such JV Interest and the other Party shall cease, and shall ensure that each of
their Affiliates and each of the JV Entities cease, to use any corporate name or
logo of the Exited Party, or any colorable imitation thereof, in connection with
the JV Businesses or otherwise.
33
SECTION 15.05. Governing Law; Jurisdiction; Consent to Service of Process;
Agent for Service. (a) This Agreement shall be governed, construed and enforced
in accordance with the law of the State of New York without regard to principles
of conflicts of law.
(b) Each of the Parties hereby irrevocably and unconditionally submits, for
itself and its property, to the jurisdiction of any New York State court sitting
in New York or any Federal court of the United States sitting in the Borough of
Manhattan in the City of New York, and any appellate court from any such court,
in any suit, action or proceeding arising out of or relating to this Agreement
or any of the Operative Documents, or for recognition or enforcement of any
judgment, and each of the Parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such suit, action or proceeding may be
heard and determined in such New York State court or, to the extent permitted by
law, by removal or otherwise, in such Federal court. It shall be a condition
precedent to each Party's right to bring any such suit, action or proceeding
that such suit, action or proceeding, in the first instance, be brought in such
New York State court or, to the extent permitted by law, by removal or
otherwise, in such Federal court (unless such suit, action or proceeding is
brought solely to obtain discovery or to enforce a judgment), and if each of
such New York state court and such Federal court refuses to accept jurisdiction
with respect thereto, such suit, action or proceeding may be brought in any
other court with jurisdiction. Neither Party may move to (i) transfer any such
suit, action or proceeding from such New York State court or Federal court to
another jurisdiction, (ii) consolidate any such suit, action or proceeding
brought in such New York State court or Federal court with a suit, action or
proceeding in another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York State court or Federal court for the purpose
of bringing the same in another jurisdiction. Each Party agrees that a final
judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
(c) Each of the Parties hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the Operative
Documents in any New York State court sitting in New York or any Federal court
sitting in the Borough of Manhattan in the City of New York. Each Party hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding in any
such court and further waives the right to object, with respect to such suit,
action or proceeding, that such court does not have jurisdiction over such
Party.
(d) Each Party irrevocably consents to service of process on it or any
agent for service appointed from time to time (including agents for service
appointed pursuant to clause (e) of this Section 15.05) in the manner provided
for notices in Section 15.06. Nothing in this Agreement shall affect the right
of either Party to serve process in any other manner permitted by law.
(e) Glaxo hereby designates and appoints Glaxo Americas Inc., and such
other persons (reasonably satisfactory to W-L) hereafter selected by it,
irrevocably agreeing in writing so to serve, as its agent to receive on its
behalf service of all process in any proceedings referred to in clause (b) of
this Section 15.04, such service being hereby acknowledged by Glaxo to be
effective and binding service in every respect.
SECTION 15.06. Notices. All notices, demands, requests and other
communications required or permitted to be given hereunder shall be in writing
and deemed duly given on the date delivered by hand, mailed by registered or
certified mail, postage prepaid, or by overnight courier or by facsimile
transmission the receipt of which is confirmed by telephone, to the respective
Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice):
if to W-L or any W-L Participant:
Warner-Lambert Company
201 Tabor Road
Morris Plains, New Jersey 07950
United States
34
Attn: (1) Vice President, Planning
Investment and Development
and (2) Vice President and
General Counsel
Facsimile: 201-540-3927
if to Glaxo or any Glaxo Participant:
The Company Secretary
Glaxo Holdings p.l.c.
Lansdowne House
Berkeley Square
London WIX GBP
England
Facsimile 071-408-0228
SECTION 15.07. Parties in Interest. Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon or give to any Person
other than the Parties any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, all of which shall be for the sole and
exclusive benefit of the Parties.
SECTION 15.08. Press Releases. All press releases or other public
communication relating to the terms of this Agreement, the JV Entities and the
other Operative Documents (other than announcements, summaries or reports of
previously disclosed information) shall be subject, except as otherwise required
by law (in which case the relevant Party will if practicable allow the other
Party an opportunity to review a draft thereof prior to release), to the prior
approval of each of W-L and Glaxo, which approval shall not be unreasonably
withheld.
SECTION 15.09. Headings. The headings of the Sections and Articles of this
Agreement are inserted as a matter of convenience and for reference purposes
only, and are of no binding effect.
SECTION 15.10. Entire Agreement; Amendment; Severability; Termination of
Existing Arrangements. (a) As at the Closing Date of this Agreement, this
Agreement (including the Schedules hereto) and the Operative Documents represent
the entire understanding and agreement between the Parties with respect to the
subject matter hereof. This Agreement can be amended, modified, supplemented,
extended, terminated (except as provided in Articles XII or XIV hereof),
discharged or charged only by an agreement in writing which makes specific
reference to this Section and which is signed by all the Parties.
(b) If and to the extent that any court of competent jurisdiction holds any
provision (or any part thereof) of this Agreement to be invalid or
unenforceable, such holding shall not affect the validity of the remainder of
this Agreement.
(c) The Parties hereby agree to terminate as of the Closing Date of this
Agreement, the Confidentiality Agreement between them dated June 15, 1992 and
the Standstill Agreement between them dated June 15, 1992.
SECTION 15.11. Waiver and Compliance. Any failure of Glaxo or W-L to comply
with any obligation, covenant, agreement or condition herein contained may be
expressly waived, in writing only, by the other Parties and such waiver shall be
effective only in the specific instance and for the specific purpose for which
made or given.
SECTION 15.12. Confidentiality. (a) Neither Party shall, or shall permit
their Affiliates to, disclose to any Third Party any information (that is not
publicly available or generally known other than by breach of the provisions of
this Agreement or made available by a Third Party which is not in breach of an
obligation of confidentiality):
(i) regarding the terms of this Agreement and of the other Operative
Documents and in particular the terms of the provisions relating to a
Change of Control contained in Section 12.03 hereof or in any other of the
Operative Documents; or
35
(ii) obtained by such Party or its Affiliates pursuant to or in
connection with the negotiation, delivery and performance of this Agreement
or the other Operative Documents or the consummation of the transactions
contemplated thereby to any Person, other than its Affiliates;
except in each case:
(w) with the prior written consent of the other Party;
(x) to the extent necessary to comply with law or the valid order of a
court of competent jurisdiction, in which event the Party making such
disclosure shall so notify the other Party as promptly as practicable (and
if possible, prior to making such disclosure) and shall seek confidential
treatment of such information;
(y) in connection with enforcement of such Party's rights hereunder;
or
(z) to a professional advisor to such Party or its Affiliates in
connection with the performance by such Party or its Affiliates of its
obligations hereunder or thereunder;
provided, however, that any disclosure which is otherwise permitted hereunder
may be made to W-WCHP which shall not disclose such information to any Person
except as may be necessary to deal with the subject of the disclosure.
(b) Upon termination of this Agreement or any Permitted Transfer to a Third
Party, each Party will return all documents, work papers and other material of
the other Party, specifically requested to be returned by a Party in writing,
relating to the transactions contemplated hereby and by the Operative Documents,
and all copies of such materials, whether so obtained before or after the
execution hereof, to the Party furnishing the same. The obligations of the
Parties under this Section 15.12 shall survive the termination of this
Agreement.
SECTION 15.13. Specific Enforcement. Each Party acknowledges and agrees
that the other Party would be irreparably damaged in the event any of the
provisions of this Agreement or the Operative Documents were not performed by it
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each Party shall be entitled to an injunction or
injunctions to prevent breaches of such provisions and specifically to enforce
such provisions, in addition to any other remedy to which such Party may be
entitled, at law or in equity.
SECTION 15.14. Counterparts. This Agreement may be executed in
counterparts, and by different Parties on separate or the same counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed in their respective names and on their behalf, all as of the date first
above written.
WARNER-LAMBERT COMPANY,
by /s/ Fred G. Weiss
...................................
Name: Fred G. Weiss
Title: Vice President
GLAXO HOLDINGS p.l.c.,
by /s/ Jeremy A. W. Strachan
...................................
Name: Jeremy A. W. Strachan
Title: Executive Director
36