SCHERING-PLOUGH CORPORATION REDACTED VERSION [***] Indicates information
omitted pursuant to a request for confidential treatment and filed separately
with the Securities and Exchange Commission pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
Exhibit 99.2
CHOLESTEROL GOVERNANCE AGREEMENT
BY AND AMONG
MSP DISTRIBUTION SERVICES (C) LLC,
MSP MARKETING SERVICES (C) LLC,
MSP TECHNOLOGY (US) COMPANY LLC,
MERCK CARDIOVASCULAR HEALTH COMPANY,
MERCK TECHNOLOGY (US) COMPANY, INC.,
SCHERING MSP CORPORATION,
SCHERING SALES MANAGEMENT, INC.,
SCHERING SALES CORPORATION,
SCHERING MSP PHARMACEUTICALS L.P.,
MSP CHOLESTEROL LLC,
MSP SINGAPORE COMPANY, LLC,
MSD TECHNOLOGY SINGAPORE Pte. Ltd.,
MSD VENTURES SINGAPORE Pte. Ltd.,
OSAMMOR Pte. Ltd. (to be renamed
SCHERING-PLOUGH (SINGAPORE) Pte. Ltd.),
CITIMERE Pte. Ltd. (to be renamed
SCHERING-PLOUGH (SINGAPORE) RESEARCH Pte. Ltd.),
SCHERING CORPORATION,
SCHERING-PLOUGH CORPORATION,
AND
MERCK & CO., INC.
DATED AS OF
May 22, 2000
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINED TERMS....................................
Section 1.1. Interpretation...................................
Section 1.2. Definitions......................................
Section 1.3. Headings.........................................
Section 1.4. Intent of the Parties............................
ARTICLE II THE TRANSACTIONS.................................
Section 2.1. Transactions at the Signing......................
Section 2.2. Transactions as of the Effective Date............
ARTICLE III MANAGEMENT.......................................
Section 3.1. Management by the Board of Members...............
Section 3.2. General Manager..................................
Section 3.3. Boards of Members................................
Section 3.4. Committees; Purposes and Principles..............
Section 3.5. Meetings of the Committees.......................
Section 3.6. Committee Decision-Making and Dispute Resolution
Section 3.7. Required Consent.................................
Section 3.8. Deficit Make-Ups.................................
ARTICLE IV EFFECTIVENESS; APPROVAL; EXCLUSIVITY.............
Section 4.1. Effectiveness....................................
Section 4.2. Commercially Reasonable Efforts..................
Section 4.3. Non-Compete......................................
ARTICLE V DEVELOPMENT AND MARKETING........................
Section 5.1. General..........................................
Section 5.2. Product Recalls..................................
Section 5.3. Trademarks.......................................
ARTICLE VI RIGHT OF FIRST OFFER.............................
Section 6.1. Right of First Offer.............................
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ARTICLE VII DISPUTE RESOLUTION, TERMINATION, DISSOLUTION AND
LIQUIDATION
Section 7.1. Dispute Resolution...............................
Section 7.2. Termination......................................
Section 7.3. Consequences of Termination......................
ARTICLE VIII REPRESENTATIONS, WARRANTIES,
COVENANTS AND INDEMNIFICATION....................
Section 8.1. Representations and Warranties of the Parties....
Section 8.2. Certain Representations..........................
Section 8.3. Certain Covenants................................
Section 8.4. Certain Obligations..............................
Section 8.5. Indemnification..................................
ARTICLE IX MISCELLANEOUS....................................
Section 9.1. Confidentiality..................................
Section 9.2. Publicity........................................
Section 9.3. Further Assurances...............................
Section 9.4. Notices..........................................
Section 9.5. Failure to Pursue Remedies.......................
Section 9.6. Cumulative Remedies..............................
Section 9.7. Assignment; Binding Effect.......................
Section 9.8. Severability.....................................
Section 9.9. Standstill.......................................
Section 9.10. Counterparts.....................................
Section 9.11. Integration......................................
Section 9.12. Governing Law....................................
Section 9.13. Amendments.......................................
Section 9.14. Judicial Proceeding..............................
Section 9.15. Enforcement of Certain Rights....................
Section 9.16. No Third Party Beneficiaries.....................
Section 9.17. Survival.........................................
Schedule A - Existing M JVs
Schedule B - Existing S-P JVs
Schedule C - Non-Pharma Companies
Schedule 7.3 - Illustrations of Change of Control Valuation
Schedule 9.4
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This Cholesterol Governance Agreement is dated as of May 22, 2000, by and
among MSP DISTRIBUTION SERVICES (C) LLC ("Distribution LLC"), MSP Marketing
Services (C) LLC ("Marketing LLC"), MSP TECHNOLOGY (US) COMPANY LLC ("Technology
LLC"), MERCK CARDIOVASCULAR HEALTH COMPANY ("M-Cardio Sub"), MERCK TECHNOLOGY
(US) COMPANY, INC., SCHERING MSP CORPORATION ("S-MSP Corp."), SCHERING SALES
MANAGEMENT, INC. ("S-Sales Sub"), SCHERING SALES CORPORATION, SCHERING MSP
PHARMACEUTICALS L.P., MSP CHOLESTEROL LLC ("Cholesterol LLC"), MSP SINGAPORE
COMPANY, LLC (the "Singapore Partnership"), MSD TECHNOLOGY SINGAPORE Pte. Ltd.,
MSD VENTURES SINGAPORE Pte. Ltd., OSAMMOR Pte. Ltd. (to be renamed
SCHERING-PLOUGH (SINGAPORE) Pte. Ltd.), CITIMERE Pte. Ltd. (to be renamed
SCHERING-PLOUGH (SINGAPORE) RESEARCH Pte. Ltd.), Schering Corporation,
Schering-Plough Corporation, a New Jersey corporation ("S-P"), and Merck & Co.,
Inc., a New Jersey corporation ("M").
WHEREAS, S-P and M, through their respective Affiliates, have entered into
limited liability company agreements dated as of the date hereof relating to the
formation of Distribution LLC, Marketing LLC, Technology LLC, Cholesterol LLC
and Singapore Partnership (Distribution LLC, Marketing LLC, Technology LLC,
Cholesterol LLC and Singapore Partnership being collectively referred to herein
as the "Companies", and each, individually, a "Company").
WHEREAS, the Companies have been formed and the Related Agreements have
been entered into for the purposes of, among other things, research, development
and commercialization of (1) the Z/E Combination Product, (2) the M/E
Combination Product and (3) the Ezetimibe Monotherapy.
WHEREAS, the parties hereto have agreed to set forth matters relating to
the governance of the Companies and development and marketing of the Cholesterol
Products.
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE I
DEFINED TERMS
Section 1.1. Interpretation. Throughout this Agreement, nouns, pronouns
and verbs shall be construed as masculine, feminine, neuter, singular or plural,
whichever shall be applicable. All references herein to "Articles," "Sections"
and clauses shall refer to corresponding provisions of this Agreement, unless
otherwise specified.
Section 1.2. Definitions. The terms defined in this Article I shall, for
the purposes of this Agreement, have the meanings herein specified.
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"Affiliate" means with respect to a specified Person, any Person that
directly or indirectly controls, is controlled by, or is under common control
with, the specified Person; provided that (i) the Existing M JVs shall be deemed
not to be Affiliates of M, so long as they continue to carry on their respective
businesses as presently conducted and (ii) the Existing S-P JVs shall be deemed
not to be Affiliates of S-P, so long as they continue to carry on their
respective businesses as presently conducted. As used in this definition, the
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract or otherwise.
"Agreement" means this Cholesterol Governance Agreement as it may be
amended from time to time.
"Bankruptcy" means the occurrence of any of the following:
(i) S-P or M or any of their respective Significant Subsidiaries
makes a general assignment for the benefit of creditors;
(ii) S-P or M or any of their respective Significant Subsidiaries
becomes insolvent;
(iii) S-P or M or any of their respective Significant Subsidiaries
files any application or petition in any tribunal for the appointment of a
trustee or receiver;
(iv) S-P or M or any of their respective Significant Subsidiaries
commences any proceeding leading towards the adjudication of S-P or M or
any of their respective Significant Subsidiaries as insolvent under any
bankruptcy or reorganization statute, or under any provision of the United
States Bankruptcy Code, or under any insolvency law in a relevant
jurisdiction, whether now or hereafter in effect; or
(v) any petition or application of the types described in clauses
(i) through (iv) above is commenced against S-P or M or any of their
respective Significant Subsidiaries and is not dismissed within sixty (60)
days after filing, or an order is entered appointing a trustee, receiver,
or custodian for S-P or M or any of their respective Significant
Subsidiaries, or an order for a relief is issued in any bankruptcy
proceeding.
"Board" has the meaning set forth in Section 3.1.
"Board Chairperson" has the meaning set forth in Section 3.3(b).
"CAI" and "Cholesterol Absorption Inhibitor" each mean a product whose
primary clinical effect is through inhibition of the absorption of cholesterol
from the diet into the plasma.
[***]
- 5 -
"Call Notice" has the meaning set forth in Section 7.3(e)(ii).
"Call Party" has the meaning set forth in Section 7.3(e).
"Call Price" has the meaning set forth in Section 7.3(e).
"C-O-C Notice" has the meaning set forth in Section 7.3(e).
"C-O-C Party" has the meaning set forth in Section 7.3(e).
"Change of Control" means, at any time on or after the date of execution
of this Agreement, with respect to either M or S-P:
(a) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Specified Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either (i) the then outstanding shares of common stock of such company
(the "Outstanding Common Stock") or (ii) the combined voting power of the then
outstanding voting securities of such company entitled to vote generally in the
election of directors (the "Outstanding Voting Securities"); provided, however,
that for purposes of this subsection (a), the following acquisitions of
securities of such company shall not constitute a Change of Control of such
company: (i) any acquisition by such company, (ii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by such company
or any corporation controlled by such company or (iii) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and
(iii) of subsection (c) of this definition; or
(b) individuals who, as of the date hereof, constitute the Board of
Directors of such company (the "Incumbent Board") cease for any reason to
constitute at least 40% of the Board of Directors of such company; provided,
however, that any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by such company's shareholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents by or on behalf of a
Specified Person other than the Board of Directors of such company; or
(c) consummation of a merger, consolidation, or other similar
extraordinary transaction, or sale or other disposition of all or substantially
all of the assets (a "Business Combination") of such company, in each case,
unless, following such Business Combination, (i) the individuals and entities
who were the beneficial owners, respectively, of the Outstanding Common Stock
and Outstanding Voting Securities
- 6 -
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 40% of, respectively, the then outstanding shares of
common stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as the case
may be, of the corporation or other entity resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the then outstanding securities of such company or all or
substantially all of such company's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Common Stock
and Outstanding Voting Securities, as the case may be, (ii) no Specified Person
(excluding any corporation resulting from such Business Combination or any
employee benefit plan (or related trust) of such company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation and (iii) at least 50% of the members of the board of directors of
the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board of Directors of such company, providing for such Business
Combination; or
(d) approval by the shareholders of such company of a complete liquidation
or dissolution of such company; or
(e) a Business Combination with a company that is a Non-Pharma Company
which results in (i) existing shareholders of S-P or M, as the case may be,
owning less than 50% of the Outstanding Common Stock or Outstanding Voting
Securities of the surviving entity or (ii) members of the Incumbent Board of S-P
or M, as the case may be, constituting less than a majority of the board of the
surviving entity; or
(f) in the case of S-P (and not M), the one-year anniversary following
consummation of a Business Combination with a company that manufactures, sells
or markets a Significantly Competitive Cholesterol Product unless prior to such
one year anniversary S-P shall have disposed of such Significantly Competitive
Cholesterol Product.
"Cholesterol Assignment Documents" means all of the agreements identified
in Section 2.1(h) to Section 2.1(n), inclusive.
"Cholesterol Business" means any or all of the Z/E Business, the M/E
Business and/or the E Monotherapy Business, as appropriate.
"Cholesterol LLC" has the meaning set forth in the Preamble hereof.
"Cholesterol Products" means any or all of the Z/E Combination Product,
the M/E Combination Product and/or the Ezetimibe Monotherapy, as appropriate.
- 7 -
"Claim Notice" has the meaning set forth in Section 8.5(c).
"Co-Chairperson" has the meaning set forth in Section 3.3(b).
"Combination Product" means either or both of the Z/E Combination Product
and/or M/E Combination Product, as appropriate.
"Committee" means any or all of the Development Committee, the Marketing
Committee or Finance Committee, as appropriate.
"Companies" has the meaning set forth in the Recitals hereof.
"Company" has the meaning set forth in the Recitals hereof.
"Company Product" means the Cholesterol Products as developed and marketed
by the Companies, either individually or as a group.
"Confidential Information" has the meaning set forth in Section 9.1(a).
"Co-Promotion Agreement" means the Co-Promotion and Marketing Services
Agreement for Cholesterol Products in the Territory, dated as of the date hereof
and as may be amended from time to time, between M, Schering Sales Corporation
and Marketing LLC.
"Development Agreement" means the Development Agreement (Cholesterol
Combinations), dated as of the date hereof and as may be amended from time to
time, among Singapore Partnership, M and S-P.
"Development Committee" has the meaning set forth in Section 3.4(a).
"Disclosing Party" has the meaning set forth in Section 9.2(a).
"Distribution LLC" has the meaning set forth in the Preamble hereof.
"E Monotherapy Business" means the research, development, registration,
manufacture and/or procurement, distribution, promotion and marketing of a
pharmaceutical product which is comprised of ezetimibe as its sole active
ingredient in the Field relating to the Territory, as and to the extent
contemplated by this Agreement and any Related Agreements.
"Effective Date" has the meaning set forth in Section 4.1.
"Ethical Pharmaceutical Product" shall mean with respect to any Person any
pharmaceutical product for human use which may be sold lawfully in any country
of the world with a prescription of a licensed practitioner.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Executive Sponsor" has the meaning set forth in Section 3.3(f).
"Existing M JVs" means those Persons listed on Schedule A.
"Existing S-P JVs" means those Persons listed on Schedule B.
"ezetimibe" has the meaning set forth in the License Agreement.
"Ezetimibe Monotherapy" has the meaning set forth in the S-P License
Agreement.
"FDA" means the United States Food and Drug Administration or its
successor agency.
"Field" has the meaning set forth in the License Agreement.
"Finance Committee" has the meaning set forth in Section 3.4(a).
"GAAP" means generally accepted accounting principles in the United States
of America as in effect from time to time, applied on a consistent basis.
"General Manager" has the meaning set forth in Section 3.2.
"Governmental Entity" means any foreign, federal, state or local judicial,
legislative, executive, administrative or regulatory body or authority or any
court, arbitration board or tribunal.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"Indemnified Entity" has the meaning set forth in Section 8.5(a).
"Interests" means a Member's or the aggregate of all Members', as
applicable, rights, title and interests in any or all of the Companies.
"Launch" means, with respect to a Cholesterol Product, the first
commercial sale of such Cholesterol Product to a Third Party in the Territory.
"Law" means any federal, state, or foreign or supranational statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines.
"License Agreement" means either or both of the M License Agreement and/or
the S-P License Agreement, as appropriate.
"Licensor" has the meaning set forth in Section 9.15.
"Losses" has the meaning set forth in Section 8.5(b).
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"M" has the meaning set forth in the Preamble hereof.
"M License Agreement" means the License Contribution Agreement
(Cholesterol Combination/Existing IP), dated as of the date hereof and as may be
amended from time to time, between MSD Technology Singapore Pte. Ltd. and
Cholesterol LLC.
"M Marks" has the meaning set forth in Section 5.3(b)(i).
"M Members" means Affiliates of M when acting in their capacities as
members or partners of any of the Companies, and/or any successors in accordance
with Section 9.7.
"Marks" means either or both the M Marks and/or the S-P Marks, as
appropriate.
"M-Cardio Sub" has the meaning set forth in the Preamble hereof.
"M/E Business" means the research, development, registration, manufacture
and/or procurement, distribution, promotion and marketing of a pharmaceutical
product in the Field relating to the Territory that shall be a combination
product comprising, but not limited to, [***], as and to the extent contemplated
by this Agreement and any Related Agreements.
"M/E Combination Product" shall mean a pharmaceutical product consisting
of a fixed single combination of pharmacologically active ingredients
comprising, but not limited to, [***].
"[***]" has the meaning set forth in the License Agreement.
"Marketing Committee" has the meaning set forth in Section 3.4(a).
"Marketing LLC" has the meaning set forth in the Preamble hereof.
"Material Breach" has the meaning set forth in Section 7.2(c).
"Material Adverse Effect" has the meaning set forth in Section 7.2(c).
"Member" means the S-P Members and the M Members, individually, when
acting in the capacity of each as a member or partner of any of the Companies,
and "Members" means S-P Members and M Members, collectively, when acting in
their capacities as members or partners of any of the Companies, and/or any
successors in accordance with Section 9.7.
"New Agreements" has the meaning set forth in Section 7.3(i).
"Non-Pharma Company" means as of the time of a Change of Control
transaction, any Person that, with respect to the most recent full fiscal year
ended immediately prior to
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the Change of Control transaction, had Pharmaceutical Sales of less than $3.25
billion (as increased annually as of January 1 of each year, commencing January
1, 2001 by the cumulative percentage growth in worldwide pharmaceutical sales
over the immediately preceding year as reported by the World Review published by
IMS Global Services or any successor publisher thereto ("Inflation Adjusted"))
unless (x) Pharmaceutical Sales represent more than 60% of sales and (y) total
company sales were less than $5 billion (Inflation Adjusted); provided that the
companies listed on Schedule C will be deemed not to be Non-Pharma Companies.
"Non-Terminated Party" means, in the event of a termination of this
Agreement pursuant to Section 7.2(b) [Bankruptcy], 7.2(c) [Material Breach] or
7.2(d) [Change of Control], the parties hereto and their Affiliates, other than
the Terminated Party.
"Offering Party" has the meaning set forth in Section 6.1(a)
"Order" has the meaning set forth in Section 4.2(b).
"Other Party" has the meaning set forth in Section 6.1(a).
"Person" means any individual, corporation, trust, association,
unincorporated association, estate, partnership, joint venture, limited
liability company, governmental entity or other legal entity.
"Pharmaceutical Sales" of a Person shall mean worldwide sales of Ethical
Pharmaceutical Products (determined on a consolidated basis in accordance with
GAAP).
"Plan" means a Marketing Plan, Five Year Strategic Plan, Default Market
Plan (each such plan as defined in the Co-Promotion Agreement) and Development
Plan and Post-Marketing Support Plan (each such plan as defined in the
Development Agreement).
"Pre-Existing Relationship" means, with respect to M, a Pre-Existing M
Relationship and, with respect to S-P, a Pre-Existing S-P Relationship.
"Pre-Existing M Relationship" means, with respect to a proposed ROW
Arrangement, any Third Party that at the time of determination is a party to a
marketing agreement with the Offering Party or its Affiliates (which such
agreement has been in existence for not less than three years) in the country
that is the subject of the proposed ROW Arrangement involving the marketing by
such Third Party of one or more of those products of the Offering Party which,
during either of the two full calendar years prior to the date of determination,
accounted for sales revenue which represented 40% or more of the Offering
Party's gross revenue in such country during the applicable year; provided that,
with respect to Argentina, Brazil, Italy and Spain, a Pre-Existing M
Relationship shall be deemed to exist with respect to any Third Party other than
a Third Party that together with its Affiliates at the time of determination is
either (i) one of the top ten companies in worldwide gross sales of Ethical
Pharmaceutical Products or (ii) one of the
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top five companies in gross sales of Ethical Pharmaceutical Products in the
European Union (other than any of those companies referred to in clause (i)).
Notwithstanding the foregoing, Sigma Tau S.p.A. and its Affiliates shall be
deemed to be a Pre-Existing M Relationship with respect to Italy and Spain.
"Pre-Existing S-P Relationship" means, with respect to a proposed ROW
Arrangement, any Third Party that at the time of determination is a party to a
marketing agreement with the Offering Party or its Affiliates (which such
agreement has been in existence for not less than three years) in the country
that is the subject of the proposed ROW Arrangement involving the marketing by
such Third Party of one or more of those products of the Offering Party which,
during either of the two full calendar years prior to the date of determination,
accounted for sales revenue which represented 40% or more of the Offering
Party's gross revenue in such country during the applicable year, provided that,
with respect to Italy and Spain, a Pre-Existing S-P Relationship shall be deemed
to exist with respect to any Third Party other than a Third Party that together
with its Affiliates at the time of determination is either (i) one of the top
ten companies in worldwide gross sales of Ethical Pharmaceutical Products or
(ii) one of the top five companies in gross sales of Ethical Pharmaceutical
Products in the European Union (other than any of those companies referred to in
clause (i)). Notwithstanding the foregoing, A. Menarini Pharmaceutical
Industries Group, Ltd. and its Affiliates shall be deemed to be a Pre-Existing
S-P Relationship with respect to Italy and Spain.
"Pre-Termination Substances" means any CAI and any Statin, or any rights
thereto, owned or held (by license or otherwise) by the Terminated Party or any
entity that was an Affiliate of the Terminated Party prior to the date
determined by clause (i) or clause (ii) hereafter, regardless of the stage of
development (i.e., whether pre-clinical, clinical or in any other stage) prior
to (i) the consummation of a Business Combination, in the case of termination
pursuant to Section 7.2(d) as a result of a Change of Control described in
paragraphs (c), (e) or (f) of the definition of Change of Control or (ii) the
termination of this Agreement, in the case of termination pursuant to Section
7.2(b) [Bankruptcy], 7.2(c) [Material Breach] or 7.2(d) as a result of the
acquisition of 50% of Outstanding Common Stock or Outstanding Voting Securities,
change in board composition or stockholder approval described in paragraphs (a),
(b) or (d) of the definition of Change of Control.
"Rejection Date" has the meaning set forth in Section 6.1(a).
"Related Agreements" shall mean any or all of the agreements listed in
Sections 2.1 and 2.2 and all other agreements executed and delivered
contemporaneously therewith, as such agreements may be amended from time to
time. When the term "Related Agreements" is used in a Related Agreement, such
term shall include this Agreement.
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"Respiratory Governance Agreement" means the Respiratory Governance
Agreement, dated as of the date hereof and as may be amended from time to time,
by and among Singapore Partnership, M, S-P and the other parties named therein.
"ROW" means all countries of the world and their territories, excluding
the Territory and Japan.
"ROW Arrangement" has the meaning set forth in Section 6.1(a).
[***]
"Significant Subsidiary" shall have the meaning as defined in Regulation
S-X of the Exchange Act.
"Significantly Competitive Cholesterol Product" means (x) any product that
in either of the [***] calendar years immediately prior to determination was one
of the [***] best selling products with respect to lipid management or other
uses that could reasonably be associated with the lipid management effects of
the Cholesterol Products, including but not limited to lipid-related vascular
disease management in the U.S. (a "Lipid Management Product"), determined on the
basis of gross sales, provided that if the [***] such best selling product has
gross sales during each of such years that (i) represented less than [***]% of
the gross sales of all Lipid Management Products and (ii) were less than [***]
(adjusted annually as of January 1 of each year, commencing January 1, 2001, by
any changes in the IMS category C10A with mail order, then the terms of this
clause (x) shall only apply to the [***] best selling Lipid Management Products
or (y) any product that (i) is entering (or is in) (or has completed) Phase III
clinical trials, or (ii) is in registration in the United States, or (iii) is
being manufactured and/or marketed and is within the first [***] years of the
first commercial sale of the product to a Third Party in the United States, and,
in the case of each of (i), (ii) and (iii), has a profile similar to or better
than the profile of any of the Cholesterol Products with respect to lipid
management or other uses that could reasonably be associated with the lipid
management effects of the Cholesterol Products, including but not limited to,
lipid related vascular disease management.
"Simvastatin" has the meaning set forth in the License Agreement.
"Singapore Partnership" has the meaning set forth in the Preamble hereof.
"S-MSP Corp." has the meaning set forth in the Preamble hereof.
"S-P" has the meaning set forth in the Preamble hereof.
"S-P License Agreement" means the Schering License Agreement (Existing
Ezetimibe and Cholesterol Combination IP), dated as of the date hereof and as
may be amended from time to time, by and between Schering Corporation and
Schering Sales Management, Inc.
- 13 -
"S-P Marks" has the meaning set forth in Section 5.3(b)(ii).
"S-P Members" means Affiliates of S-P when acting in their capacities as
members or partners of any of the Companies, and/or any successors in accordance
with Section 9.7.
"S-Sales Sub" has the meaning set forth in the Preamble hereof.
"Standstill Period" means the period beginning on the date hereof and
ending upon the later to occur of (x) three years after termination of this
Agreement and (y) three years after termination of the Respiratory Governance
Agreement; provided that if this Agreement is terminated pursuant to Section
7.2(a) due to failure to receive regulatory approval and the Respiratory
Governance Agreement is terminated pursuant to Section 7.2(a) thereof due to
failure to receive regulatory approval, then such period shall be the later of
(x) three years after termination of this Agreement or the Respiratory
Governance Agreement (whichever is later) and (y) four years after the execution
and delivery of this Agreement.
"Statin" means a product whose primary clinical effect is through the
inhibition of the human enzyme, 3-hydroxy-3-methylglutaryl Coenzyme A Reductase.
"Terminated Party" means, in the event of a termination of this Agreement
pursuant to Section 7.2(b) [Bankruptcy], 7.2(c) [Material Breach] or 7.2(d)
[Change of Control], the bankrupt party, the breaching party, or the party
experiencing the Change of Control, as the case may be, and its Affiliates.
"Territory" means the United States of America, its territories and
possessions (including but not limited to Puerto Rico).
"Third Party" means a Person which is not a Member or an Affiliate of a
Member.
"Trademark" means either or both of the US Z/E Trademark, and/or the
[***], as appropriate.
[***]
"US Z/E Trademark" has the meaning set forth in Section 5.3(a).
"Z/E Business" means the research, development, registration, manufacture
and/or procurement, distribution, promotion and marketing of a pharmaceutical
product in the Field relating to the Territory that shall be a combination
product comprising, but not limited to, simvastatin and ezetimibe, as and to the
extent contemplated by this Agreement and any Related Agreements.
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"Z/E Combination Product" shall mean a pharmaceutical product consisting
of a fixed single combination of pharmacologically active ingredients
comprising, but not limited to, simvastatin and ezetimibe.
Section 1.3. Headings. The headings and subheadings in this Agreement are
included for convenience and identification only and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
Section 1.4. Intent of the Parties. It is the intent of the parties hereto
that, without limiting the rights of the parties hereunder, S-P and M be
considered equal partners with respect to all matters relating to governance and
decision-making powers and that the parties intend to manage the operations of
the Cholesterol Business to maximize its commercial potential.
ARTICLE II
THE TRANSACTIONS
Section 2.1. Transactions at the Signing. Simultaneously with the
execution and delivery of this Agreement, the following documents shall be
executed and delivered:
(a) The Limited Liability Company Operating
Agreement of Distribution LLC between
M-Cardio Sub and S-MSP Corp.;
(b) The Limited Liability Company Operating
Agreement of Marketing LLC between
M-Cardio Sub and S-Sales Sub;
(c) The Limited Liability Company Agreement of
Technology LLC between Schering MSP
Pharmaceuticals L.P. and Merck Technology
(US) Company, Inc.;
(d) The Limited Liability Company Operating
Agreement of Cholesterol LLC by and among
MSD Technology Singapore Pte. Ltd., MSD
Ventures Singapore Pte. Ltd., Osammor Pte.
Ltd. (to be renamed Schering-Plough
(Singapore) Pte. Ltd.) and Citimere Pte.
Ltd. (to be renamed Schering-Plough
(Singapore) Research Pte. Ltd.);
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(e) The Limited Liability Company Agreement of
Singapore Partnership by and among MSD
Technology Singapore Pte. Ltd., MSD
Ventures Singapore Pte. Ltd., Osammor Pte.
Ltd. (to be renamed Schering-Plough
(Singapore) Pte. Ltd.) and Citimere Pte.
Ltd. (to be renamed Schering-Plough
(Singapore) Research Pte. Ltd.);
(f) The License Contribution Agreement
(Cholesterol Combination/Existing IP)
between MSD Technology Singapore Pte. Ltd.
and Cholesterol LLC;
(g) The License Agreement (Cholesterol
Combination/Formulation IP) -- Merck
between Merck & Co., Inc. and Cholesterol
LLC;
(h) The Contribution Agreement Osammor Pte.
Ltd. (to be renamed Schering-Plough
(Singapore) Pte. Ltd.) (Cholesterol)
between Osammor Pte. Ltd. (to be renamed
Schering-Plough (Singapore) Pte. Ltd.) and
Cholesterol LLC;
(i) The Contribution Agreement Sherico Ltd.
(Cholesterol) between Sherico, Ltd. and
Osammor Pte. Ltd. (to be renamed
Schering-Plough (Singapore) Pte. Ltd.);
(j) The Sublicense Agreement Scherico, Ltd.
(Existing Ezetimibe and Cholesterol
Combination IP) between Technology LLC and
Scherico Ltd.;
(k) The License Contribution Agreement
Schering MSP Pharmaceuticals Limited
Partnership, (Cholesterol) between
Schering MSP Pharmaceuticals L.P. and
Technology LLC;
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(l) The Contribution Agreement Schering Sales
Management, Inc. (Cholesterol) between
Schering Sales Management, Inc. and
Schering MSP Pharmaceuticals L.P.;
(m) The Schering License Agreement (Existing
Ezetimibe and Cholesterol Combination IP)
between Schering Corporation and Schering
Sales Management, Inc.;
(n) The Schering Formulation IP License
Agreement (Cholesterol Combination)
between Schering Corporation and
Cholesterol LLC;
(o) The Development Agreement (Cholesterol
Combinations) by and among Singapore
Partnership, M and Schering Corporation;
(p) The Contract Manufacturing Agreements
between Singapore Partnership and each of
the existing M bulk facilities listed below:
(i) Merck & Co., Inc. [Simvastatin], and
(ii) Merck Sharpe & Dohme (Ireland) Ltd.
[***];
(q) The Contract Manufacturing Agreement
(ezetimibe) between Singapore Partnership
and Schering-Plough Ltd.;
(r) The Toll Manufacturing Agreement (Zocor
Combination) between Singapore Partnership
and MSD Technology Singapore Pte. Ltd.;
(s) The Toll Manufacturing Agreement ([***]
Combination) between Singapore Partnership
and MSD Technology Singapore Pte. Ltd.;
(t) The Toll Manufacturing Agreement
(Ezetimibe Monotherapy) between Singapore
Partnership and Schering-Plough, Ltd.;
(u) The Toll Packaging Agreement ([***]
Combination) between Distribution LLC and
M;
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(v) The Toll Packaging Agreement (Ezetemibe
Monotherapy) between Distribution LLC and
Schering Corporation;
(w) The Toll Packaging Agreement (Zocor
Combination) between Distribution LLC and
M;
(x) Manufacturing Capacity Agreement
(Ezetimibe Active Ingredient) between MSP
Singapore Company LLC and Schering-Plough
Ltd.;
(y) Manufacturing Capacity Agreement
(Formulation) between MSP Singapore
Company LLC and Osammor Pte. Ltd. (to be
renamed Schering-Plough (Singapore) Pte.
Ltd.);
(z) Guarantee by Schering-Plough Corporation
in favor of MSP Singapore LLC re:
Utilization of Schering's Manufacturing
Capacity;
(aa) Agreement between Merck & Co., Inc. and
Schering-Plough Corporation re: Singapore
Facility Construction Delay; and
(bb) The Co-Promotion and Marketing Services Agreement for
Cholesterol Products in the Territory by and among
Marketing LLC, Schering Sales Corporation and M.
Section 2.2. Transactions as of the Effective Date.
(a) On the Effective Date and simultaneously with the closing of the
transactions contemplated by the documents set forth in Section 2.1,
Cholesterol LLC will merge with and into Singapore Partnership, and
Singapore Partnership shall be the surviving entity.
(b) On or prior to the Effective Date, the following documents shall
be executed and delivered:
(i) The Exclusive Marketing, Distributorship
and Supply Agreement between Singapore
Partnership and Marketing LLC, pursuant to
which (A) Marketing LLC obtains the
exclusive rights to market and distribute
certain Cholesterol Products in the
Territory and (B) Cholesterol Products are
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delivered to Distribution LLC;
(ii) The Sub-Distributorship Agreement between Marketing LLC
and Distribution LLC, pursuant to which Marketing LLC
employs Distribution LLC as sub-distributor and
warehouser;
(iii) The Lease Agreement between Distribution LLC and M (or any
of its Affiliates), pursuant to which Distribution LLC
acquires warehouse space for Cholesterol Products;
(iv) The Administrative and Support Services Agreement between
Distribution LLC and M (or one of its Affiliates),
pursuant to which M will provide administrative and
support services to Distribution LLC, which services may
include: accounting, accounts payable/receivable, billing,
collection, payroll, record-keeping, employee benefits,
insurance, and other services;
(v) The Agreement and Plan of Merger between
Cholesterol LLC and Singapore Partnership;
(vi) Trademark Licenses - S-P; and
(vii) Trademark Licenses - M.
(c) M and S-P agree that the aggregate annual payments for services
provided pursuant to the documents described in clauses (iii) and (iv) of
Section 2.2 (b) will be an amount equal to a fixed percentage of total
annual sales of the Companies according to the following schedule: 1.0% of
total annual sales up to $1.0 billion, plus 0.5% of total annual sales in
excess of $1.0 billion up to $2.0 billion, plus 0.25% of total annual
sales in excess of $2.0 billion up to $3.0 billion, plus 0.0% of total
annual sales in excess of $3.0 billion.
ARTICLE III
MANAGEMENT
Section 3.1. Management by the Board of Members. Except as otherwise set
forth herein the business and affairs of each of the Companies shall be managed
by, and all powers of the Companies shall be vested in, each of such Companies'
Board of Members (each such Board of Members being referred to as a "Board").
The applicable Board shall be responsible for determining the general policies
of each Company and the scope of each Company's activities and operations.
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Section 3.2. General Manager. M shall have the sole authority to designate
one employee of M, subject to the written consent of S-P (such consent not to be
unreasonably withheld) to serve as the general manager of the Cholesterol
Products and the Cholesterol Business (the "General Manager"). S-P shall have
the right to cause the removal of the General Manager (subject to the written
consent of M, not to be unreasonably withheld), provided that such right shall
be exercisable no more than once every two years. Except as otherwise provided
in this Agreement and in any of the Related Agreements, the General Manager
shall coordinate the day-to-day activities of the parties to this Agreement by
making recommendations with respect to the operation and management of the
Cholesterol Products and the Cholesterol Business and shall take such other
actions as provided in the Related Agreements. The General Manager shall be
fully dedicated to the Cholesterol Business and shall act in the best interests
of the Cholesterol Business and shall not be involved in any activities relating
to the competing products of S-P or M or any of their respective Affiliates. The
General Manager shall also enter into an appropriate confidentiality agreement
with the applicable Companies, the Members of such Companies and S-P or M, as
the case may be. Such confidentiality agreement shall prohibit the use or
disclosure of Confidential Information obtained from any of the Companies, the
Members, S-P and M, and shall provide that the General Manager shall have no
access to competition-related information of either S-P or M or any of their
respective Affiliates. The General Manager's compensation shall be based on the
success of the Cholesterol Products which, in the period prior to Launch of the
Cholesterol Products, shall be determined by the applicable Board based on the
ability to meet development timelines and, in the period following Launch of the
Cholesterol Products, shall be determined by the applicable Board based on
meeting projected sales in the Territory as set forth in the applicable Plans.
Section 3.3. Boards of Members.
(a) Formation; Purposes. Within ten (10) days after the Effective
Date, the relevant Members shall establish the Boards contemplated by this
Agreement and the Related Agreements which shall have overall
responsibility for the management of the Companies. Without limiting the
generality of the foregoing, the responsibilities of each respective Board
shall include: approval of business plans, long range plans, annual sales
and profit targets, and capital forecasts for each combination. The Boards
shall carry out their responsibilities as set forth in this Agreement and
the Related Agreements, as applicable, and shall have the authority to
approve or disapprove any recommendation of the General Manager or any
Committee under this Agreement and the Related Agreements, as applicable.
With respect to matters not the subject of recommendation by any Committee
or the General Manager under this Agreement or the Related Agreements, as
applicable, no business may be transacted on behalf of a Company without
the prior written consent or written authorization of the applicable
Board. Without limiting the generality of the foregoing, only the
applicable Board may authorize the expenditure of funds by or on behalf of
a
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Company (unless specifically delegated to a Committee or the General
Manager or pursuant to any plan approved by the Board of such Company or
as otherwise set forth in Section 3.7). The Boards shall operate
independently of the Members and all lawful determinations, decisions and
actions made or taken by the applicable Board shall be conclusive and
absolutely binding upon the applicable Company. Prior to establishment of
the Boards, the Companies will be managed by the Members.
(b) Membership. The Boards shall be composed of an equal number of
representatives appointed by the S-P Members on the one hand and the M
Members on the other. Each of the Boards (other than the Board of the
Singapore Partnership) shall initially be comprised of three (3) senior
executives of S-P or any of its Affiliates, on the one hand, and three (3)
senior executives of M or any of its Affiliates, on the other. The Board
of the Singapore Partnership shall initially be comprised of five (5)
senior executives of S-P or any of its Affiliates and five (5) senior
executives of M or any of its Affiliates. At least three of the five
members of the Board of the Singapore Partnership to be appointed by each
of S-P and M, or any of their Affiliates, shall reside outside of the
United States (including one of whom shall reside in Singapore), and at
least one of the five such members shall have expertise in research and
development matters. The applicable Members may change the size and/or
composition of any of the Boards from time to time by mutual written
consent of each of the S-P Members and the M Members. The members of each
such Board shall not be responsible for day to day competition-related
decisions of S-P or M or any of their Affiliates with respect to products
competing with the Cholesterol Products. Each of the members of the Boards
shall (i) enter into an appropriate confidentiality agreement with the
applicable Companies, the Members and S-P or M, as the case may be, which
such agreement shall prohibit the unauthorized use or disclosure of
Confidential Information obtained from any of the Companies, the Members,
or S-P and M, or any of their Affiliates, and appropriate restrictions
shall be established to govern to the extent necessary the distribution to
the members of the Board of certain materials relating to pricing, pricing
strategies, marketing and/or marketing strategies for products or
prospective products of either S-P or M, or any of their Affiliates. The
S-P Members on the one hand and the M Members on the other may replace any
of its Board representatives with another senior executive of S-P or any
of its Affiliates, or M or any of its Affiliates, as the case may be,
provided that such replacement satisfy the residency and expertise
requirements, if any, of the representative being replaced, at any time
upon written notice to the other party and the Company. The Board of each
of Distribution LLC and Marketing LLC shall be chaired by a representative
selected by the M Board Members (each, a "Board Chairperson"). The Board
of the Singapore Partnership shall be chaired by two individuals, one
representative selected by the S-P Members and one representative selected
by the M Members (each, a "Co-Chairperson"). The applicable Board
Chairperson or Co-
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Chairperson, in the case of the Singapore Partnership, shall have as his
and/or her function as Chairperson the responsibility for calling
meetings, preparing and circulating an agenda in advance of each meeting,
and preparing and, subject to the prior review and approval of the Board,
issuing minutes of each meeting within thirty (30) days thereafter. From
time to time, the Boards may establish subcommittees or subordinate
committees (which may or may not include members of the applicable Board
itself) to oversee particular projects or activities, and such
subcommittees or subordinate committees shall be constituted and shall
operate as the applicable Board agrees.
(c) Meetings of the Boards. The Boards shall hold regular meetings
no less frequently than once every quarter, unless the Board otherwise
determines. Special meetings of the Boards may be called by any Board
member or as otherwise determined by the applicable Board. Meetings, in
addition to quarterly meetings, shall be held timely to approve Plans
submitted for Board approval in accordance with this Agreement and the
Related Agreements, as applicable. Meetings of the Boards may be held by
audio or video teleconference. The S-P Members on the one hand and the M
Members on the other shall be responsible for all of their own expenses of
having their representatives participate on a Board. All meetings of the
Board of the Singapore Partnership shall be held outside the United
States. All meetings of the Boards of the Companies other than the
Singapore Partnership shall be held in the state of Nevada or at such
other location as each such Board may determine.
(d) Manner of Acting. Meetings of a Board shall be effective only if
two representatives of the S-P Members on the one hand and two
representatives of the M Members on the other are present or participating
throughout. The unanimous vote of the members of a Board present or
participating at any meeting of a Board shall be necessary for the passage
of any resolution or act of a Board. Any action required or permitted to
be taken by a Board may be taken without a meeting if each member of a
Board consents thereto in writing.
(e) Dispute Resolution. Except as set forth in Section 7.1(b)
[Product Safety], the members of each Board will use reasonable efforts to
resolve any dispute, claims, controversies or disagreements, including
without limitation matters referred to it by a Committee under Section
3.6(b) [Committee Dispute Resolution]. If any matter cannot be resolved by
the applicable Board within a reasonable period of time, such
reasonableness to be considered in view of the urgency and importance of
the matter, and in any event, within thirty (30) days after the
representative(s) of the S-P Members on the one hand or the M Members on
the other on the applicable Board has given written notice of such
disagreement to the representative(s) of the other party, the S-P Members
on the one hand and the M Members on the other shall cause to be prepared
and circulated to the other party a memorandum or other form of statement
setting out its position on the matter in dispute and its reasons for
adopting such position.
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Each such memorandum or statement shall be considered by the respective
Executive Sponsor of the S-P Members or the M Members. The respective
Executive Sponsors of the S-P Members and the M Members shall use their
respective good faith reasonable efforts to jointly recommend a resolution
of such dispute to the applicable Board within thirty (30) days. Upon
resolution of the matter the respective Executive Sponsors shall jointly
execute a written statement setting forth the terms of such recommended
resolution.
(f) Executive Sponsors. Each of M and S-P will designate one senior
executive of it or any of its Affiliates (who may also serve as a member
of the Board) to serve as that party's "Executive Sponsor" to champion
interactions between the S-P Members on the one hand and the M Members on
the other with respect to the Cholesterol Business.
Section 3.4. Committees; Purposes and Principles.
(a) General. Within ten (10) days after the Effective Date, S-P and
M shall cause to be established: (a) a Development Committee (the
"Development Committee") which shall be comprised of members designated in
a manner, and have the responsibilities and duties, and which shall be
subject to any other provisions related to the Development Committee or
any members of such Committee, as set forth in the Development Agreement;
(b) a Marketing Committee (the "Marketing Committee") which shall be
comprised of members designated in a manner, and have the responsibilities
and duties, and which shall be subject to any other provisions related to
the Marketing Committee or any members of such Committee, as set forth in
the Co-Promotion Agreement; and (c) a Finance Committee (the "Finance
Committee") which shall oversee and coordinate the financial affairs of
the Companies and which shall meet at least once every six (6) months. The
Committees shall operate independently of S-P, M and the Members, and in
the best interests of the Companies.
(b) Principles. Members of a Marketing Committee shall be persons at
a sufficiently high level within M or S-P or their Affiliates to exercise
substantive input with respect to matters presented to such Committee.
Members of the Marketing Committee may have other responsibilities within
M or S-P or their Affiliates including among other things, general
oversight of the marketing and/or sales of products in the Field, but not
primary day-to-day responsibility for products in the Field. Each of the
members of the Committees shall enter into an appropriate confidentiality
agreement with the applicable Companies, the Members, and S-P or M, as the
case may be. Such confidentiality agreement shall prohibit the
unauthorized use or disclosure of Confidential Information obtained from
any of the Companies, the Members, S-P and M or any of their respective
Affiliates. From time to time, each Committee may establish subcommittees
or subordinate committees (which may or may not include members of the
Committee itself) to oversee particular projects or activities, and such
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subcommittees or subordinate committees shall be constituted and shall
operate as the Committee agrees.
(c) Scope of Committee Authority. The activities of the committees
described in Section 3.4(a) shall be limited to making recommendations to
the General Manager and the Boards of the appropriate Companies. The
committees shall have no express or implied authority to act on behalf of
any Company or cause any Company to act, except as otherwise authorized by
the Board of each such Company.
Section 3.5. Meetings of the Committees. Each Committee shall hold
meetings at such times and in such manner as set forth in the appropriate
Related Agreements or as determined by the Committee.
Section 3.6. Committee Decision Making and Dispute Resolution.
(a) Manner of Acting. Meetings of a Committee shall be effective
only if two representatives of the S-P Members on the one hand and two
representatives of the M Members on the other are present or participating
throughout. The unanimous vote of the members of a Committee present or
participating at any meeting of a Committee shall be necessary for the
passage of any resolution or act of a Committee. Subject to Section 3.5,
any action required or permitted to be taken by a Committee may be taken
without a meeting if each member of a Committee consents thereto in
writing.
(b) Committee Dispute Resolution. Subject to the provisions in
Section 7.1(b) [Product Safety], if any matter cannot be resolved by a
Committee within a reasonable period of time, such matter shall be
submitted to the applicable Board for resolution as set forth in Section
3.3(e).
Section 3.7. Required Consent. Without limiting the generality of the
provisions of Section 3.1, no Company shall (nor shall any Member acting on any
of the Companies' behalf) take any of the following actions, either directly or
indirectly, without receiving the prior approval of the applicable Board, unless
such action is taken pursuant to any Plan approved by the Board of such Company:
(a) employ or retain any employees;
(b) enter into major transactions, contracts and binding
arrangements (other than the Related Agreement or as specifically
contemplated hereby or thereby) for which any of the Companies has direct
or indirect liability, including, without limitation, any contract,
liability or commitment which is not capable of being terminated within
twelve (12) months or which, together with all related arrangements,
involves $1,000,000 or more (provided, however, that contracts for
- 24 -
previously approved and budgeted research and development work, such as
clinical grant agreements, are excluded from this clause);
(c) create any indebtedness of any of the Companies or any security
interest, lien, mortgage, charge or other encumbrance over any assets of
any of the Companies or the giving of guarantees or indemnities by any of
the Companies;
(d) make any material change in the nature of the business of any of
the Companies;
(e) except as specifically provided in this Agreement or the Related
Agreements, commence any suit or action in the name of any of the
Companies, seek injunctive relief or specific performance with respect to
material matters or agree to any settlement of any suit or claim involving
any of the Companies, and each party shall cooperate in all respects with
each other and the Company in connection with any such suit, action or
claim;
(f) distribute any cash or assets of any of the Companies to the
Members or any of their respective Affiliates, other than as specifically
provided for in Article VII of this Agreement or the Related Agreements;
(g) make, execute or deliver any assignment for the benefit of
creditors, or commence a voluntary case seeking liquidation, dissolution,
reorganization or adjustment of debts pursuant to the provisions of any
state or federal bankruptcy or insolvency act, or consent to the
institution of an involuntary case with respect to the same, or ask for or
consent to the appointment of a receiver, liquidator, custodian, trustee,
or similar official for all or any part of any of the Companies' property;
(h) assign, transfer, pledge, compromise or release any claim of any
of the Companies except for full payment, except as specifically provided
in this Agreement;
(i) sell, assign, transfer, lease, license, sub-license, share,
exchange, grant or otherwise dispose of any assets of any of the Companies
except for distributions to Members as specifically provided pursuant to
the Related Agreements in accordance with the terms thereof;
(j) engage in any transaction not in the ordinary course of the
Cholesterol Business;
(k) except as specifically set forth in this Agreement or the
Related Agreements, approve or file the annual tax returns of any of the
Companies, make or change any and all elections for federal, state and
local tax purposes including, without limitation, any election, if
permitted by applicable law (i) to adjust the
- 25 -
basis of any of the Companies' properties or (ii) to extend the statute of
limitations for assessment of tax deficiencies against Members or S-P and
M with respect to adjustments to any of the Companies' federal, state or
local tax returns, represent any of the Companies before the taxing
authorities or courts of competent jurisdiction in tax matters affecting
any of the Companies and the Members in their capacity as Members, enter
into a settlement agreement with respect to any issue raised in an audit
of any of the Companies or execute any agreements or other documents that
bind the Members with respect to such tax matters or otherwise affect the
rights of any of the Companies or the Members;
(l) change any accounting principle or practice, including the
method of accounting for, and reporting of, any of the Companies' assets
(tangible or intangible), except as required by GAAP;
(m) enter into any transactions, contracts or arrangements involving
more than $100,000 with S-P or M or any Affiliate of S-P or M; or
(n) agree or commit to agree to any of the foregoing.
Section 3.8. Deficit Make-Ups. In the event the Singapore Partnership is
"liquidated" within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g), if
any Member's Capital Account has a deficit balance (after giving effect to all
contributions, distributions, allocations for all Fiscal Years, including the
Fiscal Year or Fiscal Years during which such liquidation occurs, and after
giving effect to Section 8.3 in the Limited Liability Company Agreement of
Singapore Partnership), such Member shall contribute to the capital of the
Singapore Partnership the amount necessary to restore such deficit balance to
zero in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(3). Capitalized
terms in this Section 3.8 shall have the meanings as defined in the Limited
Liability Company Agreement of Singapore Partnership.
ARTICLE IV
EFFECTIVENESS; APPROVAL; EXCLUSIVITY
Section 4.1. Effectiveness. Upon delivery of fully executed and duly
authorized counterparts of this Agreement and each of the Related Agreements,
S-P and M shall form the Companies contemplated hereby and by the Related
Agreements. Notwithstanding the foregoing, the activities in the Territory will
commence and transfers of assets relating to the operations in the Territory
contemplated hereby and by the Related Agreements with respect to the
Cholesterol Business will be consummated as promptly as practicable following
the date that all applicable waiting periods under the HSR Act shall have
expired or been terminated (such date the "Effective Date").
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Section 4.2. Commercially Reasonable Efforts.
(a) Each of the parties hereto shall file all necessary
notifications and reports under the HSR Act with respect to the
transactions contemplated hereby as promptly as reasonably practicable
following execution and delivery of this Agreement.
(b) Each of S-P and M and the Members shall use commercially
reasonable efforts to avoid the entry of any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, under any
Law, that would have the effect of prohibiting, preventing or restricting
consummation of the transactions contemplated by this Agreement or any of
the Related Agreements, or imposing any material limitation on the conduct
of the businesses of S-P, M or any of the Companies following consummation
of such transactions, or on the right of S-P or M to enjoy the full
benefits of ownership pursuant to this Agreement and the Related
Agreements (an "Order").
(c) Each of S-P and M shall, in connection with the efforts
referenced in the foregoing paragraph to avoid the entry of any Order, (i)
cooperate in all respects with each other in connection with any filing or
submission and in connection with any investigation or other inquiry; (ii)
promptly inform the other party of any communication to it from any
Governmental Entity and permit the other party to review in advance any
proposed communication from it to any Governmental Entity or Third Party;
and (iii) not arrange for or participate in any meeting with any
Governmental Entity in respect of any filings, investigation or other
inquiry without consulting with each other in advance, and, to the extent
permitted by such Governmental Entity, giving the other party the
opportunity to attend and participate thereat. Neither S-P or M shall
enter into any proposed understanding, undertaking, or agreement with any
Governmental Entity in connection with the transactions contemplated by
this Agreement without the prior written consent of the other party.
(d) In connection with the foregoing, if any administrative or
judicial action or proceeding is instituted (or threatened to be
instituted) challenging any transaction contemplated by this Agreement as
violative of any Law, each of S-P and M shall cooperate and use its
respective commercially reasonable efforts to contest and resist any such
action or proceeding and to have vacated, lifted, reversed or overturned
any decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, that is in effect and that prohibits, prevents,
or restricts consummation of the transactions contemplated by this
Agreement or the Related Agreements or imposes any material limitation on
the conduct of the businesses of either S-P or M or of any of the
Companies following consummation of such transactions or on the right of
S-P or M to enjoy the full benefits of ownership pursuant to this
Agreement and the Related Agreements.
- 27 -
(e) If any objections are asserted with respect to the transactions
contemplated hereby or under any Related Agreement under any Law or if any
suit is instituted challenging any of the transactions contemplated hereby
as violative of any Law or regulation, each of S-P and M shall take
commercially reasonable actions in response to any matters that may be
required or proposed (i) by the applicable Governmental Entity in order to
resolve any such objections as such Governmental Entity may have to such
transactions under such Law, or (ii) by any domestic or foreign court or
administrative agency or similar tribunal, in any suit brought by a
private party or Governmental Entity challenging the transactions
contemplated hereby as violative of any Law, in order to avoid the entry
of, or to effect the dissolution of, any injunction, temporary restraining
order or other order that has the effect of preventing the consummation of
any of such transactions or would otherwise deprive either S-P or M of the
material benefits of the ownership and control of its respective assets or
operations after the Effective Date pursuant to this Agreement and the
Related Agreements.
(f) Notwithstanding any other provision of this Agreement, nothing
in this Agreement shall require, or be construed to require, either S-P or
M to proffer to, or agree to, sell, license, or hold separate and agree to
sell or license, before or after the Effective Date, any assets,
businesses, or interest in any assets or businesses of such party or any
of its respective Affiliates (or to consent to any sale, license, or
agreement to sell or license by either S-P or M or any of their Affiliates
of any of its assets or businesses) or to agree to any material changes or
restriction in the operations of any such assets or businesses.
Section 4.3. Non-Compete.
[***]
ARTICLE V
DEVELOPMENT AND MARKETING
Section 5.1. General. The development of each Cholesterol Product shall be
governed by the provisions of the Development Agreement, the License Agreement
and this Agreement. The marketing of each Cholesterol Product shall be governed
by the provisions of the Co-Promotion Agreement and this Agreement.
Section 5.2. Product Recalls. Subject to Section 7.1(b), if either
Executive Sponsor believes that a recall of a Cholesterol Product is necessary,
such Executive Sponsor shall notify the other Executive Sponsor within
forty-eight (48) hours of its determination and both S-P and M and the relevant
Members shall cooperate to allow such recall to occur to the extent determined
by the relevant Board (other than for safety which shall be solely governed by
and resolved pursuant to Section 7.1(b)). The General Manager will be
responsible for execution of such recall.
- 28 -
Section 5.3. Trademarks.
(a) The Z/E Combination Product and the M/E Combination Product
shall each be marketed in the Territory under a single trademark
recommended by the relevant Marketing Committee and approved by the
Marketing LLC (respectively, the "US Z/E Trademark," and the "[***]"). If
not confusingly similar to the S-P or M trademarks, the US Z/E Trademark
and the [***] will each be owned solely by Marketing LLC and
filed and prosecuted by counsel selected by Marketing LLC. Notwithstanding
the foregoing, M shall retain exclusive use of the ZOCOR and [***]
trademarks, and S-P shall retain exclusive use of the ezetimibe
trademarks. The parties, however, agree that they will seek to optimize
the commercial benefits of these trademarks through the potential use of
trademarks for the Companies' Cholesterol Products.
(b) (i) Promptly following the Effective Date, M or its Affiliates
shall grant to each of the Companies a limited, royalty free,
non-sublicensable right to use the M name and logo (the "M Marks") in
connection with the marketing of the Cholesterol Products. Such grant
shall be made pursuant to a trademark license agreement in form and
substance reasonably acceptable to M. The M Marks shall only be used as
reasonably determined by the applicable Board, except as specifically
provided in the Related Agreements.
(ii) Promptly following the Effective Date, S-P or its
Affiliates shall grant to each of the Companies a limited, royalty free,
non-sublicensable right to use the S-P name and logo (the "S-P Marks") in
connection with the marketing of the Cholesterol Products. Such grant
shall be made pursuant to a trademark license agreement in form and
substance reasonably acceptable to S-P. The S-P Marks shall only be used
as reasonably determined by the applicable Board, except as specifically
provided in the Related Agreements.
ARTICLE VI
RIGHT OF FIRST OFFER
Section 6.1. Right of First Offer.
(a) Unless and until an agreement which provides for the marketing,
distribution and sale of the Cholesterol Products in the ROW has been
executed and delivered by M and S-P or their respective Affiliates,
neither M or S-P or any of their Affiliates shall enter into discussions
or negotiations with any Third Party (other than a Pre-Existing
Relationship) regarding any business arrangement either with itself or any
of its Affiliates for the marketing, sale, promotion or any similar
commercial activities of any of the Cholesterol Products in any country in
the ROW (a "ROW Arrangement") unless the party interested in pursuing such
discussions or negotiations (the "Offering Party") first submits in
writing to the
- 29 -
other party (the "Other Party") a good faith offer containing the terms on
which it would agree to enter into a ROW Arrangement for the applicable
country with the Other Party. The Other Party must accept in writing
within 20 business days of the delivery of such offer in order to accept
such offer. In the event that the Other Party rejects such offer in
writing, or fails to accept within such period (the earlier of such dates,
the "Rejection Date"), the Offering Party may enter into discussions with
Third Parties regarding such a ROW Arrangement.
(b) The Offering Party may, within 180 days after the Rejection
Date, enter into a ROW Arrangement with the Third Party on the same
financial and economic terms and, to the extent feasible, substantially
the same other terms as offered to the Other Party, and which such other
terms shall, in the aggregate, be no more favorable to the Third Party
than those offered to the Other Party. The Offering Party will provide the
Other Party with prompt written notice of the entering into of any such
agreement. In the event the Offering Party desires to enter into a ROW
Arrangement on financial and economic terms which are not the same, or
which would not have substantially the same other terms to the extent
feasible, as those previously offered, and which such other terms are, in
the aggregate, more favorable to the Third Party than those offered to the
Other Party, or after the expiration of such 180-day period, the
provisions of this Section 6.1 shall apply again.
(c) For purposes of clarity, the parties hereto agree and
acknowledge that no license rights are implied, granted or otherwise arise
pursuant to this Section 6.1
(d) For a 90-day period following the date of execution of this
Agreement, S-P and M shall negotiate exclusively concerning a business
arrangement for the development, marketing, sale, promotion or any similar
commercial activities of all of the Cholesterol Products in the ROW
together with Japan, provided that this exclusive negotiation period shall
not be construed as an obligation of the parties to enter into a final,
binding agreement with respect to such markets.
ARTICLE VII
DISPUTE RESOLUTION, TERMINATION, DISSOLUTION
AND LIQUIDATION
Section 7.1. Dispute Resolution.
(a) General. Except as set forth in Section 7.1(b) (and without
limiting any dispute resolution procedures and remedies specifically
provided in any of the Related Agreements), any and all disputes, claims,
controversies or disagreements with respect to this Agreement or any of
the Related Agreements shall be resolved pursuant to the procedures set
forth in Section 3.3(e) and Section 3.6(b), as
- 30 -
applicable, and each of S-P, M and the Members agree that none of them
shall, except as contemplated by Section 9.14 [Judicial Proceeding],
resort to any means whatsoever, including litigation, arbitration,
dissolution by a judicial forum or decree, or by operation of law,
appointment of a trustee, receiver, custodian or similar person, or to any
other form of proceeding in connection with any such dispute, claim,
controversy or disagreement, including, without limitation, pursuant to
Section 86.491 of the Nevada Limited Liability Company Act, Section 18-802
of the Delaware Limited Liability Company Act and other similar applicable
laws.
(b) Product Safety. The Development Committee will use good faith
reasonable efforts to resolve disputes relating to product safety. If
unsuccessful, the Board of the Singapore Partnership and then the
Presidents of Research and Development for each of S-P and M will use
reasonable efforts to resolve such dispute. If the Presidents of Research
and Development for each of S-P and M are unable to resolve such dispute,
the respective Chief Executive Officers of each of S-P and M shall use
their good faith reasonable efforts to resolve such dispute.
[*** Note: approximately one and one-half pages of text are omitted]
Section 7.2. Termination. This Agreement may be terminated and the
provisions of Section 7.3 shall apply, as follows:
(a) Regulatory Approval. By M or S-P, in the event that the
applicable waiting periods under the HSR Act with respect to the
Cholesterol Business shall not have expired or been terminated prior to
the twelve month anniversary of the date hereof; or
(b) Bankruptcy. By M, in the event of the Bankruptcy of S-P or any
of its Significant Subsidiaries and, by S-P, in the event of the
Bankruptcy of M or any of its Significant Subsidiaries; or
(c) Material Breach. By M, in the event of a Material Breach (as
defined below) by S-P or one of its Affiliates of its obligations under
this Agreement or one or more of the Related Agreements or, by S-P, in the
event of a Material Breach by M or one of its Affiliates of its
obligations under this Agreement or one of the Related Agreements, which
breach is not cured by the breaching party or its Affiliates within thirty
(30) days, or such longer period as specifically provided pursuant to the
Related Agreements, after receipt by the breaching party and its ultimate
parent, M or S-P, as the case may be, of written notice of the breach
requesting cure of the breach, with reasonable detail of the particulars
of the alleged breach or in the event that the breach cannot be reasonably
cured within such thirty (30) day period, or such longer period as
specifically provided pursuant to the Related Agreements, the other party
or its Affiliate has not initiated actions reasonably expected to cure the
cited failure within thirty (30) days of receiving notice and has not in
any event cured such breach within 120 days of receiving notice, or such
longer period as specifically
- 31 -
provided pursuant to the Related Agreements. For purposes of this Section
7.2(c), "Material Breach" means a breach of a material provision of this
Agreement or any of the Related Agreements that (i) results in a material
adverse effect on the business, operations or financial condition of the
Companies taken as a whole, or the value of the Companies taken as a
whole, and (ii) materially frustrates the ability of either S-P or M, as
the non-breaching party, as the case may be, to realize the reasonably
anticipated benefits from the Companies ("Material Adverse Effect"). A
Material Breach shall also be deemed to occur upon any breach of Section
9.9 of this Agreement, provided that if an alleged breach is by a Person
that has been determined to be an Affiliate of M or S-P, as the case may
be, such breach will not be deemed a Material Breach if M or S-P, as the
case may be, demonstrates by a preponderance of the evidence each of the
following (i) that it did not cause, assist or encourage such Affiliate to
take the action underlying the alleged breach, (ii) that it did not have
the power to prevent such Affiliate from taking such action and (iii) that
it used commercially reasonable efforts to prevent such Affiliate from
taking such action. Notwithstanding the prior sentence, such breach may,
however, nevertheless be determined to be a Material Breach pursuant to
the provisions of the next sentence. The determination of whether a
Material Breach has occurred and liability for such breaches shall be made
in a judicial proceeding pursuant to Section 9.14 [Judicial Proceeding];
or
(d) Change of Control. By S-P, in the event of a Change of Control
of M, or by M, in the event of a Change of Control of S-P, as the case may
be; or
[***]
Section 7.3. Consequences of Termination.
(a) General. With respect to any event of termination, each party
shall undertake, during the pendency of the procedure to determine whether
such event of termination has occurred and the implementation of the
consequences of such termination, to maintain the Cholesterol Business as
a going concern, so that all of the rights, title and interests in the
Companies and the Cholesterol Businesses may be conveyed. The parties
acknowledge that in the event of a termination of this Agreement that
results in one party acquiring the Interests of another party hereto, the
acquiring party may determine to continue operating the Cholesterol
Business through one or more of the Companies.
(b) Regulatory Approval. In the event of termination pursuant to
Section 7.2(a), either S-P or M shall have the right, exercisable by
delivery of written notice to the other, to require such reasonable
actions be taken so as to put each of S-P and M back, to the maximum
extent possible and as promptly as practicable, to the position they were
in prior to their and their Affiliates' respective contributions of the
assets to the Companies. The costs and expenses of any such actions shall
be borne equally by M and S-P.
- 32 -
(c) Bankruptcy. In the event of termination pursuant to Section
7.2(b), the non-bankrupt party (or its designee) shall be entitled to
purchase the bankrupt party's Interests in each of the Companies. Such
purchase and sale shall be consummated as soon as practicable, but in any
event within 300 days of determination of a Bankruptcy of the other, and
each of the parties shall execute such documents as are reasonable and
necessary in connection therewith. The purchase price for any such
purchase shall be an amount equal to the fair market value of the bankrupt
party's Interests determined in the manner described in Section 7.3(e)(i).
(d) Material Breach.
(i) In the event of termination pursuant to Section 7.2(c),
the non-breaching party (or its designee) shall be entitled to
purchase the breaching party's Interests in each of the Companies.
Such purchase and sale shall be consummated as soon as practicable,
but in any event within 120 days of determination of a Material
Breach and the related appraisal and damage proceedings, and each of
the parties shall execute such documents as are reasonable and
necessary in connection therewith. The purchase price for any such
purchase shall be an amount equal to the fair market value of the
breaching party's Interests as determined in a judicial proceeding
as set forth in Section 9.14. In determining the fair market value
of the breaching party's Interests, the court shall apply the
standards applicable in an appraisal proceeding under Section 262 of
the Delaware General Corporation Law as may be amended from time to
time.
(ii) Any termination of this Agreement or any of the Related
Agreements pursuant to this Section 7.3(d) due to a breach of this
Agreement or any of the Related Agreements shall not relieve the
breaching party from liability for damages caused by its breaches
(except that the breaching party shall not be liable for punitive,
special, consequential, incidental, indirect or exemplary or other
similar damages or lost profits) as a result of any such breach.
Damages shall be determined in the judicial proceeding contemplated
by this Section 7.3(d).
(e) Change of Control. Within 45 days after the date of a Change of
Control of S-P or Change of Control of M, the party which did not
experience the Change of Control (the "Call Party") may by written notice
(the "C-O-C Notice") delivered to the other party (the "C-O-C Party")
request that the fair market value of the C-O-C Party's Interests (the
"Call Price") be determined in accordance with paragraph (i) of this
Section 7.3(e).
(i) The Call Price shall be conclusively determined by two
internationally recognized investment banking firms, one of which
shall be retained and paid by the Call Party and one of which shall
be retained and
- 33 -
paid by the C-O-C Party. The Call Party and the C-O-C Party shall
promptly notify each other of their respective selections. If either
such party fails to deliver such notice to the other party of its
selection of an investment banking firm within 30 days after
delivery of a C-O-C Notice, the determination shall be rendered by
the single investment banking firm so selected (whose fees, in such
case, shall be borne equally by S-P and M). The investment banking
firms selected in accordance with the foregoing procedure shall each
determine the fair market value of the C-O-C Party's Interest,
(which value shall be an amount determined assuming that the buyer
and seller are under no compulsion to buy or sell and shall be
determined without regard to any minority or illiquidity discount)
and submit their determinations of such value to the Call Party and
the C-O-C Party within 45 days following their selection. The Call
Price shall be the amount equal to the sum of such values determined
by each investment banking firm divided by two, except that if there
is more than a 12% difference between (x) the average of such values
and (y) each of such values, the two investment banking firms shall,
within 20 days after their submissions mutually select and appoint a
third investment banking firm, similarly qualified, and give written
notice thereof to the Call Party and the C-O-C Party. If the two
investment banking firms fail to appoint a third investment banking
firm within such 20-day period, the third investment banking firm
shall be selected and appointed, at the request of either party, by
the President of the Association of the Bar of the City of New York
or by a person designated by such President. Within 30 days after
the appointment of the third investment banking firm, the third
investment banking firm shall promptly submit in writing to the Call
Party and the C-O-C Party its determination of the fair market
value. If the valuation of the third banker is not between the
valuations of the first and second bankers, fair market value shall
be the average of the valuations of the third banker and the next
closest valuation. If the valuation of the third banker is (i)
between the valuations of the first and second bankers and (ii) not
more than 30% (calculated as the average of the first two valuations
multiplied by 0.3) higher or lower than the valuations of each of
the first and second bankers, then fair market value shall be the
average of the valuations of all three bankers. If the valuation of
the third banker is (x) between the valuations of the first and
second bankers and (y) more than 30% (calculated as the average of
the first two valuations multiplied by 0.3) higher or lower than one
or both of the other two valuations, then fair market value shall be
the average of the third banker's valuation and the valuation, if
any, that is not more than 30% (calculated as the average of the
first two valuations multiplied by 0.3) higher or lower than the
third banker's valuation. For illustrative purposes only, Schedule
7.3 hereof sets forth examples of the method of determining fair
market value pursuant to the provisions of this Section 7.3(e). The
fair market value as
- 34 -
determined above shall be final and binding upon the Call Party and
the C-O-C Party. The cost of such third investment banking firm
shall be borne one-half by the Call Party and one-half by the C-O-C
Party.
(ii) The Call Party shall have the right, exercisable by
delivery of written notice to the C-O-C Party (a "Call Notice")
within 60 days after the final determination of the Call Price, to
require the C-O-C Party to sell the C-O-C Party's entire Interest to
the Call Party (or its designee) at a price equal to the Call Price.
Any such sale shall be made without representations or warranties of
the C-O-C Party other than regarding the authorization of the sale
and title to the Interest being sold. Upon and after the
consummation of such sale, the C-O-C Party shall have no
responsibility or liability for any liabilities or obligations of
the Companies (whether contingent, absolute, realized or unrealized)
that exist as of the date of such sale or that are incurred by the
Companies thereafter.
(iii) Any purchase and sale of the C-O-C Party's Interest
effected pursuant to this Section 7.3(e) shall be consummated at a
closing at the offices of the Call Party on a business day within 15
days following the delivery of the Call Notice (upon at least five
days' notice by the Call Party); provided that such period shall be
extended for 180 additional days, or such shorter period of time, as
shall be necessary in order to obtain requisite governmental or
regulatory approvals with respect to such transaction; provided,
further, that such closing may be held at such other time and place
as the parties to the transaction may agree. At such closing, the
Call Party shall pay the C-O-C Party the Call Price by wire transfer
of immediately available funds to an account specified by the C-O-C
Party, and the Company and the parties to such transaction shall
execute any and all documents necessary to effect the full and
complete transfer of the C-O-C Party's Interest.
(iv) No investment banking firm selected by a party pursuant
to this Section 7.3(e) shall have represented such party in a
significant engagement within the 24-month period immediately prior
to such selection. Any investment banking firm selected in any other
manner shall not have represented either party in a significant
engagement within the 24-month period immediately prior to such
selection.
(f) Survival of Certain Related Agreements. In the event of any
termination of this Agreement pursuant to Sections 7.2(b) [Bankruptcy],
(c) [Material Breach], or (d) [Change of Control], the Related Agreements
entered into by the breaching party, the bankrupt party or the party
experiencing the Change or Control (or its Affiliates) shall,
notwithstanding anything to the contrary contained therein, remain in
effect as provided therein.
- 35 -
(g) Survival of Certain Provisions of this Agreement. In the event
of any termination of this Agreement pursuant to Sections 7.2(b)
[Bankruptcy], (c) [Material Breach] or (d) [Change of Control]:
(i) All provisions of Section 9.1 [Confidentiality] shall
survive and continue to be binding on the Terminated
Party in all respects for six years following such
termination.
(ii) All provisions of Section 9.1 (other than Sections
9.1(a)(i) and (a)(iii)) shall survive and continue to be
binding on the Non-Terminated Party for six years
following such termination, provided that if the
Terminated Party's Interests are not acquired by the
Non-Terminated Party, all provisions of Section 9.1
shall survive and continue to be binding on the
Non-Terminating Party for six years following such
termination.
(iii) Section 4.3 [Non-Compete] with respect to ezetimibe
(whether monotherapy, combination or retained uses) (it
being understood that all CAIs other than ezetimibe are
addressed in clause (iv) of this Section 7.3(g)) shall
survive and continue to be binding on the Terminated
Party and its Affiliates, as the case may be, until the
expiration of the last to expire U.S. patents (and any
marketing exclusivity period attendant thereto) owned by
or licensed to any of the Companies which claim or cover
(A) ezetimibe or (B) a combination of ezetimibe and a
Statin.
(iv) All other provisions of Section 4.3 shall survive and
continue to be binding on the Terminated Party and its
Affiliates (including any acquiring or surviving entity
in the event of a Change of Control), but only with
respect to Pre-Termination Substances, until the later
of (A) four years following such termination or (B) four
years after the Launch of a Combination Product,
provided that the maximum survival period under this
clause (B) shall be five years after termination of this
Agreement.
(v) All provisions of Sections 8.1, 8.2, 8.4 and 8.5 shall
survive for two years following termination.
(h) [***]
(i) Agreement to Enter into New Agreements. In the event that (i)
this Agreement is terminated pursuant to [***] and (ii) S-P resolves the
issues that M believed constituted a [***], as the case may be, S-P will
promptly notify M in writing of the resolution of such issues or
completion of such study, as the case may be. Then, if M provides written
notice to S-P within 20 business days of
-36-
receipt of supporting information reasonably requested by M and study
results, as the case may be, the parties will enter into agreements on
substantially similar terms as the terms set forth in this Agreement and
the Related Agreements (the "New Agreements") within 60 days of receipt of
such notice. M shall reimburse S-P on the date of execution of the New
Agreements for costs incurred by S-P (net of costs reimbursed to S-P and
its Affiliates by any Third Party) relating to the development and
marketing of ezetimibe and the Z/E Combination Product from the date of
termination of this Agreement until the execution date of the New
Agreements that would otherwise have been borne by Singapore Partnership
and Marketing LLC. Notwithstanding the non-compete provisions of this
Agreement, the parties hereto acknowledge that from the date of
termination of this Agreement pursuant to Section 7.2(e) or 7.2(f) until
the execution date of the New Agreements, S-P will be free to enter into
any business arrangements of any kind with respect to ezetimibe and that
the New Agreements will contain such modifications to the non-compete and
other provisions as are necessary to reflect any such business
arrangements, as well as changes in law or corporate organization.
ARTICLE VIII
REPRESENTATIONS, WARRANTIES,
COVENANTS AND INDEMNIFICATION
Section 8.1. Representations and Warranties of the Parties. Each of M and
the M Members hereby represents and warrants to S-P and the S-P Members with
respect to itself and each of S-P and the S-P Members hereby represents and
warrants to M and the M Members with respect to itself as of the date hereof as
follows:
(a) Organization and Good Standing; Power and Authority;
Qualifications. Such party (i) is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, (ii) has
all requisite power and authority to own, lease and operate its properties
and to carry on its business as presently conducted and as proposed to be
conducted and (iii) has all requisite power and authority to enter into
and carry out the transactions contemplated by this Agreement and the
Related Agreements to which it is a party.
(b) Authorization of this Agreement and the Related Agreements. The
execution, delivery and performance of each of this Agreement and the
Related Agreements has been duly authorized by all requisite action on the
part of such party which is a party hereto and thereto, and each of this
Agreement and the Related Agreements constitutes a legal, valid and
binding obligation of such party which is a party hereto and thereto,
enforceable against each such party in accordance with its terms except to
the extent that enforceability may be limited
-37-
by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally.
(c) No Conflict. The execution and delivery by such party of this
Agreement and the Related Agreements to which it is a party and the
consummation by such party of the transactions contemplated hereby and
thereby and the compliance by such party with the provisions hereof and
thereof will not (i) violate any material provision of law, statute, rule
or regulation, or any ruling, writ, injunction, order, judgment or decree
of any court, administrative agency or other governmental body applicable
to it, or any of its properties or assets, (ii) conflict with or result in
any breach of any of the terms, conditions or provisions of, or constitute
(with due notice or lapse of time, or both) a default under, or result in
the creation of any encumbrance upon any of its properties or assets
under, any contract to which it is a party or (iii) violate its
certificate of incorporation or by-laws or other organizational documents,
that in the case of clause (i) or (ii), would individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, or
prevent the consummation of the transactions contemplated hereby. Without
limiting the generality of the foregoing, S-P represents and warrants that
neither it nor any of its Affiliates has any obligation to any Third Party
that would require it to contribute or license to a Third Party the right
to manufacture, market or distribute in the Territory (i) for the
over-the-counter market, any of the Cholesterol Products or (ii) any
Cholesterol Absorption Inhibitor so that such Third Party could use such
Cholesterol Absorption Inhibitor alone or in combination with a Statin.
Without limiting the generality of the foregoing, M represents and
warrants that neither it nor any of its Affiliates has any obligation to
any Third Party that would require it to contribute or license to a Third
Party the right to manufacture, market or distribute in the Territory (i)
for the over-the-counter market, any of the Cholesterol Products or (ii)
simvastatin or [***] for combination use so that such Third Party could
use simvastatin or [***] for combination use in combination with a
Cholesterol Absorption Inhibitor. Notwithstanding the foregoing, M has
represented to S-P that there may be restrictions on M's rights to
contribute simvastatin or [***] (i) for combination use for the
over-the-counter market pursuant to a joint venture with Johnson & Johnson
and (ii) for animal health uses pursuant to a joint venture with Aventis
S.A.
Section 8.2. Certain Representations.
(a)-(d) [***]
(e) S-P hereby represents and warrants that the Cholesterol
Assignment Documents, together with this Agreement and the Related
Agreements, provide to the Singapore Partnership all of the rights and
obligations and all of the benefits of all of the representations,
warranties, covenants and agreements provided to Schering Sales
Management, Inc. pursuant to the Schering
-38-
License Agreement (Existing Cholesterol Combination IP), dated as of the
date hereof and as may be amended from time to time, excluding only the
obligations under Section 7 thereof.
Section 8.3. Certain Covenants. Each party hereto, with respect to itself,
agrees that, for so long as this Agreement is in effect:
(a) Maintenance of Corporate Existence, etc. Such party shall
maintain in full force and effect its corporate existence, rights,
governmental approvals, permits, and franchises and all licenses and other
rights material to and necessary in the conduct of its business as
currently conducted and as proposed to be conducted, except to the extent
that such failure to preserve and maintain such existence and
qualifications would not reasonably be expected to have a Material Adverse
Effect.
(b) Compliance with Laws. Each Company shall use reasonable efforts
to comply with all applicable laws, rules regulations and orders, except
for violations or failures to so comply, if any, that, individually or in
the aggregate, would not reasonably be expected to have a Material Adverse
Effect. Each M Member and each S-P Member shall comply with all applicable
laws, rules, regulations and orders as it relates to such party with
respect to the Cholesterol Business, except for violations or failures to
so comply, if any, that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
(c) Insurance. The Companies shall maintain adequate insurance
covering all aspects of the Cholesterol Businesses. Each other party shall
keep its assets that are necessary to perform its obligations under this
Agreement and the Related Agreements and which are of an insurable
character, if any, insured in accordance with such party's then applicable
insurance program for its business.
Section 8.4. Certain Obligations. Each of M and S-P hereby guarantees the
performance by their respective Affiliates of each of such Affiliates'
obligations as members or partners of the Companies and/or as parties to the
Related Agreements. Each of M and S-P agrees that the Members that are their
respective Affiliates shall not engage in any business other than the ownership
of the Interests and matters incidental thereto.
Section 8.5. Indemnification.
(a) General Indemnification. Each party hereto shall indemnify,
defend and hold the other parties, their affiliates, their respective
officers, directors, partners, members, shareholders, employees, agents,
representatives, successors and assigns (each an "Indemnified Entity")
harmless from and against all Losses (as defined in Section 8.5(b))
incurred or suffered by an Indemnified Entity arising or resulting from
the breach of any of the representations, warranties or covenants
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made by any party in Sections 8.1, 8.2, 8.3 and 8.4. Notwithstanding any
provision to the contrary contained in this Agreement, none of Indemnified
Entities shall make any claim against either party, as the case may be,
for any breach of representation and warranty until the dollar amount of
all such claims shall exceed in the aggregate the amount of $2,000,000.
(b) Indemnification Principles. For purposes of this Section 8.5,
"Losses" shall mean each and all of the following items: claims, losses
(other than lost profits), liabilities, obligations, payments, damages
(other than punitive, special, indirect, consequential, incidental,
exemplary or other similar damages), charges, judgments, fines, penalties,
amounts paid in settlement, costs and expenses (including, without
limitation, interest which may be imposed in connection therewith, costs
and expenses of investigation, actions, suits, proceedings, demands,
assessments and reasonable fees, expenses and disbursements of counsel,
consultants and other experts).
(c) Claim Notice. A party seeking indemnification under this Section
8.5 shall, promptly upon becoming aware of the facts indicating that a
claim for indemnification may be warranted, give to the party from whom
indemnification is being sought a claim notice relating to such Loss (a
"Claim Notice"). Each Claim Notice shall specify the nature of the claim,
the applicable provisions of this Agreement under which the claim for
indemnity arises, and, if possible, the amount or the estimated amount
thereof. No failure or delay in giving a Claim Notice and no failure to
include any specific information relating to the claim (such as the amount
or estimated amount thereof) or any reference to any provision of this
Agreement or other instrument under which the claim arises shall affect
the obligation of the party from whom indemnity is sought except to the
extent such party is materially prejudiced by such failure or delay.
(d) Related Agreements. Notwithstanding the foregoing, to the extent
there is any conflict between the indemnification provisions in this
Agreement and any Related Agreement, the indemnification provisions in the
Related Agreements shall control and preempt this Section 8.5, but only
with respect to the applicable Related Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Confidentiality.
(a) Without limiting the effect of the confidentiality provisions of
any of the Related Agreements, and subject to the exceptions provided in
Section 9.1(b), neither S-P or M nor their respective Affiliates nor any
Company shall, without the prior written consent of S-P or M, as the case
may be, divulge, use or
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permit its, or its Affiliates', officers, employees, agents, advisors or
contractors to divulge to any Person or use (other than as provided in
Section 9.1(c)):
(i) the contents of this Agreement or any of the Related
Agreements;
(ii) any confidential or proprietary information which has
been provided to it (whether before or after the date of this
Agreement) by any of the other parties hereto; or
(iii) any confidential or proprietary information relating to
the Cholesterol Business other than the information covered by
Section 9.1(a)(ii);
including, in each case, all financial, marketing and technical
information, specifications, ideas, concepts, technology, processes,
knowledge and know-how, together with all details of customers, suppliers,
prices, discounts, margins, information relating to research and
development, current trading performance and future business strategy
(collectively, the "Confidential Information").
(b) The restrictions imposed by Section 9.1(a) shall not apply to
the disclosure of any information which:
(i) is or becomes generally available to the public other than
as a result of any breach of the provisions of this Agreement;
(ii) is lawfully in the possession of such other party prior
to receipt from the disclosing party;
(iii) is commonly known to Persons engaged in the
pharmaceutical industry other than as a result of any breach of the
provisions of this Agreement;
(iv) is independently developed by such party without
reference to the other party's or the Companies' Confidential
Information; or
(v) is required to be disclosed by S-P, M or any Member or any
Company under any law applicable to the conduct of such party's
business or otherwise or is disclosed upon S-P, M or any Member or
any Company becoming legally compelled to disclose, if, in any such
case, S-P, M or any Member or any Company under such legal
obligation or compulsion has used its best efforts to afford the
other party the opportunity to obtain an appropriate protective
order or other satisfactory assurance of confidential treatment for
the information required to be so disclosed.
(c) Each of S-P, M and the Members shall ensure that Confidential
Information is disclosed only to those of its and its Affiliate's
officers, employees, agents, advisors and contractors who need to know it,
and who are bound by
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written obligations of confidentiality in respect of such information or
have similar duties under their professional ethics code, and each party
hereto takes full responsibility for all actions of its employees and
advisors and those of its Affiliates.
(d) Each of S-P, M and the Members will return all copies of
documents containing Confidential Information to the party to which such
information relates upon request after termination hereof other than one
copy which may be maintained solely for record keeping purposes.
(e) Notwithstanding any other provision of this Agreement, during
the six-year period following termination of this Agreement pursuant to
Section 7.2(d), all Confidential Information relating to the Cholesterol
Products known to, or in the possession of, the Terminated Party and
entities that were Affiliates of the Terminated Party prior to the
termination of this Agreement, shall not be disclosed, provided or
otherwise made available, to the Person that acquired the Terminated Party
or to any of such Person's Affiliates, officers, directors, employees or
agents.
Section 9.2. Publicity. (a) Neither S-P nor any of its Affiliates on the
one hand nor M or any of its Affiliates on the other hand may use the name of
the other or any of the Companies in any publicity or advertising except as
specifically provided in any Related Agreements, and may not issue a press
release or otherwise publicize or disclose any information related to the
existence of this Agreement or any of the Related Agreements or the terms or
conditions hereof or thereof without the prior written consent of the other. S-P
and M shall agree on the form, content and timing of the initial press release
or public statement that may be used by either of S-P or M to describe this
Agreement and any of the Related Agreements and any subsequent press release or
subsequent public statement with respect to or relating to the transactions
contemplated by this Agreement or any of the Related Agreements or any of the
terms or conditions hereof or thereof. In the event that either S-P or any of
its Affiliates on the one hand or M or any of its Affiliates on the other hand
(the "Disclosing Party") is requested (by oral questions, interrogatories,
requests for information or documents in legal proceedings, subpoena, civil
investigative demand or other similar process) or required (by applicable
federal or state securities laws or any rule or regulation of any national
securities exchange) to make any such disclosure, the Disclosing Party shall
provide the other party (either S-P or M, as the case may be) with prompt
written notice of any such request or requirement so that such other party may
seek a protective order or other appropriate remedy and/or, if it also
determines that such disclosure is required, waive compliance with the
provisions of this Section 9.2. If, in the absence of a protective order or
other remedy or the receipt of a waiver by such other party, the Disclosing
Party is nonetheless, in the written opinion of its outside legal counsel,
legally compelled to make such disclosure, the Disclosing Party may disclose
only that portion which such counsel advises the Disclosing Party is legally
required to be disclosed, provided that the Disclosing Party shall use its best
efforts to avoid such disclosure including, without
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limitation, by cooperating with the other party to obtain an appropriate
protective order or other reliable assurance that, to the extent available,
confidential treatment will be afforded to such information included in the
disclosure.
(b) None of the Companies may use the name of either M or S-P or
their respective Affiliates in any publicity, press release, or other similar
public disclosure without the prior written consent of M or S-P, as the case may
be.
Section 9.3. Further Assurances. Each of S-P and the S-P Members on the
one hand and M and the M Members on the other hand shall cooperate with each
other and shall promptly execute, acknowledge and deliver any assurances,
approvals or documents reasonably requested by the other that is necessary for
the requesting party to satisfy its obligations hereunder or obtain the benefits
contemplated hereby.
Section 9.4. Notices. All consents or other notices provided for in this
Agreement shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as set
forth on Schedule 9.4. Notices delivered to an addressee shall be deemed to have
been given upon such delivery. Notices sent by telecopier shall be deemed to
have been given upon confirmation by telecopy answerback (followed promptly by
the mailing of the original of such notice). Notices mailed by registered or
certified mail shall be deemed to have been given upon the expiration of five
(5) business days after such notice has been deposited in the mail.
Section 9.5. Failure to Pursue Remedies. The failure of any party to seek
redress for violation of, or to insist upon the strict performance of, any
provision of either this Agreement or any Related Agreement shall not prevent a
subsequent act, which would have originally constituted a violation from having
the effect of an original violation. No waiver of any breach of any of the terms
of this Agreement or any of the Related Agreements shall be effective unless
such waiver is in writing and signed by the party or parties against whom such
waiver is claimed.
Section 9.6. Cumulative Remedies. The rights and remedies provided by this
Agreement are cumulative and the use of any one right or remedy by any party
shall not preclude, constitute an election of remedies or waive its right to use
any or all other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by law, statute, ordinance or otherwise.
Section 9.7. Assignment; Binding Effect. Except as specifically set forth
in the Related Agreements, without the consent of all of the parties hereto,
which consent may be given or withheld by each party in its sole discretion,
neither this Agreement nor any Interest of a party in any of the Companies may
be assigned or otherwise transferred, except (i) to wholly-owned subsidiaries of
such party provided that any such subsidiary remains at all times directly or
indirectly wholly-owned by M or S-P, as the case may be or (ii) pursuant to
Section 7.3. Subject to the foregoing, this Agreement shall be binding
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upon and inure to the benefit of the parties hereto and, to the extent permitted
by this Agreement, their successors, legal representatives and permitted
assigns.
Section 9.8. Severability. In the event of any challenge of the validity
or enforceability of any term, part or provision of this Agreement or any of the
Related Agreements, until a final, unappealable decision is rendered and,
pending such final, unappealable decision, such challenged term, part or
provision shall remain in full force and effect. Any term, part or provision of
this Agreement or any of the Related Agreements, which is determined by a court
in a final, unappealable decision to be invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering in any way invalid or
unenforceable the remaining terms, parts and provisions of this Agreement, or
any of the Related Agreements or affecting the validity or enforceability of any
of the terms, parts or provisions of this Agreement or any of the Related
Agreements, in any other jurisdiction and, accordingly, all such other terms,
parts and provisions shall remain in full force and effect. If any provision of
this Agreement or any of the Related Agreements, is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
Section 9.9. Standstill.
(a) Each of S-P and M agrees and acknowledges that, for the Standstill
Period, it and its affiliates (as currently defined in Rule 12b-2 under the
Exchange Act and as defined under current law interpreting Rule 12b-2) will not,
(and neither it nor any such affiliates will assist, facilitate, provide or
arrange financing to or for others or encourage others to), directly or
indirectly, acting alone or in concert with others, unless specifically
requested in writing in advance by the Board of Directors of the other party:
(i) acquire or agree, offer, seek or propose to acquire (or request
permission to do so), ownership (including, but not limited to, beneficial
ownership as defined in Rule 13d-3 under the Exchange Act) of any of the
assets or businesses of the other party or any securities issued by the
other party, or any rights or options to acquire such ownership (including
from a Third Party), other than de minimus acquisitions of securities
which are disposed of in the public market promptly,
(ii) seek or propose to influence or control (publicly or otherwise)
the management or the policies of the other party or to obtain
representation on the other party's Board of Directors, or "solicit," or
participate in any "solicitation" of, any "proxies" or "consents" (as such
terms are defined in Regulation 14A under the Exchange Act) with respect
to any securities of the other party,
(iii) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the provisions
of this Section 9.9,
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(iv) seek to amend, modify or supplement this Section 9.9 or seek to
have the other party or its Affiliates waive or relinquish any of the
restrictions of this Section 9.9,
(v) seek or request permission to do any of the foregoing or make or
seek permission to make any public announcement with respect to any of the
provisions of this Section 9.9, or
(vi) take any action which would result in or would reasonably be
expected to result in the other party making a public announcement
regarding any of the provisions of this Section 9.9.
(b) Notwithstanding the provisions of Section 9.9(a), in the event that
the Board of Directors of M or S-P resolves to engage in, or engages in, a
process designed for such party to solicit offers relating to transactions
which, if consummated, would constitute (i) a Business Combination involving a
sale of all or substantially all the Outstanding Voting Securities of M or S-P,
as the case may be, for consideration consisting of at least 80% cash and/or
non-voting securities, or (ii) a Business Combination that directly results in a
shift of direct and indirect majority voting control from the public
shareholders of M or S-P, as the case may be, to a single shareholder or "group"
of shareholders (as defined in Regulation 13D), then the provisions of Section
9.9(a) shall be deemed to be waived solely to the extent necessary to permit the
other party to participate in such process on terms and conditions at least as
favorable to such other party as those offered to the other participants in such
process until such time, if any, as the Board of Directors of M or S-P, as the
case may be, terminates, rescinds or allows such process to lapse.
Section 9.10. Counterparts. This Agreement may be executed in any number
of counterparts with the same effect as if all parties hereto had signed the
same document. All counterparts shall be construed together and shall constitute
one instrument.
Section 9.11. Integration. This Agreement and the Related Agreements
constitute the entire agreement among the parties hereto pertaining to the
subject matter hereof and thereof and supersede all prior agreements and
understandings pertaining thereto. In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any of
the Related Agreements, the terms and conditions of this Agreement shall
prevail, except as specifically provided herein.
Section 9.12. Governing Law. This Agreement and the rights of the parties
hereunder shall be interpreted in accordance with the laws of the State of
Delaware, and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
Section 9.13. Amendments. Any amendment, supplement or waiver to this
Agreement shall be made in writing and shall be adopted and be effective only if
signed and approved by each of the parties hereto.
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Section 9.14. Judicial Proceeding.
(a) General. Any disputes, claims, controversies or disagreements
with respect to this Agreement or any of the Related Agreements, including
whether a Material Breach has occurred, that cannot be resolved pursuant
to the procedures set forth in Sections 3.3(e), 3.6(b) and 7.1, such
procedures to be fully complied with, as applicable, shall be finally
determined in a judicial proceeding; provided that (i) no party shall seek
dissolution by a judicial forum or by operation of law, appointment of a
trustee, receiver, custodian or similar person, including, without
limitation, pursuant to Section 86.491 of the Nevada Limited Liability
Company Act and Section 18-802 of the Delaware Limited Liability Company
Act and (ii) the foregoing shall not limit any remedies specifically
provided in any of the Related Agreements. Notwithstanding anything to the
contrary, no dispute relating solely to business decisions relating to the
operation of the Cholesterol Business shall be submitted to any judicial
proceeding hereunder.
(b) Consent to Jurisdiction. Each party to this Agreement, or to any
of the Related Agreements hereby, consents to the exclusive jurisdiction
of the state courts of New York for the purposes of any action or
proceeding arising out of or in connection with this Agreement or any of
the Related Agreements pursuant to Section 9.14(a), and each of the
parties hereto irrevocably agrees that all claims in respect to such
action or proceeding may be heard and determined exclusively in the New
York Supreme Court-Commercial Division. None of the parties to this
Agreement, nor any of their subsidiaries or Affiliates, will raise any
objection to proceedings in New York based on section 1312 of the New York
Corporation Law or any similar statute. Each of the parties hereto agrees
that a final judgment in any action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. Each of the parties hereto further
irrevocably consents to the service of any summons and complaint and any
other process in any other action or proceeding relating to this Agreement
or any of the Related Agreements, on behalf of itself or its property, by
the personal delivery of copies of such process to such party. Nothing in
this Section 9.14(b) shall affect the right of any party hereto to serve
legal process in any other manner permitted by law.
Section 9.15. Enforcement of Certain Rights. In the event that M or S-P
believes that the other party or an Affiliate of the other party is not
complying with its obligations as a whole in a material respect, under any of
the Related Agreements, any dispute with respect thereto shall be referred to
the applicable Board and first be subject to resolution pursuant to the
provisions of Section 3.3(e). Notwithstanding anything contained herein, if the
dispute cannot be resolved pursuant to such dispute resolution procedures, then
the complaining party shall have the power and authority to enforce on behalf of
the Company, or to cause the Company to enforce, the Company's rights through a
judicial remedy in accordance with the provisions of Section 9.14 [Judicial
Proceedings]; provided that notwithstanding the foregoing, M shall have the
right to
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immediately seek on behalf of any Company a judicial remedy in the event it
believes that there has been or is reasonably likely to be a breach of any
agreements which require the consent of M for any licensing of ezetimibe to any
party, or that prohibits the licensing of ezetimibe to other parties, or that
any exclusive product rights are being violated or are reasonably likely to be
violated. If one Member or any of its Affiliates agrees to license to a Company
manufacturing technology or know-how pursuant to the terms of a Manufacturing
Agreement (the "Licensor"), then the parties hereto that are Affiliates of the
Licensor shall not take any action (or omit to take any action) which could
materially hinder or frustrate the ability of the Company to enforce and realize
the benefits of such License.
Section 9.16. No Third Party Beneficiaries. Except as otherwise
specifically set forth in the Related Agreements, neither this Agreement nor any
of the Related Agreements shall confer upon any Person, other than the parties
hereto and thereto, any rights or remedies hereunder or thereunder.
Section 9.17. Survival. Notwithstanding any other provision herein, if
this Agreement is terminated for any reason, the applicable provisions of
Sections 8.1, 8.2, 8.4, 8.5 and 9.14, and any applicable definitions set forth
in Section 1.2, shall survive to the extent necessary to effectuate any Related
Agreements that survive such termination, and Sections 7.3(f), 7.3(g), 7.3(i)
and 9.9 (together with the applicable definitions set forth in Section 1.2)
shall survive for the periods respectively set forth in each such section.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above stated.
[Signatures Omitted]
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SCHEDULE A
EXISTING M JVS
[***]
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SCHEDULE B
EXISTING S-P JVS
[***]
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SCHEDULE C
NON-PHARMA COMPANIES
Abbott Laboratories
Amgen Inc.
Novo Nordisk A/S
Pharmacia Corporation
Schering AG
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SCHEDULE 7.3
ILLUSTRATIONS OF CHANGE OF CONTROL VALUATION
Example 1
Low Valuation $75
High Valuation $95
Average $85
+/- 12% from Average $74.8-$95.2
Low and High Valuations Within 12% of Average? Yes
Valuation equals average of Low and High valuations $85
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Example 2
Low Valuation $60
High Valuation $100
Average $80
+/- 12% from Average $70.4-$89.6
Low and High valuations within 12% of Average? No
Third valuation required
Third valuation $110
Third valuation between Low and High valuations? No
Third Valuation closer to High or Low? High
Valuation equals average of High and Third valuations $105
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Example 3
Low Valuation $65
High Valuation $100
Average $82.5
+/- 12% from Average $72.6-$92.4
Low and High valuations within 12% of Average? No
Third valuation required
Third valuation $85
Third valuation between Low and High valuations? Yes
Low and High Average $82.5
Low Valuation +/- 30% of Average $40.25-$89.75
High Valuation +/- 30% of Average $75.25-$124.75
Third valuation within Low range? Yes
Third valuation within High range? Yes
Valuation equals average of Low, High
and Third valuations $83.33
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Example 4
Low Valuation $60
High Valuation $100
Average $80
+/- 12% from Average $70.4-$89.6
Low and High valuations within 12% of Average? No
Third valuation required
Third valuation $75
Third valuation between Low and High valuations? Yes
Low and High Average $80
Low Valuation +/- 30% of Average $36-$84
High Valuation +/- 30% of Average $76-$124
Third valuation within Low range? Yes
Third valuation within High range? No
Valuation equals average of Low and Third valuations $67.5
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Example 5
Low Valuation $50
High Valuation $120
Average $85
+ 12% from Average $74.8-$95.2
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Low and High valuations within 12% of Average? No
Third valuation required
Third valuation $85
Third valuation between Low and High valuations? Yes
Low and High Average $85
Low Valuation +/- 30% of Average $24.5-$75.5
High Valuation +/- 30% of Average $94.5-$145.5
Third valuation within Low range? No
Third valuation within High range? No
Valuation equal to Third valuation $85
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SCHEDULE 9.4
[***Note: approximately seven pages of text are omitted]
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