<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 22, 2000
REGISTRATION NO. 333-96029
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 3
TO
FORM S-1
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
------------------------------
INTERMUNE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 8731 99-3296648
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of Industrial Identification No.)
incorporation or organization) Classification Code Number)
</TABLE>
------------------------------
1710 GILBRETH ROAD
SUITE 301
BURLINGAME, CA 94010
(650) 409-2020
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------
W. SCOTT HARKONEN, M.D.
CHIEF EXECUTIVE OFFICER AND PRESIDENT
1710 GILBRETH ROAD
SUITE 301
BURLINGAME, CA 94010
(650) 409-2033
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
COPIES TO:
<TABLE>
<S> <C>
ALAN C. MENDELSON, ESQ. JONATHAN L. KRAVETZ, ESQ.
COOLEY GODWARD LLP EDWARD P. GONZALES, ESQ.
FIVE PALO ALTO SQUARE MINTZ, LEVIN, COHN, FERRIS, GLOVSKY AND POPEO, P.C.
3000 EL CAMINO REAL ONE FINANCIAL CENTER
PALO ALTO, CA 94306 BOSTON, MA 02111
(650) 843-5000 (617) 542-6000
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
The purpose of this Amendment No. 3 is solely to file certain exhibits to
the Registration Statement as set forth below as in Item 16(a) of Part II.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------------------- -----------------------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1** Certificate of Incorporation of Registrant, to be effective
upon Registrant's reincorporation in Delaware.
3.2** Amended and Restated Certificate of Incorporation of
Registrant to be effective upon the closing of the offering
made pursuant to this Registration Statement.
3.3** Bylaws of Registrant to be effective upon Registrant's
reincorporation in Delaware and upon the closing of the
offering made pursuant to this Registration Statement.
4.1 Specimen Common Stock Certificate.
4.2** Amended and Restated Investor Rights Agreement, dated
January 7, 2000, between Registrant and holders of the
Registrant's Series A-1 Preferred Stock, Series A-2
Preferred Stock and Series B Preferred Stock.
5.1* Opinion of Cooley Godward LLP.
10.1** Form of Indemnity Agreement.
10.2** 1999 Equity Incentive Plan and related documents.
10.3** 2000 Equity Incentive Plan and related documents.
10.4** 2000 Employee Stock Purchase Plan and related documents.
10.5** 2000 Non-Employee Directors' Stock Option Plan and related
documents.
10.6** Lease Agreement, dated November 9, 1999, between Registrant
and American Heart Association, Western States Affiliate.
10.7** Employment Agreement, dated April 27, 1999, between
Registrant and W. Scott Harkonen.
10.8** Employment Offer Letter, dated October 28, 1999, between
Registrant and Timothy P. Lynch.
10.9** Employment Offer Letter, dated October 22, 1999, between
Registrant and Peter Van Vlasselaer.
10.10** Employment Offer Letter, dated December 19, 1999, between
Registrant and Christine Czarniecki.
10.11** Secured Loan Agreement, Secured Promissory Note, and
Security Agreement, dated July 1, 1999, between Registrant
and W. Scott Harkonen.
10.12+ Amended and Restated Exclusive Sublicense Agreement, dated
April 27, 1999, between Registrant and Connetics
Corporation.
10.13 Collaboration Agreement, dated April 27, 1999, between
Registrant and Connetics Corporation.
10.14+ Transition Agreement, dated April 27, 1999, between
Registrant and Connetics Corporation.
10.15** Amended and Restated Service Agreement, dated April 7, 1999,
between the Registrant and Connetics Corporation.
10.16+ Supply Agreement, dated May 5, 1998, between Registrant (as
successor in interest to Connetics Corporation by
assignment) and Genentech, Inc.
10.17+** Sponsored Research and License Agreement, dated January 1,
2000, between Registrant and Panorama Research, Inc.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- --------------------- -----------------------
<C> <S>
10.18+** License Agreement, dated March 25, 1999, between Registrant
and MCW Research Foundation, Inc.
10.19+** Data Transfer, Clinical Trial, and Market Supply Agreement,
dated January 27, 1999, between the Registrant and
Boehringer Ingleheim.
23.1** Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Cooley Godward LLP. Reference is made to
Exhibit 5.1.
24.1** Power of Attorney. Reference is made to the signature page.
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
+ Confidential treatment requested with respect to certain portions of this
exhibit. Omitted portions have been filed separately with the Securities and
Exchange Commission.
** Previously filed.
(B) FINANCIAL STATEMENT SCHEDULES
Schedules are omitted because they are not applicable, or because the
information is included in the Financial Statements or the Notes thereto.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the County of Santa Clara, State of
California, on the 22nd day of March, 2000.
<TABLE>
<S> <C>
INTERMUNE PHARMACEUTICALS, INC.
By: /s/ TIMOTHY P. LYNCH
--------------------------------------------
Timothy P. Lynch
PRESIDENT AND CHIEF FINANCIAL OFFICER
</TABLE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
President and Chief
* Executive Officer and
------------------------------------------- Director (principal March 22, 2000
W. Scott Harkonen executive officer)
Vice President and Chief
/s/ TIMOTHY P. LYNCH Financial Officer
------------------------------------------- (principal financial and March 22, 2000
Timothy P. Lynch accounting officer)
*
------------------------------------------- Director March 22, 2000
James I. Healy
*
------------------------------------------- Director March 22, 2000
Edgar Engleman
*
------------------------------------------- Director March 22, 2000
John L. Higgins
*
------------------------------------------- Director March 22, 2000
Jonathan S. Leff
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
*
------------------------------------------- Director March 22, 2000
Nicholas J. Simon
*
------------------------------------------- Director March 22, 2000
Wayne Hockmeyer
</TABLE>
<TABLE>
<S> <C> <C> <C>
* /s/ TIMOTHY P. LYNCH
-----------------------------------------
Timothy P. Lynch
ATTORNEY-IN-FACT
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
3.1** Certificate of Incorporation of Registrant, to be effective
upon Registrant's reincorporation in Delaware.
3.2** Amended and Restated Certificate of Incorporation of
Registrant to be effective upon the closing of the offering
made pursuant to this Registration Statement.
3.3** Bylaws of Registrant to be effective upon Registrant's
reincorporation in Delaware and upon the closing of the
offering made pursuant to this Registration Statement.
4.1 Specimen Common Stock Certificate.
4.2** Amended and Restated Investor Rights Agreement, dated
January 7, 2000, between Registrant and holders of the
Registrant's Series A-1 Preferred Stock, Series A-2
Preferred Stock and Series B Preferred Stock.
5.1* Opinion of Cooley Godward LLP.
10.1** Form of Indemnity Agreement.
10.2** 1999 Equity Incentive Plan and related documents.
10.3** 2000 Equity Incentive Plan and related documents.
10.4** 2000 Employee Stock Purchase Plan and related documents.
10.5** 2000 Non-Employee Directors' Stock Option Plan and related
documents.
10.6** Lease Agreement, dated November 9, 1999, between Registrant
and American Heart Association, Western States Affiliate.
10.7** Employment Agreement, dated April 27, 1999, between
Registrant and W. Scott Harkonen.
10.8** Employment Offer Letter, dated October 28, 1999, between
Registrant and Timothy P. Lynch.
10.9** Employment Offer Letter, dated October 22, 1999, between
Registrant and Peter Van Vlasselaer.
10.10** Employment Offer Letter, dated December 19, 1999, between
Registrant and Christine Czarniecki.
10.11** Secured Loan Agreement, Secured Promissory Note, and
Security Agreement, dated July 1, 1999, between Registrant
and W. Scott Harkonen.
10.12+ Amended and Restated Exclusive Sublicense Agreement, dated
April 27, 1999, between Registrant and Connetics
Corporation.
10.13 Collaboration Agreement, dated April 27, 1999, between
Registrant and Connetics Corporation.
10.14+ Transition Agreement, dated April 27, 1999, between
Registrant and Connetics Corporation.
10.15** Amended and Restated Service Agreement, dated April 7, 1999,
between the Registrant and Connetics Corporation.
10.16+ Supply Agreement, dated May 5, 1998, between Registrant (as
successor in interest to Connetics Corporation by
assignment) and Genentech, Inc.
10.17+** Sponsored Research and License Agreement, dated January 1,
2000, between Registrant and Panorama Research, Inc.
10.18+** License Agreement, dated March 25, 1999, between Registrant
and MCW Research Foundation, Inc.
10.19+** Data Transfer, Clinical Trial and Market Supply Agreement,
dated January 27, 1999, between Registrant and Boehringer
Ingleheim.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
23.1** Consent of Ernst & Young LLP, Independent Auditors.
23.2* Consent of Cooley Godward LLP. Reference is made to
Exhibit 5.1.
24.1** Power of Attorney. Reference is made to the signature page.
27.1** Financial Data Schedule.
</TABLE>
- ------------------------
* To be filed by amendment.
+ Confidential treatment requested with respect to certain portions of the
exhibit. Omitted portions have been filed separately with the Securities and
Exchange Commission.
** Previously filed.
<PAGE>
6,325,000 Shares
Common Stock
($0.001 Par Value)
UNDERWRITING AGREEMENT
March ___, 2000
<PAGE>
UNDERWRITING AGREEMENT
March ___, 2000
WARBURG DILLON READ LLC
CHASE SECURITIES INC.
PRUDENTIAL SECURITIES INCORPORATED
as Managing Underwriters
c/o Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171-0026
Ladies and Gentlemen:
InterMune Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the underwriters named in Schedule A
annexed hereto (the "Underwriters") an aggregate of 5,500,000 shares (the "Firm
Shares") of Common Stock, $0.001 par value (the "Common Stock"), of the Company.
In addition, solely for the purpose of covering over-allotments, the Company
proposes to grant to the Underwriters the option to purchase from the Company up
to an additional 825,000 shares of Common Stock (the "Additional Shares"). The
Firm Shares and the Additional Shares are hereinafter collectively sometimes
referred to as the "Shares." The Shares are described in the Prospectus, which
is referred to below.
The Company has filed, in accordance with the provisions of
the Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-1 (File No. 333-96029),
including a prospectus, relating to the Shares. The Company has furnished to
you, for use by the Underwriters and by dealers, copies of one or more
preliminary prospectuses (each thereof being herein called a "Preliminary
Prospectus") relating to the Shares. Except where the context otherwise
requires, the registration statement, as amended when it becomes effective,
including all documents filed as a part thereof and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 424(b) under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the Act and also including
any registration statement filed pursuant to Rule 462(b) under the Act, is
herein called the Registration Statement, and the prospectus in the form filed
by the Company with the Commission pursuant to Rule 424(b) under the Act on or
before the second business day after the date hereof (or such earlier time as
may be required under the Act) or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the time it became
effective, is herein called the Prospectus.
The Company and the Underwriters agree as follows:
1. SALE AND PURCHASE. Upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Company agrees to sell to the respective
<PAGE>
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company the respective number of Firm Shares (subject to such
adjustment as you may determine to avoid fractional shares) which bears the same
proportion to the number of Firm Shares to be sold by the Company as the number
of Firm Shares set forth opposite the name of such Underwriter in Schedule A
annexed hereto bears to the total number of Firm Shares to be sold by the
Company, in each case at a purchase price of $[____] per Share. The Company is
advised by you that the Underwriters intend (i) to make a public offering of
their respective portions of the Firm Shares as soon after the effective date of
the Registration Statement as in your judgment is advisable and (ii) initially
to offer the Firm Shares upon the terms set forth in the Prospectus. You may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as you may determine.
In addition, the Company hereby grants to the several
Underwriters the option to purchase, and upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth, the
Underwriters shall have the right to purchase, severally and not jointly, from
the Company, ratably in accordance with the number of Firm Shares to be
purchased by each of them (subject to such adjustment as you shall determine to
avoid fractional shares), all or a portion of the Additional Shares as may be
necessary to cover over-allotments made in connection with the offering of the
Firm Shares, at the same purchase price per share to be paid by the Underwriters
to the Company for the Firm Shares. This option may be exercised by you on
behalf of the several Underwriters at any time (but not more than once) on or
before the thirtieth day following the date hereof, by written notice to the
Company. Such notice shall set forth the aggregate number of Additional Shares
as to which the option is being exercised, and the date and time when the
Additional Shares are to be delivered (such date and time being herein referred
to as the additional time of purchase); PROVIDED, HOWEVER, that the additional
time of purchase shall not be earlier than the time of purchase (as defined
below) nor earlier than the second business day 1 after the date on which the
option shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised. The number of Additional
Shares to be sold to each Underwriter shall be the number which bears the same
proportion to the aggregate number of Additional Shares being purchased as the
number of Firm Shares set forth opposite the name of such Underwriter on
Schedule A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional shares).
2. PAYMENT AND DELIVERY. Payment of the purchase price for the
Firm Shares shall be made to the Company by Federal Funds wire transfer, against
delivery of the certificates for the Firm Shares to you through the facilities
of the Depository Trust Company (the "DTC") for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 10:00 A.M., New York
City time, on March ___, 2000 (unless another time shall be agreed to by
- -------------------------------
(1) As used herein "business day" shall mean a day on which the New York
Stock Exchange is open for trading.
2
<PAGE>
you and the Company or unless postponed in accordance with the provisions of
Section 10 hereof). The time at which such payment and delivery are actually
made is hereinafter sometimes called the time of purchase. Certificates for the
Firm Shares shall be delivered to you in definitive form in such names and in
such denominations as you shall specify no later than the second business day
preceding the time of purchase. For the purpose of expediting the checking of
the certificates for the Firm Shares by you, the Company agrees to make such
certificates available to you for such purpose at least one full business day
preceding the time of purchase.
Payment of the purchase price for the Additional Shares shall
be made at the additional time of purchase in the same manner and at the same
office as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in such
denominations as you shall specify no later than the second business day
preceding the additional time of purchase. For the purpose of expediting the
checking of the certificates for the Additional Shares by you, the Company
agrees to make such certificates available to you for such purpose at least one
full business day preceding the additional time of purchase.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
(a) the Company has not received, and has no notice
of, any order of the Commission preventing or suspending the use of any
Preliminary Prospectus, or instituting proceedings for that purpose, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act when the Registration Statement becomes
effective, the Registration Statement and the Prospectus will fully comply in
all material respects with the provisions of the Act, and the Registration
Statement will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; any statutes,
regulations, contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement have been so described or filed; PROVIDED, HOWEVER, that
the Company makes no warranty or representation with respect to any statement
contained in the Registration Statement or the Prospectus in reliance upon and
in conformity with information concerning the Underwriters and furnished in
writing by or on behalf of any Underwriter through you to the Company expressly
for use in the Registration Statement or the Prospectus; and the Company has not
distributed any offering material in connection with the offering or sale of the
Shares other than the Registration Statement, the Preliminary Prospectus, the
Prospectus or any other materials, if any, permitted by the Act;
(b) as of the date of this Agreement, the Company has
an authorized capitalization as set forth under the heading entitled "Actual" in
the section of the Registration Statement and the Prospectus entitled
"Capitalization" and, as of the time of purchase and the additional time of
purchase, as the case may be, the Company shall have an authorized
capitalization as set forth under the heading entitled "As Adjusted" in the
section of the
3
<PAGE>
Registration Statement and the Prospectus entitled "Capitalization"; all of the
issued and outstanding shares of capital stock of the Company, including the
Common Stock, Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, have been duly and validly authorized and issued and are fully
paid and non-assessable, have been issued in compliance with all federal and
state securities laws and were not issued in violation of any preemptive right,
resale right, right of first refusal or similar right;
(c) the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware, with full power and authority to own, lease and operate its
properties and conduct its business as described in the Registration Statement;
(d) the Company is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction where the ownership or
leasing of its properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, properties, financial condition or results of
operation of the Company (a "Material Adverse Effect"). The Company has no
subsidiaries (as defined in the Rules and Regulations). The Company does not
own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any equity interest in any
firm, partnership, joint venture, association or other entity; complete and
correct copies of the certificate of incorporation and of the by-laws (or other
equivalent corporate governance documents) of the Company and all amendments
thereto have been delivered to you, and except as set forth in the exhibits to
the Registration Statement no changes therein will be made subsequent to the
date hereof and prior to the time of purchase or, if later, the additional time
of purchase.
(e) the Company is duly qualified or licensed by and
is in good standing in each jurisdiction in which it conducts its business and
in which the failure, individually or in the aggregate, to be so licensed or
qualified could have a Material Adverse Effect; and the Company is in compliance
in all material respects with the laws, orders, rules, regulations and
directives issued or administered by such jurisdictions;
(f) the Company is not in breach of, or in default
under (nor has any event occurred which with notice, lapse of time, or both
would result in any breach of, or constitute a default under), its certificate
of incorporation or by-laws or equivalent corporate governance documents, as the
case may be, or in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust, bank
loan or credit agreement or other evidence of indebtedness, or any lease,
contract or other agreement or instrument to which the Company is a party or by
which it or any of its property is bound, and the execution, delivery and
performance of this Agreement, the issuance and sale of the Shares and the
consummation of the transactions contemplated hereby will not conflict with, or
result in any breach of or constitute a default under (nor constitute any event
which with notice, lapse of time, or both would result in any breach of, or
constitute a default under), any provisions of the charter or by-laws, of the
Company or under any provision of any license, indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of
4
<PAGE>
indebtedness, or any lease, contract or other agreement or instrument to which
the Company is a party or by which it or its property may be bound or affected,
or under any federal, state, local or foreign law, regulation or rule or any
decree, judgment or order applicable to the Company;
(g) this Agreement has been duly authorized, executed
and delivered by the Company and is a legal, valid and binding agreement of the
Company enforceable in accordance with its terms;
(h) the capital stock of the Company, including the
Shares, conforms in all material respects to the description thereof contained
in the Registration Statement and Prospectus and the certificates for the Shares
are in due and proper form and the holders of the Shares will not be subject to
personal liability by reason of being such holders;
(i) the Shares have been duly and validly authorized
and, when issued and delivered against payment therefor as provided herein, will
be duly and validly issued and fully paid and non-assessable;
(j) no approval, authorization, consent or order of
or filing with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required in connection with the
issuance and sale of the Shares or the consummation by the Company of the
transaction as contemplated hereby other than registration of the Shares under
the Act and any necessary qualification under the securities or blue sky laws of
the various jurisdictions in which the Shares are being offered by the
Underwriters or under the rules and regulations of the National Association of
Securities Dealers, Inc. (the "NASD");
(k) no person has the right, contractual or
otherwise, to cause the Company to issue to it, or register pursuant to the Act,
any shares of capital stock of the Company upon the issue and sale of the Shares
to the Underwriters hereunder, nor does any person have preemptive rights,
co-sale rights, rights of first refusal or other rights to purchase any of the
Shares other than those that have been expressly waived prior to the dates
hereof;
(l) Ernst & Young LLP, whose reports on the financial
statements of the Company are filed with the Commission as part of the
Registration Statement and Prospectus, are independent certified public
accountants as required by the Act;
(m) the Company has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, in order to conduct its business; the Company is not in violation of,
or in default under, any such license, authorization, consent or approval or any
federal, state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company the effect of which could have a Material
Adverse Effect;
(n) all legal or governmental proceedings, contracts,
leases or documents of a character required to be described in the Registration
Statement or the Prospectus
5
<PAGE>
or to be filed as an exhibit to the Registration Statement have been so
described or filed as required;
(o) there are no actions, suits, claims,
investigations or proceedings pending or threatened to which the Company or any
of its officers is a party or of which any of its properties is subject at law
or in equity, or before or by any federal, state, local or foreign governmental
or regulatory commission, board, body, authority or agency which could result in
a judgment, decree or order having a Material Adverse Effect or prevent
consummation of the transaction contemplated hereby;
(p) the audited and unaudited financial statements
included in the Registration Statement and the Prospectus present fairly the
financial position of the Company as of the dates indicated and the results of
operations and cash flows of the Company for the periods specified; the
supporting schedules included in the Registration Statement present fairly the
information required to be stated therein; such financial statements and
supporting schedules have been prepared in conformity with U.S. generally
accepted accounting principles applied on a consistent basis during the periods
involved; no other financial statements or supporting schedules are required to
be included in the Registration Statement; the financial data set forth in the
Prospectus under the captions "Prospectus Summary -- Summary financial data",
"Capitalization", "Selected financial data" and "Management's discussion and
analysis of financial condition and results of operations" fairly present the
information set forth therein on a basis consistent with that of the audited and
unaudited financial statements contained in the Registration Statement;
(q) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus, there has
not been (i) any material adverse change, or any development which, in the
Company's reasonable judgment, is likely to cause a material adverse change, in
the business, properties or assets described or referred to in the Registration
Statement, or the results of operations, condition (financial or otherwise),
business or operations of the Company, (ii) any transaction which is material to
the Company, except transactions in the ordinary course of business, (iii) any
obligation, direct or contingent, which is material to the Company, incurred by
the Company, except obligations incurred in the ordinary course of business,
(iv) any change in the capital stock or outstanding indebtedness of the Company
or (v) any dividend or distribution of any kind declared, paid or made on the
capital stock of the Company. The Company does not have any material contingent
obligation which is not disclosed in the Registration Statement.
(r) the Company has obtained the agreement of each of
its directors and officers and certain of its other stockholders not to sell,
offer to sell, contract to sell, hypothecate grant any option to sell or
otherwise dispose of, directly or indirectly, any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or warrants or
other rights to purchase Common Stock for a period of 180 days after the date of
the Prospectus;
(s) the Company is not and, after giving effect to
the offering and sale of the Shares, will not be an "investment company" or an
entity "controlled" by an "investment
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company," as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
(t) except as described in the Registration Statement
and Prospectus, the Company owns, or has obtained valid and enforceable licenses
for, or other rights to use, the inventions, patent applications, patents,
trademarks (both registered and unregistered), tradenames, copyrights and trade
secrets described in the Registration Statement and Prospectus as being owned or
licensed by it, which the Company reasonably believes are necessary for the
conduct of its business (collectively, "Intellectual Property") and which the
failure to own, license or have such rights could have a Material Adverse
Effect. Except as described in the Registration Statement and Prospectus, (i)
the Company believes that there are no third parties who have or will be able to
establish their rights to any Intellectual Property, except for the ownership
rights of the owners of the Intellectual Property which is licensed to the
Company; (ii) to the Company's knowledge there is no infringement by third
parties of any Intellectual Property; (iii) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any Intellectual Property, and the
Company is unaware of any facts which would form a reasonable basis for any such
claim; (iv) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any Intellectual Property, and the Company is unaware of any facts which would
form a reasonable basis for any such claim; (v) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others that
the Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is unaware
of any facts which would form a reasonable basis for any such claim; (vi) to the
Company's knowledge there is no patent or patent application which contains
claims that interfere with the issued or pending claims of any of the
Intellectual Property which could have a Material Adverse Effect; and (vii)
there is no prior art of which the Company is aware that may render any patent
application owned by the Company of the Intellectual Property unpatentable which
has not been disclosed to the U.S. Patent and Trademark Office which could have
a Material Adverse Effect;
(u) the Company has filed with the U.S. Food and Drug
Administration (the "FDA"), and all applicable foreign, state and local
regulatory bodies for and received approval of all registrations, applications,
licenses, requests for exemptions, permits and other regulatory authorizations
necessary to conduct the Company's business as it is described in the
Registration Statement and Prospectus; the Company is in compliance in all
material respects with all such registrations, applications, licenses, requests
for exemptions, permits and other regulatory authorizations, and all applicable
FDA, foreign, state and local rules, regulations, guidelines and policies,
including, but not limited to, applicable FDA, foreign, state and local rules,
regulations and policies relating to good manufacturing practice ("GMP") and
good laboratory practice ("GLP"); the Company has no reason to believe that any
party granting any such registration, application, license, request for
exemption, permit or other authorization is considering limiting, suspending or
revoking the same and knows of no basis for any such limitation, suspension or
revocation;
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(v) the human clinical trials, animal studies and
other preclinical tests conducted by the Company or in which the Company has
participated that are described in the Registration Statement and Prospectus or
the results of which are referred to in the Registration Statement or
Prospectus, and such studies and tests conducted on behalf of the Company, were
and, if still pending, are being conducted in all material respects in
accordance with experimental protocols, procedures and controls generally used
by qualified experts in the preclinical or clinical study of new drugs or
diagnostics as applied to comparable products to those being developed by the
Company; the descriptions of the results of such studies, test and trials
contained in the Registration Statement and Prospectus are accurate and complete
in all material respects, and except as set forth in the Registration Statement
and Prospectus, the Company has no knowledge of any other trials, studies or
tests, the results of which the Company believes reasonably call into question
the clinical trial results described or referred to in the Registration
Statement and Prospectus when viewed in the context in which such results are
described and the clinical state of development; and the Company has not
received any notices or correspondence from the FDA or any other domestic or
foreign governmental agency requiring the termination, suspension or
modification (other than such modifications as are normal in the regulations,
any such modifications which are material have been disclosed to you) of any
animal studies, preclinical tests or clinical trials conducted by or on behalf
of the Company or in which the Company has participated that are described in
the Registration Statement or Prospectus or the results of which are referred to
in the Registration Statement or Prospectus.
(w) the Company has good and marketable title to all
the properties and assets reflected as owned in the financial statements
referred to in Section 3(p) above (or elsewhere in the Prospectus), in each case
free and clear of any security interests, mortgages, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not materially interfere with
the use made or proposed to be made of such property by the Company. The real
property, improvements, equipment and personal property held under lease by the
Company are held under valid and enforceable leases, with such exceptions as are
not material to the Company, and the Company does not have any notice of any
claim of any sort that has been asserted by anyone adverse to the rights of the
Company under any of the leases or subleases referred to above, or affecting or
questioning the rights of the Company to the continued possession of the leased
or subleased premises under any such lease or sublease, except for such notices
or claims as would not reasonably be expected to have a Material Adverse Effect;
(x) the Company has filed all necessary federal,
state and foreign income and franchise tax returns and has paid all taxes
required to be paid by it and, if due and payable, any related or similar
assessment, fine or penalty levied against it. The Company has made adequate
charges, accruals and reserves in the applicable financial statements referred
to in Section 3(p) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company has
not been finally determined;
(y) the Company is insured by recognized, financially
sound and reputable institutions with policies in such amounts and with such
deductibles and covering such risks as are generally deemed adequate and
customary for its business including, but not limited
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to, policies covering real and personal property owned or leased by the Company
against theft, damage, destruction, acts of vandalism and earthquakes. The
Company has no reason to believe that it will not be able (i) to renew its
existing insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or appropriate
to conduct its business as now conducted and at a cost that would not have a
Material Adverse Effect. The Company has not been denied any insurance coverage
which it has sought or for which it has applied;
(z) the Company has not taken and will not take,
directly or indirectly, any action designed to or that might be reasonably
expected to cause or result in stabilization or manipulation of the price of the
Common Stock to facilitate the sale or resale of the Shares;
(aa) there are no business relationships or
related-party transactions involving the Company or any other person required to
be described in the Prospectus which have not been described as required;
(bb) neither the Company nor, to the best of the
Company's knowledge, any employee or agent of the Company, has made any
contribution or other payment to any official of, or candidate for, any federal,
state or foreign office in violation of any law or of the character required to
be disclosed in the Prospectus;
(cc) the Company maintains a system of accounting
controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles as
applied in the United States and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences;
(dd) except as would not, individually or in the
aggregate, have a Material Adverse Effect: (i) the Company is not in violation
of any federal, state, local or foreign law or regulation relating to pollution
or protection of human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) or
wildlife, including without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Hazardous Materials"), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), which violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation of the
business of the Company under applicable Environmental Laws, or noncompliance
with the terms and conditions thereof, nor has the Company received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company is in violation of any Environmental
Law; (ii) there is no claim, action or cause of action filed with a court or
governmental authority, no
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investigation with respect to which the Company has received written notice, and
no written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys' fees or
penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Hazardous Materials at any location owned, leased
or operated by the Company, now or in the past (collectively, "Environmental
Claims"), pending or, to the best of the Company's knowledge, threatened against
the Company or any person or entity whose liability for any Environmental Claim
the Company has retained or assumed either contractually or by operation of law;
(iii) the Company has all permits, authorizations and approvals required under
any applicable Environmental Laws and is in compliance with their requirements;
and (iv) to the best of the Company's knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Hazardous Materials, that reasonably could result in a violation of any
Environmental Law or form the basis of a potential Environmental Claim against
the Company or against any person or entity whose liability for any
Environmental Claim the Company has retained or assumed either contractually or
by operation of law;
(ee) the Company and any "employee benefit plan" (as
defined under the Employee Retirement Income Security Act of 1974, as amended,
and the regulations and published interpretations thereunder (collectively,
"ERISA")) established or maintained by the Company or its "ERISA Affiliates" (as
defined below) are in compliance in all material respects with ERISA. "ERISA
Affiliate" means, with respect to the Company, any member of any group of
organizations described in Sections 414(b),(c),(m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company is a member. No
"reportable event" (as defined under ERISA) has occurred or is reasonably
expected to occur with respect to any "employee benefit plan" established or
maintained by the Company or any of its ERISA Affiliates. No "employee benefit
plan" established or maintained by the Company or any of its ERISA Affiliates,
if such "employee benefit plan" were terminated, would have any "amount of
unfunded benefit liabilities" (as defined under ERISA). Neither the Company nor
any of its ERISA Affiliates has incurred or reasonably expects to incur any
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "employee benefit plan" or (ii) Sections 412, 4971, 4975 or
4980B of the Code. Each "employee benefit plan" established or maintained by the
Company or any of its ERISA Affiliates that is intended to be qualified under
Section 401(a) of the Code is so qualified and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualification;
(ff) all disclosure regarding year 2000 compliance
that is required to be described under the Act (including disclosures required
by Staff Legal Bulletin No. 5) has been included in the Prospectus; and the
Company will not incur significant operating expenses or costs to ensure that
its information systems will be year 2000 compliant, other than as disclosed in
the Prospectus; and
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(gg) the Shares have been approved for listing on the
National Association of Securities Dealers Automated Quotation National Market
System ("NASDAQ"), subject only to official notice of issuance.
4. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
Intentionally Omitted.
5. CERTAIN COVENANTS OF THE COMPANY. The Company hereby
agrees:
(a) to furnish such information as may be required
and otherwise to cooperate in qualifying the Shares for offering and sale under
the securities or blue sky laws of such states as you may designate and to
maintain such qualifications in effect so long as required for the distribution
of the Shares; PROVIDED that the Company shall not be required to qualify as a
foreign corporation or to consent to the service of process under the laws of
any such state (except service of process with respect to the offering and sale
of the Shares); and to promptly advise you of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose;
(b) to make available to the Underwriters in New York
City, as soon as practicable after the Registration Statement becomes effective,
and thereafter from time to time to furnish to the Underwriters, as many copies
of the Prospectus (or of the Prospectus as amended or supplemented if the
Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) as the Underwriters may request
for the purposes contemplated by the Act; in case any Underwriter is required to
deliver a prospectus within the nine-month period referred to in Section
10(a)(3) of the Act in connection with the sale of the Shares, the Company will
prepare promptly upon request, but at the expense of such Underwriter, such
amendment or amendments to the Registration Statement and such prospectuses as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act;
(c) to advise you promptly and (if requested by you)
to confirm such advice in writing, (i) when the Registration Statement has
become effective and when any post-effective amendment thereto becomes effective
and (ii) if Rule 430A under the Act is used, when the Prospectus is filed with
the Commission pursuant to Rule 424(b) under the Act (which the Company agrees
to file in a timely manner under such Rules);
(d) to advise you promptly, confirming such advice in
writing, of any request by the Commission for amendments or supplements to the
Registration Statement or Prospectus or for additional information with respect
thereto, or of notice of institution of proceedings for, or the entry of a stop
order suspending the effectiveness of the Registration Statement and, if the
Commission should enter a stop order suspending the effectiveness of the
Registration Statement, to make every reasonable effort to obtain the lifting or
removal of such order as soon as possible; to advise you promptly of any
proposal to amend or supplement the Registration Statement or Prospectus and to
file no such amendment or supplement to which you shall object in writing;
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(e) to file promptly all reports and any definitive
proxy or information statement required to be filed by the Company with the
Commission in order to comply with the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder (collectively, the "Exchange
Act"), subsequent to the date of the Prospectus and for so long as the delivery
of a prospectus is required in connection with the offering or sale of the
shares, and to promptly notify you of such filing;
(f) if necessary or appropriate, to file a
registration statement pursuant to Rule 462(b) under the Act;
(g) to furnish to you and, upon request, to each of
the other Underwriters for a period of five years from the date of this
Agreement (i) copies of any reports or other communications which the Company
shall send to its stockholders or shall from time to time publish or publicly
disseminate, (ii) copies of all annual, quarterly and current reports filed with
the Commission on Forms 10-K, 10-Q and 8-K, or such other similar form as may be
designated by the Commission, (iii) copies of documents or reports filed with
any national securities exchange or over-the-counter market on which any class
of securities of the Company is listed, and (iv) such other information as you
may reasonably request regarding the Company, in each case as soon as such
communications, documents or information becomes available;
(h) to advise the Underwriters promptly of the
happening of any event known to the Company within the time during which a
Prospectus relating to the Shares is required to be delivered under the Act
which, in the judgment of the Company, would require the making of any change in
the Prospectus then being used so that the Prospectus would not include an
untrue statement of material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
are made, not misleading, and, during such time, to prepare and furnish, at the
Company's expense, to the Underwriters promptly such amendments or supplements
to such Prospectus as may be necessary to reflect any such change and to furnish
you a copy of such proposed amendment or supplement before filing any such
amendment or supplement with the Commission;
(i) to make generally available to its security
holders, and to deliver to you, an earnings statement of the Company (which will
satisfy the provisions of Section 11(a) of the Act) covering a period of at
least twelve months beginning after the effective date of the Registration
Statement (as defined in Rule 158(c) of the Act) as soon as is reasonably
practicable after the termination of such twelve-month period but not later than
the forty-fifth (45th) day following the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the registration
statement;
(j) to furnish to its shareholders as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, shareholders' equity and of cash flow of
the Company for such fiscal year, accompanied by a copy of the certificate or
report thereon of nationally recognized independent certified public
accountants);
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(k) to furnish to you four (4) signed copies of the
Registration Statement, as initially filed with the Commission, and of all
amendments thereto (including all exhibits thereto) and sufficient conformed
copies of the foregoing (other than exhibits) for distribution of a copy to each
of the other Underwriters;
(l) to furnish to you as early as practicable prior
to the time of purchase and the additional time of purchase, as the case may be,
but not later than two business days prior thereto, a copy of the latest
available unaudited interim financial statements, if any, of the Company which
have been read by the Company's independent certified public accountants, as
stated in their letter to be furnished pursuant to Section 8(c) hereof;
(m) to apply the net proceeds from the sale of the
Shares in the manner set forth under the caption "Use of Proceeds" in the
Prospectus;
(n) to furnish to you, before filing with the
Commission subsequent to the effective date of the Registration Statement and
during the period referred to in paragraph (f) above, a copy of any document
proposed to be filed pursuant to Section 13, 14 or 15(d) of the Exchange Act;
(o) not to sell, offer or agree to sell, contract to
sell, grant any option to sell or otherwise dispose of, directly or indirectly,
any shares of Common Stock or securities convertible into or exchangeable or
exercisable for Common Stock or warrants or other rights to purchase Common
Stock or any other Securities of the Company that are substantially similar to
Common Stock or permit the registration under the Act of any shares of Common
Stock, except for the registration of the Shares and the sales to the
Underwriters pursuant to this Agreement and except for issuances of Common Stock
upon the exercise of outstanding options, warrants and debentures, for a period
of one hundred eighty (180) days after the date hereof, without the prior
written consent of the Warburg Dillon Read LLC ("WDR"); and
(p) to cause the Shares to be listed for quotation on
the NASDAQ National Market.
6. FEES AND EXPENSES. The Company will pay all expenses, fees
and taxes (other than any transfer taxes and fees and disbursements of counsel
for the Underwriters except as set forth under Section 7 hereof or (iii) or (iv)
below) in connection with (i) the preparation and filing of the Registration
Statement, each Preliminary Prospectus, the Prospectus, and any amendments or
supplements thereto, and the printing and furnishing of copies of each thereof
to the Underwriters and to dealers (including costs of mailing and shipment),
(ii) the issuance, sale and delivery of the Shares by the Company, (iii) the
word processing and/or printing of this Agreement, any Agreement Among
Underwriters, any dealer agreements, any Statements of Information, and the
reproduction and/or printing and furnishing of copies of each thereof to the
Underwriters and to dealers (including costs of mailing and shipment), (iv) the
qualification of the Shares for offering and sale under state laws and the
determination of their eligibility for investment under state law as aforesaid
(including the legal fees and filing fees and other disbursements of counsel to
the Underwriters) and the printing and furnishing of copies of any blue sky
surveys or legal investment surveys to the Underwriters and to dealers, (v) any
listing of
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the Shares on any securities exchange or qualification of the Shares for
quotation on NASDAQ and any registration thereof under the Exchange Act, (vi)
the filing for review of the public offering of the Shares by the NASD, and
(vii) the performance of the Company's other obligations hereunder.
7. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Shares are
not delivered for any reason other than the termination of this Agreement
pursuant to the second paragraph of Section 9 hereof or the default by one or
more of the Underwriters in its or their respective obligations hereunder, the
Company shall, in addition to paying the amounts described in Section 6 hereof,
reimburse the Underwriters for all of their out-of-pocket expenses, including
the fees and disbursements of their counsel.
8. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters hereunder are subject to the accuracy of the
representations and warranties on the part of the Company on the date hereof and
at the time of purchase (and the several obligations of the Underwriters at the
additional time of purchase are subject to the accuracy of the representations
and warranties on the part of the Company on the date hereof and at the time of
purchase (unless previously waived) and at the additional time of purchase, as
the case may be), the performance by the Company of its obligations hereunder
and to the following additional conditions precedent:
(a) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of Cooley
Godward LLP, counsel for the Company, addressed to the Underwriters, and dated
the time of purchase or the additional time of purchase, as the case may be,
with reproduced copies for each of the other Underwriters in the form attached
hereto as EXHIBIT A, with any changes to be reasonably satisfactory to Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. ("Mintz Levin"), counsel for the
Underwriters, stating that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and the Prospectus, to execute and deliver this
Agreement and to issue, sell and deliver the Shares as herein
contemplated;
(ii) the Company is duly qualified or licensed to do business
in the State of California, and to the best of such counsel's knowledge
in each other jurisdiction of the United States, if any, in which it
conducts its business and in which the failure, individually or in the
aggregate, to be so licensed or qualified could have a Material Adverse
Effect and, to the best of such counsel's knowledge, is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not have Material Adverse Effect;
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(iii) this Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company;
(iv) the Shares have been duly authorized and, when issued and
delivered to and paid for by the Underwriters, will be duly and validly
issued and will be fully paid and non-assessable;
(v) the Company has an authorized capitalization as set forth
under the caption "Capitalization" in the Registration Statement and
the Prospectus; the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued, and are fully paid,
nonassessable and free of statutory and contractual preemptive rights;
the Shares when issued will be free of statutory and contractual
preemptive rights, resale rights, rights of first refusal and similar
rights, and the certificates for the Shares are in due and proper form
under the Delaware General Corporation Law, and the holders of the
Shares will not be subject to personal liability by reason of being
such holders;
(vi) such counsel has reviewed the Company's corporate records
and, to the best of such counsel's knowledge, the Company does not own
or control, directly or indirectly, any corporation, association or
other entity;
(vii) the capital stock of the Company, including the Shares,
conforms to the description thereof contained in the Registration
Statement and Prospectus;
(viii) the Company is eligible to use a registration statement
on Form S-1 to register the Shares;
(ix) the Registration Statement and the Prospectus (except as
to the financial statements and schedules and other financial and
statistical data contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
requirements of the Act;
(x) the Registration Statement has become effective under the
Act and, to the best of such counsel's knowledge, no stop order
proceedings with respect thereto are pending or threatened under the
Act and any required filing of the Prospectus and any supplement
thereto pursuant to Rule 424 under the Act has been made in the manner
and within the time period required by such Rule 424;
(xi) no approval, authorization, consent or order of or filing
with any national, state or local governmental or regulatory
commission, board, body, authority or agency is required in connection
with the issuance and sale of the Shares and consummation by the
Company of the transaction as contemplated hereby other than
registration of the Shares under the Act (except such counsel need
express no opinion as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in which the
Shares are being offered by the Underwriters or as to compliance of the
terms of the underwriting arrangement with the conduct rules of the
NASD);
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(xii) the execution, delivery and performance of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby do not and will not conflict with, or
result in any breach of, or constitute a default under (nor constitute
any event which with notice, lapse of time, or both, would result in
any breach of or constitute a default under), any provisions of the
certificate of incorporation or by-laws or other equivalent corporate
governance documents, as the case may be, of the Company or under any
provision of any license, indenture, mortgage, lease, deed of trust,
bank loan, credit agreement or other evidence of indebtedness or other
material agreement to which the Company is a party or by which its
properties may be bound or affected (collectively, the "Material
Agreements"), all of which Material Agreements are filed as exhibits to
the Registration Statement;
(xiii) the Company is not in violation of its certificate of
incorporation or by-laws or other equivalent corporate governance
documents, as the case may be, and to the best of such counsel's
knowledge, the Company has not received any notice of any breach of or
default under any license, indenture, mortgage, lease, deed of trust,
bank loan or any other agreement or instrument to which the Company is
a party or by which its properties may be bound or affected or of any
violation under any federal, state, local or foreign law, regulation or
rule or any decree, judgment or order applicable to the Company;
(xiv) to the best of such counsel's knowledge, there are no
contracts, licenses, agreements, leases or documents of a character
which are required to be filed as exhibits to the Registration
Statement or to be summarized or described in the Prospectus which have
not been so filed, summarized or described and the summaries thereof
and references thereto are correct in all material respects;
(xv) to the best of such counsel's knowledge, there are no
actions, suits, claims, investigations or proceedings pending or
overtly threatened to which the Company is subject or of which any of
its properties, is subject at law or in equity or before or by any
federal, state, local or foreign governmental or regulatory commission,
board, body, authority or agency which are required to be described in
the Prospectus but are not so described;
(xvi) the statements (i) in the Prospectus under the captions
"Risk factors -- Anti-takeover provisions in our charter documents and
under Delaware corporate law may make an acquisition of us, which may
be beneficial to our stockholders, more difficult", "Management --
Stock plans", "Management -- Limitation of liability of directors and
indemnification matters", "Description of capital stock", "Related
party transactions", "Shares eligible for future sale" and
"Underwriting" and (ii) in Item 14 of the Registration Statement,
insofar as such statements constitute matters of law, summaries of
legal matters, provisions of the Company's certificate of incorporation
or by-laws or other equivalent corporate governance documents,
documents or legal proceedings, or
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legal conclusions, has been reviewed by such counsel and fairly present
and summarize, in all material respects, the matters referred to
therein;
(xvii) except as disclosed in the Prospectus under the
captions "Registration rights" and "Shares eligible for future sale",
to the best of such counsel's knowledge, there are no persons with
registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or
included in the offering contemplated by the Underwriting Agreement,
except for such rights as have been duly waived;
(xviii) the Shares have been approved for listing on the
Nasdaq National Market, subject only to official notice of issuance;
and
(xix) such counsel have participated in conferences with
officers and other representatives of the Company, representatives of
the independent public accountants of the Company and representatives
of the Underwriters at which the contents of the Registration Statement
and Prospectus were discussed and, although such counsel is not passing
upon and does not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration Statement
or Prospectus (except as and to the extent stated in subparagraphs (v),
(vii) and (xvi) above), on the basis of the foregoing nothing has come
to the attention of such counsel that causes them to believe that the
Registration Statement or any amendment thereto at the time such
Registration Statement or amendment became effective contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus or any supplement
thereto at the date of such Prospectus or such supplement, and at all
times up to and including the time of purchase or additional time of
purchase, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to
the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus).
(b) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of
Dehlinger & Associates, LLP, intellectual property counsel for the Company,
addressed to the Underwriters, and dated the time of purchase or the additional
time of purchase, as the case may be, with reproduced copies for each of the
other Underwriters, substantially in the form attached hereto as EXHIBIT B and
satisfactory to Mintz Levin, counsel for the Underwriters.
(c) The Company shall furnish to you at the time of purchase
and at the additional time of purchase, as the case may be, an opinion of Wilson
Sonsini Goodrich & Rosati, Professional Corporation, regulatory counsel for the
Company, addressed to the Underwriters, and dated the time of purchase or the
additional time of purchase, as the case may
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be, with reproduced copies for each of the other Underwriters, substantially in
the form attached hereto as EXHIBIT C and satisfactory to Mintz Levin, counsel
for the Underwriters.
(d) You shall have received from Ernst & Young LLP, letters
dated, respectively, the date of this Agreement and the time of purchase and
additional time of purchase, as the case may be, and addressed to the
Underwriters (with reproduced copies for each of the Underwriters) in the forms
heretofore approved by WDR.
(e) You shall have received at the time of purchase and at the
additional time of purchase, as the case may be, the favorable opinion of Mintz
Levin, counsel for the Underwriters, dated the time of purchase or the
additional time of purchase, as the case may be, as to the matters referred to
in subparagraphs (vii) (with respect to the Shares only), (viii) and (ix) of
paragraph (a) of this Section 8.
In addition, such counsel shall state that such counsel
have participated in conferences with officers and other representatives of the
Company, counsel for the Company, representatives of the independent public
accountants of the Company and representatives of the Underwriters at which the
contents of the Registration Statement and Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as to matters
referred to with respect to the Shares under subparagraph (vii) of paragraph (a)
of this Section 8), on the basis of the foregoing (relying as to materiality to
a large extent upon the opinions of officers and other representatives of the
Company), no facts have come to the attention of such counsel which lead them to
believe that the Registration Statement or any amendment thereto at the time
such Registration Statement or amendment became effective contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of its date or any supplement thereto as of its date
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading (it
being understood that such counsel need express no comment with respect to the
financial statements and schedules and other financial and statistical data
included in the Registration Statement or Prospectus).
(f) No amendment or supplement to the Registration Statement
or Prospectus shall be filed prior to the time the Registration Statement
becomes effective to which you object in writing.
(g) The Registration Statement shall become effective, or if
Rule 430A under the Act is used, the Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) under the Act, at or before 5:00 P.M., New
York City time, on the date of this Agreement, unless a later time (but not
later than 5:00 P.M., New York City time, on the second full business day after
the date of this Agreement) shall be agreed to by the Company and you in writing
or by telephone, confirmed in writing; PROVIDED, HOWEVER, that the Company and
you and any group of
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Underwriters, including you, who have agreed hereunder to purchase in the
aggregate at least 50% of the Firm Shares may from time to time agree on a later
date.
(h) Prior to the time of purchase or the additional time of
purchase, as the case may be, (i) no stop order with respect to the
effectiveness of the Registration Statement shall have been issued under the Act
or proceedings initiated under Section 8(d) or 8(e) of the Act; (ii) the
Registration Statement and all amendments thereto, or modifications thereof, if
any, shall not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and (iii) the Prospectus and all amendments or
supplements thereto, or modifications thereof, if any, shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they are made, not misleading.
(i) Between the time of execution of this Agreement and the
time of purchase or the additional time of purchase, as the case may be, (i) no
material and unfavorable change, financial or otherwise (other than as referred
to in the Registration Statement and Prospectus), in the business, condition or
prospects of the Company shall occur or become known and (ii) no transaction
which is material and unfavorable to the Company shall have been entered into by
the Company.
(j) The Company will, at the time of purchase or additional
time of purchase, as the case may be, deliver to you a certificate of two of its
executive officers to the effect that the representations and warranties of the
Company as set forth in this Agreement are true and correct as of each such
date, that the Company shall perform such of its obligations under this
Agreement as are to be performed at or before the time of purchase and at or
before the additional time of purchase, as the case may be and the conditions
set forth in paragraphs (h) and (i) of this Section 8 have been met.
(k) You shall have received signed letters, dated the date of
this Agreement, from each of the directors and officers of the Company and
certain of its other stockholders to the effect that such persons shall not
sell, offer or agree to sell, contract to sell, grant any option to sell or
otherwise dispose of, directly or indirectly, any shares of Common Stock of the
Company or securities convertible into or exchangeable or exercisable for Common
Stock or warrants or other rights to purchase Common Stock for a period of 180
days after the date of the Prospectus without WDR's prior written consent.
(l) The Company shall have furnished to you such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus as of the time of purchase and
the additional time of purchase, as the case may be, as you may reasonably
request.
(m) The Shares shall have been approved for listing for
quotation on the NASDAQ National Market, subject only to notice of issuance at
or prior to the time of purchase or the additional time of purchase, as the case
may be.
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9. EFFECTIVE DATE OF AGREEMENT; TERMINATION. This Agreement
shall become effective (i) if Rule 430A under the Act is not used, when you
shall have received notification of the effectiveness of the Registration
Statement, or (ii) if Rule 430A under the Act is used, when the parties hereto
have executed and delivered this Agreement.
The obligations of the several Underwriters hereunder shall be
subject to termination in the absolute discretion of you or any group of
Underwriters (which may include you) which has agreed to purchase in the
aggregate at least 50% of the Firm Shares, if, since the time of execution of
this Agreement or the respective dates as of which information is given in the
Registration Statement and Prospectus, there has been any material adverse and
unfavorable change, financial or otherwise (other than as referred to in the
Registration Statement and Prospectus), in the operations, business, condition
or prospects of the Company which would, in your judgment or in the judgment of
such group of Underwriters, make it impracticable to market the Shares, or, if,
at any time prior to the time of purchase or, with respect to the purchase of
any Additional Shares, the additional time of purchase, as the case may be,
trading in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market shall have been suspended or limitations
or minimum prices shall have been established on the New York Stock Exchange,
the American Stock Exchange or the NASDAQ National Market or if a banking
moratorium shall have been declared either by the United States or New York
State authorities, or if the United States shall have declared war in accordance
with its constitutional processes or there shall have occurred any material
outbreak or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on the financial markets of
the United States as, in your judgment or in the judgment of such group of
Underwriters, to make it impracticable to market the Shares.
If you or any group of Underwriters elects to terminate this
Agreement as provided in this Section 9, the Company and each other Underwriter
shall be notified promptly by letter or telegram.
If the sale to the Underwriters of the Shares, as contemplated
by this Agreement, is not carried out by the Underwriters for any reason
permitted under this Agreement or if such sale is not carried out because the
Company shall be unable to comply with any of the terms of this Agreement, the
Company shall not be under any obligation or liability under this Agreement
(except to the extent provided in Sections 6, 7 and 11 hereof), and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 11 hereof) or to one another
hereunder.
10. INCREASE IN UNDERWRITERS' COMMITMENTS. Subject to Sections
8 and 9, if any Underwriter shall default in its obligation to take up and pay
for the Firm Shares to be purchased by it hereunder (otherwise than for reasons
sufficient to justify the termination of this Agreement under the provisions of
Section 9 hereof) and if the number of Firm Shares which all Underwriters so
defaulting shall have agreed but failed to take up and pay for does not exceed
10% of the total number of Firm Shares, the non-defaulting Underwriters shall
take up and pay for (in addition to the number of Firm Shares they are obligated
to purchase pursuant to Section 1 hereof) the number of Firm Shares agreed to be
purchased by all such defaulting Underwriters, as
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hereinafter provided. Such Shares shall be taken up and paid for by such
non-defaulting Underwriter or Underwriters in such amount or amounts as you may
designate with the consent of each Underwriter so designated or, in the event no
such designation is made, such Shares shall be taken up and paid for by all
non-defaulting Underwriters pro rata in proportion to the aggregate number of
Firm Shares set opposite the names of such non-defaulting Underwriters in
Schedule A.
Without relieving any defaulting Underwriter from its
obligations hereunder, the Company agrees with the non-defaulting Underwriters
that they will not sell any Firm Shares hereunder unless all of the Firm Shares
are purchased by the Underwriters (or by substituted Underwriters selected by
you with the approval of the Company or selected by the Company with your
approval).
If a new Underwriter or Underwriters are substituted by the
Underwriters or by the Company for a defaulting Underwriter or Underwriters in
accordance with the foregoing provision, the Company or you shall have the right
to postpone the time of purchase for a period not exceeding five business days
in order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this agreement shall refer to
and include any Underwriter substituted under this Section 10 with like effect
as if such substituted Underwriter had originally been named in Schedule A.
If the aggregate number of Shares which the defaulting
Underwriter or Underwriters agreed to purchase exceeds 10% of the total number
of Shares which all Underwriters agreed to purchase hereunder, and if neither
the non-defaulting Underwriters nor the Company shall make arrangements within
the five business day period stated above for the purchase of all the Shares
which the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter and
without any liability on the part of any non-defaulting Underwriter to the
Company. Nothing in this paragraph, and no action taken hereunder, shall relieve
any defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
11. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify, defend and hold
harmless each Underwriter, its partners, directors and officers, and any person
who controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense, liability or claim
(including the reasonable cost of investigation) which, jointly or severally,
any such Underwriter or any such person may incur under the Act, the Exchange
Act, the common law or otherwise, insofar as such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (or in the Registration Statement as amended by any post-effective
amendment thereof by the Company) or in a Prospectus (the term Prospectus for
the purpose of
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this Section 11 being deemed to include any Preliminary Prospectus, the
Prospectus and the Prospectus as amended or supplemented by the Company), or
arises out of or is based upon any omission or alleged omission to state a
material fact required to be stated in either such Registration Statement or
Prospectus or necessary to make the statements made therein not misleading,
except insofar as any such loss, damage, expense, liability or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information furnished in
writing by or on behalf of any Underwriter through you to the Company expressly
for use with reference to such Underwriter in such Registration Statement or
such Prospectus or arises out of or is based upon any omission or alleged
omission to state a material fact in connection with such information required
to be stated in either such Registration Statement or Prospectus or necessary to
make such information not misleading.
If any action, suit or proceeding (together, a "Proceeding")
is brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such Underwriter or such person shall promptly notify the Company in writing of
the institution of such Proceeding and the Company shall assume the defense of
such Proceeding, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses; PROVIDED, HOWEVER,
that the omission to so notify the Company shall not relieve the Company from
any liability which the Company may have to any Underwriter or any such person
or otherwise. Such Underwriter or such controlling person shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or of such person
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such Proceeding or the Company
shall not have, within a reasonable period of time in light of the circumstances
employed counsel to have charge of the defense of such Proceeding or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from, additional to or in
conflict with those available to the Company (in which case the Company shall
not have the right to direct the defense of such Proceeding on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one Proceeding or
series of related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). The Company shall not
be liable for any settlement of any such Proceeding effected without its written
consent but if settled with the written consent of the Company, the Company
agrees to indemnify and hold harmless any Underwriter and any such person from
and against any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have requested
an indemnifying party to reimburse the indemnified party for fees and expenses
of counsel as contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement of any
Proceeding effected without its written consent if (i) such settlement is
entered into more than 60 business days after receipt by such indemnifying party
of the aforesaid request, (ii) such indemnifying party shall not have reimbursed
the indemnified party in accordance with such request prior to the date of such
settlement and (iii) such indemnified party shall have given the indemnifying
party at least 30 days' prior notice of its intention to settle. No indemnifying
party shall, without the prior written
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consent of the indemnified party, effect any settlement of any pending or
threatened Proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such Proceeding and does not include an admission of fault, culpability or a
failure to act, by or on behalf of such indemnified party.
(b) Each Underwriter severally agrees to indemnify,
defend and hold harmless the Company, its directors and officers, and any person
who controls the Company or within the meaning of Section 15 of the Act, or
Section 20 of the Exchange Act from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation) which,
jointly or severally, the Company or any such person may incur under the Act,
the Exchange Act, or common law or otherwise, insofar as such loss, damage,
expense, liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and in conformity
with information furnished in writing by or on behalf of such Underwriter
through you to the Company expressly for use with reference to such Underwriter
in the Registration Statement (or in the Registration Statement as amended by or
on behalf of any post-effective amendment thereof by the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated in such Registration Statement or Prospectus or necessary to make such
information not misleading.
If any Proceeding is brought against the Company or any such
person in respect of which indemnity may be sought against any Underwriter
pursuant to the foregoing paragraph, the Company or such person shall promptly
notify such Underwriter in writing of the institution of such Proceeding and
such Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses, PROVIDED, HOWEVER, that the omission to so
notify such Underwriter shall not relieve such Underwriter, from any liability
which such Underwriter may have to the Company, or any such person or otherwise.
The Company or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company or such person unless the employment of such counsel shall have been
authorized in writing by such Underwriter in connection with the defense of such
Proceeding or such Underwriter shall not have employed counsel to have charge of
the defense of such Proceeding or such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to or in conflict with those available to such
Underwriter (in which case such Underwriter shall not have the right to direct
the defense of such Proceeding on behalf of the indemnified party or parties,
but such Underwriter may employ counsel and participate in the defense thereof
but the fees and expenses of such counsel shall be at the expense of such
Underwriter), in any of which events such fees and expenses shall be borne by
such Underwriter and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one separate
counsel (in addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the indemnified
parties who are parties to such Proceeding). No Underwriter shall be liable for
any settlement of any such Proceeding effected without the written consent of
such
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Underwriter but if settled with the written consent of such Underwriter, such
Underwriter agrees to indemnify and hold harmless the Company and any such
person from and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
paragraph, then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall have given
the indemnifying party at least 30 days' prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened Proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such Proceeding.
(c) If the indemnification provided for in this
Section 11 is unavailable to an indemnified party under subsections (a) and (b)
of this Section 11 in respect of any losses, damage, expenses, liabilities or
claims referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other hand from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses, liabilities or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriters on the
other shall be deemed to be in the same respective proportion as the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the total underwriting
discounts and commissions received by the Underwriters, bear to the aggregate
public offering price of the Shares. The relative fault of the Company on the
one hand and of the Underwriters on the other shall be determined by reference
to, among other things, whether the untrue statement or alleged untrue statement
of a material fact or omission or alleged omission relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, damages, expenses, liabilities and claims referred to in this subsection
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating, preparing to defend or
defending any claim or Proceeding.
(d) The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 11 were
determined by pro rata allocation
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(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in subsection (c) above. Notwithstanding the
provisions of this Section 11, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by such Underwriter and distributed to the public were offered to
the public exceeds the amount of any damage which such Underwriter has otherwise
been required to pay by reason of such untrue statement or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 11 are several in proportion to their respective underwriting
commitments and not joint.
(e) The indemnity and contribution agreements
contained in this Section 11 and the covenants, warranties and representations
of the Company contained in this Agreement shall remain in full force and effect
regardless of any partners, investigation made by or on behalf of any
Underwriter, its directors and officers or any person (including each partner,
officer or director of such person) who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors or officers, or any person who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the
issuance and delivery of the Shares. The Company and each Underwriter agree
promptly to notify each other of any commencement of any Proceeding against it
and, in the case of the Company, against any of the Company's officers or
directors in connection with the issuance and sale of the Shares, or in
connection with the Registration Statement or Prospectus.
12. NOTICES. Except as otherwise herein provided, all
statements, requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if delivered or
sent to Warburg Dillon Read LLC, 299 Park Avenue, New York, N.Y. 10171-0026,
Attention: Syndicate Department, and if to the Company, shall be sufficient in
all respects if delivered or sent to the Company at the offices of the Company
at 3294 West Bayshore Road, Palo Alto, California 94303, Attention: Chief
Executive Officer.
13. GOVERNING LAW; CONSTRUCTION. This Agreement and any claim,
counterclaim or dispute of any kind or nature whatsoever arising out of or in
any way relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement.
14. SUBMISSION TO JURISDICTION. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the
Company consents to the jurisdiction of such courts and personal service with
respect thereto. The Company hereby consents to personal jurisdiction, service
and venue in any court in which any Claim arising out of or in any way relating
to this Agreement is brought by
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any third party against Warburg Dillon Read LLC or any indemnified party. Each
of Warburg Dillon Read LLC and the Company (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and affiliates)
waives all right to trial by jury in any action, proceeding or counterclaim
(whether based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. The Company agrees that a final judgment in any such
action, proceeding or counterclaim brought in any such court shall be conclusive
and binding upon the Company and may be enforced in any other courts in the
jurisdiction of which the Company is or may be subject, by suit upon such
judgment.
15. PARTIES AT INTEREST. The Agreement herein set forth has
been and is made solely for the benefit of the Underwriters and the Company,
and, to the extent provided in Section 11 hereof, the controlling persons,
directors and officers referred to in such Section, and their respective
successors, assigns, heirs, pursuant representatives and executors and
administrators. No other person, partnership, association or corporation
(including a purchaser, as such purchaser, from any of the Underwriters) shall
acquire or have any right under or by virtue of this Agreement.
16. COUNTERPARTS. This Agreement may be signed by the parties
in one or more counterparts which together shall constitute one and the same
agreement among the parties.
17. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Underwriters and the Company and their successors and assigns and any
successor or assign of any substantial portion of the Company's and any of the
Underwriters' respective businesses and/or assets.
18. MISCELLANEOUS. Warburg Dillon Read LLC, an indirect,
wholly owned subsidiary of __________, is not a bank and is separate from any
affiliated bank, including any U.S. branch or agency of Warburg Dillon Read LLC.
Because Warburg Dillon Read LLC is a separately incorporated entity, it is
solely responsible for its own contractual obligations and commitments,
including obligations with respect to sales and purchases of securities.
Securities sold, offered or recommended by Warburg Dillon Read LLC are not
deposits, are not insured by the Federal Deposit Insurance Corporation, are not
guaranteed by a branch or agency, and are not otherwise an obligation or
responsibility of a branch or agency.
19. A lending affiliate of Warburg Dillon Read LLC may have
lending relationships with issuers of securities underwritten or privately
placed by Warburg Dillon Read LLC. To the extent required under the securities
laws, prospectuses and other disclosure documents for securities underwritten or
privately placed by Warburg Dillon Read LLC will disclose the existence of any
such lending relationships and whether the proceeds of the issue will be used to
repay debts owed to affiliates of Warburg Dillon Read LLC.
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If the foregoing correctly sets forth the understanding among
the Company and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this letter and your acceptance shall constitute a
binding agreement among the Company and the Underwriters, severally.
Very truly yours,
INTERMUNE PHARMACEUTICALS, INC.
By:
--------------------------------------
W. Scott Harkonen, M.D.
Chief Executive Officer
Accepted and agreed to as of the date first above written, on behalf of
themselves and the other several Underwriters named in Schedule A
WARBURG DILLON READ LLC
CHASE SECURITIES INC.
PRUDENTIAL SECURITIES INCORPORATED
By: WARBURG DILLON READ LLC
By:
-------------------------
Title:
By:
-------------------------
Title:
27
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Underwriter Shares
- ----------- ------
<S> <C>
WARBURG DILLON READ LLC
CHASE SECURITIES INC.
PRUDENTIAL SECURITIES INCORPORATED
----------
Total........................
==========
</TABLE>
<PAGE>
EXHIBIT A
FORM OF OPINION OF CORPORATE COUNSEL FOR THE COMPANY
The final opinion in draft form should be attached as EXHIBIT A at the
time this Agreement is executed pursuant to Section 8(a) of the Underwriting
Agreement.
<PAGE>
EXHIBIT B
FORM OF OPINION OF INTELLECTUAL PROPERTY COUNSEL FOR THE COMPANY
The final opinion in draft form should be attached as EXHIBIT B at the
time this Agreement is executed pursuant to Section 8(b) of the Underwriting
Agreement.
2.
<PAGE>
EXHIBIT C
FORM OF OPINION OF REGULATORY COUNSEL FOR THE COMPANY
The final opinion in draft form should be attached as EXHIBIT C at the
time this Agreement is executed pursuant to Section 8(c) of the Underwriting
Agreement.
3.
<PAGE>
Exhibit 4.1
INT
Pharmaceuticals
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 45885B 10 0
This Certifies that
is the record holder of
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK, $.001 PAR VALUE, OF
INTERMUNE PHARMACEUTICALS, INC.
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this certificate properly
endorsed. This certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.
Dated:
SECRETARY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT AND REGISTRAR
BY
AUTHORIZED SIGNATURE
1.
<PAGE>
The Corporation shall furnish without charge to each stockholder who so requests
a statement of the powers, designations, preferences and relative,
participating, optional, or other special rights of each class of stock of the
Corporation or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights. Such requests shall be made to
the Corporation's Secretary at the principal office of the Corporation.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COMD
TEN ENTD
JT TEND
as tenants in common
as tenants by the entireties
as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACTD.................Custodian......................
(Cust) (Minor)
under Uniform Gifts to Minors
Act..........................................
(State)
UNIF TRF MIN ACTD...............Custodian (until age...........)
(Cust)
...................under Uniform Transfers
(Minor)
to Minors Act...................................
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received, hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
Shares
of the common stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
1.
<PAGE>
Dated
X
X
NOTICE:
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATEVER.
Signature(s) Guaranteed
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15.
By
2.
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT 10.12
AMENDED AND RESTATED EXCLUSIVE SUBLICENSE AGREEMENT
BY AND BETWEEN
INTERMUNE PHARMACEUTICALS, INC.
AND
CONNETICS CORPORATION
APRIL 27, 1999
<PAGE>
AMENDED AND RESTATED EXCLUSIVE SUBLICENSE AGREEMENT
THIS AMENDED AND RESTATED EXCLUSIVE SUBLICENSE AGREEMENT (the
"Agreement") is made and entered into as of April 27, 1999 (the "Effective
Date") by and between CONNETICS CORPORATION, a Delaware corporation with a
principal place of business at 3400 West Bayshore Road, Palo Alto, CA 94303
("Connetics"), and INTERMUNE PHARMACEUTICALS, INC., a California corporation
with a principal place of business at 3294 West Bayshore Road, Palo Alto, CA
94303 ("InterMune"). InterMune and Connetics may be referred to herein as a
"Party" or, collectively, as the "Parties."
RECITALS
A. WHEREAS, InterMune is a corporation formed for the purpose of research
and development of biopharmaceutical products for the treatment of infectious
and autoimmune diseases; and
B. WHEREAS, Connetics has licensed the rights to certain immunology-based
products and to the technology relating thereto from Genentech, Inc.
("Genentech") pursuant to that certain License Agreement for Interferon Gamma by
and between Connetics and Genentech dated May 5, 1998 (the "Genentech License");
and
C. WHEREAS, InterMune and Connetics have entered into that certain Exclusive
Sublicense Agreement dated August 21, 1998 (the "Original Agreement") pursuant
to which (a) Connetics granted an exclusive sublicense to InterMune under the
Genentech License to develop, make, have made, import, offer for sale and sell
therapeutic products containing or derived from such immunology-based products
and technology for use for certain specific indications, and (b) InterMune
granted to Connetics the exclusive option to practice such sublicensed rights in
the dermatology field;
D. WHEREAS, Connetics and Genentech have amended the Genentech License
through Amendment No. 1 to License Agreement effective December 28, 1998,
Amendment No. 2 to License Agreement effective January 15, 1999 and Amendment
No. 3 to the License Agreement effective April 27, 1999, pursuant to which
Connetics acquired from Genentech certain additional rights to the
aforementioned immunology-based products and technology, with the intent of
sublicensing such additional rights to InterMune;
E. WHEREAS, Connetics is participating in that certain financing transaction
for InterMune Series A Preferred Shares (the "Series A Transaction") and, as
partial consideration to Connetics for its participation in the Series A
Transaction, InterMune has agreed to pay to Connetics, (i) pursuant to that
certain Collaboration Agreement between the Parties effective as of even date
herewith (the "Collaboration Agreement"), five hundred thousand dollars
($500,000) on the effective date of the Collaboration Agreement and five hundred
thousand dollars ($500,000) on March 31, 2001, and (ii) pursuant to this
Agreement, a milestone payment of one million five hundred thousand dollars
($1,500,000) as further described herein;
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
1.
<PAGE>
F. WHEREAS, as further consideration to Connetics for its participation in
the Series A Transaction, InterMune has agreed to issue to Connetics pursuant to
the Collaboration Agreement, (i) nine hundred sixty thousand (960,000) shares of
Series A-1 Preferred Stock, (ii) shares of Series B Preferred Stock of an
aggregate value of five hundred thousand dollars ($500,000), and (iii) shares of
Series C Preferred Stock of an aggregate value of one million dollars
($1,000,000); and
G. WHEREAS, InterMune and Connetics now desire to replace and supersede the
Original Agreement with this Agreement;
NOW, THEREFORE, the Parties agree as follows:
1. DEFINITIONS
1.1 "AFFILIATE" means any company or entity controlled by, controlling or
under common control with a Party. As used in this Section, "control"
means (a) that an entity or company owns, directly or indirectly, fifty
percent (50%) or more of the voting stock of another entity, or (b) that
an entity, person or group has the actual ability to control and direct
the management of the entity, whether by contract or otherwise, but
excluding, for all purposes of this Agreement, Connetics, as to
InterMune, and InterMune, as to Connetics.
1.2 "AMENDMENT NO. 3" means that certain Amendment No. Three to License
Agreement entered into between Connetics and Genentech effective April
27, 1999. For clarity, the phrase "as amended by Amendment No. 3" as used
herein is intended only for ease of reference and not as a limitation.
1.3 "BEST EFFORTS" means every necessary and prudent effort of a Party
applied in a prompt, commercially reasonable manner, to the maximum
extent reasonably allowed by such Party's available financial resources,
taking into account all of such Party's business commitments for such
financial resources.
1.4 "BLA" means a Biologics License Application.
1.5 "CONNETICS KNOW-HOW" means all Know-How in the areas of quality
assurance/ quality control (QA/QC), pharmaceutical science, process
development or regulatory affairs that (a) is Controlled by Connetics
during the term of this Agreement, and (b) is necessary or useful to the
discovery, development, use or manufacture of Products, but excluding all
Know-How that is part of the Genentech License Rights.
1.6 "CONTROLLED" means with respect to any material, Know-How or intellectual
property right, that the Party owns or has a license to such material,
Know-How or intellectual property right and has the ability to grant
access, a license, or a sublicense to such material, Know-How or
intellectual property right to the other Party as provided for herein
without violating an agreement with a Third Party as of the time the
Party would be first required hereunder to grant the other Party such
access, license or sublicense.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
2.
<PAGE>
1.7 "DERMATOLOGY FIELD" means the administration to humans of therapeutic
products for the treatment, prevention or diagnosis of any dermatological
disease or condition, including, without limitation, atopic dermatitis,
keloids/hypertrophic scars, pustular psoriasis and scleroderma, but
excluding (i) any cancer disease or condition, (ii) any infectious
disease or condition, and (iii) any indication outside of the IG Field.
1.8 "DERMATOLOGY SUBLICENSEE" means a Third Party to which Connetics has
granted a sublicense under the sublicense rights granted by InterMune to
Connetics pursuant to Section 4.1.
1.9 "FDA" means the U.S. Food and Drug Administration, or any successor
agency.
1.10 "GENE THERAPY" means the therapeutic or prophylactic treatment of a human
being with: (a) one or more oligonucleotides or nucleotide sequences, in
native form or chemically modified, which are introduced into the body in
free form, bound to a carrier molecule, contained in any molecular
vesicle (e.g. a liposome), incorporated into or attached to a vector of
any type, contained in any cellular construct and/or contained in any
mechanical device or (b) cells which have been manipulated EX VIVO using
one or more oligonucleotides or nucleotide sequences.
1.11 "GENE THERAPY FIELD" means the administration to humans of Licensed Gene
Product for Gene Therapy for the treatment or prevention of any human
disease or condition, provided however, that "Gene Therapy Field" shall
not include any treatment or prevention of any type of cardiac or
cardiovascular disease or condition.
1.12 "GENENTECH" means Genentech, Inc., a Delaware corporation with its
principal office at 1 DNA Way, South San Francisco, CA 94080.
1.13 "GENENTECH LICENSE" means the License Agreement for Interferon Gamma
between Genentech and Connetics dated May 4, 1998, as amended by
Amendment No. 1 to License Agreement effective December 28, 1998,
Amendment No. 2 to License Agreement effective January 15, 1999, and
Amendment No. 3, all of which are attached hereto as Exhibit 1.13.
1.14 "GENENTECH LICENSE RIGHTS" means all rights under Patents, Know-How and
trademarks granted to Connetics by Genentech under the Genentech License,
but only to the extent the Genentech License permits the practice of such
rights for the uses set forth in Article 3 herein. "Genentech License
Rights" shall not include any Third Party Product Rights.
1.15 "GENENTECH PATENTS" means all the Patent rights which are granted to
Connetics under the Genentech License.
1.16 "GENENTECH SUPPLY AGREEMENT" means the Supply Agreement entered into
between Genentech and Connetics dated May 4, 1998, a copy of which is
attached hereto as Exhibit 1.16.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
3.
<PAGE>
1.17 "IG FIELD" means the administration to humans of Licensed Protein Product
for the treatment or prevention of any human disease or condition,
provided however, that "IG Field" shall not include: (i) the
administration to humans of Licensed Protein Product for the treatment or
prevention of any type of arthritis or cardiac or cardiovascular disease
or condition or (ii) use of Licensed Protein Product for Gene Therapy.
1.18 "INTERFERON GAMMA" OR "IG" means the polypeptide described as "Interferon
Gamma" in Section 1.20 of the Genentech License.
1.19 "INTERMUNE NET SALES" means "Net Sales" of Licensed Protein Products in
the Territory for use in the IG Field by InterMune and its sublicensees
hereunder other than Connetics and its Affiliates and Dermatology
Sublicensees.
1.20 "KNOW-HOW" means all information, data, know-how, trade secrets,
inventions, developments, results, techniques and materials, whether or
not patentable.
1.21 "LICENSED PRODUCT," "LICENSED GENE PRODUCT" AND "LICENSED PROTEIN
PRODUCT" shall each have the same meaning as defined in Section 1.22 of
the Genentech License (as amended by Amendment No. 3).
1.22 "LICENSED TECHNOLOGY" means the Genentech License Rights and the
Connetics Know-How.
1.23 "NET SALES" means "Net Sales" (as defined in Section 1.25 of the
Genentech License) of Licensed Protein Products in the Territory for use
in the IG Field by InterMune and any of its sublicensees hereunder.
1.24 "PATENTS" means any and all issued or pending patents and patent
applications, both foreign and domestic, and including without limitation
(a) all divisionals, continuations and continuations-in-part of any such
applications, (b) any patents that issue from any of the foregoing, and
(c) all substitutions, extensions, reissues, renewals, supplementary
protection certificates and inventors' certificates with respect to any
of the foregoing issued patents.
1.25 "TERRITORY" means the United States and Japan.
1.26 "THIRD PARTY" means any party besides the Parties and their respective
Affiliates.
1.27 "THIRD PARTY PRODUCT RIGHTS" shall have the meaning set forth in Section
1.37 of the Genentech License (as amended by Amendment No. 3).
1.28 "UNITED STATES" means the United States and its territories and
possessions.
2. ORIGINAL AGREEMENT SUPERSEDED
The Parties agree that the Original Agreement is hereby replaced and
superseded in all respects by this Agreement as of the Effective Date.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
4.
<PAGE>
3. LICENSES AND COVENANTS
3.1 GENENTECH LICENSE RIGHTS.
(a) Connetics hereby grants to InterMune the exclusive sublicense, even as to
Connetics, under the Genentech License Rights to develop, use, sell,
offer for sale, import, make and have made:
(i) Licensed Protein Products in the IG Field in the Territory, subject to
any rights Connetics obtains under Section 4.1 below, and
(ii) Licensed Gene Products in the Gene Therapy Field in the United States.
(b) InterMune may sublicense any or all the foregoing rights to the extent
that Connetics is permitted to do so under the Genentech License.
3.2 THIRD PARTY PRODUCT RIGHTS.
(a) Connetics hereby grants to InterMune the exclusive sublicense, even as to
Connetics, under any Third Party Product Rights Connetics acquires in
Japan pursuant to Section 2.1(g)(iii) of the Genentech License (as
amended by Amendment No. 3), which sublicense may be further sublicensed
by InterMune to the extent that Connetics is permitted to do so under the
Genentech License.
(b) Connetics hereby assigns to InterMune its entire right, title and
interest to Connetics' rights of negotiation to Third Party Product
Rights pursuant to Section 2.1(h) of the Genentech License (as amended by
Amendment No. 3). In the event that Genentech notifies Connetics of the
availability of any such Third Party Product Rights, Connetics shall
promptly notify InterMune thereof.
3.3 CONNETICS KNOW-HOW. Connetics hereby grants to InterMune a non-exclusive
license under the Connetics Know-How to develop, use, make, have made,
import, offer for sale and sell (a) Licensed Products in the Territory,
and (b) any products covered by Third Party Patent Rights to which
Connetics or InterMune acquires rights under the Genentech License in the
applicable territory.
3.4 GENENTECH SUPPLY AGREEMENT. Connetics hereby assigns to InterMune its
entire right, title and interest under the Genentech Supply Agreement and
agrees to notify Genentech of such assignment in accordance with Section
5.4 thereof. As of the Effective Date, InterMune shall be deemed to be the
successor in interest of Connetics under the Genentech Supply Agreement and
shall assume all obligations and be entitled to all rights of Connetics
under such agreement. InterMune hereby covenants that it shall maintain the
Genentech Supply Agreement effective and in good standing. To the extent
Connetics exercises its option pursuant to Section 4.1 below, InterMune
shall procure for and supply to Connetics (and its Dermatology
Sublicensees, if any) its requirements for Bulk Product and Finished
Product (as such terms are defined in the Genentech Supply Agreement) for
use in the Dermatology
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
5.
<PAGE>
Field from Genentech pursuant to the Genentech Supply Agreement or from
any Third Party manufacturer(s) contracted by InterMune to manufacture
Finished Product and Bulk Product, provided that Connetics shall pay to
InterMune InterMune's cost, without markup, for procuring and supplying
such Finished Product and Bulk Product to Connetics.
3.5 TRANSFER OF DATA AND MATERIALS. Promptly following the Effective Date,
Connetics and InterMune shall work cooperatively together to transfer to
InterMune all documents or materials in Connetics' possession comprising
or containing the Licensed Technology, including without limitation,
biological and chemical materials, regulatory filings, and data, and
Connetics shall transfer any and all additions or improvements to the
Licensed Technology to InterMune as soon as is reasonably practicable
after the creation, development or acquisition of such addition or
improvements.
3.6 CONNETICS COVENANT. Connetics hereby covenants that it shall maintain the
Genentech License effective and in good standing subject to InterMune's
performance under Section 3.7 below.
3.7 INTERMUNE PERFORMANCE UNDER GENENTECH LICENSE.
(a) InterMune shall perform in lieu and instead of Connetics in carrying out
the rights and obligations of Connetics under the Genentech License to
the extent permitted in Section 2.3(c) of the Genentech License
(including without limitation the insurance obligations set forth in
Section 10.4 of the License Agreement (as amended by Amendment No. 3)),
and except as set forth in Article 4 below. Connetics agrees to use
commercially reasonable diligent efforts to cooperate with InterMune to
enable it to exercise such rights and to perform such obligations
thereunder.
(b) In the event that InterMune reasonably anticipates that it is likely to
materially default under any obligation under the Genentech License that
it is obligated to perform pursuant to subsection (a) above, InterMune
shall notify Connetics as promptly as reasonably practicable of such
default. At Connetics' request, InterMune shall cooperate fully with
Connetics in order to prevent, mitigate or cure such default.
4. OPTION TO DERMATOLOGY RIGHTS
4.1 OPTION GRANT. InterMune hereby grants to Connetics the exclusive option
to obtain the exclusive sublicense under the Genentech License Rights to
develop, use, make, have made, import, offer for sale and sell Licensed
Protein Products for use solely in the Dermatology Field in the United
States, subject to Genentech's rights under the Genentech License.
Connetics may exercise such option at any time prior to the [ * ]
anniversary of the Effective Date by providing InterMune written notice
of its desire to exercise such option. Upon InterMune's receipt of such
notice, InterMune shall be deemed to have granted to Connetics the
exclusive, royalty-free (with respect to InterMune only), sublicense
under the Genentech License Rights to use, make, have made, import, offer
for sale and sell Licensed Protein Products in the Dermatology Field in
the United States for the term of this Agreement, subject to the terms of
the Genentech License, and Connetics shall undertake all obligations
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
6.
<PAGE>
under the Genentech License relating to its development and
commercialization of Licensed Protein Products in the Dermatology Field
in the United States, including without limitation those obligations
described in Sections 4.2 and 4.4 below. Such sublicense shall be further
sublicenseable by Connetics to the extent permitted by the Genentech
License. If not exercised by the [ * ] anniversary of the Effective Date,
the option granted in this Section 4.1 shall expire.
4.2 PAYMENTS AND OTHER OBLIGATIONS UNDER GENENTECH LICENSE. If Connetics
exercises such option as set forth in Section 4.1 above:
(i) In the event that Connetics or a Dermatology Sublicensee achieves one of
the milestones set forth in Sections 8.2(a) or (b) of the Genentech
License with respect to its Licensed Protein Product, Connetics or such
Dermatology Sublicensee shall inform InterMune thereof and provide such
milestone payment due under the Genentech License to InterMune, and
InterMune agrees to render such payment to Genentech on behalf of
Connetics.
(ii) In the event that milestone payments to Genentech as set forth in
Sections 8.1 (c) and (d) of the Genentech License are triggered by the
sale of Licensed Protein Product by both Connetics and InterMune (and/or
their sublicensees) in the Territory, the Parties shall promptly meet and
in good faith determine a fair apportionment between the Parties of the
payment to be made to Genentech for such milestone based upon the
relative Net Sales of each Party for such calendar year or other agreed
upon method of apportionment. Connetics shall then submit to InterMune
its portion of such milestone payment in accordance with the terms of the
Genentech License, and InterMune agrees to render such payment to
Genentech on behalf of Connetics.
(b) ROYALTIES. Connetics shall be responsible for making all payments due (i)
to Genentech under Section 8.3 of the Genentech License, and (ii) to
Genentech or any other Third Party under Section 8.4 of the Genentech
License, in each case on Net Sales of Licensed Protein Products by
Connetics, its Affiliates and its Dermatology Sublicensees, in accordance
with the Genentech License.
(c) DEFAULT. In the event that Connetics reasonably anticipates that it is
likely to materially default under any obligation under the Genentech
License that it is obligated to perform under Section 4.1, including
without limitation the obligations described in subsections (a) and (b)
above, Connetics shall notify InterMune as promptly as reasonably
practicable of the nature of such default. At InterMune's request,
Connetics shall cooperate fully with InterMune in order to prevent,
mitigate or cure such default.
4.3 OFF-LABEL SALES. If Connetics exercises the option set forth in Section
4.1 then:
(a) Each Party agrees and shall require its sublicensees, if any, to use
commercially reasonable efforts to formulate all Licensed Protein
Products developed by such Party or sublicensee thereof in a manner to
reduce, to the extent reasonably practicable, the possibility that such
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
7.
<PAGE>
Licensed Protein Product can be used in the other Party's field of use as
provided hereunder. If a Party cannot so formulate a particular Licensed
Protein Product, then such Party agrees to use its Best Efforts to
prevent sales of such Licensed Protein Product for use in the other
Party's field of use, including without limitation instructing its sales
forces, and requiring all sublicensees to instruct their sales forces,
that such Licensed Protein Product is not to be promoted, marketed or
sold for use in the other Party's field of use.
(b) In the event that either Party determines that a Licensed Protein Product
is being used in a field of use other than for which it was intended,
such Party shall immediately inform the other Party. The Parties shall
then promptly meet and diligently and in good faith determine a fair and
reasonable mechanism for equitable allocation of the sales of such
Licensed Protein Product that are used outside the field of use for which
they are intended.
4.4 PATENT COSTS. If Connetics exercises the option set forth in Section 4.1,
then Connetics agrees to reimburse InterMune all costs paid by InterMune
to Genentech under Section 5.2 of the Genentech License which relate to
any patent or patent application the claims of which: (a) are
specifically directed to a Licensed Protein Product for use in the
Dermatology Field and (b) do not relate to a Licensed Protein Product for
use in any area of the IG Field other than the Dermatology Field.
4.5 MILESTONE PAYMENTS. If Connetics exercises its options under Section 4.1,
then Connetics shall make the following cash milestone payments to
InterMune:
(a) [ * ] within thirty (30) days following the date on which the first NDA
or BLA for a Licensed Protein Product is filed with the FDA by Connetics
for an indication in the Dermatology Field.
(b) [ * ] within thirty (30) days following the date Connetics receives FDA
clearance for each new indication in the Dermatology Field of a Licensed
Protein Product for commercial sale in the United States.
4.6 DERMATOLOGICAL INDICATIONS OUTSIDE OF THE DERMATOLOGY FIELD.
(a) It is the intention of the Parties that Connetics shall be InterMune's
preferred marketing partner for sales of Licensed Protein Product to
dermatologists in the United States during the term of this Agreement.
Therefore, during the term of this Agreement, if either Party desires to
sell Licensed Protein Product to dermatologists in the United States for
use for indications that are outside of the Dermatology Field but within
the IG Field (an "Outside Indication"), the provisions of this Section
4.6 shall apply.
(b) In the event that either Party desires to sell a Licensed Protein Product
for an Outside Indication to dermatologists in the United States during
the term of this Agreement, such Party shall give the other Party written
notice of such interest, which notice shall specify the indication of
interest. If InterMune notifies Connetics that InterMune itself desires
to sell such Licensed Protein Product for an Outside Indication directly
to dermatologists in the United States, then the procedures of subsection
(d) shall apply. Otherwise, for ninety (90)
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
8.
<PAGE>
days following receipt of such notice, the Parties shall exclusively
negotiate in good faith for the reasonable commercial terms under which
Connetics shall exclusively sell such Licensed Protein Product for such
Outside Indication to dermatologists in the United States. In the event
that, at the end of such ninety (90) day period, the Parties have failed
to enter into a written agreement on such commercially reasonable terms,
Connetics' rights with respect to the sale of such Licensed Protein
Product for such Outside Indication shall terminate and InterMune shall
have no further obligations to Connetics under this Section 4.6 with
respect to such Licensed Protein Product for such Outside Indication
except as set forth is subsections (c) and (d) below.
(c) If the Parties have failed to enter into an agreement by the end of such
ninety (90) day period, as described in subsection (b) above, InterMune
shall then have the right during the following one hundred eighty (180)
day period to enter into an agreement with a Third Party for the sale to
dermatologists of such Licensed Protein Product for such Outside
Indication on economic terms that, taken as a whole, are substantially
the same as, or more favorable to InterMune than, those last offered in
writing by Connetics for such rights pursuant to subsection (b) above. If
at the end of such one hundred eighty (180) day period InterMune has not
entered into an agreement with a Third Party to sell such Licensed
Protein Product for such Outside Indication to dermatologists in the
United States, then the procedures set forth in subsection (b) above
shall again apply, provided that InterMune may proceed alternatively
under subsection (d) below.
(d) If InterMune itself desires to sell such Licensed Protein Product to
dermatologists in the United States for Outside Indications, then upon
written notice from InterMune, Connetics and InterMune shall enter into
good faith negotiations, for a period of ninety (90) days from Connetics'
receipt of such notice, for the reasonable commercial terms upon which
InterMune shall grant to Connetics the rights to co-promote such Licensed
Protein Product for such Outside Indication to dermatologists in the
United States. InterMune agrees that it shall not unreasonably withhold
its agreement to such commercially reasonable terms. In the event that,
at the end of such ninety (90) day period, the Parties have failed to
enter into a written agreement for such co-promotion rights, InterMune
shall have no further obligations to Connetics under this Section 4.6
with respect to such Licensed Protein Product for such Outside
Indication, PROVIDED THAT InterMune may not enter into an agreement with
a Third Party for the rights to co-promote Licensed Protein Product for
such Outside Indication to dermatologists in the United States on
economic terms that, taken as a whole, are less favorable to InterMune
than those last offered in writing by Connetics for such rights. In the
event that InterMune does not enter into such a co-promotion agreement
with a third party and instead solely promotes and sells such Licensed
Protein Product for such Outside Indication to dermatologists in the
United States itself, if at any time following such sole promotion and
sale InterMune determines in its sole discretion that it desires to grant
a license to the rights to promote and sell the rights to co-promote such
Licensed Protein Product for such Outside Indication to dermatologists in
the United States to another party (other than an Affiliate), then the
procedures set forth in subsection (b) above shall apply.
5. CONSIDERATION
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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5.1 ROYALTIES.
(a) Beginning on January 1, 2002, InterMune shall pay to Connetics a royalty
of [ * ] of InterMune Net Sales in the United States. InterMune shall
continue to pay such royalties to Connetics until such time as the
cumulative InterMune Net Sales in United States, beginning on January 1,
2000, are equal to [ * ]. Thereafter, InterMune shall pay to Connetics a
royalty of [ * ] of InterMune Net Sales in the United States for the
remainder of the term of the Agreement.
(b) All royalties due under this Section 5.1 shall be due and payable
quarterly within thirty (30) days following the last day of each quarter
in which royalties are incurred beginning with first calendar quarter of
2002.
5.2 MILESTONE PAYMENT. InterMune shall pay to Connetics a milestone payment
of one million five hundred thousand dollars ($1,500,000), as follows
(the "Milestone Payment"), payable in a lump sum or in installments based
on the level of InterMune Net Sales as follows:
(a) If annualized InterMune Net Sales in the United States for 2001, based on
InterMune Net Sales in the United States for the third and fourth
calendar quarters of 2001, ("2001 Net Sales") are equal to or greater
than [ * ], then on March 31, 2002, InterMune shall, at its election,
either (i) pay the full Milestone Payment to Connetics, or (ii) pay to
Connetics [ * ] of the Milestone Payment and furnish to Connetics a
promissory note for the balance of the Milestone Payment, which
promissory note shall provide for three (3) principal payments to
Connetics of [ * ] each due upon June 30, 2002, September 30, 2002 and
December 31, 2002, respectively.
(b) If 2001 Net Sales are equal to or greater than [ * ] but less than [ * ],
then on March 31, 2002, InterMune shall pay to Connetics [ * ] of the
Milestone Payment, and furnish to Connetics a promissory note for the
balance of the Milestone Payment (the "Remaining Payment"), which
promissory note shall provide for full payment of the balance of such
note to Connetics on the earlier to occur of (i) March 31, 2004, or (ii)
the last day of the month following the consecutive twelve (12) month
period that InterMune Net Sales in the United States are equal to or
greater than [ * ], subject to subsection (d) below.
(c) If 2001 Net Sales are less than [ * ], then on March 31, 2002, InterMune
shall pay to Connetics a portion of the Milestone Payment equal to [ * ]
multiplied by a fraction, the numerator of which is 2001 Net Sales and
the denominator of which is [ * ]. InterMune shall furnish to Connetics a
promissory note for the balance of the Milestone Payment (the "Remaining
Payment"), which promissory note shall provide for full payment of the
balance of such note to Connetics on the earlier to occur of (i) March
31, 2004, or (ii) the last day of the month following the consecutive
twelve (12) month period that InterMune Net Sales in the United States
are equal to or greater than [ * ], subject to subsection (d) below.
(d) With respect to the promissory note for the Remaining Payment described
in subsection (b) or (c) above, if InterMune is to pay the balance of
such note on March 31, 2004, and
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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InterMune Net Sales in the United States for the twelve (12) month period
preceding March 31, 2004 are equal to or greater than [ * ] but less than
[ * ], then:
(i) InterMune may, at its election, pay [ * ] of the Remaining Payment either
in cash or in Preferred Shares of InterMune stock at the fair market
value of such shares, determined as the average closing price of such
shares over the previous thirty (30) day period; and
(ii) With respect to the other [ * ] of the Remaining Payment, Connetics may,
at its election, receive such fifty percent either in cash or in
Preferred Shares of InterMune stock at the fair market value of such
shares, determined as the average closing price of such shares over the
previous thirty (30) day period, provided that Connetics shall notify
InterMune of its election in writing at least thirty (30) days prior to
the date that such payment is due; and
(e) With respect to the Remaining Payment described in subsection (b) or (c)
above, if InterMune is to pay the balance of such note on March 31, 2004,
and InterMune Net Sales in the United States for the twelve (12) month
period preceding March 31, 2004 are less than [ * ], then InterMune may,
at its election, either:
(1) Pay such Remaining Payment in cash or in Preferred Shares of InterMune
stock at the fair market value of such shares, determined as the average
closing price of such shares over the previous thirty (30) day period; or
(2) Grant to Connetics the license to the Accounting and Revenue Rights to
CGD Units (as defined below), on commercially reasonable terms to be
agreed upon by the Parties, in which event InterMune shall thereafter
have no further obligation to Connetics with respect to such Remaining
Payment. Such license shall be [ * ] with respect to InterMune but not
with respect to Genentech or any other Third Party, and shall expire upon
the date of expiration of the last to expire Genentech Patent covering
the manufacture, use or sale of Licensed Products for the treatment of
CGD in the United States and its territories and possessions. As used
herein, "Accounting and Revenue Rights to CGD Units" means the right to
book net revenues, expenses and net profits for the sales of Licensed
Product for the treatment of chronic granulomatous disease by InterMune
and its sublicensees in the United States.
(f) All promissory notes referred to in this Section 5.2 shall bear interest
at the rate of the prime rate plus [ * ].
5.3 REPORTS; AUDIT RIGHTS. InterMune shall provide to Connetics a copy of all
reports submitted to Genentech by InterMune pursuant to Section 8.8 of
the Genentech License when InterMune submits such report to Genentech.
Connetics shall furthermore have the same audit rights as Genentech
pursuant to Section 8.8.
5.4 PAYMENTS UNDER GENENTECH LICENSE. InterMune shall make, on behalf of
Connetics, all payments owed by Connetics to Genentech under Sections 8.2
and 8.3 of the Genentech License with respect to InterMune's activities
hereunder, except as set forth in Section 4.2 above. Each Party shall be
responsible for paying all royalties due to Third Parties other than
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Genentech under Section 8.4 of the Genentech License with respect to such
Party's and/or sublicensee thereof activities hereunder.
6. INTELLECTUAL PROPERTY
6.1 OWNERSHIP OF INVENTIONS. Each Party shall remain the sole owner of its
respective technology and other intellectual property that it owned as of
the Effective Date. A Party shall not have or acquire any rights in any
inventions, Know-How or intellectual property rights of the other Party,
except as specifically granted herein.
6.2 PATENT PROSECUTION. InterMune shall have all the rights of Connetics
under the Genentech License to participate in the prosecution of the
Genentech Patents, and shall pay all patent costs due under the Genentech
License, except as set forth in Section 4.4 above.
6.3 INFRINGEMENT OF THIRD PARTY PATENTS. In the event that a Third Party
files an action against a Party alleging that such Party's activities
under this Agreement infringe such Third Party's patent rights, such
Party shall give written notice to the other Party, and the Parties will
consult and cooperate on the best course of action. The Party that was
sued shall have the right to defend itself against such action, and the
other Party shall provide all reasonable assistance in such defense.
6.4 INFRINGEMENT OF LICENSED PATENTS. In the event that either Party becomes
aware that a Third Party is infringing any rights in the Genentech
Patents, such Party shall promptly notify the other. InterMune shall have
the right, in Connetics' stead, to enforce the Genentech Patents to the
full extent Connetics has such rights under the Genentech License, and
Connetics will reasonably cooperate with InterMune in such enforcement
actions and take all reasonably necessary steps to facilitate InterMune's
enforcement of the Genentech Patents.
6.5 COOPERATION. Each Party agrees to cooperate with the other and take all
reasonable additional actions as may be reasonably required to achieve
the intent of this Article 5, including, without limitation, the
execution of all necessary and appropriate instruments and documents.
7. REPRESENTATIONS AND WARRANTIES
7.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and
warrants to the other Party as follows:
(a) Such Party (i) is duly organized, validly existing and in good standing
under the laws of the state in which it is organized; (ii) has the power
and authority and the legal right to own and operate its property and
assets, to lease the property and assets it operates under lease, and to
carry on its business as it is now being conducted; and (iii) is in
compliance with all requirements of applicable law, except to the extent
that any noncompliance would not materially adversely affect such Party's
ability to perform its obligations under the Agreement.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(b) Such Party (i) has the power and authority and the legal right to enter
into the Agreement and to perform its obligations hereunder, and (ii) has
taken all necessary action on its part to authorize the execution and
delivery of the Agreement and the performance of its obligations
hereunder. The Agreement has been duly executed and delivered on behalf
of such Party, and constitutes a legal, valid, binding obligation,
enforceable against such Party in accordance with its terms.
(c) All necessary consents, approvals and authorizations of all governmental
authorities and other persons required to be obtained by such Party in
connection with the Agreement have been obtained.
(d) The execution and delivery of the Agreement and the performance of such
Party's obligations hereunder (i) do not conflict with or violate any
requirement of applicable laws or regulations or any material contractual
obligation of such Party, and (ii) do not materially conflict with, or
constitute a material default or require any consent under any material
contractual obligation of such Party.
7.2 CONNETICS REPRESENTATIONS AND WARRANTIES. Connetics hereby represents and
warrants that:
(a) To Connetics' knowledge as of the Effective Date, the Licensed Technology
practiced as permitted herein does not infringe on any intellectual
property rights owned by any Third Party.
(b) Connetics possesses the necessary interest, title and right to the
Licensed Technology to grant the licenses and to make the assignments to
InterMune hereunder.
8. INDEMNIFICATION
8.1 INDEMNIFICATION BY CONNETICS. Connetics agrees to indemnify, hold
harmless and defend InterMune and InterMune's directors, officers,
employees and agents, and the directors, officers, employees and agents
of any InterMune Affiliate from and against any and all claims, suits,
losses, damages, costs, fees and expenses resulting from or arising out
of any negligent or wrongful act or omission by Connetics or its
Affiliates, or any breach by Connetics of its obligations under this
Agreement or under the Genentech License, except to the extent that such
claims, suits, losses, damages, costs, fees or expenses arises or results
from any negligent or wrongful act or omission of InterMune or its
Affiliates.
8.2 INDEMNIFICATION BY INTERMUNE. InterMune agrees to indemnify, hold
harmless and defend Connetics and its directors, officers, employees and
agents, and the directors, officers, employees and agents of any
Connetics Affiliates from and against any and all claims, suits, losses,
damages, costs, fees and expenses resulting from or arising out of damage
or injury caused by a negligent or wrongful act or omission of InterMune
or its Affiliates, or any breach by InterMune of its obligations under
this Agreement, except to the extent that such claims, suits, losses,
damages, costs, fees or expenses arises or results from any negligent or
wrongful act or omission of Connetics or its Affiliates.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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8.3 INDEMNIFICATION PROCEDURE. In all cases where one Party seeks
indemnification by the other under this Article 8, the Party seeking
indemnification shall promptly notify the indemnifying Party of receipt
of any claim or lawsuit covered by such indemnification obligation and
shall cooperate fully with the indemnifying Party in connection with the
investigation and defense of such claim or lawsuit. The indemnifying
Party shall have the right to control the defense, with counsel of its
choice, provided that the non-indemnifying Party shall have the right to
be represented by advisory counsel at its own expense. The indemnifying
Party shall not settle or dispose of the matter in any manner which could
negatively and materially affect the rights or liability of the
non-indemnifying Party without the non-indemnifying Party's prior written
consent, which shall not be unreasonably withheld.
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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9. CONFIDENTIALITY
9.1 CONFIDENTIAL INFORMATION OBLIGATIONS. As used herein, "Confidential
Information" means all information that a Party discloses to the other
Party under this Agreement or had disclosed to the other Party under the
Original Agreement, provided that Confidential Information shall not
include such information excluded under Section 9.2. Except to the extent
expressly authorized by this Agreement or otherwise agreed in writing by
the Parties, each Party agrees that, during the term of this Agreement
and for five (5) years after the expiration or termination of this
Agreement, it shall keep confidential and shall not publish or otherwise
disclose and shall not use for any purpose other than as provided for in
this Agreement any Confidential Information furnished to it by the other
Party pursuant to this Agreement.
9.2 EXCEPTIONS. The obligations set forth in Section 9.1 shall not apply to
any Information that the receiving Party can demonstrate by competent
evidence:
(a) was already known to the receiving Party, other than under an obligation
of confidentiality, at the time of disclosure by the other Party;
(b) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party by the other
Party;
(c) became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of
the receiving Party in breach of this Agreement;
(d) was disclosed to the receiving Party, other than under an obligation of
confidentiality to a third Party, by a third Party who had no obligation
to the disclosing Party not to disclose such information to others; or
(e) is independently developed by the receiving Party without using any of
the other Party's Confidential Information.
9.3 TERMS OF THE AGREEMENT. The Parties agree that the terms of the Agreement
will be considered Confidential Information of both Parties.
Notwithstanding the foregoing, a Party shall have the right to disclose
the material financial terms of the Agreement to any bona fide potential
investor, investment banker, acquiror, merger partner or other potential
financial partner, subject to such Party obtaining the agreement of such
party receiving such Confidential Information to keep such information
confidential.
9.4 PERMITTED DISCLOSURE. Notwithstanding the limitations in this Article 9,
each Party may disclose Confidential Information belonging to the other
Party (or otherwise subject to this Article 9), to the extent such
disclosure is reasonably necessary in the following instances, but solely
for the limited purpose of such necessity:
(a) filing or prosecuting Patents;
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(b) regulatory and tax filings;
(c) prosecuting or defending litigation;
(d) complying with applicable governmental laws or regulations or valid court
orders;
(e) conducting preclinical or clinical trials of Licensed Products; and
(f) disclosure to Affiliates, licensees, sublicensees, employees, consultants
or agents who agree to be bound by similar terms of confidentiality and
non-use at least equivalent in scope to those set forth in this Article
9.
Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party's Confidential Information pursuant to Section
9.4, it will give reasonable advance notice to the other Party of such
disclosure and endeavor in good faith to secure confidential treatment of such
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder. Further, the Parties
agree to consult with one another on the provisions of this Agreement to be
redacted in any filings made by a Party with the United States Securities and
Exchange Commission or as otherwise required by law.
10. TERMINATION
10.1 TERM OF AGREEMENT. The term of this Agreement shall expire, unless
earlier terminated as provided by Section 10.2 below, upon expiration or
termination of the Genentech License.
10.2 TERMINATION FOR MATERIAL BREACH. If either Party shall default in a
material manner with respect to any material provision of this Agreement
and the other Party shall have given the defaulting Party written notice
of such default, the defaulting Party shall have thirty (30) days to cure
such default. If such default is not cured within such thirty (30) day
period, the non-defaulting Party shall have the right, upon notice to the
defaulting Party and without prejudice to any other rights the
non-defaulting Party may have, to terminate this Agreement unless the
defaulting Party is in the process of attempting in good faith to remedy
such default, in which case, the thirty (30) day cure period shall be
extended by an additional thirty (30) days. Any material default by
InterMune in the performance of any material obligation under the
Genentech License assumed by InterMune pursuant to Section 3.7 of this
Agreement shall be deemed a material default of this Agreement and shall
entitle Connetics to terminate this Agreement in accordance with this
Section 10.2.
10.3 EFFECT OF TERMINATION. Upon termination or expiration of the Agreement,
(a) all licenses granted by Connetics to InterMune under Article 2 will
terminate; (b) any and all claims and payment obligations that accrued
prior to the date of such termination or expiration shall survive such
termination; (c) each Party shall return all of the other Party's
Confidential Information; and (d) all right, title and interest of
InterMune under the Genentech Supply Agreement shall revert to Connetics,
and Connetics shall be deemed to be the successor in
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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interest of InterMune under the Genentech Supply Agreement and shall
assume all obligations and be entitled to all rights of InterMune under
such agreement.
10.4 SURVIVING RIGHTS. The obligations and rights of the Parties under Section
5.3, 6.1, and Articles 8, 9, 10 and 11 shall survive termination or
expiration of the Agreement.
10.5 ACCRUED RIGHTS AND SURVIVING OBLIGATIONS. The termination or expiration
of the Agreement for any reason shall be without prejudice to any rights,
which shall have accrued to the benefit of either Party prior to such
termination or expiration, including any damages arising from any breach
hereunder. Such termination or expiration shall not relieve either Party
from obligations which are expressly indicated to survive termination or
expiration of the Agreement.
10.6 BANKRUPTCY RIGHTS. In the event that this Agreement is terminated or
rejected by a Party or its receiver or trustee under applicable
bankruptcy laws due to such Party's bankruptcy, then all rights and
licenses granted under or pursuant to this Agreement by such Party to the
other Party are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the Bankruptcy Code and any similar law or regulation
in any other country, licenses of rights to "intellectual property" as
defined under Section 101(52) of the Bankruptcy Code. The Parties agree
that all intellectual property rights licensed hereunder, including
without limitation any patents or patent applications in any country of a
Party covered by the license grants under this Agreement, are part of the
"intellectual property" as defined under Section 101(52) of the
Bankruptcy Code subject to the protections afforded the non-terminating
Party under Section 365(n) of the Bankruptcy Code, and any similar law or
regulation in any other country.
11. MISCELLANEOUS
11.1 WAIVER. No waiver by either Party hereto of any breach or default of any
of the covenants or agreements herein set forth shall be deemed a waiver
as to any subsequent or similar breach or default.
11.2 ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their permitted successors and assigns;
provided, however, that neither Party shall assign any of its rights and
obligations hereunder without the prior written consent of the other
Party, except as incident to the merger, consolidation, reorganization or
acquisition of stock or assets affecting substantially all of the assets
or actual voting control of the assigning Party. Any assignment or
attempted assignment by either Party in violation of the terms of this
Section 10.2 shall be null and void and of no legal effect.
11.3 NOTICES. Any notice or other communication required or permitted to be
given to either Party hereto shall be in writing and shall be deemed to
have been properly given and to be effective on the date of delivery if
delivered in person or by facsimile or five (5) days after mailing by
registered or certified mail, postage paid, to the other Party at the
following address:
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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In the case of InterMune: InterMune, Inc.
3294 West Bayshore Road
Palo Alto, CA 94303
Fax: (650) 858-2937
Attention: President
with a copy to: Cooley Godward LLP
Five Palo Alto Square
Palo Alto, CA 94306
Fax: (650) 857-0663
Attention: Barclay James Kamb, Esq.
In the case of Connetics: Connetics Corporation
3400 West Bayshore Road
Palo Alto, CA 94303
Fax: (650) 843-2899
Attention: Chief Executive Officer
Either Party may change its address for communications by a notice to the other
Party in accordance with this Section.
11.4 HEADINGS. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
11.5 AMENDMENT. No amendment or modification hereof shall be valid or binding
upon the Parties unless made in writing and signed by both Parties.
11.6 GOVERNING LAW. This Agreement shall be governed exclusively by the laws
of the State of California, U.S.A., as such law applies to contracts
entered into between and to be performed by California residents entirely
in the State of California.
11.7 DISPUTE RESOLUTION.
(a) In the event of any controversy or claim arising out of, relating to or
in connection with any provision of this Agreement, or the rights or
obligations of the Parties hereunder, the Parties shall try to settle
their differences amicably between themselves by referring the disputed
matter to the President of InterMune and the Chief Executive Officer of
Connetics for discussion and resolution. Either Party may initiate such
informal dispute resolution by sending written notice of the dispute to
the other Party, and within ten (10) days after such notice such
representatives of the Parties shall meet for attempted resolution by
good faith negotiations. If such personnel are unable to resolve such
dispute within thirty (30) days of initiating such negotiations, either
Party may seek to have such dispute resolved by binding arbitration under
this Section 11.7. The arbitration shall be held in Palo Alto, California
according to the Commercial Arbitration Rules of the American Arbitration
Association (the
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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"Rules"). The arbitration will be conducted by a panel of three (3)
arbitrators who are knowledgeable in the subject matter that is at issue
in the dispute, are not affiliated directly or indirectly with either
Party, and are selected by mutual agreement of the Parties. Failing such
agreement, the arbitrators shall be selected appointed as provided in the
Rules. During the arbitration, the Parties shall have such discovery
rights as the arbitrators may allow, consistent with the discovery
permitted by the Federal Code of Civil Procedure. In conducting the
arbitration, the arbitrators shall apply the rules of evidence applicable
in California, and shall be able to decree any and all relief of an
equitable nature, including but not limited to such relief as a temporary
restraining order, a preliminary injunction, a permanent injunction, or
replevin of property, as well as specific performance. The arbitrators
shall also be able to award direct and indirect damages, but shall not
award any other form of damage (e.g., punitive or exemplary damages). The
reasonable fees and expenses, of the arbitrators, along with the
reasonable legal fees and expenses of the prevailing Party (including all
expert witness fees and expenses), the fees and expenses of a court
reporter, and any expenses for a hearing room, shall be paid as follows:
If the arbitrators rule in favor of one Party on all disputed issues in
the arbitration, the losing Party shall pay one hundred percent (100%) of
such fees and expenses; if the arbitrators rule in favor of one Party on
some issues and the other Party on other issues, the arbitrators shall
issue with the rulings a written determination as to how such fees and
expenses shall be allocated between the Parties. The arbitrators shall
allocate fees and expenses in a way that bears a reasonable relationship
to the outcome of the arbitration, with the Party prevailing on more
issues, or on issues of greater value or gravity, recovering a relatively
larger share of its legal fees and expenses. The decision of the
arbitrators shall be final and may be entered, sued on or enforced by the
Party in whose favor it runs in any court of competent jurisdiction at
the option of such Party. Whether a claim, dispute or other matter in
question would be barred by the applicable statute of limitations, which
statute of limitations also shall apply to any claim or disputes subject
to arbitration under this Section, shall be determined by binding
arbitration pursuant to this Section.
(b) Notwithstanding anything to the contrary in this Agreement, either Party
may seek immediate injunctive or other interim relief without resort to
arbitration from any court of competent jurisdiction with respect to any
breach of Article 9 hereof, or as necessary to enforce and prevent
infringement of the patent rights, copyright rights, trademarks, trade
secrets, or other intellectual property rights owned or controlled by a
Party or its Affiliates.
11.8 FORCE MAJEURE. Any delays in performance by any Party under this
Agreement shall not be considered a breach of this Agreement if and to
the extent caused by occurrences beyond the reasonable control of the
Party affected, including but not limited to acts of God, embargoes,
governmental restrictions, fire, flood, explosion, riots, wars, civil
disorder, rebellion or sabotage. The Party suffering such occurrence
shall immediately notify the other Party as soon as practicable, and any
time for performance hereunder shall be extended by the actual time of
delay caused by the occurrence.
11.9 INDEPENDENT CONTRACTORS. In making and performing this Agreement,
InterMune and Connetics act and shall act at all times as independent
contractors and nothing contained in
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
19.
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this Agreement shall be construed or implied to create an agency,
partnership or employer and employee relationship between InterMune and
Connetics. At no time shall one Party make commitments or incur any
charges or expenses for or in the name of the other Party.
11.10 SEVERABILITY. If any part of this Agreement is declared invalid by any
legally governing authority having jurisdiction over either Party, then
such declaration shall not affect the remainder of the Agreement and the
Parties shall revise the invalidated part in a manner that will render
such provision valid without impairing the Parties' original interest.
11.11 CUMULATIVE RIGHTS. The rights, powers and remedies hereunder shall be in
addition to, and not in limitation of, all rights, powers and remedies
provided at law or in equity, or under any other agreement between the
Parties. All of such rights, powers and remedies shall be cumulative, and
may be exercised successively or cumulatively.
11.12 COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be an original and all of which shall constitute
together the same document.
11.13 ENTIRE AGREEMENT. This Agreement and any and all Exhibits referred to
herein, in conjunction with the other "Intercompany Agreements" (as that
term is described in the Collaboration Agreement), embodies the entire
understanding of the Parties with respect to the subject matter of the
Intercompany Agreements, and supersedes and terminates all previous
communications, representations or understandings, either oral or
written, between the Parties relating to the subject matter of the
Intercompany Agreements.
THIS SPACE INTENTIONALLY LEFT BLANK
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
20.
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IN WITNESS WHEREOF, both InterMune and Connetics have executed this
Agreement, as of the day and year first written above.
INTERMUNE PHARMACEUTICALS, INC. CONNETICS CORPORATION
By: /s/ W. Scott Harkonen By: /s/ T. Wiggans
--------------------------------- ---------------------------------
Name: W. SCOTT HARKONEN Name: THOMAS WIGGANS
------------------------------- -------------------------------
Title: PRESIDENT Title: PRESIDENT
------------------------------ ------------------------------
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<TABLE>
<S> <C>
1..........................................................................Definitions 2
1.1..................................................................."Affiliate" 2
1.2............................................................."Amendment No. 3" 2
1.3................................................................"Best Efforts" 2
1.4........................................................................."BLA" 2
1.5.........................................................."Connetics Know-How" 2
1.6.................................................................."Controlled" 2
1.7..........................................................."Dermatology Field" 2
1.9........................................................................."FDA" 3
1.10..............................................................."Gene Therapy" 3
1.11........................................................."Gene Therapy Field" 3
1.12.................................................................."Genentech" 3
1.13.........................................................."Genentech License" 3
1.14..................................................."Genentech License Rights" 3
1.15.........................................................."Genentech Patents" 3
1.16................................................."Genentech Supply Agreement" 3
1.17..................................................................."IG Field" 3
1.18..................................................."Interferon Gamma" or "IG" 3
1.19........................................................"InterMune Net Sales" 4
1.20..................................................................."Know-How" 4
1.21..."Licensed Product," "Licensed Gene Product" and "Licensed Protein Product" 4
1.22........................................................"Licensed Technology" 4
1.23.................................................................."Net Sales" 4
1.24...................................................................."Patents" 4
1.25.................................................................."Territory" 4
1.26................................................................"Third Party" 4
1.27................................................."Third Party Product Rights" 4
1.28.............................................................."United States" 4
2........................................................Original Agreement Superseded 4
3...............................................................Licenses and Covenants 4
3.1......................................................Genentech License Rights 4
3.2....................................................Third Party Product Rights 5
3.3............................................................Connetics Know-How 5
3.4....................................................Genentech Supply Agreement 5
3.5................................................Transfer of Data and Materials 5
3.6............................................................Connetics Covenant 6
3.7.................................InterMune Performance under Genentech License 6
4.........................................................Option to Dermatology Rights 6
4.1..................................................................Option Grant 6
4.2........................Payments and Other Obligations under Genentech License 6
4.3...............................................................Off-Label Sales 7
4.4..................................................................Patent Costs 7
4.5............................................................Milestone Payments 8
4.6...................Dermatological Indications Outside of the Dermatology Field 8
5........................................................................Consideration 9
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
1.
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5.1.....................................................................Royalties 9
5.2.............................................................Milestone Payment 9
5.3.........................................................Reports; Audit Rights 11
5.4..............................................Payments under Genentech License 11
6................................................................Intellectual Property 11
6.1.......................................................Ownership of Inventions 11
6.2............................................................Patent Prosecution 12
6.3...........................................Infringement of Third Party Patents 12
6.4..............................................Infringement of Licensed Patents 12
6.5...................................................................Cooperation 12
7.......................................................Representations and Warranties 12
7.1.........................................Mutual Representations and Warranties 12
7.2......................................Connetics Representations and Warranties 13
8......................................................................Indemnification 13
8.1..................................................Indemnification by Connetics 13
8.2..................................................Indemnification by InterMune 13
8.3.....................................................Indemnification Procedure 13
9......................................................................Confidentiality 14
9.1..........................................Confidential Information Obligations 14
9.2....................................................................Exceptions 14
9.3........................................................Terms of the Agreement 14
9.4..........................................................Permitted Disclosure 14
10.........................................................................Termination 15
10.1............................................................Term of Agreement 15
10.2..............................................Termination for Material Breach 15
10.3........................................................Effect of Termination 15
10.4.............................................................Surviving Rights 16
10.5.....................................Accrued Rights and Surviving Obligations 16
10.6............................................................Bankruptcy Rights 16
11.......................................................................Miscellaneous 16
11.1.......................................................................Waiver 16
11.2...................................................................Assignment 16
11.3......................................................................Notices 16
11.4.....................................................................Headings 17
11.5....................................................................Amendment 17
11.6................................................................Governing Law 17
11.7...........................................................Dispute Resolution 17
11.8................................................................Force Majeure 18
11.9......................................................Independent Contractors 18
11.10................................................................Severability 18
11.11...........................................................Cumulative Rights 19
11.12................................................................Counterparts 19
11.13............................................................Entire Agreement 19
</TABLE>
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
2.
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EXHIBIT 1.13
GENENTECH LICENSE (AS AMENDED)
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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LICENSE AGREEMENT FOR
INTERFERON GAMMA
BETWEEN
CONNETICS CORPORATION
AND
GENENTECH, INC.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1.0 Definitions.......................................................................2
1.1 Best Efforts.............................................................2
1.2 Biogen License...........................................................2
1.3 Biogen License Rights....................................................2
1.4 BLA......................................................................2
1.5 Bulk Product.............................................................2
1.6 C.F.R....................................................................2
1.7 CGD......................................................................2
1.8 Connetics Knowhow........................................................2
1.9 Connetics Patent Rights..................................................3
1.10 ELA......................................................................3
1.11 FDA......................................................................3
1.12 Field of Use.............................................................3
1.13 Finished Product.........................................................4
1.14 Fully Burdened Manufacturing Cost........................................4
1.15 Gene Therapy.............................................................4
1.16 Genentech Knowhow........................................................5
1.17 Genentech Manufacturing Knowhow..........................................5
1.18 Genentech Patent Rights..................................................5
1.19 IND......................................................................6
1.20 Interferon Gamma.........................................................6
1.21 Interferon Gamma-1B......................................................6
1.22 Licensed Product.........................................................6
1.23 NDA......................................................................7
1.24 NDC......................................................................7
1.25 Net Sales................................................................7
1.26 Party....................................................................8
1.27 PLA......................................................................8
1.28 Territory................................................................8
1.29 Transfer Date............................................................8
2.0 License Grant.....................................................................8
2.1 Patent and Knowhow License Grant.........................................8
2.2 Trademark License Grant.................................................10
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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2.3 Sublicenses.............................................................11
2.4 Grant Back License. ...................................................14
2.5 Data Transfer and Cooperation...........................................14
3.0 Product Development and Milestones...............................................19
3.1 Commercialization Milestones............................................19
3.2 Diligence...............................................................22
3.3 Review of Clinical Development Plan and Marketing Programs..............24
3.4 New Delivery Forms......................................................25
3.5 Costs of Development....................................................25
3.6 Joint Development and Marketing Activities..............................25
3.7 Compliance with Law and Safety and Adverse Event Reporting..............26
3.8 Clinical Development Reports ...........................................26
3.9 Technology Outside the Field of Use.....................................26
4.0 Supply of Interferon Gamma-1B....................................................29
4.1 Bulk Product and Finished Product.......................................29
4.2 Supply of Non-human Interferon Gamma....................................29
5.0 Intellectual Property Rights.....................................................29
5.1 Ownership...............................................................29
5.2 Patent Prosecution and License Fees.....................................30
5.3 Patent Infringement.....................................................31
5.4 Third Party Rights......................................................32
5.5 Trademark Infringement..................................................32
5.6 CMCC License ...........................................................32
6.0 Product Promotion................................................................33
6.1 Promotion...............................................................33
6.2 Encroachment............................................................33
7.0 Confidentiality..................................................................33
8.0 Up-front Payment, Milestone Payments and Royalties...............................35
8.1 Up-front Payment........................................................35
8.2 Milestone Payments for Licensed Products ...............................37
8.3 Royalties...............................................................38
8.4 Third-Party Royalties...................................................38
8.5 Royalty Payments........................................................39
8.6 Taxes...................................................................39
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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8.7 Termination.............................................................39
8.8 Records and Reporting...................................................40
9.0 Representations and Warranties...................................................41
9.1 Disclaimer..............................................................41
9.2 Representations and Warranties..........................................41
10.0 Liability........................................................................43
10.1 Limitation of Liability.................................................43
10.2 Connetics Indemnification...............................................43
10.3 Genentech Indemnification...............................................43
11.0 Term and Termination.............................................................44
11.1 Term....................................................................44
11.2 Termination for Default.................................................45
11.3 Genentech's Rights on Termination.......................................46
11.4 Connetics' Rights on Termination........................................47
11.5 Bankruptcy..............................................................48
11.6 Unilateral Termination. ................................................49
11.7 Survival of Certain Provisions..........................................49
12.0 General Provisions...............................................................50
12.1 Notices.................................................................50
12.2 Governing Law...........................................................50
12.3 Entire Agreement........................................................50
12.4 Binding Effect and Assignment...........................................51
12.5 Waiver..................................................................51
12.6 Severability............................................................51
12.7 Publicity...............................................................52
12.8 Counterparts............................................................52
12.9 Force Majeure...........................................................53
12.10 Headings................................................................53
12.11 No Partnership..........................................................53
Exhibit A Patent Applications and Patents Included in Genentech Patent Rights.............55
Exhibit B Interferon Gamma................................................................56
Exhibit C Interferon Gamma-1B.............................................................57
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Exhibit D Third Party Sponsored Studies...................................................58
Exhibit E Clinical Development Milestones.................................................59
Exhibit F Clinical Reports................................................................60
Exhibit G Third Party Royalties...........................................................61
Exhibit H Transfer Date Activities for Commercial Sales of Actimmune for CGD .............62
</TABLE>
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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LICENSE AGREEMENT FOR
INTERFERON GAMMA
This Agreement is entered into effective as of May 5, 1998, ("Effective
Date") by and between Connetics Corporation, a Delaware corporation with its
principal office at 3400 West Bayshore Road, Palo Alto, California 94303
("Connetics"), and Genentech, Inc., a Delaware corporation with its principal
office at 1 DNA Way, South San Francisco, California 94080 ("Genentech").
WHEREAS, Connetics wishes to obtain a non-exclusive license to
manufacture and an exclusive license to use, sell, offer for sale and import
Interferon Gamma (as defined herein) in the United States for the treatment of
certain medical disorders;
WHEREAS, in consideration for the foregoing, Connetics will issue to
Genentech shares of Connetics Common Stock on the terms and conditions set forth
in that certain stock purchase agreement between Genentech and Connetics of even
date herewith (the "Stock Agreement");
WHEREAS, Genentech will manufacture and supply Connetics with
Interferon Gamma-1B (as defined herein) under the terms and conditions set forth
in that certain supply agreement between Genentech and Connetics of even date
herewith (the "Supply Agreement");
WHEREAS, Connetics and Genentech are parties to that certain Agreement
on Interferon Gamma-1B dated December 8, 1995 (the "Prior Agreement") and desire
to terminate the Prior Agreement effective as of the date hereof and to accept
the rights and obligations created
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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pursuant hereto in lieu of the rights and obligations under the Prior Agreement;
and
WHEREAS, Genentech and Connetics therefore agree to undertake the
foregoing, all under the terms and conditions set forth in this Agreement and
for the consideration set forth herein and in the Stock Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, the Parties agree as follows:
1.0 DEFINITIONS
1.1 "Best Efforts" shall mean every necessary and prudent effort of
a Party applied in a prompt, commercially reasonable manner, to the maximum
extent reasonably allowed by such Party's available financial resources, taking
into account all of such Party's business commitments for such financial
resources.
1.2 "Biogen License" shall mean that certain license agreement
between Genentech and Biogen, Inc. ("Biogen") dated January 5, 1990, as amended
on November 23, 1992.
1.3 "Biogen License Rights" shall mean all sublicenseable rights
granted to Genentech by Biogen under the Biogen License.
1.4 "BLA" shall mean Biologics License Application.
1.5 "Bulk Product" shall mean Interferon Gamma-1B provided as bulk
protein manufactured in compliance with Good Manufacturing Practices, pursuant
to applicable FDA regulatory approvals and supplied to Connetics in such a form
and in such containers as shall be
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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mutually determined by Genentech and Connetics and as described in the Supply
Agreement.
1.6 "C.F.R." shall mean Code of Federal Regulations.
1.7 "CGD" shall mean chronic granulomatous disease.
1.8 "Connetics Knowhow" shall mean all proprietary information,
methods, processes, techniques and data that have not been publicly disclosed,
that relate to Interferon Gamma and that arise out of Connetics' and its
sublicensees' efforts in the development of Interferon Gamma (including
Interferon Gamma as part of a Licensed Product) hereunder and that on the
Effective Date and hereafter during the term of this Agreement are owned or
controlled by Connetics or its sublicensees or under which Connetics or its
sublicensees otherwise has the right to grant licenses or sublicenses.
1.9 "Connetics Patent Rights" shall mean all patents, patent
applications and any patents issuing therefrom, together with any substitutions,
extensions, reexaminations, reissues, renewals, divisions, continuations and
continuations-in-part thereof, that (a) claim inventions constituting Interferon
Gamma or its manufacture or use that arise out of Connetics' or its
sublicensee's efforts in the development of Interferon Gamma (including
Interferon Gamma as part of a Licensed Product) hereunder during the term of
this Agreement, and (b) are owned by Connetics or its sublicensees or under
which Connetics or its sublicensees otherwise has the right to grant licenses or
sublicenses as provided herein.
1.10 "ELA" shall mean Establishment License Application.
1.11 "FDA" shall mean the United States Food and Drug
Administration.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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1.12 "Field of Use" shall mean the administration to humans of
Licensed Product for the treatment or prevention of: (a) any dermatological
disease or condition including, without limitation, atopic dermatitis,
keloids/hypertrophic scars, pustular psoriasis and scleroderma, but excluding
any cancer disease or condition, (b) any infectious disease or condition
including, without limitation, fungal, viral and bacterial infections, (c)
osteopetrosis, (d) chronic granulomatous disease, (e) pulmonary fibrosis, and
(f) asthma. Notwithstanding the foregoing, the Field of Use shall not include
the administration to humans of Licensed Product for the treatment or prevention
of any type of arthritis or cardiac or cardiovascular disease or condition, or
use of Licensed Product for any indication or use in the field of oncology or
endocrinology. Each of Subsections 1.12 (a) through (f) inclusive shall
hereinafter each be referred to individually as an "Area of the Field of Use"
and together as the "Areas of the Field of Use."
1.13 "Finished Product" shall mean Interferon Gamma-1B supplied in
vialed form as 100 micrograms of Interferon Gamma-1B protein in a 0.5 ml fill
volume and as described in the Supply Agreement, manufactured in compliance with
Good Manufacturing Practices and intended for commercial sale to treat CGD and
osteopetrosis and for clinical studies.
1.14 "Fully Burdened Non-human Interferon Gamma Manufacturing Cost"
shall mean the cost of Genentech's production and testing of Non-human
Interferon Gamma, which shall be comprised of the sum of: [ * ]
1.15 "Gene Therapy" shall mean the therapeutic or prophylactic
treatment of a human being with: (a) one or more oligonucleotides or nucleotide
sequences, in native form or
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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chemically modified, which are introduced into the body in free form, bound to a
carrier molecule, contained in any molecular vesicle (e.g. a liposome),
incorporated into or attached to a vector of any type, contained in any cellular
construct and/or contained in any mechanical device or (b) cells which have been
manipulated ex vivo using one or more oligonucleotides or nucleotide sequences.
1.16 "Genentech Knowhow" shall mean all proprietary information,
methods, processes, techniques and data that are in the possession or control of
Genentech on the Effective Date or thereafter during the term of this Agreement,
that Genentech is free to license or sublicense, that have not been publicly
disclosed, and that are specific and reasonably necessary for the use, sale,
offer for sale or importation of Interferon Gamma in the Field of Use in the
Territory, but shall not include information regarding the manufacture of
Interferon Gamma.
1.17 "Genentech Manufacturing Knowhow" shall mean all proprietary
information, methods, processes, techniques and data that are in the possession
of Genentech at such time as Genentech determines or is required pursuant to the
terms of the Supply Agreement to make a manufacturing technology transfer to
Connetics, that are not generally known, and that are specific and reasonably
necessary for the manufacture of Interferon Gamma in the Field of Use in the
Territory.
1.18 "Genentech Patent Rights" shall mean all patents and patent
applications and any patents issuing therefrom, together with any extensions,
reissues, reexaminations, substitutions, renewals, divisions, continuations and
continuations-in-part thereof (a) that are owned or
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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controlled by Genentech presently or hereafter, during the term of this
Agreement, and under which Genentech is free to license or sublicense, and (b)
to the extent they claim or directly relate to Interferon Gamma or its
manufacture or use in the Field of Use, including, without limitation, the
patent rights granted under that certain license agreement between Genentech and
Children's Medical Center Corporation, dated July 16, 1990 (the "CMCC License"),
but specifically excluding any rights granted to Genentech under the Biogen
License. Genentech Patent Rights shall include, without limitation, the patents
and patent applications listed in EXHIBIT A attached hereto. Notwithstanding the
foregoing, Genentech Patent Rights shall exclude any rights Genentech acquires
after the Effective Date of this Agreement under third-party license agreements,
with the exception of those acquired under the CMCC License, unless and until
the Parties mutually agree on terms and conditions for the sublicense of such
rights from Genentech to Connetics.
1.19 "IND" shall mean Investigational New Drug Application.
1.20 "Interferon Gamma" shall mean a polypeptide having the 126
amino acid sequence set forth on EXHIBIT B or a variant of such sequence having
at least 70% homology thereto, or such polypeptide with one or more additional
amino acid residue(s) extending from the N-terminus thereof AND/OR one or more
additional amino acid residue(s) extending from the C-terminus thereof, such
polypeptides including, without limitation, Interferon Gamma-1B.
1.21 "Interferon Gamma-1B" shall mean a single chain polypeptide
containing the 140 amino acid sequence set forth on EXHIBIT C hereto, i.e., the
active ingredient in the
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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ACTIMMUNE7 (Interferon Gamma-1B) Injection product.
1.22 "Licensed Product" shall mean any pharmaceutical formulation
containing Interferon Gamma whether alone or together with or incorporated into
any other substance or product or material or device, whether active or not, and
which (i) but for the licenses granted hereunder, the manufacture, use, sale,
offer for sale or importation of which in the Territory would infringe or
contribute to the infringement of Genentech Patent Rights in the Territory, or
(ii) is based upon or incorporates or utilizes Genentech Knowhow. For purposes
of clarification, it is understood that this definition shall not include any
pharmaceutical formulation which induces the presence or activity of Interferon
Gamma IN VIVO, or the DNA encoding Interferon Gamma for Gene Therapy, or other
biological techniques aimed at establishing or modulating endogenous Interferon
Gamma IN VIvo.
1.23 "NDA" shall mean New Drug Application.
1.24 "NDC" shall mean National Drug Code.
1.25 "Net Sales" shall mean, as to each calendar quarter, the gross
invoiced sales prices charged for all Licensed Products sold by Connetics and
its sublicensees in arm's length transactions to independent third parties
during such quarter, after deduction of the following items paid by Connetics
and its sublicensees during such calendar quarter with respect to sales of
Licensed Products regardless of the calendar quarter in which such sales were
made, provided and to the extent that such items are incurred or allowed and do
not exceed reasonable and customary amounts in the market in which such sales
occurred:
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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[ * ]
Notwithstanding the foregoing, no deduction shall be made for
bad debt expense.
1.26 "Party" shall mean Genentech or Connetics, and, when used in
the plural, shall mean both of them.
1.27 "PLA" shall mean Product License Application.
1.28 "Territory" shall mean the United States of America and its
territories and possessions.
1.29 "Transfer Date" shall mean, unless otherwise mutually agreed to
by the Parties, the last day of the second full calendar month following the
first delivery by Connetics to Genentech of Connetics' labeling and packaging
materials for Genentech's use in labeling and packaging Finished Product,
pursuant to a purchase order submitted by Connetics and accepted by Genentech,
to be sold commercially by Connetics for treatment of CGD, provided that the
activities set forth on Exhibit H have been completed.
2.0 LICENSE GRANT
2.1 Patent and Knowhow License Grant
(a) Genentech grants to Connetics an exclusive license,
even as to Genentech, under Genentech Patent Rights and under Genentech Knowhow
to use, sell, offer for sale and import (but not to make or have made) Licensed
Products in the Field of Use in the Territory,
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(excluding, with respect to the fields of (i) scleroderma and (ii) infectious
disease or condition caused by human papillomavirus, Licensed Products
containing any form of Interferon Gamma other than Genentech Gamma Interferon
TRIANGLE3, as that term is defined in the Biogen License). Notwithstanding the
foregoing, Genentech reserves the right to use (but not to import, offer for
sale or sell) Licensed Products within the Field of Use for research purposes.
(b) Genentech grants to Connetics a non-exclusive license
under Genentech Patent Rights and under Genentech Knowhow to use, sell, offer
for sale and import (but not to make or have made) Licensed Products containing
any form of Interferon Gamma other than Genentech Gamma Interferon TRIANGLE3 (as
that term is defined in the Biogen License) in the Territory in the fields of:
(i) scleroderma and (ii) infectious disease or condition caused by human
papillomavirus.
(c) Genentech grants to Connetics a non-exclusive
sublicense under the Biogen License Rights to use, sell, offer for sale and
import Licensed Products (excluding Licensed Products containing Biogen Gamma
Interferon TRIANGLE0 as that term is defined in the Biogen License) in the
Territory in the fields of scleroderma and infectious disease or condition
caused by human papillomavirus.
(d) Genentech grants to Connetics a non-exclusive license
under Genentech Patent Rights to make or have made Licensed Products in the
Field of Use for use and sale in the Territory.
(e) Genentech grants to Connetics a non-exclusive license
under Genentech
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Patent Rights and Genentech Knowhow to use non-human animal species derived
homologues of Interferon Gamma (Non-human Interferon Gamma) for non-commercial
research purposes to support the Field of Use in the Territory.
Except as expressly granted herein, there are no implied licenses under
the Genentech Patent Rights or any other intellectual property rights owned or
controlled by Genentech.
2.2 Trademark License Grant
(a) Genentech hereby grants to Connetics a non-exclusive,
royalty-free license to use the trademark, ACTIMMUNE, for the advertising,
promotion, marketing, distribution and sale of Licensed Products in the
Territory. Connetics shall have the right to grant sublicenses to such
non-exclusive license, subject, however, to the prior written consent of
Genentech, which consent shall not be unreasonably withheld. Genentech agrees
not to grant any other licenses to use the ACTIMMUNE trademark without the
consent of Connetics, which consent shall not be unreasonably withheld.
(b) Use of the Mark. In using the ACTIMMUNE mark,
Connetics shall display said mark in upper case letters or otherwise display
it in a style or size of print distinguishing the mark from any accompanying
wording or text. Where feasible, Connetics shall display the registration
symbol -Registered Trademark- to the right of and slightly above or below
the last letter of the word, ACTIMMUNE. Prior to any new use by Connetics of
the ACTIMMUNE mark on product packaging or package inserts for the Licensed
Products, Connetics shall notify and
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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provide Genentech with an example of the proposed use for approval by
Genentech, which approval shall not be unreasonably withheld or delayed. Such
additional use, with respect to the ACTIMMUNE mark, shall automatically become
a part of the license grant under Section 2.2(a) above.
(c) Quality Control. If Connetics uses the ACTIMMUNE mark
for Licensed Products, such products shall be of at least the quality described
in the Specifications therefor as defined in the Supply Agreement.
(d) Ownership. Connetics hereby acknowledges Genentech's
exclusive right, title and interest in and to the ACTIMMUNE mark and agrees that
it will not at any time do, or cause to be done, any act or thing contesting or
in any way impairing or intending to impair the validity of and/or Genentech's
exclusive right, title and interest in and to the ACTIMMUNE mark. Connetics will
not in any manner represent that it owns the ACTIMMUNE mark and hereby
acknowledges that its use of the ACTIMMUNE mark as set forth in Section 2.2(b)
above shall not create any rights, title or interest in or to the ACTIMMUNE mark
in its favor, but that all use of the ACTIMMUNE mark by Connetics shall inure to
the benefit of Genentech.
2.3 Sublicenses.
(a) Connetics may grant sublicenses under the rights
granted in Section 2.1(d) on thirty (30) days prior written notice to Genentech,
subject to Genentech's prior written approval, which approval shall be at
Genentech's sole discretion. Genentech agrees that Boehringer Ingelheim
International GmbH is acceptable to Genentech as a Connetics'
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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sublicensee under the rights granted in Section 2.1(d) for the purpose of
manufacturing and supplying Bulk Product and/or Finished Product to Connetics,
and/or to its sublicensees under Sections 2.1(a), (b) and (c). In the event that
Genentech approves the grant of a sublicense under Section 2.1(d), Genentech may
in its sole discretion, or as agreed by the Parties in the Supply Agreement,
agree to grant to Connetics and such approved sublicensee a non-exclusive
license under Genentech Manufacturing Knowhow solely to make or have made
Licensed Products for use and sale by Connetics and its sublicensees in the
Field of Use in the Territory, and Genentech shall thereafter disclose to
Connetics and such sublicensee such Genentech Manufacturing Knowhow as soon as
reasonably possible.
(b) Connetics may grant one or more sublicenses under the
rights granted in Sections 2.1(a), (b), (c) and (e) in any applicable Area of
the Field of Use, on thirty (30) days prior written notice to Genentech, subject
to Genentech's prior written approval, which approval shall not be unreasonably
withheld.
(c) Notwithstanding the above, Connetics may grant one
sublicense to InterMune (as defined in Section 3.1) under any or all of the
rights granted in Sections 2.1 and 2.2(a) above without Genentech's prior
written approval. InterMune (but no other sublicensee of Connetics) may grant
further sublicenses under Sections 2.1 and 2.2(a) to the extent that Connetics
has the right to do so pursuant to the provisions of this Section 2.3 and
Section 2.2(a). Connetics and InterMune shall give Genentech a copy of any
sublicense agreement entered into by either of them with a third party pursuant
to this Agreement as soon as reasonably possible
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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after execution, provided that Connetics and InterMune may each redact from such
copies text of information or provisions that are not relevant to this Agreement
and the rights and obligations of the Parties hereunder. Genentech agrees to
permit InterMune to perform Connetics' rights and obligations under Section
2.2(b), (c) and (d), Section 2.5, Sections 3.1 through 3.8 and Article 4.0 of
this Agreement (excluding matters related to any alleged breach of the
Agreement, or dispute between the Parties concerning the performance of this
Agreement, under such enumerated Sections and Article), to the extent such
rights and obligations are sublicensed to InterMune by Connetics, and Genentech
agrees to deal with InterMune in lieu of Connetics as if it were Connetics
hereunder for purposes of performance under such enumerated Sections and
Article, provided that Connetics shall remain liable and responsible for
performance of all of the obligations of Connetics and InterMune under this
Agreement. In the event that Connetics sublicenses all of its rights under
Section 2.1 and 2.2(a) to InterMune pursuant to a written sublicense which
provides that InterMune (and not Connetics) shall make, have made, use, sell,
offer for sale, import and develop Licensed Products in all Areas of the Field
of Use in the Territory, then Genentech agrees to permit InterMune to also
perform Connetics' rights and obligations under Articles 5.0 and 6.0 and
Sections 8.2 through 8.8 of this Agreement (excluding matters related to any
alleged breach of the Agreement, or dispute between the Parties concerning the
performance of this Agreement, under such enumerated Sections and Articles), and
Genentech also agrees to deal with InterMune in lieu of Connetics as if it were
Connetics hereunder for purposes of performance under such enumerated Sections
and Articles, provided
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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that Connetics shall remain liable and responsible for performance of all of the
obligations of Connetics and InterMune under this Agreement. In the event that
InterMune sublicenses any of its rights to a third party pursuant to this
Agreement, such sublicensee shall not have the right to perform the rights and
obligations of Connetics or InterMune under the Sections and Articles enumerated
above, and Genentech shall not have any obligation to deal directly with such
sublicensee. Notwithstanding the above provisions of this Section 2.3(c), with
respect to any dispute concerning InterMune's performance, or alleged breach by
InterMune, of any applicable term of this Agreement, Genentech shall have the
right to deal directly with Connetics, and to proceed either against InterMune
or directly against Connetics, in Genentech's sole discretion, to enforce this
Agreement.
(d) In the event of the grant of any sublicense by
Connetics (including such grant to InterMune) or by InterMune, the sublicensee
shall be subject to all of the applicable obligations of Connetics hereunder.
Connetics guarantees to Genentech the performance of Connetics' applicable
obligations hereunder by Connetics' sublicensees and by InterMune's
sublicensees.
2.4 Grant Back License. Connetics hereby grants to Genentech under
any Connetics Patent Rights and Connetics Knowhow, a nonexclusive,
sublicenseable license in the Territory to make, have made, use, sell, offer for
sale and import Interferon Gamma for any use outside of the Field of Use, with a
royalty rate of one-half of a percent (0.5%) payable to Connetics on net sales
of Interferon Gamma by Genentech, its affiliates and its sublicensees covered by
such Connetics
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Patent Rights or incorporating such Connetics Knowhow. Genentech shall have the
right to grant sublicenses under such license, subject to the prior written
approval of Connetics, which approval shall not be unreasonably withheld. The
license granted to Genentech under this Section 2.4 shall expire on the later
of: (a) the expiration of the last to expire of any Connetics Patent Rights or
(b) if Connetics Knowhow was used, twenty (20) years from the first commercial
sale of Interferon Gamma outside the Field of Use by Genentech, its affiliates
or its sublicensees hereunder. As used herein, "net sales" shall have the
equivalent definition given to Net Sales in Section 1.25 above.
2.5 Data Transfer and Cooperation
(a) Genentech shall provide Connetics with reasonable
access to all such relevant information and materials in its possession (subject
to Genentech's own internal reasonable needs for the information and materials)
that Connetics reasonably needs to develop and commercialize Licensed Products
in the Field of Use under the license granted to Connetics under Section 2.1
above. Connetics shall submit requests for such information to Genentech's
Clinical Collaborations Operations Department - Medical Affairs at the address
set forth at the beginning of this Agreement. Access to such information and
materials shall be made in a timely and orderly fashion and in a manner such
that the value of the accessed information is preserved in all material
respects.
(b) Connetics shall provide Genentech with reasonable
access to such relevant information and materials in its possession as is
reasonably necessary for Genentech to exercise
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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the license rights granted by Connetics under Section 2.4 and Genentech shall
submit requests for such information to Connetics' Vice President - Intellectual
Property at the address set forth at the beginning of this Agreement. Access to
such information and materials shall be made in a timely and orderly fashion and
in a manner such that the value of the accessed information is preserved in all
material respects.
(c) Commencing on May 1, 1998 Connetics or its
sublicensees shall be responsible for any costs associated with maintaining the
Genentech breeding colony of interferon gamma gene knock-out mice at Charles
River Labs (the "Knock-Out Mice"). In consideration for Connetics paying these
costs, Genentech hereby transfers all ownership of such particular Knock-Out
Mice to Connetics, subject to Genentech's right to use such Knock-Out Mice and
the progeny thereof for Genentech's own research purposes to the extent such
Knock-Out Mice are not being used (or planned to be used) by Connetics or its
sublicensees. If Connetics and its sublicensees wish to discontinue the
maintenance of such Knock-Out Mice colony, Connetics shall give Genentech sixty
(60) days prior notice and the right to take over such maintenance, at
Genentech's sole discretion, before Connetics discontinues such maintenance.
Connetics acknowledges that Genentech has, prior to the Effective Date hereof,
transferred interferon gamma gene knock-out mice to other third parties.
(d) Connetics shall use its Best Efforts to obtain a
license from the FDA, which shall include obtaining a U.S. license number and an
NDC number, to enable the effective transfer from Genentech to Connetics of the
PLA for CGD on file with the FDA (the "CGD
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PLA"). Genentech shall use its Best Efforts to assist such transfer, to the
extent reasonably requested by Connetics. Genentech also shall, before the
Transfer Date, reasonably assist Connetics in initiating Connetics' sales of
Licensed Product in the Area of the Field of Use of CGD by transferring to
Connetics information reasonably requested by Connetics that relates to such
sales efforts for CGD. Connetics shall reimburse Genentech for all reasonable
costs associated with Genentech's providing of such information within ninety
(90) days of Connetics' receipt of an invoice of such cost from Genentech.
(e) Genentech shall transfer the CGD PLA, IND and copies
of all material correspondence with the FDA regarding such PLA and IND to
Connetics as soon as reasonably possible after the Effective Date of this
Agreement and Connetics shall be responsible for all activities, at its own
cost, necessary to maintain the CGD PLA and IND and keep them active with the
FDA after such date. Connetics shall reimburse Genentech for 50% of all
reasonable costs associated with Genentech's transfer of the CGD PLA, IND and
such FDA correspondence within ninety (90) days of Connetics' receipt of an
invoice of such cost from Genentech.
(f) Connetics shall not commence marketing and sales of
Finished Product prior to the Transfer Date. On the Transfer Date, Genentech
shall transfer to Connetics the responsibility for all marketing and sales of
Finished Product in the Field of Use in the Territory, provided that all the
activities listed on Exhibit H attached hereto are completed. The Parties shall
use Best Efforts to complete the tasks set forth on Exhibit H as expeditiously
as possible.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(g) Genentech shall provide Connetics with reasonable
access to relevant data and regulatory information in its possession in the form
existing as of the Effective Date, whether written or electronic, including all
clinical safety data and clinical efficacy data that are related to the
manufacture, use and sale of Interferon Gamma within the Field of Use and the
right to cross-reference Genentech's IND, ELA, and PLA information for
Interferon Gamma in any Genentech regulatory filings related to Interferon Gamma
within the Field of Use. Other than as expressly set forth herein, Genentech
shall have no further obligation with respect to Connetics' efforts to obtain
the FDA license referred to in Section 2.5(d) above. At Genentech's sole
discretion, Genentech may participate in regulatory filings in the Field of Use
in the Territory if the Parties agree that Genentech's participation in such
regulatory filings would expedite the approval and commercialization of a
Licensed Product. Connetics shall reimburse Genentech for all reasonable costs
associated with Genentech's providing of data and regulatory information and
referencing within ninety (90) days of Connetics' receipt of an invoice of such
cost from Genentech. Connetics shall submit requests for such information to
Genentech's Clinical Collaborations Operations Dept. - Medical Affairs at the
address set forth in the beginning of this Agreement. Such requests shall not be
submitted more than two (2) times in any twelve (12) month period, unless such
requests concern information that is critical to product registration
activities. Access to such information shall be made in a timely and orderly
fashion and in a manner such that the value of the accessed information is
preserved in all material respects.
(h) To the extent reasonably requested by Genentech,
Connetics shall provide
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Genentech with access to all data and regulatory information in its possession,
whether written or electronic, in the form existing as of the date of
Genentech's request, including all clinical safety data and clinical efficacy
data, that directly relates to the use of Interferon Gamma outside the Field of
Use and shall give Genentech the right to cross-reference Connetics' IND, ELA,
BLA and PLA information, if applicable, in any Genentech regulatory filings that
are related to the use or sale of Interferon Gamma outside the Field of Use.
Genentech shall reimburse Connetics for all reasonable actual costs associated
with Connetics' providing of data and regulatory information and referencing
within ninety (90) days of the receipt of an invoice of such cost by Genentech
from Connetics. Such requests shall not be submitted more than two (2) times in
any twelve (12) month period, unless such requests concern information that is
critical to product registration activities. Access to such information shall be
made in a timely and orderly fashion and in a manner such that the value of the
accessed information is preserved in all material respects.
(i) Commencing from Genentech's first delivery to
Connetics or Intermune of Finished Product for clinical studies in accordance
with the Supply Agreement, Connetics shall thereafter be responsible for
supplying ACTIMUNE free of charge to, and funding (if any) of, the third party
sponsors of the clinical studies listed in Exhibit D attached hereto and
incorporated herein. Connetics shall enter into clinical research agreements
with such third party sponsors governing such studies that commence after the
Effective Date hereof. With respect to clinical research agreements between
Genentech and such sponsors in effect prior to the Effective Date,
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Connetics shall replace Genentech, pursuant to an assignment, as a party.
ACTIMMUNE (and funding, if any) for all such studies shall be supplied by
Connetics to such sponsors as described in such clinical research agreements.
(j) As of the Transfer Date, Connetics shall conduct an
indigent patient program for Licensed Products sold for use in the field of CGD.
As soon as reasonably possible after Genentech transfers information regarding
patients who have participated in Genentech's indigent patient program,
Connetics will inform Genentech whether or not such patients will be eligible
and participating in Connetics' indigent patient program.
3.0 PRODUCT DEVELOPMENT AND MILESTONES
3.1 Commercialization Milestones.
(a) Connetics shall use its Best Efforts to develop, seek
FDA clearance for marketing of, commercialize and sell Licensed Products in the
Territory in all Areas of the Field of Use. The Parties acknowledge that a new
company, named InterMune Pharmaceuticals, Inc. ("InterMune"), has been
incorporated to conduct development and commercialization of Licensed Products
in the Field of Use pursuant to an appropriate sublicense from Connetics to
Intermune. Connetics agrees to perform the following Commercialization
Milestones no later than the date set forth below opposite the appropriate
Commercialization Milestone description:
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<TABLE>
<CAPTION>
COMMERCIALIZATION MILESTONE DATE OF COMPLETION
- ---------------------------------------- -----------
<S> <C>
(a) Completion of the formation of InterMune May 1, 1998
(b) Execution of a sublicense agreement granting to
InterMune rights, as permitted in this Agreement, necessary
to perform development of Licensed Products in the Field June 1, 1998
(c) Closing of at least [ * ] in equity
financing of InterMune by third parties and/or Connetics July 15, 1998
(d) Closing of at least another additional [ * ] in
equity financing of InterMune by third parties and/or Connetics September 1, 1998
(e) Enrollment and active participation
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of the first patient in the first new clinical trial
for a Licensed Product in the Field of Use in the Territory October 1, 1998
</TABLE>
(b) If Connetics fails to perform any of the
Commercialization Milestones described in 3.1 (a) through (e) inclusive by the
applicable Date of Completion for any reason within Connetics' control, then,
notwithstanding the termination provisions in Section 11.2 below, Genentech
shall have the right to terminate this Agreement and the licenses granted to
Connetics hereunder, upon written notice to Connetics, which termination shall
become effective thirty (30) days after Genentech's sending written notice of
such termination, unless such Commercialization Milestone has been completed
prior to the expiration of such thirty day period. If Connetics fails to perform
any of the Commercialization Milestones for causes beyond Connetics' control,
Genentech shall not have the termination rights above, provided that Connetics
has mitigated such causes to the extent it can reasonably do so. If Connetics
fails to reasonably mitigate such causes, Genentech will have the termination
rights described above. In addition, if Genentech exercises such termination
rights above, Genentech shall be automatically granted a co-exclusive (with
Connetics and Connetics' sublicensees), sublicenseable, royalty-free, worldwide
license: (i) to the result of efforts made by Connetics and its sublicensees in
the development of Licensed Products hereunder, (ii) to use all regulatory
submissions made by Connetics and its sublicensees hereunder, and (iii) under
all Connetics Patent Rights and
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COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Connetics Knowhow, arising from the efforts made by Connetics and its
sublicensees hereunder in the research and development of Licensed Products, to
make, have made, use, sell, offer for sale or import Licensed Products. Upon
Genentech's exercise of such termination right described above, Connetics shall
promptly provide Genentech with copies of all related documentation, whether
written or electronic, and materials, including biological materials, in the
form existing as of the effective date of such termination, reasonably necessary
for Genentech to exercise its license rights under this Section 3.1(b). Such
transfer shall be made in an orderly fashion and in a manner such that the value
in what is being transferred is preserved in all material respects. The
foregoing shall constitute Genentech's exclusive remedies for Connetics failure
to complete one or more of the Commercialization Milestones above, provided,
however, that Genentech's rights and remedies for breach of other provisions of
this Agreement, and under the Supply Agreement and the Stock Agreement, shall
remain in full force and effect.
3.2 Diligence
(a) Attached hereto as EXHIBIT E are Connetics' Clinical
Development Milestones (the "Clinical Development Milestones") for Licensed
Products in the Field of Use and the Dates of Completion for each such
milestone. Connetics shall use its Best Efforts to adhere to the Dates of
Completion as set forth in Exhibit E. Connetics shall notify Genentech in
writing when it achieves a Clinical Development Milestone.
(b) From time to time, Connetics may suggest
modifications to the Clinical Development Milestones based on new information.
Such modifications shall be effective only
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as mutually agreed upon, in writing, by the Parties. Genentech shall consider
such requested modifications in good faith and shall agree to any modifications
that are reasonably necessary to achieve the overall objectives of the
development of Licensed Product hereunder.
(c) In the event that Connetics determines that it will
be unable to meet any Date of Completion for a Clinical Development Milestone
due to an event within Genentech's control, including without limitation, delay
in the performance by Genentech of any of its obligations hereunder (e.g. the
transfer of technology or materials, including the supply of Interferon
Gamma-1B), Connetics shall give prompt notice to Genentech of such inability and
shall specify the amount of delay Connetics believes resulted from such event
within Genentech's control. Unless Genentech disagrees in writing on reasonable
grounds with the amount of such delay specified by Connetics, such Date of
Completion will automatically be extended by the length of time of the delay. In
the event Genentech disagrees in writing on reasonable grounds with the amount
of delay specified by Connetics, the Parties shall negotiate a new Date of
Completion in good faith.
(d) In the event that Connetics determines that it will
be unable to meet any Date of Completion for a Clinical Development Milestone
due to an event which would be considered a force majeure (as described in
Section 12.9), Connetics shall give prompt written notice to Genentech of such
inability and the length of the delay Connetics believes resulted from such
force majeure. Unless Genentech disagrees in writing on reasonable grounds with
the length of such delay specified by Connetics, such Date of Completion will be
automatically
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
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extended by such specified length of time of the delay. In the event Genentech
disagrees in writing on reasonable grounds with the length of delay specified by
Connetics, the Parties shall negotiate a new Date of Completion in good faith.
(e) In the event that Connetics determines that it will
be unable to meet any Date of Completion for a Clinical Development Milestone
for reasons other than (i) force majeure and/or (ii) an event within Genentech's
control, Connetics shall notify Genentech of such inability, identifying the
nature of the inability with reasonable specificity and may ask Genentech for a
reasonable extension of time in which to complete such Clinical Development
Milestone. In Genentech's sole discretion, Genentech may grant Connetics such an
extension to complete such Clinical Development Milestone.
(f) Except as set forth in Sections 3.2(c) or 3.2(d) or
in the event that Genentech shall have agreed to an extension of the time to
complete a Clinical Development Milestone as set forth in Section 3.2(e), if
Connetics fails to complete a Clinical Development Milestone by the
corresponding Date of Completion with respect to one or more of the Areas of the
Field of Use (other than in the dermatological Area of the Field of Use as
described in Section 1.12(a) above) Genentech shall have the right to terminate
this Agreement with respect to such Area(s) of the Field of Use, by providing
Connetics written notice thereof, and the termination of the Agreement with
respect to such Area(s) of the Field of Use shall be effective thirty (30) days
after Connetics' receipt of such notice unless such Clinical Development
Milestone shall have been met prior to the expiration of such thirty (30) day
period, and such
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termination shall be Genentech's exclusive remedy for such failure of Connetics
to complete such Clinical Development Milestone. Upon such termination of the
Agreement with respect to such Area(s) of the Field of Use: (i) Genentech shall
automatically have all the rights set forth in Sections 11.3(a) and (b) solely
with respect to such Area(s) of the Field of Use; and (ii) any sublicense(s)
granted by Connetics with respect to such Area(s) of the Field of Use shall not
automatically terminate, but instead, Genentech shall have the option to either
terminate or continue this Agreement with respect to such Area(s) of the Field
of Use with such sublicensee(s).
3.3 Review of Clinical Development Plan and Marketing Programs. On
or about each August 1 during the term of this Agreement, Connetics shall supply
Genentech with a report on Connetics' development and marketing programs for
Licensed Products in the Field of Use in the Territory. The report shall include
the following: (i) a description of Connetics' progress in such programs during
the twelve (12) months prior to the date of each such report, (ii) a description
of Connetics' planned development and marketing programs for the twelve (12)
months after the date of each such report, (iii) a copy of the most recent
version of the Clinical Development Milestones (if not previously provided to
Genentech), (iv) a copy of all previous versions of the Clinical Development
Milestones (if not previously provided to Genentech), (v) an explanation of any
discrepancies between Connetics' progress during the prior twelve (12) months
and the Clinical Development Milestones and (vi) a proposal to address such
discrepancies, as contemplated under Section 3.2. Genentech shall have the right
to comment on the Clinical
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Development Milestones and the development and marketing programs, and at
Genentech's discretion, the Parties shall meet to discuss and agree upon changes
to the Clinical Development Milestones.
3.4 New Delivery Forms. Connetics shall have the right to develop
and obtain regulatory approval for the marketing of new delivery forms of
Interferon Gamma for use in Licensed Products in the Field of Use in the
Territory.
3.5 Costs of Development. Connetics shall be responsible for all
aspects and costs of development, regulatory approval and registration of
Licensed Products.
3.6 Joint Development and Marketing Activities. Upon written
notice to Genentech, Connetics and InterMune shall be permitted to discuss and
enter into agreements and participate in joint development and marketing
activities for Licensed Products in the Field of Use outside the Territory with
other Genentech Interferon Gamma licensees.
3.7 Compliance with Law and Safety and Adverse Event Reporting.
(a) Connetics shall conduct clinical trials hereunder,
and shall make, use, sell and distribute Licensed Products in accordance with
all applicable laws and regulations. Genentech and Connetics shall make
available to each other during the term of this Agreement all safety data
obtained which relates to the use of Licensed Products in the Field of Use.
Connetics will provide to Genentech's Medical Information and Drug Experience
department at the time of filing a copy of each adverse event report or any
report, including summary reports, it is required to file under Title 21 or any
other applicable provision of the C.F.R. regarding
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Interferon Gamma. Genentech will provide Connetics at the time of filing with a
copy of each adverse event report or any report, including summary reports, it
is required to file regarding Interferon Gamma under Title 21 or any other
applicable provision of the C.F.R..
(b) Connetics shall maintain a safety database for all
Licensed Products and clinical trials conducted hereunder and shall submit to
regulatory agencies all adverse event and safety reports required to be filed
pursuant to Title 21 or any other applicable provision of the C.F.R. Connetics
shall also be responsible for providing product, medical and clinical
information regarding Licensed Product to its customers.
3.8 Clinical Development Reports. During the course of clinical
development of Licensed Products and clinical studies conducted by Connetics
hereunder, Connetics shall submit to Genentech the reports listed on Exhibit F
attached hereto and incorporated herein. Connetics shall submit such reports to
Genentech as promptly as reasonably practicable after such reports are completed
or such applicable information is available.
3.9 Technology Outside the Field of Use
(a) Upon mutual written amendment to this Agreement, the
Parties may expand the Field of Use, subject to the terms and conditions for
supply of Interferon Gamma 1-B set forth in the Supply Agreement, the payments
set forth in Sections 8.2 through 8.8 below inclusive and all other applicable
obligations of Connetics under this Agreement.
(b) Connetics may request an expansion of the Field of
Use in the Territory, by providing Genentech with a written letter of intent
which incorporates the terms and
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conditions specified in the Supply Agreement and Sections 8.2 through 8.8 of
this Agreement and sets forth a detailed clinical development plan and
reasonable proposed timeline (through FDA clearance) for developing the
additional medical indication(s) sought. Such letter of intent shall be deemed
Confidential Information of Connetics. Upon receipt of such letter of intent,
unless Genentech is conducting research in, or developing, Interferon Gamma for
such specified use, is already engaged in negotiations with a third party for
such specified use, or is prevented by prior written agreements to grant rights
to such additional indications to Connetics, Genentech shall negotiate
exclusively in good faith with Connetics, for a period of sixty (60) days on a
one time basis only for each such new indication outside the Field of Use, to
expand the Field of Use as proposed in the letter of intent on terms
substantially similar to those contained in this Agreement. If the Parties do
not reach mutual written agreement with respect to such proposed expansion of
the Field of Use within sixty (60) days, Genentech shall continue to have the
right to license its rights to such proposed additional indications for
Interferon Gamma outside the Field of Use to third parties other than Connetics,
provided that, for a period of six (6) months after the 60 day exclusive
negotiation period with Connetics, the milestone fee and royalty terms offered
by Genentech to third parties for such indications are not more favorable to
such third parties than those in the final offer made by Connetics.
(c) Prior to offering any third party an opportunity to
obtain any right or license under Genentech Patent Rights, Genentech Knowhow, or
Biogen License Rights to use, sell, offer for sale or import Licensed Products
for any indication outside the Field of Use in the
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Territory, Genentech shall first offer to Connetics to expand the Field of Use
to include such indication, in accordance with Section 3.8(d) below. Such
obligation to first offer to Connetics such indication outside the Field of Use
shall apply only to the first time Genentech wishes to offer rights to another
party to such indication outside the Field of Use.
(d) Genentech may offer to expand the Field of Use by
written notice to Connetics ("Offer Notice"). Upon receipt of such Offer Notice,
Connetics shall have thirty (30) days to provide Genentech with a written letter
of intent which incorporates the terms and conditions specified in the Supply
Agreement and Sections 8.2 through 8.8 of this Agreement. Upon receipt of such
letter of intent, Genentech shall negotiate exclusively in good faith with
Connetics, for a period of thirty (30) days on a one time basis only for each
such new indication outside the Field of Use, to expand the Field of Use as
proposed in the letter of intent on terms substantially similar to those
contained in this Agreement. If the Parties do not reach mutual written
agreement with respect to such proposed expansion of the Field of Use within 30
days, Genentech shall continue to have the right to license its rights to such
proposed additional indications for Interferon Gamma outside the Field of Use to
third parties other than Connetics. To remain under consideration as a potential
licensee for such rights to Interferon Gamma outside the Field of Use, within
ninety (90) days of receipt of Genentech's Offer Notice, Connetics shall provide
Genentech with a detailed written clinical development plan and reasonable
proposed timeline for developing (through FDA clearance) the additional medical
indication(s) sought, which development plan shall be deemed the Confidential
Information of
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Connetics.
4.0 Supply of Interferon Gamma-1B
4.1 Bulk Product and Finished Product. Genentech shall supply
Connetics with, and Connetics shall purchase, Bulk Product for clinical studies
and for sales of Licensed Product and Finished Product for commercial sale of
Licensed Product to treat CGD and osteopetrosis and for clinical studies,
pursuant to the terms and conditions of the Supply Agreement.
4.2 Supply of Non-human Interferon Gamma. Upon Connetics'
reasonable request and in Genentech's sole discretion, Genentech may choose to
sell to Connetics Non-human Interferon Gamma at a price equal to [ * ].
Notwithstanding the foregoing, Genentech shall have no obligation to (a) provide
any minimum amount of Non-human Interferon Gamma to Connetics or (b) produce
additional amounts of Non-human Gamma Interferon in the event its current
inventory is depleted.
5.0 Intellectual Property Rights
5.1 Ownership. Genentech shall retain title to Genentech Patent
Rights, Genentech Knowhow, Genentech Manufacturing Knowhow, the ACTIMMUNE mark,
and to any patent rights and knowhow related to Interferon Gamma or Licensed
Products developed solely by Genentech. Connetics shall retain title to
Connetics Patent Rights and Connetics Knowhow and to any patent rights and
knowhow related to Interferon Gamma and Licensed Products developed
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solely by Connetics. Except as expressly provided herein, each Party shall own
and shall have the exclusive right to exploit all intellectual property rights
owned or acquired by such Party.
5.2 Patent Prosecution and License Fees
(a) With the exception of Genentech Patent Rights under
the CMCC License, Genentech shall be responsible for the prosecution and
maintenance of the Genentech Patent Rights in the Territory at Genentech's
expense, in consultation with Connetics. Genentech shall be responsible for the
prosecution and maintenance and outside counsel fees associated therewith of the
Genentech Patent Rights under the CMCC License in the Field of Use in the
Territory at Connetics' expense, upon prior consultation with and approval from
Connetics, which approval shall not be unreasonably withheld or delayed.
Genentech shall keep Connetics promptly informed of the status of prosecution of
Genentech Patent Rights in the Territory, including providing copies of all
material correspondence with the U.S. Patent and Trademark Office. Connetics
shall have the right to comment upon such prosecution and Genentech agrees to
take such comments into consideration reasonably in advance of any action taken
by Genentech in such prosecution.
(b) Connetics shall assist Genentech in prosecuting and
maintaining the Genentech Patent Rights as contemplated by Section 5.2(a) above.
(c) At least thirty (30) days prior to the time each
benchmark payment of [ * ] under the [ * ] License becomes due during the term
of this Agreement, Genentech shall notify Connetics of such payment due and
Connetics shall have the option of paying such benchmark
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payment, on Genentech's behalf, when due to [ * ]. In the event that
Connetics chooses not to pay the benchmark payment when due, Connetics shall
so notify Genentech and Genentech shall have the option of paying such
benchmark payment. If Genentech pays such benchmark payment, Connetics shall
reimburse Genentech for such payment within thirty (30) days of receipt of
Genentech's request for reimbursement.
5.3 Patent Infringement
(a) If either Party learns that a third party is
infringing Genentech Patent Rights or Connetics Patent Rights, it shall promptly
notify the other in writing. The Parties shall use reasonable efforts in
cooperation with each other to stop such patent infringement without litigation.
(b) Genentech and Connetics each shall have the first
opportunity to take the appropriate steps to remove the infringement of its own
Patent Rights which claim Interferon Gamma and/or its manufacture or use in the
Field of Use including, without limitation, initiating suit. In either case, if
such Party decides not to take such steps with respect to its own Patent Rights
within one hundred twenty (120) days of discovering or being notified of the
infringement, the other Party may do so. Each of the Parties agrees to provide
reasonable assistance to the other in taking such steps. Any legal action taken
under this section will be at the expense of the Party by whom suit is filed and
will be controlled by the Party bringing suit. The Party not bringing suit may
choose to be represented in any such action by counsel of its own choice at its
own expense. The Party bringing suit shall be reimbursed for its costs
associated
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with bringing suit with the proceeds of any damages or costs recovered. Any
monies remaining shall be split between the Parties on an equitable basis
proportional to their respective damage from the infringement. If both Parties
bring suit, equitable apportionment of the costs and damages to be recovered
shall be agreed upon before the filing of the suit.
5.4 Third Party Rights. If a notice of infringement is received
by, or a suit is initiated against, either of Connetics or Genentech with
respect to Licensed Products or the ACTIMMUNE mark, the Parties will in good
faith discuss the best way to respond.
5.5 Trademark Infringement
(a) If either Party learns that a third party is
infringing the ACTIMMUNE mark, it shall promptly notify the other in writing.
The Parties shall use reasonable efforts in cooperation with each other to stop
such trademark infringement without litigation.
(b) Genentech shall have the first opportunity to take
the appropriate steps to remove the infringement of the ACTIMMUNE mark,
including, without limitation, initiating suit. If Genentech decides not to take
such steps within one hundred twenty (120) days of discovering or being notified
of the infringement, Connetics may do so. Each of the Parties agrees to provide
reasonable assistance to the other in taking such steps. Any legal action taken
under this section will be at the expense of the Party by whom suit is filed and
will be controlled by the Party bringing suit. The Party not bringing suit may
choose to be represented in any such action by counsel of its own choice at its
own expense. The Party bringing suit shall be reimbursed for its costs
associated with bringing suit with the proceeds of any damages or costs
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recovered. Any monies remaining shall be split between the Parties on an
equitable basis proportional to their respective damage from the infringement.
If both Parties bring suit, equitable apportionment of the costs and damages to
be recovered shall be agreed upon before the filing of the suit.
5.6 [ * ] License. If Genentech receives notice that it has
acquired any Genentech Patent Rights under the [ * ] License after the Effective
Date of this Agreement, Genentech shall notify Connetics in writing of such
additional rights as soon as reasonable after Genentech receives such notice.
6.0 Product Promotion
6.1 Promotion. Genentech agrees, and shall require its
sublicensees, if any, to agree, not to promote Interferon Gamma or a Licensed
Product in the Field of Use in the Territory. Connetics agrees, and shall
require its sublicensees to agree, not to promote Interferon Gamma or a Licensed
Product outside the Field of Use or outside the Territory.
6.2 Encroachment. In the event that either Party becomes aware of
spillover sales of Interferon Gamma by Genentech that is used within the Field
of Use or of Licensed Product by Connetics that is used outside the Field of
Use, the Parties shall meet and agree in good faith on reasonably appropriate
steps (a) to abate such encroachment and (b) to compensate the Party which has
suffered encroachment in its field of use by such spillover sales.
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7.0 Confidentiality
In the course of performance of this Agreement, one Party may disclose
to the other or receive information from the other relating to the subject
matter of this Agreement which information shall be considered to be the
disclosing Party's confidential information, if in the case of a written
disclosure, it is designated as confidential at the time of disclosure, or if in
the case of oral disclosure, the specific nature of the oral disclosure and its
confidentiality is confirmed in writing to the other Party within thirty (30)
days of the oral disclosure (the "Confidential Information"). Each Party shall
protect and keep confidential and shall not use, publish or otherwise disclose
to any third party, except as permitted by this Agreement or with the other
Party's written consent, the other Party's Confidential Information for a period
of five (5) years from the date of termination of this Agreement if it is
terminated at any time within five (5) years after the Effective Date of this
Agreement, otherwise for a period of three (3) years from date of termination or
expiration of this Agreement. A Party may disclose the other Party's
Confidential Information to its sublicensees hereunder, provided that such
sublicensees are subject to obligations of confidentiality at least equivalent
to those set forth in this Article 7. The Parties shall consult prior to the
submission of any manuscript for publication to determine if the publication
will contain any Confidential Information of the other Party. Such consultation
shall include providing a copy of the proposed manuscript to the other Party at
least forty-five (45) days prior to the proposed date of submission to a
publisher, incorporating appropriate changes proposed by the other Party into
the manuscript submission and deleting all of the other Party's
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Confidential Information which such Party does not agree to the publication
thereof. The foregoing notwithstanding, Confidential Information may be
disclosed: (a) during any official proceeding before a court or governmental
agency if reasonably related to that proceeding; (b) as a part of a patent
application filed on inventions made under this Agreement, provided that the
Party whose Confidential Information is included in such application shall have
the opportunity to review such disclosure at least fifteen (15) business days
prior to the date of such filing and such Party does not object to such
disclosure; and (c) as may be reasonably required to comply with applicable
governmental laws or regulations. For the purposes of this Agreement,
Confidential Information shall not include such information that:
(i) was known to the receiving Party at the time of
disclosure;
(ii) was generally available to the public or was
otherwise part of the public domain at the time of
disclosure or became generally available to the
public or otherwise part of the public domain after
disclosure other than through any act or omission of
the receiving Party in breach of this Agreement;
(iii) became known to the receiving Party after disclosure
from a source that had a lawful right to disclose
such information to others; or
(iv) was independently developed by the receiving Party
without the use of Confidential Information of the
other Party, as evidenced by written records.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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If Connetics sublicenses any of its rights hereunder to InterMune pursuant to
this Agreement, Genentech and InterMune shall enter into a mutual
confidentiality agreement, substantially in the form of this Article 7.0, to
protect confidential information that may be disclosed by InterMune to
Genentech.
8.0 Up-front Payment, Milestone Payments and Royalties
In consideration for the licenses granted to Connetics by Genentech
pursuant to Section 2.0 above, Connetics shall make the following payments to
Genentech:
8.1 Up-front Payment. Connetics shall issue to Genentech upon the
Original Closing Date (as defined in the Stock Agreement) shares of Connetics
Common Stock ("Original Issuance Shares" as defined in the Stock Agreement) with
a fair market value equal to two million dollars ($2,000,000), on the terms and
conditions set forth in the Stock Agreement. If, on the Second Closing Date (as
defined in the Stock Agreement), the aggregate market value of the Original
Issuance Shares (based on the Second Issuance Price (as defined in the Stock
Agreement)) is less than four million dollars ($4,000,000), Connetics shall
issue to Genentech upon the Second Closing Date the number of additional shares
of Connetics Common Stock (the ASecond Issuance Shares," as defined in the Stock
Agreement) equal to the lesser of: (i) the number of shares necessary to
increase the aggregate market value of the Original Issuance Shares (based on
the Second Issuance Price) plus the Second Issuance Shares (based on the Second
Issuance Price) to four million dollars ($4,000,000) or (ii) the number of
shares necessary to increase the aggregate number of the Company's shares of
Common Stock held by Genentech
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(exclusive of any shares that Genentech has purchased from parties other than
the Company) to 9.9% of the Company's total outstanding shares of Common Stock
as of the close of business on the third trading day before the Second Closing
Date, on the terms and conditions set forth in the Stock Agreement. In lieu of
all or any portion of the Second Issuance Shares that the Company is obligated
to issue to Genentech on the Second Closing Date, the Company may elect to pay
Genentech the cash value of such Second Issuance Shares (based on the Second
Issuance Price). The Original Closing and the Second Closing of the stock
issuances shall take place as described in the Stock Agreement. In the event
that Connetics does not issue to Genentech all of the Second Issuance Shares or
the cash value of the Second Issuance Shares, Genentech may, in addition to
other remedies available to it by law or in equity, immediately terminate this
Agreement and the licenses granted to Connetics hereunder. Such termination by
Genentech of the Agreement and the licenses hereunder does not discharge
Connetics' obligation to issue all of the Second Issuance Shares or to pay to
Genentech the cash value of the Second Issuance Shares. The up-front payment
shall not be creditable against any royalty payments owed by Connetics under
Sections 8.3 and 8.4 below.
8.2 Milestone Payments for Licensed Products. Connetics shall make
the following cash milestone payments to Genentech:
(a) [ * ] within thirty (30) days following the dates on
which each of the first three (3) NDA's or BLA's for a Licensed Product is filed
with the FDA by Connetics for a new indication in the Field of Use; provided
however, that such milestone payments shall not be paid
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upon the filing of a NDA or BLA for an osteopetrosis or atypical mycobacterial
infection indication.
(b) [ * ] within thirty (30) days following the date
Connetics receives FDA clearance of each new indication for a Licensed Product
for commercial sale in the United States; provided however, that such milestone
payment shall not be paid upon receipt of FDA clearance for an osteopetrosis or
atypical mycobacterial infection indication.
(c) [ * ] within thirty (30) days following the first
date Connetics' aggregate Net Sales of all Licensed Products in the Territory
exceed [ * ] in any calendar year.
(d) [ * ] within thirty (30) days following the first
date Connetics' aggregate Net Sales of all Licensed Products in the Territory
exceed [ * ] in any calendar year.
Notwithstanding the foregoing, upon the expiration or revocation of the
last remaining issued patent within the Genentech Patent Rights during the term
of this Agreement, each of the milestones payments set forth in (a)-(d) above
thereafter shall be reduced by fifty percent (50%). Milestone payments shall not
be creditable against any royalty payments owed under Sections 8.3 and 8.4
below.
8.3 Royalties. Connetics shall pay Genentech the following
royalties on Net Sales of Licensed Products by Connetics and its sublicensees:
(a) For annual aggregate Net Sales of all Licensed
Products in the Territory of up to three million seven hundred thousand dollars
($3,700,000), a royalty rate equal to [ * ] of such Net Sales.
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
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(b) In addition to the payment of the royalty rate
specified in (a) above, for annual aggregate Net Sales of all Licensed Products
in the Territory exceeding three million seven hundred thousand dollars
($3,700,000), a royalty rate equal to [ * ] of such Net Sales exceeding
$3,700,000.
(c) The above royalties shall be payable until the later
of: (i) the expiration or revocation of the last remaining issued patent within
the Genentech Patent Rights or (ii) twenty (20) years from the Effective Date of
this Agreement. Notwithstanding the foregoing, upon the expiration of the last
to expire issued patent within the Genentech Patent Rights during the term of
this Agreement, thereafter each of the royalty rates set forth in (a) and (b)
above shall be reduced by fifty percent (50%).
8.4 Third-Party Royalties. If Genentech or Connetics is required
to pay any third party a royalty due to the manufacture, use, sale, offer for
sale or importation of a Licensed Product in the Territory for or by Connetics
or its sublicensees, Connetics shall be responsible for the payment of [ * ] of
such third-party royalty, provided however, that Connetics may deduct from the
royalties payable to Genentech under Section 8.3 above [ * ] of such third party
royalties incurred only due to use patents in the Field of Use in the Territory,
up to a maximum total deduction of [ * ] percentage points from the royalties
payable by Connetics to Genentech under Section 8.3. For purposes of
clarification, such deductions shall not apply to any benchmark payment under
the [ * ] License made by Connetics pursuant to Section 5.2(c) above. Attached
hereto as Exhibit G is a list of all such royalty obligations to third parties
known to Genentech as
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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of the Effective Date without diligent search. No later than thirty (30) days
from the Effective Date, Genentech shall complete a reasonable internal
investigation of its records and update Exhibit G, as necessary, to accurately
reflect all such royalty obligations to third parties to the best of Genentech's
knowledge; provided however, Connetics acknowledges that Genentech has no
obligation to conduct due diligence or any investigation with respect to third
party patent rights related to Licensed Products. Genentech shall notify
Connetics in writing during the term of this Agreement if it becomes aware of
any additional Genentech third party royalty obligations.
8.5 Royalty Payments. Royalty payments shall be made to Genentech
quarterly within ninety (90) days following the end of each calendar quarter for
which royalties are due. Each royalty payment shall be accompanied by a report
summarizing the total Net Sales during the relevant three-month period, and the
calculation of royalties, if any, due thereon pursuant to Section 8.3.
8.6 Taxes. Genentech shall pay any and all taxes levied on account
of, or measured by, any payment, including, without limitation, royalties, it
receives under this Agreement.
8.7 Termination. If the license granted to Connetics herein is
terminated by the Parties, Connetics shall have no obligation to make any
milestone or royalty payments to Genentech that has not accrued prior to the
effective date of such termination, but shall remain liable for all such
payments accruing prior to termination.
8.8 Records and Reporting
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(a) Records. Connetics and any sublicensee of Connetics
shall keep full, true and accurate books of account containing all particulars
which may be necessary for the purpose of showing Net Sales. Said books of
account shall be kept at the principal place of business of Connetics or its
sublicensee, as the case may be. Said books and the supporting data shall be
open at all reasonable times, for three (3) years following the end of the
calendar year to which they pertain (and access shall not be denied thereafter,
if reasonably available), to the inspection of an independent public accountant
retained by Genentech and reasonably acceptable to Connetics (or its
sublicensee) for the purpose of verifying Net Sales under this Agreement;
subject to the provisions of Section 8.8(c) below
(b) Reports. Connetics shall within ninety (90) days
after the end of each calendar quarter beginning with the quarter of the first
commercial sale of Licensed Product in the Field of Use in the Territory by
Connetics or its sublicensee, deliver to Genentech a true and accurate report,
setting forth such particulars of the business conducted by Connetics and its
sublicensees during the preceding quarter as are pertinent to an accounting for
Net Sales and deductible expenses under this Agreement. Such reports shall
include at least the following: (i) the total gross sales of Licensed Products
occurring during that calendar quarter, (ii) the allowable deductions therefrom,
(iii) the total Net Sales of Licensed Products occurring during that calendar
quarter and (iv) the calculation of royalties, if any, due thereon pursuant to
the above Section 8.3.
(c) Auditing. At Genentech's request and expense,
Connetics shall permit a
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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certified public accountant selected by Genentech and acceptable to Connetics to
examine, not more than once in any four consecutive calendar quarters during the
term of this Agreement, but including one (1) post-termination audit, Connetics'
books of account and records of all sales of Licensed Products by Connetics for
the sole purpose of determining the correctness of the reports provided by
Connetics under the above Section 8.8(b). If such accountant reasonably
determines that the royalties owed by Connetics to Genentech under the above
Section 8.3 have been, for any calendar year in total, understated by Connetics,
Connetics shall immediately pay all understated royalties, together with
interest on such royalties from the date accrued at a rate of [ * ] and shall
pay the reasonable costs of the examination if Connetics has understated such
royalties by more than [ * ].
9.0 Representations and Warranties
9.1 Disclaimer. Except as expressly provided herein, the Parties
disclaim all other representations and warranties, express or implied, including
without limitation, WARRANTIES OF COMMERCIAL UTILITY, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, VALIDITY OR SCOPE OF GENENTECH PATENT RIGHTS or
NON-INFRINGEMENT OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS.
9.2 Representations and Warranties.
(a) Each party represents and warrants to the other that: (a)
it is free to enter into this Agreement; (b) in so doing it will not violate any
other agreement to which it is a party;
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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(c) it is currently capable of making the grant of rights described in Sections
2.1(a), (b), (c), (d), 2.2 and 2.4; and (d) it will not enter into any agreement
in the future which conflicts with or violates any term or provision of this
Agreement. Genentech makes no representation or warranty that all intellectual
property rights necessary for Connetics to make, have made, use, sell, offer for
sale and import Licensed Products in the Field of Use in the Territory have been
granted to Connetics under Section 2.0 of this Agreement.
(b) Connetics further represents and warrants that, prior
to the Effective Date of this Agreement, Connetics' officers (acting under
delegated authority of its Board of Directors) have determined that the fair
market value of the exclusive license granted to Connetics hereunder is less
than $15,000,000 and therefore that the execution and delivery of this exclusive
license Agreement, or the performance of the obligations by Genentech or
Connetics hereunder, do not require that filings be made under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or under the
rules or regulations promulgated thereunder, by Connetics, Genentech, or their
respective affiliates or ultimate parent entities, if any.
(c) Genentech represents and warrants to Connetics that
as of the Effective Date: (i) to Genentech's knowledge, it has not received any
notice of a claim by a third party for infringement of such third party's
intellectual property relating to the use and practice of the Genentech Knowhow,
the Genentech Manufacturing Knowhow, the Genentech Patent Rights or the Biogen
License Rights; and (ii) to the knowledge of Genentech's patent counsel, there
is no
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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issued patent that would be infringed by the practice of the Genentech Knowhow,
the Genentech Manufacturing Knowhow or the Genentech Patent Rights as permitted
under the license rights granted under Section 2.1; and (iii) it has no
knowledge of any actual infringement by any third party in the Field of Use in
the Territory of the Genentech Patent Rights.
10.0 Liability
10.1 Limitation of Liability. Neither Party shall be liable to the
other for indirect, incidental, special or consequential damages arising out of
any of the terms or conditions of this Agreement or with respect to their
performance or lack thereof.
10.2 Connetics Indemnification. Connetics shall indemnify, defend
and hold harmless Genentech and its affiliates from and against all third party
costs, claims, suits, expenses (including reasonable attorneys' fees) and
damages arising out of or resulting from: (a) any willful or negligent act or
omission by Connetics relating to the subject matter of this Agreement or (b)
the use by or administration to any person of a Licensed Product, Bulk Product
or Finished Product that was sold, distributed or otherwise provided to a third
party by Connetics or its sublicensees under this Agreement; except where such
costs, claims, suits, expenses or damages arose or resulted from any negligent
act or omission by Genentech or any defect in the manufacture of Bulk Product or
Finished Product by Genentech that was not discovered by Connetics, provided
that Genentech gives reasonable notice to Connetics of any such claim or action,
tenders the defense of such claim or action to Connetics and assists Connetics
at
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Connetics' expense in defending such claim or action and does not compromise or
settle such claim or action without Connetics' prior written consent.
10.3 Genentech Indemnification. Genentech shall indemnify, defend
and hold harmless Connetics, its affiliates and sublicensees from and against
all third party costs, claims, suits, expenses (including reasonable attorney's
fees) and damages arising out of or resulting from: (a) any willful or negligent
act or omission by Genentech relating to the subject matter of this Agreement;
(b) any defect in the manufacture of Bulk Product or Finished Product by
Genentech that was not discovered by Connetics; or (c) the use by or
administration to any person of a product containing Interferon Gamma sold,
distributed or otherwise provided to a third party by Genentech or its
sublicensees; except where the foregoing costs, claims, suits, expenses or
damages arose or resulted from (i) any negligent act or omission by Connetics or
(ii) the use by or administration to any person of a Licensed Product sold,
distributed or otherwise provided by Connetics or its sublicensees other than
resulting from a defect in the manufacture of such Licensed Product by
Genentech, provided that Connetics gives reasonable notice to Genentech of any
such claims or action, tenders the defense of such claim or action to Genentech
and assists Genentech at Genentech's expense in defending such claim or action
and does not compromise or settle such claim or action without Genentech's prior
written consent.
11.0 Term and Termination
11.1 Term. This Agreement shall commence on the Effective Date of
this Agreement
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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and, unless terminated earlier, shall expire at the later to occur of (a) the
expiration of the last to expire of any Genentech Patent Rights or (b) twenty
(20) years from the Effective Date of this Agreement; provided, however, that in
the event that either the [ * ] License or the [ * ] License is terminated, the
licenses granted by Genentech to Connetics under the [ * ] License or the [ * ]
License shall also terminate. Genentech shall use its Best Efforts to keep the
[ * ] License and the [ * ] License in effect during the term of this Agreement,
provided, however, that if Connetics declines to pay a [ * ] benchmark payment
as outlined in Section 5.2(c) or pay any royalty owed to [ * ] under the [ * ]
License for the sales of Licensed Products, then Genentech shall not be
obligated to make such payment and Genentech shall have the option, in its sole
discretion, to terminate the [ * ] License. One year before the expiration of
this Agreement under this Section 11.1, the Parties agree to meet and to discuss
in good faith extending the term of this Agreement on terms mutually agreeable
to the Parties.
11.2 Termination for Default. If either Party shall default in a
material manner with respect to any material provision of this Agreement and the
other Party shall have given the defaulting Party written notice of such
default, the defaulting Party shall have thirty (30) days to cure such default.
If such default is not cured within such thirty (30) day period, the
non-defaulting Party shall have the right, upon notice to the defaulting Party
and without prejudice to any other rights the non-defaulting Party may have, to
terminate this Agreement unless the defaulting Party is in the process of
attempting in good faith to remedy such default, in which case, the thirty (30)
day cure period shall be extended by an additional thirty (30) days. If
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Genentech terminates this Agreement pursuant to this Section 11.2, Genentech
shall automatically have all of the rights set forth in Sections 11.3(a) and (b)
of this Agreement. Upon such termination, any sublicenses granted under this
Agreement shall not automatically terminate, but instead, Genentech shall have
the option to either terminate or continue this Agreement with each sublicensee.
If Connetics terminates this agreement pursuant to this Section 11.2, Connetics
shall automatically have all of the rights set forth in Section 11.4 of this
Agreement. Connetics shall have no right to terminate this Agreement pursuant to
this Section 11.2 in the event of Genentech's failure to supply Bulk Product or
Finished Product. In the event of Genentech's failure to supply Bulk Product or
Finished Product, Connetics shall have the rights set forth in the Supply
Agreement.
11.3 Genentech's Rights on Termination
(a) If Genentech terminates this Agreement pursuant to Section
11.2 above, Genentech shall be automatically granted a nonexclusive,
sublicenseable, license in the Territory under Connetics Patent Rights and
Connetics Knowhow arising from the efforts made by Connetics and its
sublicensees hereunder in the research and development of Licensed Products, to
make, have made, use, sell, offer for sale or import Licensed Products and shall
be automatically granted a right to use all of Connetics' regulatory submissions
made by or on behalf of Connetics for Interferon Gamma and Licensed Products. If
Genentech sells a commercial product under the license granted in this Section
11.3 that would, but for the license granted herein, infringe a claim of such
Connetics Patent Rights or that is based upon, incorporates or
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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utilizes such Connetics Knowhow, Genentech shall pay Connetics a royalty, under
terms and conditions to be mutually agreed upon by the Parties, such royalty to
be commensurate with the value contributed by such Connetics Patent Rights and
Connetics Knowhow to such commercial product, but in no event shall such royalty
exceed two percent (2%) of Genentech's net sales of such commercial product. As
used herein, "net sales" shall have the equivalent definition given to Net Sales
in Section 1.25 above.
(b) Upon the effective date of termination by Genentech pursuant
to Section 11.2 above, Connetics shall promptly provide Genentech with copies of
all related documentation regarding Connetics Patent Rights and Connetics
Knowhow arising from the efforts made by Connetics and its sublicensees
hereunder in the research, development and manufacture of Licensed Products,
whether written or electronic, and materials, including biological materials, in
the form existing as of the effective date of such termination, reasonably
necessary for Genentech to exercise its license rights under Section 11.3(a)
above. Such transfer shall be made in a timely and orderly fashion and in a
manner such that the value of what is being transferred is preserved in all
material respects. Connetics shall promptly take all appropriate and necessary
actions, including action before the involved regulatory agency, to effect
transfer to Genentech of, and shall also permit Genentech to reference, any FDA
submissions, including, without limitation, any PLA or BLA filed with the FDA
with respect to Licensed Products. Within ninety (90) days of such assignment
and completion of all such appropriate and necessary actions, Genentech will
reimburse Connetics for its actual expenses incurred in preparing
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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documentation for filing or referencing the submission and in taking such
appropriate and necessary action related to such transfer or referencing.
11.4 Connetics' Rights on Termination. Should Connetics terminate this
Agreement pursuant to Section 11.2 above, Genentech shall grant to Connetics (a)
an exclusive, sublicenseable, royalty-bearing license, according to royalty
terms described in Sections 8.3 and 8.4 within the Field of Use in the
Territory, under terms and conditions agreed upon by the Parties, under the
Genentech Patent Rights and Genentech Knowhow in order to permit Connetics to
continue using, selling, offering for sale and importing Licensed Products in
the Field of Use in the Territory (excluding, with respect to the fields of
scleroderma and infectious disease or condition caused by human papillomavirus,
Licensed Products containing any form of Interferon Gamma other than Genentech
Gamma Interferon TRIANGLE3, as that term is defined in the Biogen License), (b)
a non-exclusive, sublicenseable, royalty-bearing license, (conforming to the
license grant in Section 2.1 (b) above) according to royalty terms described in
Sections 8.3 and 8.4 in the Territory , under terms and conditions agreed upon
by the Parties, under the Genentech Patent Rights and Genentech Knowhow in order
to permit Connetics to continue using, selling, offering for sale and importing
Licensed Products containing any form of Interferon Gamma other than Genentech
Gamma Interferon TRIANGLE3 (as that term is defined in the Biogen License) in
the Territory in the fields of scleroderma and infectious desease or condition
caused by human papillomavirus, (c) a non-exclusive, sublicenseable license (the
royalty for which is already included in clause (a) above) in the Territory in
the fields of scleroderma and infectious disease
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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or condition caused by human papillomavirus, under terms and conditions agreed
upon by the Parties, under the Biogen License Rights in order to permit
Connetics to continue using, selling, offering for sale and importing Licensed
Products (except those Licensed Products containing Biogen Gamma Interferon
TRIANGLE0) in the field of scleroderma and infectious disease or condition
caused by human papillomavirus in the Territory and (d) a non-exclusive
sublicenseable license (the royalty for which is already included in clause (a)
above) under Genentech Patent Rights and Genentech Manufacturing Knowhow in
order to permit Connetics to continue making and having made Licensed Products
in the Field of Use in the Territory.
11.5 Bankruptcy. Either Party may, in addition to any other remedies
available to it by law or in equity, terminate this Agreement, in whole or in
part as the terminating Party may determine, by written notice to the other
Party in the event the other Party shall have become bankrupt, or shall have
made an assignment for the benefit of its creditors or there shall have been
appointed a trustee or receiver of the other Party or for all or a substantial
part of its property or any case or proceeding shall have been commenced or
other action taken by or against the other Party in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up, arrangement, composition
or readjustment of its debts or any other relief under any bankruptcy,
insolvency, reorganization or other similar act or law of any jurisdiction now
or hereafter in effect and any such event shall have continued for sixty (60)
days undismissed, unbonded and undischarged. All rights and licenses granted
under to this Agreement by one Party to the other Party are, and shall otherwise
be deemed to be, for purposes of Section 365 (n)
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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of the Bankruptcy Code, licenses of rights to "intellectual property" as defined
under Section 101 (56) of the Bankruptcy Code. The Parties agree that the
licensing Party under this Agreement shall retain and may fully exercise all of
its rights and elections under the Bankruptcy Code in the event of a bankruptcy
by the other Party. The Parties further agree that in the event of the
commencement of a bankruptcy proceeding by or against one Party under the
Bankruptcy Code, the other Party shall be entitled to complete access to any
such intellectual property pertaining to the rights granted in the licenses
hereunder of the Party by or against whom a bankruptcy proceeding has been
commenced and all embodiments of such intellectual property.
11.6 Unilateral Termination. In addition to any other right of
termination provided herein, Connetics shall have the right to terminate this
Agreement for any reason, with or without cause upon six (6) months' prior
written notice to Genentech. If Connetics terminates this Agreement pursuant to
this Section 11.6, Connetics agrees that for the following three (3) years it
will not use, sell or acquire from any third party (whether by license or
otherwise) any Licensed Product in the Field of Use. If Connetics terminates
this Agreement pursuant to this Section 11.6, the licenses granted hereunder
shall terminate and Genentech shall automatically have all of the rights set
forth in Sections 11.3(a) and (b) of this Agreement.
11.7 Survival of Certain Provisions. Termination of this Agreement for
any reason shall not release either Party from any obligation arising prior to
the date of termination. The provisions of Sections 1.0, 2.4 (except in the
event of termination of this Agreement by Connetics pursuant to Section 11.2),
11.3(a) and (b) (except in the event of termination of this
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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Agreement by Connetics pursuant to Section 11.2), 11.4 (except in the event of
termination of this Agreement by Genentech pursuant to Section 11.2), and
Articles 5.0, 7.0, 9.0, 10.0, 11.0 (except as provided in this paragraph) and
12.0 shall survive any termination of this Agreement.
12.0 General Provisions
12.1 Notices. All notices which may be required pursuant to this
Agreement: (i) shall be in writing, (ii) shall be addressed, in the case of
Genentech (except as otherwise specified herein), to the Corporate Secretary at
the address set forth at the beginning of this Agreement, and in the case of
Connetics, to the Vice President - Intellectual Property at the address set
forth at the beginning of this Agreement, (or to such other person or address as
either Party may so designate from time to time), (iii) shall be mailed,
postage-prepaid, by registered mail or certified mail, return receipt requested,
or transmitted by courier for hand delivery or transmitted by facsimile and (iv)
shall be deemed to have been given on the date of receipt if sent by mail or on
the date of delivery if transmitted by courier or facsimile. Notices by
facsimile may be sent to the following numbers: for Connetics, to (650)
843-2899; for Genentech, to (650) 952-9881.
12.2 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the state of California (other than its choice of
law principles).
12.3 Entire Agreement. This Agreement is the entire agreement between
the Parties, and there are no prior written or oral promises or representations
not incorporated herein or therein, except that certain Confidentiality
Agreement between the Parties dated January 9, 1997
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
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which shall remain in full force and effect. This Agreement shall supersede and
replace the Prior Agreement in its entirety, and the Prior Agreement shall be
terminated automatically as of the Effective Date. No amendment or modification
of the terms of this Agreement shall be binding on either Party unless reduced
to writing and signed by an authorized officer of the Party to be bound.
12.4 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties hereto and their respective
permitted successors and assigns. This Agreement shall not be assignable by
either Party without the other's prior written consent, provided however, that
either Party may assign this Agreement, without the other Party's written
consent but after providing thirty (30) days prior written notice to the other
Party, to any successor pursuant to a consolidation or merger of such Party with
or into any other corporation or corporations that results in a change of
greater than 50% of the voting control of such Party, or a sale, conveyance or
disposition of all or substantially all of the assets of such Party or the
effectuation by such Party of a transaction or series of related transactions in
which more than 50% of the voting power of such Party is disposed of.
12.5 Waiver. The waiver by a Party hereto of any breach of or default
under any of the provisions of this Agreement or the failure of a Party to
enforce any of the provisions of this Agreement or to exercise any right
thereunder shall not be construed as a waiver of any other breach or default or
as a waiver of any such rights or provisions hereunder.
12.6 Severability. If any part of this Agreement shall be invalid or
unenforceable under
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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applicable law, such part shall be ineffective only to the extent of such
invalidity or unenforceability, without in any way affecting the remaining parts
of this Agreement. In addition, the part that is ineffective shall be reformed
in a mutually agreeable manner so as to as nearly approximate the intent of the
Parties as possible.
12.7 Publicity. Connetics and Genentech agree that, except as may
otherwise be required by applicable laws, regulations, rules, or orders,
including the disclosure requirements of the Securities and Exchange Commission
("SEC"), no information concerning this Agreement and the transactions
contemplated herein (except information which is already in the public domain)
shall be made public by either Party without the prior written consent of the
other Party. Notwithstanding the foregoing, with respect to complying with the
disclosure requirements of the SEC, in connection with any required SEC filing
of this Agreement by Connetics, Connetics shall seek confidential treatment of
portions of this Agreement from the SEC and Genentech shall have the right to
review and comment on such an application for confidential treatment prior to
its being filed with the SEC. Genentech shall provide its comments, if any, on
such application as soon as practicable and in no event later than seven (7)
days after such application is provided to Genentech. To assist Connetics in its
compliance with SEC disclosure obligations, Genentech shall provide to
Connetics, within fourteen (14) days of the Effective Date, electronic copies of
this Agreement (and all exhibits hereto) and the Supply Agreement. In addition,
notwithstanding the foregoing, Connetics shall have the right to disclose
information concerning this Agreement and the transactions contemplated herein
to its legal representatives, advisors,
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BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
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prospective investors, investors, third party auditors, sublicensees and
prospective sublicensees hereunder to the extent reasonably necessary and under
obligations of confidentiality no less stringent than those provided for in
Article 7.0.
12.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original for all purposes, but
all of which together shall constitute one and the same instrument.
12.9 Force Majeure. Neither Party shall be liable to the other for its
delay or failure to perform under this Agreement or shall have any right to
terminate this Agreement for any such delay or failure in performance
attributable to any act of God, flood, fire, explosion, strike, lockout, labor
dispute, casualty or accident, war, revolution, civil commotion, act of public
enemies, blockage or embargo, injunction, law, order, proclamation, regulation,
ordinance, demand or requirement of any government or subdivision, authority or
representative of any such government, or any other cause beyond the reasonable
control of such Party, if the Party affected shall give prompt notice of any
such cause to the other Party. The Party giving such notice shall thereupon be
excused from such of its obligations, hereunder for the period of time that it
is so disabled.
12.10 Headings. Headings are for the convenience of reference only and
shall not control the construction or interpretation of any of the provisions of
this Agreement.
12.11 No Partnership. Nothing in this Agreement is intended or shall be
deemed to constitute a partnership, agency, employer-employee, or joint venture
relationship between the
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<PAGE>
Parties.
[SIGNATURE PAGE TO FOLLOW]
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<PAGE>
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed by its duly authorized representatives as of the date set forth above.
GENENTECH, INC. CONNETICS CORPORATION
By: /s/ Nick Simon By: /s/ Thomas G. Wiggans
---------------------------------
Name: Nick Simon Name: Thomas G. Wiggans
------------------------------- -----------------
Title: V.P., Business and Corporate Development Title: President and CEO
----------------------------------------- ------------------
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EXHIBIT A
PATENT APPLICATIONS AND PATENTS INCLUDED IN GENENTECH PATENT RIGHTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
U.S. SERIAL NUMBER U.S. PATENT NUMBER
- --------------------------------------------------------------------------------
<S> <C>
08/460,524 Pending
- --------------------------------------------------------------------------------
08/460,539 Pending
- --------------------------------------------------------------------------------
5,690,925
- --------------------------------------------------------------------------------
5,582,824
- --------------------------------------------------------------------------------
5,151,265
- --------------------------------------------------------------------------------
5,200,177
- --------------------------------------------------------------------------------
5,112,605
- --------------------------------------------------------------------------------
5,196,191
- --------------------------------------------------------------------------------
5,096,705
- --------------------------------------------------------------------------------
5,574,137
- --------------------------------------------------------------------------------
5,248,499
- --------------------------------------------------------------------------------
</TABLE>
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EXHIBIT B
INTERFERON GAMMA
[ * ]
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EXHIBIT C
INTERFERON GAMMA-1B
[ * ]
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EXHIBIT D
THIRD PARTY SPONSORED STUDIES
[ * ]
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EXHIBIT E
[ * ]
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EXHIBIT F
CLINICAL REPORTS
The following information/reports will be provided to Genentech in a timely
manner:
- - FDA Meeting Minutes
- - IND(s)
- - Initial
- - Updates (if applicable)
- - Annual Report(s)
- - Investigator Brochure(s)
- - Clinical Studies:
- - Protocol(s)
- - Prior to FDA submission
- - First Patient-In (FPI)
- - First Patient-Out (FPO)
- - Last Patient-In (LPI)
- - Last Patient-Out (LPO)
- - Serious Adverse Event (SAE) Summary
- - Clinical Study Interim Analysis and Update(s) (if applicable)
- - Go/No-Go Decision Minutes
- - Clinical Study Final Report(s)
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- - Draft
- - Final Copy
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EXHIBIT G
THIRD PARTY ROYALTIES
Royalties are payable under the [ * ] License, as follows (capitalized terms
shall have the meanings defined in the [ * ] License): a [ * ] royalty is
payable on Net Sales of gamma interferon in Approved Countries in the Territory
for the prophylaxis or treatment of atopic dermatitis and/or steroid-dependent
asthma, where there is substantial protection from an issued Licensed Patent for
the approved indication and where the Licensee has enjoyed Market Exclusivity.
The royalty rate is [ * ] on Net Sales in the Licensed Field in Approved
Countries where the Licensee enjoyed Market Exclusivity but where there is no
substantial patent protection, or while the Licensed Patent applications
covering the indication are still pending, provided that such applications have
been diligently prepared, filed and maintained. The royalty rates described
above are reduced by [ * ] for Approved Countries where the Licensee has not
enjoyed Market Exclusivity.
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EXHIBIT H
TRANSFER DATE ACTIVITIES FOR COMMERCIAL
SALES OF ACTIMMUNE FOR CGD
Prior to the Transfer Date, as defined in Section 1.29 of this
Agreement, the following activities must be completed by the appropriate Party
as described below:
I. Regulatory Requirements
1. FDA License - Connetics must obtain all licenses,
including license numbers, required for the sale of
Actimmune for CGD by Connetics. Connetics shall also
obtain a NDC number.
2. PLA/IND Transfer - Genentech shall transfer to Connetics
the PLA and IND for CGD on file with the FDA.
3. Connetics must obtain FDA review and approval, as required
by law or regulation, for Connetics' labels, product
insert and packaging for sale of Actimmune for CGD.
4. Genentech shall transfer its safety information to
Connetics for Actimmune, as provided in Section 2.5(g) of
this Agreement. Connetics shall establish a safety
database system for Actimmune, such that as of the
Transfer Date, Connetics shall be responsible for all
safety-related requirements under FDA regulations,
including the reporting of adverse events.
5. Prior to the Transfer Date, Connetics shall establish all
procedures, controls and other methods and capabilities
needed in order to comply with all requirements, laws and
regulations applicable to the use, distribution and sale
of Actimmune for CGD.
II. Quality Control, Product Testing
1. To the extent that Connetics is required by law or
regulation to conduct any quality control, quality
assurance and/or stability testing of Actimmune sold for
CGD, in addition to any such testing to be conducted by
Genentech pursuant to the Supply Agreement, Connetics
shall establish procedures and obtain regulatory approval
to do so prior to the Transfer Date.
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III. Uninsured Patient Program
Connetics shall have established an uninsured patient program,
including procedures for determining patient eligibility.
Genentech shall transfer to Connetics its existing information
regarding such patients prior to the Transfer Date, to the
extent it has received consent from such patients to do so.
Connetics shall notify Gennetech prior to the Transfer Date
which of the patients participating in Genentech's uninsured
patient program, and for which Genentech has transferred
information, shall receive drug under Connetics' uninsured
patient program.
IV. Product Distribution and Sale
1. Connetics shall establish product distribution and
inventory systems for Actimmune. Genentech will provide to
Connetics the name of its current distributor.
2. Connetics shall establish systems and personnel required
to address customer inquiries, medical information
requrests and product returns.
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AMENDMENT NO. ONE
TO
LICENSE AGREEMENT
THIS AMENDMENT NUMBER ONE TO LICENSE AGREEMENT FOR INTERFERON GAMMA
("Amendment") is entered into effective December 28, 1998, between Genentech,
Inc. ("Genentech") and Connetics Corporation ("Connetics"). Terms not otherwise
defined in this Amendment shall have the meanings as defined in the License
Agreement.
R E C I T A L S
A. The parties have previously entered into a License Agreement effective
May 5, 1998, relating to interferon gamma (the "License Agreement"),
together with a Stock Purchase Agreement of even date (the "Stock
Agreement").
B. Pursuant to Section 2.3(c) of the License Agreement, Connetics had the
right to sublicense the Agreement to InterMune, and has in fact entered
into a sublicense to that effect dated August 21, 1998.
C. Pursuant to Section 8.1 of the License Agreement, and the terms of the
Stock Agreement, Connetics agreed to issue additional stock to
Genentech if certain conditions were not met by December 28, 1998, and
the parties anticipate that those conditions will not be met by that
date.
D. The parties desire to amend the License Agreement effective as of the
date first written above, on the terms forth in this Amendment, and
simultaneously with a corresponding Amendment Number One to the Stock
Purchase Agreement ("Stock Agreement Amendment").
NOW THEREFORE, the parties agree as follows:
AGREEMENT
1. Section 8.1 of the License Agreement is hereby amended to read in its
entirety as follows:
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8.1 Up-front Payment. Connetics shall issue to Genentech upon the
Original Closing Date (as defined in the Stock Agreement) shares of
Connetics Common Stock ("Original Issuance Shares" as defined in the
Stock Agreement) with a fair market value equal to two million dollars
($2,000,000), on the terms and conditions set forth in the Stock
Agreement. If on the Notification Date or, if later, the Second Closing
Date (each as defined in the Stock Agreement Amendment), the aggregate
market value of the Original Issuance Shares (based on the Second
Issuance Price, as defined in the Stock Agreement Amendment) is less
than $4,000,000, then Connetics shall issue to Genentech on the Second
Closing Date that number of additional shares of its Common Stock (the
"Second Issuance Shares") equal to the lesser of: (i) the number of
shares necessary to increase the aggregate market value of the Original
Issuance Shares (based on the Second Issuance Price) and the Second
Issuance Shares (based on the Second Issuance Price) to $4,000,000; or
(ii) the number of shares (rounded to the nearest whole number )
necessary to increase the aggregate number of shares of Connetics
Common Stock held by Genentech (exclusive of any shares that Genentech
has purchased from parties other than Connetics) to 9.9% of Connetics'
total outstanding shares of Common Stock as of the close of business on
the Notification Date or the Second Closing Date, if later. In lieu of
all or any portion of the Second Issuance Shares that Connetics is
obligated to issue to Genentech on the Second Closing Date, Connetics
may elect to pay Genentech the cash value of such Second Issuance
Shares (based on the Second Issuance Price). The Original Closing of
the stock issuances shall take place as described in the Stock
Agreement and the Second Closing of the stock issuances shall take
place as described in the Stock Agreement Amendment. In the event that
Connetics does not issue to Genentech all of the Second Issuance Shares
or the cash value of the Second Issuance Shares, Genentech may, in
addition to other remedies available to it by law or in equity,
immediately terminate this Agreement and the licenses granted to
Connetics under this Agreement. Such termination by Genentech of the
Agreement and the licenses hereunder does not discharge Connetics'
obligation to issue all of the Second Issuance Shares or to pay to
Genentech the case value of the Second Issuance Shares. The up-front
payment shall not be creditable against any royalty payments owed by
Connetics under Section 8.3 and 8.4 of this Agreement.
2. To the extent necessary, the remaining provisions of the License
Agreement are amended to reflect the revised definitions of Second
Closing Date and Second Issuance Shares, as modified by the Stock
Agreement Amendment.
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3. The remainder of the License Agreement, including the exhibits to that
Agreement (except the Stock Agreement, to the extent modified by the
Stock Agreement Amendment), will continue in full force and effect as
though fully set forth in this Amendment.
IN WITNESS WHEREOF, the parties have executed this Amendment Number One to
License Agreement as of the date first written above.
Genentech, Inc. Connetics Corporation
By: /s/ William D. Young By: /s/ Thomas G. Wiggans
------------------------------------ ----------------------------------
William D. Young Thomas G. Wiggans
Chief Operating Officer President & Chief Executive Officer
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AMENDMENT NO. TWO
TO
LICENSE AGREEMENT
THIS AMENDMENT NUMBER TWO TO LICENSE AGREEMENT FOR INTERFERON GAMMA
("AMENDMENT") is entered into effective January 15, 1999, by and between
Genentech, Inc. ("Genentech") and Connetics Corporation ("Connetics").
R E C I T A L S
A. The Parties have previously entered into that certain License Agreement
for Interferon Gamma, dated May 5, 1999, as amended on December 23,
1998 (the "License Agreement").
B. Pursuant to Section 2.3(c) of the License Agreement, Connetics has the
right to sublicense certain of its rights under the Agreement to
InterMune Pharmaceutical, Inc. ("InterMune"), and has in fact entered
into a sublicense to that effect dated August 21, 1998.
C. On December 3, 1998, the Parties entered into a Letter Agreement to
document the intent and agreement of Connetics and Genentech with
respect to additional terms governing the transfer and distribution of
Interferon Gamma-1B, pending the preparation of an amendment to the
License Agreement.
D. The Parties now desire to enter into a definitive amendment to the
License Agreement, effective as of the date first written above, to
permit a limited distribution of Interferon Gamma-1B by Connetics or
its sublicensee under Genentech labels and to add other additional
terms governing the transfer and distribution of Interferon Gamma-1B.
NOW THEREFORE, the Parties hereby agree as follows:
AGREEMENT
1. Terms not otherwise defined in the Amendment shall have the meanings defined
in the License Agreement.
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2. Section 1.29 of the License Agreement is hereby deleted and replaced in its
entirety as follows:
1.29 "Transfer Date" shall mean January 15, 1999, unless otherwise
mutually agreed to in writing by the Parties
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3. A new Section 1.30 is added to the License Agreement to read in its entirety
as follows:
1.30 "Connetics Product" shall mean Finished Product under the
ACTIMMUNE-Registered Trademark- and labeled under the name of
Connetics or its sublicensee. For clarification, all terms and
conditions of this Agreement that apply to Finished Product shall
also apply to Connetics Product.
4. A new Section 1.31 is added to the License Agreement to read in its entirety
as follows:
1.31 "Distribution Period" shall mean the period of time beginning
January 15, 1999 and ending on the earlier of: (a) the first date on
which Genentech supplies InterMune with Connetics Product or (b) sixty
(60) days after InterMune's receipt of a license from the FDA to sell
interferon Gamma-1B for CGD.
5. A new Section 1.32 is added to the License Agreement to read in its entirety
as follows:
1.32 "Genentech Finished Product" shall mean Genentech's inventory
of Interferon Gamma-1B under the ACTIMMUNE-Registered Trademark- and
labeled under Genentech's name. For clarification, Genentech
Finished Product is a Licensed Product under this Agreement.
6. A new Section 1.33 is added to the License Agreement to read in its entirety
as follows:
1.33 "Genentech Bulk Product" shall mean Genentech's inventory of
Interferon Gamma-1B bulk protein existing as of the Transfer Date.
7. A new Section 1.34 is added to the License Agreement to read in its entirety
as follows:
1.34 "Genentech Product" shall mean, together, Genentech Finished
Product and Genentech Bulk Product.
8. A new Section 1.35 is added to the License Agreement to read in its entirety
as follows:
1.35 "Fully Burdened Manufacturing Cost" shall mean [ * ], which shall
be comprised of the sum of: [ * ].
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9. A new Section 1.36 is added to the License Agreement to read in its entirety
as follows:
1.36 "Third Party Manufacturing Royalties" shall mean all royalties
paid or incurred by Genentech to third parties under licenses taken by
Genentech with respect to patents or patent applications that, but for
such license(s), would be infringed by the manufacture, use, sale,
offer for sale or importation of Genentech Finished Product or
Genentech Bulk Product, which royalties are based on the manufacture
and sale of Genentech Finished Product or Genentech Bulk Product by
Genentech (or its contract manufacturer) or by Connetics or its
sublicensees (or a contract manufacturer on their behalf). Genentech
shall notify Connetics in writing during the term of this Agreement if
it becomes aware of any Third Party Manufacturing Royalties.
10. A new Subsection 2.5(k) is added to the License Agreement to read in its
entirety as follows:
2.5(k) Provided that all the activities listed on Exhibit H attached
hereto are completed, Genentech also shall transfer to Connetics or its
sublicensee on the Transfer Date all responsibility for the
distribution, sales and product support of Genentech Finished Product,
in the Territory, for the treatment of infections associated with CGD,
subject to the provisions of Section 4.3 below and the following terms
and conditions:
(i) Product support of Genentech Finished Product shall
include, without limitation, all financial services, all
reporting required by federal and state law or regulation,
professional services, customer inquiries, product returns,
government chargebacks, product refunds, and patient
assistance programs except for the processing of state
Medicaid invoices and certain product returns as provided in
Subsections 2.5(k)(iii) and (iv) below.
(ii) Connetics or its sublicensee shall sell and distribute
Genentech Finished Product only during the Distribution
Period, after which time Connetics or its sublicensee shall
market, sell and distribute Connetics Product, or other
Finished Product, for CGD. Notwithstanding the foregoing, for
a period of ten (10) business days after the last day of the
Distribution Period, Connetics or its sublicensee may continue
to sell and
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distribute its existing inventory of Genentech Finished
Product in order to reduce or exhaust such existing inventory.
Under no circumstances, however, will Genentech be required to
manufacture, fill, label, package, or otherwise supply
Genentech Finished Product to Connetics or its sublicensees
after the end of the Distribution Period. After the
Distribution Period Connetics or its sublicensees shall retain
full responsibility, and provide all product support, for all
Genentech Product sold or distributed by Genentech, Connetics
or its sublicensees, prior to, during and after the
Distribution Period, including without limitation, Genentech
Product in distribution channels.
(iii) Notwithstanding the above, Genentech shall remain
responsible for processing state Medicaid invoices for
Genentech Finished Product, in accordance with this
subsection, during the Distribution Period and for that period
of time after the Distribution Period during which states
continue to send Medicaid rebate invoices for Genentech
Finished Production sold under the Genentech NDC label number
50242. Within fifteen (15) days after the end of each calendar
quarter, Connetics or its sublicensee shall supply Genentech
with a report of its Average Manufacturer Price ("AMP") and
Best Price ("BP"), as defined in the U.S. Omnibus Budget
Reconciliation Act of 1990 ("OBRA 90"), for Genentech Finished
Product for such quarter, and detailed calculations
determining such AMP and BP. The AMP, BP and supporting
calculations shall be based on the carton price for Genentech
Finished Product. Genentech shall report such quarterly AMP
and BP to the Health Care Finance Administration as required
by law and regulation, and will also process state Medicaid
rebate invoices received for Genentech Finished Product.
Genentech will pay, adjust or dispute the state Medicaid
rebate invoices as permitted under OBRA 90. Within sixty (60)
days of receipt of an invoice from Genentech, Connetics or its
sublicensee will reimburse Genentech the full amounts of
Medicaid rebates paid by Genentech. Genentech will have the
right to examine, but not more than once every calendar year,
the books of account and records of Connetics and its
sublicensees for the purpose of determining the correctness of
the quarterly reports provided by Connetics or its
sublicensees under this subsection. If Genentech reasonably
determines that any such reports(s) were incorrect, Connetics
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shall pay Genentech's costs of correcting its reports to
federal agencies and will also pay any penalties or fees
associated with such incorrect reporting.
(iv) As of the Transfer Date, Connetics or its sublicensees
will be responsible for processing returns and related credits
for all Finished Product, except that Genentech will process
credits for returns of Genentech Finished Product if Genentech
receives a returned Genentech Finished Product from a third
party. Within sixty (60) days of receipt of an invoice from
Genentech, Connetics or its sublicensees will reimburse
Genentech for such return credits processed by Genentech.
(v) Connetics or its sublicensees shall be responsible for all
government chargebacks for Genentech Finished Product sold by
wholesalers to customers on and after the Transfer Date, and
for all government chargebacks for all Connetics Product and
other Finished Product sold by Connetics and its sublicensees.
(vi) Connetics and its sublicensees shall not actively market
or promote Interferon Gamma-1B during the Distribution Period
and while selling or distributing Genentech Finished Product.
During the Distribution Period, Connetics and its sublicensees
shall not distribute any notice, publication or make any
presentation to any third party regarding Interferon Gamma-1B
without Genentech's prior review of such notice, publication
or presentation, and receipt of Genentech's prior written
consent. Connetics and its sublicensees shall not sell
Genentech Finished Product at a price higher than that charged
by Genentech on January 14, 1999.
11. A new Section 2.5(l) is added to the License Agreement to read in its
entirety as follows:
2.5(l) Connetics agrees that, as of the Transfer Date and under the
terms and conditions below, it or its sublicensee will supply Genentech
Finished Product to those certain patients in the U.S. to whom Genentech
has an existing contractual or regulatory obligation to supply Interferon
Gamma-1B, including prior clinical study patients. In addition, Connetics
or its sublicensee will supply Genentech Finished
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Product to Hoffman-LaRoche Canada Limited ("Roche Canada") for distribution
to patients to whom there is a contractural or regulatory obligation to
supply Interferon Gamma-1B. Connetics also agrees that it or its
sublicensee will supply Genentech Finished Product free of charge to those
[ * ] oncology study patients (including [ * ] National Cancer Institute
oncology clinical trial patients) who are continuing to receive Interferon
Gamma-1B. Genentech shall supply a list of all such patients, and
information regarding the amount and destination of such Interferon
Gamma-1B, as soon as reasonably possible. After the end of the Distribution
Period, Connetics or its sublicensee shall supply Connetics Product, or
other Finished Product, to such patients and to Roche Canada in the same
quantities. No other right or license is implied or granted to Connetics or
its sublicensees to distribute Genentech Finished Product, or any other
Licensed Product, outside the Field of Use or outside the Territory.
(i) To supply the patients and Roche Canada as described
above, Connetics or its sublicensee shall pay a price for such
Genentech Finished Product, and such Connetics Product and
other Finished Product supplied by Genentech, equal to [ * ]
percent [ * ] of Genentech's Fully Burdened Manufacturing
Cost, plus [ * ] of Third Party Manufacturing Royalties
attributable to the manufacture or distribution of such
Genentech Finished Product or other Finished Product.
(ii) For U.S. CGD clinical study patients that do not qualify
for Connetics' (or its sublicensee's) indigent patient
program, Connetics (or its sublicensee) shall supply, at its
own cost, Genentech Finished Product and Finished Product to
such patients free of charge for a period of time ending not
later than December 31, 1999. Connetics (or its sublicensee)
shall notify such patients that such drug shall not continue
to be supplied free of charge by Genentech, Connetics or its
sublicensee, and Connetics or its sublicensee shall use its
best efforts to terminate such supply of drug before December
31, 1999, after reasonable prior notice to such patients. If [
* ] reasonably determines that [ * ].
(iii) Roche Canada will reimburse Connetics, or its
sublicensee, for its cost of supplying such Genentech Finished
Product and Connetics Product
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to the patients in Canada under a separate agreement to be
negotiated and executed by Roche Canada and Connetics.
(iv) Connetics, or its sublicensee, will supply Genentech
Finished Product and Finished Product to the [ * ] oncology
patients without charge to Genentech or to such patients. If,
however, Genentech has not extended the Field of Use of this
Agreement to the field of oncology within six (6) months of
the Effective Date of this Amendment No. 2, then Genentech
will reimburse Connetics, or its sublicensee, for the cost of
such Genentech Finished Product and Finished Product during
such six month period. If Genentech thereafter extends the
Field of Use to oncology, then as of the effective date of
such extension Connetics or its sublicensee will provide
Finished Product to such patients without charge to Genentech
or to such patients. If Genentech does not extend the Field of
Use to oncology, Connetics or its sublicensee will continue to
supply such oncology patients, but Genentech will reimburse
Connetics, or its sublicensee, for such drug in an amount
equal to one hundred percent (100%) of the price paid to
Genentech for such Genentech Finished Product and Finished
Product and the direct administrative and distribution costs
of providing such drug to such patient.
12. A new Section 4.3 is added to the License Agreement to read in its entirety
as follows:
4.3 (a) Genentech shall sell to Connetics, or its sublicensee,
Genentech's existing inventory of Genentech Product for commercial sale
solely for the treatment of infections associated with CGD. Connetics shall
pay a price for such Genentech Product equal to [ * ] percent [ * ] of
Genentech's Fully Burdened Manufacturing Cost, plus [ * ] of Third Party
Manufacturing Royalties attributable to the manufacture or sale of such
Genentech Product.
(b) Genentech shall deliver Genentech Finished Product to
Connetics to a single destination in the United States chosen by Connetics,
by carrier identified by Connetics. Title and risk of loss as to all
Genentech Finished Product shall pass to Connetics at point of origin (FOB
Genentech). Connetics shall be responsible for all freight, freight
brokerage, insurance and other costs associated with shipping
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Genentech Finished Product hereunder. As soon as reasonably possible after
each shipment of Genentech Finished Product, Genentech shall forward to
Connetics all customary documents concerning the shipment, including
Genentech's invoice relating to such shipment. To the extent possible, a
certificate of analysis will be included in each shipment. Where it is not
possible to include a certificate of analysis with a shipment, Genentech
shall furnish the same to Connetics as soon as reasonably possible.
(c) Payment by Connetics shall be made within sixty (60) days
after Connetics' receipt of Genentech's invoice for the supply of
Genentech Finished Product. All payments to Genentech by Connetics
under this Agreement shall be made in United States dollars by wire
transfer (or such other reasonable means as Genentech may direct) to
such United States bank account as Genentech may direct. If a wire
transfer is to be made, Connetics shall provide notice at least five
(5) days prior to the date of transfer of the amount of payment and the
date good funds will be received. Such notice shall be given to the
Treasurer of Genentech at the address set forth at the beginning of
this Agreement or such other address as Genentech may subsequently
direct.
(d) Genentech shall use its best efforts to maintain its Fully
Burdened Manufacturing Cost for Genentech Finished Product at or below
the benchmark costs of [ * ] dollars [ * ] per vial of Genentech
Finished Product (the "Benchmark Costs"). All the provisions of Section
2.6(e) of that certain Supply Agreement, dated May 5, 1998, between
Genentech and Connetics, shall apply to such Benchmark Costs herein.
(e) All transfer of Genentech Finished Product to Connetics or
its sublicensee hereunder shall be subject to the provisions hereof and
shall not be subject to the terms and conditions contained on any
purchase order or confirmation by Genentech, except insofar as any such
purchase order or confirmation establishes: (i) the quantity and form
of Genentech Product, (ii) the shipment date; (iii) the shipment routes
and destinations; or (iv) the carrier.
13. This Amendment supersedes in its entirety the Letter Agreement dated
December 3, 1998.
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14. All other terms and provisions of the License Agreement, including all
exhibits to that Agreement, will continue in full force and effect as though
fully set forth in this Amendment. Nothing in this Amendment shall be construed
as affecting Connetics' obligations to be liable and responsible for the
performance of all of the obligations of Connetics and its sublicensees under
the License Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment Number Two to
License Agreement as of the date first written above.
Genentech, Inc. Connetics Corporation
By: /s/ Nicholas J. Simon By: /s/ Thomas G. Wiggans
------------------------------------ ------------------------------------
Name: Nicholas J. Simon Thomas G. Wiggans
---------------------------------- President and Chief Executive Officer
Title: Vice President, Business and
---------------------------------
Corporate Development
Acknowledged and agreed as to InterMune's rights and obligations hereunder as
Connetics' sublicensee under the License Agreement:
InterMune Pharmaceuticals, Inc.
By: /s/ Scott Harkonen
------------------------------------
Scott Harkonen, M.D.
President
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AMENDMENT NO. THREE
TO
LICENSE AGREEMENT
THIS AMENDMENT NUMBER THREE TO LICENSE AGREEMENT FOR INTERFERON GAMMA
("Amendment") is entered into effective April 27, 1999 (the "Amendment Effective
Date"), by and between Genentech, Inc. ("Genentech") and Connetics Corporation
("Connetics"). Genentech and Connetics may each be referred to herein as a
"Party" and jointly as the "Parties."
RECITALS
A. The Parties have previously entered into that certain License Agreement
for Interferon Gamma, dated May 5, 1998, as amended on December 23,
1998 and on January 15, 1999 (the "License Agreement").
B. Pursuant to Section 2.3(c) of the License Agreement, Connetics has the
right to sublicense certain of its rights under the Agreement to
InterMune Pharmaceuticals, Inc. ("InterMune"), and has in fact entered
into such sublicense to that effect dated August 21, 1998.
C. The Parties have entered into that certain letter agreement dated
January 5, 1999 and revised on March 1, 1999 (the "Letter Agreement"),
documenting the intent and agreement of Connetics and Genentech with
respect to certain additional rights to be granted to Connetics and its
sublicensees under the Genentech License, pending the preparation of an
amendment to the License Agreement.
D. In consideration of such additional rights, InterMune will issue to
Genentech shares of Genentech Series A-1 Preferred InterMune stock on
the terms and conditions set forth in that certain stock purchase
agreement between Genentech and InterMune of even date herewith.
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E. The Parties now desire to enter into a definitive amendment to the
License Agreement, as of the Amendment Effective Date, through which
Genentech shall grant, and Connetics and InterMune shall accept, such
certain additional rights under the License Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and conditions herein contained, and intending to be legally bound hereby, the
Parties mutually agree as follows:
1. Terms not otherwise defined in this Amendment shall have the meanings
defined in the License Agreement.
2. A new Section 1.7.1 is hereby added to read in its entirety as follows:
1.7.1 "Combination Product Adjustment" shall mean the
following: in the event that a Licensed Product is sold in the form of
a combination product containing one or more active ingredients or
components in addition to such Licensed Product, Net Sales for such
combination product will be adjusted by multiplying actual Net Sales of
such combination product by the fraction A/(A + B) where A is the
invoice price of the Licensed Product, if sold separately, and B is the
invoice price of any other active ingredient(s) or component(s) in the
combination, if sold separately. If, on a country-by-country basis, the
other active ingredient(s) or component(s) in the combination are not
sold separately in said country, Net Sales shall be calculated by
multiplying actual Net Sales of such combination product by the
fraction A/C where A is the invoice price of the Licensed Product if
sold separately, and C is the invoice price of the combination product.
If, on a country-by-country basis, neither the Licensed Product nor the
other active ingredient(s) or component(s) of the combination product
is sold separately in said country, Net Sales allocable to the Licensed
Product shall be determined by mutual agreement reached in good faith
by the Parties based on an equitable method of determining such Net
Sales that, among other considerations, takes into account, on a
country-by-country basis, variations in potency, the relative
contribution of each active ingredient or component in the combination
product and the relative value to the end-user of each active
ingredient or component.
3. Section 1.12 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
1.12 "Field of Use" shall mean the administration to humans of
Licensed Protein Product for the treatment or prevention of any human
disease or condition, provided
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however, that "Field of Use" shall not include: (i) the administration
to humans of Licensed Protein Product for the treatment or prevention
of any type of arthritis or cardiac or cardiovascular disease or
condition or (ii) use of Licensed Protein Product for Gene Therapy.
Each "indication" listed on Exhibit E attached hereto shall be referred
to herein individually as an "Area of the Field of Use" and
collectively as "Areas of the Field of Use."
4. A new Section 1.15.1 is hereby added to the Agreement to read in its
entirety as follows:
1.15.1 "Gene Therapy Field of Use" shall mean the
administration to humans of Licensed Gene Product for Gene Therapy for
the treatment or prevention of any human disease or condition, provided
however, that "Gene Therapy Field of Use" shall not include any
treatment or prevention of any type of cardiac or cardiovascular
disease or condition.
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5. Section 1.18 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
1.18 "Genentech Patent Rights" shall mean all patents and
patent applications and any patents issuing therefrom, together with
any extensions, reissues, reexaminations, substitutions, renewals,
divisions, continuations and continuations-in-part thereof:
(a) that are owned or controlled by Genentech
presently or hereafter, during the term of this Agreement, and
under which Genentech is free to license or sublicense; and
(b) to the extent they claim or directly relate to:
(i) Interferon Gamma or the manufacture or use of Interferon
Gamma in the Field of Use, or (ii) IG Nucleotide Sequence or
the manufacture or use of IG Nucleotide Sequence in the Gene
Therapy Field of Use;
including, without limitation, the patent rights granted under
that certain license agreement between Genentech and
Children's Medical Center Corporation, dated July 16, 1990
(the "CMCC License"), but specifically excluding any rights
granted to Genentech under the Biogen License. Genentech
Patent Rights shall include, without limitation, the patents
and patent applications listed in Exhibit A attached hereto.
Notwithstanding the foregoing, Genentech Patent Rights shall
exclude any rights Genentech acquires after the Effective Date
under third-party license agreements, with the exception of
those rights acquired under the CMCC License, unless and until
the Parties mutually agree on terms and conditions for the
sublicense of such rights from Genentech to Connetics.
6. A new Section 1.20.1 of the License Agreement is hereby added to read
in its entirety as follows:
1.20.1 "IG Nucleotide Sequence" shall mean any DNA or RNA
sequence encoding Interferon Gamma.
7. Section 1.22 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
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1.22 "Licensed Product" shall mean, collectively:
(a) Any pharmaceutical formulation containing
Interferon Gamma, whether alone or together with or
incorporated into any other substance or product or
material or device, whether active or not, and which
(i) but for the licenses granted hereunder, the
manufacture, use, sale, offer for sale or
importation of which in the Territory would infringe
or contribute to the infringement of the Genentech
Patent Rights in the Territory, or (ii) is based
upon or incorporates or utilizes Genentech Knowhow
(a "Licensed Protein Product"); and
(b) Any pharmaceutical formulation containing the IG
Nucleotide Sequence, whether alone or together with
or incorporated into any other substance or product
or material or device, whether active or not, and
which but for the licenses granted hereunder, the
manufacture, use, sale, offer for sale or
importation of which in the Territory would infringe
or contribute to the infringement of the Genentech
Patent Rights in the Territory (a "Licensed Gene
Product").
8. The following two sentences are hereby added to the end of
Section 1.25:
[ * ], shall also be deducted from the gross invoiced sales
prices charged for such Licensed Products in determining Net Sales for
such Licensed Products. In the event that a Licensed Product is sold in
the form of a combination product containing one or more active
ingredients or components in addition to such Licensed Product, Net
Sales for such combination product will be calculated in accordance
with the Combination Product Adjustment."
9. Section 1.28 of the License Agreement is hereby deleted and replaced in
its entirely as follows:
1.28 "Territory" shall mean the United States of America, and
its territories and possessions, and Japan.
10. A new Section 1.37 is hereby added to the License Agreement to read in
its entirety as follows:
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1.37 "Third Party Product Rights" shall mean any rights
licensed or sublicensed to any third party by Genentech as of the
Effective Date to use, manufacture or sell (a) Interferon Gamma, (b)
the IG Nucleotide Sequence or (c) any pharmaceutical formulation
containing either or both of Interferon Gamma and the IG Nucleotide
Sequence, whether alone or together with or incorporated into any other
substance or product or material or device, whether active or not;
PROVIDED, HOWEVER, that Third Party Product Rights shall not include
any right regarding use of the foregoing in any treatment or prevention
of any type of cardiac or cardiovascular disease or condition.
11. Section 2.1 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
2.1 Patent and Knowhow License Grants.
(a) Genentech hereby grants to Connetics an exclusive license,
even as to Genentech, under Genentech Patent Rights and under Genentech
Knowhow to use, sell, offer for sale and import (but not to make or
have made) Licensed Protein Products in the Field of Use in the
Territory (excluding Japan), (excluding, with respect to the fields of
(i) scleroderma and (ii) infectious disease or condition caused by
human papillomavirus, Licensed Protein Products containing any form of
Interferon Gamma other than Genentech Gamma Interferon TRIANGLE 3 (as
that term is defined in the Biogen License)). Notwithstanding the
foregoing, Genentech reserves the right to use (but not to import,
offer for sale or sell) Licensed Protein Products within the Field of
Use solely for non-commercial research purposes.
(b) Genentech hereby grants to Connetics a non-exclusive
license under Genentech Patent Rights and under Genentech Knowhow to
use, sell, offer for sale and import (but not to make or have made)
Licensed Protein Products containing any form of Interferon Gamma other
than Genentech Gamma Interferon TRIANGLE 3 (as that term is defined in
the Biogen License) in the Territory (excluding Japan) in the fields
of: (i) scleroderma and (ii) infectious disease or condition caused by
human papillomavirus.
(c) Genentech hereby grants to Connetics a non-exclusive
sublicense under the Biogen License Rights to use, sell, offer for sale
and import Licensed Protein Products (excluding Licensed Protein
Products containing Biogen Gamma Interferon TRIANGLE 0 (as that
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term is defined in the Biogen License)) in the Territory (excluding
Japan) in the fields of scleroderma and infectious disease or condition
caused by human papillomavirus.
(d) Genentech hereby grants to Connetics a non-exclusive
license under Genentech Patent Rights to make or have made in the
Territory (excluding Japan) Licensed Protein Products for use or sale
in the Field of Use in the Territory (excluding Japan).
(e) Genentech hereby grants to Connetics a non-exclusive
license under Genentech Patent Rights and Genentech Knowhow to use
non-human animal species derived homologues of Interferon Gamma
("Non-human Interferon Gamma") solely for non-commercial research
purposes to support the Field of Use in the Territory (excluding
Japan). Genentech hereby grants to Connetics a non-exclusive license
under Genentech Patent Rights to use non-human animal species derived
homologues of IG Nucleotide Sequence ("Non-human Interferon
Gamma-encoding IG Nucleotide Sequence") solely for non-commercial
research purposes to support the Gene Therapy Field of Use in the
Territory (excluding Japan).
(f) Genentech hereby grants to Connetics a co-exclusive
license under Genentech Patent Rights to use, make, have made, import,
offer for sale and sell Licensed Gene Products in the Gene Therapy
Field of Use in the Territory (excluding Japan). Notwithstanding the
foregoing, Genentech reserves the right to use (but not to import,
offer for sale or sell) Licensed Gene Products within the Gene Therapy
Field of Use solely for non-commercial research purposes. As used in
this subsection (f), "co-exclusive" shall mean that (i) Genentech shall
not grant a license to any party other than Connetics to use, make,
have made, import, offer for sale or sell Licensed Gene Products in the
Gene Therapy Field in the Territory (excluding Japan) other than to the
extent that such rights (including certain rights to sublicense) [ * ],
and (ii) Genentech shall not authorize or approve any grant or
assignment [ * ].
(g) (i) Genentech hereby grants to Connetics an exclusive
license, even as to Genentech, under Genentech Patent Rights and under
Genentech Knowhow, in Japan to make, have made, use, sell, offer for
sale and import Licensed Protein Product that is [ * ] (as that term is
defined in [ * ] solely for the treatment of atopic dermatitis and
infectious tuberculosis, subject to subsection (ii) below.
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(ii) Connetics, its Affiliates and sublicensees
hereunder shall [ * ] acting on behalf and in place of [ * ], and shall
[ * ], to the extent based, in whole or in part, upon [ * ] Genentech
Patent Rights as the result of the [ * ] to the extent such [ * ]
(including, without limitation, the [ * ] other than the [ * ] shall
not extend to: (A) the [ * ]; or (B) the [ * ] for the [ * ] (except
for [ * ] or as an [ * ]) or [ * ]. Connetics' and its Affiliates' and
sublicensees' obligation to [ * ] described in this subsection (ii)
shall terminate with respect to each of [ * ] simultaneously with [ *
].
(iii) In the event that any Third Party Product
Rights held by a third party in Japan that [ * ] revert to Genentech,
then Genentech shall notify Connetics or its designated sublicensee in
Japan of such reversion, and upon such notice Genentech shall be deemed
to have automatically granted to Connetics the license under Genentech
Patent Rights and under Genentech Knowhow to all such reverted rights,
which license shall be exclusive to the extent that such reverted
rights were exclusive. All rights granted to Connetics pursuant to this
subsection (iii) shall be subject to the terms of this Agreement,
including without limitation subsection (ii) above, Section 3.2(g) and
Section 8.3.
(h) In the event that any Third Party Product Rights (other
than those described in subsection (g) above) shall revert to
Genentech, then Genentech shall notify Connetics of such reversion. For
the ninety (90) day period following its receipt of such notice,
Genentech and Connetics shall negotiate exclusively in good faith the
reasonable commercial terms upon which Genentech would be willing to
grant to Connetics the license to such reverted rights. If the Parties
fail to enter a written agreement for a license to such rights by the
end of such ninety (90) day period, then Genentech shall have no
further obligation to Connetics with respect to such rights; provided
that for six (6) months following such ninety (90) day period,
Genentech shall not enter into an agreement to grant a license to such
rights with a third party on terms that, taken as a whole, are less
favorable to Genentech than those last offered by Connetics for such
rights. With respect to the foregoing sentence, [ * ] shall be [ * ] in
light of all [ * ], including without limitation the [ * ] with such [
* ] of such [ * ] under such [ * ] commercially reasonable [ * ] of the
[ * ] of such [ * ] that may be [ * ]. Nothing in the preceding
sentence shall imply any [ * ]. Connetics may not transfer its rights
under this Section 2.1(h) to any party other than InterMune without
Genentech's prior written consent.
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Except as expressly granted herein, there are no implied licenses under
the Genentech Patent Rights or any other intellectual property rights owned or
controlled by Genentech.
12. Section 2.3(b) of the License Agreement is hereby deleted and replaced
in its entirety as follows:
(b) Connetics may grant one or more sublicenses under the
rights granted in Sections 2.1(a), (b), (c), (e), (f) and (g) in the
Field of Use and the Gene Therapy Field of Use, on thirty (30) days
prior written notice to Genentech, and subject to Genentech's prior
written approval, which approval shall not be unreasonably withheld.
13. A new Section 3.2(g) is hereby added to read in its entirely as
follows:
(g) In addition to the Clinical Development Milestones (as set
forth in Exhibit E hereto), Connetics shall use its Best Efforts to
develop and commercialize Licensed Products: (i) in the Field of Use
with respect to indications and diseases that, under the provisions of
this Amendment, have been added to the "Field of Use" as defined in the
original License Agreement executed as of May 5, 1998, and (ii) in the
Gene Therapy Field of Use. Such additional indications and diseases in
the Field of Use, and the Gene Therapy Field of Use, collectively are
referred to in this subsection (g) as the "Additional Indications." In
the event that Connetics is not conducting such development efforts
with respect to any Additional Indication(s) in a country or countries
in the Territory as of the [ * ] (or if rights to such Additional
Indication were granted to Connetics pursuant to Section 2.1(g)(iii),
then as of the [ * ] that Genentech notifies Connetics or its
designated sublicensee regarding such rights as set forth in that
Section) or at any time thereafter, Genentech shall have the right to
terminate this Agreement, and the licenses granted hereunder, with
respect to Licensed Products for such Additional Indication(s) in such
country or countries, upon [ * ] days prior written notice to
Connetics, unless Connetics can reasonably demonstrate, during such
notice period, by its written records that as of the date of such
notice it is conducting such development efforts with respect to such
Additional Indication(s) in such country or countries.
14. Sections 8.2(a) and (b) of the License Agreement are hereby deleted and
replaced in their entirety as follows:
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(a) [ * ] within thirty (30) days following the dates on which
the first NDA or BLA, as applicable, for a Licensed Protein Product is
filed with the FDA by Connetics for [ * ]; provided however, that such
milestone payments shall only be paid once for each of the foregoing
indications, and shall not be paid upon the filing of a NDA or BLA for
an osteopetrosis or any mycobacterial infection indication.
(b) [ * ] within thirty (30) days following the date Connetics
receives the first FDA approval of [ * ]; provided however, that such
milestone payment shall only be paid once for each of the foregoing
indications, and shall not be paid upon receipt of FDA approval for
commercial sale for an osteopetrosis or any mycobacterial infection
indication.
15. Section 8.3 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
8.3 Royalties. Connetics shall pay Genentech the following
royalties on Net Sales of Licensed Products by Connetics and its
sublicensees:
(a) For annual aggregate Net Sales of all Licensed Protein
Products in the Territory (excluding Japan) [ * ], a royalty rate equal
to [ * ] of such Net Sales.
(b) [ * ], for annual aggregate Net Sales of all Licensed
Protein Products in the Territory (excluding Japan) [ * ], a royalty
rate equal to [ * ] of such Net Sales [ * ].
(c) For Net Sales of all Licensed Protein Products in Japan, a
royalty rate equal to [ * ] of such Net Sales; PROVIDED, HOWEVER, that
in the event that [ * ] in Japan for an indication for which InterMune
has exclusive rights under Section 2.1(g), the foregoing royalty rate
shall be reduced to [ * ] for Net Sales of [ * ] in Japan for such
indication [ * ]. For the sake of clarity, Net Sales of Licensed
Protein Products to which Connetics acquires rights pursuant to Section
2.1(g)(iii) shall be subject to this subsection (c).
(d) (i) For Net Sales of Licensed Gene Product in the
Territory, where such Licensed Gene Product is used in conjunction with
a Licensed Protein Product for the treatment or prevention of a given
indication in a given patient population, a royalty rate equal to [ * ]
of such Net Sales. As used in this subsection (d), "indication" shall
mean any particular medical condition within the Field of Use and
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Gene Therapy Field of Use, including but not limited to labeling claims
approved by a regulatory agency.
(ii) For Net Sales of Licensed Gene Product
in a country in the Territory, where such Licensed Gene Product is used
in a given patient population for the treatment or prevention of the
same indication for which a given Licensed Protein Product is used in
such patient population, a royalty rate equal to (A) [ * ] of such Net
Sales during the [ * ] period following the first commercial sale of
such Licensed Gene Product in such country for the treatment or
prevention of such indication in such patient population by Connetics,
or its Affiliates and sublicensees (the "First Commercial Sale"); (B) [
* ] of such Net Sales during the [ * ] period following the First
Commercial Sale; and (C) [ * ] of such Net Sales beginning on the [ * ]
anniversary of the First Commercial Sale and thereafter.
(iii) Notwithstanding the provisions of subsections
(i) and (ii) above, in the event that annual Net Sales of a Licensed
Gene Product for the treatment or prevention of an indication in a
patient population in a country in the Territory [ * ] for the
treatment or prevention of such indication in such patient population
in such country, the royalty rate thereafter applicable to Net Sales of
such Licensed Gene Product for the treatment or prevention of such
indication in such patient population in such country shall be [ * ] of
such Net Sales.
(iv) In the event that Connetics or InterMune
determines at any point following [ * ] that the above royalty rates
are having or are likely to have an adverse impact on Connetics' or
InterMune's ability to compete effectively in its sales of such
Licensed Gene Product, Connetics or InterMune shall so notify
Genentech, and the Parties shall in good faith discuss and attempt to
reach a reasonable and mutually agreeable resolution to the situation.
(e) (i) The royalties set forth in subsections (a), (b) and
(c) above shall be payable, on a country-by-country basis, until the
later of: (A) the expiration or revocation of the last remaining issued
patent in such country within the Genentech Patent Rights that covers
Licensed Protein Products, or (B) [ * ] years from the Effective Date
of this Agreement. Notwithstanding the foregoing, upon the expiration
of the last to expire issued patent in each country within the
Genentech Patent Rights during the term of this
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Agreement, thereafter each of the royalty rates set forth in (a), (b)
and (c) above shall be reduced by [ * ] with respect to such country.
(ii) The royalties set forth in subsection (d) above
shall be payable, on a country-by-country basis, until the expiration
or revocation of the last remaining issued patent in such country
within the Genentech Patent Rights that covers Licensed Gene Products.
16. Section 8.4 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
8.4 Third-Party Royalties. If Genentech or Connetics is
required to pay any third party a royalty due to the manufacture, use,
sale, offer for sale or importation of a Licensed Product in the
Territory for or by Connetics or its sublicensees, Connetics shall be
responsible for the payment of [ * ] of such third-party royalty,
PROVIDED HOWEVER, that Connetics may deduct from the royalties
otherwise payable to Genentech under Section 8.3 above, an amount equal
to [ * ] of such third party royalties incurred only due to use patents
in the Field of Use or in the Gene Therapy Field of Use in the
Territory, provided that the amount deducted shall not exceed [ * ] of
the royalties otherwise payable by Connetics to Genentech under Section
8.3. For purposes of clarification, such deductions shall not apply to
[ * ]. Attached hereto as Exhibit G is a list of all such royalty
obligations to third parties known to Genentech as of the Effective
Date without diligent search. No later than thirty (30) days from the
Effective Date, Genentech shall complete a reasonable internal
investigation of its records and update Exhibit G, as necessary, to
accurately reflect all such royalty obligations to third parties to the
best of Genentech's knowledge; provided however, Connetics acknowledges
that Genentech has no obligation to conduct due diligence or any
investigation with respect to third party patent rights related to
Licensed Products. Genentech shall notify Connetics in writing during
the term of this Agreement if it becomes aware of any additional
Genentech third party royalty obligations.
17. Section 8.5 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
8.5 Royalty Payments.
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(a) Royalty payments shall be made to Genentech quarterly
within ninety (90) days following the end of each calendar quarter for
which royalties are due. Each royalty payment shall be accompanied by a
report summarizing the total Net Sales during the relevant three-month
period, and the calculation of royalties, if any, due thereon pursuant
to Section 8.3.
(b) Notwithstanding subsection (a) above, any royalty payments
which accrue during 1999 on Net Sales of Licensed Protein Product sold
by Connetics' sublicensee InterMune shall be paid to Genentech in the
form of promissory note, in the form attached hereto as Exhibit I. For
each calendar quarter in 1999 for which royalty payments are due,
InterMune shall execute and deliver to Genentech, within ninety (90)
days following the end of each such calendar quarter, a promissory note
in the form of Exhibit I, and in the amount of such royalties due to
Genentech for such quarter. Each such promissory note shall be
accompanied by the report described in Section 8.5(a) above for such
quarter. In the event that any such note is delivered by InterMune
after such 90 day period, nevertheless interest shall accrue on the
date that such note was due.
18. The following provision is hereby inserted as Section 10.4 to the
License Agreement:
10.4 Insurance. At all times during the term of this
Agreement, Connetics and its sublicensees shall provide the following
insurance at its sole cost and expense:
(a) Commercial General Liability, including coverage
for products and completed operations (maintained for a period of at
least [ * ] after the expiration or termination of this Agreement) [ *
]. The policy shall have a limit of no less than [ * ] dollars.
(b) Foreign Local Coverages: Where required by law,
Connetics and its sublicensees will purchase foreign local coverages in
an amount that, at a minimum, satisfies the legal requirements of that
jurisdiction.
(c) Policy Conditions: All policies under (a) and (b)
above shall:
(i) be written by insurance companies with an A.M.
Best's rating of A:VIII or higher (or if Connetics' or its sublicensees
policies are not subject to the Best rating, then by carriers who are
acceptable to Genentech); and
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(ii) add Genentech as an additional insured.
(d) Additionally, Connetics shall use its Best Efforts to
obtain from its insurance carrier for the policies described in
subsections (a) and (b) covenants:
(i) [ * ]; and
(ii) [ * ].
Connetics and its sublicensees shall provide Genentech a
certificate of insurance which shall reflect the above coverages and
provisions, with annual renewals as long as the contract continues.
19. Section 11.1 of the License Agreement is hereby deleted and replaced in
its entirety as follows:
11.1 Term. This Agreement shall commence on the Effective Date of this
Agreement and, unless terminated earlier, shall expire:
(a) With respect to Licensed Protein Products, at the later to
occur of (i) the expiration of the last to expire of any Genentech
Patent Rights covering a Licensed Protein Product, or (ii) twenty (20)
years from the Effective Date of this Agreement; and
(b) With respect to Licensed Gene Products, at the expiration
of the last to expire of any Genentech Patent Rights covering a
Licensed Gene Product;
PROVIDED, HOWEVER, that in the event that either the CMCC
License or the Biogen License is terminated, the licenses granted by
Genentech to Connetics under the CMCC License or the Biogen License
shall also terminate. Genentech shall use its Best Efforts to keep the
CMCC License and the Biogen License in effect during the term of this
Agreement, provided, however, that if [ * ] as outlined in Section
[ * ] under the [ * ] shall not be [ * ] shall have the [ * ]. One (1)
year before the expiration of this Agreement under Section 11.1(a), the
Parties agree to meet and to discuss in good faith extending the term
of this Agreement with respect to Licensed Protein Products on terms
mutually agreeable to the Parties.
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20. Exhibit E of the License Agreement is hereby deleted and replaced in
its entirety with new Exhibit E attached hereto and incorporated herein.
21. In consideration for the rights granted to Connetics and its
sublicensees under this Amendment, InterMune shall issue to Genentech eight
hundred seventy five thousand (875,000) shares of Series A-1 Preferred Stock
simultaneously herewith.
22. This Amendment supersedes the Letter Agreement in its entirety. All
other terms and provisions of the License Agreement, including all exhibits to
that Agreement, will continue in full force and effect as though fully set forth
in this Amendment. Nothing in this Amendment shall be construed as affecting
Connetics' obligations to be liable and responsible for the performance of all
of the obligations of Connetics and its sublicensees under the License
Agreement.
THIS SPACE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by the
respective duly authorized officers as of the date first written above.
GENENTECH, INC. CONNETICS CORPORATION
By: /s/ Nicholas J. Simon By: /s/ T. G. Wiggans
--------------------------------- -----------------------------------
Printed Name: Nicholas J. Simon Printed Name: T. G. Wiggans
Title: Vice President, Business and Title: President and Chief Executive
Corporate Development Officer
Acknowledged and agreed as to InterMune's rights and obligations hereunder as
Connetics' sublicensee under the License Agreement:
INTERMUNE PHARMACEUTICALS, INC.
By: /s/ W. Scott Harkonen
---------------------------------
Printed Name: W. Scott Harkonen
Title: President
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EXHIBIT E
CLINICAL DEVELOPMENT MILESTONES
[ * ]
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CONVERTIBLE PROMISSORY NOTE
$ , 2000
---------- ----------
Palo Alto, California
FOR VALUE RECEIVED, InterMune Pharmaceuticals, Inc., a California corporation
("COMPANY") promises to pay to Genentech, Inc., a Delaware corporation, or its
registered assigns ("HOLDER"), the principal sum of _______________ Dollars and
__________ Cents ($__________ ), or such lesser amount as shall equal the
outstanding principal amount hereof, together with interest from the date of
this Note on the unpaid principal balance at a rate equal to prime rate plus two
percent (2%) per annum, computed on the basis of the actual number of days
elapsed and a year of 365 days. All unpaid principal, together with any then
unpaid and accrued interest and other amounts payable hereunder, shall be due
and payable on the earlier of (i) December 31, 2002, (ii) the closing of the
initial public offering of the Company's Common Stock pursuant to a registration
statement declared effective by the Securities Exchange Commission, and (iii)
the merger or consolidation of the Company with or into any other corporation or
corporations (except where a majority of the outstanding equity securities of
the surviving corporation immediately after the merger or consolidation is held
by persons who were shareholders of the Company immediately prior to the merger
or consolidation), or a sale or other transfer of all or substantially all of
the assets of the Company (or any series of related transactions resulting in
the same).
The following is a statement of the rights of Holder and the conditions to which
this Note is subject, and to which Holder, by the acceptance of this Note,
agrees:
1. DEFINITIONS. As used in this Note, the following capitalized
terms have the following meanings:
(a) "COMPANY" includes the corporation initially executing this
Note and any Person which shall succeed to or assume the
obligations of Company under this Note in accordance with and
subject to the terms of this Note.
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(b) "HOLDER" shall mean the Person specified in the introductory
paragraph of this Note or any other Person(s) who shall at the
time be the registered holder of this Note.
(c) "LIEN" shall mean, with respect to any property, any security
interest, mortgage, pledge, lien, claim, charge or other
encumbrance in, of, or on such property or the income
therefrom, including, without limitation, the interest of a
vendor or lessor under a conditional sale agreement, capital
lease or other title retention agreement, or any agreement to
provide any of the foregoing, and the filing of any financing
statement or similar instrument under the Uniform Commercial
Code or comparable law of any jurisdiction.
(d) "LICENSE AGREEMENT" means the License Agreement for Interferon
Gamma between Genentech, Inc. and Connectics Corporation dated
May 5, 1998, as amended on December 23, 1999, January 15, 1999
and April ___, 1999, and as further amended from time to time.
(e) "PERSON" shall mean and include an individual, a partnership,
a corporation (including a business trust), a joint stock
company, a limited liability company, an unincorporated
association, a joint venture or other entity or a governmental
authority.
2. PREPAYMENT. Upon five (5) days prior written notice to Holder,
Company may prepay this Note in whole or in part; provided, however, that any
such prepayment will be applied first to the payment of expenses due under this
Note, second to interest accrued on this Note and third, if the amount of
prepayment exceeds the amount of all such expenses and accrued interest, to the
payment of principal of this Note.
3. CERTAIN COVENANTS. While any amount is outstanding under the
Note:
(a) LIENS. Without the prior written consent of Holder, Company
shall not create, incur, assume or permit to exist any Lien on
or with respect to the License Agreement or any intellectual
property or other assets of Holder licensed by the Company
thereunder.
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(b) ASSET DISPOSITIONS. Without the prior written consent of
Holder, Company shall not sell, lease, transfer, license or
otherwise dispose of the License Agreement or any intellectual
property or other assets of Holder licensed or sublicensed by
the Company thereunder, other than as permitted under the
License Agreement.
(c) DIVIDENDS, REDEMPTIONS, ETC. Without the prior written consent
of Holder, Company shall not (i) pay any dividends or make any
distributions on its equity securities; (ii) purchase, redeem,
retire, defease or otherwise acquire for value any of its
equity securities, other than in respect to stock purchases
from departing employees; (iii) return any capital to any
holder of its equity securities; (iv) make any distribution of
assets, equity securities, obligations or other securities to
any holder of its equity securities; or (v) set apart any sum
for any such purpose.
4. EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an "Event of Default" under this Note and the other Transaction
Documents:
(a) FAILURE TO PAY. Company shall fail to pay (i) when due any
principal payment under this Note or the License Agreement or
(ii) any interest or other payment required under the terms of
this Note or the License Agreement and such payment shall not
have been made within five (5) days of Company's receipt of
Holder's written notice to Company of such failure to pay; or
(b) BREACHES OF CERTAIN COVENANTS. Company shall fall to observe
or perform any covenant, obligation, condition or agreement
set forth in Section 3 of this Note; or
(c) BREACHES OF OTHER COVENANTS. Company shall fall to observe or
perform any other covenant, obligation, condition or agreement
contained in this Note (other than those specified in Sections
4(a) and 4(b)) or fail to observe or perform any material
covenant, obligation, condition or agreement contained in the
License Agreement and such failure shall continue for fifteen
(15) days; or
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(d) REPRESENTATIONS AND WARRANTIES. Any representation, warranty,
certificate, or other statement (financial or otherwise) made
or furnished by or on behalf of Company to Holder in writing
in connection with this Note or the License Agreement, or as
an inducement to Holder to enter into this Note or the License
Agreement, shall be false, incorrect, incomplete or misleading
in any material respect when made or furnished; or
(e) VOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. Company shall
(i) apply for or consent to the appointment of a receiver,
trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in
writing its inability, to pay its debts generally as they
mature, (iii) make a general assignment for the benefit of its
or any of its creditors, (iv) be dissolved or liquidated, (v)
become insolvent (as such term may be defined or interpreted
under applicable statute), (vi) commence a voluntary case or
other proceeding seeking liquidation, reorganization' or other
relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter
in effect or consent to any such relief or to the appointment
of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or
(vi) take any action for the purpose of effecting any of the
foregoing; or
(f) INVOLUNTARY BANKRUPTCY OR INSOLVENCY PROCEEDINGS. Proceedings
for the appointment of a receiver, trustee, liquidator or
custodian of Company or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings
seeking liquidation, reorganization or other relief with
respect to Company or the debts thereof under any bankruptcy,
insolvency or other similar law now or hereafter in effect
shall be commenced and an order for relief entered or such
proceeding shall not be dismissed or discharged within thirty
(30) days of commencement; or
(g) LICENSE AGREEMENT. The License Agreement terminates or is
declared void.
5. RIGHTS OF HOLDER UPON DEFAULT. Upon the occurrence or
existence of arty Event of Default (other than an Event of Default, referred to
in Sections 4(e) and 4(f)) and at any time thereafter during the continuance of
such Event of Default, Holder may, by written notice to Company, declare all
outstanding obligations payable by Company under this Note to be
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immediately due and payable without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything contained
herein or in the License Agreement to the contrary notwithstanding. Upon the
occurrence or existence of any Event of Default described in Sections 4(e) and
4(f), immediately and without notice, all outstanding Obligations payable by
Company under this Note shall automatically become immediately due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in the License
Agreement to the contrary notwithstanding. In addition to the foregoing
remedies, upon the occurrence or existence of any Event of Default, Holder may
exercise any other right, power or remedy granted to it by this Note or the
License Agreement or otherwise permitted to it by law, either by suit in equity
or by action at law, or both.
6. CONVERSION RIGHTS.
(a) OPTIONAL CONVERSION. At the sole election of Holder, this Note
may be converted into equity securities of the Company, as set
forth in Section 6(b) below, at any time.
(b) SECURITIES ISSUED UPON CONVERSION. In the event that Holder
elects to convert all or a part of this Note into equity
securities of the Company, Holder shall provide the Company
with written notice of its election. Upon receipt of such
notice by the Company, the sum of the aggregate principal and
accrued interest designated in such notice shall be
automatically converted into that number of shares of the
Company's equity securities (the "SHARES") that are sold in
the last financing precedent to the date of such conversion
involving the sale by the Company of equity securities (other
than those issued to employees of the Company) in which the
Company receives an aggregate of at least $1,000,000 in cash
(excluding any financing incident to a corporate or strategic
partnering transaction) (an "EQUITY FINANCING") as is equal to
such unpaid principal and interest to be converted divided by
the per share purchase price of the Shares issued in such
Equity Financing (the "PER SHARE PRICE"), with any fraction of
a Share rounded to the next whole Share. The Company covenants
to cause the Shares, when issued pursuant to this Section 6,
to be fully paid and nonassessable, and free from all taxes,
liens and charges with respect to
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the issuance thereof and such Shares shall be issued on the
same contractual terms as those issued in the Equity
Financing.
7. SURRENDER AND CANCELLATION OF NOTE. Upon payment in full of
all principal, expenses and interest payable under this Note, Holder agrees to
surrender this Note to Company for cancellation.
8. SUCCESSORS AND ASSIGNS. Subject to the restrictions on
transfer described in Section 10 below, the rights and obligations of Company
and Holder shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
9. WAIVER AND AMENDMENT. Any provision of this Note may be
amended, waived or modified upon the written consent of Company and Holder.
10. ASSIGNMENT BY COMPANY. Neither this Note nor any of the
rights, interests or obligations hereunder may be assigned, by operation of law
or otherwise, in whole or in part, by Company without the prior written consent
of Holder.
11. NOTICES. Any notice, request or other communication required
or permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by registered or certified mail, postage
prepaid, or by recognized overnight courier or personal delivery (a) if to
Company, at 3294 West Bayshore Road, Palo Alto, CA 94303, and (b) if to Holder,
to Genentech, Inc. 1 DNA Way, South San Francisco, CA 94080-4990, attention
Legal Department. Any party hereto may by notice so given change its address for
future notice hereunder. Notice shall conclusively be deemed to have been given
when received.
12. PAYMENT. Payment shall be made in lawful tender of the United
States.
13. DEFAULT RATE; USURY. In the event that any payment of
principal or interest provided for herein is not paid by Company when due
(including the entire unpaid balance of this Note in the event such amount is
made immediately due and payable pursuant to the terms hereof), then Company
shall pay interest on the such amounts not paid when due at a rate per annum
equal to the rate otherwise applicable hereunder plus two percent (2%). In the
event any interest is paid on this Note which is deemed to be in excess of the
then legal maximum rate, then that portion of the interest payment representing
an amount in excess of the then legal
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maximum rate shall be deemed a payment of principal and applied against the
principal of this Note.
14. ENTIRE AGREEMENT. This Note and the License Agreement, taken
together, constitute and contain the entire agreement of Company and Holder, and
supersede any and all prior agreements, negotiations, correspondence,
understandings and communications among the parties, whether written or oral,
respecting the subject matter hereof.
15. EXPENSES; WAIVERS. If action is instituted to collect this
Note, Company promises to pay all costs and expenses, including, without
limitation, reasonable attorneys' fees and costs, incurred in connection with
such action. Company hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or
demands relative to this instrument.
16. GOVERNING LAW. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with
the laws of the State of California, without regard to the conflicts of law
provisions of the State of California. or of any other state.
IN WITNESS WHEREOF, Company has caused this Note to be issued as of the date
first written above.
INTERMUNE PHARMACEUTICALS, INC.
a California corporation
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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EXHIBIT 1.16
GENENTECH SUPPLY AGREEMENT
The Genentech Supply Agreement was filed as Exhibit 10.16 to the Company's
Registration Statement on Form S-1/A, dated March 22, 2000, and is herein
incorporated by reference.
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INTERMUNE PHARMACEUTICALS, INC.
----------------------------
COLLABORATION AGREEMENT
----------------------------
APRIL 27, 1999
<PAGE>
INTERMUNE PHARMACEUTICALS, INC.
COLLABORATION AGREEMENT
THIS COLLABORATION AGREEMENT is made effective as of the 27th day of
April, 1999 (the "Effective Date") by and between INTERMUNE PHARMACEUTICALS,
INC., a California corporation (the "Company"), and CONNETICS CORPORATION, a
Delaware corporation ("Connetics"). Each of the Company and Connetics may be
referred to herein as a "Party" or together as the "Parties."
RECITALS
WHEREAS, as of even date herewith, the Company and Connetics have
amended and restated that certain Exclusive Sublicense Agreement, dated August
21, 1998, pursuant to which, among other things, InterMune shall make certain
milestone and royalty payments to Connetics; and
WHEREAS, as of even date herewith, the Company and Connetics have
entered into a Transition Agreement pursuant to which, among other things,
Connetics shall book net revenues, expenses, and net profits of Actimmune Units
for the treatment of Chronic Granulomatous Disease from January 15, 1999 through
December 31, 2001; and
WHEREAS, as of April 7, 1999 herewith, the Company and Connetics have
amended and restated that certain Service Agreement, dated October 12, 1998 (the
"Service Agreement"), pursuant to which, among other things, Connetics provides
to the Company certain information services, payroll, facilities, human
resources, accounting, employee benefits administration, and R&D related
services; and
WHEREAS, pursuant to the terms of that certain term sheet between the
Company and certain of the Series A-1 and A-2 Preferred Stock investors, the
Board of Directors of the Company intends to declare and pay a dividend (the
"Dividend") of four million seven hundred twenty one thousand eight hundred
seventy six dollars and seventy two cents ($4,721,876.72) to Connetics as the
sole holder of shares of Series A Preferred Stock, following the closing of the
Series A-1 and A-2 Preferred Stock financing; and
WHEREAS, Connetics has delivered concurrently herewith a notice of
conversion, pursuant to which, in accordance with the Company's Amended and
Restated Articles of Incorporation, all of Connetics' 11,200,000 shares of
Series A Preferred shall be converted into 960,000 shares of Series A-1
Preferred Stock once the Dividend has been paid to Connetics.
NOW, THEREFORE, in consideration of the foregoing recitals and mutual
promises hereinafter set forth, the parties hereby agree as follows:
1.
<PAGE>
1. CASH PAYMENTS.
1.1 COLLABORATION AGREEMENT CASH PAYMENT. On the Effective Date, the
Company shall pay to Connetics five hundred thousand dollars ($500,000) by wire
transfer.
1.2 TRANSITION AGREEMENT CASH PAYMENT. On the Effective Date, the
Company shall pay to Connetics one hundred fifty three thousand six hundred
fifty five dollars ($153,655) by wire transfer as payment representing the
Actimmune Gross Margin for the period from January 15, 1999 to the Effective
Date, pursuant to Section 2.3(c) of the Transition Agreement.
1.3 AMENDED AND RESTATED SERVICE AGREEMENT CASH PAYMENT. On the
Effective Date, the Company shall pay to Connetics two hundred two thousand nine
hundred eighty nine dollars ($202,989) by wire transfer as payment for services
provided from January 1, 1999, through March 31, 1999 under the Service
Agreement.
1.4 REIMBURSEMENT FOR PREPAID EXPENSES. On the Effective Date, the
Company shall pay to Connetics fifty one thousand eight hundred thirty dollars
($51,830) by wire transfer as payment for the prepaid expenses provided from
January 1, 1999, through March 31, 1999.
2. CONVERSION OF SERIES A PREFERRED INTO SERIES A-1 PREFERRED.
2.1 CONVERSION NOTICE. Connetics shall deliver, concurrent with the
execution of this Agreement, a notice of conversion of all of Connetics'
11,200,000 shares of Series A Preferred Stock into an aggregate of 960,000
shares of Series A-1 Preferred Stock. Such notice shall be in the form attached
hereto as EXHIBIT A (the "Conversion Notice").
2.2 CONVERSION. Promptly following payment of the dividend declared by
the Board of Directors of the Company to Connetics, Connetics shall deliver to
the Company its Series A Preferred Stock certificate. The Company shall then
convert the Series A Preferred Stock into Series A-1 Preferred Stock in
accordance with Article III.E.1 of the Company's Amended and Restated Articles
of Incorporation.
3. COMMITMENT TO PAY CASH OR ISSUE PROMISSORY NOTE.
3.1 COMMITMENT. On March 31, 2001, the Company shall, in its sole
discretion, either pay to Connetics (i) five hundred thousand dollars
($500,000.00) by check or by wire transfer or (ii) two hundred thousand dollars
($200,000) by check or by wire transfer and deliver a promissory note in the
form attached hereto as EXHIBIT B (the "Note").
3.2 PROMISSORY NOTE. The Note will be due and payable in two principal
payments of $150,000 each with the first payment on or before June 30, 2001, and
the second payment on or before September 30, 2001.
2.
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3.3 MILESTONE PAYMENT. The Company shall pay to Connetics a milestone
payment of one million five hundred thousand dollars ($1,500,000) in the form
and at the times set forth in Section 5.2 of the Amended and Restated Exclusive
Sublicense Agreement.
4. ISSUANCE OF SERIES B PREFERRED.
4.1 SERIES B PREFERRED. Effective upon the closing of the Company's
Series B Preferred Stock Financing (the "Series B Financing"), the Company shall
issue to Connetics shares of Series B Preferred Stock (the "Series B Preferred")
in an amount equal to the quotient of five hundred thousand dollars ($500,000)
divided by the price per share of Series B Preferred paid by the purchasers of
the Series B Preferred. The Company shall use its best efforts to assure that
the terms, conditions, rights, preferences and privileges of the Series B
Preferred issued to Connetics by the Company in the Series B Financing shall be
the same as those of the Series B Preferred issued to the other purchasers,
provided however, that such efforts shall not require the Company to accept a
lower price per share or make other material concessions to the other purchasers
of the Series B Preferred. Notwithstanding the foregoing, in the event of either
a Company Sale (as defined below) or a firm underwritten public offering of the
Company's Common Stock either of which occurs prior to a Series B Financing, the
Company shall, in its sole discretion, either (i) deliver to Connetics five
hundred thousand dollars ($500,000) by check or wire transfer or (ii) issue to
Connetics four hundred thousand (400,000) shares of Series A-2 Preferred Stock
concurrently with the closing of such Company Sale or public offering.
4.2 COMPANY SALE. For the purposes of this Agreement, a "Company Sale"
shall mean (a) any capital reorganization or reclassification of the capital
stock of the Company, or consolidation or merger of the Company with another
corporation after which fifty percent (50%) or more of the voting securities of
the surviving corporation is held by persons who were not stockholders of the
Company immediately prior to such reorganization, reclassification,
consolidation, or (b) the sale of all or substantially all of the Company's
assets or of any successor corporation's property and assets to any other
corporation or corporations, including, without limitation, a sale, assignment,
transfer or termination in any manner in whole or in part of the License
Agreement(s) between the Company and Connetics, Genentech and U.C. Davis and/or
patent rights described in the License Agreement.
5. ISSUANCE OF SERIES C PREFERRED
5.1 SERIES C PREFERRED. In addition to and not in lieu of Section 4.1,
effective upon the closing of the Company's Series C Preferred Stock Financing
(the "Series C Financing"), the Company shall issue shares to Connetics of
Series C Preferred Stock (the "Series C Preferred") in an amount equal to the
quotient of one million dollars ($1,000,000) divided by the price per share of
Series C Preferred paid by the purchasers of the Series C Preferred. The Company
shall use its best efforts to assure that the terms, conditions, rights,
preferences and privileges of the Series C Preferred issued to Connetics by the
Company in the Series C Financing shall be same as those of the Series C
Preferred issued to the other purchasers, provided however, that such efforts
shall not require the Company to accept a lower price per share or make other
material
3.
<PAGE>
concessions to the other purchasers of the Series C Preferred. Notwithstanding
the foregoing, in the event of either a Company Sale or a firm underwritten
public offering of the Company's Common Stock either of which occurs prior to
the Series B Financing or Series C Financing (if the Series B Financing has
occurred), the Company shall, in its sole discretion, either (i) deliver to
Connetics one million dollars ($1,000,000) or (ii) issue to Connetics either
eight hundred thousand (800,000) shares of Series A-2 Preferred Stock (if the
Series B Financing has not occurred) or that number of shares of Series B
Preferred in an amount equal to one million dollars ($1,000,000) divided by the
price paid per share for the Series B Preferred in the Series B Financing,
concurrently with the closing of such Company Sale or public offering .
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY
The Company hereby represents and warrants to Connetics as follows:
6.1 CORPORATE POWER. The Company has all requisite corporate power to
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.
6.2 AUTHORIZATION. All corporate action on the part of the Company and
its Board of Directors necessary for the authorization, execution, delivery and
performance of this Agreement by the Company and the performance of the
Company's obligations hereunder has been taken, except for the authorization and
reservation of the Series B Preferred and Series C Preferred. This Agreement and
the Note, when executed and delivered by the Company, shall constitute valid and
binding obligations of the Company enforceable in accordance with their terms,
subject to laws of general application relating to bankruptcy, insolvency, the
relief of debtors and, with respect to rights to indemnity, subject to federal
and state securities laws. The Series B Preferred and Series C Preferred of the
Company, when issued in compliance with the provisions of this Agreement, will
be validly issued, fully paid and nonassessable and free of any liens or
encumbrances, other than restrictions on transfer under the applicable state and
federal securities laws.
6.3 OFFERING. Assuming the accuracy of the representations and
warranties of Connetics contained in Section 5 hereof, the issuance of the Note
will be exempt from the registration and prospectus delivery requirements of the
Securities Act of 1933, as amended (the "1933 Act"), and has been registered or
qualified (or are exempt from registration and qualification) under the
registration, permit, or qualification requirements of all applicable state
securities laws.
7. REPRESENTATIONS AND WARRANTIES OF CONNETICS
7.1 PURCHASE FOR OWN ACCOUNT. Connetics represents that it shall be
acquiring the Note, the Series B Preferred and Series C Preferred solely for its
own account and beneficial interest for investment and not for sale or with a
view to distribution of the Note, Series B Preferred and Series C Preferred or
any part thereof, has no present intention of selling (in
4.
<PAGE>
connection with a distribution or otherwise), granting any participation in, or
otherwise distributing the same, and does not presently have reason to
anticipate a change in such intention.
7.2 INFORMATION AND SOPHISTICATION. Connetics acknowledges that it has
received all the information it has requested from the Company and it considers
necessary or appropriate for deciding whether to acquire the Note, the Series B
Preferred, and Series C Preferred. Connetics represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Note, the Series B Preferred, and
the Series C Preferred, and to obtain any additional information necessary to
verify the accuracy of the information given Connetics. Connetics further
represents that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risk of this investment.
7.3 ABILITY TO BEAR ECONOMIC RISK. Connetics acknowledges that
investment in the Note, the Series B Preferred and Series C Preferred involves a
high degree of risk, and represents that it is able, without materially
impairing its financial condition, to hold the Note, the Series B Preferred and
the Series C Preferred for an indefinite period of time and to suffer a complete
loss of its investment.
7.4 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting the
representations set forth above, Connetics further agrees not to make any
disposition of all or any portion of the Note, the Series B Preferred and the
Series C Preferred unless and until:
(a) There is then in effect a registration statement under the
1933 Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) Connetics shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if reasonably
requested by the Company, Connetics shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration under the 1933 Act or any applicable
state securities laws.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by Connetics to a shareholder or partner (or retired partner) of
such Connetics, or transfers by gift, will or intestate succession to any spouse
or lineal descendants or ancestors, if all transferees agree in writing to be
subject to the terms hereof to the same extent as if they were Connetics
hereunder.
7.5 EXPERIENCE. Connetics is an "accredited" investor as such term is
defined in Rule 501 under the Securities Act.
7.6 FURTHER ASSURANCES. Connetics agrees and covenants that at any time
and from time to time it will promptly execute and deliver to the Company such
further instruments and
5.
<PAGE>
documents and take such further action as the Company may reasonably require in
order to carry out the full intent and purpose of this Agreement.
7.7 INSURANCE. Connetics agrees and covenants that the Company shall be
covered as an insured party under Connetics' general liability and products
liability policy until May 31, 1999.
8. CONFIDENTIALITY.
8.1 CONFIDENTIAL INFORMATION OBLIGATIONS. As used herein, "Confidential
Information" means all information that a Party discloses to the other Party
under this Agreement, provided that "Confidential Information" shall not include
such information excluded under Section 8.2. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing by the Parties, each
Party agrees that, during the term of this Agreement and for five (5) years
after the expiration or termination of this Agreement, it shall keep
confidential and shall not publish or otherwise disclose and shall not use for
any purpose other than as provided for in this Agreement any Confidential
Information furnished to it by the other Party pursuant to this Agreement.
8.2 EXCEPTIONS. The obligations set forth in Section 8.1 shall not
apply to any Information that the receiving Party can demonstrate by competent
evidence:
(a) was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by the other Party;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the receiving Party by the
other Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
(d) was disclosed to the receiving Party, other than under an
obligation of confidentiality to a third Party, by a third Party who had no
obligation to the disclosing Party not to disclose such information to others;
or
(e) is independently developed by the receiving Party without
using any of the other Party's Confidential Information.
8.3 PERMITTED DISCLOSURE. Notwithstanding the limitations in this
Section 8, each Party may disclose Confidential Information belonging to the
other Party (or otherwise subject to this Section 8), to the extent such
disclosure is reasonably necessary in the following instances, but solely for
the limited purpose of such necessity:
(a) regulatory and tax filings;
6.
<PAGE>
(b) prosecuting or defending litigation;
(c) complying with applicable governmental laws or regulations
or valid court orders; or
(d) disclosure to affiliates, employees, consultants or agents
who agree to be bound by similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this Section 8.
Notwithstanding the foregoing, in the event a Party is required to make
a disclosure of the other Party's Confidential Information pursuant to Section
8.3, it will give reasonable advance notice to the other Party of such
disclosure and endeavor in good faith to secure confidential treatment of such
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder. Further, the Parties
agree to consult with one another on the provisions of this Agreement to be
redacted in any filings made by a Party with the United States Securities and
Exchange Commission or as otherwise required by law.
9. MISCELLANEOUS
9.1 BINDING AGREEMENT. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
9.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California, as such laws are applied to
agreements among California residents, made and to be performed entirely within
the State of California.
9.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.5 NOTICES. Any notice required or permitted under this Agreement
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon two (2) days after deposit with the United States Post Office,
postage prepaid, addressed to the Company, or to Connetics at its address at
3400 West Bayshore Road, Palo Alto, CA 94303, or at such other address as such
Party may designate by ten (10) days advance written notice to the other Party.
7.
<PAGE>
9.6 MODIFICATION; WAIVER. No modification or waiver of any provision of
this Agreement or consent to departure therefrom shall be effective unless in
writing and approved by the Company and Connetics.
9.7 INDEPENDENT COUNSEL. Connetics acknowledges that this Agreement has
been prepared on behalf of the Company by Cooley Godward LLP, counsel to the
Company, and that Cooley Godward LLP does not represent, and is not acting on
behalf of, Connetics. Connetics has been provided with an opportunity to consult
with its own counsel with respect to this Agreement.
9.8 ENTIRE AGREEMENT. This Agreement and the Exhibits hereto, the
Transition Agreement, the Amended and Restated Exclusive Sublicense Agreement,
and the Amended and Restated Service Agreement (collectively, the "Intercompany
Agreements") constitute the full and entire understanding and agreement between
the parties with regard to the subjects of the Intercompany Agreements and no
Party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth in the Intercompany Agreements.
8.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this COLLABORATION
AGREEMENT as of the date first written above.
INTERMUNE PHARMACEUTICALS, INC.
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
CONNETICS CORPORATION
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
COLLABORATION AGREEMENT
SIGNATURE PAGE
<PAGE>
EXHIBIT A
FORM OF CONVERSION NOTICE
<PAGE>
FORM OF CONVERSION NOTICE
April ___, 1999
InterMune Pharmaceuticals, Inc.
3294 West Bayshore Road
Palo Alto, CA 94303
RE: CONVERSION OF SERIES A PREFERRED STOCK INTO SERIES A-1
PREFERRED STOCK
In accordance with Article III.E.1 of the Amended and Restated Articles
of Incorporation of InterMune Pharmaceuticals, Inc. (the "Company"), Connetics
Corporation hereby gives irrevocable notice of its election to convert its
shares of Series A Preferred Stock into shares of Series A-1 Preferred Stock.
Enclosed please find a copy of the Series A Preferred Stock certificate
PA-1 evidencing ownership by Connetics Corporation of 11,200,000 shares of
Series A Preferred Stock of the Company (the "Stock Certificate"), which Stock
Certificate shall be delivered to the Company upon payment of the dividend
referenced in the recitals of the Collaboration Agreement. Upon the closing of
the Series A-1 and A-2 Preferred Stock financing and receipt of the original
Stock Certificate, please deliver the certificate for 960,000 shares of Series
A-1 Preferred Stock to Connetics Corporation at the address shown on the
Company's record books.
Sincerely,
Connetics Corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
EXHIBIT B
FORM OF PROMISSORY NOTE
<PAGE>
PROMISSORY NOTE
$300,000.00 March 31, 2001
Palo Alto, California
For value received INTERMUNE PHARMACEUTICALS, INC., a California
corporation ("PAYOR") promises to pay to Connetics Corporation or its assigns
("HOLDER") the principal sum of $300,000.00 with interest on the outstanding
principal amount at the prime rate plus two percent (2%) per annum. Interest
shall commence with the date hereof and shall continue on the outstanding
principal until paid in full.
1. This note (the "Note") is issued to the Holder pursuant to the terms
of that certain Agreement dated as of April ___, 1999 between the Company and
the Holders.
2. All payments of interest and principal shall be in lawful money of
the United States of America. All payments shall be applied first to accrued
interest, and thereafter to principal.
3. $150,000 of the outstanding principal balance and all unpaid accrued
interest shall become fully due and payable on June 30, 2001, and $150,000 of
the outstanding principal balance and all unpaid accrued interest shall become
due and payable on September 30, 2001.
4. In the event of any default hereunder, Payor shall pay all
reasonable attorneys' fees and court costs incurred by Holder in enforcing and
collecting this Note.
5. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.
6. The terms of this Note shall be construed in accordance with the
laws of the State of California, as applied to contracts entered into by
California residents within the State of California, which contracts are to be
performed entirely within the State of California.
7. Any term of this Note may be amended or waived with the written
consent of Payor and the Holder.
INTERMUNE PHARMACEUTICALS, INC.
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
<PAGE>
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
EXHIBIT 10.14
TRANSITION AGREEMENT
This TRANSITION AGREEMENT ("Agreement"), dated as of April 27, 1999 ("Effective
Date"), is entered into by and between Connetics Corporation, a Delaware
corporation ("Connetics") and InterMune Pharmaceuticals, Inc., a California
corporation ("InterMune"). Connetics and InterMune are also referred to as a
"Party" or "Parties" to this Agreement.
BACKGROUND
A. Connetics is party to a License Agreement with Genentech, Inc. dated May 5,
1998, as amended, ("Genentech License") pursuant to which Genentech
licensed to Connetics certain rights to Actimmune (as defined below).
B. Connetics has sublicensed to InterMune its rights under the Genentech
License and under the Supply Agreement between Connetics and Genentech
dated May 5, 1998 ("Genentech Supply Agreement"), all done pursuant to the
Exclusive Sublicense Agreement between Connetics and InterMune dated as of
August 21, 1998, as amended and restated effective April 27, 1999.
C. The Genentech Supply Agreement includes provisions for Connetics to
transfer manufacturing of Actimmune to a third party manufacturer [ * ],
and Connetics desires to create an incentive for InterMune (as Connetics'
sublicensee) to accelerate the transfer of manufacturing.
D. InterMune and Connetics have entered into a Term Sheet as of February 26,
1999 (the "Term Sheet") pursuant to which, among other things, InterMune
agreed that Connetics will have the right to book certain net revenues,
expenses and net profits related to sales of Actimmune Units for the
treatment of CGD (defined below) until December 31, 2001 (the "CGD
Revenues").
E. InterMune and Connetics have entered into that certain Collaboration
Agreement (the "Collaboration Agreement") and certain other related
documents as of even date herewith, which collectively set forth the
transaction contemplated by the Term Sheet (the "Transaction").
F. In connection with the Transaction, InterMune and Connetics desire to enter
into this Transition Agreement to outline the mechanism by which Connetics
shall book the CGD Revenues.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, and intending to be legally bound, the Parties
agree as follows:
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
PAGE 1 OF 12
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AGREEMENT
SECTION 1
DEFINITIONS
1.1 ACTIMMUNE. "Actimmune" means the filled and finished form of the
protein encoded by the interferon gamma-1b gene, and sold and distributed under
the trademark ACTIMMUNE-Registered Trademark-, which is owned by Genentech and
licensed to Connetics and its sublicensees under the Genentech License.
1.2 ACTIMMUNE GROSS MARGIN. "Actimmune Gross Margin" means Actimmune Net
Sales less all applicable [ * ].
1.3 ACTIMMUNE GROSS SALES. "Actimmune Gross Sales" means [ * ].
1.4 ACTIMMUNE NET SALES. "Actimmune Net Sales" means Actimmune Gross
Sales less adjustments for the following: [ * ].
1.5 ACTIMMUNE UNITS. "Actimmune Units" means vials of
ACTIMMUNE-Registered Trademark- that are sold [ * ].
1.6 BASELINE. "Baseline" means [ * ] Actimmune Units in 1999; [ * ]
Actimmune Units in 2000; and [ * ] Actimmune Units in 2001, adjusted as
applicable pursuant to Section 2.3(c). For clarity, the Parties intend that the
applicable Baseline shall represent the sales of Actimmune Units for the
treatment of CGD in each of the foregoing years.
1.7 CGD. "CGD" means chronic granulomatous disease, which is the only FDA
approved indication for the sale of Actimmune as of the Effective Date.
1.8 COLLECTION PERIOD. "Collection Period" means one full calendar month
during the Period.
1.9 CORD DISTRIBUTION COSTS. "CORD Distribution Costs" means the actual
monthly payment by InterMune to CORD Logistics, Inc., for distribution services
for sales of Actimmune up to the Baseline.
1.10 GNE ROYALTIES. "GNE Royalties" means the amount of royalties payable
to Genentech, Inc. pursuant to Section 8.3 of the Genentech License for
Actimmune Net Sales.
1.11 PERIOD. "Period" means the time from April 1, 1999 through December
31, 2001.
1.12 PRODUCT COST. "Product Cost" means actual cost paid by InterMune to
the manufacturer for each Actimmune Unit, regardless of whether the manufacturer
is Genentech or a third party manufacturer qualified pursuant to the
manufacturing transition contemplated by Section 3.
1.13 PRODUCT MANAGEMENT COSTS. "Product Management Costs" means
InterMune's actual costs to manage sales of Actimmune Units for the treatment of
CGD up to the Baseline,
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
PAGE 2 OF 12
<PAGE>
including all expenses and services related to sales of such Actimmune Units,
such as maintenance of safety databases, etc., tracked on a regular basis and
properly accounted for, at hourly rates to be agreed on by the Parties.
SECTION 2
SERVICES PERFORMED; PAYMENTS
2.1 SERVICES. During the Period, InterMune shall perform, or have
performed, order entry, packaging, shipping, invoicing, and credit and
collection services (subject to Section 2.3(b)) related to sales of Actimmune
Units. All such services shall be performed on a timely basis consistent with
standard industry practices.
2.2 PRODUCT MANAGEMENT COSTS. Except for Product Management Costs,
InterMune shall receive no separate consideration for providing services
under this Agreement. No later than thirty (30) days after the end of each
Collection Period, InterMune shall invoice Connetics for Product Management
Costs for such Collection Period, and Connetics shall remit payment on such
invoices within thirty (30) days after receipt of the invoice. InterMune's
invoice shall be accompanied by a statement itemizing such Product Management
Costs, including a list of all relevant projects, services provided, travel
and other expenses. InterMune agrees that it will not include in Product
Management Costs any non-headcount related expenses or extraordinary expenses
without first obtaining Connetics' authorization to incur such expenses. Any
expenses incurred with the consent of the Commercialization Committee formed
pursuant to Section 2.7 shall be deemed to have been authorized by Connetics
for purposes of this Section 2.2.
2.3 ACCOUNTING FOR ACTIMMUNE UNIT SALES; PAYMENTS TO CONNETICS.
(a) RECORDING REVENUE. During the Period, InterMune agrees that
Connetics shall be entitled to book the Actimmune Net Sales until the total
Actimmune Units sold reaches the Baseline applicable for each calendar year
during the Period, all in accordance with generally accepted accounting
principles, and InterMune will not book such Net Sales or otherwise record
the revenue related to the Net Sales that Connetics is entitled to book
pursuant to this Agreement. For clarification, the payment which Connetics
receives from InterMune pursuant to subsection (c) below, and the sales of
Actimmune Units represented thereby, shall accrue to the total Actimmune
Net Sales booked by Connetics for 1999. InterMune shall be entitled to
book the Actimmune Net Sales for sales of all Actimmune Units above the
Baseline, after the Baseline is met in a given calendar year.
(b) PAYMENTS TO CONNETICS. InterMune shall pay to Connetics the
amount of Actimmune Gross Margin each Collection Period, until the total
Actimmune Units sold reaches the applicable Baseline in each calendar year
during the Period, according to the following schedule: no later than
[ * ] business days after the end of each Collection Period, InterMune
shall (i) submit to Connetics the reports required pursuant to Section 2.4
for the Collection Period just ended, and (ii) remit payment for the
Collection Period immediately preceding such Collection Period, together
with a statement as described in Section 2.4. For purposes of this
Agreement, payments for a given Collection Period shall be due on the
[ * ] business day after the end of the first full calendar month following
that Collection Period
[ * ] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES ACT OF 1933, AS AMENDED.
PAGE 3 OF 12
<PAGE>
("Due Date"). To the extent that InterMune has not received payment for
sales of Actimmune Units for a given Collection Period, InterMune's
remittance on the Due Date may exclude any such unpaid amounts, but
InterMune shall remit such amount withheld from Actimmune Gross Margin on
the next Due Date, regardless of whether InterMune has received payment.
Notwithstanding the foregoing, if such unpaid amount from a purchaser of
Actimmune Units remains unpaid six (6) months after the date of invoice
("Bad Debt"), then Connetics shall reimburse InterMune for such Bad Debt
within thirty (30) days following the end of such six month period. In
such case, InterMune shall provide to Connetics the necessary documentation
in its possession for the accounting for and collection of such Bad Debt,
and shall permit Connetics to pursue collection for such Bad Debt.
(c) GROSS MARGIN FOR THE FIRST QUARTER OF 1999. InterMune will make
a one-time payment to Connetics on the Effective Date equal to Actimmune
Gross Margin for the period from January 15, 1999 to March 31, 1999, in the
amount of [ * ], together with supporting documentation as described in
this Article 2. The amount paid will count toward the total Actimmune Net
Sales booked by Connetics for 1999, as set forth in paragraph (a) above.
(d) OVERDUE PAYMENTS. For each Collection Period, if InterMune fails
to remit payment by the Due Date, the amount due shall accrue interest at
the rate of [ * ] per year until the amount due together with all accrued
interest are paid in full. If InterMune fails for [ * ] consecutive
Collection Periods to remit payment by the Due Date, InterMune hereby
agrees that Connetics shall have the right (at its sole option) to modify
the payment structure described in subsection (b) above so that Connetics
collects all revenue with respect to sales of Actimmune Units, withholds
the Actimmune Gross Margin, and remits the balance to InterMune. In such
event:
(i) InterMune shall take all action necessary to provide
Connetics with the necessary permissions and authorization to make
such modifications to the payment structure, in accordance with a
payment and reporting schedule equivalent to that set forth in
Subsection (b) above;
(ii) The provisions of Sections 2.4 and 2.6 shall apply MUTATIS
MUTANDIS; and
(iii) At the termination or expiration of this Agreement,
Connetics' right to collect revenues for the sales of Actimmune Units
shall terminate and InterMune shall thereafter have the right to
collect all revenues for such sales. Connetics shall take all action
necessary to provide InterMune with the necessary permissions and
authorization to allow InterMune to collect such revenues.
(e) SALES BELOW BASELINE. The Parties agree that, if Actimmune Unit
sales are [ * ] or more below the Baseline (on a quarterly-adjusted basis)
for a period of [ * ] days following [ * ], they will meet to evaluate the
effect of [ * ] on sales volume compared with historical trends and other
market dynamics. If the sales of Actimmune Units remain below the Baseline
for the second [ * ] day period following such price increase, the Parties
agree
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to re-set the Baseline, provided that such lower sales are not attributable
to an extraordinary circumstance, such as an interruption in supply. If,
however, sales of Actimmune Units increase during such second [ * ] day
period, the Parties agree to review the market dynamics and trends from
prior years with respect to CGD patients, and to make a final decision
regarding whether and to what extent to re-set the Baseline. The revised
Baseline number shall be deemed to be the Baseline for all relevant
purposes of this Agreement beginning with the date the revised Baseline is
agreed upon (or such earlier date as the Parties may agree). If the
Parties cannot agree on an appropriate adjustment to the Baseline following
[ * ] as set forth in this subsection, then the proposals of each Party
shall be referred for resolution according to the mechanism set forth in
Section 5.9.
(f) SALES ABOVE THE BASELINE. During [ * ], if Actimmune Net Sales
in any given calendar quarter exceed the Baseline (as may be adjusted
pursuant to subsection (e) above) for that quarter by more than [ * ],
Connetics agrees that it will [ * ] for the purpose of offsetting any
deferred net profits that InterMune might have realized for such quarter
had it been entitled to book those Actimmune Net Sales. The Parties agree
to [ * ], in an amount that approximates the profits deferred by InterMune
for Actimmune Unit sales above Baseline for the relevant quarter, [ * ]
InterMune's right to book sales after Baseline is met for the year. [ * ]
to be mutually agreed upon at the time of [ * ].
2.4 MONTHLY STATEMENTS AND REPORTS TO BE PROVIDED BY INTERMUNE. On the
[ * ] business day of each month, InterMune shall furnish to Connetics:
(a) with respect to the Collection Period just ended, a report or
reports (in a format reasonably acceptable to Connetics), listing the
quantities of Actimmune Units sold and related sales dollars (itemized by
customer and/or distributor), cost of Actimmune Units sold, inventory of
Actimmune Units as of the end of the Collection Period, accounts receivable
aging summary, returns, chargebacks, and rebates; and
(b) with respect to the Collection Period ended a month earlier,
payment of the Actimmune Gross Margin together with a statement that
reconciles the payment submitted with the reports submitted for the same
Collection Period in the prior month, and which includes all the
information necessary to calculate Actimmune Gross Sales, Actimmune Net
Sales, Actimmune Gross Margin and the payment made to Connetics. The
principal financial officer of InterMune shall certify that such monthly
statement complies with this Agreement.
In addition to the periodic reporting outlined above, InterMune shall continue
to permit Connetics [ * ] as InterMune might use during the term of this
Agreement. The initial report pursuant to subsection 2.4(a) shall be due on
May 4, 1999, and the initial statement and payment pursuant to subsection 2.4(b)
shall be due on June 2, 1999. InterMune's obligation to submit reports,
statements and payments shall continue after the term of this Agreement, until
all Collection Periods during the term have been fully accounted for.
2.5 ROYALTY PAYMENTS TO GENENTECH. InterMune shall remit to Genentech any
amounts payable on Actimmune Net Sales for third party royalties and for GNE
Royalties, all as required by the Genentech License. InterMune covenants and
agrees to remit the full amount of
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such royalties directly to Genentech or the applicable third party, and shall
[ * ] after the Effective Date and during the term of this Agreement.
2.6 AUDIT. During the term of this Agreement, and for [ * ] years after
expiration or termination of this Agreement, InterMune shall permit an
independent auditor, reasonably acceptable to InterMune, to have access to
InterMune's records as may be necessary to verify the accuracy of the statements
provided to Connetics under this Agreement, including Actimmune Gross Sales,
Actimmune Net Sales, and Actimmune Gross Margin, and to assure that InterMune
has complied with the payment terms of this Agreement. Such records shall be
open during reasonable business hours for examination at Connetics' expense, and
not more often than once each calendar year, by such independent auditor (who
shall be required to enter into a binder of confidentiality with InterMune).
2.7 COMMERCIALIZATION COMMITTEE. The Parties shall establish a
Commercialization Committee which shall be responsible for monitoring progress,
managing information exchange between the Parties, deciding key strategies and
solving problems with respect to commercialization and promotion of Actimmune
for the CGD market. At the first meeting of the Commercialization Committee,
the members shall establish a regular meeting time and structure, and appoint a
secretary whose responsibility it will be to coordinate the timing, notice, and
agendas for Commercialization Committee meetings.
SECTION 3
MANUFACTURING COST TRANSITION
3.1 OFFSET TO TRANSITION COSTS. The Parties anticipate that the transfer
of manufacturing to a third party manufacturer could result in a substantial
reduction in the Product Cost for Actimmune. As an incentive to InterMune to
complete the transfer of manufacturing of Actimmune to a third party
manufacturer pursuant to Section 4.1 of the Genentech Supply Agreement before
May 2001, and in consideration of an increase in Actimmune Gross Margin during
the Period by virtue of such lower Product Cost, Connetics agrees to reimburse
InterMune for [ * ] of InterMune's actual costs to effect such transfer of
manufacturing up to a maximum payment of [ * ], subject to adjustment as follows
for each subsequent quarter that the transfer is not complete:
<TABLE>
<CAPTION>
Amount Payable by Connetics* If Transfer is Complete by:
---------------------------- ---------------------------
<S> <C>
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
[ * ] [ * ]
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<PAGE>
<CAPTION>
Amount Payable by Connetics* If Transfer is Complete by:
---------------------------- ---------------------------
<S> <C>
[ * ] [ * ]
</TABLE>
- ----------------
* The amounts payable by Connetics listed above assume a [ * ] as of the
Effective Date). Accordingly, if the transition is completed by the target date
but results in a [ * ], the amount payable by Connetics shall be [ * ]. By way
of example, if the transfer is completed before [ * ].
3.2 COMPLETION OF MANUFACTURING TRANSFER. For purposes of this Agreement,
the transfer of manufacturing from Genentech to a third party manufacturer shall
be deemed to be complete in the first Collection Period for which [ * ].
3.3 PAYMENT TERMS. Any payment by Connetics pursuant to this Section 3
shall be payable in cash no later than thirty (30) days following completion of
the manufacturing transfer as set forth in Section 3.2.
SECTION 4
CONFIDENTIALITY
4.1 CONFIDENTIAL INFORMATION OBLIGATIONS. As used herein, "Confidential
Information" means all information that a Party discloses to the other Party
under this Agreement, provided that "Confidential Information" shall not include
such information excluded under Section 4.2. Except to the extent expressly
authorized by this Agreement or otherwise agreed in writing by the Parties, each
Party agrees that, during the term of this Agreement and for [ * ] years after
the expiration or termination of this Agreement, it shall keep confidential and
shall not publish or otherwise disclose and shall not use for any purpose other
than as provided for in this Agreement any Confidential Information furnished to
it by the other Party pursuant to this Agreement.
4.2 EXCEPTIONS. The obligations set forth in Section 4.1 shall not apply to
any Information that the receiving Party can demonstrate by competent evidence:
(a) was already known to the receiving Party, other than under an
obligation of confidentiality, at the time of disclosure by the other
Party;
(b) was generally available to the public or otherwise part of the public
domain at the time of its disclosure to the receiving Party by the other
Party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or
omission of the receiving Party in breach of this Agreement;
(d) was disclosed to the receiving Party, other than under an obligation
of confidentiality to a third Party, by a third Party who had no obligation
to the disclosing Party not to disclose such information to others; or
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(e) is independently developed by the receiving Party without using any of
the other Party's Confidential Information.
4.3 PERMITTED DISCLOSURE. Notwithstanding the limitations in this Article 4,
each Party may disclose Confidential Information belonging to the other Party
(or otherwise subject to this Article 4), to the extent such disclosure is
reasonably necessary in the following instances, but solely for the limited
purpose of such necessity:
(a) regulatory and tax filings;
(b) prosecuting or defending litigation;
(c) complying with applicable governmental laws or regulations or valid
court orders; or
(d) disclosure to affiliates, employees, consultants or agents who agree
to be bound by similar terms of confidentiality and non-use at least
equivalent in scope to those set forth in this Article 4.
Notwithstanding the foregoing, in the event a Party is required to make a
disclosure of the other Party's Confidential Information pursuant to Section
4.4, it will give reasonable advance notice to the other Party of such
disclosure and endeavor in good faith to secure confidential treatment of such
information. In any event, the Parties agree to take all reasonable action to
avoid disclosure of Confidential Information hereunder. Further, the Parties
agree to consult with one another on the provisions of this Agreement to be
redacted in any filings made by a Party with the United States Securities and
Exchange Commission or as otherwise required by law.
SECTION 5
GENERAL PROVISIONS
5.1 NO OFFSET. Neither Party shall be entitled to offset any amounts due
to the other Party under this Agreement against any amounts due from such other
Party pursuant to this Agreement or other agreements between the Parties.
Notwithstanding the foregoing sentence, any amounts due to a Party under this
Agreement that are [ * ] or more days overdue may be offset by such Party
against any amounts such Party owes the other Party under this Agreement.
5.2 SURVIVAL. The payment and reporting obligations set forth in Article
2, and the provisions of Section 2.6 and Article 4 shall survive any expiration
or termination of this Agreement, as will all rights accrued and obligations
incurred hereunder prior to such expiration or termination.
5.3 TERM AND TERMINATION. The term of this Agreement shall coincide with
the Period, and this Agreement will expire with no further action required by
either Party on December 31, 2001. In addition, either Party may terminate this
Agreement on no less than [ * ] days' notice to the other Party for material
breach of this Agreement by that Party.
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5.4 WAIVER. No waiver by either Party of any breach or default of any of
the covenants or agreements set forth in this Agreement shall be deemed a waiver
as to any subsequent or similar breach or default.
5.5 ASSIGNMENT. This Agreement shall be binding upon and inure to the
benefit of the Parties and their permitted successors and assigns; PROVIDED,
HOWEVER, that neither Party shall assign any of its rights and obligations under
this Agreement without the prior written consent of the other Party, except as
incident to the merger, consolidation, reorganization or acquisition of stock or
assets affecting substantially all of the assets or actual voting control of the
assigning Party. Any assignment or attempted assignment by either Party in
violation of the terms of this Section 4.2 shall be null and void and of no
legal effect.
5.6 NOTICES. Any notice or other communication required or permitted to
be given to either Party shall be in writing and shall be deemed to have been
properly given and to be effective on the date of delivery if delivered in
person or by facsimile or five (5) days after mailing by registered or certified
mail, postage paid, to the other Party at the following address:
In the case of InterMune: InterMune, Inc.
3294 West Bayshore Road
Palo Alto, CA 94303
Fax: (650) 858-2937
Attention: President
In the case of Connetics: Connetics Corporation
3400 West Bayshore Road
Palo Alto, CA 94303
Fax: (650) 843-2899
Attention: Chief Executive Officer
Either Party may change its address for communications by a notice to the other
Party in accordance with this Section.
5.7 HEADINGS. The headings of the several sections are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
5.8 AMENDMENT. No amendment or modification hereof shall be valid or
binding upon the Parties unless made in writing and signed by both Parties.
5.9 GOVERNING LAW. This Agreement shall be governed exclusively by the
laws of the California, as such law applies to contracts entered into between
and to be performed by California residents entirely in California.
5.10 DISPUTE RESOLUTION.
(a) In the event of any controversy or claim arising out of, relating
to or in connection with any provision of this Agreement, or the rights or
obligations of the Parties, the Parties shall try to settle their differences
amicably between themselves by referring the disputed
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matter to the President of InterMune and the Chief Executive Officer of
Connetics for discussion and resolution. Either Party may initiate such
informal dispute resolution by sending written notice of the dispute to the
other Party, and within ten (10) days after such notice such representatives of
the Parties shall meet for attempted resolution by good faith negotiations.
(b) If such personnel are unable to resolve such dispute within
thirty (30) days of initiating such negotiations, either Party may seek to have
such dispute resolved by binding arbitration under this Section 5.9. The
arbitration shall be held in Palo Alto, California according to the Commercial
Arbitration Rules of the American Arbitration Association (the "Rules"). The
arbitration will be conducted by a panel of three (3) arbitrators who are
knowledgeable in the subject matter that is at issue in the dispute, are not
affiliated directly or indirectly with either Party, and are selected by mutual
agreement of the Parties. Failing such agreement, the arbitrators shall be
selected appointed as provided in the Rules. During the arbitration, the
Parties shall have such discovery rights as the arbitrators may allow,
consistent with the discovery permitted by the Federal Code of Civil Procedure.
In conducting the arbitration, the arbitrators shall apply the rules of evidence
applicable in California, and shall be able to decree any and all relief of an
equitable nature, including but not limited to such relief as a temporary
restraining order, a preliminary injunction, or a permanent injunction, as well
as specific performance. The arbitrators shall also be able to award direct and
indirect damages, but shall not award any other form of damage (E.G., punitive
or exemplary damages).
(c) The reasonable fees and expenses, of the arbitrators, along with
the reasonable legal fees and expenses of the prevailing Party (including all
expert witness fees and expenses), the fees and expenses of a court reporter,
and any expenses for a hearing room, shall be paid as follows: If the
arbitrators rule in favor of one Party on all disputed issues in the
arbitration, the losing Party shall pay 100% of such fees and expenses; if the
arbitrators rule in favor of one Party on some issues and the other Party on
other issues, the arbitrators shall issue with the rulings a written
determination as to how such fees and expenses shall be allocated between the
Parties. The arbitrators shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the arbitration, with the Party
prevailing on more issues, or on issues of greater value or gravity, recovering
a relatively larger share of its legal fees and expenses.
(d) The decision of the arbitrators shall be final and may be
entered, sued on or enforced by the Party in whose favor it runs in any court of
competent jurisdiction at the option of such Party. Whether a claim, dispute or
other matter in question would be barred by the applicable statute of
limitations, which statute of limitations also shall apply to any claim or
disputes subject to arbitration under this Section, shall be determined by
binding arbitration pursuant to this Section.
5.11 FORCE MAJEURE. Any delays in performance by any Party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the Party
affected, including but not limited to acts of God, embargoes, governmental
restrictions, fire, flood, explosion, riots, wars, civil disorder, rebellion or
sabotage. The Party suffering such occurrence shall immediately notify the
other Party as soon as practicable, and any time for performance hereunder shall
be extended by the actual time of delay caused by the occurrence.
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5.12 INDEPENDENT CONTRACTORS. In making and performing this Agreement,
InterMune and Connetics act and shall act at all times as independent
contractors and nothing contained in this Agreement shall be construed or
implied to create an agency, partnership or employer and employee relationship
between InterMune and Connetics. At no time shall one Party make commitments or
incur any charges or expenses for or in the name of the other Party.
5.13 SEVERABILITY. If any part of this Agreement is declared invalid by
any legally governing authority having jurisdiction over either Party, then such
declaration shall not affect the remainder of the Agreement and the Parties
shall revise the invalidated part in a manner that will render such provision
valid without impairing the Parties' original interest.
5.14 CUMULATIVE RIGHTS. The rights, powers and remedies under this
Agreement shall be in addition to, and not in limitation of, all rights, powers
and remedies provided at law or in equity, or under any other agreement between
the Parties. All of such rights, powers and remedies shall be cumulative, and
may be exercised successively or cumulatively.
5.15 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
5.16 ENTIRE AGREEMENT. This Agreement, in conjunction with the other
"Intercompany Agreements" (as that term is described in the Collaboration
Agreement), embodies the entire understanding of the Parties with respect to
the subject matter of the Intercompany Agreements, and supersedes and terminates
all previous communications, representations or understandings, either oral or
written, between the Parties relating to the subject matter of the Intercompany
Agreements.
[INTENTIONALLY LEFT BLANK]
SIGNATURE PAGE FOLLOWS
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IN WITNESS WHEREOF, both InterMune and Connetics have executed this
Agreement, as of the day and year first written above.
INTERMUNE PHARMACEUTICALS, INC. CONNETICS CORPORATION
By: /s/ W. Scott Harkonen By: /s/ T. Wiggans
------------------------------ ------------------------------------------
Name: W. Scott Harkonen Name: Thomas G. Wiggans
---------------------------- ----------------------------------------
Title: President Title: President and Chief Executive Officer
--------------------------- ---------------------------------------
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SUPPLY AGREEMENT
This Supply Agreement ("Agreement") is entered into as of May 5, 1998
(the "Effective Date") between Genentech, Inc., a Delaware corporation, with its
principal offices at 1 DNA Way, South San Francisco, California 94080
("Genentech") and Connetics Corporation, a Delaware corporation, with a
principal office at 3400 West Bayshore Road, Palo Alto, California 94303
("Connetics").
Genentech and Connetics are parties to that certain License Agreement
for Interferon Gamma of even date herewith (the "License Agreement"). Pursuant
to the terms and conditions of the License Agreement, Genentech has agreed to
supply Connetics with Interferon Gamma-1B, and Connetics has agreed to purchase
Interferon Gamma-1B from Genentech for clinical studies of and commercial sales
of Licensed Products containing Interferon Gamma-1B in the Field of Use in the
Territory. This Supply Agreement, which is referred to in Section 4.0 of the
License Agreement, describes the specific terms and conditions under which
Genentech will supply Interferon Gamma-1B to Connetics for such clinical use and
commercial sale.
Genentech and Connetics agree as follows:
1.0 DEFINITIONS
Unless specified otherwise below, the terms with initial capitalization
in this Agreement shall have the same meanings as those given to them in the
License Agreement. In addition, for the purposes of this Supply Agreement, the
following terms shall have the following meanings:
1.1 "BENCHMARK COSTS" shall have the meaning defined in Section 2.6(e)
below.
1.2 "BULK PRODUCT" shall mean Interferon Gamma-1B provided hereunder as
bulk protein manufactured in compliance with Good Manufacturing Practices,
pursuant to FDA regulatory approvals as applicable during the term of this
Agreement, and supplied to Connetics in such a form and in such containers as
shall be mutually determined by Genentech and
1.
<PAGE>
Connetics and as described in the Specifications.
1.3 "CERTIFICATE OF ANALYSIS" shall mean a summary of the quality
control testing, as described in the Specifications, performed by Genentech for
Bulk Product and Finished Product supplied hereunder.
1.4 "FINISHED PRODUCT" shall mean Interferon Gamma-1B supplied in an
unlabeled vialed form as 100 micrograms of Interferon Gamma-1B protein in a 0.5
ml fill volume, manufactured in compliance with Good Manufacturing Practices,
pursuant to FDA regulatory approvals as applicable during the term of this
Agreement, and intended for commercial sale to treat CGD and osteopetrosis and
for clinical studies.
1.5 "FULLY BURDENED MANUFACTURING COST" shall mean the cost of
Genentech's production, testing and (if applicable) labeling and packaging, of
Bulk Product and Finished Product, which shall be comprised of the sum of: [*]
1.6 "FULLY BURDENED SUPPLY COST" shall mean the cost to Genentech of
obtaining from a third party contract manufacturer Bulk Product or Finished
Product, or portion thereof, as the case may be, which Genentech supplies to
Connetics, which shall be comprised of [*]
1.7 "SPECIFICATIONS" shall mean those specifications set forth in
Exhibit A attached hereto and which is incorporated herein.
1.8 "THIRD PARTY MANUFACTURING ROYALTIES" shall mean all royalties paid
or incurred by Genentech to third parties under licenses taken by Genentech with
respect to patents or patent applications that, but for such license(s), would
be infringed by the manufacture, use, sale, offer for sale or importation of
Bulk Product or Finished Product, which royalties are based on the manufacture
and sale of Bulk Product or Finished Product by Genentech (or its contract
manufacturer) on behalf of Connetics or its sublicensees, or by Connetics or its
sublicensees (or a contract manufacturer on their behalf). Attached hereto as
Exhibit B is a list of all such
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<PAGE>
royalty obligations to third parties known to Genentech as of the Effective Date
without diligent search. No later than thirty (30) days from the Effective Date,
Genentech shall complete a reasonable internal investigation of its records and
update Exhibit B, as necessary, to accurately reflect all such royalty
obligations to third parties to best of Genentech's knowledge. Genentech shall
notify Connetics in writing during the term of this Agreement if it becomes
aware of any additional Third Party Manufacturing Royalties.
2.0 SUPPLY OF PRODUCTS
2.1 PURCHASE AND SALE OF BULK PRODUCT AND FINISHED PRODUCT
During the term of this Agreement, and subject to the terms
and conditions of this Agreement, Genentech agrees to supply to Connetics, and
Connetics agrees to purchase from Genentech, quantities of Bulk Product for
clinical studies and commercial sales of Licensed Product, and Finished Product
for commercial sales of Licensed Product to treat CGD and osteopetrosis and for
clinical studies, pursuant to the License Agreement.
2.2 PRODUCT REQUIREMENT FORECASTS AND PRODUCTION
(a) By thirty (30) days after the date of execution of this
Agreement, Connetics shall provide Genentech with an eighteen (18) month advance
forecast of the expected quantity requirements, and timing of those
requirements, of Connetics and InterMune for Bulk Product and Finished Product.
Thereafter, Connetics shall provide rolling eighteen (18) month advance
forecasts at the end of each calendar quarter. Connetics agrees to use its Best
Efforts in preparing all forecasts. Forecasts shall include the amounts of Bulk
Product and Finished Product to be supplied by Genentech and the expected timing
for the delivery of each shipment during the forecast period. The Parties shall
discuss each of the forecasts and shall mutually agree in good faith on the
appropriateness of each forecast versus anticipated demand for Bulk
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<PAGE>
Product and Finished Product. Genentech shall have the right to review and
approve all forecasts submitted by Connetics and to make reasonable requests of
Connetics to modify such forecasts based on Genentech's anticipated production
capabilities.
(b) Genentech will produce Bulk Product and Finished Product
to meet the mutually agreed upon forecasts, subject to the provisions of Section
2.3 below. Genentech will notify Connetics of all scheduled production activity
for Bulk Product or Finished Product. The timing of such production and final
vial fills will be dependent upon Genentech's requirements to utilize its
manufacturing facilities for its own uses and for other purposes, subject to
Genentech's obligation under Section 2.4(d) to use its Best Efforts to meet
delivery dates in accepted purchase orders.
2.3 QUANTITY OBLIGATION LIMIT
(a) Genentech's obligation to supply Bulk Product and Finished
Product to Connetics shall be limited to a total maximum amount of [*] grams per
year of Interferon Gamma-1B supplied in the form of Bulk Product and Finished
Product. Of this total amount, Genentech shall be obligated to provide no more
than [*] grams per year of Interferon Gamma-1B as Finished Product unless
otherwise agreed to by Genentech.
(b) Genentech's obligation to supply Bulk Product and Finished
Product to Connetics shall terminate pursuant to the provisions of Article 4.0
below.
2.4 PURCHASE ORDERS
(a) No later than thirty (30) days after the Effective Date,
Connetics shall place firm purchase orders for Finished Product and Bulk Product
required by Connetics for clinical studies through December 31, 1998 and firm
purchase orders for Finished Product and Bulk Product required by Connetics for
commercial sale for treatment of CGD through December 31, 1998. Each such
purchase order shall specify the precise quantity of Finished Product and Bulk
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Product required. Genentech shall respond in writing as to its acceptance of
each firm purchase order within thirty (30) days of receipt of such order,
provided that Genentech may not withhold acceptance of any quantity of Finished
Product for commercial sale specified in the purchase order therefor that is not
more than [*] of the pro-rata quantity of Finished Product manufactured by
Genentech for commercial sale in the twelve months prior to the Effective Date,
and any portion of the order that is in excess thereof shall be accepted at
Genentech's discretion. The Parties agree that purchase orders for Finished
Product for clinical studies and Bulk Product for any use submitted pursuant to
this Section 2.4(a) shall be accepted by Genentech and scheduled for delivery as
soon as reasonably possible if Genentech has sufficient quantities of Finished
Product and Bulk Product in its inventory, or if no sufficient quantities of
Finished Product and Bulk Product exist in Genentech's inventory, at the
earliest time at which Genentech can reasonably supply such quantities of
Finished Product and Bulk Product specified in the purchase order taking into
account Genentech's available plant capacity and timing of its production of
Bulk Product and/or Finished Product. The Parties agree that Finished Product
for commercial sale ordered pursuant to this Section 2.4(a) shall be scheduled
for delivery at the earliest time at which Genentech can reasonably supply such
quantities of Finished Product specified in the purchase order taking into
account Genentech's available plant capacity and timing of its production, but
in no event later than the Transfer Date.
(b) For Bulk Product and Finished Product that Connetics
wishes to receive after December 31, 1998, Connetics shall place firm purchase
orders for Bulk Product and Finished Product with Genentech by August 1 of the
calendar year prior to the calendar year in which Bulk Product or Finished
Product will be produced. The firm purchase order shall specify the precise
quantity and form of Bulk Product or Finished Product required and the delivery
dates for deliveries of the specified quantities. Genentech shall promptly
acknowledge its receipt of purchase orders and shall use its Best Efforts to
meet the terms of a purchase order that it accepts, taking into account mutually
agreed upon forecasts under Section 2.2(a), available plant capacity and timing
of its production. Genentech shall respond in writing as to its acceptance of
each firm purchase order within thirty (30) days of receipt of such order
provided that Genentech may not withhold acceptance of a purchase order that is
within [*] of the quantity requirement listed in
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the most recent eighteen (18) month forecast. Any portion of the order that is
more than [*] greater or less in quantity than the most recent corresponding
eighteen (18) month forecast will be accepted at Genentech's discretion.
Notwithstanding the above, Connetics shall have the right to submit one purchase
order for Finished Product for clinical studies only on or prior to December 31,
1998 for delivery by June 30, 1999, which shall be a replacement for the
purchase order placed by Connetics on or just prior to August 1, 1998 for
Finished Product for clinical studies only. Genentech shall accept such
replacement purchase order provided that the quantity of Finished Product for
clinical studies specified in such purchase order is within [*] of the quantity
specified in the purchase order placed on or just prior to August 1, 1998, and
provided that sufficient Finished Product is available in Genentech's inventory.
If sufficient Finished Product is not available in Genentech's inventory,
Genentech shall accept such replacement purchase order at its discretion, and
subject to available plant capacity and the timing of its production campaigns.
If Genentech accepts such replacement purchase order, Connetics shall pay for
such Finished Product, and Bulk Product if required to produce such Finished
Product, at the prices provided in Section 2.6 below. After Genentech fills such
replacement purchase order, it shall have no further obligation to supply
Finished Product to Connetics for clinical studies. Once a specified quantity,
form and delivery date terms have been agreed to by the Parties in any purchase
order placed pursuant to this Section 2.4(a), the purchase order may not be
canceled by either Party except as provided in this Section 2.4 or in Section
3.3 below.
(c) The Parties acknowledge and agree that the yield of
product from each production lot run may vary. If Bulk Product is to be filled
as Finished Product pursuant to a purchase order, each lot of such Bulk Product
will be filled in multiple fill runs, and, due to shelf life, each lot of Bulk
Product must be completely filled within six (6) months of production.
(d) Genentech shall use Best Efforts to ship Bulk Product and
Finished Product to Connetics by the delivery date specified in the accepted
purchase order. If Genentech believes there will be a significant delay in
shipment of Bulk Product or Finished Product beyond the delivery dates specified
in any accepted purchase order, Genentech shall promptly inform Connetics of
such expected delay and shall use its Best Efforts to minimize the delay. In the
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event that Genentech cannot deliver to Connetics the Bulk Product or Finished
Product conforming to the Specifications by the delivery dates in an accepted
purchase order, Connetics will have the following rights in lieu of the rights
provided in Section 4.2 below: (a) in the event that Genentech cannot deliver
the conforming Bulk Product or Finished Product to Connetics within ninety (90)
days after the delivery date specified in an accepted purchase order, Connetics
either may cancel such portion of the purchase order by written notice to
Genentech or may accept delivery at a later date specified by Genentech, but
subject to subsection (b) below; (b) if Genentech continues to fail to deliver
conforming Bulk Product or Finished Product within six (6) months of the
delivery date specified in an accepted purchase order, Connetics may terminate
this Agreement effective upon written notice given to Genentech, and after such
termination, Genentech will transfer Genentech Manufacturing Knowhow to
Connetics at Genentech's expense, and shall be deemed to have granted Connetics
a nonexclusive, sublicenseable license, under Genentech Manufacturing Knowhow to
make or have made Licensed Products in the Field of Use for use and sale by
Connetics and its sublicensees in the Territory.
2.5 CHANGE ORDERS
Except as set forth in Section 2.4(c) above, the time of
delivery and quantities specified in a purchase order accepted by Genentech
pursuant to Section 2.4(a) above shall be binding upon the Parties and may not
be changed or canceled, except as provided in Section 3.3 below.
2.6 PRICE
(a) Connetics shall pay for Bulk Product and Finished Product
supplied pursuant to this Agreement at the prices set forth below in Sections
2.6(b), 2.6(c) and 4.1, as applicable. All payments shall be made in the manner
set forth in Section 2.7 of this Agreement.
(b) Genentech shall sell Bulk Product to Connetics for
clinical studies at a price equal to[*]. Genentech shall sell Bulk Product to
Connetics for commercial sale of Licensed
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Products at a price equal to [*]. If Genentech chooses to have a third party
contract manufacturer produce or contribute to the production of Bulk Product
for clinical studies, Genentech shall sell such Bulk Product to Connetics at a
price equal to [*]. If Genentech chooses to have a third party contract
manufacturer produce or contribute to the production of Bulk Product for
commercial sale of Licensed Product, Genentech shall sell such Bulk Product to
Connetics at a price equal to [*].
(c) Genentech shall sell Finished Product to Connetics at a
price equal[*]. If Genentech chooses to have a third party contract manufacturer
produce or contribute to the production of Finished Product, Genentech shall
sell such Finished Product to Connetics at a price equal to[*]. The size and
form of the vials to be filled hereunder by Genentech shall be those used by
Genentech prior to the Effective Date for its ACTIMMUNE product. All costs
incurred by the Parties related to any change in such vials, or in labels or
packaging materials, shall be paid by Connetics.
(d) Genentech will label and package Finished Product vials,
pursuant to a firm purchase order accepted by Genentech as described in Section
2.4, provided, however, that Connetics shall supply all labels, inserts and
packaging materials to Genentech, at Connetics' sole cost. Genentech will label
and package such Finished Product vials at a price equal to [*]. Genentech
chooses to have a third party contract manufacturer produce or contribute to the
labeling and packaging of Finished Product, Genentech shall sell such Finished
Product to Connetics at a price equal to [*].
(e) Genentech shall use its Best Efforts to maintain its Fully
Burdened Manufacturing Cost and its Fully Burdened Supply Cost for Bulk Product
and Finished Product that is manufactured and configured according to the
Specifications at or below the benchmark costs of [*] (the "Benchmark Costs").
The Parties agree that the Fully Burdened Manufacturing Cost, Fully Burdened
Supply Cost and Benchmark Costs are based upon Bulk Product and Finished Product
being produced in multiples of the following production lot size and fill
quantity, respectively: (i) a production lot size which has an expected yield of
[*] Bulk Product
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(the actual yield of such lots may vary; the yield range, observed to date, has
been [*] of Bulk Product) and (ii) a filled vial quantity of [*] for Finished
Product. Adjustments to such Benchmark Costs of up to [*] annually may be made
for any increases in the Fully Burdened Manufacturing Cost and Fully Burdened
Supply Cost that are within Genentech's sole control. If increases in the Fully
Burdened Manufacturing Cost and Fully Burdened Supply Cost, within Genentech's
sole control, in any calendar year result in the Fully Burdened Manufacturing
Cost and/or Fully Burdened Supply Cost exceeding the adjusted Benchmark Costs,
Connetics shall pay to Genentech an amount equal to [*] of the amount that
exceeds the adjusted Benchmark Costs. Adjustments to Benchmark Costs due to
increases in the Fully Burdened Manufacturing Cost and Fully Burdened Supply
Cost that are not within the sole control of Genentech may be made without
regard to such [*] annual limit, including, without limitation, any increases
due to inflation, raw material costs, changes in the manufacturing process
required by the FDA, or changes in United States generally accepted accounting
principles.
(f) For any Third Party Manufacturing Royalties paid directly
by Connetics to Genentech hereunder, Genentech shall pay such amounts of Third
Party Manufacturing Royalties to the third party licensors to which such Third
Party Manufacturing Royalties are due and payable (provided Genentech has not
already made such payments prior to the time of such Connetics' payment).
2.7 PAYMENT
Payment by Connetics shall be made within sixty (60) days after
Connetics' receipt of Genentech's invoice for the supply of Bulk Product or
Finished Product. Such invoice shall be submitted on or after delivery by
Genentech of Bulk Product or Finished Product to the carrier as provided in
Section 3.1. If within thirty (30) days after the delivery of Bulk Product or
Finished Product and the accompanying Certificate of Analysis to Connetics,
Connetics demonstrates non-conformance under Section 2.9 below and Genentech
agrees with such finding, which agreement shall not be unreasonably withheld,
Connetics shall not be obligated to pay for such non-conforming shipment of Bulk
Product or Finished Product. All payments to Genentech by
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Connetics under this Agreement shall be made in United States dollars by wire
transfer (or such other reasonable means as Genentech may direct) to such United
States bank account as Genentech may designate from time to time. If a wire
transfer is to be made, Connetics shall provide notice at least five (5) days
prior to the date of transfer of the amount of payment and the date good funds
will be received. Such notice should be given to the Treasurer of Genentech at
the address set forth at the beginning of this Agreement or such other address
as Genentech may subsequently direct.
2.8 RECORDS; AUDIT RIGHTS
(a) Genentech shall keep full, true and accurate books of
account containing all particulars which may be necessary for the purpose of
showing Fully Burdened Manufacturing Cost, Fully Burdened Supply Cost and Third
Party Manufacturing Royalties. Said books of account shall be kept at the
principal place of business of Genentech. Said books and the supporting data
shall be open at all reasonable times, for three (3) years following the end of
the calendar year to which they pertain (and access shall not be denied
thereafter, if reasonably available), to the inspection of an independent public
accountant retained by Connetics and reasonably acceptable to Genentech for the
purpose of verifying Fully Burdened Manufacturing Cost, Fully Burdened Supply
Cost and Third Party Manufacturing Royalties under this Agreement; provided,
however, that Connetics shall give Genentech reasonable prior notice of such
review by Connetics' independent public accountant and that such review shall
not take place more often than once a year. If such review reveals that
Connetics has overpaid Genentech for Bulk Product or Finished Product supplied
hereunder, Genentech shall refund to Connetics the amount of such overpayment,
plus interest thereon at the prime rate of interest as reported by Bank of
America in San Francisco, California at the time of such review. If such
overpayment is greater than [*] of the actual amount that should have been
charged to Connetics, then Genentech shall pay Connetics' actual costs of such
review.
(b) Connetics shall pay to Genentech [*] of Genentech's fully
burdened costs related to requests by Connetics to audit or inspect Genentech's,
or Genentech's third party
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contract manufacturer's, manufacturing facility, and such audits or inspections
may occur only for the purpose of compliance with regulatory obligations.
Connetics shall have the right to conduct such an audit, or such an inspection,
of Genentech's, or Genentech's third party contract manufacturer's,
manufacturing facility once every twenty-four (24) months from the Effective
Date hereof and no more frequently than in twenty-four (24) month intervals,
with at least ten (10) days prior written notice. Notwithstanding the above, for
any audit or inspection of Genentech's facilities for the purpose of complying
with regulatory obligations for the transfer to Connetics of the fill, labeling
and packaging of Bulk Product or Finished Product, Connetics shall pay [*] of
Genentech's fully burdened costs related to such audit or inspection. Connetics
may inspect or audit only those physical areas of Genentech's, or its contract
manufacturer's, facility that are directly involved in the manufacture of Bulk
Product or Finished Product, as applicable.
(c) Genentech shall pay to Connetics [*] of Connetics' fully
burdened costs related to requests by Genentech to audit or inspect Connetics',
or Connetics' sublicensees' or third party contract manufacturer's, quality
assurance and quality control records and facilities, and such audits or
inspections may occur only for the purpose of compliance with regulatory
obligations or of verifying the capability of Connetics to adequately test and
confirm conformity of Bulk Product and Finished Product with the Specifications.
Genentech shall have the right to conduct such an audit or inspection of
Connetics', or Connetics' sublicensees' or third party contract manufacturer's,
quality assurance and quality control facility and records once every
twenty-four (24) months from the Effective Date hereof and no more frequently
than in twenty-four (24) month intervals, with at least ten (10) days prior
written notice. Notwithstanding the above, for any audit or inspection of
Connetics' facilities for the purpose of complying with regulatory obligations
for the transfer to Connetics of the fill, labeling and packaging of Bulk
Product and Finished Product, Genentech shall pay [*] of Connetics' fully
burdened costs related to such audit or inspection. Genentech may inspect or
audit only those physical areas of Connetics', or of its sublicensees' or its
contract manufacturer's, facility that are directly involved in the quality
assurance and quality control of Bulk Product or Finished Product, as
applicable.
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2.9 NON-CONFORMING PRODUCT
(a) The Bulk Product and Finished Product supplied by
Genentech to Connetics hereunder shall be in conformance with the
Specifications. Non-conformance of Bulk Product and Finished Product shall be
proved by establishing non-conformity of the Bulk Product or Finished Product
delivered as compared to the Specifications. Any claim by Connetics of
non-conforming Bulk Product or Finished Product must be submitted to Genentech,
in writing, within thirty (30) days after the delivery of Bulk Product or
Finished Product and the accompanying Certificate of Analysis to Connetics,
accompanied by a report of Connetics' analysis (which analysis shall be
conducted in good faith) and a sample of the Bulk Product or Finished Product at
issue, explaining in reasonable detail the basis on which the allegedly
non-conforming Bulk Product or Finished Product does not meet the
Specifications. Only those tests listed in the Specifications may be used to
demonstrate non-conformance of Bulk Product or Finished Product.
(b) If after Genentech's own analysis of the sample (which
shall be conducted in good faith and completed within thirty (30) days after the
receipt by Genentech of the report and sample from Connetics, and the results of
which shall be provided to Connetics) Genentech agrees with the claim of
non-conformity, Connetics shall promptly inform Genentech if it wishes to have
Genentech replace the non-conforming Bulk Product or Finished Product with
conforming Bulk Product or Finished Product. If Connetics wishes to receive such
replacement Bulk Product or Finished Product, Genentech shall provide such
replacement as soon as reasonably practicable thereafter, in which case
Connetics shall be obligated to pay only for such replacement Bulk Product or
Finished Product. Connetics shall not be obligated to pay for the nonconforming
Bulk Product or Finished Product, and Genentech shall: (i) credit Connetics for
the amount paid by Connetics for the non-conforming Bulk Product or Finished
Product if Connetics has already paid for such non-conforming Bulk Product or
Finished Product or (ii) cancel its invoice to Connetics for such non-conforming
Bulk Product or Finished Product if Connetics has not yet paid for such
non-conforming Bulk Product or Finished Product, and
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Connetics shall not be obligated to pay such canceled invoiced amount. If, after
its own analysis, Genentech does not agree with the claim of non-conformity or
determines that Connetics is responsible for the non-conformity, the Parties
shall in good faith discuss and agree upon a settlement of the issue, and
Connetics shall not be obligated to pay for such alleged nonconforming Bulk
Product or Finished Product until such settlement is reached.
(c) If there are procedures by which Connetics, without
unreasonable effort, inconvenience or expense, can convert, or cause to be
converted, the non-conforming Bulk Product or Finished Product into conforming
Bulk Product or Finished Product, Connetics shall upon Genentech's request and,
if Genentech is responsible for the non-conformity, at Genentech's expense, do
so. If Connetics converts the non-conforming Bulk Product or Finished Product
into conforming Bulk Product or Finished Product, upon such conversion the Bulk
Product or Finished Product shall be deemed to be conforming Bulk Product or
Finished Product delivered hereunder on the date on which such conversion is
completed. If Genentech is responsible for the cost of such conversion pursuant
to this Section 2.9(c), unless the Parties shall have agreed on the cost of such
conversion in advance, Connetics shall provide to Genentech such evidence as
Genentech may reasonably need to substantiate such cost.
(d) After Genentech has agreed that Bulk Product or Finished
Product shipment is non-conforming, and if Parties have agreed that it cannot be
converted to conforming Bulk Product or Finished Product pursuant to Section
2.9(c) above and Genentech is responsible for the non-conformity, Connetics
shall return or destroy it at Genentech's request and cost in the most cost
effective and environmentally safe and appropriate manner available, consistent
with federal, state and local laws and regulations.
(e) If conforming Bulk Product or Finished Product supplied
under this Agreement becomes non-conforming or unsuitable for use in Licensed
Products at no fault of Genentech, Connetics will remain obligated to pay
Genentech for such Bulk Product or Finished Product at the prices set forth in
Section 2.6 or 4.1 as applicable. At Genentech's request, Connetics shall return
such unsuitable Bulk Product or Finished Product to Genentech.
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Otherwise, Connetics shall destroy it in the most environmentally safe and
appropriate manner available, consistent with federal, state and local laws and
regulations.
3.0 SHIPMENT OF BULK PRODUCT AND FINISHED PRODUCT
3.1 SHIPMENT
For each purchase order for Bulk Product or Finished Product
accepted by Genentech pursuant to Section 2.4, Genentech shall deliver Bulk
Product or Finished Product to Connetics to a single destination in the United
States chosen by Connetics. Such shipment will be by carrier identified by
Connetics. Title and risk of loss as to all Bulk Product and Finished Product
shall pass to Connetics at point of origin (FOB Genentech). Connetics shall be
responsible for all freight, freight brokerage, insurance and other costs
associated with shipping the Bulk Product or Finished Product hereunder.
3.2 SHIPPING DOCUMENTS
As soon as reasonably possible after each shipment of Bulk
Product or Finished Product ordered and shipped pursuant to this Agreement,
Genentech shall forward to Connetics all customary documents concerning the
shipment, including Genentech's invoice relating to such shipment. A packing
list and, to the extent possible, a Certificate of Analysis will be included in
each shipment. Where it is not possible to include a Certificate of Analysis
with a shipment, Genentech shall use its Best Efforts to furnish the same to
Connetics as soon as reasonably possible.
3.3 PURCHASE ORDER CANCELLATION
Except as provided in Section 2.4(d) above, Connetics, on 60
days prior written notice to Genentech, may cancel any or all outstanding
purchase orders only in the event that:
(a) Connetics has first terminated this Supply Agreement
pursuant to Section 4.2
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below; or
(b) a recall of the Bulk Product or Finished Product is
reasonably deemed necessary by Genentech, Connetics or the FDA.
(c) Connetics has entered into a written supply agreement with
a third party manufacturer, as described in Section 4.1 below.
For any cancellation of an outstanding purchase order, for any
reason, after the first step in production has begun, Genentech shall provide
Connetics with a written estimate of all expenses specifically incurred by
Genentech with regard to filling such purchase order as of the date of
cancellation. No later than ten (10) days after receipt of such estimate,
Connetics shall notify Genentech in writing as to whether it elects to: (i)
proceed with the order, at the prices set out in Section 2.6 or 4.1 as
applicable or (ii) compensate Genentech for all expenses specifically incurred
by Genentech with regard to filling such purchase order as of the date of
cancellation.
3.4 GOVERNING TERMS
All sales hereunder shall be subject to the provisions hereof
(including, without limitation, the Specifications) and shall not be subject to
the terms and conditions contained on any purchase order of Connetics or
confirmation of Genentech, except insofar as any such purchase order or
confirmation establishes:
(i) the quantity and form of any Bulk Product or Finished
Product ordered;
(ii) the shipment date;
(iii) the shipment routes and destinations; or
(iv) the carrier.
3.5 TAXES
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Connetics shall bear all applicable taxes such as sales, use,
value added or similar taxes. All payments from Connetics to Genentech under
this Agreement shall be made without setoff and without any deduction or
withholding for or on account of any taxes, duties, levies, imports, fees or
charges.
3.6 COMPLIANCE WITH LAW
Connetics shall be responsible, at its expense, for complying
with all applicable regulatory requirements relating to its use, marketing or
sale of the Bulk Product or Finished Product supplied hereunder. Genentech shall
be responsible, at its expense, for complying with all applicable regulatory
requirements relating to the manufacture of the Bulk Product or Finished Product
supplied hereunder.
3.7 NO IMPLIED REPRESENTATIONS, WARRANTIES OR CONDITIONS
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN OR IN THE
LICENSE AGREEMENT, GENENTECH MAKES NO REPRESENTATIONS OR WARRANTIES AND THERE
ARE NO CONDITIONS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO
BULK PRODUCT OR FINISHED PRODUCT SUPPLIED HEREUNDER, INCLUDING, WITHOUT
LIMITATION, ANY REPRESENTATIONS, WARRANTIES OR CONDITIONS WITH RESPECT TO
NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF SUCH
BULK PRODUCT OR FINISHED PRODUCT.
3.8 QUALITY CONTROL AND IDENTITY TEST
(a) Each shipment of Bulk Product and Finished Product
hereunder shall have been manufactured in accordance with U.S. Good
Manufacturing Practices in a duly licensed
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facility and shall have been subject to a quality control inspection by
Genentech in accordance with the Specifications and with Genentech's then
current quality control standards and systems. Genentech shall number each Bulk
Product or Finished Product shipment with a vendor lot number that is traceable
to raw materials and/or components used to manufacture such Bulk Product and
Finished Product.
(b) Prior to any use or distribution by Connetics, Connetics
shall subject all Bulk Product and Finished Product to be so used or distributed
to Connetics' then current quality control review for Licensed Products which
shall be consistent with those quality control standards and systems in general
use in the pharmaceutical industry. Connetics shall identify Licensed Products
sold by it or its distributors with a vendor lot number and NDC number that is
traceable to the shipment of Bulk Product or Finished Product purchased from
Genentech. For each Bulk Product or Finished Product shipment, Connetics shall
maintain a complete record of the raw data associated with all material aspects
of the processing of Bulk Product or Finished Product performed by it or under
its direction until all Bulk Product or Finished Product from that shipment is
sold.
(c) All costs incurred by Genentech for the transfer to
Connetics of technical procedures, documents, assays and other materials and
information reasonably necessary for Connetics' quality control procedures
and other purposes hereunder shall be paid by Connetics.
(d) All costs incurred by the Parties' related to any changes
in the Specifications shall be paid by Connetics, including, without limitation,
changes in vial size, fill quantity, and development and validation of new
methodologies.
4.0 TERM; TERMINATION
4.1 TERM
The term of this Supply Agreement shall commence on the
Effective Date hereof
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and, unless terminated earlier pursuant to Section 2.4(d), 4.2 or 4.3 below,
shall terminate as follows:
(a) Subject to Section 4.1(d) below, the provisions under this
Agreement governing the rights and obligations of the Parties with respect to
the supply and purchase of Bulk Product for clinical studies and for sales of
Licensed Product shall terminate on the earlier of: (i) three (3) years from the
Effective Date of this Agreement or (ii) the date on which that a third party
manufacturer, approved by the Parties, enters into a supply agreement with
Connetics to manufacture Bulk Product and, if for the supply of Licensed Product
for sale, has received a FDA license to manufacture Bulk Product. Genentech
agrees that Boehringer Ingelheim GmbH (or its successor entity) will be approved
by Genentech if proposed by Connetics as a third party manufacturer of Bulk
Product for supply to Connetics and its sublicensees. For the supply of Bulk
Product for sales of Licensed Product, Connetics shall replace Genentech with
such third party as a contract manufacturer on the PLA or any subsequent BLA
filed with the FDA. Connetics shall use Best Efforts to locate a third party
manufacturer to produce Bulk Product within three (3) years of the Effective
Date of this Agreement. As soon as reasonably possible after finding a third
party manufacturer that is approved by the Parties to manufacture Bulk Product,
Connetics shall enter into a supply agreement directly with such manufacturer.
Genentech will then transfer Genentech Manufacturing Knowhow to such third party
manufacturer at Connetics' expense, and shall be deemed to have granted
Connetics and such third party manufacturer a nonexclusive license, under
Genentech Manufacturing Knowhow to make or have made Licensed Products for
supply to Connetics and its sublicensees for use and sale by Connetics and its
sublicensees in the Field of Use in the Territory. Connetics thereafter shall
pay to Genentech [ *** ] of Third Party Manufacturing Royalties, if any,
attributable to the manufacture of Bulk Product by Connetics, its sublicensee or
its third party manufacturer, and Genentech shall timely pay all such Third
Party Manufacturing Royalties as required under license agreements with the
applicable licensors.
(b) Subject to Section 4.1(e) below, the provisions under this
Agreement governing the rights and obligations of the Parties with respect to
the supply and purchase of Finished Product for clinical studies shall terminate
on the earlier of: (i) June 30, 1999 or (ii) the
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date on which a third party manufacturer, approved by the Parties, enters into a
supply agreement with Connetics to fill and finish Bulk Product. Genentech
agrees that Boehringer Ingelheim GmbH (or its successor entity) will be approved
by Genentech if proposed by Connetics as a third party manufacturer of Finished
Product for supply to Connetics and its sublicensees. As soon as reasonably
possible after finding a third party manufacturer approved by the Parties to
fill and finish Bulk Product, Connetics shall enter into a supply agreement
directly with such manufacturer. Genentech will then transfer Genentech
Manufacturing Knowhow to such third party manufacturer at Connetics' expense,
and shall be deemed to have granted Connetics and such third party manufacturer
a nonexclusive license, under Genentech Manufacturing Knowhow to make or have
made Licensed Products for supply to Connetics and its sublicensees for use and
sale by Connetics and its sublicensees in the Field of Use in the Territory.
Connetics thereafter shall pay to Genentech [*] of Third Party Manufacturing
Royalties attributable to the production of Finished Product by Connetics, its
sublicensee or its third party manufacturer, and Genentech shall timely pay all
such Third Party Manufacturing Royalties as required under license agreements
with the applicable licensors.
(c) Subject to Section 4.1(e) below, the provisions under
this Agreement governing the rights and obligations of the Parties with respect
to the supply and purchase of Finished Product for sales of Licensed Product to
treat CGD and osteopetrosis shall terminate on the earlier of: (i) three (3)
years from the Effective Date of this Agreement or (ii) the date on which a
third party manufacturer, approved by the Parties to fill and finish Bulk
Product, receives a FDA license to produce Finished Product and enters into a
supply agreement with Connetics to fill and finish Bulk Product. Genentech
agrees that Boehringer Ingelheim GmbH (or its successor entity) or [*] will be
approved by Genentech if proposed by Connetics as its third party manufacturer
to fill and finish Bulk Product for supply to Connetics and its sublicensees. At
the time such third party receives a FDA license, Connetics shall replace
Genentech with such third party as a contract manufacturer on the PLA or any
subsequent BLA filed with the FDA. As soon as reasonably possible after finding
a third party manufacturer approved by the Parties to fill and finish Bulk
Product, Connetics shall enter into a supply agreement directly with such
manufacturer. Genentech will then transfer Genentech Manufacturing Knowhow to
such third party manufacturer at Connetics' expense, and shall be deemed to have
granted Connetics and such third
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party manufacturer a nonexclusive license, under Genentech Manufacturing Knowhow
to make or have made Licensed Products for supply to Connetics and its
sublicensees for use and sale by Connetics and its sublicensees in the Field of
Use in the Territory. Connetics shall pay to Genentech [*] of Third Party
Manufacturing Royalties attributable to the production of Finished Product by
Connetics, its sublicensees or its third party manufacturer, and Genentech shall
timely pay all such Third Party Manufacturing Royalties as required under
license agreements with the applicable licensors.
(d) If no third party manufacturer has entered into an
agreement with Connetics to manufacture Bulk Product within three (3) years from
the Effective Date of this Agreement, the Parties shall continue to work
together in good faith to find an acceptable third party manufacturer. Until
such manufacturer is found, and provided that Connetics has used Best Efforts to
find such acceptable third party manufacturer, the provisions of this Agreement
governing the rights and obligations of the Parties with respect to the supply
and purchase of Bulk Product shall remain in effect until the fifth anniversary
of the Effective Date of this Agreement, after which date the rights and
obligations of the Parties with respect to Bulk Product shall terminate and
Connetics solely shall be responsible for the supply of Bulk Product except as
otherwise provided below. After three years from the Effective Date of this
Agreement, Genentech's supply of Bulk Product for clinical studies shall be at a
price equal to [*]. After three years from the Effective Date of this Agreement,
Genentech's supply of Bulk Product for commercial sale of Licensed Product shall
be at a price equal to [*]. Notwithstanding the above, if during the three (3)
years after the Effective Date of this Agreement, Connetics has used Best
Efforts to locate a third party manufacturer for Bulk Product and has requested
that Genentech approve a reasonable, capable third party for the manufacture of
Bulk Product, and Genentech does not give such approval, Genentech's obligation
to supply Bulk Product to Connetics shall continue until the fifth anniversary
of the Effective Date at the prices described in Section 2.6(b) above. If ,
after the third anniversary of the Effective Date, Connetics has used Best
Efforts to locate a third party manufacturer for Bulk Product and has requested
that Genentech approve a reasonable, capable third party for the manufacture of
Bulk Product, and Genentech does not
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give such approval, Genentech's obligation to supply Bulk Product to Connetics
shall continue beyond the fifth anniversary of the Effective Date, at the prices
described in this Section 4.1(d), until the Parties agree upon a third party
manufacturer.
(e) If no third party manufacturer has entered into an
agreement with Connetics and received a FDA license to manufacture Finished
Product within three (3) years from the Effective Date of this Agreement, the
Parties shall continue to work together in good faith to find a third party
manufacturer. Until such manufacturer is found, the provisions of this Agreement
governing the rights and obligations of the Parties with respect to the supply
and purchase of Finished Product shall remain in effect with the prior written
consent of Genentech (which consent shall be in the sole discretion of
Genentech), until the fifth anniversary of the Effective Date of this Agreement,
after which date the rights and obligations of the Parties with respect to
Finished Product shall terminate and Connetics solely shall be responsible for
the supply of Finished Product except as otherwise provide below. After three
years from the Effective Date of the Supply Agreement, if Genentech consents to
continue to supply Finished Product, such supply shall be at a price equal to
[ *** ]. Notwithstanding the above, if during the three (3) years after the
Effective Date of this Agreement, Connetics has used Best Efforts to locate a
third party manufacturer and has requested that Genentech approve a reasonable,
capable third party for the manufacture of Finished Product, and Genentech does
not give such approval, Genentech's obligation to supply Finished Product to
Connetics shall continue until the fifth anniversary of the Effective Date at
the prices described in Section 2.6(b) above. If, after the third anniversary
of the Effective Date, Connetics has used Best Efforts to locate a third party
manufacturer for Finished Product and has requested that Genentech approve a
reasonable, capable third party for the manufacture of Finished Product, and
Genentech does not give such approval, Genentech shall continue to supply
Finished Product to Connetics beyond the fifth anniversary of the Effective
Date, at the prices described in this Section 4.1(e), until the Parties agree
upon a third party manufacturer.
(f) This Agreement and any licenses granted to Connetics
and/or its third party manufacturers hereunder shall terminate automatically,
without any action on the part of either of
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the Parties, on the effective date of any termination of the License Agreement.
(g) Notwithstanding the termination of this Agreement as a
result of Connetics' entering into an agreement with a third party manufacturer
approved by Genentech for the supply of Bulk Product and Finished Product,
Genentech shall retain the right to approve each new third party manufacturer
selected by Connetics who has not previously been approved by Genentech for
supply of Bulk Product and/or Finished Product to Connetics and its sublicensees
prior to Connetics' entering into an agreement with such new third party
manufacturer, provided, however, if Genentech does not give such approval,
Genentech shall be obligated to supply Bulk Product and Finished Product to
Connetics and its sublicensees at the prices set forth in Section 4.1(d) until
Connetics enters into an agreement with a third party manufacturer approved by
Genentech for the manufacture and supply of Bulk Product and Finished Product
for Connetics and its sublicensees. This Section 4.1(g) shall survive the
termination of this Agreement.
4.2 TERMINATION FOR DEFAULT
If either Party shall default in a material manner with
respect to any material provision of this Agreement and the other Party shall
have given the defaulting Party written notice of such default, the defaulting
Party shall have thirty (30) days to cure such default. If such default is not
cured within such thirty (30) day period, the nondefaulting Party shall have the
right, upon written notice to the defaulting Party and without prejudice to any
other rights the nondefaulting Party may have, to terminate this Agreement and
any licenses granted to Connetics and/or its third party manufacturers
hereunder, effective upon such notice, unless the defaulting Party is in the
process of attempting in good faith to remedy such default, in which case the
thirty (30) day cure period shall be extended by an additional thirty (30) days.
Connetics shall have no right to terminate this Supply Agreement under this
Section 4.2 in the event that Genentech fails to supply Bulk Product or Finished
Product pursuant to a firm purchase order or a fails to provide Bulk Product or
Finished Product conforming to the Specifications. In such event, Connetics will
have the rights set forth in Sections 2.4(c) and 2.9 above.
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4.3 BANKRUPTCY
Either Party may, in addition to any other remedies available
to it by law or in equity, terminate this Agreement immediately by written
notice to the other Party in the event the other Party shall have made an
assignment for the benefit of its creditors, or there shall have been appointed
a trustee or receiver of the other Party for all or a substantial part of its
property, or any case or proceeding shall have been voluntarily initiated by or
commenced against or other action taken by or against the other Party in
bankruptcy or seeking reorganization, liquidation, dissolution, winding-up,
arrangement, composition or readjustment of its debts or any other relief under
any bankruptcy, insolvency, reorganization or other similar act or law of any
jurisdiction now or hereafter in effect and, in the event of any such
involuntary proceeding, shall have continued for sixty (60) days undismissed,
unbonded and undischarged.
4.4 TERMINATION BY CONNETICS. Connetics may terminate this Agreement at
any time upon sixty (60) days prior written notice to Genentech, provided,
however, that Connetics:
(a) accept and pay Genentech for all deliveries of Bulk
Product and Finished Product ordered by Connetics
hereunder, under purchase orders, that conform to the
Specifications, or
(b) if Connetics so elects in writing, cancel any amounts of
products not yet delivered under unfulfilled, outstanding
purchase orders hereunder (or portions thereof) and pay
Genentech for all expenses incurred by Genentech with
regard to each unfulfilled, outstanding purchase orders
hereunder as of the date of termination.
4.5 EFFECT OF TERMINATION
The expiration or termination of this Supply Agreement shall
not relieve either of the Parties from any of its outstanding obligations to the
other Party as of the effective date of such expiration or termination,
including, without limitation, Genentech's obligation to deliver
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Bulk Product or Finished Product ordered under purchase orders received and
accepted by Genentech prior to the effective date of such expiration or
termination, unless such termination is effected by Genentech pursuant to
Section 4.2, and Connetics' obligation to accept, and, upon delivery, pay for
any such Bulk Product or Finished Product, unless termination is effected by
Connetics pursuant to Section 4.2 and Connetics has canceled the purchase
order(s) for such Bulk Product or Finished Product in its written notice of
termination provided under Section 4.2. Notwithstanding the above, the Parties
may mutually agree to cancel any outstanding purchase order if this Agreement,
or any portion thereof, is terminated pursuant to Section 4.1 above.
5.0 GENERAL PROVISIONS
5.1 NOTICES
All notices which may be required pursuant to this Agreement:
(i) shall be in writing, (ii) shall be addressed, in the case of Genentech
(except as otherwise specified herein), to the Corporate Secretary at the
address set forth at the beginning of this Agreement, and in the case of
Connetics, to the Chief Executive Officer at the address set forth at the
beginning of this Agreement, (or to such other person or address as either Party
may so designate from time to time), (iii) shall be mailed, postage-prepaid, by
registered mail or certified mail, return receipt requested, or transmitted by
courier for hand delivery or transmitted by facsimile and (iv) shall be deemed
to have been given on the date of receipt if sent by mail or on the date of
delivery if transmitted by courier or facsimile. Notices by facsimile may be
sent to the following numbers: for Connetics, to (650) 843-2899; for Genentech,
to (650) 952-9881.
5.2 GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of California (other than its choice of
law principles).
5.3 ENTIRE AGREEMENT
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This Agreement and the License Agreement and their respective
exhibits are the entire agreements between the Parties with respect to the
subject matter herein, and there are no prior written or oral promises or
representations not incorporated herein or therein. No amendment or modification
of the terms of this Agreement shall be binding on either Party unless reduced
to writing and signed by an authorized representative of the Party to be bound.
5.4 BINDING EFFECT AND ASSIGNMENT
This Agreement shall be binding upon and inure to the benefit
of the Parties hereto and their respective permitted successors and assigns.
This Agreement shall not be assignable by either Party without the other's prior
written consent, provided however, that either Party may assign this Agreement,
without the other Party's written consent, to any successor pursuant to a
consolidation or merger of such Party with or into any other corporation or
corporations that results in a change of greater than 50% of the voting control
of such Party, or a sale, conveyance or disposition of all or substantially all
of the assets of such Party, or the effectuation by such Party of a transaction
or series of related transactions in which more than 50% of the voting power of
such Party is disposed of. In addition, Connetics may assign this Agreement to
InterMune, described in Section 3.1 of the License Agreement, upon thirty (30)
days written notice to Genentech, without Genentech's prior written consent,
provided that Connetics has granted to InterMune a sublicense to use and/or sell
Licensed Product under the License Agreement and in accordance with the terms of
the License Agreement. In the event of such assignment to InterMune, Connetics
shall promptly notify Genentech in writing of such assignment. Connetics hereby
guarantees the performance by InterMune of all of Connetics' obligations under
this Agreement.
5.5 WAIVER
The waiver by a Party hereto of any breach of or default under
any of the provisions of this Agreement or the failure of a Party to enforce any
of the provisions of this
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Agreement or to exercise any right hereunder shall not be construed as a waiver
of any other breach or default or as a waiver of any such rights or provisions
hereunder.
5.6 SEVERABILITY
If any part of this Agreement shall be invalid or
unenforceable under applicable law, such part shall be ineffective only to the
extent of such invalidity or unenforceability, without in any way affecting the
remaining parts of this Agreement. In addition, the part that is ineffective
shall be reformed in a mutually agreeable manner so as to as nearly approximate
the intent of the Parties as possible.
5.7 PUBLICITY
Connetics and Genentech agree that, except as may otherwise be
required by applicable laws, regulations, rules, or orders, including, without
limitation, the disclosure requirements of the Securities and Exchange
Commission ("SEC"), no information concerning this Agreement and the
transactions contemplated herein (except information which is already in the
public domain) shall be made public by either Party without the prior written
consent of the other Party. Notwithstanding the foregoing, with respect to
complying with the disclosure requirements of the SEC, in connection with any
required SEC filing of this Agreement by Connetics, Connetics shall seek
confidential treatment of this Agreement from the SEC and Genentech shall have
the right to review and comment on such an application for confidential
treatment prior to its being filed with the SEC.
5.8 COUNTERPARTS
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original for all purposes, but all of which
together shall constitute one and the same instrument.
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5.9 CONFIDENTIALITY
The confidentiality provisions of the License Agreement shall
apply to the exchanged confidential information of the Parties under this
Agreement ("Confidential Information") in the same manner and respect as those
provisions apply to the exchange of such information under the License
Agreement.
5.10 FORCE MAJEURE
Neither Party shall be liable to the other for its delay or
failure to perform under this Agreement or shall have any right to terminate
this Agreement for any such delay or failure in performance attributable to any
act of God, flood, fire, explosion, strike, lockout, labor dispute, casualty or
accident, war, revolution, civil commotion, act of public enemies, blockage or
embargo, injunction, law, order, proclamation, regulation, ordinance, demand or
requirement of any government or subdivision, authority or representative of any
such government, or any other cause beyond the reasonable control of such Party,
if the Party affected shall give prompt written notice of any such cause to the
other Party. The Party giving such notice shall thereupon be excused from such
of its obligations hereunder for the period of time that it is so disabled.
5.11 HEADINGS
Headings are for the convenience of reference only and shall
not control the construction or interpretation of any of the provisions of this
Agreement.
IN WITNESS WHEREOF, the Parties have caused this Supply Agreement to be
duly executed by their respective duly authorized officers effective on the
Effective Date first set forth above.
GENENTECH, INC. CONNETICS CORPORATION
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By: /s/ Nick Simon By: /s/ Thomas G. WIGGANS
-------------------------------------- -------------------------------
Name: NICK SIMON Name: THOMAS G. WIGGANS
------------------------------------ -----------------------------
Title: V.P., Business Development and Title: President and CEO
----------------------------------- ----------------------------
Corporate Development
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EXHIBIT A
SPECIFICATIONS
[*]
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EXHIBIT B
THIRD PARTY MANUFACTURING ROYALTIES
None (as of the Effective Date)
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