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EXHIBIT 10.15
LICENSE AND DEVELOPMENT AGREEMENT
THIS LICENSE AND DEVELOPMENT AGREEMENT (this "Agreement") is entered
into as of the 10th day of July, 2000 (the "Effective Date"), by and between
INSMED PHARMACEUTICALS, INC., a corporation organized under the laws of the
Commonwealth of Virginia and having a business address at 800 East Leigh Street,
Richmond, Virginia 23219 ("INSMED"), and TAISHO PHARMACEUTICAL CO., LTD., a
corporation organized under the laws of Japan and having a business address at
24-1, Takata 3-chome, Toshima-ku, Tokyo, 170-8633, Japan ("TAISHO").
WHEREAS, INSMED owns or may acquire certain patents and patent
applications, certain licenses to patents and patent applications, and certain
know-how, trade secrets and scientific and technical information relating to D-
chiro-inositol; and
WHEREAS, TAISHO desires to acquire from INSMED certain licenses and
sub-licenses to said patents, patent applications, licenses, and related know-
how, trade secrets and scientific and technical information, and INSMED is
agreeable to granting such licenses and sub-licenses pursuant to the terms and
conditions of this Agreement; and
WHEREAS, INSMED and TAISHO entered into a letter of intent, effective
February 23, 2000, indicating their mutual agreement to execute a license and
development agreement for further development of D-chiro-inositol by either
party and/or both parties in and outside the Territory (defined below), and
commercialization of D-chiro-inositol and/or a product involving D-chiro-
inositol by TAISHO in the Territory and by INSMED outside the Territory;
NOW, THEREFORE, in consideration of the foregoing recitals and of the
covenants and undertakings set forth below, and for other good and valuable
consideration, the receipt and sufficiency of which are acknowledged by both
parties, TAISHO and INSMED hereby agree as follows:
ARTICLE 1 DEFINITIONS
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For purposes of this Agreement, the following definitions, whether used in
the singular or plural, shall be applicable:
1.1. "Affiliate" means, with respect to any party, its respective direct
or indirect parent company, if any, and any company, firm or other entity
which is owned or controlled, directly or indirectly, by said party or by
its parent company, but only for so long as said ownership or control shall
continue. The term "control" used in this Article 1.1. means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a company, firm, or other
entity, whether through the ownership of at least twenty five percent (25%)
of voting securities, or at least twenty five percent (25%) of the equity
interest of non-corporate entities.
1.2. "Combination Product" means one or more of the Licensed Products
formulated in combination with one or more additional active components
developed either inside or outside of the Joint Development Program.
1.3. "Compound" means D-chiro-inositol.
1.4. "Exclusive License" means the license granting TAISHO, as the sole
licensee, rights in the Territory under this Agreement and excluding all
other parties, including INSMED, from exercising such rights in the
Territory, with the exception that INSMED, or any other party selected by
INSMED, will retain (i) the right in the Territory, (a) upon notification
to TAISHO and discussion of any concerns with TAISHO, to source,
manufacture, formulate, package and/or label the Compound or Licensed
Products for any use outside the Territory or (b) upon TAISHO's approval,
to enter into a contract with a vendor to meet the TAISHO Parties'
requirement for the Compound when it so desires under Article 3.14., and
(ii) the rights under the Semi-Exclusive License to TAISHO for the People's
Republic of China (hereinafter referred to as China) under Article 2.2.
1.5. "First Commercial Sale" means the first sale of Licensed Products by
the TAISHO Parties, to a third party other than a TAISHO Party, in
substantial quantities as are normal to the commercial launch of a product
in that country in the Territory.
1.6. "Gross Sales" means gross revenue from all sales of Licensed Products
by the TAISHO Parties to a third party other than a TAISHO Party.
1.7. "Indications" means type 2 diabetes and polycystic ovary syndrome
(PCOS) (excluding diagnosis).
1.8. "Initiation" means the date that the first animal or human subject
receives treatment in connection with a development activity that is
conducted under the Joint Development Program Plan or the date that INSMED
makes its first payment to a
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contract research organization participating in the development activity
that is conducted under the Joint Development Program Plan.
1.9. "INSMED Party" or "INSMED Parties" means Insmed Pharmaceuticals Inc.
and its Affiliates and sub-licensees.
1.10. Joint Development Program" means any development activities related
to the Compound and/or Licensed Products outside the Territory that TAISHO
pays for pursuant to Article 3.7.1. and any development activities related
to the Compound and/or Licensed Products inside the Territory that a TAISHO
Party pays for pursuant to Article 3.7.2.
1.11. "Joint Development Program Plan" means any plans related to the
Joint Development Program. The initial Joint Development Program Plan
inside the Territory will be included as Schedule A to this Agreement at a
later date through an amendment to this Agreement. The initial Joint
Development Program Plan outside the Territory will be included as Schedule
B to this Agreement at a later date through an amendment to this Agreement.
The Joint Development Program Plan will thereafter be modified by the Joint
Development Committee as provided in Article 3.
1.12. "License Agreement" means the Amended and Restated License Agreement
between INSMED and the University of Virginia Alumni Patent Foundation
dated June 11, 1991 and as amended from time to time and attached hereto as
Schedule C.
1.13. "Licensed Products" means any final dosage form containing the
Compound in whole (in its stand alone form) or in part (including
Combination Products) for any Indications and/or the New Indications in
humans.
1.14. "Licensed Patents" means all right, title, and interest in and to
the patents and patent applications that are included in Licensed Patents
Owned By INSMED and Licensed Patents Owned Jointly.
1.15. "Licensed Patents Owned By INSMED" means all right, title, and
interest in and to the patents and patent applications that are part of
INSMED's Technical Information including those identified in Schedule D to
this Agreement or New Intellectual Property which are owned or controlled
by or exclusively licensed to INSMED and a valid claim of which would be
infringed by manufacture, use, sale or other activities of TAISHO, in
connection with the Compound or the Licensed Products but for the licenses
and rights granted to TAISHO by virtue of this Agreement, including all
divisionals, continuations, renewals, continuations-in-part, patents of
addition, supplementary protection certificates, extensions, registration
or confirmation patents and reissues with respect to such patents and
patent applications, and which have not lapsed, been canceled or become
abandoned and have not been declared invalid or unenforceable by an
unreversed and unappealable decision or judgment of a court or other
appropriate body of competent jurisdiction and excludes Licensed Patents
Owned Jointly.
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1.16. "Licensed Patents Owned Jointly" means all right, title, and
interest in and to the patents and patent applications that are part of any
New Intellectual Property which is jointly owned, controlled by or licensed
to INSMED and TAISHO, including all divisionals, continuations, renewals,
continuations-in-part, patents of addition, supplementary protection
certificates, extensions, registration or confirmation patents and reissues
with respect to such patents and patent applications, and which have not
lapsed, been canceled or become abandoned and have not been declared
invalid or unenforceable by an unreversed and unappealable decision or
judgment of a court or other appropriate body of competent jurisdiction.
1.17. "NDA Approval" means the authorization to manufacture, formulate,
sell, import, and export the Compound or the Licensed Products in the
applicable country as granted by the relevant governmental or regulatory
authorities.
1.18. "NDA Submission" means the submission of Technical Information, and
other materials for review by the relevant governmental or regulatory
authorities for evaluation for possible NDA Approval.
1.19. "Net Sales" means Gross Sales, less (i) trade, quantity and cash
discounts and any other adjustments, including those granted on account of
price adjustments, billing errors, recalls, returns, rebates,
reimbursements or similar payments granted or given to wholesalers or other
distributors, buying groups, health care insurance carriers or other
institutions to the degree they are included in the calculation of Gross
Sales, (ii) freight and insurance charges billed to the customers and (iii)
customs or excise duties, sales tax, consumption tax, and other taxes
(except income taxes) or duties relating to sales. In the case of sales of
Combination Products by TAISHO Parties, Net Sales of the Combination
Product shall be determined by multiplying the Net Sales of the Combination
Product by a ratio calculated as follows:
A is divided by the sum of A and B (A/[A+B]) where A is the Net Sales
price of the Licensed Products incorporated into Combination Product,
in their stand alone form, and B is the sum of the Net Sales prices of
all active components incorporated in the Combination Product other
than the Licensed Products, in their stand alone form.
In case one or more of the active components other than the Licensed
Product included in the Combination Product are not being sold in their
stand alone form, thus preventing calculation of the Net Sales of the
Combination Product by the methods described above, TAISHO and INSMED will
negotiate the contribution of the Licensed Products to the Combination
Product in order to arrive at an appropriate component percentage. In no
case shall such percentage be less than forty percent (40%).
1.20. "New Indications" means any indication of a disease state other than
the Indications, that is developed as part of the Joint Development Program
(excluding diagnosis).
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1.21. "New Intellectual Property" means any Technical Information derived
from the Joint Development Program.
1.22. "Phase III Study" means any clinical study, designated in the Joint
Development Program Plan, whose results are or will be pivotal to receiving
NDA Approval in any country or territory in or outside the Territory.
1.23. "Stock Purchase Agreement" means the Stock Purchase Agreement, dated
March 7, 2000, between INSMED and TAISHO.
1.24. "Semi-Exclusive License To TAISHO" means a license granting co-equal
rights to TAISHO or one party designated by TAISHO, and INSMED or one party
designated by INSMED, as the only licensees granted rights to the Compound
and Licensed Products for China, with the exception that INSMED, or any
other party selected by INSMED will retain the right in China, (a) upon
notification to TAISHO and discussion of any concerns with TAISHO, to
source, manufacture, formulate, package and/or label the Compound or
Licensed Products for any use outside the Territory or (b) upon TAISHO's
approval, to enter into a contract with a vendor to meet the TAISHO
Parties' requirement for the Compound when it so desires under Article
3.14.
1.25. "TAISHO Party or TAISHO Parties" means Taisho Pharmaceutical Co.,
Ltd., its Affiliates and sub-licensees.
1.26. "Technical Information" means all know-how, trade secrets, data,
technology, scientific information, technical information, patents and
patent applications that result from or relate to any research or
development of the Compound and/or Licensed Products that are owned,
controlled by or licensed to a TAISHO Party or an INSMED Party. The term
"INSMED's Technical Information" means all Technical Information that is
owned, controlled by, or licensed to INSMED as of the execution of this
Agreement.
1.27. "Territory" means any country or territory listed in Schedule E to
this Agreement.
ARTICLE 2 LICENSES
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2.1. Exclusive License
Subject to the terms of this Agreement, INSMED hereby grants to TAISHO an
Exclusive License, with the right to sub-license, to the Licensed Patents
Owned By INSMED, other INSMED's Technical Information and INSMED's New
Intellectual Property, to use, research, develop, manufacture, have
manufactured, formulate, sell, have sold, export, and import the Compound
and/or the Licensed Products for treatment of and/or any other uses
(excluding diagnosis) for the Indications and New Indications in the
Territory except for China.
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2.2. Semi-Exclusive License To Taisho
Subject to the terms of this Agreement, INSMED hereby grants a Semi-
Exclusive License to TAISHO, with the right to sub-license, to the Licensed
Patents Owned By INSMED, other INSMED's Technical Information and INSMED's
New Intellectual Property, to use, research, develop, manufacture, have
manufactured, formulate, sell, have sold, export, and import the Compound
and the Licensed Products for treatment of and/or any other uses (excluding
diagnosis) for the Indications and New Indications in China.
2.3. Outside the Territory
The licenses granted to TAISHO herein to export the Compound and the
Licensed Products permit only the export of the Compound and the Licensed
Products within and between countries in the Territory, and do not permit
export of the Compound or the Licensed Products to countries or territories
outside the Territory, except as contemplated by Article 9.6., below.
ARTICLE 3 JOINT DEVELOPMENT PROGRAM
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3.1. Collaboration
INSMED and TAISHO agree to pursue the Joint Development Program as set
forth in the Joint Development Program Plan. The Joint Development
Committee will administer the Joint Development Program Plan. Either party
may propose to the Joint Development Committee further research and
development activities for any improvement regarding the Compound and/or
Licensed Products.
3.2. Joint Development Committee
The Joint Development Committee will consist of four (4) representatives,
two (2) appointed by INSMED and two (2) appointed by TAISHO. The Chair of
the Joint Development Committee will be appointed by INSMED. The Joint
Development Committee will hold quarterly meetings, which may take place in
person, by teleconference, or by video conference. Quarterly meetings held
in person will be held at locations that are mutually agreed upon by the
Joint Development Committee. The members of the Joint Development Committee
will attempt to agree to the development of the Compound or Licensed
Products by unanimous consent. In the event that the Joint Development
Committee cannot agree regarding the development of the Compound or
Licensed Products within the Territory with the exception of China,
decisions as to the development of the Compound or Licensed Products will
be made by the Joint Development Committee representatives appointed by
TAISHO and these decisions will be final. In the event the Joint
Development Committee cannot agree regarding the development of the
Compound or Licensed Products outside the Territory, decisions will be made
by the Joint Development Committee representatives appointed by INSMED and
these decisions will be final.
3.3. Joint Development Program Plan
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The Joint Development Committee will establish the objectives and planned
activities of the Joint Development Program Plan. The Joint Development
Committee shall direct the Joint Development Program Plan, review the
progress of the Joint Development Program Plan and allocate each party's
roles with respect to the Joint Development Program Plan. At its quarterly
meetings, the Joint Development Committee shall assess TAISHO's and
INSMED's progress against the Joint Development Program Plan and shall
suggest such actions as may be necessary to implement the Joint Development
Program Plan. INSMED will have primary responsibility for administering the
Joint Development Program Plan outside the Territory and TAISHO will have
primary responsibility for administering the Joint Development Program Plan
inside the Territory with the exception of China.
3.3.1. Joint Development Program Plan outside the Territory
At the Joint Development Committee meetings and at such other times as
INSMED deems advisable, INSMED will provide the Joint Development
Committee with a detailed description of all development activities,
including expected costs related to the Compound and/or Licensed
Products, that INSMED has planned for outside of the Territory. During
the ninety (90) days following such presentation the Joint Development
Committee will discuss alterations to such plans with the intention to
maximize the value of such development activities to INSMED and TAISHO
as follows. Within thirty (30) days following such presentation by
INSMED, TAISHO may present a written request to the Joint Development
Committee suggesting alterations to such plans. INSMED will review
such request and within thirty (30) days of receiving such request
will present a written response to the Joint Development Committee
describing any alterations to such plans that it intends to make as a
result of the request. Within thirty (30) days of receiving INSMED's
response or at the next scheduled Joint Development Committee meeting,
whichever occurs first, TAISHO will inform the Joint Development
Committee in writing whether it accepts such planned development
activities. If TAISHO accepts such planned development activities, the
Joint Development Committee will amend the Joint Development Program
Plan outside the Territory to reflect such planned development
activities, and TAISHO will become obligated to fund such development
activities as provided in Article 3.7.1. If TAISHO does not accept
such planned development activities or fails to respond in a timely
manner to such planned development activities, such planned
development activities will be excluded from the Joint Development
Program Plan outside the Territory and TAISHO shall have no obligation
to fund such development activities as provided in Article 3.7.1.
3.3.2. The Joint Development Program Plan inside the Territory
At the Joint Development Committee meetings and at such other times as
TAISHO deems advisable, TAISHO will provide the Joint Development
Committee with a detailed description of all development activities
related to the Compound and/or Licensed Products, that a TAISHO Party
has planned for inside of the Territory. During the ninety (90) days
following such presentation the Joint Development
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Committee will discuss alterations to such plans with the intention to
maximize the value of such development activities to INSMED and TAISHO
as follows. Within thirty (30) days following such presentation by
TAISHO, INSMED may present a written request to the Joint Development
Committee suggesting alterations to such plans. TAISHO will review
such request and within thirty (30) days of receiving such request
will present a written response to the Joint Development Committee
describing any alterations to such plans that it intends to make as a
result of the request. The Joint Development Committee will amend the
Joint Development Plan to reflect such planned development activities
in the Territory and TAISHO will be obligated to bear all costs of
such development activities as provided in Article 3.7.2.
3.4. INSMED and TAISHO Project Managers
INSMED and TAISHO will each appoint a project manager to manage INSMED's
and TAISHO's day-to-day activities within each party with respect to the
Joint Development Program and to act as a liaison with the other party with
respect to the Joint Development Program.
3.5. Exchange of the Technical Information and New Intellectual Property
3.5.1. In order to allow each party to exercise its rights and
fulfill its obligations set forth herein and subject to the
confidentiality obligations set forth in Article 5. hereof, INSMED
shall disclose to TAISHO at least once per quarter during the term of
this Agreement, INSMED's New Intellectual Property; and TAISHO shall
also disclose to INSMED TAISHO's New Intellectual Property. The party
generating New Intellectual Property shall retain in its records data
(including raw data), material, and information regarding such New
Intellectual Property for five (5) years after expiration or
termination of this Agreement.
3.5.2. In order to allow each party to exercise its rights and
fulfill its obligations set forth herein and subject to the
confidentiality obligations set forth in Article 5., INSMED will allow
TAISHO to have access to INSMED's Technical Information (including raw
data, if appropriate) that INSMED generated with respect to the
Compound or Licensed Products for the Indications from development
activities that have already been substantially completed by INSMED, a
list of which development activities is attached as Schedule F to this
Agreement. All Technical Information disclosed by INSMED to TAISHO
prior to the Effective Date shall be deemed to have been disclosed
pursuant to this Agreement and shall be subject to all applicable
provisions of this Agreement.
3.5.3. The parties shall establish a system for exchange of safety
information on the Compound or Licensed Products and prepare a written
policy evidencing such system to meet the requirements of the
applicable local and international regulations and guidelines.
3.6. Conduct of Development Activities Outside the Territory
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INSMED will conduct the Joint Development Program outside the Territory, or
will direct that any such development activities be conducted, in
accordance with principles of GMP, GLP and GCP set forth by the United
States Food and Drug Administration (FDA), the International Conference on
Harmonization (ICH) guidelines or the applicable local government
regulations. Upon obtaining INSMED's consent, TAISHO through its
representatives and at TAISHO's expense may participate with and/or observe
INSMED in such development outside the Territory. In accordance with
Article 3.5.1., INSMED shall without delay disclose to TAISHO INSMED's New
Intellectual Property for the purpose of NDA Submission and acquisition of
NDA Approval by the TAISHO Parties in the Territory.
3.7. Payments for Development Activities
3.7.1. Outside the Territory
For any development activities, excluding those listed in Schedule F,
which are specified in the Joint Development Program Plan outside the
Territory, TAISHO shall pay to INSMED the following amounts at the
following times: within thirty (30) days from the receipt by TAISHO of
written notification of such development activity's Initiation and
invoice thereof, ten percent (10%) of the projected cost of the
development activity as listed in the Joint Development Program Plan
outside the Territory; and within thirty (30) days from the receipt by
TAISHO of a written report describing the results of the development
activity and the invoice thereof, an amount equal to the difference
between twenty percent (20%) of the actual total cost of the
development activity listed in the Joint Development Program Plan and
the amount paid by TAISHO at the Initiation of the development
activity. For this end INSMED shall provide TAISHO with supporting
documents and materials to verify such actual development costs for
such development activity.
3.7.2. Inside the Territory
TAISHO will bear all costs associated with any development activities
which are specified in the Joint Development Program Plan inside the
Territory with the exception of China.
3.8. Failure to Make Timely Payments for Development Activities Outside
the Territory
In the event TAISHO does not make all such payments related to a
development activity of the Joint Development Program Plan outside the
Territory as contemplated in Article 3.7.1. in a timely manner, without any
reasonable cause, such development activity will cease to be part of the
Joint Development Program and INSMED's New Intellectual Property derived
from or related to such development activity, with the exception of the
provisions related to serious adverse event reporting, shall not be subject
to the New Intellectual Property disclosure provisions of Article 3.5. or
the licenses granted under Articles 2.1. and 2.2. of this Agreement. If
TAISHO thereafter wishes to receive a license to such INSMED's New
Intellectual Property in the Territory without having paid, in a
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timely manner, the sharing cost for the development activity in question as
referenced above in Article 3.7.1., INSMED and TAISHO will negotiate such a
license in good faith.
3.9. Projected Costs, Invoicing and Expense Records for Joint Development
Activities Outside the Territory
3.9.1. The Joint Development Program Plan outside the Territory sets
forth projected costs for each development activity contemplated for
the Joint Development Program. The Joint Development Committee may
revise these projected costs from time to time, based upon new
information that it may acquire. Any such changes in projected costs
will be set forth by the resolution of the Joint Development Committee
in an amendment to the Joint Development Program Plan outside the
Territory.
3.9.2. Upon Initiation and completion of any development activities
included in the Joint Development Program Plan outside the Territory,
INSMED will provide TAISHO with invoices setting forth projected
costs, actual total costs, and payments due from TAISHO, as set forth
in Article 3.7.1. Within thirty (30) days of TAISHO's receipt of such
invoices, TAISHO shall pay INSMED any amounts due as indicated on such
invoices.
(i) 3.9.3. INSMED will maintain expense records associated with the
invoices it sends to TAISHO pursuant to Article 3.9.2. Upon request by
TAISHO, INSMED shall permit TAISHO, at TAISHO's expense and using
independent, qualified public accountants employed by TAISHO and
acceptable to INSMED, which acceptance shall not be unreasonably
withheld, to examine such expense records for up to three (3) years
after TAISHO's receipt of such invoices. TAISHO's right of examination
may be exercised only once per invoice. Its accountants will be
allowed to copy INSMED's books and records relevant to such audit. Any
accountants selected by TAISHO and accepted by INSMED for such
examinations shall, upon request by INSMED, enter into appropriate
confidentiality agreements, and shall not disclose to TAISHO or any
other party any information other than that specifically and directly
related to the accuracy of INSMED's invoices. The determinations of
such accountants with respect to the accuracy of such invoices shall
be binding on the both parties.
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3.10. Conduct of Development Activities in the Territory with the
exception of China
TAISHO, at its expense, will conduct or will direct the development
activities of the Joint Development Program Plan inside the Territory with
the exception of China, and such activities will be conducted in accordance
with principles of GLP, GMP and GCP set forth by the Japanese Ministry of
Health and Welfare (Koseisho) and the ICH guidelines or the regulatory
guidelines applicable to the country or territory in the Territory. Upon
obtaining TAISHO's consent, INSMED through its representatives and at
INSMED's expense may participate with and/or observe TAISHO in such
development inside the Territory. Any New Intellectual Property owned by
TAISHO shall be disclosed to INSMED pursuant to Article 3.5.1. without
delay, and TAISHO will grant to the INSMED Parties exclusive rights to the
New Intellectual Property owned by TAISHO to use, research, develop,
manufacture, have manufactured, formulate, sell, have sold, export and
import the Compound and Licensed Products only for the Indications and New
Indications outside the Territory without any payment to TAISHO and TAISHO
will grant to the INSMED Parties semi-exclusive rights to the New
Intellectual Property owned by TAISHO to use, research, develop,
manufacture, have manufactured, formulate, sell, have sold, export and
import the Compountd and Licensed Products only for the Indications and New
Indications in China, without any payment to TAISHO. Notwithstanding the
foregoing upon notification to TAISHO and discussion of any concerns with
TAISHO, INSMED shall have the right to source, manufacture, formulate,
package and/or label the Compound and Licensed Products derived from such
New Intellectual Property owned by TAISHO in countries in the Territory for
any use outside the Territory.
3.11. Conduct of Development Activities in China
The conduct of development activities in China shall be determined by
mutual agreement between INSMED and TAISHO which will take into account the
parties' equal interests with respect to the development and exploitation
of the Compound and Licensed Products in China.
3.12. Amendment of the Joint Development Program Plans
The Joint Development Committee has authority to amend the Joint
Development Program Plan based upon review of progress and results of the
Joint Development Program that, in the reasonable discretion of the Joint
Development Committee, makes such amendment appropriate. In the event that
the Joint Development Committee determines to amend the Joint Development
Program Plan, Schedule A and/or Schedule B to this Agreement shall be
amended to reflect such amendments.
3.13. Worldwide Development Coordination
In the event INSMED enters into other License Agreements for the
Indications or New Indications with a licensee in the United States or
Europe, the TAISHO Parties and INSMED Parties will make an effort to
coordinate the world-wide development activities for the Compound and/or
Licensed Products to minimize the time period and cost of development while
maximizing the market potential, profit potential, and likelihood of
achieving commercial success; provided this Article 3.13. will be construed
and carried
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out only to the extent any such coordination will not violate relevant
anti-trust or similar laws.
3.14. Supply of the Compound
3.14.1. In accordance with the Joint Development Program Plan inside
the Territory and at the request of TAISHO, INSMED itself or through a
third party of its choosing, shall supply TAISHO with all bulk
Compound necessary solely for the research and/or development of the
Compound and/or Licensed Products in the Territory [REDACTED],
including any applicable shipping, customs duties, transportation,
taxes, overhead and similar expenses [REDACTED].
3.14.2. TAISHO shall have the right to manufacture the Compound for
the commercial use of the Licensed Products in the Territory. TAISHO
shall notify INSMED in writing as to whether or not TAISHO will
manufacture the Compound itself or through a third party of its
choosing no later than the Initiation of the first Phase III study in
the Territory that will be used for an NDA Submission for any Licensed
Products in the Territory. In the event that TAISHO notifies INSMED
that TAISHO exercises its right to manufacture the Compound, INSMED
shall provide TAISHO with the required manufacturing information for
the Compound to enable TAISHO to manufacture, subject to the
confidentiality obligations of Article 5., without additional payment
or royalty due from TAISHO to INSMED.
3.14.3. In the event that TAISHO does not exercise the option
described in Article 3.14.2. and requests INSMED in writing to supply
the Compound to TAISHO for the commercial use of the Licensed Products
by the TAISHO Parties in the Territory, INSMED itself or through a
third party of its choosing shall supply TAISHO with bulk Compound
necessary for commercial use of the Licensed Products by the TAISHO
Parties in the Territory. Such requests will be communicated to INSMED
or a third party of INSMED's choosing in writing at least six (6)-
months before the expected delivery date to TAISHO. INSMED itself or
through a third party of its choosing will supply such bulk Compound
to TAISHO [REDACTED], including any applicable shipping, customs
duties, transportation, taxes, overhead and similar expenses
[REDACTED]. In such case the parties will negotiate in good
faith necessary terms and conditions of a supply arrangement other
than the price of the Compound and shall also prepare documents
required by applicable laws and regulations.
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3.14.4. In the event that TAISHO requests INSMED to supply the
Compound after having exercised the option described in Article
3.14.2. above, subject to INSMED's capacities and reasonable
availability, INSMED, either itself or through a third party of its
choosing, will use reasonable commercial efforts to supply TAISHO with
bulk Compound necessary for commercial sale of the Licensed Products
by the TAISHO Parties in the Territory [REDACTED], including any
applicable shipping expenses, customs duties, transportation, taxes,
overhead and similar expenses [REDACTED]. In such case the
parties shall negotiate in good faith the terms and conditions of a
supply arrangement other than the price of the Compound and shall also
prepare documents required by applicable laws and regulations.
3.14.5. In case INSMED is unable to meet the TAISHO Parties'
requirements of the Compound under this Article 3. for reasons outside
of INSMED's control, both parties shall discuss in good faith
alternative ways to meet the TAISHO Parties' requirements.
3.14.6. For the purposes of this Article 3., INSMED is under no
obligation to supply Compound to a TAISHO party for sale of the
Compound or Licensed Products in a country in the Territory where
royalties are no longer being paid to INSMED. However, at TAISHO's
request the parties will negotiate in good faith a separate supply
agreement for such country providing for a profit margin to INSMED
that is a reasonable margin for manufacturing by a company in the
pharmaceutical manufacturing industry.
ARTICLE 4 INITIAL LICENSE FEE, MILESTONE PAYMENTS, AND ROYALTIES
------------------------------------------------------
4.1. Consideration
In consideration of the licenses and rights granted to TAISHO hereunder,
TAISHO shall pay INSMED an initial license fee, milestone payments, and
royalties as set forth herein.
4.2. Initial License Fee
Within fifteen (15) business days after the Effective Date of this
Agreement, TAISHO shall pay to INSMED an initial license fee in the sum of
two million US dollars (US$2,000,000) by wire transfer to a bank account
designated by INSMED.
4.3. Milestone Payments
4.3.1. Within thirty (30) days of the achievement of each milestone
set forth below, TAISHO shall pay to INSMED milestone payments
totaling [REDACTED] so long as this Agreement is in force and
effective, as follows:
<PAGE>
<TABLE>
<CAPTION>
Milestone for PCOS for Type2 diabetes
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Initiation of the first Phase III Study [REDACTED] [REDACTED]
outside the Territory in support of
registration in any country in
the Territory other than China
Initiation of the first Phase III Study [REDACTED] [REDACTED]
inside the Territory in support of
registration in any country in the
Territory other than China
First NDA Submission in any country [REDACTED] [REDACTED]
in the Territory other than China
First NDA Approval in any country in the [REDACTED] [REDACTED]
Territory other than China
$ in ( ) represent net payments after deducting withholding tax.
</TABLE>
The milestone payments set forth above shall be paid when each
milestone for PCOS is first achieved and when each milestone for type
2 diabetes is first achieved. However, the Joint Development Committee
may substitute a New Indication for either PCOS and/or type 2 diabetes
on the following basis. In the event that the Joint Development
Committee determines to pursue any New Indications instead of either
or both of the Indications, the parties shall discuss and determine
the milestone
<PAGE>
payments with respect to the New Indications. The amount of milestone
payments for such New Indications will be negotiated in good faith
among the parties and will in principle be in a similar proportion to
the market for such New Indication in the Territory as the milestones
for the type 2 diabetes indication are to the size of the type 2
diabetes market in the Territory. If the parties agree to replace the
milestone payments for the Indications with new milestone payments for
New Indications, such agreement shall be set forth in a written
amendment to this Agreement. It is understood that TAISHO is only
required to pay milestones for an aggregate of two (2) indications
regardless of whether they are for the Indications or New Indications.
However, all milestones for each of the first two Indications or New
Indications, as the case may be, must be paid to INSMED before the
First Commercial Sale of the Compound or Licensed Products for that
particular Indication or New Indication in the Territory. In the event
the parties elect to pursue New Indications as additions to, rather
than substitutions for, the Indications and all milestone payments
have already been paid by TAISHO for two (2) other Indications or New
Indications as the case may be, then no further milestone payments
will be payable for such additional New Indications.
4.4. Royalties in the Territory Other Than China
In each country in the Territory other than China (the "Exclusive
Territory") where the sale of Licensed Products is covered by one or more
Licensed Patents Owned By INSMED, TAISHO shall pay INSMED the following
royalties on Net Sales of the Licensed Products. TAISHO's obligation to pay
such royalties shall expire upon the expiration of the last to expire of
the Licensed Patents Owned By INSMED that enable the TAISHO Parties to
make, use or sell the Licensed Products in the Exclusive Territory on an
exclusive basis, as follows:
i) Royalty on Net Sales of the Licensed Products in Japan:
Net Sales Range Royalty Rate
---------------------------------------------------------------------------
$0 up to $fifty (50) million (inclusive) [REDACTED]
$fifty (50) up to $one hundred (100)
million (inclusive) [REDACTED]
$one hundred (100) million and greater [REDACTED]
---------------------------------------------------------------------------
ii) Royalty on Net Sales of the Licensed Products in the Exclusive
Territory other than Japan: [REDACTED].
In each country in the Exclusive Territory where sale of the Licensed
Products is not embraced within any claims of any unexpired Licensed
Patents Owned By INSMED issued and in force in such country, royalties
shall be the same as set forth above in Articles 4.4. i) and 4.4. ii),
except that the duration of such royalties shall be for five (5) years
after the First Commercial Sale of the Licensed Products in such country.
<PAGE>
In the event the TAISHO Parties are legally required to pay a royalty or
any fees to a third party in order to continue making, using or selling the
Compound and Licensed Products in any country in the Territory, the dollar
amount of the royalty payable to INSMED on Net Sales of Licensed Products
in that country shall be reduced by [REDACTED] of the dollar amount of
royalty or fee so paid to that third party; provided that the royalty paid
to INSMED shall never be less than [REDACTED] of Net Sales of Licensed
Products. TAISHO shall immediately provide INSMED with proof of payments to
any such third party.
4.5. Royalties in China
Royalties or profit sharing in China will be determined upon the mutual
agreement of INSMED and TAISHO and shall in principle represent an equal
distribution of profit resulting from distribution of Licensed Products in
China. Upon reaching such agreement the parties shall prepare and enter
into a written contract setting forth their agreement.
4.6. Accounting and Procedures for Payments.
4.6.1. Payments due from one party ("Paying Party") to the other
party ("Receiving Party") under this Agreement shall be subject to the
following provisions. The Paying Party will pay to the Receiving Party
all royalties or shared profit due under this Agreement within sixty
(60) days after the end of each calendar quarter. Each such payment
shall be accompanied by a report identifying and detailing the
Licensed Products, Gross Sales per Licensed Product, itemized
deductions from Gross Sales, Net Sales, and royalties or shared profit
payable to the Receiving Party. The Receiving Party shall maintain
such reports in confidence; provided, however, that the Receiving
Party may disclose the amount of any payment and accompanying reports
to any of its accountants, other professional advisors and any other
persons to whom the Receiving Party has a legal or fiduciary duty to
share such information.
4.6.2. All payments from the Paying Party to the Receiving Party
pursuant to this Agreement shall be made in U.S. dollars and shall be
made by electronic transfer in immediately available funds via either
a bank wire transfer, or any other means of electronic funds transfer,
at Paying Party's election, to such bank account as the Receiving
Party shall designate in writing at least fifteen (15) business days
before the payment is due. For the purposes of determining the amount
of payment due, the amount of Net Sales in any foreign currency shall
be computed by converting such amount into U.S. dollars at a rate
equal to the prevailing commercial average rate of exchange for
selling and purchasing dollars with such foreign currency as published
in the U.S. edition of the Wall Street Journal, for the close of the
last business day of the calendar quarter for which the relevant
payment is to be made by the Paying Party.
<PAGE>
4.6.3. The Paying Party shall, and shall cause its Affiliates and
sub-licensees to, keep full and accurate books and records setting
forth Gross Sales per Licensed Product, itemized deductions from Gross
Sales, Net Sales, and amounts payable to the Receiving Party. Upon
request by the Receiving Party, the Paying Party shall permit the
Receiving Party, at the Receiving Party's expense and using
independent, qualified public accountants employed by the Receiving
Party and acceptable to the Paying Party, which acceptance shall not
be unreasonably withheld, to examine the Paying Party's books and
records for up to three (3) years after the Receiving Party's receipt
of the reports to which they relate. Such accountants will be allowed
to copy books and records relevant to such audit. The Receiving
Party's right of examination may be exercised only once per report.
Any accountants selected by the Receiving Party and accepted by the
Paying Party for such examinations shall, upon request by the Paying
Party, enter into appropriate confidentiality agreements, and shall
not disclose to the Receiving Party any information other than that
related to the accuracy of the Paying Party's reports. The
determinations of such accountants with respect to the accuracy of
such reports shall be binding on the both parties.
ARTICLE 5 CONFIDENTIALITY
---------------
5.1. Undertaking
For the purpose of this Article 5., Confidential Information means the
other party's Technical Information, New Intellectual Property, and any
other information or material supplied by the other party and designated as
confidential or proprietary, orally or in writing, prior to or during the
term of this Agreement. For any INSMED's Technical Information, INSMED New
Intellectual Property and other Confidential Information supplied by
INSMED, TAISHO shall hold such Confidential Information in confidence, and
shall not disclose or use such Confidential Information for any purpose,
except as specifically authorized herein, during the term of this Agreement
and for ten (10) years (i) after termination or expiration of this
Agreement for any reason or (ii) after expiration of all Licensed Patents
and patents and patent applications included in INSMED's Technical
Information but subject to the exceptions provided in Article 5.2.,
whichever occurs later. For any TAISHO New Intellectual Property and other
Confidential Information supplied by TAISHO, INSMED shall hold such
Confidential Information in confidence, and shall not disclose or use such
Confidential Information for any purpose, except as specifically authorized
herein, during the term of this Agreement and for ten (10) years (i) after
termination or expiration of this Agreement for any reason or (ii) after
expiration of all Licensed Patents and patents and patent applications
included in TAISHO's New Intellectual Property but subject to the
exceptions provided in Article 5.2., whichever occurs later.
5.2. Exceptions
Obligations of confidentiality and non-use set forth in Article 5.1.
imposed on the receiver of the Confidential Information ("Recipient") shall
not apply to the extent that any Confidential Information is: (i) already
known to the Recipient at the time of
<PAGE>
disclosure; (ii) publicly known prior to or after disclosure other than
through acts or omissions of the Recipient or its employees; (iii)
disclosed in good faith to Recipient by a third party under no obligation
of confidentiality to the supplier of the Confidential Information; or (iv)
disclosed or used by the Recipient pursuant to prior written approval of
the supplier of Confidential Information for such disclosure. The Recipient
may disclose the Confidential Information to pre-clinical investigators,
clinical investigators, and other third parties under an enforceable
confidentiality agreement with at least the equivalent confidentiality
obligations as provided herein, provided that such disclosure is necessary
for the Recipient to fulfill their obligations under this Agreement, and
provided that Recipient shall notify the supplier of Confidential
Information in advance of such disclosure. The Recipient may disclose the
Confidential Information to governmental agencies, provided that the
Recipient shall follow procedures normally taken in the pharmaceutical
industry in the country where such governmental agencies are located or as
may otherwise be required by law.
5.3. Publicity Related to this Agreement
Except as otherwise specifically permitted by this Agreement, as required
by law or as required by any securities exchange, neither party shall (i)
disclose to any third party any financial or other terms or conditions of
this Agreement, or (ii) originate any publicity, news release or public
announcement, written or oral, whether to the public, press, stockholders
or otherwise, communicating the economic terms of this Agreement, or any of
its specific terms or conditions, without the express prior written consent
of the other party, which consent will not be unreasonably withheld.
ARTICLE 6 PATENTS AND INTELLECTUAL PROPERTY
---------------------------------
6.1. Ownership
6.1.1. INSMED shall own the entire right, title and interest in and
to all Licensed Patents Owned By INSMED, INSMED's Technical
Information and New Intellectual Property developed solely by INSMED
or acquired solely by INSMED, subject to the licenses granted herein
to TAISHO. TAISHO shall own the entire right, title and interest in
and to New Intellectual Property that is developed or acquired solely
by TAISHO, subject to the rights granted herein to INSMED. The parties
shall jointly own the entire right, title and interest in all
countries in the world, all Licensed Patents Owned Jointly and New
Intellectual Property that is developed jointly by INSMED and TAISHO,
subject to the conditions that (i) (a) INSMED has an exclusive right
to use, research, develop, manufacture, have manufactured, formulate,
sell, have sold, export and import the Compound and/or Licensed
Products under the Licensed Patents Owned Jointly outside the
Territory, and (b) TAISHO has an exclusive right under the Exclusive
License to use, research, develop, manufacture, have manufactured,
formulate, sell, have sold, export and import the Compound and/or
Licensed Products under the Licensed Patents Owned Jointly in the
Territory except China, and (c) INSMED and TAISHO each has semi-
<PAGE>
exclusive rights in China to use, research, develop, manufacture, have
manufactured, formulate, sell, have sold, export and import the
Compound and/or Licensed Products under the Licensed Patents Owned
Jointly.
6.1.2. If the Licensed Patents Owned Jointly are used for purposes
that do not include the use, research, development, manufacture, have
manufactured, formulate, sell, have sold, export and import of the
Compound and Licensed Products ("Other Uses") (i) TAISHO shall have
the exclusive right to Other Uses within the Territory excluding China
without payment of royalties to INSMED, (ii) INSMED shall have the
exclusive right to Other Uses outside the Territory without payment of
royalties to TAISHO and (iii) INSMED and TAISHO shall each have the
right to Other Uses in China without payment of royalties to either
party. If with respect to the Other Uses (i) TAISHO wishes to make
Other Uses in a country outside the Territory or (ii) INSMED wishes to
make Other Uses in a country inside the Territory other than China,
the parties will negotiate a separate license agreement in good faith
for such use. Notwithstanding the foregoing, upon notification to
TAISHO and discussion of any concerns with TAISHO, INSMED shall have
the right to source, manufacture, formulate, package and/or label
products derived from the Licensed Patents Owned Jointly in countries
in the Territory for any use outside the Territory.
6.1.3. To the extent the Exclusive License and the Semi-Exclusive
License granted by INSMED to TAISHO includes rights to Licensed
Patents Owned By INSMED that have been licensed to INSMED under the
License Agreement, TAISHO agrees to be bound by the obligations of the
current License Agreement as of the date hereof or any future License
Agreement provided the terms of such License Agreement require no
greater obligation by TAISHO or unless otherwise agreed by TAISHO.
INSMED warrants as of the Effective Date that, except for minor
discrepancies, there is no material conflict between this Agreement
and the License Agreement.
6.2. Prosecution and Maintenance
6.2.1. INSMED shall have the right and responsibility, within its own
discretion and at its own expense, to prosecute and maintain patent
protection for all Licensed Patents Owned By INSMED. TAISHO shall have
the right and responsibility, within its own discretion and at its own
expense, to prosecute and maintain patent protection for all patents
included in the TAISHO's New Intellectual Property. INSMED shall have
the right and responsibility outside the Territory, within its own
discretion and at INSMED's expense, to prosecute and maintain patent
protection for all Licensed Patents Owned Jointly. TAISHO shall have
the right and responsibility inside the Territory, within its own
discretion and at TAISHO's expense, to prosecute and maintain patent
protection for all Licensed Patents Owned Jointly. Each party shall
assist and cooperate with the other in connection with the other
party's prosecution and maintenance of any Licensed Patents for which
it is responsible.
<PAGE>
6.2.2. INSMED shall, within its own discretion, prosecute and
maintain all patent protection for Licensed Patents Owned By INSMED,
and TAISHO shall reimburse INSMED for all expenses, including
attorney's fees, incurred by INSMED in prosecuting and maintaining
Licensed Patents Owned By INSMED in the Territory. From time to time,
INSMED will provide TAISHO with invoices setting forth such expenses,
and TAISHO will pay INSMED the amounts on such invoices within sixty
(60) days of receipt of the invoices. The failure to make payment,
without reasonable cause, within thirty (30) days after written notice
from INSMED that the invoice has not been paid in a timely manner,
will result in a loss of the License for such patent in the applicable
country.
6.2.3. Upon request by either party the other party ("Audited Party")
will permit the requesting party ("Requesting Party"), at the
Requesting Party's expense and using independent, qualified public
accountants employed by the Requesting Party and acceptable to the
Audited Party, which acceptance shall not be unreasonably withheld, to
examine the Audited Party's expense records related to patent
prosecution and maintenance, as set forth in this Article for up to
three (3) years after the Requesting Party's receipt of such invoices.
The Requesting Party's right of examination may be exercised only once
per invoice. The Requesting Party's accountants will be allowed to
copy books and records relevant to such audit. Any accountants
selected by the Requesting Party and accepted by the Audited Party for
such examinations shall, upon request by the Audited Party, enter into
appropriate confidentiality agreements, and shall not disclose to the
Requesting Party any information other than that specifically and
directly related to the accuracy of the Audited Party's invoices. The
determinations of such accountants with respect to the accuracy of
such invoices shall be binding on both parties.
6.2.4. If INSMED desires TAISHO to file any patent applications for
patents included in the TAISHO's New Intellectual Property in
countries identified by INSMED outside the Territory and TAISHO agrees
thereto, TAISHO, at INSMED's expense, will cause such patent
applications to be filed or take such actions to allow INSMED to file
such patent applications. For any such patent applications filed by
INSMED, TAISHO shall allow INSMED, upon request, reasonable access to
all documentation, filings, and communications necessary for INSMED to
make such patent applications and INSMED shall keep TAISHO advised as
to the status of such patent applications.
6.2.5. If TAISHO desires INSMED to file any patent applications for
Licensed Patents Owned by INSMED in countries identified by TAISHO in
the Territory, and INSMED agrees thereto, INSMED, at TAISHO's expense,
will cause such patent applications to be filed or take such actions
to allow TAISHO to file such patent applications. For any such patent
applications filed by TAISHO, INSMED shall allow TAISHO, upon request,
reasonable access to all documentation, filings, and
<PAGE>
communications necessary for TAISHO to make such patent applications
and TAISHO shall keep INSMED advised as to the status of such patent
applications.
6.2.6. In the event INSMED elects not to seek or maintain patent
protection on Licensed Patents Owned By INSMED in any country in the
Territory or the Licensed Patents Owned Jointly outside the Territory,
or TAISHO elects not to seek or maintain patent protection on patents
included in the New Intellectual Property owned by TAISHO in any
country outside the Territory, or the Licensed Patents Owned Jointly
inside the Territory, the other party shall have the right, within its
own discretion and at its expense to prosecute and/or maintain patent
protection on such patent. No party shall abandon its interest in such
a patent or patent application without at least sixty (60) days' prior
written notice to the other party. If either party notifies the other
party of its intent to abandon its interest in such a patent or patent
application, the other party shall have the option to obtain an
assignment of such patent and related applications free of charge and
to continue the prosecution and maintenance of such patent and related
applications in its own name within its own discretion and at its own
expense.
ARTICLE 7 INFRINGEMENT
------------
7.1. Notice
TAISHO and INSMED will each promptly notify the other party in the event it
becomes aware of (i) any potential infringement by any third party of
Licensed Patents or patents included in TAISHO's New Intellectual Property,
or (ii) any claims by any third party of alleged infringement by the TAISHO
Parties or the INSMED Parties of the intellectual property of such third
party with respect to the use, sale, manufacture or distribution of the
Compound or the Licensed Products in the Territory.
7.2. Warranty
INSMED warrants as of the Effective Date that it has not received any claim
from a third party that the Licensed Patents Owned By INSMED or INSMED's
Technical Information infringes the intellectual property rights of any
third party.
7.3. Infringement by Third Party
7.3.1. INSMED itself or through another party of its choice shall
have the right, but not the obligation, to institute litigation in
connection with infringement by any third party of the Licensed
Patents. TAISHO, upon request of INSMED, agrees to assist in any such
litigation at INSMED's expense provided that in the event TAISHO
desires to join INSMED in litigation related to the infringement of
Licensed Patents Owned Jointly, TAISHO may do so at its own expense.
If INSMED itself or through another party designated by it fails to
institute litigation in connection with infringement of the Licensed
Patents in the Territory by any third party,
<PAGE>
TAISHO itself or through another party of its choice shall have the
right, but not obligation, at TAISHO's expense, to do so. In the event
the litigation connected with infringement in the Territory results in
an award to INSMED or TAISHO, such award shall be used to first pay
all expenses related to the cost of litigation with any residual
distributed equally between INSMED and TAISHO.
7.3.2. TAISHO itself or through another party of its choice shall
have the right, but not the obligation, to institute litigation in
connection with infringement by any third party of patents included in
the TAISHO's New Intellectual Property. INSMED, upon request of
TAISHO, agrees to assist in any such litigation at TAISHO's expense.
If TAISHO itself or through another party fails to institute
litigation in connection with infringement by any third party of
patents included in the TAISHO's New Intellectual Property, INSMED
itself or through another party of its choice shall have the right,
but not obligation, at INSMED's expense, to do so. In the event the
above litigation results in an award to TAISHO or INSMED, such award
shall be used to first pay all expenses related to the cost of
litigation with any residual distributed equally between TAISHO and
INSMED.
7.3.3. Notwithstanding anything to the contrary set forth in the
other provisions of this Agreement, in the event that any third party
takes any action which constitutes an infringement of both the
Licensed Patents and the TAISHO's New Intellectual Property, and
INSMED and TAISHO each determines to exercise its right to prosecute
such infringement as contemplated in Articles 7.3.1. and 7.3.2., then
outside the Territory INSMED itself or through another party of its
choice shall have the right, but not obligation to institute
litigation in connection with such infringement, provided that TAISHO
itself or through another party of its choice shall have the right,
but not obligation, to join INSMED in litigation related to the
infringement at its own expense, and inside the Territory TAISHO
itself or through another party of its choice shall have the right,
but not obligation, to institute litigation in connection with such
infringement, provided that INSMED itself or through another party of
its choice shall have the right, but not obligation, to join TAISHO in
litigation related to the infringement at its own expense. If the
responsible party, subject to the two (2) preceding sentences, itself
or through another party designated by it fails to institute in
connection with infringement by any third party of the Licensed
Patents and TAISHO's New Intellectual Property inside or outside the
Territory, as the case may be, the other party itself or through
another party of its choice shall have the right, but not obligation,
at the other party's expense, to do so. Each party, upon request of
the other party, agrees to assist in any such litigation at requesting
party's expense. In the event the above litigation connected with
<PAGE>
infringement in the Territory results in an award to TAISHO or INSMED,
such award shall be used first to pay all expenses related to the cost
of litigation with any residual distributed equally between INSMED and
TAISHO.
7.4. Infringement on Third Party's Right
7.4.1. In the event any claims are brought against the TAISHO Parties
by a third party that alleges that the TAISHO Parties are infringing
patents owned by the third party by exercising the rights licensed to
TAISHO under this Agreement, TAISHO itself or through a third party of
choice shall have the right, within its own discretion, to defend
against any such claims, and any such litigation shall be at TAISHO's
expense. INSMED, upon request of TAISHO, agrees to assist in any such
litigation at TAISHO's expense. If TAISHO fails to defend against any
such claims, INSMED shall have the right but not the obligation, at
INSMED's expense, itself or through a third party of choice, to defend
against any such claims. In the event the above litigation results in
an award in favor of plaintiff, such damages including attorney's fees
required to be paid in the award shall be borne equally between INSMED
and TAISHO.
7.4.2. In the event any claims of alleged infringement of a third
party's intellectual property are brought against the INSMED Parties
with respect to the Compound or the Licensed Products in the
Territory, INSMED, itself or through a third party of its choice,
shall have the right, within its own discretion, to defend against any
such claims, and any such litigation shall be at INSMED's expense.
TAISHO, upon request of INSMED, agrees to assist in any such
litigation at INSMED's expense. If INSMED fails to defend against any
such claims, TAISHO, itself or through a third party of choice, shall
have the right but not the obligation, at TAISHO's expense, to defend
against any such claims. In the event the above litigation results in
an award in favor of plaintiff, such damages including attorney's fees
required to be paid in the award shall be borne equally between INSMED
and TAISHO.
7.4.3. In the event of any claims of alleged infringement of a third
party's intellectual property against the TAISHO Parties and the
INSMED Parties with respect to the Compound or the Licensed Products
in the Territory, both parties, themselves or through a third party of
their own choice, shall have the right, within their own discretion to
defend against any such claims, and the cost of any such litigation
shall be divided equally between the parties. Each party agrees to
assist the other in any such litigation. If either party fails to
defend against any such claims, the other party, itself or through a
third party of choice, shall have the right but not the obligation, at
its expense, to defend against any such claims. In the event the above
litigation results in an award in favor of plaintiff, such damages
including attorney's fees required to be paid in the award shall be
borne equally between INSMED and TAISHO.
<PAGE>
7.4.4. If claims are brought by a third party against the TAISHO
Parties and such claims relate to Licensed Patents Owned Jointly for
Other Uses as defined in Article 6.1.2., TAISHO, itself or through a
third party of its choice, shall have the right within its own
discretion to defend such claims and any such litigation shall be at
TAISHO'S expense. If TAISHO fails to defend against any such claims,
INSMED, itself or through a third party of choice, shall have the
right but not the obligation, at INSMED's expense, to defend against
any such claims only for the purpose of protection of the Licensed
Patents. All damages, including the third party's attorney's fees that
are required to be paid in the award shall be borne by TAISHO.
7.4.5. If claims are brought by a third party against the INSMED
Parties and such claims relate to Licensed Patents Owned Jointly for
Other Uses as defined in Article 6.1.2., INSMED, itself or through a
third party of its choice, shall have the right within its own
discretion to defend such claims and any such litigation shall be at
INSMED'S expense. If INSMED fails to defend against any such claims,
TAISHO, itself or through a third party of choice, shall have the
right but not the obligation, at TAISHO's expense, to defend against
any such claims only for the purpose of protection of the Licensed
Patents Owned Jointly or TAISHO's New Intellectual Property. All
damages, including the third party's attorney's fees that are required
to be paid in the award shall be borne by INSMED.
ARTICLE 8 DEVELOPMENT AND COMMERCIALIZATION OF LICENSED PRODUCTS
------------------------------------------------------
8.1. TAISHO development
TAISHO will use commercially reasonable efforts to develop, market and sell
the Licensed Products, as prescription medications, in the Territory for
the Indications and/or New Indications . Upon written notice to INSMED and
after payment of the initial license fee and all milestone payments to
INSMED as described in Articles 4.2. and 4.3. to this Agreement, TAISHO
may, but is not obligated to, market the Licensed Products as non-
prescription medications in the Territory.
8.2. Trademark
The trademark(s) for the Licensed Products sold by a TAISHO Party in the
Territory (not excluding China) shall be established and owned by TAISHO.
In no event shall TAISHO use INSMED's trademarks without INSMED's prior
written consent. Notwithstanding the foregoing, in China, INSMED may use or
allow others to use its own or other trademark(s) other than TAISHO's
trademark(s) for INSMED's sale of the Licensed Products. On any packaging
or advertising for the Licensed Products, TAISHO will include a notice
provided by INSMED, that the Licensed Products are licensed from INSMED.
<PAGE>
ARTICLE 9 TERM AND TERMINATION
--------------------
9.1. Term of This Agreement
This Agreement shall be effective as of the Effective Date, and shall
remain in effect for so long as a party is obligated to make payments to
the other party under this Agreement hereof, unless earlier terminated as
provided herein. The provisions of Articles 3.5. (pertaining to the
retention of data only), 3.9.2., 3.9.3., 4.6., 5., 6.1., 6.2.3., 7.3.,
7.4., 9.7., 9.8., 10. and 11.1. shall survive the expiration or termination
of this Agreement for any reason.
9.2. Termination for Convenience
At any time, TAISHO, after six (6) months' written notice to INSMED, shall
have the right, for any reason and at TAISHO's sole discretion, to
terminate this Agreement, whereupon this Agreement shall terminate six (6)
months after the date of such notice, or earlier at INSMED's discretion
after notification in writing to TAISHO and all rights granted by INSMED
hereunder to TAISHO shall terminate. In such case the parties will pay each
other all amounts due as of the date of termination.
9.3. Termination for Breach or Insolvency
9.3.1. If either party materially breaches or defaults under this
Agreement, and such breach or default is not cured within sixty (60)
days after notice by the other party specifying such breach or
default, the other party shall have the right to terminate this
Agreement. A material breach or default by TAISHO shall be deemed to
have occurred if TAISHO fails to make any payments as specified in
Articles 3., 4., 6., or 7., or TAISHO fails to provide proper reports
or other information needed to enable INSMED to perform an audit of
royalty payments and expenses as set forth in this Agreement. A
material breach and default by INSMED shall be deemed to have occurred
if INSMED fails to make any payments as specified in Articles 4. or
7., or INSMED fails to provide proper reports or other information
needed to enable TAISHO to perform an audit of payments and expenses
as set forth in this Agreement
9.3.2. INSMED has the right to terminate this Agreement immediately
without any responsibility or liability to TAISHO other than those set
forth in Article 9.7 herein in the event that TAISHO is subject to any
proceedings under applicable bankruptcy laws to obtain protection from
creditors, suffers the appointment of a receiver for its assets,
becomes insolvent, approves a plan of liquidation or ceases to carry
on pharmaceutical business.
9.3.3. Even if INSMED is subject to any proceedings under applicable
bankruptcy laws to obtain protection from creditors, suffers the
appointment of a receiver for its assets, becomes insolvent, approves
a plan of liquidation or ceases to
<PAGE>
carry on a pharmaceutical business, TAISHO may continue to research,
develop, make, use, and sell the Compound and/or Licensed Products
under the terms and conditions hereof without any adverse effect to
TAISHO to the extent permitted by applicable laws, or terminate this
Agreement without any responsibility or liability to INSMED other than
those set forth in Article 9.7 herein.
9.4. Modification Due to Breach by INSMED
In the event of early termination of this Agreement by TAISHO based on a
material breach or failure by INSMED to meet its obligations hereunder,
TAISHO shall have the right to continue using, developing and
commercializing the Compound, and/or Licensed Products in the Territory
under the Licensed Patents Owned By INSMED, other INSMED's Technical
Information and INSMED's New Intellectual Property, subject to the payment
of a reduced royalty and reduced milestone payments to be negotiated in
good faith by INSMED and TAISHO.
9.5. Conversion to Non-Exclusive License
If TAISHO (i) materially fails to use commercially reasonable efforts, for
reasons other than those beyond TAISHO's control, to (a) make any progress
in the Joint Development Program inside the Territory for a period
exceeding six (6) months following the First NDA Approval outside the
Territory and such failure is confirmed by the Joint Development Committee
or, (b) market and sell the Licensed Products as prescription medications
within six (6) months after the first NDA Approval inside the Territory
(including listing of National Health Insurance (NHI) drug price thereof if
such system exists) or (ii) fails to meet any other material obligation
under this Agreement, INSMED may notify TAISHO of this failure and request
that it commence actions to remedy such failure. If TAISHO does not take
actions to remedy its failure within sixty (60) days after written notice
from INSMED, the issues associated with the failure will be presented to
the respective Presidents of TAISHO and INSMED for resolution. The
Presidents or their representatives will meet within sixty (60) days after
the end of the notice period. If no resolution is reached during that time,
then INSMED with the approval of TAISHO, or if necessary after agreement
through mediation as described in Article 10.2., may change the Exclusive
License of TAISHO to a non-exclusive license by notifying TAISHO in writing
of such a change.
9.6. Failure to Progress the Joint Development Program Outside the
Territory
If INSMED materially fails, for reasons other than those beyond INSMED's
control, to make any progress in the Joint Development Program outside the
Territory for a period exceeding six (6) months, and such failure is
confirmed by the Joint Development Committee, TAISHO may notify INSMED of
its intent to continue the progress of the Joint Development Program
outside the Territory. If INSMED does not begin to progress the Joint
Development Program within sixty (60) days after receipt of such notice,
TAISHO may continue at TAISHO's expense, such development under the Joint
Development Program without any additional payment to INSMED other than
milestone payments and royalties as set forth in Article 4. In such case,
(i) the New Intellectual Property generated by TAISHO's development of the
Compound and/or Licensed
<PAGE>
products outside the Territory will be owned by TAISHO, and (ii) TAISHO
will grant to INSMED an exclusive license to such New Intellectual Property
on terms to be negotiated in good faith among the parties. If INSMED elects
to forego such license, INSMED will deliver written notice of its election
to TAISHO and the parties will discuss the possibility of executing a
separate license agreement, to be negotiated in good faith, giving Taisho
the right to INSMED's Technical Information and New Intellectual Property
outside of the Territory under which TAISHO may commercialize the Compound
and/or Licensed Products outside the Territory. However, if within three
(3) years of the commencement of TAISHO's independent development work
outside the Territory hereunder, INSMED reimburses TAISHO for one-hundred
percent (100%) of TAISHO's reasonable cost in developing the Compound
and/or Licensed Products outside the Territory, then TAISHO will (i)
transfer to INSMED the results (i.e. data, material or information)
obtained from such TAISHO's development work and (ii) grant to INSMED an
exclusive, royalty-free, fully paid license for rights outside the
Territory to the TAISHO's New Intellectual Property generated by TAISHO's
development of the Compound and/or Licensed Products with additional terms
to be negotiated in good faith between the parties.
9.7. Effect of Termination
Upon termination of this Agreement INSMED and TAISHO will receive all
payments and awards due to them under this Agreement, and be entitled to
any other remedies that they may otherwise have. Upon any termination of
this Agreement by INSMED subject to Articles 9.3.1. or 9.3.2., or by TAISHO
pursuant to Article 9.2. or 9.3.3., all rights granted herein to TAISHO
shall terminate, and TAISHO shall allow INSMED to use its New Intellectual
Property related to the Compound or the Licensed Products both inside and
outside the Territory without payment to TAISHO of royalties or other fees.
To the extent legally and practicably possible TAISHO will promptly deliver
to INSMED all documentation with respect to any governmental or regulatory
approvals (including any INDs or NDAs or their foreign equivalents) related
to the Compound or the Licensed Products.
9.8. Effect of Expiration
After the final royalty payment and any other payments due to INSMED are
paid by TAISHO and an audit of such payments by INSMED if so requested has
taken place then TAISHO shall have a full paid-up license with respect to
all rights granted to TAISHO hereunder.
ARTICLE 10 DISPUTE RESOLUTION
------------------
10.1. Governing Law, and Jurisdiction
This Agreement shall be governed by the laws of the Commonwealth of
Virginia without giving effect to the principles of conflicts of law.
10.2. Mediation
<PAGE>
In the event of any dispute arising out of or in connection with this
Agreement, including without limitation its validity and interpretation,
prior to commencing any arbitration proceeding or action in any court (a)
the parties agree that any matter in dispute will first be presented to the
respective Presidents of TAISHO and INSMED for resolution and (b)if the
Presidents or their respect representatives do not resolve such dispute
within thirty (30) days after meeting, then the dispute shall be submitted
to mediation through such mediator, mediation facility or organizations as
the parties shall agree upon. The cost of mediation shall be shared equally
by the parties. The place of mediation shall be in the country of the party
other than the party requesting mediation. Mediation of the dispute shall
be conducted promptly upon submission of the dispute to mediation and the
parties agree to participate in such mediation in good faith with a view to
achieving a mutually satisfactory resolution of the dispute. Mediation of
the dispute shall be completed within fifteen (15) days of its commencement
unless the parties extend such time by mutual agreement or the mediator
earlier declares the parties to be at an impasse. Such mediation shall be
conducted using the English language.
10.3. Arbitration
If the dispute is not settled by negotiation or mediation as provided
above, then the dispute shall be finally resolved by binding arbitration
under ICC Rules. The situs of the arbitration proceedings shall be the
country of the party other than the party who sought such arbitration. The
award of arbitration shall be final and binding upon both parties. Such
arbitration shall be conducted using the English language.
ARTICLE 11 MISCELLANEOUS PROVISIONS
------------------------
11.1. Indemnity
(a) Each party shall indemnify, defend and hold harmless the other party
and its Affiliates, licensees and sub-licensees, and their respective
officers, directors, employees, agents and stockholders ("Related Parties")
from and against any loss, liability, claim or damage (collectively
referred to as "Losses") resulting from the failure by the indemnifying
party to perform any of its covenants set forth herein.
(b) TAISHO assumes all risk of damage or injury to persons and to property
arising out of TAISHO's manufacture, use or sale of the Licensed Products,
Combination Products or Compound manufactured by TAISHO or its designated
manufacturer, and shall hold harmless, defend and indemnify INSMED and its
Related Parties from and against any Losses arising out of TAISHO's
manufacture, use or sale of Licensed Products or Combination Products.
(c) INSMED assumes all risk of damage or injury to persons and to property
arising out of the manufacture of the Compound sold to TAISHO by INSMED or
its designated manufacturers pursuant to this Agreement and shall hold
harmless, defend and indemnify TAISHO and its Related Parties from and
against any Losses arising out of the
<PAGE>
manufacture of the Compound sold to TAISHO by INSMED or its designated
manufacturers. To the extent INSMED is providing the Compound to TAISHO at
INSMED's cost, INSMED's liability hereunder will be limited to the greater
of the indemnification given to INSMED by and recovered by INSMED from the
manufacturer or manufacturers of the Compound or insurance proceeds payable
pursuant to a product liability insurance policy maintained by INSMED or
its manufacturer in an amount determined by the Joint Development Committee
to be appropriate. However, if INSMED is providing the Compound to TAISHO
at cost plus reasonable profit margin, the preceding sentence shall not be
applied.
(d) Notwithstanding anything to the contrary set forth herein, in no event
shall INSMED or TAISHO be liable to the other party for any incidental,
consequential or punitive damages, including but not limited to lost
profits and damage to reputation.
11.2. Waiver
Any terms or conditions of this Agreement may be waived at any time by the
party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on
behalf of the party or parties waiving such terms or conditions. Neither
the waiver by any party of any terms or conditions of this Agreement nor
the failure on the part of any party, on one or more instances, to enforce
any of the provisions of this Agreement or to exercise any right or
privilege, shall be deemed or construed to be a waiver of such terms or
conditions for any similar instance in the future or of any subsequent
breach hereof. All rights, remedies, undertakings, obligations and
agreements contained in this Agreement shall be cumulative and none of them
shall be a limitation of any other remedy, right, undertaking, obligation
or agreement.
11.3. Force Majeure
Neither TAISHO nor INSMED shall be responsible to the other for failure to
perform any of its obligations (other than the obligation to pay money)
imposed by this Agreement, if such failure caused by fire, flood,
explosion, lightning, windstorm, earthquake, subsidence of soil, failure or
destruction, in whole or in part, of machinery or equipment, failure of
supply of materials, discontinuity in the supply of power, governmental
interference, civil commotion, riot, war, strikes, labor disturbance,
transportation difficulties, labor shortage, or any cause beyond the
reasonable control of the party in question.
11.4. Severability
If any provision of this Agreement is determined to be invalid or
unenforceable, or shall render this entire Agreement to be unenforceable or
invalid, such provision shall be of no effect and shall not affect the
validity or enforceability of the remainder of this Agreement or any of its
provisions; provided, however, that the parties shall use their reasonable
good faith efforts to re-negotiate such provisions to best accomplish the
original intentions of the parties.
<PAGE>
11.5. Independence of Parties
INSMED and TAISHO are considered independent contractors from one another
and therefore neither is considered an employee or an affiliate of the
other.
11.6. No Warranty
Nothing in this Agreement shall be construed as a warranty with respect to
the Compound, the Licensed Patent, or New Intellectual Property, as an
obligation for a party having such right to file infringement suits against
third parties, or as a warranty that anything made, used, sold, or
otherwise disposed of by the other party will be free of possible
infringement of the intellectual property rights of third parties, unless
otherwise specifically provided for hereunder.
11.7. Third Party Actions
Except as expressly contemplated herein, none of the provisions of this
Agreement shall be for the benefit of or enforceable by any third party
including, without limitation, any creditor of either party hereto. No
third party shall obtain any right under any provision of this Agreement or
shall by reason of any such provision make any claim in respect of any
debt, liability, or obligation against either party hereto.
11.8. Taxes
Taxes related to the initial license fee, milestone, royalty and/or other
payments made by a party to the other that are required to be withheld
anywhere in and outside the Territory with respect to any Licensed Products
shall be deducted by the paying party from the milestone, royalty and/or
other payments due to the other party. The paying party shall provide
receipts to the other party acknowledging payment of any such taxes along
with the milestone, royalty and/or other payments when due.
11.9. Assignment
This Agreement shall not be assignable by any party without the prior
consent of the other, except (i) that INSMED may assign this Agreement, in
whole or in part, to any Affiliate or to any successor to substantially all
of INSMED's business or assets, who shall assume and be liable for all
INSMED's obligations to TAISHO provided for in this Agreement and (ii) that
INSMED may assign the proceeds from this Agreement in connection with
financing transactions.
11.10. Notice
Any notice, consent, approval, report, request, or other communication
under this Agreement shall be in writing sent by registered airmail,
postage prepaid, by courier service, or facsimile (confirmed by such
registered mail or courier service) and addressed as follows:
--------------------------------------------------------------------------------
If to TAISHO: If to INSMED:
--------------------------------------------------------------------------------
Taisho Pharmaceutical Co., Ltd. INSMED PHARMACEUTICALS INC.
24-1. Takata 3-chome, Toshimaku, 800 E. Leigh Street
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
(2) Tokyo, 170-8633, Japan Richmond, Virginia 23219
--------------------------------------------------------------------------------
Fax: 011-81-3-3985-0716 Fax: 001-1-804-828-6894
--------------------------------------------------------------------------------
Attention: General Manager Attention: President
Business Development Group
Ethical Business Strategy Div.
--------------------------------------------------------------------------------
All notices shall be deemed to be effective on the date of mailing. In case
any party changes its address at which notice is to be received, written
notice of such change shall be given without delay to the other party.
11.11. Headings
Headings in this Agreement are included herein for ease of reference only
and shall have no legal effect. References to Articles, Articles and
Schedules are to Articles and Schedules of this Agreement unless otherwise
specified.
11.12. Binding Effect
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted
assigns.
11.13. Entire Agreement
This Agreement, together with the Stock Purchase Agreement, constitutes the
entire agreement and understanding between the parties with respect to the
subject matter hereof, and all agreements (including the Confidentiality
Agreement dated June 18, 1999, and the Binding Letter of Intent dated
February 23, 2000) or understandings, verbal or written, made between the
parties before the date hereof with respect to the subject matter hereof
are superseded hereby. None of the terms of this Agreement shall be
amended, supplemented or modified except in writing signed by the parties
hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized officers, effective as of the Effective Date first
written above.
(i) INSMED PHARMACEUTICALS, INC.
By: /s/ Geoffrey Allan
-------------------------------
Name: Geoffrey Allan
Title: President and CEO
Date: July 10, 2000
<PAGE>
(ii) TAISHO PHARMACEUTICAL CO., LTD.
By: /s/ Akira Uehara
-------------------------------
Name: Akira Uehara
Title: President
Date: July 14, 2000
----------------------
<PAGE>
b. LIST OF SCHEDULES
TO
THE TAISHO/INSMED LICENSE AND DEVELOPMENT AGREEMENT
A. Joint Development Program Plan Inside the Territory
B. Joint Development Program Plan Outside the Territory
C. Amended and Restated License Agreement Between INSMED and the UVA Alumni
Patents Foundation
D. List of Licensed Patents Owned By INSMED
E. List of Countries in the Territory
F. List of Studies Substantially Completed to Date
