<PAGE>
GENSIA SICOR INC.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the Quarter ended March 31, 1997.
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from __________ to
__________.
Commission File No. 0-18549
-------
GENSIA SICOR INC.
(Formerly Gensia, Inc.)
----------------------------
(Exact name of registrant as
specified in its charter)
Delaware 33-0176647
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9360 Towne Centre Drive
San Diego, California 92121
---------------------------
(Address of principal executive offices and zip code)
(619) 546-8300
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common stock $.01 par value 74,338,932
- --------------------------- -----------------------------
Class Outstanding at March 31, 1997
<PAGE>
GENSIA SICOR INC.
INDEX
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements PAGE
--------------------
Consolidated Balance Sheets at March 31, 1997 and
December 31, 1996 3
Consolidated Statements of Operations for the three
months ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the three
months ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2: Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Results of Operations - for the three months ended
March 31, 1997 and 1996 9
Liquidity and Capital Resources 10
PART II OTHER INFORMATION
Item 1: Legal Proceedings 13
Item 4: Submission of Matters to a Vote of Security Holders 13
Item 6: Exhibits and Reports on Form 8-K 14
SIGNATURES 16
2
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GENSIA SICOR INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents ............................................. $ 23,269 $ 16,271
Short-term investments ................................................ 4,133 5,096
Accounts receivable ................................................... 29,432 5,038
Inventories ........................................................... 52,308 16,999
Other current assets .................................................. 13,257 2,316
--------- ---------
Total current assets .............................................. 122,399 45,720
Property and equipment, net ............................................... 68,064 33,657
Other noncurrent assets ................................................... 7,162 8,148
Intangibles, net .......................................................... 54,479 2,025
Goodwill, net ............................................................. 48,967 --
--------- ---------
$ 301,071 $ 89,550
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ...................................................... $ 45,191 $ 11,138
Accrued payroll and related expenses .................................. 3,695 3,057
Other accrued liabilities ............................................. 12,747 4,924
Current portion of deferred revenue ................................... 1,771 1,771
Short-term borrowings ................................................. 26,190 --
Current maturities of long-term obligations ........................... 2,529 76
--------- ---------
Total current liabilities ......................................... 92,123 20,966
Other long-term liabilities ............................................... 4,396 --
Deferred revenue, less current portion .................................... 125 500
Long-term obligations, less current maturities ............................ 10,681 85
Contingencies
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized, 1,600,000
issued and outstanding, liquidation preference of $80,000,000 .... 16 16
Common stock, $.01 par value, 125,000,000 shares authorized,
74,338,932 and 39,657,982 shares issued and outstanding
at March 31, 1997 and December 31, 1996, respectively ............. 743 396
Additional paid-in capital ............................................ 497,370 332,778
Accumulated deficit ................................................... (303,899) (265,136)
Unearned compensation ................................................. -- (55)
Foreign currency translation adjustment ............................... (484) --
--------- ---------
Total stockholders' equity ........................................ 193,746 67,999
--------- ---------
$ 301,071 $ 89,550
========= =========
</TABLE>
See accompanying notes.
3
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GENSIA SICOR INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
March 31,
---------
1997 1996
---- ----
<S> <C> <C>
Revenues:
Product sales ....................................... $ 19,805 $ 12,894
Contract research and license fees .................. 2,563 --
Interest income ..................................... 223 712
-------- --------
Total revenues .................................. 22,591 13,606
Costs and expenses:
Cost of sales ....................................... 16,457 8,471
Research and development ............................ 5,914 8,197
Selling, general and administrative ................. 9,084 7,927
Amortization expense ................................ 408 --
Interest and other .................................. (336) 307
Acquisition of in-process research and development... 29,200 --
-------- --------
Total costs and expenses......................... 60,727 24,902
-------- --------
Net loss before income taxes ............................ (38,136) (11,296)
Provision for income taxes .............................. (627) --
-------- --------
Net loss before dividends ............................... (38,763) (11,296)
Dividends on preferred stock ............................ (1,488) (1,488)
-------- --------
Net loss applicable to common shares .................... $(40,251) $(12,784)
======== ========
Net loss per common share ............................... $ (.66) $ (.36)
======== ========
Shares used in computing per share amounts .............. 61,395 35,458
======== ========
</TABLE>
See accompanying notes.
4
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GENSIA SICOR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1996 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................................ $ (38,763) $ (11,296)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization of property and equipment ......... 1,414 796
Amortization of intangibles and goodwill ........................ 408 --
Amortization of licenses and other .............................. 101 75
Amortization of unearned compensation ........................... 56 520
Loss on disposal of property and equipment ...................... -- 192
Charge for acquired in-process research and
development .................................................. 29,200 --
Inventory purchase price allocation adjustment................... 1,234 --
Change in operating assets and liabilities, net of effects of the
acquisition of Rakepoll Holding:
Accounts receivable ...................................... 2,427 (320)
Inventories .............................................. (1,748) 738
Other current assets ..................................... 807 (287)
Accounts payable ......................................... 5,774 (1,270)
Accrued research and development costs ................... -- (202)
Accrued payroll and related expenses ..................... (241) 425
Other accrued liabilities ................................ (1,135) (1,827)
Deferred revenue ......................................... (375) --
--------- ---------
Net cash used in operating activities ................................... (841) (12,456)
Cash flows from investing activities:
Acquisition of Rakepoll Holding, net of $2,232 cash acquired ........ (8,868) --
Proceeds from short-term investments ................................ 5,097 42,034
Purchases of short-term investments ................................. (4,134) (52,503)
Purchase of property and equipment .................................. (2,803) (2,386)
Proceeds from sale of property and equipment ........................ 8 58
Notes receivable from officers and employees ........................ 223 (95)
--------- ---------
Net cash used in investing activities ................................... (10,477) (12,892)
Cash flows from financing activities:
Payments of preferred stock dividends ............................... (1,488) --
Issuance of common stock and warrants, net .......................... 19,812 485
Change in short-term borrowings ..................................... 77 --
Issuance of long-term obligations ................................... 189 206
Principal payments on long-term obligations ......................... (198) (250)
Principal payments on capital lease obligations ..................... (21) (41)
--------- ---------
Net cash provided by financing activities ............................... 18,371 400
--------- ---------
Effect of exchange rate changes on cash ................................. (55) --
--------- ---------
Increase (decrease) in cash and cash equivalents ........................ 6,998 (24,948)
Cash and cash equivalents at beginning of period ........................ 16,271 47,421
--------- ---------
Cash and cash equivalents at end of period .............................. $ 23,269 $ 22,473
========= =========
Supplemental schedule of noncash financing activities:
Common stock issued to acquire net assets of Rakepoll Holding:
Fair value of assets, other than cash............................ $ 207,593 $ --
Liabilities assumed.............................................. 81,309 --
</TABLE>
See accompanying notes.
5
<PAGE>
GENSIA SICOR INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. ORGANIZATION AND PRINCIPLES OF CONSOLIDATION
ORGANIZATION
------------
Gensia Sicor Inc, formerly known as Gensia, Inc. ("Gensia Sicor" or
the "Company"), a Delaware corporation, was incorporated November 17,
1986. On February 28, 1997, Gensia Sicor completed the acquisition of
Rakepoll Holding B.V. ("Rakepoll Holding") from Rakepoll Finance N.V.
("Rakepoll Finance") Rakepoll Holding is the parent company of three
specialty pharmaceutical businesses: SICOR-Societa Italiana
Corticosteroidi S.p.A. ("Sicor") of Milan, Italy, and two companies
located in Mexico: Lemery, S.A. de C.V. ("Lemery") and Sintesis Lerma,
S.A. de C.V. ("Sintesis Lerma"). Gensia Sicor is a specialty
pharmaceutical company focused on the development, manufacture and
marketing of products for the worldwide oncology and injectable
pharmaceutical market. The Company also has a proprietary medical products
group and a research group focused on pain, inflammation, diabetes and
cardiovascular. The newly combined company is headquartered in San Diego,
California.
PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated financial statements include the accounts of the
Company and its seven wholly-owned subsidiaries: Rakepoll Holding,
Gensia Laboratories, Ltd., Gensia Automedics, Inc., Gensia Europe Limited,
Gensia GmbH, Aramed, Inc., and Gensia Development Corporation. All
significant intercompany accounts and transactions have been eliminated.
The accompanying consolidated balance sheet at March 31, 1997 includes the
assets, liabilities and stockholder's equity of the combined companies.
The consolidated statement of operations and statement of cash flows
include the results for one month for Rakepoll Holding from February 28,
1997, (the date of acquisition), through March 31, 1997 only.
In the opinion of the Company, all adjustments, consisting only of
normal recurring adjustments, necessary for the fair statement of the
results for the three-month periods ended March 31, 1997 and 1996 have
been made. The results of operations for the three-month period ended
March 31, 1997 are not necessarily indicative of the results to be
expected for the full fiscal year.
The accompanying consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto
included in the Company's 1996 Form 10-K filed with the Securities and
Exchange Commission and the audited financial statements and notes
thereto of Rakepoll Holding B.V. included in the Company's 1997 Form 8-K/A
filed with the Securities and Exchange Commission..
2. THE RAKEPOLL HOLDING ACQUISITION
On February 28, 1997, after shareholder approval, Gensia Sicor
acquired all of the outstanding shares of capital stock of Rakepoll
Holding from Rakepoll Finance in exchange for 29,500,000 shares of the
Company's Common Stock and $100,000. The acquisition was accounted for
using the purchase method. Rakepoll Holding is the parent company of three
specialty pharmaceutical businesses: SICOR-Societa Italiana
Corticosteroidi S.p.A. of Milan, Italy, and two companies located in
Mexico: Lemery S.A. de C.V. and Sintesis Lerma, S.A. de C.V. The total
purchase price was $157.7 million, which was comprised of the fair value
of Common Stock issued of $146.6 million, acquisition costs of $11.0
million, and a cash payment of $100,000.
6
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GENSIA SICOR INC.
Based on the purchase price of $157.7 million, allocation of the total
acquisition cost is as follows:
<TABLE>
<S> <C>
Net tangible assets..................... $ 27,542
Developed technology.................... 45,000
Other intangibles....................... 6,870
In-process research and development..... 29,200
Goodwill................................ 49,103
---------
Total............................... $ 157,715
=========
</TABLE>
The developed technology and other intangibles are being amortized
over their estimated lives. The excess of the purchase price over the
value of identified assets and liabilities, in the amount of $49.1 million
was recorded as goodwill and is being amortized over its estimated life.
The value assigned to in-process research and development was immediately
charged to the statement of operations. This charge is not deductible
for income tax purposes.
3. CONTINGENCIES
During 1995, Rakepoll Holding received claims from certain of its
customers in connection with shipments of a contaminated product. While no
lawsuits have been filed against Rakepoll Holding with respect to this
matter, Rakepoll Holding had a reserve of approximately $2.8 million
at March 31, 1997, which represents management's best estimate of product
rework costs, attorneys' costs and other settlement costs. Actual costs to
be incurred in relation to the ultimate settlement may vary from the
amount estimated.
4. NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of
common shares outstanding during the period.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
The Company will be required to adopt these new rules effective December
15, 1997. Management does not anticipate any impact resulting from the
adoption of this new standard upon current or previously reported primary
earnings per share.
5. SUBSEQUENT EVENTS
In April 1997, the Company entered into an agreement with Sankyo Co.,
Ltd, of Japan ("Sankyo") to collaborate on a research program to discover
and develop drugs for the treatment of non-insulin dependent (Type II)
diabetes. Under the terms of the agreement, the Company will receive an
up-Front license fee of $1.4 million and will receive research funding
for at least three years, to be paid quarterly. Under the provisions of a
Letter of Intent signed in March 1997, the Company recorded as revenue, an
up-front non-refundable commitment fee of $1.4 million from Sankyo. In
conjunction with this research collaboration, Sankyo, at Gensia Sicor's
option, may also make up to a $7.3 million equity investment, at a premium
to market price, in the Company's Common Stock or the common stock of an
assignee determined by the Company. The Company may receive payments upon
the achievement of specified milestones if a product is successfully
developed by Sankyo under the agreement. The Company would also receive
royalties on any product sales that result from the collaboration.
7
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GENSIA SICOR INC.
In May 1997, the Company entered into an agreement to privately place
$20 million in convertible notes due in 2004. The notes bear a coupon of
2.675%. The notes are convertible into Gensia Sicor Convertible Preferred
Stock or Common Stock at a conversion price of $3.78 per share and include
Warrants to purchase up to 2,645,503 shares of Gensia Sicor Common Stock
at $4.35 per share. Fifty percent of these Warrants are Conditional
Warrants that may not be exercised for three years and will be canceled if
the Gensia Sicor Common Stock price exceeds certain levels during the
first three years after the closing. The terms of the agreement contain,
among other provisions, requirements for maintaining defined levels of net
worth and various financial ratios, and a provision that the parties will
enter into a Registration Rights Agreement under which the Company would
not be required to register the shares of Common Stock into which the
notes are convertible until August 28, 1998. The financing is expected to
close in May 1997.
In May 1997, the Company announced that it had received a letter from
the U.S. Food and Drug Administration (FDA) indicating that its New Drug
Application (NDA) for the GenESA System is approvable. The GenESA System
will be indicated for use in the diagnosis of coronary artery disease in
conjunction with radionuclide myocardial perfusion imaging for patients
who cannot exercise adequately. Approval of the product is contingent on
acceptance by the FDA on final labeling. The Company anticipates being
able to respond promptly to the request for final labeling and anticipates
launching the product through its Gensia Automedics subsidiary in the
third quarter of 1997.
8
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GENSIA SICOR INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Gensia has been unprofitable on an annual basis since its inception in
1986 and expects to incur additional operating losses at least through 1997. For
the period from its inception to March 31, 1997, the Company has incurred a
cumulative net loss of $303.9 million.
When used in this Form 10-Q, the words "expects", "anticipates",
"estimates" and similar expressions are intended to identify forward-looking
statements. Such statements involve risks and uncertainties, including the
timely development, regulatory approval, and successful marketing of new
products and acceptance of new products, the impact of competitive products,
product costs and pricing, changing market conditions and other risks described
in this Form 10-Q and in the Company's Annual Report on Form 10-K for the year
ended December 31, 1996. Actual results may differ materially from those
projected. These forward-looking statements represent the Company's judgment
only as of the date of the filing of this Form 10-Q. The Company disclaims,
however, any intent or obligation to update these forward-looking statements.
RESULTS OF OPERATIONS
The Company reported a net loss of $40.3 million, or $.66 per common share
(after dividends on preferred stock of $1.5 million), in the first quarter ended
March 31, 1997 compared to a net loss of $12.8 million, or $.36 per common share
(after undeclared and unpaid dividends on preferred stock of $1.5 million), in
the first quarter of 1996. The first quarter includes the results of Rakepoll
Holding from February 28, 1997, the date of its acquisition and a $29.2 million
write-off of in-process research and development associated with the acquisition
of Rakepoll Holding.
Product sales in the first quarter of 1997 increased to $19.8 million from
$12.9 million in the first quarter of 1996. The increase in product sales is
attributable to the inclusion of one month of sales reported by the Rakepoll
Holding companies for March. The cost of sales associated with product sales was
$16.5 million for the first quarter of 1997 and $8.5 million for the first
quarter of 1996. The gross margin for the 1997 first quarter decreased compared
to the first quarter of 1996 due to increased competition with respect to
certain of Gensia Laboratories' multisource injectable products and a $1.2
million increase in cost of sales for Rakepoll Holding products resulting from
the write-up of inventory associated with the acquisition of Rakepoll Holding.
Second quarter gross margin will also be negatively effected as the remainder of
the inventory write-up is charged to cost of sales. The Company expects product
sales to grow significantly in 1997, primarily as a result of the acquisition of
Rakepoll Holding on February 28, 1997, and if new products are approved for sale
by the regulatory agencies. There can be no assurance that Gensia Sicor will be
able to achieve growth from new product sales. In May 1997, the Company
announced that it had received a letter from the U.S. Food and Drug
Administration (FDA) indicating that its New Drug Application (NDA) for the
GenESA System is approvable for use in the diagnosis of coronary artery disease
in conjunction with radionuclide myocardial perfusion imaging for patients who
cannot exercise adequately. The Company anticipates launching the product
through its Gensia Automedics subsidiary in the third quarter of 1997.
In the first quarter of 1997, contract research and license fees were
$2.6 million of which $1.2 million was from research collaboration with Pfizer,
Inc. and $1.4 million was from an up-front non-refundable commitment received
from Sankyo under the provisions of a Letter of Intent signed in March 1997. No
contract research or license fees were recorded in the first quarter of 1996.
The Company expects to record contract research revenue in future quarters
relating to its agreements with Sankyo and Pfizer. The Company is pursuing
additional collaborations which would fund a portion of Gensia's research and
development efforts; however, there can be no assurance that any such agreements
will be reached.
Interest income for the first quarter of 1997 decreased to $0.2
million from $0.7 million for the first quarter of 1996 due to lower average
cash and investment balances in 1997.
9
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GENSIA SICOR INC.
Research and development expenses in the first quarter of 1997 decreased
to $5.9 million from $8.2 million in the 1996 first quarter. The decrease is due
to the reduction of expenses for the Geomatrix nifedipine program as a result of
a restructuring of an agreement with Jago Pharma AG and Boehringer Mannheim
Corporation and due to ongoing expense reduction programs. The future level of
spending in research and development will, in part, depend on the Company's
ability to complete additional collaborations with corporate partners to fund
its research and development programs.
Selling, general and administrative expenses in the first quarter of 1997
increased to $9.1 million from $7.9 million in the first quarter of 1996, mainly
due to the inclusion of Rakepoll Holding's expenses for March 1997. Selling,
general and administrative expenses are expected to continue to grow as the
Company increases sales and marketing activities to support the GenESA System
product launch, and as Rakepoll Holding is consolidated for a full accounting
period. The amount of any such growth will depend, in part, upon the Company's
success in gaining U.S. regulatory approval for additional multisource
injectable drugs. Expenses are also expected to grow as Gensia Sicor continues
to integrate the Rakepoll Holding business.
The Company had interest and other income of $0.3 million in the first
quarter of 1997 compared to interest and other expense of $0.3 million in the
first quarter of 1996.
In the first quarter of 1997, the Company recorded amortization expense of
$0.4 million related to the identified intangibles and goodwill resulting from
the acquisition of Rakepoll Holding.
In connection with the Rakepoll Holding acquisition, the assets and
liabilities of Rakepoll Holding were adjusted to their estimated fair values,
and the Company incurred a one time $29.2 million write-off related to the value
assigned to the acquired in-process research and development. This charge is not
deductible for income tax purposes.
The Company is party to a number of agreements with Gensia Clinical
Partners related to the GenESA System technology. Pursuant to these agreements,
the Company is required to make a milestone payment of approximately $5 million
payable in cash or Gensia Sicor Common Stock within a specified time after
approval of the GenESA System by the FDA.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had cash, cash equivalents and short-term
investments of $27.4 million. In March 1997, the Company raised approximately
$17 million through a private placement of Gensia Sicor units for $4.1875 per
unit. Each unit consists of one share of Common Stock and a warrant to purchase
one half of one share of the Company's Common Stock for $4.1875 per share.
In early May 1997, the Company entered into an agreement to privately
place $20 million in convertible notes due in 2004. The notes bear a coupon of
2.675%. The notes are convertible into Gensia Sicor Convertible Preferred Stock
or Common Stock at a conversion price of $3.78 per share and include Warrants to
purchase up to 2,645,503 shares of Gensia Sicor Common Stock at $4.35 per share.
Fifty percent of these Warrants are Conditional Warrants that may not be
exercised for three years and will be canceled if the Gensia Sicor Common Stock
price exceeds certain levels during the first three years after the closing. The
terms of the agreement contain, among other provisions, requirements for
maintaining defined levels of net worth and various financial ratios, and a
provision that the parties will enter into a Registration Rights Agreement under
which the Company would not be required to register the shares of Common Stock
into which the notes are convertible until August 28, 1998. The financing is
expected to close in May 1997 .
The Company's current operating plan includes funding its research
activities primarily through collaborations with
10
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GENSIA SICOR INC.
other pharmaceutical companies. The Company is currently receiving contract
research revenues through its research collaboration with Pfizer, Inc. In April
1997, the Company entered into an agreement with Sankyo pursuant to which Sankyo
will provide basic research funding to discover and develop drugs for the
treatment of non-insulin dependent (Type II) diabetes for a period of at least
three years, and may provide payments for attainment of certain preclinical and
clinical milestones and royalty payments from commercial sales of any
successfully developed product. Subject to certain consents and availability of
funding, Gensia Sicor plans to transfer certain of its San Diego based
pharmaceutical research and development programs into its newly created
Metabasis Therapeutics, Inc. subsidiary and spin off such subsidiary to its
shareholders. To the extent the Company is unable to spin off Metabasis
Therapeutics, Inc. and is unable to fund its research activities through its
collaboration with Sankyo and Pfizer, the Company plans to reduce its research
expense to the level necessary to fulfill its obligations under the Pfizer and
Sankyo agreements. There can be no assurance that the Company's product
development efforts with Pfizer and Sankyo will be successful or that Pfizer and
or Sankyo will not terminate their respective collaborations before any such
milestones are achieved or that Gensia Sicor will be able to obtain consents and
financing necessary to spin off Metabasis Therapeutics, Inc. to shareholders.
The Company anticipates that its current capital resources, commitments
from third parties, including the agreements signed in May 1997 to issue
convertible notes and warrants in exchange for $20 million, and efforts to
reduce overall product costs will enable it to maintain its current and planned
operations through at least 1997. The Company will continue to pursue debt and
lease financing for its capital needs. In addition, as the Company has
indicated, it may seek equity funds to finance its subsidiaries Gensia
Automedics, Inc. and Metabasis Therapeutics, Inc. There can be no assurance that
any such financings will be available on acceptable terms, if at all.
Gensia Sicor expects to incur additional costs, including the cost of
increased sales and marketing activities to support product launches and
increased emphasis on overall commercial activities. Management also plans to
invest in plant and equipment to increase and improve the existing manufacturing
capacity in the acquired Rakepoll Holding businesses. Increased spending will
also be required to integrate the Gensia and Rakepoll Holding businesses. Any
difficulties experienced in integrating the operations of the companies
successfully could have a material adverse effect on the business and results of
operations of the combined company. The amount of such additional costs, as well
as the increased spending necessary for working capital and capital
requirements, will depend on numerous factors including the successful
integration of the Gensia Sicor companies, the timing of any final regulatory
approval of the GenESA System in the U.S., the Company's ability to market this
product in the U.S. and Europe if appropriate regulatory approvals are obtained,
and Gensia's success at maintaining or improving Gensia Laboratories' current
sales and profitability. In May 1997, the Company announced that it had received
a letter from the FDA indicating that its NDA for the GenESA System is
approvable for use in the diagnosis of coronary artery disease in conjunction
with radionuclide myocardial perfusion imaging for patients who cannot exercise
adequately. The Company anticipates launching the product through its Gensia
Automedics, Inc. subsidiary in the third quarter of 1997. Also, Gensia
Laboratories is undertaking a significant capital expenditure program in 1997
related to the development of an oncology manufacturing facility. The Company
has commitments to finance this expansion largely through lease or debt
financing secured against certain assets of Gensia Laboratories. There can be no
assurance such financing will remain available on acceptable terms, if at all.
Significant changes in operating assets and liabilities during the first
quarter of 1997, excluding the net assets from the Rakepoll Holding acquisition,
included a $5.8 million increase in accounts payable, a $2.4 million decrease in
accounts receivable and a $1.7 million increase in inventories. Other
significant cash flows in the first quarter of 1997 included $8.9 million for
the transaction costs associated with the acquisition of Rakepoll Holding as of
February 28, 1997, net of cash acquired of $2.2 million, $19.8 million received
from the issuance of common stock and warrants, primarily as a result of private
placement of 4.2 million shares of Gensia Common Stock in March 1997 and $2.8
million expended on property and equipment.
11
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GENSIA SICOR INC.
The Company made quarterly cash dividend payments of approximately $1.5
million per quarter on its outstanding preferred stock from June 1, 1993 through
March 1, 1995. Subsequent to March 1995, as a measure to reduce cash outflows,
the Company's Board of Directors suspended quarterly cash dividend payments on
its outstanding preferred stock. The Company resumed quarterly payment of the
Preferred Stock dividend in September 1996. At March 31, 1997, the Company had
approximately $7.5 million in undeclared cumulative preferred dividends. If the
Company chooses to not declare dividends for six cumulative quarters, the
holders of this preferred stock, voting separately as a class, will be entitled
to elect two additional directors until the dividend in arrears has been paid.
12
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GENSIA SICOR INC.
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
There have been no material developments in legal proceedings during the
quarter ended March 31, 1997.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 26, 1997, the Company held a Special Meeting of Stockholders.
The following actions were taken at the meeting:
1. A proposal to adopt the Stock Exchange Agreement, dated as of
November 12, 1996, as amended on December 16, 1996, between Gensia
and Rakepoll Finance, N.V., a corporation organized under the laws of
the Netherlands Antilles, was approved.
19,201,232 shares were voted in favor of the proposal, 715,992 shares
were voted against the proposal, 89,503 shares abstained and
11,206,150 shares were not voted or were broker non-votes.
2. A proposal to amend and restate Gensia's Restated Certificate of
Incorporation to (a) change the name of Gensia to "Gensia Sicor
Inc.", (b) increase the number of authorized shares of Gensia Common
Stock, from 75,000,000 to 125,000,000 and (c) increase the number of
authorized shares of Gensia preferred stock designated as Series I
Participating Preferred Stock, $.01 par value, from 100,000 to
125,000, was approved.
18,051,855 shares were voted in favor of the proposal, 1,866,748
shares were voted against the proposal, 155,124 shares abstained and
11,139,150 shares were not voted or were broker non-votes.
3. A proposal to adopt a new stock plan, the Gensia 1997 Long-Term
Incentive Plan was approved.
24,911,564 shares were voted in favor of the proposal, 6,163,565
shares were voted against the proposal, 137,748 shares abstained and
none were not voted or were broker non-votes.
13
<PAGE>
GENSIA SICOR INC.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit
Number Description of Document
------ -----------------------
3(i)(1) Restated Certificate of Incorporation of Gensia Sicor Inc.
3(ii)(1) Bylaws of Gensia Sicor Inc.
4.1(1) Shareholder's Agreement dated November 12, 1996, as
amended on December 21, 1996 and on February 28, 1997,
between Gensia Sicor Inc. and Rakepoll Finance N.V.
4.2 Form of Unit Purchase Agreement between the Company and
certain accredited investors, dated as of March 27, 1997.
10.1(+) Collaborative Research and Development Agreement between
the Company and Sankyo Co., Ltd., dated as of April 18,
1997.
10.2(+) Supply Agreement between and among Sicor S.p.A., Alco
Chemicals, Ltd. and Boehringer Ingelheim International
GmbH, dated September 23, 1996.
10.3(+) Distribution and Supply Agreement between and among the
Sicor S.p.A. and Alco Chemicals, Ltd. and The Upjohn
Company, dated as of January 1, 1994.
10.4 Agency Agreement between Sintesis Lerma S.A. de C.V. and
Alco Chemicals, Ltd., dated September 26, 1996.
10.5(+) Agency Agreement between Sicor S.p.A. and Alco Chemicals,
Ltd., dated January 1, 1994.
10.6 Agreement between Sicor S.p.A. and Alco Chemicals, Ltd.,
dated September 30, 1996.
10.7(+) Agreement between Sicor S.p.A. and Horse Vitality S.A. re:
colostrum, dated September 26, 1996.
10.8 Distribution Agreement between Sicor S.p.A. and Alco
Chemicals, Ltd. re: Budesonide, dated January 1, 1995.
10.9 Distribution Agreement between Sicor S.p.A. and Alco
Chemicals, Ltd. re: Difluprednate, dated January 1, 1995.
10.10 Distribution Agreement between Sicor S.p.A. and Alco
Chemicals, Ltd. re: Etoposide, dated March 1, 1995.
10.11(+) License Agreement between Sicor S.p.A. and Alco Chemicals,
Ltd., dated January 9, 1989, as amended on June 16, 1992
and October 31, 1996.
10.12 Manufacturing Agreement between Sicor S.p.A. and Alco
Chemicals, Ltd., dated July 16, 1992.
14
<PAGE>
GENSIA SICOR INC.
10.13 Service Agreement between Sintesis Lerma and Grupo Fairmex
S.A. de C.V., dated January 2, 1995.
10.14 Letter Agreement between the Company and Donald E. Panoz,
dated March 18, 1997.
10.15(2) Gensia Sicor Inc. 1997 Long-Term Incentive Plan.
27.1 Financial Data Schedule.
--------------------
(1) Incorporated by reference to the Exhibits of the same number
filed with the Company's Current Report on Form 8-K dated
February 28, 1997 (No. 0-18549).
(2) Incorporated by reference to Annex D of the Company's
Definitive Proxy Statement dated January 15, 1997 (No. 0-18549)
(+) Confidential treatment has been requested for certain portions
of these agreements.
(b) Reports on Form 8-K during the first quarter
Report on Form 8-K filed on March 14, 1997 with respect to an event
dated February 28, 1997 (acquisition of Rakepoll Holding by Gensia Sicor).
Report on Form 8-K filed on February 19,1997 with respect to an event
dated December 30, 1996 (private placements of 2,260,000 shares of Gensia Sicor
Common Stock for net proceeds of approximately $9.0 million).
15
<PAGE>
GENSIA SICOR INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GENSIA SICOR INC.
Date: May 15, 1997 By: /s/ David F. Hale
-----------------
David F. Hale
President and Chief Executive Officer
Date: May 15, 1997 By: /s/ John W. Sayward
-------------------
John W. Sayward
Vice President, Finance, Chief Financial Officer
and Treasurer
16
<PAGE>
EXHIBIT 4.2
-----------
EXECUTION VERSION
-----------------
UNIT PURCHASE AGREEMENT
Gensia Sicor Inc.
9360 Towne Centre Drive
San Diego, California 92121
Ladies & Gentlemen:
The undersigned purchaser (the "Purchaser") hereby confirms its agreement
with you as follows:
1. This Unit Purchase Agreement (the "Purchase Agreement") is made by and
between Gensia Sicor Inc., a Delaware corporation (the "Company"), and the
Purchaser as of the date this Purchase Agreement is accepted by the Company
below (the "Effective Date").
2. The Company has authorized the issuance and sale of up to nine million
(9,000,000) units (the "Units"). Each Unit consists of one share of the
Company's Common Stock, par value $.01 per share (the "Common Stock"), and a
warrant (the "Warrant") to purchase one-half share of the Company's Common Stock
at a per share exercise price of $4.1875, such Warrant to be issued if and to
the extent that the Purchaser sells no Common Stock or other securities of the
Company for a period commencing on the Effective Date and ending on December 31,
1997, all as more fully described in this Purchase Agreement, the Warrant and
accompanying documents.
3. The Company and the Purchaser agree that the Purchaser will purchase
from the Company, and the Company will sell to the Purchaser
----------------
Units, at a purchase price per Unit (the "Purchase Price") equal to $4.1875, and
pursuant to, the Terms and Conditions for Purchase of Units attached hereto as
Annex I and incorporated herein by reference as if fully set forth herein.
4. Units will be sold on a first come, first served basis. The Company
makes no representation that this Purchase Agreement will be accepted by the
Company.
5. Purchaser hereby agrees not to engage in the short sale of the
Company's Common Stock for a twenty (20) day period prior to and for a ninety
(90) day period following the Closing Date.
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
between us by signing in the space provided below for that purpose.
PURCHASER
-----------------------------------------
Print Name
By:
--------------------------------------
Title:
-----------------------------------
Address:
---------------------------------
ACCEPTED as of March 27, 1997
Gensia Sicor Inc.
By:
---------------------------------
Title:
------------------------------
<PAGE>
ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF UNITS
1. Authorization and Sale of the Units.
-----------------------------------
1.1 Authorization of the Units. The Company has authorized the issuance
--------------------------
and sale of up to nine million (9,000,000) units (the "Units"), each Unit
consisting of one share of the Company's Common Stock, par value $.01 per share
(the "Common Stock") and a warrant to purchase one-half share of the Company's
Common Stock (the "Warrant") in the form attached hereto as Exhibit 1.1.
1.2 Sale of Units. Subject to the terms and conditions hereof, the
-------------
Purchaser will purchase the number of Units agreed upon by the Purchaser at the
Purchase Price, as set forth in the Unit Purchase Agreement by and between the
Company and the Purchaser (the "Purchase Agreement"). The shares of Common
Stock sold to Purchaser pursuant to the Purchase Agreement are hereinafter
referred to as the "Initial Shares" and the shares of Common Stock arising from
the exercise of the Warrant are hereinafter referred to as the "Warrant Shares."
The Initial Shares, the Warrant and the Warrant Shares are hereinafter
collectively referred to as the "Securities."
2. Closing Date.
------------
2.1 Closing Date. The closing of the purchase and sale of the Units to
------------
the Purchaser hereunder (the "Closing") shall be held at the offices of
Pillsbury Madison & Sutro LLP, 235 Montgomery Street, San Francisco 94104, at
9:00 A.M. California time, on March 26, 1997 or at such other time within five
(5) business days thereof as the Company may select. The date of the Closing is
hereinafter referred to as the "Closing Date." As of the Closing Date, the
Company shall prepare a certificate or certificates registered in the name of
the Purchaser representing the Initial Shares to be purchased by such Purchaser
under the Purchase Agreement, and the Purchaser shall send to the Company a wire
transfer (in accordance with the instructions set forth on Exhibit 2.l(a)
hereto) in the amount of the purchase price of the Units to be purchased by such
Purchaser, payable to the Company's order. Funds received prior to the Closing
Date will not bear interest.
2.2 Warrant Issuance. The Company will issue a Warrant to purchase one-
----------------
half share of the Company's Common Stock at a per share exercise price of
$4.1875 (with such number of shares and purchase price as adjusted pursuant to
the provisions of Section 3 of the Warrant for any events which occur from and
after the Closing Date and on or prior to December 31, 1997) to each Purchaser
for each share of the Company's Common Stock purchased by the Purchaser at the
Closing and held by such Purchaser until December 31, 1997 (the "Warrant
Determination Date"). The
1
<PAGE>
Warrant will be issued by the Company promptly after the Warrant Determination
Date; provided, however, that for purposes of calculating the amount of the
Warrant, the number of shares purchased at the Closing and held until the
Warrant Determination Date will be reduced by any other sales of Company
securities (including short sales and sales or purchases of derivative
securities) by the Purchaser from the Closing Date until the Warrant
Determination Date. The Company may request an affidavit and other reasonable
supporting materials as to the foregoing from any Purchaser prior to issuance of
the Warrant.
3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to the Purchaser as of the Closing Date as follows:
3.1 Organization and Standing. The Company has been duly incorporated
-------------------------
and is validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation.
3.2 Corporate Power; Authorization. The Company has all requisite legal
------------------------------
and corporate power and has taken all requisite corporate action to execute and
deliver the Purchase Agreement, to sell and issue the Securities and to carry
out and perform all of its obligations hereunder. The Purchase Agreement has
been duly authorized, executed and delivered on behalf of the Company and
constitutes the valid and binding agreement of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally, (ii) as limited by equitable
principles generally and (iii) rights to indemnification hereunder may be
limited by applicable law. The consummation of the transactions contemplated
herein and the fulfillment of the terms hereof will not result in a breach of
any of the terms or provisions of, or constitute a default under, the Company's
Certificate of Incorporation, the Company's by-laws, or any material indenture,
mortgage, deed of trust or other agreement or instrument to which the Company is
a party or by which it is bound.
3.3 Units; Warrant Shares. The Company has full corporate power and
---------------------
lawful authority to sell the Units on the terms and conditions contemplated
herein, and when so sold against payment therefor as provided herein, the
Initial Shares and, when issued, the Warrants will be validly authorized and
issued, fully paid and nonassessable. The issuance and delivery of each of the
Initial Shares and the Warrants is not subject to preemptive or any similar
rights of the stockholders of the Company or any liens or encumbrances arising
through the Company and when the Warrant Shares are issued in accordance with
the terms of the Warrants, they will be validly issued and outstanding, fully
paid and nonassessable and free of any liens or encumbrances arising through the
Company.
2
<PAGE>
3.4 SEC Documents; Financial Statements. The Company's Annual Report on
-----------------------------------
Forms 10-K and 10-K/A for the Fiscal Year Ended December 31, 1995, the Company's
Quarterly Reports on Forms 10-Q for the quarterly period ended March 31, 1996,
the Company's Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1996, the Company's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1996, the Company's Form 8-K dated December 30, 1996, the
Company's definitive Proxy Statement dated January 15, 1997, and the Company's
Form 8-K dated February 28, 1997 (the "SEC Documents") as filed by the Company
with the Securities and Exchange Commission (the "Commission") have been
provided to the Purchaser. The SEC Documents conform in all material respects
to the requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as applicable, and the rules, regulations and instructions of
the Commission thereunder. The SEC Documents did not as of their dates contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. The
financial statements of the Company included in the SEC Documents (the
"Financial Statements") comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto. Except as may be indicated in the notes
to the Financial Statements, the Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied
and fairly present the consolidated financial position of the Company and its
subsidiaries at the dates thereof and the consolidated results of their
operations, stockholders' equity and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal, recurring
adjustments).
3.5 Subsequent Events. Since February 28, 1997 (the date of the closing
-----------------
of the Gensia/Sicor combination), (i) neither the Company nor any of its
subsidiaries has incurred any liabilities or obligations, contingent or
otherwise, that are material in the aggregate to the Company and its
subsidiaries, taken as a whole, except in the ordinary course of business, and
(ii) there has been no material adverse change in the condition or results of
operations, financial or otherwise, of the Company and its subsidiaries, taken
as a whole.
3.6 Legal Proceedings. Except as set forth in the SEC Documents, there
-----------------
are no material legal proceedings to which the Company or any subsidiary is a
party or of which property of the Company or any subsidiary is the subject and,
to the Company's knowledge, no such proceedings are contemplated by governmental
authorities or others.
3.7 Validity of Securities. The Company has full corporate power and
----------------------
lawful authority to sell the Units on the terms and conditions contemplated in
the Purchase Agreement, and
3
<PAGE>
when so sold against payment therefor as provided therein, the Initial Shares
and the Warrant will be validly authorized and issued, fully paid and
nonassessable and will have the rights, preferences and privileges described in
the Certificate of Incorporation and the Warrant, respectively. The issuance and
delivery of the Initial Shares, when issued, and the Warrant are not subject to
preemptive or any similar rights of the stockholders of the Company or any liens
or encumbrances arising through the Company; and when the Warrant Shares are
issued in accordance with the terms of the Warrant, they will be validly issued
and outstanding, fully paid and nonassessable and free of any liens or
encumbrances arising through the Company. Subject to compliance with the
provisions of applicable securities laws of state or foreign jurisdictions, no
other approval of any public body (state or federal) is or will, on the Closing
Date be necessary in connection with the offer, issue and sale of the Initial
Shares and the Warrant as contemplated herein.
3.8 No Breach. The consummation of the transactions contemplated in the
---------
Purchase Agreement and the fulfillment of the terms thereof will not result in a
breach of any of the terms or provisions of, or constitute a default under, the
Company's Certificate of Incorporation, the Company's by-laws, or any material
indenture, mortgage, deed of trust or other agreement or installment to which
the Company is a party or by which it is bound.
3.9 Good Standing. Each of the Company and its subsidiaries has been duly
-------------
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation with full corporate power and
corporate authority to own, lease and operate its properties and conduct its
businesses as described in the SEC Documents; each of the Company and its
subsidiaries is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the ownership or leasing of
properties or the conduct of its business as presently conducted require such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the condition (financial or otherwise), earnings,
operations, business or business prospects of the Company and its subsidiaries
taken as a whole; to the knowledge of the Company, each of the Company and its
subsidiaries is in possession of and operating in compliance with all
authorizations, licenses, certificates, consents, orders and permits from state,
federal and other regulatory authorities that are material to the conduct of its
business, all of which are valid and in full force and effect to the extent that
the failure of such would have a material adverse effect on the Company's
business or results from operations; and each of the Company and its
subsidiaries is not in violation of its respective charter or bylaws.
4
<PAGE>
3.10 Outstanding Stock. All outstanding shares of capital stock of the
-----------------
Company have been duly authorized and validly issued and are fully paid and
nonassessable; all issued and outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued and are
fully paid and nonassessable.
3.11 Intellectual Property. Except as set forth in the SEC Documents, to
---------------------
the best of the Company's knowledge, each of the Company and its subsidiaries
owns or possesses adequate rights to use all material patents, patent rights,
inventions, trade secrets, know-how, trademarks, service marks, trade names and
copyrights which are described in the SEC Documents; except as set forth in the
SEC Documents, the Company has not received any notice of, and has no knowledge
of, any infringement of or conflict with asserted rights of the Company by
others with respect to any patent, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, trade names and copyrights which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the condition (financial or otherwise),
earnings, operations, business of the Company and its subsidiaries, taken as a
whole, as presently conducted; and, except as set forth in the SEC Documents,
the Company has not received any notice of, and has no knowledge of, any
infringement of or conflict with the asserted rights of others with respect to
any patent, patent rights, inventions, trade secrets, know-how, trademarks,
service marks, trade names and copyrights which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would have a material
adverse effect on the condition (financial or otherwise), earnings, operations,
business of the Company and its subsidiaries, taken as a whole, as presently
conducted.
3.12 Common Stock Registration. The Common Stock is registered pursuant
-------------------------
to Section 12(g) of the Exchange Act and is listed on The Nasdaq National
Market, and the Company has taken no action designed to, or, to the Company's
knowledge, likely to have the effect of, terminating the registration of the
Common Stock under the Exchange Act or removing the Common Stock from quotation
on The Nasdaq National Market, nor has the Company received notification that
the Commission or the National Association of Securities Dealers, Inc. (the
"NASD") is contemplating terminating such registration or quotation.
3.13 Private Placement. The Company has not taken any action inconsistent
-----------------
with the treatment of the sale of the Units pursuant to the Purchase Agreement
as a private placement exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act") pursuant to the
provisions of Section 4(2) thereof and Regulation D thereunder. Assuming the
accuracy of the purchasers' representations and warranties in the Purchase
Agreement and the compliance by each purchaser with all of its covenants and
agreements, the offer,
5
<PAGE>
sale, and issuance by the Company of the Units to the purchasers as contemplated
herein constitute transactions exempt from the registration requirements of
Section 5 of the Securities Act.
4. Representations and Warranties of the Purchaser; Access to
----------------------------------------------------------
Information; Independent Investigation. The Purchaser hereby represents and
- --------------------------------------
warrants to the Company as follows:
4.1 Investment Intent. The Purchaser is purchasing the Units for
-----------------
investment for its own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the Securities
Act. The Purchaser understands that the Securities have not been registered
under the Securities Act or registered or qualified under any state securities
law in reliance on specific exemptions therefrom, which exemptions may depend
upon, among other things, the bona fide nature of Purchaser's investment intent
as expressed herein.
4.2 Investment Experience. The Purchaser is an "accredited investor"
---------------------
within the meaning of Rule 501 of the Commission, and was not organized for the
specific purpose of acquiring the Units. The Purchaser is aware of the
Company's business affairs and financial condition and has acquired sufficient
information about the Company to reach an informed and knowledgeable decision to
acquire the Units. The Purchaser has such business and financial experience as
is required to give it the capacity to protect its own interests in connection
with the purchase of the Securities.
4.3 Authorization. This Purchase Agreement has been duly and validly
-------------
authorized, executed and delivered on behalf of the Purchaser and is a valid and
binding agreement of the Purchaser enforceable in accordance with its terms,
subject as to enforceability to general principles of equity and to bankruptcy,
insolvency, moratorium and other similar laws affecting the enforcement of
creditors' rights generally.
4.4 Compliance with Securities Laws and Regulations. All subsequent
-----------------------------------------------
offers and sales of the Securities by the Purchaser shall be made pursuant to
registration under the Securities Act and qualification under the applicable
state securities laws or pursuant to exemptions from registration and
qualification.
4.5 Reliance by Company. The Purchaser understands that the Units are
-------------------
being offered and sold to it in reliance on specific exemptions from the
registration and qualification requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with the representations, warranties, agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Securities.
6
<PAGE>
4.6 No Government Approval. The Purchaser understands that no United
----------------------
States federal or state agency or any other government or governmental agency
has passed on or made any recommendation or endorsement of the Units.
4.7 No Legal, Tax or Investment Advice. The Purchaser understands that
----------------------------------
nothing in the Purchase Agreement or any other materials presented to the
Purchaser in connection with the purchase and sale of the Units constitutes
legal, tax or investment advice. The Purchaser has consulted such legal, tax
and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Units.
4.8 Access to Information. The Purchaser acknowledges that it has had
---------------------
the opportunity to ask questions, to receive answers concerning the terms and
conditions of this offering from the Company and to obtain any additional
information from the Company that the Company possesses or can acquire without
unreasonable effort or expense regarding this offering.
4.9 Individual Investor. If Purchaser is a natural person, Purchaser
-------------------
makes the additional representations and warranties set forth on Exhibit 4.9
attached hereto
5. Restrictions on Transfer, Information and Registration Rights.
-------------------------------------------------------------
5.1 Restrictions on Transferability. The Securities shall not be
-------------------------------
transferable in the absence of a registration under the Securities Act or an
exemption therefrom, or in the absence of compliance with any term of the
Purchase Agreement. Without limiting the foregoing, (i) the Securities may be
offered, resold, pledged or otherwise transferred only (A) in a transaction
meeting the requirements of Rule 144 of the Commission ("Rule 144"), or in
accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel if the Company so requests)
or (B) pursuant to an effective registration statement under the Securities Act,
in each case in accordance with the applicable securities laws of any state of
the United States or any other applicable jurisdiction and (ii) Purchaser will
be required to notify any subsequent purchaser of the resale restrictions set
forth above. The Company shall be entitled to give stop transfer instructions
to the transfer agent with respect to the Securities in order to enforce the
foregoing restrictions.
5.2 Restrictive Legends. Each certificate representing any of the
-------------------
Securities shall bear substantially the following legends (in addition to any
legends required under applicable securities laws):
7
<PAGE>
In the Case of All Securities:
-----------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS REGISTERED UNDER THE 1933 ACT AND QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE
RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
AND OTHER RESTRICTIONS, AND THE HOLDER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS BOUND BY THE TERMS OF A
UNIT PURCHASE AGREEMENT BETWEEN THE ORIGINAL PURCHASER AND THE COMPANY
(COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY) .
5.3 Registration on Form S-3.
------------------------
5.3.1 Filing of Registration Statement. The Company shall use its
--------------------------------
best efforts to secure effectiveness of, as soon as practicable, and shall file
no later than thirty (30) days after the Closing Date (unless such registration
is not permitted under the applicable rules and regulations of the Commission),
a registration statement on Form S-3 (the "Registration Statement") with the
Commission under the Securities Act to register the resale of the Initial Shares
and Warrant Shares (the "Registrable Securities"); provided however, that in the
event the Company fails (due to an action or inaction of the Company) to be
eligible to file a registration statement on Form S-3, the Company shall file a
registration statement on Form S-1.
5.3.2 Registration Expenses. The Company shall pay all Registration
---------------------
Expenses (as defined below) in connection with any registration, qualification
or compliance hereunder, and each holder of Registrable Securities (the
"Holders") shall pay all Selling Expenses (as defined below) and other expenses
that are not Registration Expenses relating to the Registrable Securities resold
by such Holder. "Registration Expenses" shall mean all expenses, except for
Selling Expenses, incurred by the Company in complying with the registration
provisions herein described, including, without limitation, all registration,
qualification and filing fees, printing expenses, fees and disbursements of
counsel for the Company, blue sky fees and expenses and the expense of any
special audits incident to or required by any such registration. "Selling
Expenses" shall mean all selling commissions, underwriting fees and stock
8
<PAGE>
transfer taxes applicable to the Registrable Securities and all fees and
disbursements of counsel for any Holder.
5.3.3 Additional Company Obligations. In the case of any
------------------------------
registration effected by the Company pursuant to these registration provisions,
the Company will use its best efforts to: (i) keep such registration effective
until December 31, 2004 (or such earlier date as all of the Registrable
Securities have been sold or may be sold under Rule 144(k)); (ii) prepare and
file with the SEC such amendments and supplements to the Registration Statement
and the prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of the Registrable Securities; (iii) furnish such number of
prospectuses and other documents incident thereto, including any amendment of or
supplement to the prospectus, as a Holder from time to time may reasonably
request; (iv) cause all such Registerable Securities registered as described
herein to be listed on each securities exchange and quoted on each quotation
service on which similar securities issued by the Company are then listed or
quoted; (v) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to the Registration Statement and a CUSIP number
for all such Registrable Securities; (vi) use its best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and (vii) advise Holders of the issuance of
any stop order by the SEC with respect to the Registration Statement or any
request by the SEC for an amendment to the Registration Statement, and notify
Holders of the happening of any event as a result of which the prospectus
included in the Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; (viii) file the documents required of
the Company and otherwise use its best efforts to maintain requisite blue sky
clearance in (A) all jurisdictions in which any of the Registrable Securities
are originally sold and (B) all other states specified in writing by a Holder as
may reasonably be required to sell such Holder's Registrable Securities,
provided as to clause (B), however, that the Company shall not be required to
qualify to do business or consent to service of process in any state in which it
is not now so qualified or has not so consented.
9
<PAGE>
5.4 Indemnification and Contribution.
--------------------------------
5.4.1 Indemnification by the Company. The Company agrees to
------------------------------
indemnify and hold harmless each Holder from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
such Holder may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any claim by a third party
asserting any untrue statement of a material fact contained in the Registration
Statement, on the effective date thereof, or arise out of any failure by the
Company to fulfill any undertaking included in the Registration Statement, and
the Company will, as incurred, reimburse such Holder for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim; provided, however, that the Company shall
-------- -------
not be liable in any such case to the extent that such loss, claim, damages or
liability arises out of, or is based upon (i) an untrue statement or alleged
untrue statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Holder specifically for use in preparation of the Registration Statement or
(ii)) any untrue statement in any prospectus that is corrected in any subsequent
prospectus that was delivered to the Holder prior to the pertinent sale or sales
by the Holder.
5.4.2 Indemnification by Holder. Each Holder, severally and not
-------------------------
jointly, agrees to indemnify and hold harmless the Company from and against any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) to which the Company may become subject (under the Securities Act or
otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon any claim by a
third party asserting (i) an untrue statement made in such Registration
Statement in reliance upon and in conformity with written information furnished
to the Company by or on behalf of such Holder specifically for use in
preparation of the Registration Statement, provided, however, that no Holder
-------- -------
shall be liable in any such case for any untrue statement included in any
Prospectus which statement has been corrected, in writing, by such Holder and
delivered to the Company at least three business days before the sale from which
such loss occurred or (ii) any untrue statement in any prospectus that is
corrected in any subsequent prospectus that was delivered to the Holder prior to
the pertinent sale or sales by the Holder, and each Holder, severally and not
jointly, will, as incurred, reimburse the Company for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim.
10
<PAGE>
5.4.3 Indemnification Procedures. Promptly after receipt by any
--------------------------
indemnified person of a notice of a claim or the beginning of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to this Section 5.4, such indemnified person shall notify the
indemnifying person in writing of such claim or of the commencement of such
action, and, subject to the provisions hereinafter stated, in case any such
action shall be brought against an indemnified person and the indemnifying
person shall have been notified thereof, the indemnifying person shall be
entitled to participate therein, and, to the extent that it shall wish, to
assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, the indemnifying person shall not be liable to such indemnified person
for any legal expenses subsequently incurred by such indemnified person in
connection with the defense thereof; provided, however, that if there exists or
-------- -------
shall exist a conflict of interest that would make it inappropriate in the
reasonable opinion of counsel for the indemnified person for the same counsel to
represent both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person; provided,
--------
however, that in the case of the immediately preceding proviso the indemnifying
- -------
person shall not be responsible for the legal expenses of more than one counsel
for all indemnified persons.
5.4.4 Contribution in Lieu of Indemnity. If the indemnification
---------------------------------
provided for in this Section 5.4 is unavailable to or insufficient to hold
harmless an indemnified party under Section 5.4.1 or 5.4.2 above in respect of
any losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as result of such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
a Holder on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 5.4.4 were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred to above in this Section 5.4.4. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
5.4.4
11
<PAGE>
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 5.4.4, no Holder
shall be required to contribute any amount in excess of the net amount received
by the Holder from the sale of the Registrable Securities to which such loss
relates. No person guilty of fraudulent misrepresentation (within the meaning of
Section 11 (f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The Holders'
obligations in this Section 5.4.4 to contribute are several in proportion to
their respective sales of Registrable Securities to which such loss relates and
not joint.
5.4.5 Controlling Persons Indemnified. The obligations of the
-------------------------------
Company and the Holders under this Section 5.4 shall be in addition to any
liability which the Company and the respective Holders may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls the Company or any Holder within the meaning of the Securities Act.
5.5 Transfer of Registration Rights. The right to sell Registrable
-------------------------------
Securities pursuant to the registration statement described herein will
automatically be assigned to each transferee of at least 50,000 Initial Shares
or Warrant Shares. In the event that it is necessary, in order to permit a
Holder to sell Registrable Securities pursuant to the Registration Statement, to
amend the Registration Statement to name such Holder, such Holder shall, upon
written notice to the Company, be entitled to have the Company make such
amendment as soon as reasonably practicable. Notwithstanding the above
provisions relating to Registration Expenses, in the event that such an
amendment is requested, the Holder shall, at the request of the Company, be
obligated to reimburse the Company for reasonable Registration Expenses incurred
by it in connection with such amendment.
5.6 Reports Under the Exchange Act. With a view to make available to the
------------------------------
Purchasers or Holders the benefits of Rule 144 promulgated under the Securities
Act and any other rule or regulation of the SEC that may at any time permit a
Purchaser or Holder to sell Securities to the public without registration or
pursuant to a registration on Form S-3, the Company will covenant and agree to:
(i) make and keep public information available, as those terms are understood
and defined in Rule 144, at all times after the Closing; (ii) file with the SEC
in a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act; and (iii) furnish to any Purchaser or
Holder, so long as the Purchaser or Holder owns any Securities forthwith upon
request, (A) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange
12
<PAGE>
Act, (B) a copy of the most recent annual or quarterly report of the Company,
and (C) such other information as may be reasonably requested in order to avail
any Purchaser or Holder of any rule or regulation of the SEC that permits
the selling of any such Securities without registration or pursuant to such
Form S-3.
6. Miscellaneous.
-------------
6.1 Waivers and Amendments. Without the written consent of (i) the
----------------------
Company, (ii) the record holders of more than fifty percent (50%) of the
Securities (on a converted-to-Common Stock basis) then outstanding that have not
previously been sold in a public offering, and, (iii) all holders of 500,000 or
more Units, the terms of the Purchase Agreement may not be waived or amended.
6.2 Governing Law. The Purchase Agreement shall be governed in all
-------------
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
6.3 Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive any investigation made by the Company or
the Purchaser and the Closing.
6.4 Successors and Assigns. Subject to Section 5.5, the provisions
----------------------
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto (specifically
including successors in interest to the Shares).
6.5 Entire Agreement. The Purchase Agreement (including all
----------------
Exhibits thereto) constitutes the full and entire understanding and agreement
between the parties with regard to the subject hereof.
6.6 Notices, etc. All notices and other communications required or
-------------
permitted hereunder shall be effective upon receipt and shall be in writing and
may be delivered in person, by facsimile, or express delivery service, addressed
(a) if to the Purchaser, at the address set forth on the signature page hereof
or at such other address as the Purchaser shall have furnished the Company in
writing, or (b) if to the Company, at its address set forth at the beginning of
the Purchase Agreement, or at such other address as the Company shall have
furnished to the Purchaser in writing.
6.7 Severability. If any provision of the Purchase Agreement shall
------------
be judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
13
<PAGE>
6.8 Titles and Subtitles. The titles of the paragraphs and
--------------------
subparagraphs of the Purchase Agreement are for convenience of reference and
shall not, by themselves, determine the construction of the Purchase Agreement.
6.9 Counterparts. The Purchase Agreement may be executed in any
------------
number of counterparts, each of which be an original, but all of which together
shall constitute one instrument.
14
<PAGE>
Exhibit 1.1
-----------
Warrant No. GS -
------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS REGISTERED UNDER THE 1933 ACT AND QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE
RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
AND OTHER RESTRICTIONS, AND THE HOLDER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS BOUND BY THE TERMS OF A
UNIT PURCHASE AGREEMENT BETWEEN THE ORIGINAL PURCHASER AND THE COMPANY
(COPIES OF WHICH MAY BE OBTAINED FROM THE COMPANY).
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF GENSIA SICOR INC.
This certifies that (the "Holder"), for value received is entitled
--------
to purchase from Gensia Sicor Inc., a Delaware corporation (the "Company"),
( ) fully paid and nonassessable shares of the Company's
- ---------------- --------
Common Stock (the "Warrant Shares") at a price of $4.1875 per share (the "Stock
Purchase Price") at any time or from time to time on or after the Commencement
Date (as defined below) up to and including 5:00 p.m. (Pacific time) on the
Expiration Date (as defined below), upon surrender to the Company at its
principal office at 9360 Towne Centre Drive, San Diego, California 92121 (or at
such other location as the Company may advise Holder in writing) of this Warrant
properly endorsed with the Form of Subscription attached hereto duly filled in
and signed and upon payment by cash, cashier's check or wire transfer of
immediately available funds of the aggregate Stock Purchase Price for the number
of shares for which this Warrant is being exercised determined in accordance
with the provisions hereof, such exercise to be conditioned upon the accuracy of
all representations and warranties contained in such Form of Subscription. The
Stock Purchase Price and the number of shares purchasable hereunder are subject
to adjustment as provided in Section 3 of this Warrant. "Commencement Date"
means December 31, 1997 (the date of issuance of this Warrant) and "Expiration
Date" means the earlier of (i) December 31, 2002 (five years from the
Commencement Date) or (ii) the occurrence of an event, proposal of which is
described in subsection (d) of Section 3.4 which causes termination of this
Warrant under
1
<PAGE>
Section 3.4. This Warrant is issued pursuant to the Unit Purchase Agreement
between the Company and Holder dated as of the date hereof (the "Purchase
Agreement").
This Warrant is subject to the following terms and conditions:
1. Exercise of Warrant
-------------------
1.1 Issuance of Certificates. This Warrant is exercisable at the option
------------------------
of Holder at any time or from time to time on or after the Commencement Date and
prior to or on the Expiration Date for all or a portion of the shares of Warrant
Shares which may be purchased hereunder. The Company agrees that the Warrant
Shares purchased under this Warrant shall be and are deemed to be issued to
Holder as the record owner of such shares as of the close of business on the
date on which this Warrant shall have been surrendered and payment made for such
shares. Subject to the provisions of Section 2, certificates for the Warrant
Shares so purchased, together with any other securities or property to which
Holder is entitled upon such exercise, shall be delivered to Holder by the
Company's transfer agent at the Company's expense within a reasonable time after
this Warrant has been exercised. Each stock certificate so delivered shall be
in such denominations of Warrant Shares as may be requested by Holder and shall
be registered in the name of Holder or such other name as shall be designated by
Holder, subject to the limitations contained in Section 2. If, upon exercise of
this Warrant, fewer than all of the Warrant Shares evidenced by this Warrant are
purchased prior to the date of expiration of this Warrant, one or more new
warrants substantially in the form of, and on the terms in, this Warrant will be
issued for the remaining number of Warrant Shares not purchased upon exercise of
this Warrant.
1.2 Payment. Payment of the Stock Purchase Price shall be made at the
-------
option of Holder by surrender to the Company of this Warrant properly endorsed
with the Form of Subscription attached hereto duly filled in and signed and (i)
payment by cash, cashier's check or wire transfer of immediately available funds
or (ii) by surrender of this Warrant to the Company, with a duly executed
exercise notice marked to reflect "Net Issue Exercise," and, in either case,
specifying the number of Warrant Shares to be purchased, during normal business
hours on any day that is not a Saturday or Sunday or a day on which banks are
required or permitted to be closed in the State of California. Upon a Net Issue
Exercise, Holder shall be entitled to receive Warrant Shares equal to the value
of this Warrant (or the portion thereof being exercised by Net Issue Exercise)
by surrender of this Warrant to the Company together with notice of such
election, in which event the Company shall issue to Holder a number of Warrant
Shares computed as of the date of surrender of this Warrant to the Company using
the following formula:
2
<PAGE>
X = Y x (A-B)
---------
A
Where X = the number of Warrant Shares to be issued to Holder pursuant
to this Section 1.2;
Y = the number of Warrant Shares otherwise purchasable under
this Warrant, or any lesser number of Warrant Shares as to
which this Warrant is being exercised (at the date of such
calculation);
A = the fair market value of one share of the Company's Common
Stock (at the date of such calculation);
B = the Stock Purchase Price (as adjusted to the date of such
calculation).
2. Shares to be Fully Paid; Reservation of Shares. The Company covenants
----------------------------------------------
and agrees that all Warrant Shares which may be issued upon the exercise of the
rights represented by this Warrant will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable and free from all preemptive rights
of any stockholder and free of all taxes, liens and charges with respect to the
issue thereof. The Company further covenants and agrees that during the period
within which the rights represented by this Warrant may be exercised, the
Company will use its best efforts to at all times have authorized and reserved,
for the purpose of issue or transfer upon exercise of this Warrant, a sufficient
number of shares of authorized but unissued Common Stock. When and as required
to provide for the exercise of the rights represented by this Warrant, the
Company will take all such action as may be necessary to assure that such shares
of Common Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange or automated quotation system upon which the Common Stock may be
listed. If for any reason the Company does not have available sufficient
authorized but unissued shares to permit full exercise of this Warrant at any
time, then it may, in its discretion, pay to the Holder an amount in cash equal
to the fair market value of the Warrant Shares the Holder has elected to
purchase by exercise of this Warrant, instead of issuing Warrant Shares to the
Holder. For purposes of this Warrant, the fair market value of one Warrant
Share shall mean, to the extent it applies to the Company's Common Stock, the
average of the daily high and low trading prices of the Company's Common Stock
on the Nasdaq National Market (or other exchange or market that is the primary
trading market for the Company's Common Stock at that time, as determined by the
Company's Board of Directors in good faith) on the ten trading days prior to the
date the Warrant is exercised and, to the extent it applies to other securities
or property, as determined by the Company's Board of Directors in good faith.
3
<PAGE>
3. Adjustment of Stock Purchase Price; Number of Shares. The Stock
----------------------------------------------------
Purchase Price and the number of shares of Warrant Shares purchasable upon the
exercise of this Warrant shall be subject to adjustment from time to time upon
the occurrence of certain events described in this Section 3.
3.1 Adjustment of Purchase Price. In the event that the Company at
----------------------------
any time or from time to time after the issuance of this Warrant shall declare
or pay, without consideration, any dividend on the Common Stock payable in
Common Stock or in any right to acquire Common Stock for no consideration, or
shall effect a subdivision of the outstanding shares of Common Stock into a
greater number of shares of Common Stock (by stock split, reclassification or
otherwise than by payment of a dividend in Common Stock or in any right to
acquire Common Stock), or in the event the outstanding shares of Common Stock
shall be combined or consolidated, by reclassification or otherwise, into a
lesser number of shares of Common Stock, then the Stock Purchase Price in effect
immediately prior to such event shall, concurrently with the effectiveness of
such event, be proportionately decreased or increased, as appropriate. In the
event that the Company shall declare or pay, without consideration, any dividend
on the Common Stock payable in any right to acquire Common Stock for no
consideration, then the Company shall be deemed to have made a dividend payable
in Common Stock in an amount of shares equal to the maximum number of shares
issuable upon exercise of such rights to acquire Common Stock. Upon each
adjustment of the Stock Purchase Price pursuant to this Section 3.1, the holder
of this Warrant shall thereafter be entitled to purchase, at the Stock Purchase
Price resulting from such adjustment, the number of shares of Common Stock
obtained by multiplying the Stock Purchase Price in effect immediately prior to
such adjustment by the number of shares of Common Stock purchasable pursuant
hereto immediately prior to such adjustment, and dividing the product thereof by
the Stock Purchase Price resulting from such adjustment.
3.2 Adjustments for Reclassification and Reorganization. If the
---------------------------------------------------
Common Stock shall be changed into the same or a different number of shares of
any other class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of shares
provided for in Section 3.1), the Stock Purchase Price then in effect shall,
concurrently with the effectiveness of such reorganization or reclassification,
be proportionately adjusted so that this Warrant shall represent the right to
purchase, in lieu of the number of shares of Common Stock which this Warrant
would otherwise represent the right to purchase, a number of shares of such
other class or classes of stock equivalent to the number of shares of Common
Stock which this Warrant would have otherwise entitled the holder to purchase
immediately before that change.
3.3 Notice of Adjustment. Upon any adjustment of the Stock Purchase
--------------------
Price or any increase or decrease in the number of shares of Common Stock
purchasable upon the exercise of this
4
<PAGE>
Warrant, the Company shall within five business days give written notice
thereof, by first class mail, postage prepaid, (or by international delivery
service, for international addresses) addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company. The
notice shall be signed by the Company's chief financial officer and shall state
the Stock Purchase Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of this Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
3.4 Other Notices. If at any time:
-------------
(a) the Company shall propose to declare any cash dividend upon
its Common Stock;
(b) the Company shall propose to declare or make any dividend
or other distribution to the holders of its Common Stock, whether in cash,
property or other securities;
(c) the Company shall propose to effect any reorganization or
reclassification of the capital stock of the Company or any consolidation or
merger of the Company with or into another corporation or any sale, lease or
conveyance of all or substantially all of the property of the Company; or
(d) the Company shall propose to effect a voluntary or
involuntary dissolution, liquidation or winding-up of the Company;
then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, or international delivery service for
international deliveries, addressed to the holder of this Warrant at the address
of such holder as shown on the books of the Company, (i) at least fifteen (15)
business days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend or distribution
or for determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding-up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding-up, at least fifteen (15) business days' written notice
of the date when the same shall take place. Any notice given in accordance with
clause (i) above shall also specify, in the case of any such dividend or
distribution, the record date for such dividend or distribution, if after the
Commencement Date. Any notice given in accordance with clause (ii) above shall
also specify the date on which the holders of Common Stock shall be entitled to
exchange their Common Stock for securities or other property, if any,
deliverable upon such reorganization, reclassification, consolidation/merger,
sale, lease, conveyance, dissolution, liquidation or winding-up, as the case may
be. In the event that the Holder of the Warrant
5
<PAGE>
does not exercise this Warrant prior to the occurrence of an event described in
clause (a) or (b) above, the Holder shall not be entitled to receive the
benefits accruing to existing holders of the Common Stock in such event. Upon
the occurrence of an event described in clause (c), the Holder shall be entitled
thereafter, upon payment of the Stock Purchase Price in effect immediately prior
to such action, to receive upon exercise of this Warrant the class and number of
shares which the Holder would have been entitled to receive after the occurrence
of such event had this Warrant been exercised immediately prior to such event.
In connection with the transactions described in clause (c), the Company will
require each person (other than the Company) that may be required to deliver any
cash, stock, securities or other property upon the exercise of this Warrant as
provided herein to assume, by written instrument delivered to, and reasonably
satisfactory to, the holder of this Warrant (x) the obligations of the Company
under this Warrant and (y) the obligation to deliver to such holder such cash,
stock, securities or other property as such holder may be entitled to receive in
accordance with the provisions of this Section 3. Upon the occurrence of an
event the proposal of which is described in clause (d), this Warrant shall
terminate. Notwithstanding any other provision hereof, no Holder shall have the
right to obtain an injunction or restraining order or otherwise interfere with
or prevent the occurrence of any of the actions described in (a) - (d) above.
4. Issue Tax. The issuance of certificates for the Warrant Shares upon
---------
the exercise of the Warrant shall be made without charge to the holder of the
Warrant for any issue tax in respect thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than that of the then holder of the Warrant being exercised.
5. No Voting or Dividend Rights; Limitation of Liability. Nothing
-----------------------------------------------------
contained in this Warrant shall be construed as conferring upon the holder
hereof the right to vote or to consent or to receive notice as a stockholder in
respect of meetings of stockholders for the election of directors of the Company
or any other matters or any rights whatsoever as a stockholder of the Company.
Except for the adjustment to the Stock Purchase Price pursuant to Section 3.2 in
the event of a dividend on the Common Stock payable in shares of Common Stock,
no dividends or interest shall be payable or accrued in respect of this Warrant
or the interest represented hereby or the shares purchasable hereunder until,
and only to the extent that, this Warrant shall have been exercised. No
provisions hereof, in the absence of affirmative action by the holder to
purchase shares of Warrant Shares, and no mere enumeration herein of the rights
or privileges of the holder hereof, shall give rise to any liability of such
holder for the Stock Purchase Price or as a stockholder of the Company whether
such liability is asserted by the Company or by its creditors.
6
<PAGE>
6. Restrictions on Transferability of Securities: Compliance With
--------------------------------------------------------------
Securities Act.
- --------------
6.1 Restrictions on Transferability. The Warrant and the Warrant
-------------------------------
Shares (collectively, the "Securities") shall not be transferable except upon
the conditions specified in the Purchase Agreement, which conditions are
intended to insure compliance with the provisions of the Securities Act and
applicable "blue sky" law (the "Law").
6.2 Restrictive Legend. Each certificate representing the
------------------
Securities or any other securities issued in respect of the Securities upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of the Purchase
Agreement) be stamped or otherwise imprinted with a legend substantially in the
following form (in addition to any legend required under applicable state
securities laws):
In the Case of Warrant and Warrant Shares:
-----------------------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "1933 ACT"). THE SECURITIES MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS REGISTERED UNDER THE 1933 ACT AND QUALIFIED
UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE 1933 ACT AND THE QUALIFICATION REQUIREMENTS OF APPLICABLE STATE
SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION ARE
NOT REQUIRED. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE
RIGHTS OF HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER
AND OTHER RESTRICTIONS, AND THE HOLDER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE (INCLUDING ANY FUTURE HOLDERS) IS BOUND BY THE TERMS OF A
UNIT PURCHASE AGREEMENT BETWEEN THE
7
<PAGE>
ORIGINAL PURCHASER AND THE COMPANY (COPIES OF WHICH MAY BE OBTAINED FROM
THE COMPANY).
6.3 Exchange of Warrant. Subject to the terms and conditions
-------------------
hereof, including the restrictions on transfer in this Section 6 and in the
Purchase Agreement, upon surrender of this Warrant to the Company with a duly
executed Assignment Form in the form attached hereto and funds sufficient to pay
any transfer tax, the Company shall, without charge, execute and deliver a new
Warrant or Warrants of like tenor in the name of the assignee named in such
Assignment Form and this Warrant shall promptly be canceled. The term "Warrant"
as used herein shall be deemed to include any Warrants issued in exchange for
this Warrant.
6.4 Ownership of Warrant. The Company may deem and treat the
--------------------
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in Section 6.3.
7. Modification and Waiver. Except as otherwise provided herein, this
-----------------------
Warrant and any provision hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of the same is sought.
8. Notices. Except as otherwise provided herein, any notice, request or
-------
other document required or permitted to be given or delivered to the holder
hereof or the Company shall be delivered or shall be sent by United States
certified or registered mail, postage prepaid, (or international delivery
service for international deliveries) to Holder at its address as shown on the
books of the Company or to the Company at the address indicated therefor in the
first paragraph of this Warrant.
9. Descriptive Headings and Governing Law. The descriptive headings of
--------------------------------------
the several sections and paragraphs of this Warrant are inserted for convenience
only and do not constitute a part of this Warrant. This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California (without regard to its
conflicts of law provisions).
10. Lost Warrants or Stock Certificates. The Company represents and
-----------------------------------
warrants to Holder that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of any Warrant or stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity and, if requested, bond reasonably satisfactory to the
Company, or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant or stock certificate, the Company at its expense will make and
8
<PAGE>
deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
11. Amendment. This Warrant may be amended only with the written
---------
approval of the Company and the Holder of this Warrant.
12. Binding Effect; Benefits. This Warrant shall inure to the benefit of
------------------------
and shall be binding upon the Company and the Warrantholder and their respective
heirs, legal representatives, successors and assigns. Nothing in this Warrant,
expressed or implied, is intended to or shall confer on any person other than
the Company and the Warrantholder, or their respective heirs, legal
representatives, successors or assigns, any rights, remedies, obligations or
liabilities under or by reason of this Warrant.
13. Fractional Shares. No fractional shares shall be issued upon exercise
-----------------
of this Warrant. The Company shall, in lieu of issuing any fractional share,
pay the Holder entitled to such fraction a sum in cash equal to such fraction
multiplied by the market price of the Common Stock, which shall be, on any date,
the closing price for the Common Stock or the closing bid if no sales were
reported, as quoted on the Nasdaq National Market.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officers, thereunto duly authorized this 31st day of December, 1997.
Gensia Sicor Inc.
By:
--------------------------------------
Name:
Title:
9
<PAGE>
FORM OF SUBSCRIPTION
--------------------
(To be signed only upon exercise of Warrant)
To: Gensia Sicor Inc.
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise such Warrant for, and to purchase thereunder,
( ) shares of Common Stock of Gensia Sicor Inc. (the
- ---------------- --------
"Company"), and herewith makes payment in the amount of $ therefore.
--------
The certificates for such shares should be issued in the name of, and delivered
to, whose address is .
---------------- ----------------
The undersigned represents, unless the exercise of this Warrant has been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
that (i) the undersigned is acquiring such Common Stock for his or its own
account for investment and not with a view to or for sale in connection with any
distribution thereof (except for any resale pursuant to a registration statement
under the Securities Act), (ii) the undersigned has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the undersigned's investment in the shares of Common Stock,
(iii) the undersigned has received all of the information the undersigned
requested from the Company and the undersigned considers necessary or
appropriate for deciding whether to purchase the shares, (iv) the undersigned
has the ability to bear the economic risks of the undersigned's prospective
investment and (v) the undersigned is able, without materially impairing his
financial condition, to hold the shares of Common Stock for an indefinite period
of time and to suffer complete loss on the undersigned's investment.
The undersigned is an "accredited investor" as defined in Regulation D of
the Securities and Exchange Commission on the date hereof.
DATED:
------------------------
--------------------------------------------
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant)
--------------------------------------------
--------------------------------------------
(Address)
10
<PAGE>
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT.
ASSIGNMENT FORM
---------------
(To be executed only upon transfer of this Warrant)
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto (the "Assignee")
--------------------
the right represented by such Warrant to purchase Warrant Shares and
----------
all other rights of the Warrantholder with respect thereto under the within
Warrant, and appoints as Attorney to make such transfer on the
-----------------
books of Gensia Sicor Inc. maintained for such purpose, with full power of
substitution in the premises.
The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the Warrant Shares to be issued upon exercise
hereof are being acquired for investment and that the Assignee will not offer,
sell or otherwise dispose of this Warrant or any Warrant Shares to be issued
upon exercise hereof except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws. Further, the Assignee has acknowledged that upon exercise of this
Warrant, the Assignee shall, if requested by the Company, confirm in writing, in
a form satisfactory to the Company, that the Warrant Shares so purchased are
being acquired for investment and not with a view toward distribution or resale.
Dated: .
---------------------
Signature
------------------------------------
------------------------------------
(Print Name)
------------------------------------
(Street Address)
------------------------------------
(City) (State) (Zip Code)
11
<PAGE>
Exhibit 2.1(a)
--------------
WIRE TRANSFER INSTRUCTIONS
Bank: Bank of New York
IOC565 Institutional Custody
New York, NY
ABA #: 021-000-018
Credit: 131375
Name of: Gensia Sicor Inc.
<PAGE>
Exhibit 4.9
-----------
INVESTMENT REPRESENTATION STATEMENT
1. Acquisition Entirely for Own Account. Purchaser represents and
------------------------------------
warrants that Purchaser is acquiring the Securities solely for Purchaser's own
account for investment and not with a view to sale or distribution of the
Securities or any portion or component thereof, and Purchaser will not sell,
offer to sell or otherwise dispose of or distribute the Securities or any
portion or component thereof in any transaction other than a transaction
complying with the registration requirements of the Securities Act, and
applicable state securities or "Blue Sky" laws, or pursuant to an exemption
therefrom. Purchaser also represents that the entire legal and beneficial
interest of the Securities that Purchaser is acquiring is being acquired for,
and will be held for Purchaser's account only, and neither in whole nor in part
for any other person or entity.
2. Information Concerning the Company. Purchaser represents and warrants
----------------------------------
that Purchaser has been provided with such information concerning the Company
that Purchaser deems necessary and appropriate to enable Purchaser to evaluate
the financial risk inherent in making an investment in the Securities.
Purchaser further acknowledges that Purchaser has received satisfactory and
complete information concerning the business and financial condition of the
Company in response to all inquiries in respect thereof.
3. Economic Risk and Suitability. Purchaser represents and warrants as
-----------------------------
follows:
3.1 Purchaser realizes that Purchaser's purchase of the Securities
involves a high degree of risk and will be a highly speculative investment and
that Purchaser is able, without impairing Purchaser's financial condition, to
hold the Securities for an indefinite period of time and to suffer a complete
loss of Purchaser's investment.
3.2 Purchaser has carefully considered and has, to the extent
Purchaser believes such discussions necessary, discussed with Purchaser's
professional, legal, tax and financial advisors the suitability of an investment
in the Securities for the particular legal, tax and financial situation of
Purchaser and that Purchaser and/or Purchaser's advisors have determined that
the Securities are a suitable investment for Purchaser.
3.3 Purchaser has such knowledge and experience in business and
financial matters as will enable Purchaser to evaluate the merits and risks of
an investment in the Securities and to make an informed investment decision.
3.4 Purchaser has carefully read this Agreement and the Company has
made available to Purchaser or Purchaser's advisors all information and
documents requested by Purchaser
1
<PAGE>
relating to investment in the Securities, and has provided answers to
Purchaser's satisfaction to all of Purchaser's questions concerning the Company
and the Securities to be acquired.
3.5 Purchaser understands that neither the Company nor any of its
officers/directors, has any obligation to register the Securities under any
federal or state securities act or law except as otherwise expressly set forth
in Section 5 of the Purchase Agreement.
3.6 All information that Purchaser has provided concerning himself
or herself, his or her financial position and (each of) his/her Purchaser
Representative(s), if any, is correct and complete as of the date set forth
below, and if there should be any material change in such information, Purchaser
will provide such information to the Company as soon as practicable thereafter.
3.7 Purchaser understands that the Company is relying on the truth
and accuracy of the declarations, representations, warranties and agreements
made by Purchaser to the Company herein in transferring the Securities to
Purchaser.
3.8 Purchaser confirms that Purchaser has received no general
solicitation or general advertisement and has attended no seminar or meeting
(whose attendees have been invited by any general solicitation or general
advertisement) and has received no advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media or
broadcast or television or radio regarding the offering of the Securities.
4. Status of Purchaser. Purchaser represents and warrants that Purchaser
-------------------
is an "Accredited Investor", as defined in Rule 501 of the Commission because
Purchaser is either:
(a) A natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his/her purchase, exceeds $1 million;
or
(b) A natural person who had individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation
of reaching the same income level in the current year.
5. Residency. The undersigned is a bona fide resident of .
--------- -------------
2
<PAGE>
EXHIBIT 10.1
------------
[CERTAIN INFORMATION HAS BEEN OMITTED HEREIN PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.]
COLLABORATIVE RESEARCH AND DEVELOPMENT AGREEMENT
------------------------------------------------
THIS AGREEMENT, dated as of April __, 1997 (the "Effective Date") between
GENSIA SICOR INC., a Delaware corporation having its principal place of business
at 9360 Towne Centre Drive, San Diego, California 92121 ("Gensia Sicor"), and
SANKYO CO., LTD., a Japanese corporation having its principal place of business
at 5-1 Nihonbashi-Honcho, 3-chome, Chuo-ku, Tokyo 103, Japan ("Sankyo"),
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS Gensia Sicor and Sankyo desire to develop products for treatment of
Diabetes (as such term is hereinafter defined); and
WHEREAS Sankyo desires to sponsor research by Gensia Sicor and to develop
and commercialize with Gensia Sicor products resulting from such research;
NOW, THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1.
DEFINITIONS
-----------
For purposes of this Agreement, the terms defined in this Section shall
have the meanings specified below:
1.1 "Affiliate" shall mean, in respect of a party hereto, any corporation
---------
or other entity which controls, is controlled by, or is under common control
with such party. A corporation or other entity shall be regarded as in control
of another corporation or entity if it owns or directly or indirectly controls
more than fifty percent (50%) of the voting stock or other ownership interest of
the other corporation or entity, or if it possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of the
corporation or other entity or the power to elect or appoint fifty percent (50%)
or more of the members of the governing body of the corporation or other entity.
<PAGE>
1.2 "Candidate Compound" shall mean a Recommended Compound which has been
------------------
selected by the appropriate research and development committee of Sankyo under
Section 4.3 hereof for further development and evaluation under this Agreement.
1.3 "Compound" shall mean a Research Compound, Recommended Compound,
--------
Candidate Compound or Licensed Compound.
1.4 "Diabetes" shall mean insulin-dependent diabetes mellitus (Type I
--------
Diabetes), noninsulin-dependent diabetes mellitus (Type II Diabetes) and other
conditions of high blood glucose.
1.5 "Field" shall mean the treatment of Diabetes by means of lowering
-----
blood glucose levels by [CONFIDENTIAL TREATMENT REQUESTED].
1.6 "First Commercial Sale" of any Product shall mean the first sale for
---------------------
use or consumption by the general public of such Product in a country after
required marketing and pricing approval has been granted by the governing health
authority of such country.
1.7 "IND" shall mean an Investigational New Drug Application filed with
---
the Food and Drug Administration, or any successor agency, in the United States
pursuant to 21 C.F.R. Part 312, or any successor provision thereto (or the
equivalent application with the governing health authority of any other Primary
Country, as defined in Section 4.2 hereof).
1.8 "License Agreement" shall mean the license agreement regarding a
-----------------
Licensed Compound, prepared and executed by the parties (or their respective
permitted assignees) pursuant to Section 4.4, which shall incorporate all
applicable terms and conditions of this Agreement, together with those such
other terms and conditions as the parties mutually agree and are consistent with
the terms and conditions of this Agreement. If the parties cannot mutually
agree on the terms and conditions of any such License Agreement, such License
Agreement shall be on the terms and conditions as set forth in this Agreement.
1.9 "Licensed Compound" shall mean a Candidate Compound which Sankyo has
-----------------
exercised its option to license under Section 4.4 below.
1.10 "NDA" shall mean an application to market a new drug filed with the
---
Food and Drug Administration, or any successor agency, in the United States
pursuant to section 505 of the Federal Food, Drug and Cosmetic Act and 21 C.F.R.
Part 314, or any successor provisions thereto (or the equivalent application
with the governing health authority of any other Primary Country).
1.11 "Net Sales" with respect to any Product shall mean the invoiced sales
---------
price of such Product billed to independent customers (who are not Affiliates),
less, to the extent such amounts are included in the invoiced sales price,
actual credited allowances to such independent customers for such Product which
was
-2-
<PAGE>
spoiled, damaged, out-dated or returned, and less actual (a) freight and
insurance costs incurred in transporting such Product to such customers; (b)
quantity and other trade discounts (including prime vendor rebates) actually
allowed and taken; (c) customs duties and surcharges and other governmental
charges incurred in connection with the exportation or importation of such
Product in final form; and (d) liabilities incurred resulting from any
government (or agency thereof) mandated rebate program, whether Federal, State,
Municipal or Local; provided, however, that, with respect to any Product in any
-------- -------
country, the sum of the amounts in clauses (a), (b), (c) and (d) with respect to
such Product in such country, when expressed as a percentage of the invoiced
sales price of such Product in such country, shall not exceed the average of the
sum of the amounts in clauses (a), (b), (c) and (d) with respect to all other
comparable Sankyo product sold in such country, when expressed as a percentage
of the invoiced sales price of such other products in such country.
1.12 "Patent Rights" shall mean all patent applications heretofore or
-------------
hereafter filed or having legal force in any country within the Territory owned
by or licensed to Gensia Sicor or Sankyo or to which Gensia Sicor or Sankyo
otherwise acquires rights, which claim a Product or Licensed Compound, or the
process of manufacture or use of a Product or Licensed Compound for use in the
Field, together with any and all patents that have issued or in the future issue
therefrom, including utility model and design patents, extensions or
restorations, including Supplementary Protection Certificates or the equivalent
thereof, certificates of invention and any and all divisions, continuations,
continuations-in-part, reissues or additions to any of the aforesaid patents and
patent applications; all to the extent and only to the extent that Gensia Sicor
or Sankyo now has or hereafter will have the right to grant licenses, immunities
or other rights thereunder. Patent Rights shall also include technology
respecting the subject matter of the patents and patent applications embraced by
Patent Rights necessary to carry out the purposes of this Agreement in the
Field.
1.13 "Products" shall mean pharmaceutical compositions incorporating a
--------
Licensed Compound. All formulations of the same drug substance for the same
route of administration, such as oral, parenteral or intravenous, shall
constitute a single Product.
1.14 "Recommended Compound" shall mean a Research Compound which has
--------------------
utility in the Field and which has been selected by the Steering Committee under
Section 4.2 hereof for further development under the Research Program.
1.15 "Recommended Compound Criteria" shall mean the detailed scientific
-----------------------------
criteria set forth in Appendix A for determining whether a Research Compound has
utility in the Field and is suitable for further development and evaluation as a
Recommended Compound under this Agreement.
-3-
<PAGE>
1.16 "Research Compound" shall mean a compound that is selected by the
-----------------
party which owns or licenses (with a right to sublicense) such compound (or in
the case of jointly-owned compounds, selected jointly) and that is evaluated as
part of the Research Program.
1.17 "Research Program" shall mean the research program described generally
----------------
in the research work plan set forth in Appendix A hereto, as revised from time
to time as provided in this Agreement.
1.18 "Research Program Term" shall mean the period of time indicated in
---------------------
Section 3.4 as modified by the termination provisions in Article 14.
1.19 "Research Year" shall mean each twelve-month period during the
-------------
Research Program with the first Research Year beginning as of the date of this
Agreement.
1.20 "Royalty Term" shall mean, with respect to each Product in each
------------
country, the period of time equal to the longer of (a) [CONFIDENTIAL TREATMENT
REQUESTED] from the date of the First Commercial Sale of such Product in such
country or (b) if the manufacture, use or sale of such Product in such country
was at the time of the First Commercial Sale in such country covered by a Valid
Patent Claim, the term for which such Valid Patent Claim remains in effect and
would, if in a granted patent, be infringed but for the license granted by this
Agreement.
1.21 "Steering Committee" shall mean the joint research committee composed
------------------
of representatives of Gensia Sicor and Sankyo described in Section 5.1 hereof.
1.22 "Stock Purchase Agreement" shall mean the Stock Purchase Agreement
------------------------
prepared and executed between the parties (or their respective assignees)
pursuant to Section 7.3.
1.23 "Territory" shall mean the entire world.
---------
1.24 "Third Party" shall mean any entity other than Gensia Sicor or Sankyo
-----------
and their respective Affiliates.
1.25 "Valid Patent Claim" shall mean either (a) a claim of an issued and
------------------
unexpired patent included within the Patent Rights, which has not been held
permanently revoked, unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise or (b) a claim of a
pending patent application included within the Patent Rights, which claim was
filed in good faith and has not been abandoned or finally disallowed without the
possibility of appeal or refiling of said application.
-4-
<PAGE>
ARTICLE 2.
REPRESENTATIONS AND WARRANTIES
------------------------------
2.1 Authorization. Each party warrants and represents to the other that
-------------
it has the legal rights and power to extend the rights and licenses granted to
the other in this Agreement, that it has the full right to enter into this
Agreement, and to fully perform its obligations hereunder, and that it has not
made nor will it make any commitments to others in conflict with or in
derogation of such rights or this Agreement. Except as otherwise disclosed,
each party further represents to the other that it is not aware of any legal
obstacles, including patent rights of others, which could prevent it from
carrying out the provisions of this Agreement.
2.2 Patent Validity. Nothing in this Agreement shall be construed as a
---------------
warranty or representation by either party as to the validity or scope of any
Patent Rights.
ARTICLE 3.
RESEARCH PROGRAM
----------------
3.1 Research Procedures.
-------------------
3.1.1 Conduct of Research. The Research Program shall be conducted in
-------------------
good scientific manner, and in compliance with all applicable legal
requirements, to attempt to achieve efficiently and expeditiously its
objectives. Gensia Sicor and Sankyo shall proceed diligently with the work set
out in the Research Program by using their respective good faith efforts
considering, in the case of Gensia Sicor, the research funding received from
Sankyo hereunder.
3.1.2 Use of Research Funding. Gensia Sicor shall apply the research
-----------------------
funding it receives from Sankyo under this Agreement for the sole purpose of
discovering, identifying, studying, improving and testing Research Compounds in
accordance with the Research Program (including overhead expenses related
thereto) set forth on Appendix A hereto, and amended from time to time by the
parties, with the goal of identifying candidate compounds for designation as
Recommended Compounds. In each of the first two Research Years during the term
of the Research Program, Gensia Sicor shall allocate an average of approximately
fourteen (14) to (16) full time equivalent researchers and staff to perform its
obligations under the Research Program. In the third Research Year during the
term of the Research Program, Gensia Sicor shall allocate an average of the
proportionate number of full time equivalent researchers and staff to perform
its obligations under the Research Program to reflect the proportionate amount
of funding to be received by Gensia Sicor during the third Research Year during
the term of the Research Program. Gensia Sicor's staffing obligations
-5-
<PAGE>
during the term of the Research Program shall be subject to adjustment at the
recommendation of the Steering Committee.
3.1.3 Other Work. During the Research Program Term, neither Gensia Sicor
----------
nor Sankyo shall perform any research and development work for any Third Party
in the Field, except that a party may use for any purpose outside the Field any
Research Compounds made or obtained by such party that are not designated as
Recommended Compounds or are no longer being evaluated for designation as
Recommended Compounds, any Recommended Compounds made or obtained by such party
that are not selected as Candidate Compounds, and any Candidate Compounds made
or obtained by such party that are not licensed as Licensed Compounds. It is
understood that Gensia Sicor and Sankyo each presently conducts, and will
conduct during the Research Program Term, research for itself and for others
outside the Field.
3.1.4 Subcontracts. Gensia Sicor may subcontract portions of the
------------
Research Program with the prior approval of the Steering Committee.
3.1.5 Data. Gensia Sicor and Sankyo shall each maintain records in
----
sufficient detail and in good scientific manner appropriate for patent purposes
and as will properly reflect all work done and results achieved in the
performance of the Research Program (including all data in the form required
under any applicable governmental regulations). Such records shall include
books, records, reports, research notes, charts, graphs, comments, computations,
analyses, recordings, photographs, computer programs and documentation thereof,
computer information storage means, samples of materials and other graphic or
written data generated in connection with the Research Program including any
data required to be maintained pursuant to applicable governmental regulations.
Gensia Sicor and Sankyo shall each provide the other the right to inspect
records, and shall provide copies of all requested records, to the extent
reasonably required for the performance of the requesting party's obligations
under this Agreement; provided that each party shall maintain such records and
--------
the information of the other contained therein in confidence in accordance with
Section 11.1 below and shall not use such records or information except to the
extent otherwise permitted by this Agreement.
3.1.6 Delivery of Compounds. Gensia Sicor will promptly identify and
---------------------
deliver to Sankyo, at no additional cost to Sankyo, information on the structure
of, data generated on, and (if so requested) reasonable quantities (for research
and preclinical pharmacology use) of, any Research Compound meeting the criteria
for development set forth in Appendix A hereto or any Recommended Compound or
any Candidate Compound, for development and evaluation by Sankyo in accordance
with the Research Program. The parties shall discuss in good faith any
requested arrangements for the synthesis and supply to Sankyo of larger
quantities of materials for use under the Research Program.
-6-
<PAGE>
3.1.7 Gensia Sicor and Sankyo Quarterly Reports. Gensia Sicor and Sankyo
-----------------------------------------
shall each provide to the members of the Steering Committee quarterly written
reports which shall reasonably detail and evaluate the work each has performed
during such calendar quarter under the Research Program and the results thereof.
In addition, each quarterly report by Gensia Sicor shall set forth, in
reasonable detail, (a) the goals of the Research Program for such calendar
quarter, (b) the results actually achieved by Gensia Sicor under the Research
Program during such calendar quarter, (c) the number of full time equivalent
researchers and staff allocated to perform Gensia Sicor's obligations under the
Research Program during such calendar quarter, (d) Gensia Sicor's estimated
fully burdened cost for such full time equivalent researchers and staff
allocated to perform its obligations under the Research Program during such
calendar quarter, (e) a summary of the costs and expenses of any subcontractors
and outside consultants incurred by Gensia Sicor under the Research Program
during such calendar quarter, and (f) the goals of the Research Program for the
next calendar quarter. Such reports shall be sent to each member of the
Steering Committee fourteen (14) days subsequent to the end of a calendar
quarter.
3.1.8 Steering Committee Quarterly Reports. Within fourteen (14) days
------------------------------------
following a Steering Committee meeting held pursuant to the provisions of
Section 5.1 hereof, the Steering Committee shall prepare and send to each party
to this Agreement minutes of such meeting, together with a reasonably detailed
written report which shall (a) describe the work performed to date on the
Research Program, (b) evaluate the work performed in relation to the goals of
the Research Program and (c) state any determination of the Steering Committee
not to proceed with a Research Compound and the reasons therefor.
3.2 Other Options.
-------------
3.2.1 Screening of Third Party Compounds. Gensia Sicor may screen
----------------------------------
compounds obtained from a Third Party ("Third Party Research Compounds") with a
view to finding Recommended Compounds. The Steering Committee shall decide
whether such evaluation of Third Party Research Compounds can be carried out
within the existing budget of the Research Program, or if additional funding is
required for such evaluation. If the Steering Committee decides that additional
funding is required, Sankyo may at its sole option agree to provide the
necessary additional funding, in which case such evaluation shall be treated as
part of the Research Program. In the event Sankyo does not agree to provide
such funding, Gensia Sicor may provide the funding, and shall be entitled to a
royalty, in an amount to be negotiated between the parties in good faith, in
addition to that set forth in Section 7.1.1 hereof on any Products resulting
from such Third-Party Compounds.
3.2.2 Sankyo Compounds. At its option, Sankyo shall supply Gensia Sicor
----------------
with available Sankyo compounds for screening, and shall designate a Sankyo
employee whose responsibility shall be the
-7-
<PAGE>
procurement of compounds for screening from within Sankyo and from other
sources.
3.3 Funding of the Research Program.
-------------------------------
3.3.1 Amount of Funding. In consideration of Gensia Sicor's performance
-----------------
of its obligations under the Research Program, Sankyo shall pay Gensia Sicor (a)
a research fee of [CONFIDENTIAL TREATMENT REQUESTED] for each of the first two
Research Years during the term of the Research Program, and (b) a research fee
in an amount (which shall not be less than [CONFIDENTIAL TREATMENT REQUESTED]
determined by the mutual agreement of the parties not less than ninety (90) days
prior to the commencement of the third Research Year, for the third Research
Year during the term of the Research Program. The Steering Committee shall
discuss during the third quarter of the second Research Year, and recommend to
the parties, the level of funding for the third Research Year necessary to
conduct the Research Program for the third Research Year.
3.3.2 Payment Terms. The research fee for the first Research Year shall
-------------
be paid in equal quarterly installments: the first installment shall be paid
within thirty (30) days after the Effective Date, and subsequent installments
upon the first business day of the fourth, seventh and tenth month thereafter.
The research fee for subsequent Research Years shall be paid in equal quarterly
installments on the first business day of the first, fourth, seventh and tenth
months in that Research Year.
3.3.3 Audit.
-----
(a) Upon the written request of Sankyo at Sankyo's expense and not more
than once in each calendar year, Gensia Sicor shall permit an internationally
recognized independent public accountant selected by Sankyo and reasonably
acceptable to Gensia Sicor, to have access during normal business hours to such
supporting financial records of Gensia Sicor as may be reasonably necessary to
verify the accuracy of the allocable expense calculations set forth in Gensia
Sicor's reports under Section 3.1.7 above in respect of any fiscal year ending
not more than twenty-four (24) months prior to the date of such request.
(b) The fees charged by such accountant shall be paid by Sankyo unless the
audit discloses that the allocable expense calculations reported by Gensia Sicor
for the audited period are more than one hundred five percent (105%) of the
actual allocable expense calculations for such period, in which case Gensia
Sicor shall pay the reasonable fees and expenses charged by the accountant.
(c) Upon the expiration of twenty-four (24) months following the end of any
fiscal year, the expense calculations with respect to such year shall be binding
and conclusive upon Sankyo. Sankyo agrees that all information subject to
review under this
-8-
<PAGE>
Section 3.3 is confidential and that Sankyo shall cause its accountant to retain
all such information in confidence.
3.3.4 Adjustments to Second and Third Year Funding. Notwithstanding
--------------------------------------------
anything to the contrary in this Section 3.3, if the aggregate expenditures by
Gensia Sicor in performing its obligations under the Research Program during the
first or second Research Year are greater than [CONFIDENTIAL TREATMENT
REQUESTED], or are less than [CONFIDENTIAL TREATMENT REQUESTED], of the
aggregate [CONFIDENTIAL TREATMENT REQUESTED] in research funding received by
Gensia Sicor from Sankyo under Section 3.3.1 above for such Research Year, then
the research funding from Sankyo to Gensia for the immediately following
Research Year shall be increased or decreased, as appropriate, to account for
such variance.
3.4 Term of Research Program.
------------------------
3.4.1 Term. Except as provided herein, the term of the Research Program
----
shall commence as of the first day of the month following the Effective Date,
and continue for [CONFIDENTIAL TREATMENT REQUESTED].
3.4.2 Extension. Within three months following the expiration or
---------
termination of the Research Program (other than under Section 14.2 hereof),
Gensia Sicor and Sankyo shall prepare a written report describing Research
Compounds that have not, as of the date of such expiration or termination, been
recommended as Recommended Compounds. Sankyo shall have the right during the
three (3) month period after receipt of such report to fund further research and
development of such Research Compounds by so notifying Gensia Sicor. In the
event Sankyo so funds further research and development of such Research
Compounds, such further research and development shall be carried out under the
terms and conditions of this Agreement, with appropriate amendments, mutually
acceptable to the parties, to reflect such additional funding and extended
period of research and development as mutually agreed to by the parties.
ARTICLE 4.
FURTHER EVALUATION AND DEVELOPMENT
----------------------------------
OF RESEARCH COMPOUNDS
---------------------
4.1 Research and Evaluation of Research Compounds. The parties shall
---------------------------------------------
conduct such research and evaluation under the Research Program of a Research
Compound until such time as it is determined whether or not such Research
Compound meets the Recommended Compound Criteria.
4.2 Designation of Recommended Compounds. Within [CONFIDENTIAL TREATMENT
------------------------------------
REQUESTED] after identification by either party of a Research Compound which is
believed to meet the Recommended Compound Criteria, each party shall present to
the Steering Committee all data and other evidence available to such
-9-
<PAGE>
party regarding such Research Compound for use in the Field. The Steering
Committee promptly shall review all such data and other evidence and shall
determine whether such Research Compound meets the Recommended Compound
Criteria. If the Steering Committee determines that such Research Compound
meets the Recommended Compound Criteria, such Research Compound shall be
designated as a Recommended Compound.
4.3 Selection of Candidate Compounds. For a period of [CONFIDENTIAL
--------------------------------
TREATMENT REQUESTED] after designation of a Recommended Compound, Sankyo shall
have the right to conduct further preclinical development and evaluation of such
Recommended Compound under the Research Program, and to determine in its sole
discretion whether such Recommended Compound is appropriate to conduct more
extensive preclinical development under this Agreement to evaluate its potential
as a clinical candidate. If, within such [CONFIDENTIAL TREATMENT REQUESTED]
period, Sankyo gives written notice to Gensia Sicor that the appropriate
research and development committee of Sankyo has selected such Recommended
Compound to conduct further preclinical development under this Agreement,
thereafter such Recommended Compound shall be a Candidate Compound.
4.4 Exercise of Option to License Licensed Compounds. For a period of
------------------------------------------------
[CONFIDENTIAL TREATMENT REQUESTED] after selection of a Candidate Compound,
Sankyo shall have the right to conduct more extensive preclinical development
and evaluation of such Candidate Compound as a clinical candidate, and to
exercise in its sole discretion its option to license such Candidate Compound in
accordance with the provisions of this Agreement. If, within such [CONFIDENTIAL
TREATMENT REQUESTED] period, Sankyo gives written notice to Gensia Sicor of the
exercise of its option to license such Candidate Compound in accordance with the
provisions of this Agreement, thereafter such Candidate Compound shall be a
Licensed Compound, and the parties promptly shall prepare and execute a License
Agreement for such Licensed Compound.
4.5 Clinical Development.
--------------------
4.5.1 Responsibility to Develop. Sankyo is to be responsible for all
-------------------------
clinical development and regulatory approvals and shall own all such approvals,
provided that in the event that Gensia Sicor terminates this Agreement pursuant
- --------
to Section 14.2 hereof, Sankyo shall transfer all such registrations to Gensia
Sicor. Gensia Sicor may attend meetings held by Sankyo respecting development
of Licensed Compounds, and Sankyo will provide notice to Gensia Sicor of such
meetings in a reasonable and timely manner and solicit Gensia Sicor input, but
no such development meetings need be delayed, postponed or altered to
accommodate participation by Gensia Sicor. Notwithstanding the foregoing,
Sankyo shall neither commence human clinical trials of any Compound, nor file
any regulatory application therefor, unless and until such Compound is a
Licensed Compound, and the parties have prepared and executed a License
Agreement for such Licensed Compound.
-10-
<PAGE>
4.5.2 Clinical Development and Marketing. The preclinical and clinical
----------------------------------
development of Licensed Compounds shall be the responsibility of Sankyo. For
each Licensed Compound, Sankyo shall use reasonable diligence and scientific
judgment to evaluate and develop such Licensed Compounds in a timely manner in
accordance with industry standards and Sankyo's internal practices and advise
Gensia Sicor as to the status of such Licensed Compounds. Sankyo agrees to
conduct such preclinical and human clinical trials as are necessary to obtain
all regulatory approvals to manufacture and market Products in each Primary
Country in the Territory, and diligently, consistent with industry standards
generally, develop, obtain necessary approval to market and commence marketing
each such Product in Primary Countries. For the purposes of this Agreement,
"Primary Countries" shall mean Australia, the Benelux countries, Canada, France,
Germany, Italy, Japan, the Scandinavian countries, Spain, Switzerland, the
United Kingdom and the United States. Sankyo shall use reasonable diligence,
consistent with industry standards generally, to develop and market Products in
other countries ("the non-Primary Countries") in the Territory unless in its
reasonable business judgment such development and marketing is not practical or
strategically inadvisable. Notwithstanding anything to the contrary in this
Agreement, if Sankyo does not diligently develop and market a Product
incorporating a Licensed Compound in a Primary Country, or in a non-Primary
Country where Sankyo has not made a reasonable business judgment that to develop
and market such Product is not practical or strategically inadvisable, then
following one hundred eighty (180) days' written notice by Gensia Sicor to
Sankyo if such breach has not been remedied, (a) the license and other rights
granted to Sankyo with respect to such Licensed Compound and such country shall
become co-exclusive with Gensia Sicor, and (b) Sankyo automatically shall grant
to Gensia Sicor a nonexclusive license, with the right to sublicense, to use
Sankyo's data and regulatory filings as necessary to develop, make, use, import
and sell Products incorporating such Licensed Compound in such country.
4.5.3 Development Information. Sankyo shall keep Gensia Sicor informed
-----------------------
as to the progress of Sankyo in the development and testing of all Licensed
Compounds and Products and the preparing, filing and obtaining of the approvals
necessary for marketing. In addition, Sankyo shall provide Gensia Sicor with a
minimum of three (3) months' advance notice of the contemplated filing of an IND
or an NDA. Sankyo shall also provide Gensia Sicor with a report on all
regulatory submissions, communications or meetings on or prior to the date of
such submissions and a copy of any INDs, NDAs or other regulatory communication
within five (5) days of filing thereof, which material shall be subject to non-
disclosure obligations as provided for in Article 11 hereof except as otherwise
set forth herein.
4.6 Rights to Compounds.
-------------------
4.6.1 Any Research Compounds that are not designated as Recommended
Compounds, any Recommended Compounds that are not
-11-
<PAGE>
selected as Candidate Compounds, any Candidate Compounds that are not licensed
as Licensed Compounds, and any Licensed Compounds that have been dropped by
Sankyo or have not been diligently developed or commercialized by Sankyo, its
Affiliates or sublicensees, shall revert to Gensia Sicor if such Compounds were
Gensia Sicor compounds or Gensia Sicor's Third Party Compounds, and shall revert
to Sankyo if such Compounds were Sankyo compounds or Sankyo's Third Party
Compounds. Thereafter, the parties shall be free to develop such Compounds
without restriction other than the confidentiality obligations which may be
applicable under Article 11 or as otherwise set forth in this Agreement.
4.6.2 Notwithstanding the above, if within a period of [CONFIDENTIAL
TREATMENT REQUESTED] after reversion of any such Compound to Sankyo under
Section 4.6.1 above, Sankyo, its Affiliates or (sub)licensees develop such
Compound for use in the Field, or within a period of [CONFIDENTIAL TREATMENT
REQUESTED] after termination of this Agreement, Sankyo, its Affiliates or
(sub)licensees develops any other compound for use in the Field, then such
Compound or compound will be subject to the payment obligations, co-promotion
rights and other rights in favor of Gensia Sicor under this Agreement.
4.6.3 Notwithstanding the above, for a period of [CONFIDENTIAL TREATMENT
REQUESTED] after reversion of any such Compound to Gensia Sicor under Section
4.6.1 above, Gensia Sicor shall not license to, or otherwise collaborate with
any Third Party to develop and commercialize, such Compound for use in the
Field; provided, however, that (a) after the expiration of the Research Program
-------- -------
Term, Gensia Sicor and its Affiliates shall have the right to develop and
commercialize such Compound for use in the Field, and (b) if, after the
expiration or termination of this Agreement, Sankyo is not diligently developing
or commercializing at least one Licensed Compound or Product, then Gensia Sicor
shall have the right without restriction to license to, or otherwise collaborate
with any Third Party to develop and commercialize, such Compound for use in the
Field.
4.6.4 If Gensia Sicor, its Affiliates or (sub)licensees develops and
commercializes any Compound which has reverted to Gensia Sicor under Section
4.6.1 above, Gensia Sicor shall pay to Sankyo the following royalties based on
Net Sales by Gensia Sicor, its Affiliates or (sub)licensees of products
incorporating such Compound for use in the Field:
(a) [CONFIDENTIAL TREATMENT REQUESTED], if Sankyo has exercised its option
to license at least one Licensed Compound which Sankyo is diligently
developing and commercializing in accordance with the provisions of this
Agreement; or
(b) [CONFIDENTIAL TREATMENT REQUESTED], if Sankyo has not exercised its
option to license at least one Licensed Compound, or is not diligently
developing and commercializing
-12-
<PAGE>
at least one Licensed Compound in accordance with the provisions of this
Agreement.
The provisions of Section 7.5 and Articles 8 and 9 shall apply to Gensia Sicor
mutatis mutandis.
- ------- --------
ARTICLE 5.
MANAGEMENT OF THE PROGRAM
-------------------------
5.1 Steering Committee. A joint research committee comprised of three
------------------
named representatives of Sankyo and three named representatives of Gensia Sicor
(the "Steering Committee") shall meet once each calendar quarter during the term
of the Research Program within forty-five (45) days of the end of the preceding
calendar quarter. Such meetings shall be at times and places agreed to by
Gensia Sicor and Sankyo, alternating between San Diego and Tokyo, or such other
locations as the parties shall agree. At such meetings, the Steering Committee
will discuss the Research Program, set priorities thereunder and make any
necessary modifications to the research workplan therefor. Members of the
Steering Committee may be represented at any meeting by another member of the
Steering Committee, or by a deputy. Any approval, determination or other action
agreed to by all of the members of the Steering Committee or their deputies
present at the relevant Steering Committee meeting shall be the approval,
determination or other action of the Steering Committee, provided that at least
--------
two representatives of each party are present at such meeting. Each party shall
bear its own costs in connection with the Steering Committee meetings. The
Steering Committee shall have only such powers as are specifically delegated to
it hereunder, and, notwithstanding the creation of the Steering Committee, each
party to this Agreement shall retain the rights, powers and discretion granted
to it hereunder, and the Steering Committee shall not be vested with any such
rights, powers or discretion except as expressly provided herein or as expressly
agreed to by the parties in writing. The Steering Committee shall not have the
power to amend this Agreement, which may be amended only by the parties as
provided in Section 20.3 hereof.
5.2 Disagreements. All disagreements within the Steering Committee shall
-------------
be subject to the following:
5.2.1 The representatives of the Steering Committee shall promptly
present the disagreement to the executive of each of Gensia Sicor and Sankyo who
has the principal responsibility for his respective company's work under this
Agreement;
5.2.2 Such executives shall meet to discuss each party's view and to
explain the basis for such disagreement;
-13-
<PAGE>
5.2.3 If such executives cannot promptly resolve such disagreement, then
such disagreement shall be referred to the chief executive officers of Gensia
Sicor and Sankyo;
5.2.4 If such chief executive officers cannot promptly resolve such
disagreement, then (a) any disputes concerning the early screening or synthesis
of a Research Compound (other than as to matters set forth in Sections 3.2.1,
4.3 and 4.4 hereof) shall be finally determined by Gensia Sicor, and (b) any
disputes concerning the determination of whether a compound will be a Candidate
Compound under Section 4.3 hereof or Licensed Compound under Section 4.4 hereof
shall be determined by Sankyo.
5.3 Project Leaders. Gensia Sicor and Sankyo shall each appoint a project
---------------
leader to coordinate its part of the Research Program. Project leaders shall be
the primary contact between the parties with respect to the Research Program.
Each party shall notify the other within thirty (30) days of the date of this
Agreement of the appointment of its project leader and shall notify the other
party as early as practicable before changing this appointment.
5.4 Availability of Employees. Each party agrees to make its employees
-------------------------
and nonemployee consultants reasonably available at their respective places of
employment to consult with the other party on issues arising during the Research
Program and in connection with any request from any regulatory agency, including
regulatory, scientific, technical and clinical testing issues.
5.5 Visit of Facilities. Representatives of Gensia Sicor and Sankyo may,
-------------------
upon reasonable notice and at times reasonably acceptable to the other party (a)
visit the facilities where the Research Program is being conducted, and the
facilities where the other party manufactures any Product or active compound
contained therein (or has a Product or such a compound manufactured) to the
extent relating to such Product or compound, (b) consult informally, during such
visits and by telephone, with personnel of the other party performing work on
the Research Program, and (c) with the other party's prior approval, which
approval shall not be withheld unreasonably, visit the sites of any clinical
trials or other experiments being conducted by such other party in connection
with the Research Program or Products, but only to the extent in each case as
such trials or other experiments relate to the Research Program or Products. If
requested by the other party, Gensia Sicor and Sankyo shall cause appropriate
individuals working on the Research Program or Products to be available for
meetings at the location of the facilities where such individuals are employed
at times reasonably convenient to the party responding to such request.
-14-
<PAGE>
ARTICLE 6.
LICENSE -- RESEARCH, DEVELOPMENT,
---------------------------------
MARKETING AND MANUFACTURING
---------------------------
6.1 License Grant to Sankyo.
-----------------------
6.1.1 Sankyo's License Rights. In the event Sankyo exercises its option
-----------------------
under Section 4.4 hereof to license a Licensed Compound, Gensia Sicor shall
grant to Sankyo, subject to the provisions of this Agreement, an exclusive
license (or, in the case of licensed Third Party Patent Rights, when permissible
an exclusive sublicense), including the right to grant sublicenses to Affiliates
under any part of the Patent Rights licensable or sublicensable by Gensia Sicor,
including Gensia Sicor's rights in any jointly owned Patent Rights, to make,
have made, use and sell Products incorporating such Licensed Compounds, and such
Licensed Compounds for use in Products, in the Territory; provided, however,
-------- -------
that no license or sublicense is granted to Sankyo or its Affiliates for any use
outside the Field covered by claims of patents or patent applications of Gensia
Sicor or its Affiliates directed to uses outside the Field. Any sublicense to a
non-Affiliate shall require the consent of Gensia Sicor, which consent shall not
be unreasonably withheld.
6.1.2 Sankyo's Right to Negotiate Further Licenses. In the event that
--------------------------------------------
Gensia Sicor or its Affiliates owns or has licensed (with the right to grant
sublicenses) any patents or patent applications (other the Patent Rights) which,
if in an issued patent, would be infringed by making, using or selling such
Licensed Compound, or any Product incorporating such Licensed Compound, outside
the Field, then upon the written request of Sankyo, the parties in good faith
shall attempt to negotiate a mutually acceptable royalty bearing license to
Sankyo under such patents and patent applications to make, use and sell such
Licensed Compound, or any Product incorporating such Licensed Compound, outside
the Field.
6.2 Joint Development and Marketing.
-------------------------------
6.2.1 Co-Promotion Option. Gensia Sicor shall have the option to co-
-------------------
promote each Product in the United States, Canada and Mexico in accordance with
terms and conditions of a co-promotion agreement to be negotiated in good faith
between Gensia Sicor and Sankyo.
6.2.2 Notification to Gensia Sicor. In the event that Sankyo plans to
----------------------------
file an NDA on a Product in the United States or Canada, it shall so inform
Gensia Sicor in writing of its intention to file an NDA at least three (3)
months prior to such filing. Included with such written notification by Sankyo
will be all information Sankyo has on the Product which has not previously been
provided to Gensia Sicor relevant to Gensia Sicor's making a decision as to
whether it wishes to co-promote Product pursuant to
-15-
<PAGE>
Section 6.2.1 above. Such decision shall be communicated, in writing, to Sankyo
not more than sixty (60) days after Gensia Sicor has received the notification
and information referred to in the preceding sentence.
6.2.3 Brand of Product. The parties agree that all co-promoted Products
----------------
shall be sold and marketed under a common brand chosen and owned by Sankyo.
6.2.4 Development Committee. Promptly after exercise of Sankyo's option
---------------------
to license a Licensed Compound pursuant to Section 4.4, the parties shall
designate a committee (the "Development Committee"). In addition to any other
responsibilities designated herein, the Development Committee shall meet from
time to time on an as-needed basis to discuss at such meetings the preclinical
or clinical development, or the marketing, of Licensed Compounds or Products, as
well as any anticipated regulatory filings with respect to possible Products.
The parties may designate and appoint any reasonable number of scientific or
technical personnel of the parties to interact with each other regarding the
Licensed Compounds or the Products to be marketed hereunder. Members of the
Development Committee may be represented at any meeting by another member of the
Development Committee, or by a deputy. Any approval, determination or other
action agreed to by all of the members of the Development Committee or their
deputies present at the relevant Development Committee meeting shall be the
approval, determination or other action of the Development Committee, provided
--------
that at least two representatives of each party are present at such meeting.
Each party shall bear its own costs in connection with the Development Committee
meetings. The Development Committee shall have only such powers as are
specifically delegated to it hereunder, and, notwithstanding the creation of the
Development Committee, each party to this Agreement shall retain the rights,
powers and discretion granted to it hereunder, and the Development Committee
shall not be vested with any such rights, powers or discretion except as
expressly provided herein or as expressly agreed to by the parties in writing.
The Development Committee shall not have the power to amend this Agreement,
which may be amended only by the parties as provided in Section 20.3 hereof.
6.2.5 Disagreements. All disagreements within the Development Committee
-------------
shall be subject to the following:
(a) The representatives of the Development Committee shall promptly present
the disagreement to the executive of each of Gensia Sicor and Sankyo who has the
principal responsibility for his respective company's work under this Agreement;
(b) Such executives shall meet to discuss each party's view and to explain
the basis for such disagreement;
(c) If such executives cannot promptly resolve such disagreement, then such
disagreement shall be referred to the chief executive officers of Gensia Sicor
and Sankyo;
-16-
<PAGE>
(d) If such chief executive officers cannot promptly resolve such
disagreement, then any dispute concerning the preclinical development necessary
or desirable for the preparation of filing of an IND or the clinical development
of Licensed Compounds or Products (other than disputes concerning Sankyo's
diligence or reasonable business judgment in developing Licensed Compounds or
Products which disputes shall be resolved under the provisions of Section
20.2.2) shall be determined by Sankyo.
6.3 Manufacturing. Except as otherwise provided in this Agreement,
-------------
Sankyo, its Affiliates and permitted sublicensees shall have the exclusive
license to manufacture Licensed Compounds and Products; provided, however, that
-------- -------
if Sankyo desires to have a Third Party manufacture a Licensed Compound, then
Gensia Sicor shall have the right of first refusal to manufacture such Licensed
Compound under the same terms as required generally by Sankyo with Third
Parties.
ARTICLE 7.
ROYALTIES, SIGNING FEE,
-----------------------
EQUITY PURCHASE AND MILESTONE PAYMENTS
--------------------------------------
7.1 Royalties Payable by Sankyo.
---------------------------
7.1.1 Subject to the other provisions in this Section 7.1, in
consideration of licenses granted to Sankyo herein, during the royalty term,
Sankyo shall pay to Gensia Sicor a royalty equal to (a) [CONFIDENTIAL TREATMENT
REQUESTED] of Net Sales of Products by Sankyo, its Affiliates, permitted
sublicensees or distributors in Japan and [CONFIDENTIAL TREATMENT REQUESTED] of
Net Sales of Products by Sankyo, its Affiliates, permitted sublicensees or
distributors in the rest of the Territory, with respect to those Products, the
manufacture, use or sale of which is covered by a Valid Patent Claim, and (b)
[CONFIDENTIAL TREATMENT REQUESTED] the royalty rate set forth above with respect
to those Products, the manufacture, use or sale of which is not covered by a
Valid Patent Claim.
7.1.2 If Gensia Sicor chooses to co-promote the Products in accordance
with Section 6.2 hereof, the royalty payable by Sankyo shall be [CONFIDENTIAL
TREATMENT REQUESTED] instead of the percentages set forth in Section 7.1.1 for
such country or countries for which the right to co-promote was exercised.
7.1.3 Royalties shall be paid in respect of Net Sales of each Product in
a country for a period equal to the Royalty Term for such Product in such
country.
7.1.4 In the event that a Product is covered by more than one Patent
Right claiming the composition, manufacture or method of use of such Product,
only the royalties set forth in Section 7.1.1 above, shall be paid with respect
to such Product.
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<PAGE>
7.1.5 In the event that either party owns or controls patented technology
that could be used to significantly improve the pharmacokinetics of a Product or
extend the patent life of such Product, as determined by the Steering Committee
or the Development Committee, the parties will meet to determine whether such
technology will be incorporated into such Product (the resulting product
hereinafter referred to as an "Improved Product") and, if so, will negotiate an
increase in the royalty payable to Gensia Sicor (in the case of technology owned
or controlled by Gensia Sicor) or a decrease in the royalty payable to Gensia
Sicor (in the case of technology owned or controlled by Sankyo). If Sankyo
declines to incorporate such technology, Gensia Sicor shall have the exclusive
right to develop and market the Improved Product upon payment of a reasonable
royalty to Sankyo.
7.2 Signing Fee. Sankyo shall pay to Gensia Sicor a signing fee of
-----------
US $1,375,000 within thirty (30) days after the execution of this
Agreement.
7.3 Equity Purchase. At Gensia Sicor's option, Sankyo shall purchase that
---------------
number of shares of common stock of Gensia Sicor (or its assignee) having an
aggregate purchase price of [CONFIDENTIAL TREATMENT REQUESTED] and a purchase
price per share equal to [CONFIDENTIAL TREATMENT REQUESTED] of the fair market
value of such shares. The fair market value of such shares shall equal (a) the
average of the per share closing price for such shares as reported on the Nasdaq
National Market System on each of the twenty (20) trading days ending three (3)
business days before the closing date of such equity purchase, or (b) if such
shares are not reported on the Nasdaq National Market System, the fair market
value of such shares as determined by an independent investment banking firm
selected by Gensia Sicor and reasonably acceptable to Sankyo. The costs of any
such determination by an independent investment banking firm shall be shared
equally by Gensia Sicor and Sankyo. Within ninety (90) days after Gensia Sicor
(or its assignee) delivers to Sankyo a draft Stock Purchase Agreement, Sankyo
shall purchase such shares pursuant to the final Stock Purchase Agreement
obligating Sankyo to purchase such shares in accordance with the provisions of
this Section 7.3 and containing such other terms and conditions as the parties
mutually agree. During such ninety (90) day period, Sankyo shall have the right
to conduct due diligence regarding the business and financial condition of the
issuer of such shares. Sankyo's obligation to purchase such shares shall be
subject to its completion, during such ninety (90) day period, of satisfactory
due diligence regarding the business and financial condition of the issuer of
such shares.
7.4 Development Milestone Payments. Sankyo shall make the following
------------------------------
development milestone payments to Gensia Sicor (a) for the first Compound which
achieves the milestone events set forth in the table below, in the amounts and
in accordance with the table below, and (b) for each additional Compound which
achieves the milestone events set forth in the table below, in one-half (1/2)
the amounts and in accordance with the table below; in each case other
-18-
<PAGE>
than for Compounds which have properties, results and effects that are
substantially similar to a Compound (a "Back-up Compound") for which Sankyo has
previously made milestone payments. Sankyo shall not make milestone payments
for any Back-up Compound unless it replaces a Compound which has been selected
as either a Candidate Compound or a Licensed Compound which has not gone to
market, and in this instance, the only milestone payments due are those which
have not been made for the Compound it replaces. After any such previously
unpaid milestone payments have been paid, such Back-up Compound shall no longer
be a Back-up Compound. Notwithstanding the above, if such Back-up Compound is
subsequently developed in addition to the Compound it was meant to replace, all
appropriate milestone payments (for those milestones which such Back-up Compound
already has achieved) shall be promptly paid upon initiation of Phase III
clinical studies (or its regulatory equivalents in the United States or in a
Primary Country) for that Back-up Compound.
[CONFIDENTIAL TREATMENT REQUESTED]
7.5 Combination Product. In the event a Product is sold in a combination
-------------------
product with other pharmacologically active components, Net Sales, for purposes
of royalty payments on the combination product, shall be calculated by
multiplying the Net Sales of that combination by the fraction A/B, where A is
the gross selling price of the Product sold separately and B is the gross
selling price of the combination product. In the event that no such separate
sales are made by Sankyo or a permitted sublicensee, Net Sales for royalty
determination shall be calculated by multiplying Net Sales of the combination by
the fraction C/(C+D) where C is the fully allocated cost of the Product and D is
the fully allocated cost of such other pharmacologically active components. In
no event shall Net Sales of any Product calculated under this Section 7.2 with
respect to any combination product be less than fifty percent of the Net Sales
of such combination product.
ARTICLE 8.
ROYALTY REPORTS AND ACCOUNTING
------------------------------
8.1 Reports, Exchange Rates. During the term of this Agreement following
-----------------------
the First Commercial Sale of a Product, Sankyo shall furnish to Gensia Sicor a
written quarterly report showing, on a country by country basis, (i) the gross
sales of all Products sold by Sankyo and its sublicensees in the Territory
during the reporting period and the calculation of Net Sales from such gross
sales; (ii) the royalties payable in U.S. dollars, which shall have accrued
hereunder in respect of such sales; (iii) withholding taxes, if any, required by
law to be deducted in respect of such royalties, provided that Sankyo will take
--------
reasonable action to seek to minimize any such withholding taxes; (iv) the dates
of the First Commercial Sales of any Products in any country in the Territory
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<PAGE>
during the reporting period; and (v) the exchange rates used in determining the
amount of United States dollars. For sales which took place outside of the
United States, its territories and possessions, the royalty obligation of Sankyo
shall be determined on the basis of Sankyo's monthly standard account of sales
which shall be interpreted as representing the result of conversion of all local
currency sales to U.S. Dollars at the rate equal to the average of the rate
published in the London Times for the close of business in London on the last
-----
business day of each of the three (3) months of the calendar quarter for which
the payments are reported. Reports shall be due on the thirty-fifth (35th) day
following the close of each respective quarter. If no royalty is due for any
royalty period hereunder, Sankyo shall so report. Sankyo shall keep accurate
records in sufficient detail to enable the royalties payable hereunder to be
determined.
8.2 Audits.
------
8.2.1 Upon the written request of Gensia Sicor at Gensia Sicor's expense
and not more than once in each calendar year, Sankyo shall permit an
internationally recognized independent public accountant selected by Gensia
Sicor and reasonably acceptable to Sankyo, to have access during normal business
hours to such of the records of Sankyo as may be reasonably necessary to verify
the accuracy of the royalty reports hereunder in respect of any fiscal year
ending not more than twenty-four (24) months prior to the date of such request.
8.2.2 In the event such accountant concludes that additional royalties
were owed during such period, the additional royalty shall be paid within thirty
(30) days of the date Gensia Sicor delivers to Sankyo such accountant's written
report so concluding. The fees charged by such accountant shall be paid by
Gensia Sicor unless the audit discloses that the royalties payable by Sankyo for
the audited period are more than one hundred five percent (105%) of the
royalties actually paid for such period, in which case Sankyo shall pay the
reasonable fees and expenses charged by the accountant.
8.2.3 Sankyo shall include in each sublicense granted by it pursuant to
this Agreement a provision requiring the sublicensee to make reports to Sankyo,
to keep and maintain records of sales made pursuant to such sublicense and to
grant access to such records by Gensia Sicor's independent accountant to the
same extent required of Sankyo under this Agreement. Upon the expiration of
twenty-four (24) months following the end of any fiscal year, the calculation of
royalties payable with respect to such year shall be binding and conclusive upon
Gensia Sicor, and Sankyo and its sublicensees shall be released from any
liability or accountability with respect to royalties for such year.
8.3 Confidential Financial Information. Gensia Sicor agrees that all
----------------------------------
information subject to review under this Article 8 or under any sublicense
agreement is confidential and that Gensia
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<PAGE>
Sicor shall cause its accountant to retain all such information in confidence.
ARTICLE 9.
PAYMENTS
--------
9.1 Payment Terms. Royalties shown to have accrued by each royalty report
-------------
provided for under Article 8 of this Agreement shall be due and payable on the
date such royalty report is due. Payment of royalties in whole or in part may
be made in advance of such due date. Royalties determined to be owing, and any
overpayments to be credited, with respect to any prior quarter shall be added,
together with interest thereon under Section 9.4 below from the date of the
report for the quarter for which such amounts are owing, or credited, as the
case may be, to the next quarterly payment hereunder.
9.2 Exchange Control. Except as hereinafter provided in this Section 9.2,
----------------
all royalties due and other payments hereunder shall be paid in United States
dollars. If at any time legal restrictions prevent the prompt remittance of
part or all royalties with respect to any country of the Territory where the
product is sold, payment shall be made through such lawful means or methods as
Sankyo may determine. When in any country the law or regulations prohibit both
the transmittal and deposit of royalties on sales in such a country, royalty
payments shall be suspended for as long as such prohibition is in effect
(provided, however, that such suspended payments shall bear interest at the
- --------- -------
initial rate stated in Section 9.4 hereof), and so soon as such prohibition
ceases to be in effect, all royalties that Sankyo or its sublicensees would have
been obligated to transmit or deposit, but for the prohibition, shall forthwith
be deposited or transmitted promptly to the extent allowable, as the case may
be. If the royalty rate specified in this Agreement should exceed the
permissible rate established in any country, the royalty rate for sales in such
country shall be adjusted to the highest legally permissible or government-
approved rate.
9.3 Payment Method. Except as provided in Section 9.2, all payments by
--------------
Sankyo to Gensia Sicor under this Agreement shall be made by bank wire transfer
in immediately available funds to such account as Gensia Sicor specified to
Sankyo before such payment is due.
9.4 Late Payments. Any payments by Sankyo that are not paid within thirty
-------------
(30) days of when such payments are due under this Agreement shall bear
interest, to the extent permitted by applicable law, at ten (10) percentage
points above the London Interbank Offered Rate (LIBOR) calculated on the
respective dates such payments are due.
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<PAGE>
9.5 Withholding Taxes.
-----------------
9.5.1 Royalties. Sankyo may withhold from the royalties due to Gensia
---------
Sicor hereunder amounts for payment of any withholding tax that Sankyo has paid
to any taxing authority with respect to the royalty amounts due to Gensia Sicor
hereunder; provided, however, that the net amount payable to Gensia Sicor for
-------- -------
any royalty period shall in no event be reduced by more than ten percent (10%)
of the royalties owing to Gensia Sicor for such royalty period. Sankyo agrees
to reasonably cooperate with Gensia in obtaining a foreign tax credit in the
United States with respect to such withholding tax on royalties due to Gensia
Sicor hereunder on the sale or manufacture of Products.
9.5.2 Other Payments. All amounts payable by Sankyo to Gensia Sicor
--------------
hereunder, other than royalties due on the sale or manufacture of Products,
represent the actual net proceeds to be received by Gensia Sicor. Gensia Sicor
agrees to reasonably cooperate with Sankyo in obtaining a refund of any
withholding taxes paid by Sankyo with respect to any such amounts payable to
Gensia Sicor hereunder. In the event that Gensia is successful in obtaining any
refund of withholding taxes paid by Sankyo with respect to any such amounts
payable to Gensia Sicor hereunder, Gensia agrees to promptly remit the amount of
such refund to Sankyo.
ARTICLE 10.
INFRINGEMENT ACTIONS BY THIRD PARTIES
-------------------------------------
10.1 Defense. If Gensia Sicor or Sankyo, or any of their respective
-------
Affiliates, shall be named as a defendant in a legal proceeding by a Third Party
for infringement of a patent because of the manufacture, use or sale of Products
or Licensed Compounds (but only to the extent such manufacture, use or sale is
claimed in the Gensia Sicor Patent Rights), the party which has been sued shall
promptly notify the other party in writing of the institution of such suit. The
party which has been sued may, at its option and at its sole expense, control
and defend such suit. The controlling party may not settle such suit or
otherwise consent to an adverse judgment in such suit that diminishes the right
or interests of the non-controlling party, or subjects the non-controlling party
to any liability for contribution pursuant to Section 10.3 hereof, without the
express written consent of the non-controlling party. The party which has been
sued shall keep the other party at all times reasonably informed as to the
status of the suit. The party which is not controlling such legal proceedings
shall have the right to be represented by advisory counsel of its own selection
(such counsel's opinion shall be reasonably considered by the controlling
party), at its own expense, and shall cooperate fully in the defense of such
suit and furnish to the party controlling such legal proceedings all evidence
and assistance in its control.
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<PAGE>
10.2 Defense of Actions Against Gensia Sicor and Sankyo. If Gensia
--------------------------------------------------
Sicor and Sankyo, or any of their respective Affiliates shall be jointly named
as defendants in a legal proceeding by a Third Party or shall be joined in the
same litigation for infringement of a patent because of the manufacture, use or
sale of Products or Licensed Compounds (but only to the extent such manufacture,
use or sale is claimed in the Gensia Sicor Patent Rights), Gensia Sicor shall be
entitled to control the defense of such suit, and all expenses including costs,
attorney fees, adverse judgements or settlement amounts incurred on account of
Sankyo or Gensia Sicor or both shall be paid as set forth under Section 10.3
below. Sankyo shall have the right to be represented by counsel of its own
selection, but at its sole expense, and shall cooperate fully in the defense of
such suit and furnish to Gensia Sicor all evidence and assistance in its
control. Gensia Sicor shall, however, not be entitled to settle such suit or
otherwise consent to an adverse judgment in such suit without the express
written consent of Sankyo if such settlement or adverse judgment diminishes any
right or interest of Sankyo hereunder, or subjects Sankyo to any liability for
contribution pursuant to Section 10.3 hereof.
10.3 Contribution. With respect to any judgments, settlements or damages
------------
payable with respect to legal proceedings covered by Sections 10.1 and 10.2
above, Gensia Sicor shall contribute an amount, equal to twenty-five percent
(25%) of such judgments, settlements or damages (not to exceed in the aggregate
the amount of royalties actually paid by Sankyo to Gensia Sicor through the date
of such judgment, settlement or damage with respect to the alleged infringing
Product in the country where the legal action was maintained), and Sankyo shall
pay the remainder. With respect to any legal proceedings covered by Section
10.2 above, Gensia Sicor may deduct the actual expenses paid by Gensia Sicor in
such suit, including costs, attorney fees, advance judgments or settlement
amounts, for the purpose of determining the amount of its contribution under the
previous sentence.
ARTICLE 11.
CONFIDENTIALITY
---------------
11.1 Nondisclosure Obligations. Except as otherwise provided in this
-------------------------
Article 11, and subject to Article 12 hereof, during the term of this Agreement
and for a period of five (5) years thereafter, both parties shall maintain in
confidence and use only for purposes of this Agreement confidential information
and data, received from the other party, resulting from or related to the
development of Research Compounds or Products.
For purposes of this Article 11, information and data described above shall
be referred to as "Information." To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement, a party may disclose Information it is otherwise obligated under this
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<PAGE>
Section not to disclose to its Affiliates, sublicensees, consultants, outside
contractors and clinical investigators, on a need-to-know basis on condition
that such entities or persons agree to keep the Information confidential for the
same time periods and to the same extent as such party is required to keep the
Information confidential; and a party or its sublicensees may disclose such
Information to government or other regulatory authorities to the extent that
such disclosure is reasonably necessary to obtain patents or authorizations to
conduct clinical trials with and to commercially market the Product. The
obligation not to disclose Information shall not apply to any party of such
Information that (i) is or becomes patented, published or otherwise part of the
public domain other than by acts of the party obligated not to disclose such
Information or its Affiliates or sublicensees in contravention of this
Agreement; or (ii) is disclosed to the receiving party or its Affiliates or
sublicensees by a Third Party, provided such Information was not obtained by
--------
such Third Party directly or indirectly from the other party under this
Agreement; or (iii) prior to disclosure under this Agreement, was already in the
possession of the receiving party or its Affiliates or sublicensees, provided
--------
such Information was not obtained directly or indirectly from the other party
under this Agreement; or (iv) can be shown by written documents to have been
independently developed by the receiving party or its Affiliates without breach
of any of the provisions of this agreement.
11.2 Terms of This Agreement. Gensia Sicor and Sankyo each agrees not to
-----------------------
disclose any terms or conditions of this Agreement to any Third Party without
the prior consent of the other party, except as required by applicable law or to
persons with whom Sankyo or Gensia Sicor has entered into or proposes to enter
into a business relationship. Notwithstanding the foregoing, prior to execution
of this Agreement, Sankyo and Gensia Sicor shall agree upon the substance of
information that can be used to describe the terms of this transaction, and
Sankyo and Gensia Sicor may disclose such information, as modified by mutual
agreement from time to time, without the other party's consent.
ARTICLE 12.
PUBLICATION
-----------
12.1 During the terms of this Agreement, Gensia Sicor and Sankyo each
acknowledge the other party's interest in publishing certain of its results to
obtain recognition within the scientific community and to advance the state of
scientific knowledge. Each party also recognizes the mutual interest in
obtaining valid patent protection. Consequently, either party, its employees or
consultants wishing to make a publication (including any oral disclosure made
without obligation of confidentiality) relating to work performed by such party
as part of the Research Program (the "Publishing Party") shall transmit to the
other party (the "Reviewing Party") a copy of the proposed written publication
at
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<PAGE>
least sixty (60) days prior to submission for publication, or an abstract of
such oral disclosure at least thirty (30) days prior to submission of the
abstract or the oral disclosure, which ever is earlier. The Reviewing Party
shall have the right (a) to propose modifications to the publication for patent
reasons, (b) to request a delay in publication or presentation in order to
protect patentable information and (c) to propose modifications to the
publication to protect valuable know-how and technology of the Receiving Party.
If the Reviewing Party requests such a delay, the Publishing Party shall
delay submission or presentation of the publication for a period of ninety (90)
days to enable patent applications protecting each party's rights in such
information to be filed in accordance with Article 13 below. Upon the expiry of
sixty (60) days, in the case of proposed written disclosures, or thirty (30)
days, in the case of an abstract of proposed oral disclosures, from transmission
of such proposed disclosures to the Reviewing Party, the Publishing Party shall
be free to proceed with the written publication or the oral presentation,
respectively, unless the Reviewing Party has requested the delay described
above.
ARTICLE 13.
PATENTS
-------
13.1 Ownership of Inventions, Applications for Patent, Patents and
-------------------------------------------------------------
Copyrights. The entire right and title in all writings, inventions,
- ----------
discoveries, improvements and other technology directed to the manufacture or
use of a Product, or constituting a Product; whether or not patentable or
copyrightable, and any patent applications, patents or copyrights based thereon
(collectively, the "Inventions") that are made or conceived during and as a
result of the Research Program (i) solely by employees or others acting on
behalf of Gensia Sicor shall be solely owned by Gensia Sicor ("Gensia Sicor
Inventions") (ii) solely by employees of Sankyo or others acting on behalf of
Sankyo shall be solely owned by Sankyo ("Sankyo Inventions"), or (iii) jointly
by employees or others acting on behalf of Gensia Sicor and Sankyo shall be
owned jointly by Sankyo and Gensia Sicor ("Joint Inventions"). Each party shall
promptly disclose to the other party the making, conception or reduction to
practice of Inventions by employees or others acting on behalf of such party.
Each party represents and agrees that, all employees and other persons acting on
its behalf in performing its obligations under this Agreement shall be obligated
under a binding written agreement to assign to such party or as such party shall
direct, all Inventions made or conceived by such employee or other person, or in
the case of non-employees working for other companies or institutions on behalf
of Gensia Sicor or Sankyo; Gensia Sicor or Sankyo, as applicable, shall have the
right to license all Inventions made by such non-employees on behalf of Gensia
Sicor or Sankyo, as applicable, in accordance with the policies of said company
or institution. Gensia Sicor and Sankyo
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<PAGE>
agree to undertake to enforce such agreements (including, where appropriate, by
legal action) considering, among other things, the commercial value of such
inventions.
13.2 Patent Applications.
-------------------
13.2.1 Priority Filings. When a Gensia Sicor Invention or Joint Invention
----------------
has been made which may reasonably be considered to be patentable, Gensia Sicor
promptly shall file a United States priority patent application, and, in the
case of a Joint Invention, shall assign such patent application jointly to
Sankyo and Gensia Sicor. When a Sankyo Invention has been made which may
reasonably be considered to be patentable, Sankyo promptly shall file a Japanese
priority patent application. Gensia Sicor shall give Sankyo an opportunity to
review the text of an application for a Joint Invention before filing, and shall
supply Sankyo with a copy of the application as filed, together with a note of
its filing date and serial number.
13.2.2 Foreign Filing Decisions. No later than nine (9) months following
------------------------
the filing date of a priority patent application filed according to Section
13.2.1 above, the parties shall consult together, through the Steering Committee
or otherwise, and agree whether such priority application should be abandoned
without replacement; abandoned and refiled; proceeded within the country of
filing only; or used as the basis for a claim of priority under the Paris
Convention for corresponding applications in other countries.
13.2.3 Prosecution and Maintenance.
---------------------------
(a) Gensia Sicor shall control the preparation, filing, prosecution and
maintenance of all patent applications and patents which claim Gensia Sicor
Inventions and Joint Inventions. Sankyo shall control the preparation, filing,
prosecution and maintenance of all patent applications and patents which claim
Sankyo Inventions.
(b) Gensia Sicor shall bear all applicable costs associated with the
preparation, filing, prosecution and maintenance of patents and patent
applications which claim Gensia Sicor Inventions in the United States, its
territories and possessions. All applicable costs associated with the
preparation, filing, prosecution and maintenance of patents and patent
applications which claim Joint Inventions in the United States, its territories
and possessions shall be split evenly between the parties. Sankyo shall bear
all applicable costs associated with the preparation, filing, prosecution and
maintenance of all other patents and patent applications subject to this Section
13.2.
13.3 Cooperation. Each party shall make available to the other party or
-----------
its authorized attorneys, agents or representatives, its employees, agents or
consultants necessary or appropriate to enable the appropriate party to file,
prosecute and maintain patent applications and resulting patents with respect to
Inventions for
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<PAGE>
a period of time sufficient for such party to obtain the assistance it needs
from such personnel. Where appropriate, each party shall sign or cause to have
signed all documents relating to said patent applications or patents at no
charge to the other.
13.4 No Other Technology Rights. Except as otherwise provided in this
--------------------------
Agreement, under no circumstances shall a party hereto, as a result of this
Agreement, obtain any ownership interest or other right in any technology, know-
how, patents, pending patent applications, products, vaccines, antibodies, cell
lines or cultures, or animals of the other party, including items owned,
controlled or developed by the other, or transferred by the other to said party
at any time pursuant to this Agreement. It is understood and agreed by the
parties that this Agreement does not grant to either party any license or other
right in basic technology of the other party except to the extent necessary to
enable the parties to carry out their party of this Agreement.
13.5 Enforcement of Patent Rights.
----------------------------
13.5.1 Gensia Sicor and Sankyo shall promptly notify the other in writing
of any alleged or threatened infringement of Patent Rights in the Field of which
they become aware. The Parties shall then confer and may agree jointly to
prosecute any infringement described in this Section 13.5. The party owning the
Patent alleged or threatened to be infringed shall control the joint litigation
in the event of any dispute between the parties with respect to any aspect of
the litigation. With respect to Joint Inventions, Gensia Sicor shall control
such joint litigation.
13.5.2 If the parties do not agree on whether or how to proceed with
enforcement activity within (i) ninety (90) days following the notice of alleged
infringement or (ii) ten (10) days before the time limit, if any, set forth in
the appropriate laws and regulations for the filing of such actions, whichever
comes first, then either party may act in its own name to commence litigation
with respect to the alleged or threatened infringement. The non-controlling
party shall reasonably cooperate with the party bringing such enforcement
action, at the sole expense of the party bringing such enforcement action.
13.5.3 In the event a party brings an infringement action, the other party
shall reasonably cooperate, including, if required to bring such action, the
furnishing of a power of attorney. Neither party shall have the right to settle
any patent infringement litigation under this Section 13.5 in a manner that
diminishes the rights or interests of the other party without the express
written consent of such other party.
13.5.4 The costs of any joint litigation commenced pursuant to Section
13.5.1, including attorneys' fees and expenses, shall be borne equally by the
parties (unless they agree to a different cost sharing arrangement in any
particular matter), with such costs to be accounted for by equalizing payments
to be made on a quarterly
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<PAGE>
basis. Only out-of-pocket costs shall be accounted for and reimbursed under
this Section 13.5.4, without an allocation for internal resources devoted to the
litigation. The costs of any sole litigation commenced pursuant to Section
13.5.2, including attorneys' fees and expenses, shall be borne solely by the
party bringing such infringement action.
13.5.5 Except as otherwise agreed to by the parties as part of a cost
sharing arrangement, any recovery realized as a result of any joint litigation
commenced pursuant to Section 13.5.1 shall be shared equally by the parties
(unless they agree beforehand to a different sharing of such recovery). Any
recovery realized as a result of any sole litigation commenced pursuant to
Section 13.5.2 shall be retained by the party bringing such infringement action.
ARTICLE 14.
TERM, TERMINATION
-----------------
14.1 Expiration. Unless terminated earlier pursuant to Section 14.2 below,
----------
and subject to termination of the Research Program according to Article 3
hereof, this Agreement shall expire on the expiration or earlier termination of
Research Program Term.
14.2 Termination for Cause. Either party may terminate this Agreement upon
---------------------
the occurrence of any of the following:
14.2.1 Upon written notice by one party to the other, if the other party
files or has filed against it a petition under the Bankruptcy Act, makes an
assignment for the benefit of creditors, has a receiver appointed for it or any
of its assets, provided that, notwithstanding anything herein to the contrary, a
--------
party shall not be able to terminate this Agreement pursuant to this Section
14.2.1 for any period during which the other party is proceeding in good faith
to reorganize under Chapter 11 of the United States Bankruptcy Code. In the
event Sankyo terminates this Agreement pursuant to this Section 14.2.1, Sankyo
shall retain all rights to make, have made, use and sell the Products, subject
to the payment to Gensia Sicor of a royalty under the terms and conditions set
forth in Article 6 hereof.
14.2.2 Upon the failure of either party to comply with any material
obligation set forth in this Agreement (a "Default"), the non-defaulting party
shall give to the defaulting party written notice (the "Notice of Default")
specifying the nature of the Default and requesting that the defaulting party
cures such Default within one hundred eighty (180) days. If the defaulting
party shall dispute the existence, extent or nature of any Default set forth in
a Notice of Default, the parties shall use good faith efforts to resolve the
dispute. In the event any Default shall not be cured within one hundred eighty
(180) days of the defaulting party's receipt of a Notice of Default, the non-
defaulting party shall be entitled to terminate this Agreement in its entirety
and
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<PAGE>
the licenses granted hereunder, but only after the Chief Executive Officers of
the parties have conferred as provided in Section 20.2.2 hereof.
(a) If the non-defaulting party under this Section 14.2.2 is Sankyo, Sankyo
shall retain (i) all rights under this Agreement and any License Agreements to
make, have made, use and sell all Licensed Compounds and Products incorporating
such Licensed Compounds in accordance with the terms hereof and thereof, and
(ii) all rights under this Agreement with respect to all Recommended Compounds
that are identified in the most recent Steering Committee minutes, and all
Candidate Compounds, in accordance with the terms hereof, subject to the payment
to Gensia Sicor of royalties and other amounts under the terms and conditions
set forth in this Agreement; provided, however, that such payment to Gensia
-------- -------
Sicor shall be at one-half (1/2) the rates set forth in Section 7.1.1 hereof in
the event of Gensia Sicor's default.
(b) If the non-defaulting party under this Section 14.2.2 is Gensia Sicor,
all rights to compounds shall revert to Gensia Sicor if such compounds were
Gensia Sicor compounds or Third Party Compounds or revert to Sankyo if such
compounds were Sankyo compounds (subject to the restrictions set forth in
Section 4.6 hereof).
14.3 Effect of Termination. Expiration or termination of this Agreement
---------------------
shall not relieve the parties of any obligation accruing prior to such
expiration or termination and the provisions of Section 4.2, 4.3, 4.4, 4.6 and
7.4, and Article 11, 12 and 15 shall survive the expiration of this Agreement.
Upon the termination of the Research Program, (i) Sankyo's obligation to fund
the Research Program pursuant to Section 3.3 hereof shall terminate; and (ii)
for so long as at least one (1) Licensed Compound is in development, all
Licensed Compounds and Products resulting therefrom shall continue to be
governed by the terms and conditions set forth in this Agreement and the
applicable License Agreement.
ARTICLE 15.
INDEMNITY
---------
15.1 Sankyo Indemnity Obligations. Sankyo agrees to defend, indemnify and
----------------------------
hold Gensia Sicor, Gensia Sicor's Affiliates and their directors, officers,
employees and agents harmless from all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) incurred as a result of any
claim, demand, action, or other proceeding by any Third Party arising as a
result of (a) breach of representation or warranty by Sankyo; (b) breach of any
of its obligations under this Agreement by Sankyo; (c) actual or asserted
violations of any applicable law or regulation by Sankyo, its Affiliates or
sublicensees by virtue of which Products manufactured, distributed or sold by
Sankyo, its Affiliates or sublicensees shall be alleged or determined to be
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<PAGE>
adulterated, misbranded, mislabeled or otherwise not in compliance with any
applicable law or regulation; (d) bodily injury, death or property damage
attributable to the manufacture, distribution, sale or use of Products by
Sankyo, its Affiliates or sublicensees or otherwise attributable to a Product
manufactured in accordance with specifications provided by Sankyo; or (e)
Product recall ordered by a governmental agency, or required by a confirmed
Product failure as reasonably determined by the parties hereto, with respect to
a Product manufactured by Sankyo, its Affiliates or sublicensees; in each case
except to the extent such loss, liability, damage or expense was attributable to
Gensia Sicor's gross negligence or willful misconduct.
15.2 Gensia Sicor Indemnity Obligations. Gensia Sicor agrees to defend,
----------------------------------
indemnify and hold Sankyo, Sankyo's Affiliates and their directors, officers,
employees and agents harmless from all losses, liabilities, damages and expenses
(including reasonable attorneys' fees and costs) incurred as a result of any
claim, demand, action, or other proceeding by any Third Party arising as a
result of (a) breach of representation or warranty by Gensia Sicor; (b) breach
of any of its obligations under this Agreement by Gensia Sicor; (c) actual or
asserted violations of any applicable law or regulation by Gensia Sicor, its
Affiliates or licensees (other than Sankyo, its Affiliates or sublicensees) by
virtue of which Products manufactured, distributed or sold by Gensia Sicor, its
Affiliates or licensees (other than Sankyo, its Affiliates or sublicensees)
shall be alleged or determined to be adulterated, misbranded, mislabeled or
otherwise not in compliance with any applicable law or regulation; (d) bodily
injury, death or property damage attributable to the manufacture of Products by
Gensia Sicor, its Affiliates or licensees (other than Sankyo, its Affiliates or
sublicensees), unless manufactured in accordance with specifications provided by
Sankyo; or (e) Product recall ordered by a governmental agency, or required by a
confirmed Product failure as reasonably determined by the parties hereto, with
respect to a Product manufactured by Gensia Sicor, its Affiliates or licensees
(other than Sankyo, its Affiliates or sublicensees), unless manufactured in
accordance with specifications provided by Sankyo; in each case except to the
extent such loss, liability, damage or expense was attributable to Sankyo's
gross negligence or willful misconduct.
15.3 Procedure. A party or any of its Affiliates or their employees or
---------
agents (the "Indemnitee") that intends to claim indemnification under this
Article 15 shall promptly notify the other party (the "Indemnitor") of any loss,
claim, damage, liability or action in respect of which the Indemnitee intends to
claim such indemnification, and the Indemnitor shall assume the defense thereof
with counsel mutually satisfactory to the parties; provided, however, that an
-------- -------
Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by the Indemnitor, if representation of such Indemnitee by
the counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other
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<PAGE>
party represented by such counsel in such proceedings. The indemnity agreement
in this Article 15 shall not apply to amounts paid in settlement of any loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably.
The failure to deliver notice to the Indemnitor within a reasonable time after
the commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such Indemnitor of any liability to the Indemnitee
under this Article 15, but the omission so to deliver notice to the Indemnitor
will not relieve it of any liability that it may have to any Indemnitee
otherwise than under this Article 15. The Indemnitee under this Article 15, its
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification. In the event that each party claims indemnity from the
other and one party is finally held liable to indemnify the other, the
Indemnitor shall additionally be liable to pay the reasonable legal costs and
attorneys' fees incurred by the Indemnitee in establishing its claim for
indemnity.
15.4 Insurance. Sankyo and Gensia Sicor shall each maintain product
---------
liability insurance with respect to development, manufacture and sales of
Products by Sankyo or Gensia Sicor, respectively, in such amount as Sankyo or
Gensia Sicor, respectively, customarily maintains with respect to the
development, manufacture and sales of its other products. Sankyo or Gensia
Sicor, as applicable, shall maintain such insurance for so long as it continues
to develop, manufacture or sell any Products, and thereafter for so long as
Sankyo or Gensia Sicor, as applicable, customarily maintains insurance for
itself covering the development, manufacture or sale of its other products.
ARTICLE 16.
FORCE MAJEURE
-------------
Neither party shall be held liable or responsible to the other party nor be
deemed to have defaulted under or breached this Agreement for failure or delay
in fulfilling or performing any term of this Agreement when such failure or
delay is caused by or results from causes beyond the reasonable control of the
affected party including but not limited to fire, floods, embargoes, war, acts
of war (whether war be declared or not), insurrections, riots, civil commotions,
strikes, lockouts or other labor disturbances, acts of God or acts, omissions or
delays in acting by any governmental authority or the other party.
-31-
<PAGE>
ARTICLE 17.
ASSIGNMENT
----------
This Agreement may not be assigned or otherwise transferred by either
party without the consent of the other party; provided, however, that either
-------- -------
Gensia Sicor or Sankyo may, without such consent, assign this Agreement and its
rights and obligations hereunder to its Affiliates or in connection with the
transfer or sale of all or substantially all of its business to which this
Agreement pertains, or in the event of its merger or consolidation or change in
control or similar transaction. Any purported assignment in violation of the
preceding sentences shall be void. Any permitted assignee shall assume all
obligations of its assignor under this Agreement. Notwithstanding the
foregoing, in the event of a merger, consolidation, change of control or similar
transaction by Gensia Sicor, Sankyo shall not be required to provide to Gensia
Sicor's successor the information described in Sections 4.3 and 5.5 hereof if,
in Sankyo's reasonable judgment, the provision of such information to such
successor could cause material competitive harm to Sankyo.
ARTICLE 18.
NOTIFICATION OF PATENT TERM RESTORATION
---------------------------------------
Gensia Sicor shall notify Sankyo of (i) the issuance of each United States
patent included within the Patent Rights, giving the date of issue and patent
number for each such patent, and (ii) each notice pertaining to any patent
included within the Patent Rights which it receives as patent owner pursuant to
the Drug Price Competition and Patent Term Restoration Act of 1984 (the "Act"),
including notices pursuant to sections 101 and 103 of the Act from persons who
have filed an abbreviated NDA. Such notices shall be given promptly, but in any
event within fifteen (15) calendar days of each such patent's date of issue or
receipt of each such notice pursuant to the Act, whichever is applicable.
Gensia Sicor shall notify Sankyo of each filing for patent term restoration
under the Act, any allegations of failure to show due diligence and all awards
of patent term restoration (extensions) with respect to the Patent Rights.
Likewise, Sankyo will inform Gensia Sicor of patent extensions and periods of
data exclusivity in the rest of the world regarding any Product.
ARTICLE 19.
SEVERABILITY
------------
Each party hereby agrees that it does not intend to violate any public
policy, statutory or common laws, rules, regulations, treaty or decision of any
government agency or executive body thereof of any country or community or
association of countries.
-32-
<PAGE>
Should one or more provisions of this Agreement be or become invalid, the
parties hereto shall substitute, by mutual consent, valid provisions for such
invalid provisions which valid provisions in their economic effect are
sufficiently similar to the invalid provisions that it can be reasonably assumed
that the parties would have entered into this Agreement with such valid
provisions. In case such valid provisions cannot be agreed upon, the invalidity
of one or several provisions of this Agreement shall not affect the validity of
this Agreement as a whole, unless the invalid provisions are of such essential
importance to this Agreement that it is to be reasonably assumed that the
parties would not have entered into this Agreement without the invalid
provisions.
ARTICLE 20.
MISCELLANEOUS
-------------
20.1 Notices. Any consent, notice or report required or permitted to be
-------
given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery or courier) or courier, postage prepaid (where
applicable), addressed to such other party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor and shall be effective upon receipt by the addressee.
If to Gensia Sicor: Gensia Sicor Inc.
9360 Towne Centre Drive
San Diego, California 92121
Attention: President
Copy to: General Counsel
If to Sankyo: Sankyo Co., Ltd.
2-58, Hiromachi, 1-chome
Shinagawa-ku
Tokyo 140, Japan
Attention: Dr. H. Fukumi,
Deputy Director,
Research Institute
20.2 Applicable Law; Arbitration.
---------------------------
20.2.1 Applicable Law. This Agreement shall be governed by and construed
--------------
in accordance with the laws of the state of California.
20.2.2 Arbitration. Any disputes arising between the parties relating to,
-----------
arising out of or in any way connected with this Agreement or any term or
condition hereof, or the performance by either party of its obligations
hereunder, whether before or after termination of this Agreement, shall be
promptly presented to the
-33-
<PAGE>
chief executive officers of Gensia Sicor and Sankyo for resolution and if the
chief executive officers cannot promptly resolve such disputes, then such
dispute shall be finally resolved by binding arbitration. Whenever a party
shall decide to institute arbitration proceedings, it shall give written notice
to that effect to the other party. The party giving such notice shall refrain
from instituting the arbitration proceedings for a period of sixty (60) days
following such notice. Any arbitration hereunder shall be conducted under the
International Chamber of Commerce Arbitration Rules. Each such arbitration
shall be conducted in the English language by a panel of three arbitrators
appointed in accordance with such rules. Any such arbitration shall be held in
Los Angeles, California. The arbitrators shall have the authority to grant
specific performance, and to allocate between the parties the costs of
arbitration in such equitable manner as they determine. Judgment upon the award
so rendered may be entered in any court having jurisdiction or application may
be made to such court for judicial acceptance of any award and an order of
enforcement, as the case may be.
20.3 Entire Agreement. This Agreement, together with the Stock Purchase
----------------
Agreement, contains the entire understanding of the parties with respect to the
subject matter hereof. All express or implied agreements and understandings,
either oral or written, heretofore made are expressly merged in and made a part
of this Agreement. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both parties hereto.
20.4 Headings. The captions to the several Articles and Sections hereof
--------
are not a part of this Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.
20.5 Independent Contractors. It is expressly agreed that Gensia Sicor and
-----------------------
Sankyo shall be independent contractors and that the relationship between the
two parties shall not constitute a partnership, joint venture or agency.
Neither Gensia Sicor nor Sankyo shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the party to do so.
20.6 Waiver. The waiver by either party hereto of any right hereunder or
------
the failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder of any other breach or failure by said other
party whether of a similar nature or otherwise.
-34-
<PAGE>
20.7 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.
GENSIA SICOR INC.
/s/ Paul Laikind, Ph.D.
______________________________
By: Paul Laikind, Ph.D.
Title: Vice President
SANKYO CO., LTD.
/s/ Yoshihiko Baba, Ph.D.
______________________________
By: Yoshihiko Baba, Ph.D.
Title: Managing Director, Director of
Research Institute
-35-
<PAGE>
APPENDIX A
[CONFIDENTIAL TREATMENT REQUESTED]
-36-
<PAGE>
EXHIBIT 10.2
------------
[CERTAIN INFORMATION HAS BEEN OMITTED HEREIN PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.]
SUPPLY AGREEMENT
- ----------------
by and between
ALCO CHEMICALS LTD a Guernsey Channel Islands company with a branch office at
via San Salvatore 7, LUGANO 6902, Switzerland; hereinafter referred to as ALCO,
SICOR - SOCIETA' ITALIANA CORTICOSTEROIDI SPA an Italian company with offices at
Via Terrazzano 77, RHO (Milan), Italy; hereinafter referred to as SICOR
and
BOEHRINGER INGELHEIM INTERNATIONAL GmbH with its principal office address at
Binger Strasse 173, 55218 INGELHEIM, Germany; hereinafter referred to as
BOEHRINGER.
Whereas SICOR manufactures bulk active ingredients including [CONFIDENTIAL
TREATMENT REQUESTED] for the pharmaceutical industry.
Whereas ALCO has been granted exclusive distribution rights for [CONFIDENTIAL
TREATMENT REQUESTED] by SICOR.
Whereas BOEHRINGER develops several pharmaceutical products in the respiratory
field containing [CONFIDENTIAL TREATMENT REQUESTED] as an active substance
(hereinafter referred to as "Products").
Whereas BOEHRINGER desires to buy [CONFIDENTIAL TREATMENT REQUESTED],
manufactured by SICOR, from ALCO and ALCO desires to sell [CONFIDENTIAL
TREATMENT REQUESTED] to BOEHRINGER.
Now, therefore, in consideration of the premises and the mutual covenants
hereinafter provided for, the parties agree as follows:
1. Purpose - The purpose of this Agreement is to define the terms and
-------
conditions under which SICOR and ALCO agree to manufacture and sell
[CONFIDENTIAL TREATMENT REQUESTED] to BOEHRINGER respectively, and BOEHRINGER
agrees to buy [CONFIDENTIAL TREATMENT REQUESTED] from ALCO.
1/11
<PAGE>
2. Specifications, DMF and Manufacturing Methods - [CONFIDENTIAL TREATMENT
---------------------------------------------
REQUESTED] means the unmicronised compound meeting the specifications given in
Appendix I hereto (hereinafter called "Specifications").
SICOR shall provide BOEHRINGER with the open part of a DMF for BOEHRINGER's use
in any country of the world.
In case any health administration or governmental authority in any country will
ask BOEHRINGER for additional information concerning [CONFIDENTIAL TREATMENT
REQUESTED] (e.g. about the closed part of a DMF) SICOR undertakes, either
directly or through ALCO, to promptly pass such information to the respective
administration or other authority.
For the term of this Agreement, SICOR shall not change any Specifications,
manufacturing methods (given in Appendix II) or site of manufacture for the
[CONFIDENTIAL TREATMENT REQUESTED] supplied to BOEHRINGER hereunder without
BOEHRINGER's prior written consent to any such changes, provided that SICOR may
--------
make such changes without BOEHRINGER's consent where so required by the relevant
Health Authorities and/or if necessary to maintain any Pharmacopoeia standards
as set forth in Appendix I.
The site of manufacture for the [CONFIDENTIAL TREATMENT REQUESTED] supplied
hereunder may be either SICOR's facilities or the facilities of SINTESIS LERMA,
S.A. de C.V., a Mexican corporation with its principal place of business at Av.
San Rafael No. 35, Parque Industrial Lerma, Lerma de Villada, E.do Mexico,
Mexico ("LERMA"), who would produce such [CONFIDENTIAL TREATMENT REQUESTED]
under a toll manufacturing arrangement with SICOR.
SICOR shall undertake to enter into a toll manufacturing agreement for
[CONFIDENTIAL TREATMENT REQUESTED] with LERMA upon LERMA's receiving approval
from the United States Food and Drug Administration as a facility for the
manufacture of bulk active ingredients for use in the United States. In any such
toll manufacturing agreement with LERMA, SICOR undertakes to ensure that LERMA
fulfills all the obligations of SICOR concerning [CONFIDENTIAL TREATMENT
REQUESTED] supplied hereunder which should be met by LERMA so as to give effect
to said SICOR obligations, including but not limited to SICOR's obligations with
regards to the open part of the [CONFIDENTIAL TREATMENT REQUESTED] DMF (but
which, in a toll manufacturing agreement, would require the filing of change of
site applications) and other regulatory information, manufacturing methods and
specifications. SICOR shall also undertake to ensure that in such agreement,
LERMA will use its best efforts to supply as fast as possible to the relevant
Health Authorities all the documentation necessary for manufacturing
[CONFIDENTIAL TREATMENT REQUESTED] for SICOR, which [CONFIDENTIAL TREATMENT
REQUESTED] is to be provided by SICOR hereunder. However, the parties agree that
the [CONFIDENTIAL TREATMENT REQUESTED] delivered to BOEHRINGER under this
Agreement will in general be manufactured by SICOR and LERMA shall only be
appointed as a second source to cover any force majeure situations.
2/11
<PAGE>
3. Preferential dealing - As long as the price and quality terms and conditions
--------------------
hereunder are met, BOEHRINGER agrees to make ALCO and SICOR its first choice as
supplier of [CONFIDENTIAL TREATMENT REQUESTED]. In this sense, BOEHRINGER shall
purchase all its requirements of [CONFIDENTIAL TREATMENT REQUESTED] for the
production and use of clinical samples containing [CONFIDENTIAL TREATMENT
REQUESTED] for potential repetitions of clinical trials, and for the production
and sales of the Products in case these Products will be registered,
preferentially from ALCO for the term of this Agreement, and ALCO and SICOR
through ALCO to supply to BOEHRINGER all such requirements of [CONFIDENTIAL
TREATMENT REQUESTED].
Should another party offer BOEHRINGER an equivalent quality of [CONFIDENTIAL
TREATMENT REQUESTED] at a lower price or at more favourable conditions and ALCO
is not prepared to accept this offer by providing [CONFIDENTIAL TREATMENT
REQUESTED] at a price equal to the price offered by that other party within four
(4) weeks of BOEHRINGER's informing ALCO of said lower price or more favourable
conditions, then BOEHRINGER is exempted from its obligation to purchase
[CONFIDENTIAL TREATMENT REQUESTED] from ALCO for the quantities of [CONFIDENTIAL
TREATMENT REQUESTED] offered at such lower price or more favourable conditions.
However, in view of cost and burden to be incurred for re-registration,
BOEHRINGER is willing to accept a price up five percent (5%) above the price
offered by that other party.
For the purposes of this Agreement, the quality of [CONFIDENTIAL TREATMENT
REQUESTED] shall be considered equivalent if and only if:
- the other party offering such lower prices or more favourable conditions
for [CONFIDENTIAL TREATMENT REQUESTED] has the capacity, manufacturing
facilities, and rights to intellectual/industrial property necessary and
sufficient to be a reasonably reliable supplier of [CONFIDENTIAL TREATMENT
REQUESTED] over the term of this Agreement;
- the other party offering such lower prices or more favourable conditions
for [CONFIDENTIAL TREATMENT REQUESTED] has been approved or BOEHRINGER can
demonstrate that said other party will be approved as a manufacturing
facility for bulk active ingredients by the appropriate regulatory
authorities of the country or countries in which BOEHRINGER intends to sell
products containing [CONFIDENTIAL TREATMENT REQUESTED] to be purchased from
that other party; and
- any such [CONFIDENTIAL TREATMENT REQUESTED] offered by the other party
would meet the BOEHRINGER quality requirements, and would comply with the
same governmental regulations and manufacturing practices, and meet the
same standards, as those complied with and met by SICOR in under this
Agreement for the country or countries in which BOEHRINGER intends to sell
products containing [CONFIDENTIAL TREATMENT REQUESTED] to be purchased from
that other party.
3/11
<PAGE>
In case [CONFIDENTIAL TREATMENT REQUESTED] which meets all the requirements
stated above is offered to BOEHRINGER, BOEHRINGER will inform ALCO of that fact
and of the prices and conditions of this offer. In order to prove the existence
of a competitive order BOEHRINGER undertakes, if required by ALCO and/or SICOR,
to provide information regarding the requirements listed above to an auditor
bound to secrecy. The auditor shall not reveal the identity of the competitive
supplier to ALCO or to SICOR.
The costs of such an auditing shall be borne by ALCO and/or SICOR.
ALCO shall grant to BOEHRINGER the lowest price offered by ALCO to any third
party solely for BOEHRINGER's intended sales in the country or countries in
which that third party or its client(s) sell products containing [CONFIDENTIAL
TREATMENT REQUESTED], unless special circumstances justify this price being
------
granted to that third party. For purposes of this Agreement, such special
circumstances can mean, among other circumstances, the requirement of higher
quantities of [CONFIDENTIAL TREATMENT REQUESTED] or an individual supply of
[CONFIDENTIAL TREATMENT REQUESTED] without any further support by ALCO and/or
SICOR.
In case ALCO intends to offer a lower price to a third party in accordance with
the special circumstances mentioned above, BOEHRINGER shall be informed
promptly.
4. Price and Delivery Terms - With regard to the cumulative quantities sold in
------------------------
any calendar year, the price for [CONFIDENTIAL TREATMENT REQUESTED] supplied
thereunder through December 31, 1998 during any calendar year shall be:
50 kgs or less [CONFIDENTIAL TREATMENT REQUESTED]
50.001 kgs through 100 kgs [CONFIDENTIAL TREATMENT REQUESTED]
100.001 kgs through 200 kgs [CONFIDENTIAL TREATMENT REQUESTED]
200.001 kgs through 300 kgs [CONFIDENTIAL TREATMENT REQUESTED]
greater than 300 kgs [CONFIDENTIAL TREATMENT REQUESTED]
for [CONFIDENTIAL TREATMENT REQUESTED] delivered by ALCO to BOEHRINGER DDU
(Incoterms 1990) named destination, payment terms thirty (30) days net after
receipt of the invoice.
No later than October 1 1998 and each October 1st thereafter during the term of
this Agreement, the price of [CONFIDENTIAL TREATMENT REQUESTED] for the
following year shall be negotiated in good faith and timely manner between ALCO
and BOEHRINGER. Increases of pricesshall only be negotiated in case of increase
in the cost due to an increase in labour, overhead and/or raw materials
exceeding five per cent (5%). SICOR or ALCO for SICOR will provide to BOEHRINGER
adequate evidence of such developments.
If BOEHRINGER can demonstrate to ALCO that the price does not allow BOEHRINGER
to make reasonable sales of its Products
4/11
<PAGE>
containing [CONFIDENTIAL TREATMENT REQUESTED] in a reasonable number of its
markets, ALCO and BOEHRINGER shall discuss in good faith negotiations a new
price to be applied hereunder for said markets.
If ALCO and BOEHRINGER do not reach an agreement at such time, then BOEHRINGER
is exempted from its obligation to purchase for the said markets.
5. Forecasts and order procedure - At the end of each March, June, September
-----------------------------
and December hereafter throughout the term of this Agreement, BOEHRINGER shall
provide to SICOR through ALCO an updated forecast of its anticipated overall
requirements of [CONFIDENTIAL TREATMENT REQUESTED] for the following twelve (12)
month period, and its anticipated requirements for the United States and Canada
for the following twelve (12) month period. These forecasts shall be non-binding
estimates except as indicated in the following paragraph.
BOEHRINGER shall order [CONFIDENTIAL TREATMENT REQUESTED] from ALCO by written
purchase orders with a lead time of three (3) months. In the case of unexpected
demand ALCO and SICOR shall make every effort to satisfy BOEHRINGER's
requirements. Notwithstanding the foregoing, ALCO shall not be obligated to
accept any order to the extent that it results in ALCO's having to supply
[CONFIDENTIAL TREATMENT REQUESTED] in excess of one hundred twenty-five percent
(125%) of the first twelve month overall forecast given by BOEHRINGER here-
under--within which falls the date of such order. In such case, ALCO and SICOR
shall nonetheless make all commercially reasonable efforts to comply with such
unplanned changes, but shall not be held liable for their inability to do so.
SICOR agrees to hold a Delivery Stock of [CONFIDENTIAL TREATMENT REQUESTED] at
its premises for future delivery to BOEHRINGER, under the following terms and
conditions:
- The quantities of [CONFIDENTIAL TREATMENT REQUESTED] to be held in stock
shall not be less than the greater of the following:
i) 50% of the most recent twelve (12) month rolling overall forecast
received by SICOR through ALCO pursuant to the first paragraph of this
Article 5; or
ii) 100% of the most recent twelve (12) month rolling forecast for the
United States and Canada received by SICOR through ALCO pursuant to
the first paragraph of this Article 5;
provided, however, that SICOR shall not be required to have in said Delivery
- --------
Stock at any one time more than one hundred fifty (150) kilograms of
[CONFIDENTIAL TREATMENT REQUESTED] at any one time.
- - Notwithstanding the foregoing, SICOR shall be permitted ninety (90) days from
the date any [CONFIDENTIAL TREATMENT REQUESTED] ordered hereunder leaves its
facilities to replenish the Delivery Stock to the required
5/11
<PAGE>
minimum levels in cases of force majeure (as set forth in Article 8) or in case
of orders resulting in SICOR and ALCO having to supply an amount in excess of
the first twelve month overall forecast given by BOEHRINGER hereunder within
which falls the date of such order. For all other orders, SICOR shall proceed
immediately to replenish the Delivery Stock.
- - For each order accepted hereunder, SICOR shall withdraw from the Delivery
Stock those batches of [CONFIDENTIAL TREATMENT REQUESTED] which would result in
SICOR supplying the earliest produced batches in the Delivery Stock.
6. Warranty and Inability to supply - If SICOR fails to manufacture
--------------------------------
[CONFIDENTIAL TREATMENT REQUESTED] for supply hereunder and/or ALCO fails to
deliver [CONFIDENTIAL TREATMENT REQUESTED] to BOEHRINGER according to the
Specifications set out in Appendix I, then SICOR shall manufacture and/or ALCO
shall deliver, at SICOR or ALCO's own expense or at SICOR and ALCO's expense and
as soon as possible, [CONFIDENTIAL TREATMENT REQUESTED] which meets the
Specifications set out in Appendix I so as to replace the quantity which did not
meet these requirements and Specifications, and ALCO and SICOR shall deal with
this matter according to the terms and conditions of any then valid distribution
agreement for [CONFIDENTIAL TREATMENT REQUESTED] between the two parties.
Except for orders exceeding one hundred twenty-five percent (125%) of
BOEHRINGER's forecast as set forth in the second paragraph of Article 5, in the
event that SICOR and/or ALCO is unable to meet orders or is only able to meet
partial orders for reasons other than those set forth in the force majeure
-------------
provision in Article 8 of this Agreement, BOEHRINGER shall have the option of
purchasing the remaining quantity of [CONFIDENTIAL TREATMENT REQUESTED] ordered
that calendar year from a third party, and shall be free to claim damages for
such non-performance from the directly responsible party or parties.
7. Right of Inspection - So as to permit the inspection of [CONFIDENTIAL
-------------------
TREATMENT REQUESTED] production, SICOR shall allow the representatives of
BOEHRINGER to visit, no more than twice a year, during normal working hours and
upon reasonable prior written notice, those premises of SICOR where
[CONFIDENTIAL TREATMENT REQUESTED] is being produced, stored and/or analysed,
and SICOR shall grant said representatives access to such premises and to
documentation necessary for the production, storage and quality control of the
[CONFIDENTIAL TREATMENT REQUESTED], said documentation not to include, however,
individual batch records for [CONFIDENTIAL TREATMENT REQUESTED] production. The
responsible authorities shall be granted the right of inspection at any time
they choose provided, however, such visit is announced beforehand.
8. Force Majeure - Except with respect to the payment of any monies due
-------------
hereunder, a party shall not be held liable to the other for failure to perform
or fulfill an obligation required of the party to the extent such is prevented
by force majeure including, but not limited to, acts of God, fire, delays caused
by suppliers of materials or products, industrial disputes,
6/11
<PAGE>
technical problems or disturbances, natural disasters, wars declared or
undeclared, civil strike, embargo, lack of failure of transport facilities,
currency restrictions, or events caused by legislation, regulations, or orders
by any government or governmental agency or by any other supervening
circumstances beyond the control of either party provided, however, that the
force majeure is limited to a period of three (3) months.
9. Confidentiality - ALCO and SICOR undertake to use all information named
---------------
hereunder and received from or through BOEHRINGER only for the purpose of
manufacturing and selling [CONFIDENTIAL TREATMENT REQUESTED] to BOEHRINGER.
BOEHRINGER undertakes to use all information named hereunder and received from
or through ALCO or SICOR, and in particular during any Inspections pursuant to
the provisions of Article 7 of this Agreement, only for the purpose of
purchasing [CONFIDENTIAL TREATMENT REQUESTED] from SICOR through ALCO or of
manufacturing any Products containing [CONFIDENTIAL TREATMENT REQUESTED]. All
parties hereto guarantee to treat as confidential all documents, details,
information and experience of proprietary nature to the other parties regarding
[CONFIDENTIAL TREATMENT REQUESTED] under this Agreement, especially concerning
such know-how, knowledge, information and formulas that has come to the
knowledge of the party at any stage in connection with this Agreement.
The parties agree not to use any such documents, details, information and
experience proprietary to one of the other parties, for any other purpose than
the proper fulfillment of this Agreement, nor to reveal any such documents,
details, information and experience proprietary another party or parties hereto,
to any outsider and/or unauthorized person(s), unless such information has
become public knowledge for reasons for which that party (or someone for whom
that party is responsible) cannot be held liable, unless that other party or
parties, gives its or their consent thereto separately in writing. For the
purposes hereof all parties hereto shall also be liable for the due observation
of these provisions of confidentiality by any employees of that party, and by
any subcontractor, agent etc. acting for on behalf of that party.
10. Process Patent Rights - SICOR's process for manufacturing [CONFIDENTIAL
---------------------
TREATMENT REQUESTED]may make use of an invention or inventions claimed in the
European Patent Application [CONFIDENTIAL TREATMENT REQUESTED] and corresponding
patents/patent applications (together, the "Process Patents").
SICOR has a non-exclusive right to use all inventions claimed in the Process
Patents for the life of said Process Patents, which license was granted by AB
Astra under Swedish law in the same agreement in which SICOR transferred
ownership of said Process Patents to AB Astra.
Termination of said agreement, and thus of the license granted thereunder, is
not possible by SICOR nor by AB Astra to the extent that SICOR has transferred
to Astra AB proper title to the Process Patents.
7/11
<PAGE>
SICOR hereby represents that one remaining patent in the family of Process
Patents [CONFIDENTIAL TREATMENT REQUESTED] is still in the process of being
assigned by SICOR to AB Astra, while SICOR has duly assigned by the means and
manner requested by AB Astra all other patents in said family, including but not
limited to the Italian [CONFIDENTIAL TREATMENT REQUESTED] applied for through
the European Patent Organization.
SICOR in addition represents that AB Astra is obliged to use its best endeavors
to prosecute, maintain and defend Process Patents or, in the event that AB Astra
decides to abstain from prosecuting, maintaining or defending any such Process
Patents, to transfer back to SICOR any and all rights to these Process Patents.
To the best of SICOR's and ALCO's knowledge, unless and, in such case, with the
sole exception of Astra AB having maintained its opposition to the Canadian
family member of the Process Patents, which patent is included among those duly
assigned to AB Astra by the means and manner requested by AB Astra, there are no
current third-party claims concerning any of the Process Patents.
11. Liability and Indemnity - Liability and indemnity between the contracting
-----------------------
parties are subject to the applicable laws.
SICOR shall indemnify, defend, and hold BOEHRINGER and ALCO harmless, against
any and all liability, damage, loss, cost or expense (including reasonable
attorney's fees) resulting from a third party claim made or suit brought against
BOEHRINGER and/or ALCO respectively to the extent such arises out of a claim of
infringement of any intellectual property rights concerning [CONFIDENTIAL
TREATMENT REQUESTED] and/or the Process Patents. Upon filing of any such claim
or suit BOEHRINGER and/or ALCO shall immediately notify SICOR either directly,
or in the case of BOEHRINGER, through ALCO thereof and shall permit SICOR, at
its cost, to handle and control such claim or suit. BOEHRINGER and/or ALCO shall
have the right to participate in the defence of such claim or suit at its own
expense.
Both BOEHRINGER and SICOR shall each maintain a comprehensive general liability
insurance policy providing sufficient extensive coverage for personal injury,
bodily injury, property damages, or such coverage as is usual and customary in
the pharmaceutical industry to procure in the case of activities to be carried
out by the respective party because of and under this Agreement.
12. Term - This Agreement shall become effective on the last date of signature
----
hereunder, and shall continue thereafter for fifteen (15) years. Thereafter
this Agreement shall be automatically renewed for successive one year periods
unless either party hereto gives written notice to the other party at the
address hereinabove of its intentions not to extend the
8/11
<PAGE>
term, said notice to be given at least three (3) years prior to expiry of the
then current term.
13. Termination for Cause - BOEHRINGER shall have the right in its discretion
---------------------
to terminate this Agreement at once by written notice to the other parties in
the event that:
a) one or both of the other parties should breach or fail to observe or perform
any term or condition of this Agreement, and such breach or default is not cured
and remedied in full within (90) days after written notice thereof is given to
the party or parties at fault.
b) one of the other party or parties by voluntary or involuntary action go(es)
into liquidation or receivership; or dissolve(s) or file(s) a petition for
bankruptcy or reorganization or for suspension of payments or is (are)
adjudicated as bankrupt, become(s) insolvent or assign(s) or make(s) any
composition of its (their) assets for the benefit of creditors;
c) ownership of or control over one or both of the other parties is transferred
to others than those presently holding ownership of such party or parties.
d) if in good faith BOEHRINGER determines that there are reasonable scientific
or commercial reasons to stop development or sale of the Products; provided that
such commercial reasons cannot be solely related to BOEHRINGER's finding lower
prices available for [CONFIDENTIAL TREATMENT REQUESTED] of equivalent quality.
Neither ALCO nor SICOR alone shall have the right to terminate this Agreement.
Notwithstanding the foregoing, ALCO and SICOR together in common accord shall
have the right in their discretion to terminate this Agreement at once by
written notice by both parties to BOEHRINGER in the event that:
a) BOEHRINGER should breach or fail to observe or perform any term or condition
of this Agreement, and such breach or default is not cured and remedied in full
within (90) days after written notice thereof is given to BOEHRINGER;
b) BOEHRINGER by voluntary or involuntary action goes into liquidation or
receivership; or dissolves or files a petition for bankruptcy or reorganization
or for suspension of payments or is adjudicated as bankrupt, becomes insolvent
or assigns or makes any composition of its assets for the benefit of creditors;
or
c) ownership of or control over BOEHRINGER is transferred to others than those
presently holding ownership of BOEHRINGER.
In any of the three aforementioned cases, if only ALCO but not SICOR, or only
SICOR but not ALCO desires to terminate the
9/11
<PAGE>
present Agreement, the party so desiring to terminate reserves the right to
those damages directly or indirectly resulting therefrom from the party not
desiring to terminate.
In the event of early termination of this Agreement by BOEHRINGER due to cause
by SICOR or ALCO hereunder, BOEHRINGER may request shipment of any orders
placed, but not yet filled. In the event of early termination of this Agreement
by ALCO and SICOR, due to cause by BOEHRINGER, ALCO and SICOR shall not be
obligated to ship orders placed by BOEHRINGER, but provided SICOR has
manufactured and has available sufficient quantities for BOEHRINGER, shall have
the right to ship such orders DDP named destination; this shall be considered to
be accepted by BOEHRINGER if such [CONFIDENTIAL TREATMENT REQUESTED] conforms
with the specifications set out in Appendix I.
14. Severability - In the event that individual provisions of this Agreement
------------
become wholly or partially invalid the effectiveness of the remaining rulings
shall not be affected. The contracting parties undertake to replace an invalid
ruling by a valid one which most closely corresponds with the economic intention
of the invalid ruling.
15. Notice - All notices or other communication permitted or required hereunder
------
shall be sufficiently given if sent by registered mail, postage prepaid, or by
telefax, addressed to Ms. Margrit Foery or Dr. Michael Cannon at the addresses
hereinabove set forth and to BOEHRINGER to the Purchase Department BI KG,
Ingelheim, Germany with copy to the Legal Department BI GmbH, Ingelheim,
Germany, or at such other address or as shall be furnished in writing by ALCO,
SICOR or BOEHRINGER to the other parties hereto. Any such notice or
communication required or permitted hereunder shall be deemed to have given as
of the date mailed, telexed or telefaxed as evidenced by the postmark on the
envelope or the official notice of time and date on a telex or telefax.
16. Assignment - This Agreement or the rights and duties hereunder may not, in
----------
whole or in part, be transferred, assigned, pledged or delegated by any of the
parties without prior written consent of the other parties.
17. Governing Law and Arbitration - This Agreement shall be governed entirely
-----------------------------
by the laws of Germany.
IN WITNESS WHEREOF both parties have caused this Agreement to be signed by their
respective duly authorized officers or representatives on the dates indicated
below.
For and on behalf of
BOEHRINGER INGELHEIM INTERNATIONAL GmbH
ppa. ppa.
10/11
<PAGE>
/s/ Muller /s/ Dr. Blank
- ----------------------------------
Muller Dr. Blank
Date: August 2, 1996
For and on behalf of
ALCO CHEMICALS Ltd.
/s/ M. Foery
- -----------------------------------
Date: September, 23rd 1996
For and on behalf of
SICOR S.p.A.
/s/ Dr. Colla /s/ Dr. Giani
- -------------------------------------
Dr. Colla Dr. Giani
Date: September, 20th 1996
11/11
<PAGE>
EXHIBIT 10.3
------------
[CERTAIN INFORMATION HAS BEEN OMITTED HEREIN PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE REDACTED MATERIAL HAS
BEEN SEPARATELY FILED WITH THE COMMISSION.]
DISTRIBUTION AND SUPPLY AGREEMENT
This Agreement is dated as of January 1, 1994 between:
The Upjohn Company
a company duly incorporated in Delaware, U.S.A., having its principal place of
business at 7000 Portage Road, Kalamazoo, Michigan, 49001, U.S.A. (hereinafter
"Upjohn"), and
Sicor, S.p.A.
a company duly incorporated in Italy having its registered address at Sicor -
Societa Italiana Corticosteroidi, S.p.A. Via Terrazzano 77 20017 Rho (Milano)
Italy (hereinafter "Sicor").
Alco Chemicals, Ltd.
a company duly incorporated in Switzerland having its registered address at Alco
Chemicals, Ltd., Via San Salvatore, 7, CH 6902, Lugano, Switzerland (hereinafter
"Alco")
WHEREAS Upjohn is a manufacturer of pharmaceutical chemical intermediates,
including certain steroid intermediates (more particularly described in Schedule
A, hereinafter the "Products"); and
WHEREAS Sicor is a manufacturer that converts steroid intermediates into
finished bulk steroids for sale to pharmaceutical manufacturers in world
markets; and
WHEREAS Alco is a distributor of Sicor products in certain market areas; and
WHEREAS Sicor desires to purchase the Products from Upjohn for manufacture into
finished bulk steroids (finished bulk steroids manufactured from the Products
supplied by Upjohn being hereinafter the "Finished Products"), and otherwise to
purchase from Upjohn all of its requirements of the Products, for marketing,
distribution, and sale of the Finished Products in
-1-
<PAGE>
certain territories of the world (more particularly defined in Schedule B,
hereinafter the "Territory").
NOW THEREFORE, in consideration of the premises and the mutual covenants set
forth in this Agreement, Upjohn and Sicor hereby agree as follows:
I. Distribution
1. Grant of Distribution Rights
----------------------------
1.1 Upjohn hereby grants to Sicor and its designees exclusive rights to
distribute the Finished Products in the Territory upon the terms set forth in
this Agreement. Sicor assumes and accepts such appointment, and agrees that at
all times it will devote its best efforts to the marketing, distribution, and
sale of the Finished Products in the Territory.
1.2 Upjohn intends to market, distribute, and sell the Finished Products (as
manufactured by Upjohn from the Products) in Canada, Korea, China, India,
Taiwan, and the United States to its current customers. Sicor also may market,
distribute, and sell the Finished Products to its customers in these six
countries. Upjohn intends to sell the Product [CONFIDENTIAL TREATMENT
REQUESTED] to its customer in India.
2. Sicor's Obligations as Distributor
----------------------------------
2.1 Not make any representations concerning the Finished Products, or
extend any warranties concerning the use, safety, or effectiveness of
the Finished Products, except as such representations or warranties
may be consistent with the Products' labeling and data sheets.
2.2 Report to Upjohn all complaints or claims with respect to the Products
immediately and cooperate with Upjohn in the processing of such
complaints or claims.
II. Supply
3. Supply
------
3.1 Upjohn shall supply on a timely basis to Sicor all of Sicor's
requirements for the Products which shall be manufactured in
accordance with the specifications set forth in Schedule C. Sicor
shall purchase from Upjohn all of its requirements of the Products.
3.2 Unless otherwise agreed to in writing by Upjohn, Sicor will not export
Products to any third party manufacturer.
-2-
<PAGE>
III. Commercial Terms
4. Price and Terms of Payment
--------------------------
4.1 The prices for the Products shall be as specified by Upjohn in U.S.
dollars and notified to Sicor from time to time. Upjohn shall have
the right to change its prices for the Products upon one hundred
eighty (180) days notice to Sicor.
4.2 Upjohn shall sell the Products to Sicor CIF duty paid destination
unless otherwise agreed by the Parties.
4.3 In the event that Sicor encounters price competition in the Territory
from reputable manufacturers of finished bulk steroids of like
quality, quantity, availability, and other terms equivalent to that of
the Finished Goods, then Upjohn shall review its prices for the
Products and offer Sicor revised prices that enable Sicor to better
compete with such other manufacturers.
4.4 Upjohn shall send Sicor an invoice on the date that the Products
purchased are shipped. Sicor shall pay the invoice within one
hundred twenty (120) days of the date of the invoice. Other terms of
payment shall be established by Upjohn from time to time and
communicated to Sicor.
5. Forecasts and Orders
--------------------
5.1 Upon execution of this Agreement, Sicor shall provide to Upjohn a
forecast of its requirements for the Products by quarter, for the
succeeding twelve months. Thereafter, throughout the term of this
Agreement, on the first day of each calendar quarter, Sicor shall
furnish to Upjohn a revised forecast of its requirements for the
Products, by quarter, for the succeeding twelve (12) month period.
6. Warranties
----------
6.1 Upjohn warrants to Sicor that, in the event any of the Products, at
the time of receipt by Sicor, do not meet the specifications set forth
in Schedule C, Upjohn shall either replace the non-conforming Products
or give Sicor a credit against future purchases for the purchase price
of such non-conforming goods, at Sicor's option.
6.2 EXCEPT AS PROVIDED IN THIS CLAUSE, UPJOHN MAKES NO REPRESENTATION OR
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT THE PRODUCTS,
THEIR
-3-
<PAGE>
MERCHANTABILITY, OR THEIR FITNESS FOR A PARTICULAR PURPOSE.
7. Indemnity
---------
7.1 Upjohn shall indemnify and hold harmless Sicor from and against all
claims or legal proceedings, including legal expenses (other than for
liability which is proved arising out of the negligence or other fault
of Sicor), which may be asserted against Sicor by or on behalf of any
person or entity for personal injury or other damage arising out of or
relating to the failure of the Products to meet the specifications set
forth in Schedule C or a hidden defect in the Products.
7.2 Sicor shall indemnify and hold harmless Upjohn from and against all
claims or legal proceedings, including legal expenses (other than for
liability which is proved arising out of the negligence or other fault
of Upjohn), which may be asserted against Upjohn by or on behalf of
any person or entity for personal injury or other damages arising out
of or relating to the manufacture, distribution, marketing, sale, or
use of the Products or Finished Products.
IV. General Provisions
8. Term and Termination
--------------------
8.1 This Agreement shall become effective on the date first written above
and shall remain in effect for a term of five (5) years. Upon
expiration of the initial term, this Agreement shall be renewed
automatically for additional successive terms of one (1) year provided
that neither party has given the other party notice of intent to
terminate within one hundred eighty (180) days of the end of the
current term.
8.2 This Agreement may be terminated by either party if:
A. The other party commits a breach of any of its obligations under
this Agreement which shall not have been remedied within thirty
(30) days from the party's giving of notice of such breach; or
B. The other party becomes insolvent, makes an assignment for the
benefit of its creditors, or is placed in receivership,
liquidation or bankruptcy.
-4-
<PAGE>
9. Assignment
----------
This Agreement shall not be assigned by either party without the
written consent of the other party.
10. Notices
-------
All notices or other communications which shall or may be given
pursuant to this Agreement shall be effective upon receipt and shall
be in writing and delivered personally or by registered or certified
mail or telefax, addressed as follows:
If to Upjohn: The Upjohn Company
7000 Portage Road
Kalamazoo, Michigan 49001 U.S.A.
Attn: R. V. Costello
Fax: 616/323-5191
with a copy to: N.V. Upjohn S.A.
10 rue de Geneve
1140 Brussels
BELGIUM
Attn: K. D. Schumacher
Fax: 322/727-0558
If to Sicor: Sicor, S.p.A.
Via Terrazzano 77
20017 Rho (Milano)
ITALY
Attn: Dr. G. Palladino
-5-
<PAGE>
If to Alco: Alco Chemicals, Ltd.
Via San Salvatore, 7
CH 6902 Lugano,
SWITZERLAND
Attn: Carlo Salvi
Fax: 91/549777
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in
duplicate by their duly authorized officers or representatives as of the day and
year first written above.
The Upjohn Company Sicor, S.p.A.
By: /s/ R. V. Costello By: /s/ Rolando Santi
------------------------- ----------------------------
R. V. Costello Rolando Santi
Title: Vice President Title: President
Pharmaceutical Commercial
Services
Date: Date:
Alco Chemicals, Ltd.
By: /s/ Carlo Salvi
------------------
Carlo Salvi
Title: Managing Director
Date: 29-7-94
-6-
<PAGE>
Distribution and Supply Agreement
The Upjohn Company - Sicor, S.p.A.
Schedule A
Products
--------
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
Distribution and Supply Agreement
The Upjohn Company - Sicor, S.p.A.
Schedule B
Territory
---------
The Territory shall consist of all countries of the world except:
Canada
China
India
Korea
Taiwan
United States
Existing traditional account relationships will be respected by both parties.
<PAGE>
Distribution and Supply Agreement
The Upjohn Company - Sicor, S.p.A.
Schedule C
Specifications
--------------
[CONFIDENTIAL TREATMENT REQUESTED]
<PAGE>
EXHIBIT 10.4
------------
AGREEMENT
---------
SINTESIS LERMA, S.A. DE C.V., Av. San Rafael no. 35, Parque Industrial Lerma,
- ----------------------------
52000 Lerma, Mexico,
- as one party -
and
ALCO CHEMICALS LTD., Paradiso, Switzerland Branch Office, with company
- -------------------
headquarters in Lugano, [Switzerland] Via S. Salvatore no. 7, hereinafter
referred to as ALCO
- as the other party -
whereas
- - Lerma manufactures chemical products for the pharmaceuticals industry,
hereinafter referred to as Products;
- - ALCO has for some time worked with LERMA for purposes of commercial promotion
of the Products;
- - the Parties intend for this agreement to regulate their relationship in
systematic manner;
- - ALCO has the marketing know-how and resources in general that are necessary
in order to adequately promote sales of the Products;
agree upon and provide the following:
. ROLE AS AGENT
1.1. Lerma confers upon ALCO, and ALCO accepts, the role of exclusive agent,
without representation authority, for ongoing promotion on a worldwide scale,
excluding the clients that reside or carry out their activities in the country
of Mexico (within the borders of same
-1-
<PAGE>
that are internationally recognized at the time this Agreement is adopted), of
sales of the products manufactured by Lerma or by third parties on behalf of
Lerma), which are listed in Appendix 1.
1.2. ALCO, with respect to the Products set forth in Appendix 1, shall have
exclusive rights and obligations as LERMA's agent.
1.3. Lerma may not engage in promotional activities for the Products [either]
directly or by simultaneously availing itself of other parties for the purpose
of promoting sales of the Products; in the event of a violation of the
exclusivity obligation provided herein, in addition to any right provided by
applicable law, ALCO shall also be entitled to the commission referred to in
Article 2.1 hereinafter.
. ALCO'S RIGHTS
2.1. ALCO, with respect to sales obtained for LERMA in its role as Exclusive
Agent, shall be entitled to a commission equal to 4% of the billing for properly
executed transactions or, if the transaction has been executed only in part,
equal to 4% of the executed portion.
No commission shall be due ALCO in the event that the sales solicited and
obtained are carried out at a price below the LERMA-ALCO price list in effect as
of that date, unless the sale at a lower price was authorized by Lerma.
In addition, no commission shall be due ALCO for Lerma sales to the clients
referred to in Clause 1.2.
2.2. ALCO, upon a routine written request from LERMA, shall be required to
provide "del credere", and shall therefore be fully liable vis-a-vis LERMA for
the proper execution of the transaction it has initiated. In that event, ALCO
shall be entitled to a higher commission equal to 1% of the billing.
2.3. At the request of ALCO, LERMA obligates itself to provide to same the
documentation
-2-
<PAGE>
required from registration of the Products in the territories that are covered
by this agreement.
3. ALCO'S OBLIGATIONS
3.1. ALCO obligates itself in accordance with the following:
3.1.1. ALCO must, during the entire term of this agreement, diligently and in
good faith serve and assist LERMA so as to increase LERMA's business, as well as
sales of the Products;
3.1.2 ALCO must refrain from any act that might obstruct or interfere with
promotion of sales of the Products;
3.1.3. ALCO shall be required to provide "del credere" in accordance with the
provisions of Article 2.2. hereinabove;
3.1.4. ALCO must comply with all existing provisions of law and regulations
pertaining to the Products in every country in which it operates for purposes of
promoting sales of the Products;
3.1.5. ALCO must not, throughout the term of this agreement, manufacture or
market, either directly or indirectly, products competing with the Products. On
the other hand, it may unrestrictedly act as agent of companies belonging to the
same group to which Lerma belongs;
3.1.6. ALCO may not imitate, produce, or modify the Products;
3.1.7 ALCO must promote sales of the Products with LERMA's name or trademark,
without in any may marketing them with its own trademark, and without erasing or
covering LERMA's distinguishing marks, including but not limited to notations
that cite possible patents, trademarks, or other intellectual property rights
held by LERMA;
3.1.8. ALCO must transmit to LERMA no later than the end of October of every
calendar year the projected budget for the following calendar year for each of
the Products whose sales
-3-
<PAGE>
ALCO is promoting;
3.1.9. ALCO must transmit to LERMA the purchase orders received with the
greatest possible speed;
3.1.10. ALCO guaranties to LERMA that it will solicit and obtain sales of the
Products with a minimum annual billing of USD 3,000,000.00. Such minimum
billing may be modified by consent of the Parties upon every contractual
expiration, within the meaning of Clause 7.1. hereinafter, with a minimum of
three months advance notice;
3.1.11 ALCO must indemnify LERMA for any damage caused to LERMA by negligent or
in any event untimely performance by ALCO of the obligations assigned to ALCO by
this Agreement or by law.
PROMOTION OF THE PRODUCTS
4.1. ALCO shall reach an agreement with LERMA by the end of October of every
year with respect to the sales promotion program for the Products for the
following calendar year. The agreed upon program may be modified in the light
of market conditions, without prejudice to the obligation for a promotion that
is reasonably sufficient in relation to the budget referred to in Clause 3.1.8
and the guaranteed minimum billing referred to in Clause 3.1.10.
4.2. Unless there is a written agreement to the contrary, all agency expenses
shall be chargeable solely to ALCO.
4.3. ALCO obligates itself to maintain, throughout the term of this Agreement,
staff and organization that is sufficient for promotion of sales of the Products
and, in particular, to maintain a salesperson network of a size that is
sufficient for timely performance of ALCO's obligations under this agreement.
4.4. ALCO shall communicate to LERMA all information regarding the competition,
production trends, and supply and demand trends that have a significant impact
on market
-4-
<PAGE>
conditions, as well as other information regarding the activities covered by
this Agreement that LERMA may reasonably require. LERMA may request that such
information be transmitted on the appropriate standard forms that it may
prepare.
5. INTELLECTUAL PROPERTY RIGHTS
5.1. The patent rights and trade secrets in general as well as trademark rights
are held exclusively by LERMA. ALCO must adopt any agreement with LERMA
(including, but not limited to, licenses), perform any formality or carry out
any action, including protective measures, that are necessary or useful in order
to protect LERMA's rights in the territories where ALCO promotes sales of the
Products.
5.2. ALCO obligates itself to notify LERMA of any unauthorized use of
intellectual property or trademark rights held by LERMA as soon as it should
become aware of same. At LERMA's request, ALCO shall participate in legal
actions and administrative procedures, and shall take any other action that
should be reasonably necessary in order to protect the intellectual and trade
secret rights (including, but not limited to trademarks) in the areas where ALCO
operates.
6. EXCLUSION OF JOINT VENTURES OR PARTNERSHIPS
The agreement contained in this agreement is to be adopted by two companies that
have absolutely no control, ownership, or organizational relationship between
each other or with respect to any other party in common, and it does not entail
the founding of partnership or joint venture and, except where otherwise
expressly agreed in writing, neither of the parties is authorized to act in
representation of the other or to make statements or declarations to third
parties, assume guarantees or sureties on behalf of the other, or in any way
obligate the other party vis-a-vis third parties.
7. EFFECTIVE DATE AND EXPIRATION OF THE AGREEMENT. CANCELLATION
-5-
<PAGE>
CLAUSES. WITHDRAWAL AND TERMINATION.
7.1. The agreement contained in this legal instrument (except in the event of
termination prior to expiration of its term) shall have a term of three years
beginning on October 1, 1996 and ending on September 31, 1999, and shall
thenceforth be considered to be tacitly renewed from one year to another, unless
there is a termination notice to be communicated to the other Party with a
minimum of six months advance notice.
7.2. In addition to the provisions of applicable law, this agreement shall be
canceled de jure in the event of one party's non-performance of any obligation
-------
contained in this Agreement, should the nonperforming party fail to comply with
the obligations required of it within fifteen days following receipt of a
performance demand communicated by the other party.
7.3. The parties are also to be granted the right to cancel in the following
instances:
73.1. Should, due to the lack of and termination of permits, authorizations,
[or] licenses, the other party is unable to start up or continue production or
sales promotion, respectively, with respect to any of the Products;
7.3.2 in any instance [in which] the other party is made subject to an
individual or joint insolvency proceedings, or in any instance in which it
should cease operating for more than thirty consecutive days (with the exception
of summer vacations);
7.3.3. in any instance in which the other party is unable or should become
incapable of performing the obligations provided by this agreement;
7.4. Lerma shall also be granted the right to cancel in the event that control
of Alco should pass through the current stockholders to other parties that
Lerma, at its sole discretion, should consider unsuitable.
8. EFFECTS OF TERMINATION OF THE AGREEMENT
In any instance of termination of this Agreement:
-6-
<PAGE>
8.1. ALCO must return all material of any type in its possession or subject to
its control, that pertains to the Products or to LERMA (except administrative
correspondence between the Parties);
8.2. ALCO shall lose all rights to utilize the patent or trademark rights
possibly granted in implementation of this Agreement and in particular it shall
cease to utilize the LERMA trademark on letterhead stationary or any other
material;
8.3. ALCO, upon a routine request by LERMA, must transmit to LERMA complete
lists containing the background data and addresses of clients interested in the
products;
8.4. ALCO must transfer to Lerma's bane, and waive the right to make future use
of, any permit, authorization, or license possibly issued to ALCO by competent
authorities in specific reference to marketing of the Products;
8.5. ALCO shall not be entitled to any type of indemnification, with the
exception of mandatory indemnification or compensation possibly provided by
applicable law regarding the agency relationship.
9. CONFIDENTIALITY OBLIGATION
9.1. ALCO must keep strictly confidential, not disclose to third parties, and
utilize solely for the purpose of performing this Agreement, all information
regarding the Products, whether technical or commercial, as well as information
regarding Lerma, whether such information is communicated by Lerma or is in any
way obtained by ALCO for the purposes and effects of this Agreement.
9.2. The confidentiality obligation set forth in Article 9.1 hereinabove does
not pertain to information of those portions of information:
9.2.1. that is in the public domain, unless it becomes so due to actions
attributable to ALCO or to a person for which the latter is liable;
-7-
<PAGE>
9.2.2. that should become known to and registered by ALCO prior to its
disclosure by LERMA;
9.2.3. that should be disclosed to ALCO by a source other than LERMA without
any violation of the confidentiality obligation on the part of ALCO;
9.2.4. That is independently developed by ALCO without having in any way made
use of the information received for the purposes and effects of this agreement;
10. NON-ASSIGNABILITY OF RIGHTS
The rights and obligations generated by this Agreement are specific to the
Parties and may not be assigned without the prior written consent of the other
Party. Neither of the parties may transfer or assign to third parties all or
part of the rights and obligations set froth in this agreement, with the
exception of ALCO's right to discount at financial institutions accrued accounts
receivable for commissions.
11. MISCELLANEOUS PROVISIONS
11.1. This Agreement lists and contains all existing agreements between the
Parties in reference to the products and, as of October 1, 1996, [and]
retroactively cancels and supersedes for all purposes and effects all
agreements, declarations, commitments, whether written or oral, adopted or made
by the parties at any time, of any nature, wherever they may be contained, which
pertain to the matters governed by this Agreement, with the exception of the
agreement concerning the Sales Franchise referred to in the preamble.
11.2. The rights of the Parties provided in this Agreement are not understood
to be in any way waived or restricted in the event that one of the Parties
should tolerate instances of non-performance by the other, and no refusal to
assert a right resulting from any instance of non-performance by the other party
may be interpreted as a waiver with respect to subsequent or repeated instances
of non-performance.
-8-
<PAGE>
11.3. Amendments, supersessions, and cancellations of this Agreement or
individual clauses of same are required to be in writing.
11.4 Should one of the clauses in this Agreement be ruled invalid, such clause
shall be deemed void and all the other clauses of this Agreement shall remain
valid and in effect, with the exception of the obligation of the Parties to
negotiate in good faith a clause to supersede the clause that was ruled invalid,
that can satisfy the legitimate interests of both parties.
12. APPLICABLE LAW AND ARBITRATION CLAUSE
12.1. The law applicable to this Agreement is Swiss law.
12.2. Disputes that should arise between the parties regarding the
interpretation, implementation, and cancellation of this agreement shall be
referred for a decision by an arbitration board in accordance with the
regulations and procedure of the International Chamber of Commerce (ICC), the
first two arbiters shall be appointed by the parties, and the third arbiter
shall be appointed by agreement of the other two or, failing that, by the
International Chamber of Commerce, Paris headquarters.
The arbitration shall take place in Paris and shall be carried out in the
English language.
13. NOTICES AND COMMUNICATIONS
13.1. Any notice provided for in this Agreement must be sent via registered
letter with return receipt to the following addresses:
- - to Lerma at Av. San Rafael No. 35, Parque Industrial Lerma, 52000 Lerma,
Mexico.
- - to Alco at Via S. Salvatore, 7 Lugano Paradiso.
13.2. Or at whatever other address for communications the other Party has
provided in accordance with Article 13.1 above.
Attached as Exhibit 1 is the product list of Lerma.
Lugano, September 26, 1996
Lerma
/s/ Gianni Morisoli
Alco Ltd.
/s/ Carlo Salvi
-9-
<PAGE>
[LOGO of Sintesis Lerma] SINTESIS
LERMA
PRODUCT LIST
ACTUAL PRODUCTS
- --------------------------------------------------------------------------------
NAME OF PRODUCT PHARMACOPOEIA
MEDROXYPROGESTERONE ACETATE USP 23 - BP'93 - EUR P II
MEGESTROL ACETATE USP 23 - BP'93
CYPROTERONE ACETATE IT P IX - JSPI'91
DEFLAZACORT
ALCLOMETHASONE DIPROPIONATE USP 23
BECLOMETHASONE DIPROPIONATE
MONOHYDRATE
CHLORMADINONE ACETATE BP'68 - JAP P XII - USNF XIII - Fr P X
DESONIDE
ANTICANCERS
- --------------------------------------------------------------------------------
NAME OF PRODUCT PHARMACOPOEIA
CISPLATIN USP 23 - BP'93 - EUR P II
CARBOPLATIN USP 23
MITOXANTRONE HYDROCHLORIDE USP 23
- --------------------------------------------------------------------------------
LERMA MAKES NO REPRESENTATIONS ABOUT PATENT COVERAGE OUTSIDE MEXICO
FOR ANY OF THE PRODUCTS LISTED ABOVE
-10-
<PAGE>
EXHIBIT 10.5
------------
[CERTAIN INFORMATION HAS BEEN OMITTED HEREIN PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE COMMISSION]
Agreement
---------
Between
SICOR S.p.A, with its registered office in Milan, Via Senato, 19, tax number
- -----------
IT06827530152 (hereinafter "Sicor"),
on the one side,
and
ALCO CHEMICALS Ltd., Swiss branch, with its registered office in Lugano
- -------------------
(Switzerland), Via S. Salvatore, 7 (hereinafter "Alco"),
on the other side.
Premises
- - Whereas Sicor manufactures chemical products for the pharmaceutical industry
(hereinafter "Products");
- - Whereas Alco has collaborated with Sicor for the marketing of the Products;
- - Whereas the Parties intend for this Agreement to govern their relationship;
- - Whereas Alco has the commercial know-how and the means necessary to
adequately carry out the promotion and sale of the Products;
- - Whereas there existed a prior commercial relationship ("concessione di
--------------
vendita") between the Parties, the nature of which is not to be considered an
- -------
agency relationship ("rapporto di agenzia").
-------------------
In light of the above, the Parties hereby agree to the following:
1. APPOINTMENT AS AGENT
1.1 Sicor grants to Alco, which accepts, the appointment as agent without
representation powers and without exclusivity (Non-exclusive Agent) for the
worldwide sale, excluding customers that reside in or carry out their activity
in the countries listed in Appendix 1 (the borders shall be those in existence
----------
at the signing of this Agreement), of the Products listed in Appendix 2.
----------
1.2 Sicor reserves the right to exclude from this appointment the promotion and
sale of products listed in Appendix 2 with respect to certain customers with
----------
whom Sicor has a direct sales relationship and that, in total, do not represent
more than 10% of Sicor's annual sales revenue. For 1994, said customers are
-1-
<PAGE>
listed in Appendix 3. For subsequent years, Sicor shall notify Alco of the
----------
names of said customers on or before October 30th of each calendar year, for the
following year.
1.3 Alco, with reference to the Products listed in Appendix 2, shall be the
----------
exclusive agent with reference to customers located in or that carry out their
principle activity in the following countries: Japan, Korea, Taiwan (the borders
shall be those in existence at the signing of this Agreement).
1.4 Excluding the countries set forth in Article 1.3, for the purposes of this
Agreement (not applicable to the territories set forth in Appendix 1 and with
----------
respect to the customers set forth in Article 1.2), Sicor may promote the sale
of the Products directly or by means of third parties, notwithstanding Article
2.3.
2. RIGHTS OF ALCO
2.1 On the sales made on behalf of Sicor, Alco (whether as Exclusive Agent
pursuant to Article 1.3 or Non-exclusive Agent pursuant to Article 1.1.) shall
have the right to a commission of 5% on the annual sales revenue for properly
executed transactions or part thereof in the event the transaction has only been
partially executed.
No commission shall be owed to Alco in the event the sales are effectuated
at a price lower than that indicated on the Sicor-Alco price agreement in effect
at the time of sale.
Moreover, no commission shall be owed to Alco for any sales by Sicor to
customers set forth in Article 1.2.
2.2 Alco, upon the simple written request of Sicor, shall be subject to a "star
----
del credere" and thus shall respond to Sicor with the proper execution of the
- -----------
matter. In such case, Alco shall have the right to a higher commission equal to
1% of the annual sales revenue.
2.3 On sales made by other agents on behalf of Sicor pursuant to Article 1.4 or
on sales made directly by Sicor, Alco, notwithstanding Article 1.2, shall have
the right to a commission equal to the positive difference, if any, between any
commissions owed by Sicor to other agents or intermediaries and 5% of annual
sales revenue for the duly executed transactions or part thereof in the event
the transaction has only been partially executed.
Thus for example, if for a given transaction a commission of 3% is owed to a
third party agent, Sicor shall owe a commission of 2% to Alco. However, if a
commission of 5% is owed to a third party agent, Sicor shall owe no commission
to Alco.
2.4 No commission shall be owed to Alco for sales made directly by Alco in its
capacity as a sales agent.
-2-
<PAGE>
2.5 Upon the request of Alco, Sicor undertakes to supply any requested
documents for the Products in the territories subject to this Agreement.
3. THE RESPONSIBILITIES OF ALCO
3.1 Alco undertakes the following:
3.1.1 Alco shall, for the duration of this Agreement, perform its duties
diligently and in good faith in order to increase sales of the Products.
3.1.2 Alco shall not take actions that would interfere or obstruct the sale of
the Products.
3.1.3 Alco shall be bound by the "star credere" in accordance with Article 2.2.
of this Agreement.
3.1.4 Alco shall observe all existing laws and regulations in all countries in
relation to the Products.
3.1.5 Alco shall not, for the duration of this Agreement, make or market
(whether directly or indirectly) any competing products.
3.1.6 Alco shall not imitate, produce or amend the Products.
3.1.7 Alco shall promote the sale of the Products using only the name and
trademark of Sicor. Alco shall not cancel or cover distinctive signs, including
but not limited to signs relative to any patents, trademarks or other
intellectual property owned by Sicor.
3.1.8 Alco shall notify Sicor no later than the end of October of each calendar
year, of the budget to be implemented for the following calendar year for each
of the Products.
3.1.9 Alco shall promptly transmit to Sicor the purchase orders it receives.
3.1.10 Alco guarantees that it will transmit sales orders of at least
$20,000,000.00 per year to Sicor. Said minimum may be modified by the
Parties at the end of each contractual period (as defined by Article 7.1),
by giving at least three (3) months notice.
3.1.11 Alco shall indemnify Sicor for any damages suffered due to negligence or
breach of obligations set forth in this Agreement or by Italian law.
[4.] PROMOTION OF PRODUCTS
4.1 Alco shall define with Sicor on or before the end of October of each year,
the promotion plan for the sale of the
-3-
<PAGE>
Products to be implemented the following calendar year. Said plan may be
modified on the basis of market conditions subject to the obligation of a
reasonably sufficient promotion in relation to the budget (Article 3.1.8 ) and
the minimum guaranteed sales revenue (Article 3.1.10).
4.2 All publicity and promotional activities of the Products must be pre-
approved by Sicor.
4.3 As otherwise agreed in writing, Alco shall be exclusively responsible for
the expenses of the agency relationship.
4.4 Alco undertakes to maintain, for the duration of this Agreement, sufficient
personnel and organization for the sale of the Products and in particular, to
maintain a sales network sufficient to perform its responsibilities on a timely
basis.
4.5 Alco shall provide Sicor with all information relating to the competitors,
manufacturing improvements and trends in offers and requests that impact the
market conditions. Alco shall also provide all other information relative to
this Agreement that Sicor may reasonably request.
5. PATENT RIGHTS
5.1 Sicor maintains exclusive ownership of industrial trademark and patent
rights in general, as well as the rights to brand-names. Alco shall enter into
all agreements with Sicor (including but not limited to licensing for use),
carry out all formalities and take all necessary or useful actions to safeguard
the Sicor's rights in the territory where Alco promotes the sale of the
Products.
5.2 Alco shall inform Sicor of all unauthorized uses of Sicor's trademark or
patent rights of which it becomes aware. Upon Sicor's request, Alco will
participate in suits, administrative proceedings and whatever else might be
reasonably necessary to protect Sicor's intellectual property rights (including
but not limited to trademarks) in the territory where Alco carries out its
activities.
6. EXCLUSION OF JOINT-VENTURE OR PARTNERSHIP
This Agreement is to be concluded between two companies without a dependent
relationship or some other subject in common and does not constitute an
association, partnership or joint-venture and, except where expressly agreed in
writing otherwise, neither of the Parties is authorized to act as the agent of
the other, make declarations to third parties, assume guarantees for the other's
account or in any way obligate the other to a third party.
-4-
<PAGE>
7. COMMENCEMENT AND TERMINATION OF THE AGREEMENT. TERMINATION CLAUSES.
WITHDRAWAL
7.1 This Agreement (except for any anticipated termination) will have a
duration of three (3) years, beginning January 1, 1994 and ending December 31,
1996, at which time it is understood that the Agreement will be automatically
renewed annually, unless a Party has given at least six (c) months notice of its
intention to terminate the Agreement.
7.2 In addition to those anticipated by the applicable law, Sicor can make use
of the following express termination clauses:
7.2.1 in the case of a breach by Alco of any of its obligations contained in
this Agreement (except as provided in Article 7.2.2), when Alco fails to meet
its obligations and within fifteen (15) days of Alco's receipt of a notice of
breach from Sicor;
7.2.2 whenever Alco, without the express written consent of Sicor, tries to
transfer or sell to a third party all or part of its rights and obligations
under this Agreement, or to assign a third party as sub-agent.
7.3 Moreover, Sicor can withdraw from the Agreement in the following cases:
7.3.1 whenever, as the result of the lack or cancellation of permits,
authorizations or licenses, Alco is not able to begin or to continue sales
promotion of some of the Products in some of its exclusive territory or in some
other territory where Alco, as an agent, undertakes activity related to the
Products;
7.3.2 whenever Alco is subject to proceedings executed individually or jointly,
or whenever operations are ceased for more than thirty (30) consecutive days
(except for the summer holidays);
7.3.3 whenever it is impossible or Alco is unable, to perform its obligations
under this Agreement;
7.3.4 whenever control of Alco passes to shareholders or others whom Sicor,
upon its sole evaluation, finds to be unsuitable;
8. THE EFFECTS OF TERMINATION OF THIS AGREEMENT
In any termination of this Agreement:
8.1 Alco shall return all materials of whatever nature in its possession or
control relative to the Products or to Sicor (except ordinary technical
correspondence between the Parties).
8.2 Alco shall lose all rights to the use of patents and trademarks possibly
granted in accordance with this Agreement and
-5-
<PAGE>
in particular, will stop using the name Sicor on its letterhead and on any other
material.
8.3 Alco, upon the simple request of Sicor, shall give to Sicor a complete list
containing the personal data and addresses of clients interested in the
Products.
8.4 Alco shall transfer to Sicor, renouncing any future use, all permits,
authorizations and licenses possibly granted to Alco by the competent
authorities with specific reference to the marketing of the Products.
8.5 Alco shall not have the right to any form of indemnity, except that
possibly made compulsory by the law concerning agency relationships.
9. OBLIGATIONS OF CONFIDENTIALITY
9.1 Alco shall rigorously maintain confidentiality. It shall not divulge to
third parties nor use itself, any information learned during the performance of
this Agreement relating to the Products, including techniques marketed, as well
as any information regarding Sicor - information communicated by Sicor or
obtained by Alco through any other means in order to effectuate this Agreement.
9.2 The confidentiality obligation referred to in Article 9.1 above, does not
include the information, or part thereof:
9.2.1 that is within the public domain, except that which has been made public
as a result of actions by Alco or by a person who answers to Alco;
9.2.2 that is made known and registered by Alco before communication on the
part of Sicor;
9.2.3 that is communicated to Alco by a source other than Sicor without some
violation of Alco's confidentiality obligation;
9.2.4 that is independently developed by Alco without having in any way
utilized the information received as a result of this Agreement.
10. NON-TRANSFERABILITY OF RIGHTS
The rights and obligations derived from this Agreement are personal to the
Parties and may not be transferred without the express written consent of the
other Party. Neither Party may transfer or sell to third parties all or part of
their rights and obligations under this Agreement. This excludes Alco's power
to discount matured credits with financial institutions for commissions.
-6-
<PAGE>
11. MISCELLANEOUS PROVISIONS
11.1 This Contract states and contains all the agreements in existence between
the Parties in reference to the Products and will be dated January 1, 1994. It
rescinds with a retroactive effect and substitutes all effects for, preceding
agreements, declarations and pledges between the Parties, whether written or
oral, made at any time, of any nature and content, concerning the subject
regulated by the present Agreement, except for the contract concerning the
agency arrangement ("la Concessione di Vendita," discussed in the premises.
11.2 The rights of the Parties provided for in this Agreement are not intended
to be in any way waived or limited in case of the tolerance by one of Parties
for the breach of the other. Similarly, a waiver of the enforcement of ones
rights following a breach shall not be considered a waiver with respect to
subsequent or repeated breaches.
11.3 Any modification, substitution or termination of this Agreement, in whole
or in part, must be in writing.
11.4 Any clauses of this Agreement that are found to be invalid or ineffective,
shall be stricken while all the other clauses remain valid and effective. Both
Parties are obliged to negotiate in good faith for a substitute for the invalid
or ineffective clause that can satisfy the legitimate interests of both Parties.
12. APPLICABLE LAW AND ARBITRATION CLAUSE
12.1 Italian law governs this Agreement.
12.2 Any controversies that might arise between the Parties concerning the
interpretation, execution or termination of this Agreement shall be settled by
an arbitration panel pursuant to the Italian Code of Civil Procedure. The panel
shall be composed of three (3) arbitrators, the first two (2) to be nominated by
the Parties and the third to be agreed upon by the first two or, in default, by
the President of the Court of Milan.
The applicable procedures shall be those established for international
arbitration pursuant to article 832 of the Italian Code of Civil Procedure, as
provided for by articles 816 to 831 of the Italian Code of Civil Procedure in so
far as they do not deviate from the norms of international arbitration.
The arbitration shall take place in Milan.
13. COMMUNICATIONS
13.1 Any communications made necessary by this Agreement shall be sent by
registered mail, return receipt requested, to the following addresses:
-7-
<PAGE>
- to Sicor at Via Senato, 19, Milan
- to Alco at Via S. Salvatore, 7, Lugano Paradiso
13.2 Or at whatever other address for communications the other Party has
provided in accordance with Article 13.1 above.
Lugano, January 1, 1994
signed by Sicor /s/ Gaetano Palladino
----------------------
Alco /s/Carlo Salvi
----------------------
-8-
<PAGE>
APPENDIX 1
- ----------
EXCLUDED COUNTRIES
------------------
ITALY
-9-
<PAGE>
APPENDIX 2
- ----------
PRODUCT LIST
------------
CORTICOSTEROIDS
AMCINONIDE
BECLOMETHASONE DIPROPIONATE
BETAMETHASONE
BETAMETHASONE ACETATE
BETAMETHASONE BENZOATE
BETAMETHASONE DIPROPIONATE
BETAMETHASONE SODIUM PHOSPHATE
BETAMETHASONE VALERATE
CLOBETASOL PROPIONATE
CLOBETASONE BUTYRATE
DEFLAZACORT
DESONIDE
DESONIDE PIVALATE
DESONIDE SODIUM PHOSPHATE
DESOXIMETHASONE
DEXAMETHASONE
DEXAMETHASONE ACETATE
DEXAMETHASONE DIPROPIONATE
DEXAMETHASONE ISONICOTINATE
DEXAMETHASONE PIVALATE
DEXAMETHASONE SODIM PHOSPHATE
DEXAMETHASONE VALERATE
DIFLORASONE DIACETATE
DIFLUCORTOLONE VALERATE
FLUMETHASONE
FLUMETHASONE PIVALATE
FLUNISOLIDE ANHYDROUS
FLUOCINOLONE ACETONIDE
FLUOCINONIDE
FLUOROMETHOLONE
FLURANDRENOLIDE
HALCINONIDE
HYDROCORTISONE BUTYRATE
HYDROCORTISONE HEMISUCCINATE
HYDROCORTISONE SODIUM SUCCINATE BUFFERED
METHYLPREDNISOLONE
METHYLPREDNISOLONE ACETATE
METHYLPREDNISOLONE HEMISUCCINATE
METHYLPREDNISOLONE SODIUM SUCCINATE
METHYLPREDNISOLONE SODIUM SUCCINATE BUFFERED
PREDNISOLONE VALERATE ACETATE
TRIAMCINOLONE
TRIAMCINOLONE ACETONIDE
TRIAMCINOLONE DIACETATE
-10-
<PAGE>
TRIAMCINOLONE HEXACETONIDE
ANTIBIOTICS
BLEOMYCIN SULFATE
DAUNORUBICIN HYDROCHLORIDE
MITOMYCIN
HORMONES
CHLORMADINONE ACETATE
MEDROGESTONE
MEDROXYPROGESTERONE ACETATE
MEGESTROL ACETATE
OTHER PRODUCTS
PANCURONIUM BROMIDE
VECURONIUM BROMIDE
PIPECURONIUM BROMIDE
ATRACURIUM BESYLATE
MEPITIOSTANE
-11-
<PAGE>
APPENDIX 3
- ----------
EXCLUDED CLIENTS
----------------
[CONFIDENTIAL TREATMENT REQUESTED]
-12-
<PAGE>
[Sicor S.p.A. Logo]
ALCO CHEMICALS LTD.
SWISS BRANCH
Via San Salvatore
06902 Lugano
January 2, 1996
MODIFICATION OF AGENCY AGREEMENT
- --------------------------------
In regard to our agency agreement currently in force, signed on January 1,
1994, following up on the agreements made, I advise you that, effective January
1, 1996:
(i) your commission set forth in Article 2.3 of the agency agreement is
reduced from 5% to 3.5% and
(ii) the increase in commission for possible "del credere" guarantees, set
forth in Article 2.2 of the agreement, is reduced from 1% to 0.75%.
All the remaining provisions remain in effect and are confirmed.
We ask that you show your acceptance by sending a letter transcribing the
present terms and signed by you.
With best regards,
Sicor SpA
/s/ Dr. Gaetano Palladino
-13-
<PAGE>
ALCO CHEMICALS LTD. [Logo] Swiss branch
FINE CHEMICALS AND PHARMACEUTICALS
SICOR SOCIETA ITALIANA
CORTICOSTEROIDI SPA
Via Terrazano 7
I-20017 RHO (MI)
Lugano, January 15, 1996
AMENDMENT TO AGENCY AGREEMENT
- -----------------------------
Dear Sirs:
We are in receipt of your letter of January 9, 1996 containing the following
text:
"In regard to our agency agreement currently in force, signed on January 1,
1994, following up on the agreements made, I advise you that, effective January
1, 1996:
(i) your commission set forth in Article 2.3 of the agency agreement is
reduced from 5% to 3.5% and
(ii) the increase in commission for possible "del credere" guarantees, set
forth in Article 2.2 of the agreement, is reduced from 1% to 0.75%.
All the remaining provisions remain in effect and are confirmed."
We confirm for you our approval of the foregoing and send you our most
cordial regards.
ALCO CHEMICALS LTD
/s/ Carlo Salvi
-14-
<PAGE>
EXHIBIT 10.6
------------
Agreement
Between
Sicor S.p.A., having its registered office at Via Senato no. 19, Milan, Italy,
C.F. and P.I. IT06827530152, hereinafter called SICOR,
Party of the first part,
and
Alco Chemicals Ltd Swiss France, having its registered office at Via S.
Salvatore, 7, Lugano, [Switzerland], hereinafter called ALCO,
Party of the second part,
Recital
Whereas in effect there exists between the Parties an agency contract
(hereinafter called "the Contract"), executed on 1/1/94 and subsequently amended
as regards the extent of its provisions by exchange of letters dated 1/2/96 and
1/15/96; and
Whereas several other sales license agreements have been stipulated between the
Parties, for the Cyproterone and Ifosfamide products among others;
Now therefor the Parties stipulate and covenant the following, to wit:
1. The Parties reciprocally acknowledge that the reduction of the
provisions (to 3.5%) mentioned in the exchange of letters dated 1/2/96
and 1/15/96 referred also to the provision of Article 2.1 of the
Contract and that the missing mention of such provision under
paragraph (1) of the cited letter resulted merely from a material
error.
-1-
<PAGE>
2. The Parties acknowledge to one another that:
(i) by mutual agreement of the Parties, the sales licensing agreement
relating to the Ifosfamide product has not in fact ever been
implemented by the Parties;
(ii) by mutual agreement of the Parties, the sales licensing agreement
relating to the Cyproterone product has not in fact been
implemented by the Parties since 1/1/1995;
In consequence, the Parties mutually agree, insofar as what might occur in
future, to retroactively terminate such agreements as of the dates indicated
below:
(i) with respect to the Ifosfamide product, from the date of signing
same;
(ii) with respect to the Cyproterone product, from 1/1/1995;
and reciprocally state to one another that, with respect to these
agreements, they have no claim whatsoever to anything and, to the
extent of what might occur in future, waive all claims that might
possibly derive from the terms and stipulations so terminated,
including, but not limited to, the provisions regarding the
conditions for giving notice with a view to termination of the
contracts.
-2-
<PAGE>
3. The Parties covenant that, from 1/1/97, the provisions referred to in
articles 2.1 and 2.3 of the Contract shall be equal to 4%.
4. The rights and obligations accruing from the present Agreement are
personal to the Parties and non transferable without prior written
agreement from the other Party. Neither Party may transfer or assign
to any third party any part or all of the rights and obligations
mentioned in this Agreement, except that ALCO shall have the option to
discount to financial institutions drafts which have matured according
to the provisions [of this Agreement].
5. The rights of the Parties provided for in this Agreement shall not in
any way be interpreted as waived or limited in the event of tolerance
by one Party of a failure by the other Party to perform hereunder and
no waiver by one Party of its rights subsequent to a failure by the
other Party to fulfil its obligations may be interpreted as a waiver
with respect to subsequent and repeated failures to perform.
6. Any change, amendment or termination of this Agreement or a single
provision of this Agreement must be in writing.
7. Whenever a provision of this Agreement shall become invalid or
ineffective, such provision shall be declared null and void but all
the other provisions shall remain valid and enforceable, except the
obligation of the Parties to negotiate in good faith a substitute
provision to that declared invalid or ineffective which might satisfy
the legitimate interests of both Parties.
-3-
<PAGE>
8. The law applicable to this Agreement shall be Italian law.
Any dispute between the Parties which might arise from the
interpretation, implementation or termination of this Agreement shall
be referred to the decision of a three-person arbitration panel
appointed to proceed and decide according to the Italian Code of Civil
Procedure.
The international arbitration procedure so established, in conformity
with sections 812 et seq. of the Code of Civil Procedure shall be the
regular procedure by right pursuant to the provisions of sections 816
through 831 of the Code of Civil Procedure.
The arbitration shall take place in Milan.
9. All communications whatsoever provided for in this Agreement or in the
Contract must be sent by registered letter with return receipt
requested to the following addresses:
- as regards SICOR: Via Terrazzano, no. 77, 20017 Rho (Milan)
- as regards ALCO: Via S. Salvatore, 7, Lugano Paradiso,
Switzerland,
or to any other address communicated to the other Party in conformity with
the preceding section 13.1.
Lugano, September 30, 1996
SICOR S.p.A.
/s/ Rolando Santi Zoppi
- -------------------------------------
ALCO CHEMICALS LTD
/s/ Carlo Salvo
- -------------------------------------
-4-
<PAGE>
EXHIBIT 10.7
------------
[CERTAIN INFORMATION HAS BEEN OMITTED HEREIN PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE REDACTED MATERIAL
HAS BEEN SEPARATELY FILED WITH THE COMMISSION]
AGREEMENT
---------
Between HORSE VITALITY S.A., whose corporate headquarters is located at 23, Rue
-------------------
Beaumont L. 1217, Luxembourg, represented by its President and legal
representative, Dr. Oreste Severgnini, hereinafter referred to as the "Company";
SICOR SOCIETA ITALIANA CORTICOSTEROIDI S.P.A., whose corporate headquarters are
- ---------------------------------------------
located in Milan, Via Senato no. 19, represented by its President and legal
representative, Dr. Rolando Santi Zoppi, hereinafter referred to as "Sicor";
whereas
. The Company is a licensee for:
a. The rights covered by industrial patent application no. MI 93 A 000118,
filed on January 26, 1993 and the subsequent supplement, file no. MI V 1587/93,
filed on June 21, 1993 (hereinafter referred to as the "patent") and the
pertinent applications for extensions, whose subject is "pharmaceutical and/or
dermo-cosmetological and cosmetic compounds containing horse colostrum
[foremilk] and milk" (hereinafter referred to as the "patented compounds")
b. The rights covered by industrial patent application no. MI 93 A 001417,
filed on July 1, 1993 (hereinafter referred to as the "second patent") and the
subject of which is "pharmaceutical and/or dermo-cosmetological and cosmetic
compounds containing horse colostrum [foremilk] and milk" (hereinafter referred
to as the "patented compounds");
c. The rights covered by business trademark registration application no. MI 93
C 004836, filed on June 30, 1993 and the pertinent extension applications, whose
subject is the trademark (hereinafter referred to as the "registered trademark")
used to identify and
-1-
<PAGE>
distinguish products containing any of the "patented compounds" or the "other
patented compounds";
B. That it is the Company's intention to implement the "patent" and the "second
patent", through the production and marketing of pharmaceutical, cosmetic, and
dermo-cosmetological preparations (hereinafter referred to as the "products";
C. The Company does not, however, have the facilities and the organization
required for that indicated in subsection B hereinabove;
D. It is the intention of Sicor to utilize the patent rights indicated in
subsection A hereinabove (hereinafter referred to as the "patent rights"),
including by sublicensing them to third parties;
the following is agreed upon and provided
ARTICLE 1
The Company grants Sicor the exclusive right to employ and utilize the "patent
rights" on an exclusive basis, both for production and marketing of the
"products", with the right to sublicense to third parties (hereinafter referred
to as the "License").
ARTICLE 2
The "License" covers all countries in the world and shall have the following
term:
a. With respect to the "patent", the "second patent", and possible additional
patents, for their entire period of validity;
b. With respect to the "registered trademark", for a period of ten years
following the expiration of the last of the patents indicated in subsection a
hereinabove.
-2-
<PAGE>
ARTICLE 3
For granting the "License", Sicor shall pay the Company an amount equal to:
a. [CONFIDENTIAL TREATMENT REQUESTED] of the total amount billed by Sicor for
sales of the "products", net after value added tax, commissions, returns,
rebates, and discounts;
b. [CONFIDENTIAL TREATMENT REQUESTED] of the total amount billed by Sicor as
the consideration for granting a sublicense for the "patent rights".
For each year, the royalties indicated above shall be paid on a quarterly basis.
Same shall be calculated by taking as a basis of reference the amounts billed
each calendar month, beginning at the end of the month in which the "products"
are first placed on sale, or the first granting of a sublicense for the "patent
rights". The pertinent payment shall be accompanied by a statement of all the
data necessary for determining the total amount of the consideration due, and
shall be [sic] 180 days following the end of every pertinent calendar quarter.
ARTICLE 4
Sicor expressly obligates itself to utilize and to have its assigns utilize the
"registered trademark" solely and exclusively to identify and distinguish the
"products".
ARTICLE 5
The parties reciprocally acknowledge the legal status of each of them, which is
that they are independent and autonomous business entrepreneurs.
-3-
<PAGE>
ARTICLE 6
The Company obligates itself to carry out all the activities necessary to avoid
the lapsing of, or in any event to maintain the validity and effectiveness and
term of the "patent rights", and to assume responsibility for the payment of any
tax, fee, or assessment in general which is required for such purpose, according
to provisions of law and regulations currently in force, and by those that shall
enter into effect after the adoption of this agreement.
ARTICLE 7
This contract and the obligations created by same are and shall remain governed
by Italian law.
Any agreement amending the provisions contained in this agreement must be
adopted in written under penalty of invalidity.
The notifications provided for by this agreement must be addressed to the
parties at the following addresses:
- - with respect to the Company: to Horse Vitality S.A. - 23, Rue Beaumont L 1217
- -Luxembourg;
- - with respect to Sicor: to SICOR Societa Italiana Corticosteroidi S.p.A. - Via
Terrazano no. 77, Rho, with the exception of possible changes communicated in
writing to the other party by the company interested in the change.
-4-
<PAGE>
ARTICLE 8
Any dispute in any way pertaining to the validity, interpretation, and
implementation of this agreement shall be referred to a board of arbitration
made up of three members.
The arbiters shall be appointed, with respect to the first two, one by each of
the parties, and the third by agreement between the first two or, failing an
agreement, by the Chief Judge of the Milan Court.
The arbitration shall take place in Milan.
The arbiters shall render a decision according to law and according to the
provisions of and in the terms provided by the Italian Code of Civil Procedure,
applying Italian law.
The [arbitration] award shall be filed and may be made enforceable according to
the provisions of the Italian Code of Civil Procedure.
The validity, implementation, and interpretation of this arbitration clause is
and shall remain governed by Italian law.
Milan, July 1, 1996
HORSE VITALITY S.A.
/s/ Authorized Officer
----------------------
SICOR
/s/ Gaetano Palladino
---------------------
-5-
<PAGE>
EXHIBIT 10.8
------------
DISTRIBUTION AGREEMENT
----------------------
Between
SICOR S.p.A, with its registered office in Milan, Via Senato, 19, tax number
- -----------
IT06827530152 (hereinafter "Sicor"),
on the one side,
and
ALCO CHEMICALS Ltd., with its registered office in Lugano (Switzerland), Via S.
- -------------------
Salvatore, 7 (hereinafter "Alco"),
on the other side.
Premises
--------
Whereas Sicor manufactures the chemical product BUDESONIDE for the
pharmaceutical industry;
Whereas the Parties have a commercial relationship relating to the
Alco's right to the exclusive distribution of the Products;
Whereas Alco possesses the know-how and the means necessary to
adequately marketing of Sicor's products;
Whereas Alco also supplies to Sicor its technological know-how in
relation to the production process of some products, in continuing technology;
Whereas the Parties intend for this Agreement to govern their
relationship;
Whereas the Parties also have an independent Agency relationship
regarding other Sicor products;
In light of the above, the Parties hereby agree to the following:
1. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR.
1.1 Sicor grants to Alco, which accepts, the appointment as exclusive seller of
the Product worldwide with the exception of India, Korea and Italy.
1.2 Alco guarantees to purchase a minimum annual quantity equal to 60 kg of the
Product that is the subject of this exclusive sale agreement, at the price of
$15 per gram. For the
-1-
<PAGE>
determination of said annual minimum quantity the calendar year shall be
considered as starting from January 1, 1995.
1.3 Said minimum annual quantity can be freely and at any time re-determined by
Sicor provided they give notice three (3) before the next calendar year.
1.4 If Alco fails to reach the guaranteed sales volume, it shall notify Sicor
of the difference between the sales revenue realized and the guaranteed sales
within 30 days of the end of that calendar year.
2. ALCO'S OBLIGATIONS.
2.1 Alco, as an exclusive distributor, undertakes the following:
2.1.1 Alco shall, in the territory, reach the guaranteed minimum sales of the
Product in accordance with Article 1.2 of this Agreement. Moreover, Alco shall
diligently seek to increase sales of the Product in the territory.
2.1.2 Alco shall not take actions that would interfere or obstruct the sale of
the Products.
2.1.3 Alco shall observe all existing laws and regulations in relation to the
sale of the Product.
2.1.4 Alco shall transport, clear through customs and keep the Product in such
a way as to prevent deterioration and shall follow any of Sicor's instructions
regarding special conditions for the conservation of the Product. To that end,
Alco shall consent to inspections of the conservation methods for the Product by
Sicor and its representatives provided reasonable prior notice is given.
2.1.5 Alco shall not, for the duration of this Agreement, manufacture or
market, directly or indirectly, competing products.
2.1.6 Alco shall not imitate, manufacture or modify the Product.
2.1.7 Alco shall market the Product with the name or trademark of Sicor without
destroying or covering distinctive signs of Sicor, including but not limited to
signs related to any patents, trademarks or other intellectual property owned by
Sicor.
2.1.8 Alco shall notify Sicor no later than the end of October of each calendar
year, of the budget for the marketing and promotion of the Product to be
implemented the next calendar year.
2.1.9 Alco shall maintain a supply of the Product sufficient for the timely
satisfaction of all requests within the territory,
-2-
<PAGE>
supplying Sicor information regarding said supply upon Sicor's occasional
request.
2.1.10 Alco shall indemnify Sicor for any damages suffered due to its
negligence or a breach of obligations set forth in this Agreement or by the law.
3. SUPPLY OF THE PRODUCTS.
3.1 Alco undertakes to acquire the Product for the territory exclusively from
Sicor and Sicor undertakes to sell the Product destined for clients within the
territory exclusively to Alco.
3.2 The Parties agree that the terms regarding the supply of technology by Alco
to Sicor form an integral and essential part of the conditions of supply of the
Product by Sicor to Alco.
3.3 Sicor reserves the right to modify the Product without prior notice. Under
no circumstances shall Alco be owed indemnification or compensation for the
consequences, direct or indirect, of such unilateral modifications.
4. PRODUCT PROMOTION.
4.1 Alco shall define with Sicor on or before the end of October of each year,
the promotion plan for the sale of the Product to be implemented the following
calendar year. Said plan may be modified on the basis of market conditions
subject to the obligation of a reasonably sufficient promotion in relation to
the budget (Article 2.1.8) and the minimum guaranteed sales (Article 2.1.1).
4.2 All publicity and promotional activities of the Product must be pre-
approved by Sicor and, in every case, shall remain the exclusive responsibility
of Alco.
4.3 Alco shall, as an exclusive distributor, freely resell the Product acquired
from Sicor at price it finds appropriate. None of the terms of this Agreement
may be used by Sicor to control Alco's sales price.
4.4 Nevertheless, Alco agrees that the prices it charges for the Product shall
include all post-sale charges commonly offered in each relevant market for
similar products, as well as service costs relating to the legal or contractual
warranties owed to the client.
4.5 Alco undertakes to maintain, for the duration of this Agreement, sufficient
personnel and organization for the sale and distribution of the Product and in
particular, to maintain a sales network sufficient to perform its
responsibilities under this Agreement on a timely basis.
-3-
<PAGE>
4.6 Alco shall provide Sicor with all information relating to the competitors,
manufacturing improvements and trends in offers and requests that impact the
market conditions. Alco shall also provide all other relevant information that
Sicor may reasonably request. Sicor may ask that such information be sent on
special prearranged forms.
5. PATENT RIGHTS.
5.1 Sicor maintains exclusive ownership of industrial trademark and patent
rights in general, as well as the rights to brand-names. Alco shall enter into
all agreements with Sicor (including but not limited to licensing for use),
carry out all formalities and take all necessary or useful actions to safeguard
the Sicor's rights in the territory where Alco promotes the sale of the
Products.
5.2 Alco shall inform Sicor of all unauthorized uses of Sicor's trademark or
patent rights of which it becomes aware. Upon Sicor's request, Alco will
participate in suits, administrative proceedings and whatever else might be
reasonably necessary to protect Sicor's intellectual property rights (including
but not limited to trademarks) in the territory where Alco carries out its
activities.
6. EXCLUSION OF JOINT-VENTURE OR PARTNERSHIP.
This Agreement is to be concluded between two companies without a dependent
relationship or some other subject in common and does not constitute an
association, partnership or joint-venture and, except where expressly agreed in
writing otherwise, neither of the Parties is authorized to act as the agent of
the other, make declarations to third parties, assume guarantees for the other's
account or in any way obligate the other to a third party.
7. COMMENCEMENT AND TERMINATION OF THE AGREEMENT; TERMINATION CLAUSES;
WITHDRAWAL.
7.1 This Agreement (except for any anticipated termination) will have a
duration of three (3) years, beginning January 1, 1995 and ending December 31,
1997, at which time it is understood that the Agreement will be automatically
renewed annually, unless a Party has given at least six (6) months notice of its
intention to terminate the Agreement.
7.2 In addition to those anticipated by the applicable law, Sicor can make use
of the following express termination clauses:
7.2.1 in the case of a breach by Alco of any of its obligations contained in
this Agreement (except as provided in Articles 9.2.2 and 9.2.3), when Alco fails
to meet its obligations and within fifteen (15) days of Alco's receipt of a
notice of breach from Sicor;
-4-
<PAGE>
7.2.2 when Alco fails to meet the minimums as set forth in Article 1.2, except
if such failure is the result of mere chance or force majeure;
7.2.3 whenever Alco, without the express written consent of Sicor, tries to
transfer or sell to a third party all or part of its rights and obligations
under this Agreement, or to assign a third party as sub-agent.
7.3 Moreover, Sicor can withdraw from the Agreement in the following cases:
7.3.1 whenever, as the result of the lack or cancellation of permits,
authorizations or licenses, Alco is not able to begin or to continue
distribution of the Product in some country that is part of its territory;
7.3.2 whenever Alco is subject to proceedings executed individually or jointly,
or whenever operations are ceased for more than thirty (30) consecutive days
(except for the summer holidays);
7.3.3 whenever it is impossible or Alco is unable, to perform its obligations
under this Agreement;
7.3.4 whenever control of Alco passes to shareholders or others whom Sicor,
upon its sole evaluation, finds to be unsuitable;
8. THE EFFECTS OF TERMINATION OF THIS AGREEMENT.
In any termination of this Agreement:
8.1 Alco shall return all materials of whatever nature in its possession or
control relative to the Product or to Sicor (except ordinary technical
correspondence between the Parties).
8.2 Alco shall lose all rights to the use of patents and trademarks possibly
granted in accordance with this Agreement and in particular, will stop using the
name Sicor on its letterhead and on any other material and, at the request of
Sicor, shall proceed with the sale of possible inventory of the Product without
using neither the trademark nor name of Sicor.
8.3 Alco, upon the simple request of Sicor, shall give to Sicor a complete list
containing the personal data and addresses of clients interested in the Product.
8.4 Alco shall transfer to Sicor, renouncing any future use, all permits,
authorizations and licenses possibly granted to Alco by the competent
authorities with specific reference to the marketing of the Product.
8.5 Alco shall not have the right to any form of indemnity.
-5-
<PAGE>
9. OBLIGATIONS OF CONFIDENTIALITY.
9.1 Alco shall rigorously maintain confidentiality. It shall not divulge to
third parties nor use itself, any information learned during the performance of
this Agreement relating to the Products, including techniques marketed, as well
as any information regarding Sicor--information communicated by Sicor or
obtained by Alco through any other means in order to effectuate this Agreement.
9.2 The confidentiality obligation referred to in Article 9.1 above, does not
include the information, or part thereof:
9.2.1 that is within the public domain, except that which has been made public
as a result of actions by Alco or by a person who answers to Alco;
9.2.2 that is made known and registered by Alco before communication on the
part of Sicor;
9.2.3 that is communicated to Alco by a source other than Sicor without some
violation of Alco's confidentiality obligation;
9.2.4 that is independently developed by Alco without having in any way
utilized the information received as a result of this Agreement.
9.3 The Parties shall be bound to the terms of this Article even after the
termination of this Agreement.
10. NON-TRANSFERABILITY OF RIGHTS.
The rights and obligations derived from this Agreement are personal to the
Parties and may not be transferred without the express written consent of the
other Party. Similarly, without the express written consent of the other Party,
neither Party may transfer or sell to third parties all or part of their rights
and obligations under this Agreement. This excludes the Parties' ability to
discount, or give guarantees to financial institutions on, credits connected
with the execution of this Agreement. Alco's ability to enter into contracts of
factoring, or of guarantees in general, regarding the Products of which Alco is
the owner is also excluded.
11. MISCELLANEOUS PROVISIONS.
11.1 This Contract states and contains all the agreements in existence between
the Parties in reference to the exclusive distribution of the Product in the
territory and will be dated January 1, 1995. It rescinds with a retroactive
effect and substitutes all effects for, preceding agreements, declarations and
pledges between the Parties, whether written or oral, made at any time, of any
nature and content, concerning the subject regulated by the present Agreement.
-6-
<PAGE>
11.2 The rights of the Parties provided for in this Agreement are not
intended to be in any way waived or limited in case of the tolerance by one of
Parties for the breach of the other. Similarly, a waiver of the enforcement of
ones rights following a breach shall not be considered a waiver with respect to
subsequent or repeated breaches.
11.3 Any modification, substitution or termination of this Agreement, in whole
or in part, must be in writing.
11.4 Any clauses of this Agreement that are found to be invalid or ineffective,
shall be stricken while all the other clauses remain valid and effective. Both
Parties are obliged to negotiate in good faith for a substitute for the invalid
or ineffective clause that can satisfy the legitimate interests of both Parties.
12. APPLICABLE LAW AND ARBITRATION CLAUSE.
12.1 Italian law governs this Agreement. The Parties agree not to apply the
Vienna Convention concerning the international sale of movable goods to the
relationship between them that arises from the present Agreement.
12.2 Any controversies that might arise between the Parties concerning the
interpretation, execution or termination of this Agreement shall be settled by
an arbitration panel pursuant to the Italian Code of Civil Procedure. The panel
shall be composed of three (3) arbitrators, the first two (2) to be nominated by
the Parties and the third to be agreed upon by the first two or, in default, by
the President of the Court of Milan.
The applicable procedures shall be those established for international
arbitration pursuant to article 832 of the Italian Code of Civil Procedure, as
provided for by articles 816 to 831 of the Italian Code of Civil Procedure in so
far as they do not deviate from the norms of international arbitration.
The arbitration shall take place in Milan.
13. COMMUNICATIONS.
13.1 Any communications made necessary by this Agreement shall be sent by
registered mail, return receipt requested, to the following addresses:
to Sicor at Via Senato, 19, Milan
to Alco at Via S. Salvatore, 7, Lugano
-7-
<PAGE>
13.2 Or at whatever other address for communications the other Party has
provided in accordance with Article 13.1 above.
Lugano, January 1, 1995.
signed by Sicor /s/ Dr. Gaetano Palladino
-----------------------------
Alco /s/ Carlo Salvi
-----------------------------
-8-
<PAGE>
EXHIBIT 10.9
------------
DISTRIBUTION AGREEMENT
----------------------
Between
SICOR S.p.A, with its registered office in Milan, Via Senato, 19, tax number
- -----------
IT06827530152 (hereinafter "Sicor"),
on the one side,
and
ALCO CHEMICALS Ltd., with its registered office in Lugano (Switzerland), Via S.
- -------------------
Salvatore, 7 (hereinafter "Alco"),
on the other side.
Premises
--------
Whereas Sicor manufactures the chemical product DIFLUPREDNATE for the
pharmaceutical industry;
Whereas the Parties have a commercial relationship relating to the Alco's
right to the exclusive distribution of the Products;
Whereas Alco possesses the know-how and the means necessary to adequately
marketing of Sicor's products;
Whereas Alco also supplies to Sicor its technological know-how in relation
to the production process of some products, in continuing technology;
Whereas the Parties intend for this Agreement to govern their relationship;
Whereas the Parties also have an independent Agency relationship regarding
other Sicor products;
In light of the above, the Parties hereby agree to the following:
1. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR.
1.1 Sicor grants to Alco, which accepts, the appointment as exclusive seller of
the Product worldwide with the exception of Italy.
1.2 Alco guarantees to purchase a minimum annual quantity equal to 30 kg of the
Product that is the subject of this exclusive sale agreement, at the price of
$17 per gram (1700 Japanese yen per gram). For the determination of said annual
minimum quantity
-1-
<PAGE>
the calendar year shall be considered as starting from January 1, 1995.
1.3 Said minimum annual quantity can be freely and at any time re-determined by
Sicor provided they give notice three (3) before the next calendar year.
1.4 If Alco fails to reach the guaranteed sales volume, it shall notify Sicor
of the difference between the sales revenue realized and the guaranteed sales
within 30 days of the end of that calendar year.
2. ALCO'S OBLIGATIONS.
2.1 Alco, as an exclusive distributor, undertakes the following:
2.1.1 Alco shall, in the territory, reach the guaranteed minimum sales of the
Product in accordance with Article 1.2 of this Agreement. Moreover, Alco shall
diligently seek to increase sales of the Product in the territory.
2.1.2 Alco shall not take actions that would interfere or obstruct the sale of
the Products.
2.1.3 Alco shall observe all existing laws and regulations in relation to the
sale of the Product.
2.1.4 Alco shall transport, clear through customs and keep the Product in such
a way as to prevent deterioration and shall follow any of Sicor's instructions
regarding special conditions for the conservation of the Product. To that end,
Alco shall consent to inspections of the conservation methods for the Product by
Sicor and its representatives provided reasonable prior notice is given.
2.1.5 Alco shall not, for the duration of this Agreement, manufacture or
market, directly or indirectly, competing products.
2.1.6 Alco shall not imitate, manufacture or modify the Product.
2.1.7 Alco shall market the Product with the name or trademark of Sicor without
destroying or covering distinctive signs of Sicor, including but not limited to
signs related to any patents, trademarks or other intellectual property owned by
Sicor.
2.1.8 Alco shall notify Sicor no later than the end of October of each calendar
year, of the budget for the marketing and promotion of the Product to be
implemented the next calendar year.
2.1.9 Alco shall maintain a supply of the Product sufficient for the timely
satisfaction of all requests within the territory,
-2-
<PAGE>
supplying Sicor information regarding said supply upon Sicor's occasional
request.
2.1.10 Alco shall indemnify Sicor for any damages suffered due to its
negligence or a breach of obligations set forth in this Agreement or by the law.
3. SUPPLY OF THE PRODUCTS.
3.1 Alco undertakes to acquire the Product for the territory exclusively from
Sicor and Sicor undertakes to sell the Product destined for clients within the
territory exclusively to Alco.
3.2 The Parties agree that the terms regarding the supply of technology by Alco
to Sicor form an integral and essential part of the conditions of supply of the
Product by Sicor to Alco.
3.3 Sicor reserves the right to modify the Product without prior notice. Under
no circumstances shall Alco be owed indemnification or compensation for the
consequences, direct or indirect, of such unilateral modifications.
4. PRODUCT PROMOTION.
4.1 Alco shall define with Sicor on or before the end of October of each year,
the promotion plan for the sale of the Product to be implemented the following
calendar year. Said plan may be modified on the basis of market conditions
subject to the obligation of a reasonably sufficient promotion in relation to
the budget (Article 2.1.8) and the minimum guaranteed sales (Article 2.1.1).
4.2 All publicity and promotional activities of the Product must be pre-
approved by Sicor and, in every case, shall remain the exclusive responsibility
of Alco.
4.3 Alco shall, as an exclusive distributor, freely resell the Product acquired
from Sicor at price it finds appropriate. None of the terms of this Agreement
may be used by Sicor to control Alco's sales price.
4.4 Nevertheless, Alco agrees that the prices it charges for the Product shall
include all post-sale charges commonly offered in each relevant market for
similar products, as well as service costs relating to the legal or contractual
warranties owed to the client.
4.5 Alco undertakes to maintain, for the duration of this Agreement, sufficient
personnel and organization for the sale and distribution of the Product and in
particular, to maintain a sales network sufficient to perform its
responsibilities under this Agreement on a timely basis.
-3-
<PAGE>
4.6 Alco shall provide Sicor with all information relating to the competitors,
manufacturing improvements and trends in offers and requests that impact the
market conditions. Alco shall also provide all other relevant information that
Sicor may reasonably request. Sicor may ask that such information be sent on
special prearranged forms.
5. PATENT RIGHTS.
5.1 Sicor maintains exclusive ownership of industrial trademark and patent
rights in general, as well as the rights to brand-names. Alco shall enter into
all agreements with Sicor (including but not limited to licensing for use),
carry out all formalities and take all necessary or useful actions to safeguard
the Sicor's rights in the territory where Alco promotes the sale of the
Products.
5.2 Alco shall inform Sicor of all unauthorized uses of Sicor's trademark or
patent rights of which it becomes aware. Upon Sicor's request, Alco will
participate in suits, administrative proceedings and whatever else might be
reasonably necessary to protect Sicor's intellectual property rights (including
but not limited to trademarks) in the territory where Alco carries out its
activities.
6. EXCLUSION OF JOINT-VENTURE OR PARTNERSHIP.
This Agreement is to be concluded between two companies without a dependent
relationship or some other subject in common and does not constitute an
association, partnership or joint-venture and, except where expressly agreed in
writing otherwise, neither of the Parties is authorized to act as the agent of
the other, make declarations to third parties, assume guarantees for the other's
account or in any way obligate the other to a third party.
7. COMMENCEMENT AND TERMINATION OF THE AGREEMENT; TERMINATION CLAUSES;
WITHDRAWAL.
7.1 This Agreement (except for any anticipated termination) will have a
duration of three (3) years, beginning January 1, 1995 and ending December 31,
1997, at which time it is understood that the Agreement will be automatically
renewed annually, unless a Party has given at least six (6) months notice of its
intention to terminate the Agreement.
7.2 In addition to those anticipated by the applicable law, Sicor can make use
of the following express termination clauses:
7.2.1 in the case of a breach by Alco of any of its obligations contained in
this Agreement (except as provided in Articles 9.2.2 and 9.2.3), when Alco fails
to meet its obligations and within fifteen (15) days of Alco's receipt of a
notice of breach from Sicor;
-4-
<PAGE>
7.2.2 when Alco fails to meet the minimums as set forth in Article 1.2, except
if such failure is the result of mere chance or force majeure;
7.2.3 whenever Alco, without the express written consent of Sicor, tries to
transfer or sell to a third party all or part of its rights and obligations
under this Agreement, or to assign a third party as sub-agent.
7.3 Moreover, Sicor can withdraw from the Agreement in the following cases:
7.3.1 whenever, as the result of the lack or cancellation of permits,
authorizations or licenses, Alco is not able to begin or to continue
distribution of the Product in some country that is part of its territory;
7.3.2 whenever Alco is subject to proceedings executed individually or jointly,
or whenever operations are ceased for more than thirty (30) consecutive days
(except for the summer holidays);
7.3.3 whenever it is impossible or Alco is unable, to perform its obligations
under this Agreement;
7.3.4 whenever control of Alco passes to shareholders or others whom Sicor,
upon its sole evaluation, finds to be unsuitable;
8. THE EFFECTS OF TERMINATION OF THIS AGREEMENT.
In any termination of this Agreement:
8.1 Alco shall return all materials of whatever nature in its possession or
control relative to the Product or to Sicor (except ordinary technical
correspondence between the Parties).
8.2 Alco shall lose all rights to the use of patents and trademarks possibly
granted in accordance with this Agreement and in particular, will stop using the
name Sicor on its letterhead and on any other material and, at the request of
Sicor, shall proceed with the sale of possible inventory of the Product without
using neither the trademark nor name of Sicor.
8.3 Alco, upon the simple request of Sicor, shall give to Sicor a complete list
containing the personal data and addresses of clients interested in the Product.
8.4 Alco shall transfer to Sicor, renouncing any future use, all permits,
authorizations and licenses possibly granted to Alco by the competent
authorities with specific reference to the marketing of the Product.
8.5 Alco shall not have the right to any form of indemnity.
-5-
<PAGE>
9. OBLIGATIONS OF CONFIDENTIALITY.
9.1 Alco shall rigorously maintain confidentiality. It shall not divulge to
third parties nor use itself, any information learned during the performance of
this Agreement relating to the Products, including techniques marketed, as well
as any information regarding Sicor--information communicated by Sicor or
obtained by Alco through any other means in order to effectuate this Agreement.
9.2 The confidentiality obligation referred to in Article 9.1 above, does not
include the information, or part thereof:
9.2.1 that is within the public domain, except that which has been made public
as a result of actions by Alco or by a person who answers to Alco;
9.2.2 that is made known and registered by Alco before communication on the
part of Sicor;
9.2.3 that is communicated to Alco by a source other than Sicor without some
violation of Alco's confidentiality obligation;
9.2.4 that is independently developed by Alco without having in any way
utilized the information received as a result of this Agreement.
9.3 The Parties shall be bound to the terms of this Article even after the
termination of this Agreement.
10. NON-TRANSFERABILITY OF RIGHTS.
The rights and obligations derived from this Agreement are personal to the
Parties and may not be transferred without the express written consent of the
other Party. Similarly, without the express written consent of the other Party,
neither Party may transfer or sell to third parties all or part of their rights
and obligations under this Agreement. This excludes the Parties' ability to
discount, or give guarantees to financial institutions on, credits connected
with the execution of this Agreement. Alco's ability to enter into contracts of
factoring, or of guarantees in general, regarding the Products of which Alco is
the owner is also excluded.
11. MISCELLANEOUS PROVISIONS.
11.1 This Contract states and contains all the agreements in existence between
the Parties in reference to the exclusive distribution of the Product in the
territory and will be dated January 1, 1995. It rescinds with a retroactive
effect and substitutes all effects for, preceding agreements, declarations and
pledges between the Parties, whether written or oral, made at any time, of any
nature and content, concerning the subject regulated by the present Agreement.
-6-
<PAGE>
11.2 The rights of the Parties provided for in this Agreement are not
intended to be in any way waived or limited in case of the tolerance by one of
Parties for the breach of the other. Similarly, a waiver of the enforcement of
ones rights following a breach shall not be considered a waiver with respect to
subsequent or repeated breaches.
11.3 Any modification, substitution or termination of this Agreement, in whole
or in part, must be in writing.
11.4 Any clauses of this Agreement that are found to be invalid or ineffective,
shall be stricken while all the other clauses remain valid and effective. Both
Parties are obliged to negotiate in good faith for a substitute for the invalid
or ineffective clause that can satisfy the legitimate interests of both Parties.
12. APPLICABLE LAW AND ARBITRATION CLAUSE.
12.1 Italian law governs this Agreement. The Parties agree not to apply the
Vienna Convention concerning the international sale of movable goods to the
relationship between them that arises from the present Agreement.
12.2 Any controversies that might arise between the Parties concerning the
interpretation, execution or termination of this Agreement shall be settled by
an arbitration panel pursuant to the Italian Code of Civil Procedure. The panel
shall be composed of three (3) arbitrators, the first two (2) to be nominated by
the Parties and the third to be agreed upon by the first two or, in default, by
the President of the Court of Milan.
The applicable procedures shall be those established for international
arbitration pursuant to article 832 of the Italian Code of Civil Procedure, as
provided for by articles 816 to 831 of the Italian Code of Civil Procedure in so
far as they do not deviate from the norms of international arbitration.
The arbitration shall take place in Milan.
13. COMMUNICATIONS.
13.1 Any communications made necessary by this Agreement shall be sent by
registered mail, return receipt requested, to the following addresses:
to Sicor at Via Senato, 19, Milan
to Alco at Via S. Salvatore, 7, Lugano
-7-
<PAGE>
13.2 Or at whatever other address for communications the other Party has
provided in accordance with Article 13.1 above.
Lugano, January 1, 1995.
signed by Sicor /s/ Dr. Gaetano Palladino
-----------------------------
Alco /s/ Carlo Salvi
-----------------------------
-8-
<PAGE>
EXHIBIT 10.10
-------------
DISTRIBUTION AGREEMENT
----------------------
Between
SICOR S.p.A, with its registered office in Milan, Via Senato, 19, tax number
- -----------
IT06827530152 (hereinafter "Sicor"),
on the one side,
and
ALCO CHEMICALS Ltd., with its registered office in Lugano (Switzerland), Via S.
- -------------------
Salvatore, 7 (hereinafter "Alco"),
on the other side.
Premises
--------
Whereas Sicor manufactures the chemical product ETOPOSIDE for the
pharmaceutical industry;
Whereas the Parties have a commercial relationship relating to the
Alco's right to the exclusive distribution of the Products;
Whereas Alco possesses the know-how and the means necessary to
adequately marketing of Sicor's products;
Whereas Alco also supplies to Sicor its technological know-how in
relation to the production process of some products, in continuing technology;
Whereas the Parties intend for this Agreement to govern their
relationship;
Whereas the Parties also have an independent Agency relationship
regarding other Sicor products;
In light of the above, the Parties hereby agree to the following:
1. APPOINTMENT AS EXCLUSIVE DISTRIBUTOR.
1.1 Sicor grants to Alco, which accepts, the appointment as exclusive seller of
the Product in the United States, Canada and Australia.
1.2 Alco guarantees to purchase a minimum annual quantity equal to 60 kg of the
Product that is the subject of this exclusive sale agreement, at the price of
$25 per gram. For the
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determination of said annual minimum quantity the calendar year shall be
considered as starting from March 1, 1995.
1.3 Said minimum annual quantity can be freely and at any time re-determined by
Sicor provided they give notice three (3) before the next calendar year.
1.4 If Alco fails to reach the guaranteed sales volume, it shall notify Sicor
of the difference between the sales revenue realized and the guaranteed sales
within 30 days of the end of that calendar year.
2. ALCO'S OBLIGATIONS.
2.1 Alco, as an exclusive distributor, undertakes the following:
2.1.1 Alco shall, in the territory, reach the guaranteed minimum sales of the
Product in accordance with Article 1.2 of this Agreement. Moreover, Alco shall
diligently seek to increase sales of the Product in the territory.
2.1.2 Alco shall not take actions that would interfere or obstruct the sale of
the Products.
2.1.3 Alco shall observe all existing laws and regulations in relation to the
sale of the Product.
2.1.4 Alco shall transport, clear through customs and keep the Product in such
a way as to prevent deterioration and shall follow any of Sicor's instructions
regarding special conditions for the conservation of the Product. To that end,
Alco shall consent to inspections of the conservation methods for the Product by
Sicor and its representatives provided reasonable prior notice is given.
2.1.5 Alco shall not, for the duration of this Agreement, manufacture or
market, directly or indirectly, competing products.
2.1.6 Alco shall not imitate, manufacture or modify the Product.
2.1.7 Alco shall market the Product with the name or trademark of Sicor without
destroying or covering distinctive signs of Sicor, including but not limited to
signs related to any patents, trademarks or other intellectual property owned by
Sicor.
2.1.8 Alco shall notify Sicor no later than the end of October of each calendar
year, of the budget for the marketing and promotion of the Product to be
implemented the next calendar year.
2.1.9 Alco shall maintain a supply of the Product sufficient for the timely
satisfaction of all requests within the territory,
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<PAGE>
supplying Sicor information regarding said supply upon Sicor's occasional
request.
2.1.10 Alco shall indemnify Sicor for any damages suffered due to its
negligence or a breach of obligations set forth in this Agreement or by the law.
3. SUPPLY OF THE PRODUCTS.
3.1 Alco undertakes to acquire the Product for the territory exclusively from
Sicor and Sicor undertakes to sell the Product destined for clients within the
territory exclusively to Alco.
3.2 The Parties agree that the terms regarding the supply of technology by Alco
to Sicor form an integral and essential part of the conditions of supply of the
Product by Sicor to Alco.
3.3 Sicor reserves the right to modify the Product without prior notice. Under
no circumstances shall Alco be owed indemnification or compensation for the
consequences, direct or indirect, of such unilateral modifications.
4. PRODUCT PROMOTION.
4.1 Alco shall define with Sicor on or before the end of October of each year,
the promotion plan for the sale of the Product to be implemented the following
calendar year. Said plan may be modified on the basis of market conditions
subject to the obligation of a reasonably sufficient promotion in relation to
the budget (Article 2.1.8) and the minimum guaranteed sales (Article 2.1.1).
4.2 All publicity and promotional activities of the Product must be pre-
approved by Sicor and, in every case, shall remain the exclusive responsibility
of Alco.
4.3 Alco shall, as an exclusive distributor, freely resell the Product acquired
from Sicor at price it finds appropriate. None of the terms of this Agreement
may be used by Sicor to control Alco's sales price.
4.4 Nevertheless, Alco agrees that the prices it charges for the Product shall
include all post-sale charges commonly offered in each relevant market for
similar products, as well as service costs relating to the legal or contractual
warranties owed to the client.
4.5 Alco undertakes to maintain, for the duration of this Agreement, sufficient
personnel and organization for the sale and distribution of the Product and in
particular, to maintain a sales network sufficient to perform its
responsibilities under this Agreement on a timely basis.
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<PAGE>
4.6 Alco shall provide Sicor with all information relating to the competitors,
manufacturing improvements and trends in offers and requests that impact the
market conditions. Alco shall also provide all other relevant information that
Sicor may reasonably request. Sicor may ask that such information be sent on
special prearranged forms.
5. PATENT RIGHTS.
5.1 Sicor maintains exclusive ownership of industrial trademark and patent
rights in general, as well as the rights to brand-names. Alco shall enter into
all agreements with Sicor (including but not limited to licensing for use),
carry out all formalities and take all necessary or useful actions to safeguard
the Sicor's rights in the territory where Alco promotes the sale of the
Products.
5.2 Alco shall inform Sicor of all unauthorized uses of Sicor's trademark or
patent rights of which it becomes aware. Upon Sicor's request, Alco will
participate in suits, administrative proceedings and whatever else might be
reasonably necessary to protect Sicor's intellectual property rights (including
but not limited to trademarks) in the territory where Alco carries out its
activities.
6. EXCLUSION OF JOINT-VENTURE OR PARTNERSHIP.
This Agreement is to be concluded between two companies without a dependent
relationship or some other subject in common and does not constitute an
association, partnership or joint-venture and, except where expressly agreed in
writing otherwise, neither of the Parties is authorized to act as the agent of
the other, make declarations to third parties, assume guarantees for the other's
account or in any way obligate the other to a third party.
7. COMMENCEMENT AND TERMINATION OF THE AGREEMENT; TERMINATION CLAUSES;
WITHDRAWAL.
7.1 This Agreement (except for any anticipated termination) will have a
duration of three (3) years, beginning March 1, 1995 and ending February 28,
1998, at which time it is understood that the Agreement will be automatically
renewed annually, unless a Party has given at least six (6) months notice of its
intention to terminate the Agreement.
7.2 In addition to those anticipated by the applicable law, Sicor can make use
of the following express termination clauses:
7.2.1 in the case of a breach by Alco of any of its obligations contained in
this Agreement (except as provided in Articles 9.2.2 and 9.2.3), when Alco fails
to meet its obligations and within fifteen (15) days of Alco's receipt of a
notice of breach from Sicor;
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<PAGE>
7.2.2 when Alco fails to meet the minimums as set forth in Article 1.2, except
if such failure is the result of mere chance or force majeure;
7.2.3 whenever Alco, without the express written consent of Sicor, tries to
transfer or sell to a third party all or part of its rights and obligations
under this Agreement, or to assign a third party as sub-agent.
7.3 Moreover, Sicor can withdraw from the Agreement in the following cases:
7.3.1 whenever, as the result of the lack or cancellation of permits,
authorizations or licenses, Alco is not able to begin or to continue
distribution of the Product in some country that is part of its territory;
7.3.2 whenever Alco is subject to proceedings executed individually or jointly,
or whenever operations are ceased for more than thirty (30) consecutive days
(except for the summer holidays);
7.3.3 whenever it is impossible or Alco is unable, to perform its obligations
under this Agreement;
7.3.4 whenever control of Alco passes to shareholders or others whom Sicor,
upon its sole evaluation, finds to be unsuitable;
8. THE EFFECTS OF TERMINATION OF THIS AGREEMENT.
In any termination of this Agreement:
8.1 Alco shall return all materials of whatever nature in its possession or
control relative to the Product or to Sicor (except ordinary technical
correspondence between the Parties).
8.2 Alco shall lose all rights to the use of patents and trademarks possibly
granted in accordance with this Agreement and in particular, will stop using the
name Sicor on its letterhead and on any other material and, at the request of
Sicor, shall proceed with the sale of possible inventory of the Product without
using neither the trademark nor name of Sicor.
8.3 Alco, upon the simple request of Sicor, shall give to Sicor a complete list
containing the personal data and addresses of clients interested in the Product.
8.4 Alco shall transfer to Sicor, renouncing any future use, all permits,
authorizations and licenses possibly granted to Alco by the competent
authorities with specific reference to the marketing of the Product.
8.5 Alco shall not have the right to any form of indemnity.
-5-
<PAGE>
9. OBLIGATIONS OF CONFIDENTIALITY.
9.1 Alco shall rigorously maintain confidentiality. It shall not divulge to
third parties nor use itself, any information learned during the performance of
this Agreement relating to the Products, including techniques marketed, as well
as any information regarding Sicor--information communicated by Sicor or
obtained by Alco through any other means in order to effectuate this Agreement.
9.2 The confidentiality obligation referred to in Article 9.1 above, does not
include the information, or part thereof:
9.2.1 that is within the public domain, except that which has been made public
as a result of actions by Alco or by a person who answers to Alco;
9.2.2 that is made known and registered by Alco before communication on the
part of Sicor;
9.2.3 that is communicated to Alco by a source other than Sicor without some
violation of Alco's confidentiality obligation;
9.2.4 that is independently developed by Alco without having in any way
utilized the information received as a result of this Agreement.
9.3 The Parties shall be bound to the terms of this Article even after the
termination of this Agreement.
10. NON-TRANSFERABILITY OF RIGHTS.
The rights and obligations derived from this Agreement are personal to the
Parties and may not be transferred without the express written consent of the
other Party. Similarly, without the express written consent of the other Party,
neither Party may transfer or sell to third parties all or part of their rights
and obligations under this Agreement. This excludes the Parties' ability to
discount, or give guarantees to financial institutions on, credits connected
with the execution of this Agreement. Alco's ability to enter into contracts of
factoring, or of guarantees in general, regarding the Products of which Alco is
the owner is also excluded.
11. MISCELLANEOUS PROVISIONS.
11.1 This Contract states and contains all the agreements in existence between
the Parties in reference to the exclusive distribution of the Product in the
territory and will be dated March 1, 1995. It rescinds with a retroactive
effect and substitutes all effects for, preceding agreements, declarations and
pledges between the Parties, whether written or oral, made at any time, of any
nature and content, concerning the subject regulated by the present Agreement.
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<PAGE>
11.2 The rights of the Parties provided for in this Agreement are not
intended to be in any way waived or limited in case of the tolerance by one of
Parties for the breach of the other. Similarly, a waiver of the enforcement of
ones rights following a breach shall not be considered a waiver with respect to
subsequent or repeated breaches.
11.3 Any modification, substitution or termination of this Agreement, in whole
or in part, must be in writing.
11.4 Any clauses of this Agreement that are found to be invalid or ineffective,
shall be stricken while all the other clauses remain valid and effective. Both
Parties are obliged to negotiate in good faith for a substitute for the invalid
or ineffective clause that can satisfy the legitimate interests of both Parties.
12. APPLICABLE LAW AND ARBITRATION CLAUSE.
12.1 Italian law governs this Agreement. The Parties agree not to apply the
Vienna Convention concerning the international sale of movable goods to the
relationship between them that arises from the present Agreement.
12.2 Any controversies that might arise between the Parties concerning the
interpretation, execution or termination of this Agreement shall be settled by
an arbitration panel pursuant to the Italian Code of Civil Procedure. The panel
shall be composed of three (3) arbitrators, the first two (2) to be nominated by
the Parties and the third to be agreed upon by the first two or, in default, by
the President of the Court of Milan.
The applicable procedures shall be those established for international
arbitration pursuant to article 832 of the Italian Code of Civil Procedure, as
provided for by articles 816 to 831 of the Italian Code of Civil Procedure in so
far as they do not deviate from the norms of international arbitration.
The arbitration shall take place in Milan.
13. COMMUNICATIONS.
13.1 Any communications made necessary by this Agreement shall be sent by
registered mail, return receipt requested, to the following addresses:
to Sicor at Via Senato, 19, Milan
to Alco at Via S. Salvatore, 7, Lugano
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<PAGE>
13.2 Or at whatever other address for communications the other Party has
provided in accordance with Article 13.1 above.
Lugano, March 1, 1995.
signed by Sicor /s/ Dr. Gaetano Palladino
-----------------------------
Alco /s/ Carlo Salvi
-----------------------------
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<PAGE>
EXHIBIT 10.11
-------------
[CERTAIN INFORMATION HAS BEEN OMITTED HEREIN PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT UNDER RULE 24b-2. THE REDACTED MATERIAL HAS BEEN
SEPARATELY FILED WITH THE COMMISSION.]
LICENSE AGREEMENT
-----------------
between
ALCO Chemicals Ltd., 223 Regents Street, London WlR 7DB, England (hereinafter
called "ALCO"), represented for these purposes by Mr. Carlo Salvi,
and
SICOR Limited, 34 John Street, London WC1 N2AT, England (hereinafter called
"SICOR "), represented for these purposes by Mr. Martin Roy Priest.
RECITALS
WHEREAS SICOR has entrusted SICOR Societa Italiana Corticosteroidi S.p.A., Rho
(Mi), Italy with the production of certain anti-neoplastic antibiotics on an
industrial scale and is interested in obtaining suitable micro-organisms and
related Technology to assist it in enlarging the scope of such production,
WHEREAS ALCO is willing to supply such a micro-organism and technology useful in
the production of such an antibiotic,
Now, THEREFORE, the parties have agreed as follows :
1) DEFINITIONS
-----------
(a) "MITOMYCIN C" shall mean :
the compound described in the United States Pharmacopoeia, XXI edition, page
699; which complies with the United States Pharmacopoeia and the Code Federal
Regulations effective as of the date of delivery of the STRAINS and TECHNOLOGY
as provided for in clause 3 below.
(b) "STRAIN" shall mean :
a micro-organism belonging to the genus Streptomyces as described in the
attached exhibit 1.
(c) "TECHNOLOGY" shall mean :
(i) information relating to the maintenance and reproduction of the STRAIN in
the laboratory as described in the attached Exhibit 2.
(ii) information relating to the utilization of the STRAIN to produce MITOMYCIN
C in the laboratory as described in the attached Exhibit 3.
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<PAGE>
(d) "TERRITORY" shall mean : All countries world-wide except the People's
Republic of China.
(e) "IMPROVEMENTS" shall mean: All inventions, modifications and
discoveries, patented or not, related to the STRAIN and/or TECHNOLOGY which
enables MITOMYCIN C to be manufactured more efficiently or at a lower cost,
acquired or conceived, during the term of this Agreement.
2) LICENSE GRANT
-------------
ALCO hereby grants SICOR, subject to all the terms and conditions hereof, an
exclusive right and license to use the STRAIN and TECHNOLOGY and manufacture and
sell MITOMYCIN C in all the countries in the TERRITORY except the United States
of America and Japan.
Furthermore ALCO hereby grants SICOR subject to all the terms and conditions
hereof, a non-exclusive right and license to sell MITOMYCIN C in the People's
Republic of China.
ALCO represents and warrants that ALCO has full right to grant the license set
forth herein.
3) DELIVERY OF THE STRAIN AND TECHNOLOGY
-------------------------------------
Within 30 days of the effective date of this agreement, ALCO will deliver to
SICOR the STRAIN in lyophilized form and as a soil culture in three ampoules
each, together with the TECHNOLOGY as described in the attached Exhibits 1, 2,
and 3 in the English language in sufficient detail that experts in the art may
verify the guarantees as set forth in clause 4 below. This detailed TECHNOLOGY
will include complete instructions for STRAIN maintenance, propagation, media
composition, productivity testing in the laboratory, and isolation and
purification of MITOMYCIN C.
4) GUARANTEES
----------
(a) ALCO guarantees the efficiency of the STRAIN to produce the stipulated
amount of MITOMYCIN C as well as the recovery rate of MITOMYCIN C as specified
in attached Exhibits 1, 2, and 3 when the STRAIN is utilized in the manner
described in such Exhibits as well as the TECHNOLOGY described in the same
Exhibits and in clause 4 above provided SICOR Societa Italiana Corticosteroidi's
facilities have all the equipment listed in Exhibits 1, 2, and 3.
(b) In the event that the STRAIN should prove to be less than that
guaranteed in clause 4(a) above, ALCO shall be entitled to receive an additional
three (3) ampoules of the lyophilized form and soil culture in replacement of
the faulty STRAIN, provided that SICOR gives written notice to ALCO within
2
<PAGE>
four (4) months of the delivery of the STRAIN that the results of initial
testing of any ampoule of the STRAIN failed to meet the guaranteed efficiency,
accompanied by a written report on the results of such testing.
(c) In the event that either the replacement STRAIN as described in clause
4(b) above or the TECHNOLOGY as described in attached exhibits 2, and 3, and
clause 4 above shall fail to meet the guaranties as described in clause 4(a)
above, SICOR shall have the right of recourse to the Technical Arbitration as
described in clause 8 below, provided that SICOR gives written notice to ALCO
within four (4) months of the delivery of either the replacement STRAIN or the
TECHNOLOGY that the results of ALCO's verification of either the replacement
STRAIN and/or TECHNOLOGY failed to meet the guarantees as stipulated in clause
4(a) above, accompanied by a written report on the results of such verification.
(d) In the event that the decision of the Technical Arbitration finds in
favour of SICOR, SICOR shall be entitled to a reduction of the payments provided
for in clause 6 below according to the following formulae:
(i) in the event only on guarantee has not been met :
verified performance _ x 100 = % payable guaranteed performance
- --------------------
(ii) in the event more than one guarantee has not been met
verified performance i x verified performance n x 100 =
- -------------------- --------------------
guaranteed performance i guaranteed performance n
% payable
where "i" represents the first guarantee not met and "n" represents each
successive guarantee not met.
5) TECHNICAL ASSISTANCE
--------------------
Upon SICOR's request ALCO agrees to provide SICOR with all necessary technical
assistance for the start-up, and SICOR agrees to reimburse ALCO all expenses
incurred, without any extra fee.
6) PAYMENT AND PAYMENT TERMS
-------------------------
In consideration of the license to the STRAIN and TECHNOLOGY granted pursuant to
clause 2 above, ALCO shall receive from SICOR the sum of United States Dollars
Ninety thousand (US$ 90,000) to be paid by compensation with fifty percent (50%)
of the amount of SICOR's invoices to ALCO for the sale of COMPOUND pursuant to
clause 7 below.
3
<PAGE>
7) SUPPLY OF COMPOUND
------------------
In further consideration of the license to the STRAIN and TECHNOLOGY granted
pursuant to clause 2 above, SICOR agrees to sell MITOMYCIN C exclusively to
ALCO, and ALCO agrees to purchase MITOMYCIN C exclusively from SICOR for
distribution solely within the territory of the United States of America and
Japan. The terms and conditions of a supply agreement covering such sale and
purchase shall be defined separately.
8) RESTRICTIONS AND CONFIDENTIALITY
--------------------------------
Except as permitted herein, each party shall maintain in confidence and make no
use of any data or information disclosed to it by the other party hereunder.
Such undertaking shall, however, not apply to the extent the receiving party is
able to demonstrate that such data or information was already known to it prior
to disclosure hereunder, that such data or information was in the public domain
at the time of disclosure or subsequently became part of the public domain
through no fault of the receiving party, or that such data or information was
acquired by the receiving party from a third party having no secrecy obligation
to the disclosing party. Data and information disclosed prior to the execution
of this Agreement shall also be governed by the provisions hereof.
8) VERIFICATION BY INDEPENDENT EXPERTS
-----------------------------------
In the event of any dispute which cannot be amicably resolved between the
parties hereto as to whether or not any one or more of the guarantees indicated
in clause 4 above has been met, SICOR shall be entitled to appoint an
internationally qualified independent expert in accordance with the
International Chamber of Commerce's Rules for Technical Expertise to witness a
re-testing of the STRAIN and/or TECHNOLOGY in question in SICOR's laboratory.
ALCO shall be entitled to appoint its own representative to attend such re-
testing. The independent experts' decision as to whether or not the guarantee
in question has been met shall be final and binding. The costs of such
verification shall be shared equally by SICOR and ALCO.
9) IMPROVEMENTS
------------
If during the validity of this agreement, ALCO should acquire any IMPROVEMENTS
in either the STRAIN and/or TECHNOLOGY, SICOR shall have the right of first
refusal to such improvements under terms and conditions to be agreed upon by
SICOR and ALCO. If SICOR elects to exercise such a right the conditions
particularly with regard to the exclusivity will be essentially the same as
those contained in this Agreement.
4
<PAGE>
10) FORCE MAJEURE
-------------
Except with respect to the payment of any monies due hereunder, neither party
shall be liable or be in breach of any provision of this Agreement for any
failure or delay on their part to perform any obligation hereunder because of
force majeure or any other cause beyond the control of such party including
without limitation, strikes, lockouts, technical problems/disturbances in the
production, and shortage of raw materials or energy, legal restrains or
governmental or authorities' regulations/actions provided that such party shall
promptly give notice to the other party of such occurrence, and shall move to
eliminate the effect thereof to the extent possible and with all reasonable
dispatch.
11) TERM AND TERMINATION
--------------------
a) This Agreement shall become effective on the date of
the last signature to this Agreement.
b) This Agreement shall continue for a period of ten (10) years from the
date of the last signature to this Agreement.
c) In case a condition of force majeure continues for a period of three
(3) months or more, the parties shall meet and decide the future course of
action. In the event that no settlement is concluded regarding future course of
action, the party not claiming force majeure shall be entitled to terminate this
Agreement by giving thirty (30) days' notice in writing to that effect to the
other party.
12) BREACH OF AGREEMENT
-------------------
Notwithstanding the provisions of clause 11 above, either party shall be
entitled to terminate this Agreement forthwith by written notice to the other
upon the happening of anyone of the following events :
a) If the other party breaches or fails to observe or perform any of its
material obligations under this Agreement and shall fail to cure such breach
during a period of sixty (60) days after receipt of written notice from the
offended party. If the other party fails to cure the breach, then the party who
has given notice may terminate the Agreement with one month's written notice
without prejudice to any other rights.
b) If the other party is a corporation and there is a change in the
effective ownership or control of that corporation which would materially and
detrimentally affect the interests of the party wishing to terminate.
c) If the other party becomes subject to winding-up proceedings or
procedure or suffers the appointment of an official inspector, a receiver,
manager or provisional
5
<PAGE>
liquidator, or becomes insolvent or commits an act of bankruptcy.
13) COMPENSATION
------------
No compensation shall be payable in consequence of a termination of this
agreement pursuant to clause 10. However, should this Agreement be terminated
by reason of breach of agreement pursuant to clause 12, the party terminating
this Agreement shall be entitled to seek recovery of the damages suffered by him
as a result of the breach.
14) NOTICES
-------
All notices, communications, demands and payments under this Agreement shall be
in writing and shall conclusively be presumed to be given or made at the time
they are personally given or made, or at the time of sending if sent by telex of
telefacsimile, or ten days after mailing if sent by registered or certified air
mail (return receipt registered) as evidenced by the postmark at the point of
mailing, or three days after they are placed in an envelope and deposited with a
reputable international courier service for express delivery, addressed as
follows :
If to ALCO
Alco Chemicals Ltd.,
271 Preston Road,
Harrow,
Middlesex HA3 OPS
England
Attention : Managing Director
Telex : 265871 MONREF G
Telefax : (00441) 904 2044
If to SICOR
SICOR Limited,
34 John Street,
London WC1 N2AT
England
Attention : Chairman
Telex : 884587 G
Telefax : (00441) 831 8249
or to such other person or address as either party may, by notice, specify to
the other.
15) VARIATIONS AND AMENDMENTS
-------------------------
Variations, alterations and additions to this Agreement shall only be deemed to
have become part of this Agreement when it is specifically stated that it has
become part of this Agreement
6
<PAGE>
and has been signed by both parties. This Agreement sets forth the entire
understanding and supersedes and replaces any and all prior negotiations,
discussions or agreements of the parties as to such subject matter, oral or
written.
16) WAIVER
------
No failure or delay of any party to exercise any right, power or privilege
hereunder, shall operate as waiver, nor shall the waiver of any right or default
hereunder be a waiver of any right on a continuing default or a subsequent
default of a similar nature.
17) ASSIGNMENT
----------
Without the mutual written agreement of the parties hereto, this Agreement shall
not be assignable.
18) CAPTIONS
--------
The captions of the respective clauses of this Agreement are for convenience
only and do not constitute a part of this Agreement and shall be disregarded in
construing this Agreement.
19) PARTIAL INVALIDITY
------------------
Should any part of this Agreement be rendered invalid or unenforceable, such
rendering shall not affect the validity or enforceability of the remainder,
unless the part so rendered invalid or unenforceable impairs the value of the
whole Agreement to either party. Subject to this, such part shall be re-
negotiated between the parties in such a way as to render the same valid and to
achieve its purposes to the extent valid and enforceable
20) LAW
---
a) This Agreement shall be governed by and construed in accordance with
the substantive laws for the time being in force in the England.
b) Any dispute of difference between the parties arising out of, or in
connection with this Agreement which the parties cannot resolve amicably or by
recourse to the I.C.C.'s International Center for Technical Expertise as
provided in clause 8 shall be finally resolved by arbitration in London in
accordance with the Rules and Regulations of the International Chamber of
Commerce by three arbitrators appointed in accordance
7
<PAGE>
with such rules and judgement on the award may be entered by any Court having
jurisdiction thereof.
IN WITNESS WHEREOF both parties have caused this Agreement to be signed by their
respective duly authorized officers or representatives on the dates indicated
below.
For and on behalf of
ALCO CHEMICALS Limited SICOR Limited
By: /s/ Carlo Salvi By: /s/ Mr. Martin Roy Priest
---------------- ---------------------------
Mr. Carlo Salvi Mr. Martin Roy Priest
Managing Director Director
Date: January 9th, 1989 Date: January 9th, 1989
8
<PAGE>
EXHIBITS 1 AND 2
[CONFIDENTIAL TREATMENT REQUESTED]
9
<PAGE>
[CONFIDENTIAL TREATMENT REQUESTED]
10
<PAGE>
EXHIBIT 3
[CONFIDENTIAL TREATMENT REQUESTED]
11
<PAGE>
Table 1. The cultural characteristics of
[CONFIDENTIAL TREATMENT REQUESTED]
12
<PAGE>
LICENSE AGREEMENT - ADDENDUM NO. 1
----------------------------------
between
ALCO CHEMICALS LTD., 223 Regents Street, London W1R 7DB, England (hereinafter
"ALCO"), represented for these purposes by Mr. Carlo Salvi,
and
SICOR - SOCIETA ITALIANA CORTICOSTEROIDI SPA, Rho (MI), Italy (hereinafter
"SICOR SPA"), represented for these purposes by Mr. Rolando Santi.
WHEREAS ALCO has stipulated a License Agreement dated January 9th, 1989
(hereinafter the "License Agreement"), with SICOR LIMITED, London, England.
WHEREAS ALCO has been informed that as a result of the restructuring of the
companies part of the SICOR group, SICOR SPA has assumed all rights,
obligations, benefits and interest of SICOR LIMITED under the License Agreement.
The said restructuring was carried out, with respect to the License Agreement,
in agreement with ALCO.
WHEREAS ALCO and SICOR SPA wish to modify certain terms and conditions of the
License Agreement.
NOW THEREFORE the parties hereby agree as follows:
(1) SICOR SPA hereby confirm to ALCO that in accordance with the agreements
reached and arrangements made in the context of the restructuring of the
SICOR group companies, SICOR SPA has assumed and acquired all of SICOR
LIMITED's rights, obligations, interest and benefits under the License
Agreement. SICOR SPA hereby confirms being fully aware of the terms and
conditions of the License Agreement and expressly confirms its approval
thereof and its undertaking to be bound by the said terms and conditions as
were previously applicable to SICOR LIMITED.
ALCO hereby expressly confirms its unconditional agreement with the said
assumption and acquisition by SICOR SPA and hereby acknowledges its
acceptance of SICOR SPA as counterpart under the License Agreement and
agrees that it will have no further claims towards SICOR LIMITED arising
under the License Agreement.
(2) In consideration of the surrogation as foreseen in section 1 hereof, all
reference in the License Agreement to "SICOR" shall be deemed reference to
"SICOR SPA".
13
<PAGE>
(3) ALCO and SICOR SPA agree that section 6) PAYMENT AND PAYMENT TERMS of the
-------------------------
License Agreement shall be deemed modified to include the following new
paragraph:
quote
On the other hand, in order to partially cover the expenses incurred by
SICOR SPA for the development of the process for the manufacture of
MITOMYCIN C, and moreover in consideration of the undertaking of SICOR SPA
to provide ALCO, free of charge, with a certain quantity of MITOMYCIN C in
order to allow ALCO to obtain marketing license approval in the United
States of America and in Japan, ALCO has agreed to pay to SICOR SPA an
amount of US$ 1'000'000.-- (US Dollars one million) to be paid as follows:
- US$ 400'000.-- (US Dollars four hundred thousand) on July 31st, 1992; -
US$ 400'000.-- (US Dollars four hundred thousand) on December 31st, 1992; -
US$ 200'000.-- (US Dollars two hundred thousand) on March 31st, 1993.
unquote
(4) ALCO and SICOR SPA agree that section 7) SUPPLY OF COMPOUND of the License
------------------
Agreement shall be deemed modified to include the following new paragraph:
quote
SICOR SPA agrees and undertakes to provide ALCO, free of charge, with 750
grammes of MITOMYCIN C in order to allow ALCO to obtain marketing license
approval in the United States of America and in Japan.
unquote
(5) ALCO and SICOR SPA agree that section 14) NOTICES of the License Agreement
-------
shall be deemed modified in so far as the address of SICOR LIMITED shall be
replaced by the address of SICOR SPA to read as follows:
quote
If to SICOR SPA
SICOR - Societa Italiana Corticosteroidi S.p.A.
via Terrazzano, 77
20017 RHO (Milan)
ITALY
Att: Mr. Rolando Santi
Telex: 325814 sicor i
Telefax: (00392) 9306630
14
<PAGE>
unquote
(6) Terms and expressions used herein shall, unless otherwise determined, have
the same meaning as defined in the License Agreement.
(7) Except as expressly provided herein all other terms and conditions of the
License Agreement remain unchanged, valid and in full force and effect.
(8) The present Addendum shall constitute an integral part of the License
Agreement and shall be construed and interpreted in accordance therewith.
(9) The present Addendum shall be deemed to have entered into effect as of
January 1st, 1992.
IN WITNESS WHEREOF the parties hereto have caused this Addendum to be duly
executed this 16th day of June, 1992.
ALCO SICOR SPA
- ---- ---------
ALCO CHEMICALS LTD. SICOR
Societa Italiana Corticosteroidi S.p.A.
/s/ Carlo Salvi /s/ Rolando Santi Zoppi
- ----------------------- ------------------------------
15
<PAGE>
ADDENDUM NO. 2, dated as of October 31, 1996, between ALCO CHEMICALS
LTD., a corporation organized under the laws of Guernsey, Channel Islands
("Alco"), and SICOR Societa' Italiana Corticosteroidi S.p.A., a corporation
organized under the laws of Italy ("SICOR"), to the License Agreement, dated
January 9, 1989, between Alco and SICOR, as successor to SICOR Limited, as
amended by Addendum No. 1, dated June 16, 1992, between ALCO and SICOR (as to
amended, the "License Agreement").
W I T N E S S E T H:
WHEREAS, Alco and SICOR, as successor in interest to SICOR Limited,
are parties to the License Agreement; and
WHEREAS, Section 7 (Supply of Compound) of the License Agreement
provides, among other things, that SICOR shall only sell Mitomycin C
("Mitomycin") to customers in the United States of America or Japan through
Alco; and
WHEREAS, SICOR, with the consent of Alco, has delivered Mitomycin to
customers located in the United States of America, without selling through Alco;
and
WHEREAS, SICOR has requested that the License Agreement be modified to
reflect the understanding between SICOR and Alco; and
WHEREAS, Alco is willing to amend the License Agreement, as more fully
set forth herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
(10) Defined Terms. Terms defined in the License Agreement as amended
-------------
hereby shall have their respective defined meaning when used herein.
(11) Amendment to Section 1 (Definitions). Section 1 (Definitions) of
------------------------------------
the License Agreement is hereby amended by deleting it its entirely paragraph
(a) of such section and substituting in lieu thereof the following:
"(a) 'MITOMYCIN C' shall mean:
the compound described in the United States Pharmacopoeia, XXI
edition, page 699; which complies with the United States Pharmacopoeia
and the Code of Federal Regulations effective as of the date of
delivery of the STRAIN and TECHNOLOGY, as provided in clause 3 below,
and which is manufactured from the STRAIN employing the TECHNOLOGY."
(12) Amendment to Section 2 (License Grant). Section 2 (License Grant) of
--------------------------------------
the License Agreement is hereby amended by deleting in its entirely the first
paragraph of such section and substituting in lieu thereof the following:
16
<PAGE>
"ALCO hereby grants SICOR, subject to all the terms and conditions
hereof, an exclusive right and license to use the STRAIN and
TECHNOLOGY and to manufacture and sell MITOMYCIN C in all the
countries of the TERRITORY except Japan."
(13) Amendment to Section 7 (Supply of Compound). Section 7 (Supply
-------------------------------------------
of Compound) of the License Agreement is hereby amended by deleting such section
in its entirety and substituting in lieu thereof the following:
"In further consideration of the license to the STRAIN and TECHNOLOGY
granted pursuant to clause 2 above, SICOR agrees to sell MITOMYCIN C
to ALCO, and ALCO agrees to purchase MITOMYCIN C from SICOR. The
terms and conditions of any such supply agreement covering any such
sale and purchase shall be defined separately.
SICOR agrees to provide ALCO, free of charge, with an amount of up to
750 grams of MITOMYCIN C in order to allow ALCO to obtain marketing
license approval in the United States of America and in Japan."
(14) Effective Date of Amendment. This Addendum No. 2 shall have
---------------------------
effect from January 9, 1989, and the License Agreement shall be deemed amended
as herein provided effective as of such date.
(15) Waiver. Notwithstanding the foregoing, Alco hereby waives any
------
and all breaches of, or defaults under, the License Agreement which may have
occurred, during, or which may arise from, the period from the date of the
License Agreement to the date hereof.
(16) No Other Amendments; Confirmation. Except as expressly amended,
---------------------------------
modified and supplemented hereby, the provisions of the License Agreement shall
remain in full force and effect.
(17) Governing Law. This Addendum No. 2 shall be governed by, and
-------------
construed and interpreted in accordance with, the laws of England.
(18) Counterparts. This Addendum No. 2 may be executed in any number
------------
of counterparts (including on separate counterparts), all of which counterparts,
taken together, shall constitute one and the same instrument. This Addendum No.
2 may be delivered by facsimile transmission of the relevant signature pages
hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Addendum No. 2 to
the duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
ALCO CHEMICAL LTD.
By /s/ Carlo Salvi
---------------------------
17
<PAGE>
Name: Carlo Salvi
Title: Attorney in Fact
SICOR SOCIETA' ITALIANA
CORTICOSTEROIDI S.P.A.
By /s/ Dr. Giampaolo Colla
--------------------------
Name: Dr. Giampaolo Colla
Title: Managing Director
By /s/ Dr. Roberto Giani
-------------------------
Name: Dr. Roberto Giani
Title: Technical Director
18
<PAGE>
EXHIBIT 10.12
-------------
AGREEMENT
ALCO Chemicals ltd., London, England, hereinafter referred to as "ALCO",
represented by managing director Carlo Salvi
as one party
and
SICOR Societa Italiana Corticosteroidi S.p.A., with corporate headquarters in
Rho (Milan) Via Terrazano no. 77, tax identification number and VAT file number
06827530152, represented by the acting legal representative, Dr. Gaetano
Palladino, who holds the necessary powers of attorney
as the other party
whereas
- - ALCO is the exclusive licensee for a new microorganism, referred to
hereinafter as "STRAIN", and better described hereinafter, who agrees to
produce a pharmaceutical product named Aclarubicine;
- - Aclarubicine, which can be produced with the STRAIN, has the following
formula;
[Chemical Formula] methyl ester and/or its chloridated salt";
- - the STRAIN that is the subject of this agreement was developed by the
Shanghai Medical Material Institute, Shanghai, China;
- - SICOR S.p.A. possesses sufficient technical knowledge and facilities to, in
conjunction with the technology and the strain possessed by ALCO, to
produce Aclarubicine;
- - it is ALCO's intention to assign production of Aclarubicine to SICOR S.p.A.
on a non-exclusive basis;
The following is agreed
. ALCO shall send to SICOR S.p.A. in Italy, at its facility in Rho, via
Terrazzano no.
-1-
<PAGE>
77, the microorganism strain referred to in the preamble, along with
maintenance and reproduction instructions, so that SICOR S.p.A. may utilize
same for the production of unpackaged finished product.
. SICOR S.p.A. shall attend to maintenance and reproduction of the strain,
and shall take due precautions to avoid damage and loss.
. SICOR S.p.A. shall utilize the material sent to same, both the
microorganism and the technology, solely and exclusively for production of
Aclarubicine, which shall be produced solely and exclusively on behalf of
and in the interests of ALCO. SICOR S.p.A. obligates itself to resell
Aclarubicine to ALCO alone, on an exclusive basis, with an absolute
prohibition against transferring to third parties, in any form and for any
reasons or on any basis, either Aclarubicine, or any semi-finished product
possibly derivable from the microorganism and from the aforementioned
technology, which are the subject of this agreement.
. For preservation and reproduction of the microorganism strain, as well as
subsequent processing until Aclarubicine is produced, ALCO shall pay SICOR
S.p.A. a consideration to be determined on the basis of the impact of the
following elements:
- materials and ingredients necessary for processing,
- electrical power consumption,
- labor,
- treatment of processing waste,
- depreciation, overhead, and profits.
SICOR S.p.A. obligates itself to maintain the utmost confidentiality with
respect to all information that it shall gain knowledge of in any manner in
relation to this agreement, including information regarding all technological
improvements that might possibly be achieved during the course of same. Such
improvements shall remain the property of ALCO, the sole licensee for the strain
and its processing technology. SICOR S.p.A. obligates itself to have its
employees who are involved in the processing covered by this agreement sign a
confidentiality agreement.
. ALCO declares that, to its knowledge, there is no third party that can
assert that use of
-2-
<PAGE>
the STRAIN or the pertinent technology violates the rights of third parties
and SICOR S.p.A. takes officially acknowledges same.
. This agreement is for an indefinite term, and it may be canceled with 6
months advance notice by either of the parties, via registered letter with
return receipt.
. In the event this contract is terminated, on any grounds, SICOR S.p.A. may
not claim any indemnification from ALCO and must arrange for the immediate
return or in any event to the immediate transfer to the person or entity
designated by ALCO of the microorganism strain and the instructions
delivered. SICOR S.p.A.'s obligation to maintain to utmost
confidentiality, already provided for the term of this agreement, shall
remain in effect, and the obligation to not longer produce Aclarubicine,
either directly or indirectly, either for itself or on behalf of third
parties.
. This agreement is governed by Italian law and the Milan Court shall have
jurisdiction with respect to any dispute or disagreement.
. The agreement may only be amended by additional written agreement,
Lugano, June 16, 1992
SICOR Societa Italiana ALCO Chemicals Ltd
Corticosteroidi S.p.A.
(The General Manager) (The Managing Director)
Dr. G. Palladino Mr. C. Salvi
/s/ Dr. G. Palladino /s/ Mr. C. Salvi
-3-
<PAGE>
EXHIBIT 10.13
-------------
SERVICES CONTRACT MADE BY AND BETWEEN GRUPO FARIMEX, S.A. de C.V., REPRESENTED
HEREIN BY ITS LEGAL REPRESENTATIVE, JOSE ANTONIO ESCANDON SEPTIEN, HEREINAFTER
CALLED THE "PROVIDER", PARTY OF THE FIRST PART, AND SINTESIS LERMA, S.A. de
C.V., REPRESENTED BY ITS LEGALLY-EMPOWERED REPRESENTATIVE, FERNANDO URRUTIA
MONCADA, HEREINAFTER CALLED THE "CLIENT", PURSUANT TO THE FOLLOWING DECLARATIONS
AND CLAUSES:
DECLARATIONS
------------
Jose Antonio Escandon Septien declares:
1. That his principal, the PROVIDER, is a corporation organized and existing
under Mexican law, and that its corporate purpose is to provide all kinds
of advisory and consulting services to the senior management of industrial
and commercial entities, it having the required staff therefor, and is
accordingly qualified to provide the subject services of the present
contract.
2. That the authority required for making the within contract on behalf of
his principal has not been revoked as of the present date.
Fernando Urrutia Moncada declares:
3. That his principal, the CLIENT, is a corporation organized and existing
under Mexican law, and that its corporate purpose is, among other things,
to manufacture, formulate, produce, import and export all kinds of raw
materials for the manufacturing of medications.
4. The CLIENT is fully acquainted with the PROVIDER's organization and its
material and human resources for rendering consulting services in the
following areas: Business strategy, government relations, financial,
accounting and business management, internal auditing, legal affairs,
human resources, procurement, data processing, import and export traffic.
5. That the authority required for making the within contract on behalf of
his principal has not been revoked as of the present date.
6. That accordingly, the CLIENT is interested in contracting the services of
the PROVIDER in those activity areas referred to in the preceding
declarations.
-1-
<PAGE>
In view of the foregoing, the parties hereto stipulate the following
CLAUSES:
-------
FIRST.- The PROVIDER undertakes to furnish the CLIENT with the services required
by the latter in those areas set forth in declaration fourth above, as well as
in any other service area that may be connected therewith, whenever requested by
the CLIENT within the context of the within contract.
SECOND.- The PROVIDER agrees, if so requested by the CLIENT, to provide and
render the services referred to in the preceding clause directly to the CLIENT
at its domicile located at Avenida San Rafael No. 35, Parque Industrial Lerma,
Lerma de Villada, CP 52000, Estado Mexico, or else at any such premises that may
be advised or requested by the CLIENT, even if such premises are owned by third-
parties, provided that such services are of the same kind as constitute the
subject matter of the present contract.
THIRD.- The services which the PROVIDER will render the CLIENT shall be
furnished with the CLIENT's own human and material resources, but in no way or
manner shall the said services carry with them a delegation of decision-making
or management powers, nor of any powers inherent in the operation of the
company, which powers shall in all cases remain vested in and with the CLIENT.
FOURTH.- As consideration for the services to be provided in accordance with
Clause First by the PROVIDER to the CLIENT, the latter shall pay the former a
fee that will come to the sum of One Hundred Seven New Mexican Pesos (NM$107.00)
per hour for the rendering of the said services. This fee shall be
reviewed/revised semi-annually, and what is agreed to by the parties shall be
appended hereto as a rider.
FIFTH.- For purposes of determining the amount of the consideration under the
terms of Clause Fourth above, the PROVIDER undertakes to maintain an accounting
system that will reasonably allow for determining the amount of direct and
indirect operating costs incurred for the providing of the services.
The direct and indirect operating costs referred to in this clause do not
include payment of taxes, notarial fees, travel, meals or other costs of a
similar nature that might be incurred on behalf of the CLIENT, and for such
reason, these types of costs shall be absorbed directly by the CLIENT,
notwithstanding those incurred by the PROVIDER's staff. Said staff shall
request that the appropriate expense voucher be marked or made out in the name
of the CLIENT, to whom the respective expense report will have to be submitted
in accordance with the policies and procedures established by the CLIENT, who
will have to authorize said report, with a copy to the PROVIDER. Likewise, the
direct and indirect costs referred to in this clause do not include financing
interest or costs that are incurred or may be incurred by the PROVIDER, but on
the other hand, those costs or expenses which may have been incurred as of the
end of a fiscal or business year will be included, even if they have not been
paid in full.
-2-
<PAGE>
SIXTH.- The sum which as consideration the CLIENT is obligated to pay the
PROVIDER shall be determined by the latter depending on the amount of the
operating costs. The CLIENT shall deliver a monthly advance on account of the
services, taking the average of the last two months as a basis; such advance
shall be delivered within the first ten (10) days of the month.
SEVENTH.- The PROVIDER undertakes to put forth its best efforts to render the
services efficiently, continuously, responsibly and diligently.
EIGHTH.- The PROVIDER agrees to maintain confidential any and all documents and
information received from the CLIENT at the latter's business domicile.
NINTH.- During the life of this contract, the PROVIDER shall have full
responsibility for the efficient rendering and execution per se of the subject
services, and therefore the PROVIDER shall be solely responsible and answerable
to the CLIENT for the rendering of the services described in Clause First, it
being authorized for such purpose to send such persons as it may designate to
the CLIENT's facilities, or to such places where the activities are being
conducted, or to any other place agreed to by the parties, for the purpose of
having the services rendered properly and adequately.
TENTH.- It is duly understood that the PROVIDER shall pay all contributions,
taxes and fees which under law may be assessed on its business, and that the
CLIENT is not nor will be responsible for any acts that may be committed by the
PROVIDER or by its employees during the rendering of the services hereunder. It
is likewise expressly understood that the PROVIDER has the status of employer
insofar as concerns the personnel under its control and direction, and through
whom the services will be rendered, and that it has its own sufficient means for
meeting all corresponding labor-related obligations, and that this contract does
not grant any status of representative or intermediary to the CLIENT.
ELEVENTH.- Both parties agree that each shall be responsible for any labor or
labor-related obligations deriving from the relationship existing with their
respective employees, and in no case and for no reason may the employees of any
of the parties consider the other as an employer. For such purpose, the
PROVIDER undertakes to enter into written employment agreements with its own
employee-workers, which agreements clearly state that the PROVIDER is the only
employer which the worker recognizes, and agrees that no contractual
relationship exists between he or she (the worker) and the CLIENT, who shall be
considered totally disconnected from any such labor agreement made.
TWELFTH.- The within contract shall have a term of one (1) year from the date on
which it is made, but may be automatically renewed for similar one-year periods
with the understanding that either party may terminate it by giving written
notice to the other party thirty (30) days in advance or within any other party
agreed to by the parties, provided that no debt exists between the parties in
connection herewith.
In respect to everything stipulated herein, the parties expressly submit to the
laws of the Federal District, and in respect to interpretation and compliance,
the parties accept the
-3-
<PAGE>
jurisdiction of the courts and tribunals of Mexico City, D.F., waiving any other
jurisdiction which they currently have or might have in the future by reason of
their domicile or by reason of anything else.
IN WITNESS WHEREOF, the parties through their designated legal representatives
affix their signatures hereto in triplicate, in Mexico City, Federal District,
with effectiveness commencing January 2, 1995.
THE PROVIDER THE CLIENT
GRUPO FARIMEX S.A. de C.V. SINTESIS LERMA S.A. de C.V.
/s/ Jose Antonio Escandon Septien /s/ Fernando Urrutia Moncada
- --------------------------------- ----------------------------
Legal Representative Legal Representative
Jose A. Escandon Septien Fernando Urrutia Moncada
-4-
<PAGE>
EXHIBIT 10.14
-------------
March 18, 1997
Donald E. Panoz
Chateau Elan
6060 Golf Club Drive
Braselton, GA 30517
Dear Don:
Thanks for flying to New York to meet with Carlo and me to discuss your becoming
non-executive Chairman of Gensia Sicor (the "Company"). We are very excited
that you have agreed to accept this position and help us build Gensia Sicor into
a major worldwide specialty pharmaceutical company.
We have agreed on the following terms relating to your acceptance of this
position:
1. You will serve as a member of the Board of Directors and as non-
executive Chairman of the Board for a period of two years. You will not
be either an officer or an employee of Gensia Sicor.
2. You will advise and consult with the Company on strategic planning as
requested.
3. You will help the Company with positioning and with contacts in the
financial community.
4. You will assist Carlo Salvi, a principal shareholder and a director of
the Company, with introductions to the investment community.
5. You will be available to the Company for other assignments, as
appropriate.
We have also agreed on the following terms relating to your compensation:
1. A fee of $200,000 per year, paid monthly. You will serve at the
pleasure of the Board, and upon the cessation of your services, no
further fees will be payable provided that you will receive a minimum
of $200,000.
2. Reasonable expenses for your office related to your activities as non-
executive Chairman.
3. Options on 200,000 shares of Gensia Sicor common stock, immediately
vested, at the average closing market price of Gensia common stock for
the ten (10) trading days ending on the day immediately prior to our
announcement of your role with Gensia Sicor.
<PAGE>
Donald E. Panoz
March 18, 1997
Page 2
4. The Company will grant options for Gensia Sicor common stock at the
average closing market price for the ten (10) trading days ending on
the day immediately prior to our announcement of your role with Gensia
Sicor for up to 300,000 additional shares which will be exercisable, in
increments of 100,000 shares per increase in market capitalization
(other than increases due to corporate reorganizations, combinations or
similar transactions) for the Company of $100 million for increases in
market capitalization over $700 million.
5. If during the three-year period from the date of you becoming non-
executive Chairman, the market capitalization of the Company reaches $1
billion, you will receive a bonus of $1 million in the form of an
annuity payable over 10 years, which amount may be paid by the Company
in stock or cash.
6. The Company will pay reasonable expenses related to your activities
with the Company.
The terms contained in this letter are conditional upon shareholder approval of
the Gensia Sicor combination on February 26, 1997 and on the closing of the
Gensia Sicor transaction on or about February 28, 1997. Certain aspects of the
stock options to be granted to you will be subject to Board and shareholder
approval, which we shall endeavor to obtain at the next annual meeting of
shareholders. Please review and if the terms in this letter reflect our
discussions in New York, please sign a copy of this letter and return it to me
and keep a copy for your records. If this meets with your approval, we will
prepare a formal Consulting Agreement that sets forth these and other
appropriate terms. Carlo and I look forward to working with you very much to
make Gensia Sicor successful.
Sincerely,
/s/ David F. Hale
David F. Hale ACCEPTED & AGREED TO:
President and CEO
/s/ Donald E. Panoz
-------------------------------------
Donald E. Panoz
/s/ Carlo Salvi
Carlo Salvi
Chairman of the Board, Rakepoll Finance N.V.
DFH/CS:sa
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