SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K A-2
Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required) For the fiscal year ended December 31, 1998
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required) For the transition period from
___________ to ___________
Commission File No. 0-16132
CELGENE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2711928
- -------------------------------- --------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification)
incorporation or organization)
7 Powder Horn Drive
Warren, New Jersey 07059
- ----------------------------------------- --------------
(Address of principal executive offices) (Zip Code)
(732) 271-1001
-------------------------------------------------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
---
Aggregate market value of voting stock held by non-affiliates of registrant as
of March 1, 1999: $146,007,577
Number of shares of Common Stock outstanding as of March 1, 1999: 16,753,028
<PAGE>
CELGENE CORPORATION
ANNUAL REPORT ON FORM 10-K
This form 10-K A-2 amends Celgene Corporation's 10K for the fiscal year ended
December 31, 1998 in the following respects: Exhibit 10-17, Agreement between
the Company and EntreMed, Inc., which has been amended in accordance with the
Company's Amended Confidential Treatment Request dated May 5, 1999, is herewith
attached.
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Item No. Page
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Part I
<S> <C> <C>
1. Business 1
2. Properties 25
3. Legal Proceedings 25
4. Submission of Matters to a Vote of
Security Holders 25
Part II
5. Market for registrant's Common Equity
and Related Stockholder Matters 26
6. Selected Financial Data 27
7. Management's Discussion and Analysis
of Financial Condition and results of Operations 28
8. Financial Statements and Supplementary Data 32
9. Changes in and disagreements with Accountants
on Accounting and Financial Disclosure 33
Part III
10. Directors and Executive Officers of the
Registrant 33
11. Executive Compensation 35
12. Security Ownership of Certain Beneficial
Owners and Management 39
13. Certain Relationships and Related
Transactions 40
Signatures 41
Part IV
14. Exhibits, Financial Statements, and
Reports on Form 8-K F-1
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CELGENE CORPORATION
By /s/ Sol J. Barer
----------------
Sol J. Barer
President and
Chief Operating Officer
Date: May 5, 1999
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ John W. Jackson Chairman of the Board and Chief March 31, 1999
- ------------------- Executive Officer
John W. Jackson
/s/ Sol J. Barer Director March 31, 1999
- -------------------
Sol J. Barer
/s/ Jack L. Bowman Director March 31, 1999
- -------------------
Jack L. Bowman
/s/ Frank T. Cary Director March 31, 1999
- -------------------
Frank T. Cary
/s/ Arthur Hull Hayes, Jr. Director March 31, 1999
- -------------------
Arthur Hull Hayes, Jr.
/s/ Gilla Kaplan Director March 31, 1999
- -------------------
Gilla Kaplan
/s/ Richard C. E. Morgan Director March 31, 1999
- -------------------
Richard C. E. Morgan
/s/ Walter L. Robb Director March 31, 1999
- -------------------
Walter L. Robb
/s/ Lee J. Schroeder Director March 31, 1999
- -------------------
Lee J. Schroeder
/s/ James R. Swenson Controller (Chief Accounting Officer) March 31, 1999
- -------------------
James R. Swenson
</TABLE>
The foregoing constitutes a majority of the directors.
41
<PAGE>
(c) Exhibit Index.
3.1 Certificate of Incorporation of the Company, as amended (incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-1, dated July 24, 1987).
3.2 Bylaws of the Company (incorporated by reference to the Company's
Current Report on Form 8K, dated September 16, 1996).
10.1 Lease Agreement, dated January 16, 1987, between the Company and Powder
Horn Associates (incorporated by reference to Exhibit 10.17 to the
Company's Registration Statement on Form S-1, dated July 24, 1987).
10.2 1992 Long-Term Incentive Plan (incorporated by reference to Exhibit A
to the Company's Proxy Statement, dated May 30, 1997).
10.3 1995 Non-Employee Directors' Incentive Plan (incorporated by reference
to Exhibit B to the Company's Proxy Statement, dated May 30, 1997).
10.4 Agent's Warrant issued in connection with the placement of 8%
Convertible Debentures (incorporated by reference to Exhibit 10.2 to
the Company's Quarterly Report on Form 10Q for the quarter ended June
30, 1995).
10.5 Agent's Warrant issued in connection with the placement of Series A
Convertible Preferred Stock (incorporated by reference to the Company's
Annual Report on Form 10K for the year ended December 31, 1995).
10.6 Form of Lock-Up Warrant issued to certain holders of Series A
Convertible Preferred Stock (incorporated by reference to the Company's
Registration Statement on Form S-3 dated November 25, 1997 (No.
333-38891)).
10.7 Form of Warrant to be issued in connection with the issuance of Series
B Convertible Preferred Stock (incorporated by reference to Exhibit
10.2 to the Company's Current Report on Form 8K dated June 10, 1997).
10.8 Rights Agreement, dated as of September 16, 1996, between Celgene
Corporation and American Stock Transfer & Trust Company (incorporated
by reference to the Company's Registration Statement on Form 8A, filed
on September 16, 1996).
10.9 Form of indemnification agreement between the Company and each officer
and director of the Company (incorporated by reference to Exhibit 10.12
to the Company's Annual Report on Form 10K for the year ended December
31, 1996).
10.10 Form of Employment Agreement dated September 30, 1997 between the
Company and John W. Jackson (incorporated by reference to the Company's
Registration Statement on Form S-3 dated November 25, 1997 (No.
333-38891)).
10.11 Form of Employment Agreement dated September 30, 1997 between the
Company and Sol J. Barer (incorporated by reference to the Company's
Registration Statement on Form S-3 dated November 25, 1997 (No.
333-38891)).
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<PAGE>
10.12 Manufacturing Agreement between Penn Pharmaceuticals Limited and the
Company (incorporated by reference to the Company's Registration
Statement on Form S-3 dated November 25, 1997 (No.
333-38891)).
10.13 Celgene Corporation Replacement Stock Option Plan (incorporated by
reference to Exhibit 99.1 of the Company's Registration Statement on
Form S-3 dated May 18, 1998 (No. 333-52963)).
10.14 Form of Stock Option Agreement to be issued in connection with the
Celgene Corporation Replacement Stock Option Plan (incorporated by
reference to Exhibit 99.2 of the Company's Registration Statement on
Form S-3 dated May 18, 1998 (No. 333-52963)).
10.15 1998 Long Term-Incentive Plan (incorporated by reference to Exhibit A
to the Company's Proxy Statement, dated May 18, 1998).
10.16 Stock Purchase Agreement dated June 23, 1998 between the Company and
Biovail Laboratories Incorporated (incorporated by reference to the
Company's Current Report on Form 8K filed on July 17, 1998 (No.
000-16132)).
10.17 Agreement dated December 9, 1998 between the Company and EntreMed, Inc.
(certain portions of the agreement have been omitted and filed
separately with the United States Securities and Exchange Commission
pursuant to a request for confidential treatment.
* 23.1 Consent of KPMG LLP
* 27. Financial Data Schedule
- -------------
* Previously Filed
["..." indicates material has been omitted pursuant to a Confidential Treatment
Request, which the Company has filed separately with the Securities and Exchange
Commission]
AGREEMENT
by and between
ENTREMED, INC.
and
CELGENE CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
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SECTION 1 - DEFINITIONS................................................1
1.1 "AFFILIATE"................................................2
1.2 "CALENDAR QUARTER".........................................2
1.3 "CELGENE DEVELOPED INTELLECTUAL PROPERTY"..................2
1.4 "CELGENE DEVELOPED PATENT RIGHTS"..........................2
1.5 "CELGENE DEVELOPED TECHNOLOGY RIGHTS"......................2
1.6 "CELGENE EXISTING INTELLECTUAL PROPERTY"...................3
1.7 "CELGENE EXISTING PATENT RIGHTS"...........................3
1.8 "CELGENE EXISTING TECHNOLOGY RIGHTS".......................3
1.9 "CMCC AGREEMENT"...........................................3
1.10 "ENTREMED DEVELOPED PATENT RIGHTS".........................3
1.11 "ENTREMED DEVELOPED TECHNOLOGY RIGHTS".....................4
1.12 "ENTREMED EXISTING PATENT RIGHTS"..........................4
1.13 "ENTREMED EXISTING TECHNOLOGY RIGHTS"......................4
1.14 "ENTREMED INTELLECTUAL PROPERTY"...........................4
1.15 "FIELD"....................................................5
1.16 "FIRST COMMERCIAL SALE"....................................5
1.17 "NCI AGREEMENT"............................................5
1.18 "NDA"......................................................5
1.19 "NET SALES"................................................5
1.20 "PATENT RIGHT(s)"..........................................6
1.21 "PRODUCT"..................................................7
1.22 "SUBLICENSEE"..............................................7
1.23 "TECHNOLOGY RIGHTS"........................................7
1.24 "TERRITORY"................................................8
1.25 "THALIDOMIDE"..............................................8
1.26 "THIRD PARTY(IES)".........................................8
1.27 "VALID CLAIM"..............................................8
SECTION 2 - GRANT......................................................8
2.1 Grant of ENTREMED EXISTING PATENT RIGHTS
and ENTREMED EXISTING TECHNOLOGY RIGHTS....................8
2.2 Grant of ENTREMED DEVELOPED PATENT RIGHTS and
ENTREMED DEVELOPED TECHNOLOGY RIGHTS.......................9
2.3 CELGENE'S Right To Sublicense..............................9
2.4 Assignment Of Investigational New Drug and Orphan Drug
Status Applications.......................................10
2.5 Assignment Of Agreements..................................10
2.6 Technology Transfer.......................................11
2.7 Understanding Regarding CMCC AGREEMENT....................11
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<PAGE>
SECTION 3 - DUE DILIGENCE.............................................13
3.1 In the United States......................................13
3.2 Outside the United States.................................15
3.3 For PRODUCTS For Use In Animals...........................16
3.4 No Other ENTREMED Rights..................................17
3.5 Co-Promotion By CELGENE And ENTREMED......................17
3.6 Establishment Of A Scientific Committee...................19
SECTION 4 - ROYALTIES.................................................21
4.1 Royalty Payments..........................................21
4.2 Sublicensing Payments and Royalties.......................22
4.3 Later-Issued VALID CLAIM..................................23
4.4 No Multiple Royalties.....................................23
4.5 THIRD PARTY Sales.........................................23
4.6 Recordkeeping.............................................24
4.7 Quarterly Payments and Reports............................25
4.8 Accounting Reports........................................25
SECTION 5 - CONFIDENTIALITY...........................................26
5.1 Confidential Information..................................26
5.2 Non-Confidential Information..............................27
5.3 Disclosure To THIRD PARTIES...............................27
5.4 Disclosure To Sublicensees................................28
5.5 Public Statements.........................................28
SECTION 6 - ADVERSE MEDICAL EXPERIENCES...............................28
6.1 Adverse Medical Experience Reporting......................28
SECTION 7 - PATENTS...................................................29
7.1 Patent Prosecution........................................29
7.2 Cooperation In Prosecution................................29
7.3 Infringement and Declaratory Judgment Actions.............30
SECTION 8 - REPRESENTATIONS AND WARRANTIES............................32
8.1 By Both Parties...........................................32
8.2 By ENTREMED...............................................32
SECTION 9 - INDEMNIFICATION AND INSURANCE.............................34
9.1 By CELGENE................................................34
9.2 By ENTREMED...............................................35
9.3 Conditions to Indemnification.............................36
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<PAGE>
SECTION 10 - ASSIGNMENT AND SUCCESSORS................................37
10.1 By Either Party...........................................37
10.2 By CELGENE................................................37
10.3 CELGENE As Guarantor......................................37
10.4 Binding Effect............................................37
SECTION 11 - FORCE MAJEURE............................................38
SECTION 12 - TERMINATION..............................................38
12.1 Term......................................................38
12.2 By Reason Of FDA Action...................................38
12.3 Termination Of Royalty Obligations........................38
12.4 Breach....................................................39
12.5 Insolvency................................................41
12.6 Work-In-Progress..........................................41
12.7 Survival..................................................41
12.8 Reversion of Rights.......................................41
SECTION 13 - GENERAL PROVISIONS.......................................42
13.1 Relationship of Parties...................................42
13.2 Entire Understanding......................................42
13.3 Governing Law.............................................42
13.4 Headings..................................................42
13.5 No Waiver.................................................42
13.6 Export Controls...........................................42
13.7 Notices...................................................43
13.8 Original Counterparts.....................................43
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<PAGE>
AGREEMENT
This Agreement is effective this 9th day of December, 1998 (the "EFFECTIVE
DATE") by and between CELGENE CORPORATION, a Delaware corporation located at 6
Powder Horn Drive, Warren, New Jersey 07059 ("CELGENE"), and ENTREMED, INC., a
Delaware Corporation located at 9610 Medical Center Drive, Rockville, Maryland
20850 ("ENTREMED").
WHEREAS, CELGENE is a company that develops, manufactures, markets and
sells pharmaceutical products for healthcare, and that has developed and owns
certain patents, patent applications, proprietary technology, know-how, and
United States Food and Drug Administration ("FDA") filings relating to PRODUCTS,
as hereinafter defined; and
WHEREAS, ENTREMED is the owner or exclusive licensee of certain PATENT
RIGHTS as hereinafter defined, TECHNOLOGY RIGHTS, as hereinafter defined, and
FDA filings related to PRODUCTS, and has certain rights and obligations relating
to PRODUCTS pursuant to agreements with THIRD PARTIES, as hereinafter defined;
and
WHEREAS, CELGENE desires to obtain assignments and/or exclusive rights in
the TERRITORY in and to all of ENTREMED's PATENT RIGHTS, TECHNOLOGY RIGHTS,
rights by agreement, and FDA filings, whether presently existing or subsequently
developed, for the commercial development, use, and sale of PRODUCTS; and
WHEREAS, ENTREMED is willing to grant the assignments and/or exclusive
rights desired by CELGENE, as set forth herein, in order to transfer its entire
present and future right, title and interest in PRODUCTS to CELGENE.
NOW, THEREFORE, in consideration of the mutual promises and other good and
valuable consideration, the parties agree as follows:
SECTION 1 -- DEFINITIONS
The terms used in this Agreement have the following meaning:
<PAGE>
1.1 The term "AFFILIATE" as applied to either party shall mean any company or
other legal entity other than the party in question in whatever country
organized, controlling controlled by or under common control with that
party. The term "control" means ownership or control, directly or
indirectly, of at least fifty percent (50%) of the outstanding stock or
voting rights entitled to elect directors.
1.2 The term "CALENDAR QUARTER" shall mean the period of three (3) consecutive
calendar months ending on March 31, June 30, September 30 or December 31,
as the case may be.
1.3 The term "CELGENE DEVELOPED INTELLECTUAL PROPERTY" shall mean CELGENE
DEVELOPED PATENT RIGHTS and CELGENE DEVELOPED TECHNOLOGY RIGHTS.
1.4 The term "CELGENE DEVELOPED PATENT RIGHTS" shall mean any United States or
foreign patents or patent applications filed by CELGENE, or an AFFILIATE,
successor or assign thereof at any time subsequent to the EFFECTIVE DATE,
in which CELGENE has a transferrable interest, relating to a modification
of a PRODUCT described in any ENTREMED INTELLECTUAL PROPERTY or a method
of using such PRODUCT, which modification is (a) necessary for the
manufacture, use, or sale of such PRODUCT, and (b) then currently in use
by CELGENE at the time ENTREMED exercises its rights under Section
12.4(b), for the manufacture, use, or sale of such PRODUCT.
1.5 The term "CELGENE DEVELOPED TECHNOLOGY RIGHTS" shall mean any TECHNOLOGY
RIGHTS developed, obtained, or acquired by CELGENE or an AFFILIATE,
successor or assign thereof at any time subsequent to the EFFECTIVE DATE,
in which CELGENE has a transferrable interest, relating to a modification
of a PRODUCT described in any ENTREMED INTELLECTUAL PROPERTY or a method
of using or use of such PRODUCT, which modification is (a) necessary for
the
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manufacture, use, or sale of such PRODUCT, and (b) then currently in use
by CELGENE at the time ENTREMED exercises its rights under Section
12.4(b), for the manufacture, use, or sale of such PRODUCT.
1.6 The term "CELGENE EXISTING INTELLECTUAL PROPERTY" shall mean CELGENE
EXISTING PATENT RIGHTS and CELGENE EXISTING TECHNOLOGY RIGHTS.
1.7 The term "CELGENE EXISTING PATENT RIGHTS" shall mean the United States and
foreign patents and patent applications relating to PRODUCTS in which
CELGENE has an interest, jointly or solely, as owner, assignee, or
licensee, whether exclusive or nonexclusive, as of the EFFECTIVE DATE.
1.8 The term "CELGENE EXISTING TECHNOLOGY RIGHTS" shall mean any TECHNOLOGY
RIGHTS developed, obtained, or acquired, solely or jointly, exclusively or
non-exclusively, by CELGENE or an AFFILIATE, successor or assign thereof
as of the EFFECTIVE DATE.
1.9 The term "CMCC AGREEMENT" shall mean that certain License Agreement
entered into by and between ENTREMED and Children's Medical Center
Corporation ("CMCC"), dated May 26, 1994, as amended to the date hereof,
attached hereto as Exhibit A.
1.10 The term "ENTREMED DEVELOPED PATENT RIGHTS" shall mean any United States
or foreign patent applications relating to PRODUCTS assigned to, licensed
to or filed, solely or jointly, by ENTREMED, or an AFFILIATE, successor or
assign thereof at any time subsequent to the EFFECTIVE DATE, including any
United States or foreign patent applications filed pursuant to the CMCC
AGREEMENT or NCI AGREEMENT, and the patents issuing therefrom, which
patent applications and patents shall be added to Appendix A and shall be
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<PAGE>
included in this Agreement as PATENT RIGHTS and licensed to CELGENE in
accordance with Section 2 of this Agreement.
1.11 The term "ENTREMED DEVELOPED TECHNOLOGY RIGHTS" shall mean any TECHNOLOGY
RIGHTS developed, obtained, or acquired, solely or jointly, exclusively or
non-exclusively, by ENTREMED, or an AFFILIATE, successor or assign thereof
at any time subsequent to the EFFECTIVE DATE, including any TECHNOLOGY
RIGHTS developed or obtained pursuant to the CMCC AGREEMENT or NCI
AGREEMENT, which TECHNOLOGY RIGHTS shall be included in this Agreement and
licensed to CELGENE in accordance with Section 2 of this Agreement.
1.12 The term "ENTREMED EXISTING PATENT RIGHTS" shall mean the PATENT RIGHTS in
which ENTREMED has an interest, jointly or solely, as owner, assignee, or
licensee, whether exclusive or nonexclusive, as of the EFFECTIVE DATE.
1.13 The term "ENTREMED EXISTING TECHNOLOGY RIGHTS" shall mean any TECHNOLOGY
RIGHTS developed, obtained, or acquired, solely or jointly, exclusively or
non-exclusively, by ENTREMED, or an AFFILIATE, successor or assign thereof
as of the EFFECTIVE DATE, including without limitation any TECHNOLOGY
RIGHTS developed or obtained pursuant to the CMCC AGREEMENT or NCI
AGREEMENT. ENTREMED EXISTING TECHNOLOGY RIGHTS expressly includes any
regulatory data and filings, including without limitation all FDA
Investigational New Drug and Orphan Drug Status applications, as set forth
in Appendix C.
1.14 The term "ENTREMED INTELLECTUAL PROPERTY" shall mean and include ENTREMED
DEVELOPED PATENT RIGHTS, ENTREMED DEVELOPED TECHNOLOGY RIGHTS, ENTREMED
EXISTING PATENT RIGHTS, and ENTREMED EXISTING TECHNOLOGY RIGHTS.
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1.15 The term "FIELD" shall mean the use of THALIDOMIDE in humans and animals,
including without limitation any and all diagnostic, prophylactic,
therapeutic, and research and development uses.
1.16 The term "FIRST COMMERCIAL SALE" shall mean, in each country of the
TERRITORY, the first sale after the EFFECTIVE DATE in such country to a
THIRD PARTY in connection with the nationwide introduction of any PRODUCT
by CELGENE, its AFFILIATES or SUBLICENSEES following marketing and/or
pricing approval by the appropriate governmental agency for the country in
which the sale is to be made and, when governmental approval is not
required, the first sale in that country in connection with the nationwide
introduction of a PRODUCT in that country.
1.17 The term "NCI AGREEMENT" shall mean that certain Agreement by and between
the Division of Cancer Treatment at the National Cancer Institute ("NCI")
and ENTREMED, dated November 16, 1994, and executed on behalf of ENTREMED
on November 23, 1994, and on behalf of NCI on November 18, 1994, attached
hereto as Exhibit B.
1.18 The term "NDA" shall mean a New Drug Application filed with the United
States Food and Drug Administration.
1.19 The term "NET SALES" means the gross amount received by CELGENE or its
AFFILIATES or SUBLICENSEES for sale of PRODUCT to THIRD PARTIES, less: (i)
cost of freight, postage, and freight insurance, (if paid by seller); (ii)
sales taxes, value added taxes, excise taxes, and customs duties; (iii)
cost of export licenses and any taxes, fees or other charges associated
with the exportation or importation of PRODUCTS; (iv) rebates accrued,
incurred or paid to Federal Medicaid and State Medicare and any other
price reductions required by a governmental agency; (v) rejected
shipments, returns, and retroactive deductions; (vi) the amount received
for sales which become the subject of a subsequent temporary or partial
recall
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by a regulatory agency for safety or efficacy reasons outside the control
of CELGENE; and (vii) customary cash, quantity, and trade discounts;
provided, however, that a sale or transfer to an AFFILIATE or SUBLICENSEE
for re-sale by such AFFILIATE or SUBLICENSEE shall not be considered a
sale for the purpose of this provision but the resale by such AFFILIATE or
SUBLICENSEE shall be a sale for such purposes. A "sale" shall also include
a transfer or other disposition for consideration, but not such transfers
or dispositions, without consideration, for pre-clinical, clinical,
regulatory or governmental purposes prior to receiving marketing approval
for the specific indication for which such transfer is made. In the event
that consideration in addition to or in lieu of money is received for
PRODUCT, such consideration shall be added to the NET SALES as valued on
the day of receipt thereof by CELGENE. To the extent that a PRODUCT is
sold in other than an arms length transaction, NET SALES shall be the fair
market value of such PRODUCT if sold in an arms length transaction, less
the costs identified in subsections (i)-(vi) of this Section 1.19. PRODUCT
shall be considered "sold" at the earlier of (a) the transfer of title in
such PRODUCT to a person other than an AFFILIATE or SUBLICENSEE of CELGENE
or (b) the shipment of such PRODUCT from the manufacturing or warehouse
facilities of CELGENE or its AFFILIATE or SUBLICENSEE to a THIRD PARTY.
1.20 The term "PATENT RIGHT(s)" shall mean:
(a) the United States patent applications and patents listed in Appendix
A;
(b) the United States and foreign patents issued from applications
listed in Appendix A and from divisionals and continuations of such
applications;
(c) claims of United States continuation-in-part applications and of
equivalent foreign applications, and of the resulting patent(s),
that
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<PAGE>
are directed to subject matter described in the United States and
foreign applications listed in Appendix A;
(d) claims of all later-filed foreign patent applications, and of the
resulting patents, that are directed to subject matter described in
the United States patents and/or patent applications described in
the foregoing subsections of this Section 1.20;
(e) any reissues, re-examinations or extension of United States patents
described in the foregoing subsections of this Section 1.20; and
(f) ENTREMED DEVELOPED PATENT RIGHTS, when assigned to, licensed to or
filed, solely or jointly, by ENTREMED, or an AFFILIATE, successor or
assign thereof, pursuant to Section 1.10 of this Agreement.
1.21 The term "PRODUCT" shall mean any article of manufacture, substance,
material, chemical, formulation or composition for use in the FIELD which
is or includes THALIDOMIDE as an active ingredient, including, without
limitation, a composition that comprises THALIDOMIDE and a non-steroidal
anti-inflammatory compound(s). PRODUCT expressly excludes THALIDOMIDE
analogs.
1.22 The term "SUBLICENSEE" shall mean any THIRD PARTY licensed by CELGENE to
make, have made, use, offer to sell, sell or import any PRODUCT.
1.23 The term "TECHNOLOGY RIGHTS" shall mean any information relating to
PRODUCTS that is not covered by a patent or patent application, including
without limitation technical and non-technical information, know-how,
methods, processes, procedures, compositions, devices, formulae,
protocols, techniques, software, designs, drawings, plans, diagrams,
specifications, data, the results of tests or assays, and all other
information relating to PRODUCTS.
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<PAGE>
1.24 The term "TERRITORY" shall mean all countries of the world.
1.25 The term "THALIDOMIDE" shall mean a compound with the chemical structure
described as 2-(2,6-Dioxo-3-piperidinyl)-1H-isoindole-1,3(2H)-dione, or as
otherwise defined in the Merck Index, entry 9390, 12th ed., and
pharmaceutically acceptable salts thereof.
1.26 The term "THIRD PARTY(IES)" shall mean a person or entity who or which is
neither a party hereto nor an AFFILIATE of a party hereto.
1.27 The term "VALID CLAIM" shall mean an issued claim of an unexpired patent
("ISSUED VALID CLAIM") or a claim of a pending patent application, which
shall not have been withdrawn, canceled or disclaimed, or held invalid or
unenforceable by a court of competent jurisdiction in an unappealed or
unappealable decision. Notwithstanding the foregoing to the contrary, a
claim of a pending patent application, divisional application or
continuation-in-part shall cease to be a VALID CLAIM if no patent has
issued on such claim on or prior to the fifth (5th) anniversary of the
EFFECTIVE DATE of this Agreement, provided that such claim shall once
again become a VALID CLAIM on the issue date of a patent that subsequently
issues and covers such claim.
1.28 The use herein of the plural shall include the singular, and the use of
the masculine shall include the feminine.
SECTION 2--GRANT
2.1 Grant of ENTREMED EXISTING PATENT RIGHTS and ENTREMED EXISTING TECHNOLOGY
RIGHTS. ENTREMED hereby grants to CELGENE and CELGENE hereby accepts from
ENTREMED an exclusive, royalty bearing right and license or sublicense, as
the case may be, under the ENTREMED EXISTING PATENT RIGHTS and the
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<PAGE>
ENTREMED EXISTING TECHNOLOGY RIGHTS to make, have made, use, offer to
sell, sell, and import PRODUCTS in the TERRITORY.
2.2 Grant of ENTREMED DEVELOPED PATENT RIGHTS and ENTREMED DEVELOPED
TECHNOLOGY RIGHTS. ENTREMED hereby grants to CELGENE, to the extent not
prohibited by the United States Government or by prior contractual
obligations to any THIRD PARTY, and CELGENE hereby accepts from ENTREMED:
(a) an exclusive, royalty bearing right and license under the ENTREMED
DEVELOPED PATENT RIGHTS and the ENTREMED DEVELOPED TECHNOLOGY RIGHTS
to make, have made, use, offer to sell, sell, and import PRODUCTS in
the TERRITORY; and
(b) to the extent an exclusive license is not available to CELGENE in a
country under a particular ENTREMED DEVELOPED PATENT RIGHT or
ENTREMED DEVELOPED TECHNOLOGY RIGHT, but a non-exclusive license
would be available, ENTREMED hereby grants CELGENE a nonexclusive,
royalty bearing right and license under such ENTREMED DEVELOPED
PATENT RIGHT(s) and ENTREMED DEVELOPED TECHNOLOGY RIGHT(s) to make,
have made, use, offer to sell, sell, and import PRODUCTS in the
TERRITORY.
2.3 CELGENE'S Right To Sublicense.
(a) In the United States. ENTREMED hereby grants to CELGENE the right to
sublicense ENTREMED INTELLECTUAL PROPERTY in the United States with
the consent of ENTREMED, to be exercised in ENTREMED's sole
discretion.
(b) Outside the United States. ENTREMED hereby grants to CELGENE the
right to sublicense ENTREMED INTELLECTUAL
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PROPERTY outside the United States with the written consent of
ENTREMED, which consent shall not be unreasonably withheld. Outside
the United States, CELGENE shall use reasonable efforts to negotiate
sublicensing agreements that are commercially reasonable according
to contemporaneous prevailing standards within the pharmaceutical
industry.
2.4 Assignment Of Investigational New Drug and Orphan Drug Status
Applications. Within ten (10) days of the EFFECTIVE DATE, ENTREMED and
CELGENE shall notify the Food and Drug Administration ("FDA") of the
transfer of ENTREMED's rights in PRODUCTS to CELGENE by submitting to the
FDA letters substantially in the form attached hereto as Exhibit C, and
ENTREMED shall notify CELGENE of its compliance with this Section 2.4 by
copies of such letters. ENTREMED shall take all further steps necessary or
helpful to assign to CELGENE all Orphan Drug Status and Investigational
New Drug applications filed by ENTREMED as of the EFFECTIVE DATE, as set
forth in Appendix C. If the FDA declines to allow the assignment of any of
ENTREMED's Investigational New Drug and/or Orphan Drug Status
application(s) to CELGENE, for whatever reason, then ENTREMED's rights
under such application(s) will be included in this Agreement as ENTREMED
EXISTING TECHNOLOGY RIGHTS and will be licensed to CELGENE in accordance
with Section 2 of this Agreement.
2.5 Assignment Of Agreements. Within ten (10) days of the EFFECTIVE DATE,
ENTREMED shall notify CMCC and NCI of the sublicense and transfer,
respectively, of its rights in PRODUCTS to CELGENE, and shall take all
steps necessary or helpful to assign to CELGENE the NCI AGREEMENT,
including without limitation requesting consent to assign ENTREMED's
obligations and entire right, title, and interest, under such agreement to
CELGENE, and upon receipt of the consent of NCI to assign the NCI
AGREEMENT, CELGENE will expressly assume all of
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ENTREMED's duties and obligations thereunder. In the event that ENTREMED
is not permitted to assign its rights under the NCI AGREEMENT to CELGENE,
ENTREMED's rights in any PATENT RIGHTS or TECHNOLOGY RIGHTS resulting from
the NCI AGREEMENT will be included in this Agreement as ENTREMED DEVELOPED
PATENT RIGHTS and ENTREMED DEVELOPED TECHNOLOGY RIGHTS, respectively, and
will be licensed to CELGENE in accordance with Section 2.2 of this
Agreement.
2.6 Technology Transfer. As soon as reasonably possible following the
EFFECTIVE DATE, but in no event later than one (1) month after such date,
ENTREMED shall transfer to CELGENE all ENTREMED EXISTING TECHNOLOGY RIGHTS
and ENTREMED DEVELOPED TECHNOLOGY RIGHTS not already in CELGENE's
possession. ENTREMED agrees to disclose and transfer all ENTREMED
DEVELOPED TECHNOLOGY RIGHTS to CELGENE promptly, as they are obtained or
developed. ENTREMED also agrees to provide, upon reasonable notice from
CELGENE, any technical, scientific, statistical, and/or regulatory support
necessary or useful to CELGENE's understanding and/or use of ENTREMED
EXISTING TECHNOLOGY RIGHTS and ENTREMED DEVELOPED TECHNOLOGY RIGHTS.
2.7 Understanding Regarding CMCC AGREEMENT. To the extent TECHNOLOGY RIGHTS
and/or PATENT RIGHTS licensed to CELGENE under this Agreement are rights
which ENTREMED has licensed from CMCC under the CMCC AGREEMENT, CELGENE
and ENTREMED understand and agree as follows:
(a) The rights licensed to CELGENE by ENTREMED are subject to the terms,
limitations, restrictions and obligations of the CMCC AGREEMENT.
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(b) CELGENE will comply with the terms, obligations, limitations and
restrictions of sublicensees under Articles II, V, VII, VIII, IX, X,
XII, XIII, and XV of the CMCC AGREEMENT.
(c) ENTREMED will, at its own expense, timely pay the milestone payment
of "..." due to CMCC upon completion of a Phase II clinical trial
for any indication, pursuant to Section 4.1.3 of the CMCC AGREEMENT.
ENTREMED shall promptly provide written notice to CELGENE of such
payment.
(d) CELGENE will, at its own expense, timely pay the milestone payment
of "..." due to CMCC upon completion of a Product License
Application for any indication, pursuant to Section 4.1.4 of the
CMCC AGREEMENT, which payment shall be made to ENTREMED and timely
forwarded by ENTREMED to CMCC; provided, however, that if (i) such
payment becomes due prior to January 1, 2000, and (ii) CELGENE's
annual sales in the year such payment becomes due are less than
"...", CELGENE may notify ENTREMED, in writing, that it wishes
ENTREMED to pay such amount to CMCC directly, which ENTREMED hereby
agrees to do, and, by June 30, 2000 CELGENE shall reimburse ENTREMED
the amount paid to CMCC, plus interest calculated at the annual rate
of the sum of one percent (1%) plus the prime interest rate quoted
by Citibank, N.A. on the date said payment is due. ENTREMED shall
promptly provide written notice to CELGENE of all payments under
this Section 2.7(d).
(e) ENTREMED will comply with the terms, obligations, limitations and
restrictions of the CMCC AGREEMENT, including, without limitation,
any provisions relating to due diligence, notification with respect
to sublicenses, and milestone payments, subject to Sections 2.7(c)
and (d) of this Agreement.
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(f) The CMCC AGREEMENT and ENTREMED's rights thereunder shall remain in
full force and effect for the life of the last to expire patent
issued under the Patent Rights, as defined therein, unless earlier
terminated pursuant to Article XIII of the CMCC AGREEMENT.
SECTION 3--DUE DILIGENCE
3.1 In the United States.
(a) CELGENE shall initiate and diligently use reasonable efforts to
develop, or to file for regulatory approval of or register, and to
market and sell PRODUCTS in the United States. Reasonable efforts
with respect to the development and/or pursuit of regulatory
approval or registration for PRODUCTS in the United States shall be
demonstrated by CELGENE (i) developing and pursuing regulatory
approval for PRODUCTS for those uses CELGENE, in good faith,
determines to be commercially and scientifically reasonable,
including but not limited to (a) one (1) "...", (b) one (1) "...",
and (c) one (1) "..."; and (ii) funding and conducting clinical
trials for PRODUCTS for other uses in order to enhance scientific
knowledge with regard to such PRODUCTS, including for the
publication of data and results in scientific journals, whether or
not such clinical trials result in or facilitate the pursuit of
regulatory approval.
(b) ENTREMED agrees that, subject to Section 3.6 of this Agreement, (i)
the decision regarding which uses to pursue regulatory approval of
PRODUCTS for, and/or to fund and conduct clinical trials of PRODUCTS
for, pursuant to Section 3.1(a) of this Agreement, shall be made by
and in the sole discretion of CELGENE; and (ii) with respect to the
manner in which regulatory approval is sought and/or clinical trials
are funded and conducted, CELGENE shall
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have sole discretion, including, without limitation, complete
control over all regulatory submissions of PRODUCTS to the
appropriate regulatory agencies worldwide, including whether, when,
and how to file, maintain, withdraw, or abandon an application for
regulatory approval of PRODUCTS.
(c) Within 90 days after the EFFECTIVE DATE, CELGENE shall draft a
Development Plan outlining CELGENE'S development objectives for
PRODUCTS, in accordance with Sections 3.1(a)(i) and (b) of this
Agreement. CELGENE shall consult with ENTREMED concerning the
Development Plan. The Development Plan shall include suitable
clinical milestones which are reasonably intended to lead to
regulatory approval of PRODUCTS, in accordance with Sections
3.1(a)(i) and (b) of this Agreement.
(d) CELGENE shall provide a written summary report to ENTREMED within
thirty (30) days after June 30th and December 31st of each calendar
year concerning the efforts being made in accordance with this
Section 3.1 with respect to PRODUCTS. CELGENE shall provide ENTREMED
with any additional information reasonably requested by ENTREMED in
this respect.
(e) At ENTREMED'S reasonable request, CELGENE shall provide ENTREMED
access to all clinical trial data for PRODUCTS conducted by CELGENE
in accordance with the Development Plan set forth in this Section
3.1. In the event that rights are returned to ENTREMED under Section
3.1(f) of this Agreement, ENTREMED shall have the right to review
and use the clinical trial data in its own clinical program.
(f) In the event that CELGENE fails to meet any of its obligations under
this Section 3.1 with respect to PRODUCTS in the United
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States, and such failure is not cured within sixty (60) days after
written notice thereof is received by CELGENE from ENTREMED, then
ENTREMED shall have the right and option to terminate the license
granted in this Agreement and this Agreement by giving CELGENE sixty
(60) days prior written notice thereof.
3.2 Outside the United States.
(a) Diligence. CELGENE shall initiate and diligently use reasonable
efforts to develop, or to file for regulatory approval of or
register, and to market and sell PRODUCTS in Europe, in Canada, and
in the Pacific Rim, Japan, and Australia (collectively, the "PACIFIC
RIM"). Reasonable efforts with respect to the development and/or
pursuit of regulatory approval or registration for PRODUCTS in
Europe, Canada, and the PACIFIC RIM shall be demonstrated by
CELGENE, or a sublicensee thereof, pursuing regulatory approval for
PRODUCTS (i) in Italy, France, the United Kingdom, and Germany (in
the case of Europe), and in Japan and one other country of the
PACIFIC RIM (in the case of the PACIFIC RIM), within "..." from the
date of the first FDA approval of a PRODUCT for an oncology
indication or Crohn's disease, whichever occurs earlier; and (ii) in
Canada, within one (1) year from the date of the first FDA approval
of a PRODUCT for an oncology indication or Crohn's disease,
whichever occurs earlier.
(b) CELGENE's Discretion. ENTREMED agrees that, subject to Section 3.6
of this Agreement, (i) the decision regarding which uses to pursue
regulatory approval of PRODUCTS for, and/or to fund and conduct
clinical trials of PRODUCTS for, pursuant to Section 3.2(a) of this
Agreement, shall be made by and in the sole discretion of CELGENE;
and (ii) with respect to the manner in
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which regulatory approval is sought and/or clinical trials are
funded and conducted, CELGENE shall have sole discretion, including,
without limitation, complete control over all regulatory submissions
of PRODUCTS to the appropriate regulatory agencies worldwide,
including whether, when, and how to file, maintain, withdraw, or
abandon an application for regulatory approval of PRODUCTS.
(c) Cooperation. If CELGENE fails to use reasonable efforts in Europe,
Canada, or the PACIFIC RIM, as set forth in Section 3.2(a) of this
Agreement, or to sublicense its rights to a THIRD PARTY, then
ENTREMED shall have the right and option to either (i) terminate the
licenses granted in the region where such failure has occurred,
i.e., Europe, Canada, or the PACIFIC RIM, respectively, by giving
CELGENE sixty (60) days prior written notice thereof, or (ii)
cooperate with CELGENE to find an appropriate SUBLICENSEE for such
rights.
3.3 For PRODUCTS For Use In Animals.
(a) Diligence. CELGENE shall initiate and diligently use reasonable
efforts to develop, or to file for regulatory approval of or
register, and to market and sell PRODUCTS for use in animals. Such
reasonable efforts shall be demonstrated by CELGENE obtaining
regulatory approval for the sale of a PRODUCT for use in animals
within four (4) years of the EFFECTIVE DATE in the United States
and, outside the United States, in one of the following countries:
Italy, France, the United Kingdom, or Germany.
(b) Cooperation. If CELGENE fails to use reasonable efforts either in
the United States or outside the United States, as set forth in
Section 3.3(a) of this Agreement, or to sublicense its rights in
such regions to a THIRD PARTY, then ENTREMED shall have the
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right and option to either (i) terminate CELGENE's rights in the
region where such failure has occurred, i.e., in the United States
or outside the United States, respectively, in and to such PRODUCTS
for use in animals by giving CELGENE sixty (60) days prior written
notice thereof, or (ii) cooperate with CELGENE to find an
appropriate SUBLICENSEE for such rights.
3.4 No Other ENTREMED Rights. Except as otherwise expressly provided in this
Agreement, ENTREMED agrees that it has not retained any rights under
ENTREMED INTELLECTUAL PROPERTY to PRODUCTS, and that is shall not (i)
make, use, offer to sell, sell, or import PRODUCTS in the TERRITORY, or
(ii) collaborate, negotiate, or deal with THIRD PARTIES with respect to
PRODUCTS.
3.5 Co-Promotion By CELGENE And ENTREMED.
(a) With Regard To PRODUCTS. If CELGENE, in its sole discretion, decides
to co-promote any PRODUCT or to seek sales assistance in promoting
any PRODUCT, including, but not limited to, sales assistance for
indications not then promoted by CELGENE sales personnel, CELGENE
shall, in good faith, consider ENTREMED for the opportunity to
co-promote such PRODUCT(S) for such indications in the United
States.
(i) CELGENE will give ENTREMED due consideration for the
opportunity to co-promote such PRODUCT(S) as set forth herein,
provided that ENTREMED has a sales force capable of providing
the required details to the targeted physician audience, or is
capable of assembling such a sales force within six (6)
months, and agrees to do so. If and only if ENTREMED either
has a sales force capable of providing the required details to
the targeted physician audience, or commits to assembling such
a sales force
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within six (6) months, the decision to offer ENTREMED the
opportunity to co-promote such PRODUCT(s) for such indications
in the United States shall be made, in good faith, by CELGENE,
and CELGENE shall notify ENTREMED of its decision in writing.
(ii) If CELGENE offers ENTREMED the opportunity to co-promote,
pursuant to Section 3.5(a)(i) of this Agreement, ENTREMED
shall have thirty (30) days to accept such offer by written
notice to CELGENE. If ENTREMED accepts such offer to
co-promote PRODUCTS, then the parties will negotiate, in good
faith, a co-promotion agreement setting forth the substance of
this Section 3.5 and other normal and customary conditions
within six (6) months of CELGENE's receipt of ENTREMED's
acceptance pursuant to this Section 3.5(a)(ii).
(iii) ENTREMED's co-promotion efforts will focus on detailing
(product presentations) the PRODUCT to the targeted physician
audience. In such case, ENTREMED's sales representatives will
also have the opportunity, from time to time, to participate
in seminars, in-service training, group presentations, and
other educational and promotional activities initiated by
CELGENE in consultations with ENTREMED. In addition, ENTREMED
will assign a product manager to participate with the CELGENE
marketing team to provide input as appropriate and to be the
operational liaison between CELGENE and ENTREMED's sales
force.
(b) With Regard To Anti-angiogenic Compounds. If ENTREMED, in its sole
discretion, decides to co-promote an anti-angiogenic compound or a
composition containing, as an active ingredient, such a compound, or
to seek sales assistance in promoting any
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such anti-angiogenic compound or composition, including, but not
limited to, sales assistance for indications not then promoted by
ENTREMED sales personnel, ENTREMED shall, in good faith, consider
CELGENE for the opportunity to co-promote such anti-angiogenic
compounds and/or compositions. The decision to offer CELGENE the
opportunity to co-promote such anti-angiogenic compounds and/or
compositions shall be made in the sole discretion of ENTREMED, and
be subject, mutatis mutandis, to the terms and conditions set forth
in Sections 3.5(a)(ii) and (iii) of this Agreement.
3.6 Establishment Of A Scientific Committee. CELGENE agrees to conduct and
fund a development program designed to obtain approval to market PRODUCTS,
in accordance with its obligations under Section 3.1(a)(i) and 3.1(b) of
this Agreement (the "PROGRAM"). To ensure the continued participation of
ENTREMED in these development activities, the PROGRAM will be monitored by
a Scientific Committee as described herein (the "COMMITTEE").
(a) Members. Within ten (10) days of the date hereof, ENTREMED and
CELGENE shall each appoint two (2) persons to serve on the
COMMITTEE. Each party will have the right to change its
representation on the COMMITTEE upon written notice to the other.
(b) Chairperson. The COMMITTEE will be chaired by one representative of
CELGENE, who shall be chosen in the sole discretion of CELGENE.
(c) Responsibilities. The COMMITTEE will have authority to:
(i) act in an advisory role and provide information, including
without limitation technical and regulatory information and
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marketing and sales information, helpful in connection with
the PROGRAM;
(ii) make recommendations regarding the performance of the PROGRAM
and the conduct of the work pursuant thereto, and monitor
performance thereunder;
(iii) propose modifications to the PROGRAM;
(iv) review any and all proposed publication(s) relating to the
PROGRAM and the results therefrom; and
(v) review all information and data resulting from the PROGRAM.
(d) Meetings. The COMMITTEE will meet not less than four (4) times a
year during the term of the PROGRAM, at such dates and times as
agreed to by the parties. The COMMITTEE will prepare written minutes
of each meeting and a written record of all decisions whether made
at a formal meeting or not. All decisions made and actions taken by
the COMMITTEE will be made or taken in the sole discretion of
CELGENE after good faith consideration of the position or opinion of
the ENTREMED members.
(e) Term and Termination. The PROGRAM will continue until there are no
longer any ongoing activities in pursuit of regulatory approval, or
any pending applications for regulatory approval, for PRODUCTS,
pursuant to Sections 3.1(a)(i) and (b) of this Agreement. Once all
such activities have been completed and all such regulatory
approvals have been obtained, CELGENE may, in its sole discretion,
extend the term of the PROGRAM to include PRODUCTS in clinical
trials for other uses, as set forth in Sections 3.1(a)(ii) and (b)
of this Agreement, in which case the PROGRAM will continue until
such clinical trials have been completed or otherwise terminated or,
if applicable, until regulatory approval has
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been obtained, unless the PROGRAM is sooner terminated by CELGENE.
SECTION 4--ROYALTIES
4.1 Royalty Payments.
(a) First Twelve Years. CELGENE shall pay to ENTREMED the following
royalties on the NET SALES of PRODUCTS sold by CELGENE or its
AFFILIATES in each country of the TERRITORY (i) for the first
consecutive twelve (12) years from the date of the FIRST COMMERCIAL
SALE of a PRODUCT in each country of the TERRITORY, and, separately
and independently, (ii) for the first consecutive twelve (12) years
from the date of the FIRST COMMERCIAL SALE of each PRODUCT that
contains, as a second active ingredient, a compound other than
THALIDOMIDE, in each country of the TERRITORY:
(i) "..." of NET SALES up to "..." dollars of such sales;
(ii) "..." of NET SALES between "..." dollars and "..." dollars of
such sales;
(iii) "..." of NET SALES between "..." and "..." dollars of such
sales; and
(iv) "..." of NET SALES over "..." dollars of such sales.
(b) After Twelve Years. For each PRODUCT in each country in the
TERRITORY in which the twelve (12) year period provided for in
Section 4.1(a) of this Agreement shall have terminated, CELGENE
shall pay to ENTREMED the following royalties on the NET SALES of
such PRODUCT covered by an ISSUED VALID CLAIM of the PATENT RIGHTS
that are sold by CELGENE or its AFFILIATES in such country:
(i) "..." of NET SALES up to "..." dollars of such sales;
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(ii) "..." of NET SALES between "..." dollars and "..." dollars of
such sales;
(iii) "..." of NET SALES between "..." and "..." dollars of such
sales; and
(iv) "..." of NET SALES over "..." dollars of such sales;
and such royalties under this Section 4.1(b) shall be payable until
the last to expire PATENT RIGHT containing an ISSUED VALID CLAIM
covering such PRODUCT sold by CELGENE or its AFFILIATES in such
country.
4.2 Sublicensing Payments and Royalties.
(a) Under CELGENE's Rights. If CELGENE grants a sublicense of its
exclusive rights under this Agreement, pursuant to Section 2.3 of
this Agreement, in any country(ies) of the TERRITORY, CELGENE shall
pay to ENTREMED (i) "..." of any non-royalty consideration,
including but not limited to any sublicensing and/or milestone
payments received by CELGENE pursuant to such sublicense and (ii)
"..." of the royalty income paid by SUBLICENSEES to CELGENE on NET
SALES of PRODUCTS.
(b) CELGENE-ENTREMED Cooperation. If CELGENE grants a sublicense of any
of its rights under this Agreement in any area of the FIELD or any
country of the TERRITORY with respect to which ENTREMED and CELGENE
are cooperating pursuant to Sections 3.2 or 3.3 of this Agreement,
CELGENE shall pay to ENTREMED "..." of any non-royalty
consideration, including but not limited to any sublicensing and/or
milestone payments received by CELGENE pursuant to such sublicense.
CELGENE shall also pay to ENTREMED, as applicable, the following:
(i) if CELGENE and ENTREMED are cooperating in any country(ies)
pursuant to Section 3.2 of this Agreement, "..." of the royalty
income paid by SUBLICENSEES to CELGENE on NET SALES, in such
country(ies), of PRODUCTS; and (ii) if CELGENE and
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ENTREMED are cooperating in any country(ies) with regard to PRODUCTS
for use in animals pursuant to Section 3.3 of this Agreement, "..."
of the royalty income paid by SUBLICENSEES to CELGENE on NET SALES
in such country(ies) of such PRODUCTS.
4.3 Later-Issued VALID CLAIM. In the event that there is no ISSUED VALID CLAIM
of a PATENT RIGHT in a country within the TERRITORY on the date the twelve
(12) year period provided for in Section 4.1(a) of this Agreement expires,
no royalties shall be owed by CELGENE to ENTREMED under Sections 4.1(b)
and 4.2 of this Agreement on PRODUCTS sold by CELGENE or its AFFILIATES in
such country, provided, however, that if a VALID CLAIM of a PATENT RIGHT
thereafter issues in such country, CELGENE shall pay ENTREMED royalties on
the NET SALES in such country of PRODUCTS covered by an ISSUED VALID CLAIM
of the PATENT RIGHTS that are sold by CELGENE or its AFFILIATES, according
to the royalty rates set forth in Sections 4.1(b) and 4.2 of this
Agreement, and such royalties under this Section 4.3 shall be payable
until the last to expire PATENT RIGHT containing an ISSUED VALID CLAIM
covering the PRODUCTS sold by CELGENE, its AFFILIATES or SUBLICENSEE in
such country.
4.4 No Multiple Royalties.
No multiple royalties shall be payable because any PRODUCT, its
manufacture, use, importation, lease, or sale is or shall be covered by
more than one PATENT RIGHT.
4.5 THIRD PARTY Sales. In any country where sales by a THIRD PARTY of a
PRODUCT(s) for a similar dosage form and/or route of administration:
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(a) are equal to or greater than "..." of the dollar market share for
such PRODUCT in such country ("MARKET SHARE"), but less than "..."
of the MARKET SHARE, then the royalty payable to ENTREMED pursuant
to Sections 4.1 and 4.3 of this Agreement shall be reduced by "...";
(b) are equal to or greater than "..." of the MARKET SHARE, but less
than "..." of the MARKET SHARE, then the royalty payable to ENTREMED
pursuant to Sections 4.1 and 4.3 of this Agreement shall be reduced
by "...";
(c) are equal to or greater than "..." of the MARKET SHARE, but less
than "..." of the MARKET SHARE, then the royalty payable to ENTREMED
pursuant to set Sections 4.1 and 4.3 of this Agreement shall be
reduced by "..."; and
(d) are equal to or greater than "..." of the MARKET SHARE, then the
royalty payable to ENTREMED pursuant to Sections 4.1 and 4.3 of this
Agreement shall be reduced by "...";
provided that royalties payable to ENTREMED shall never be reduced below
"..." of NET SALES in each royalty bracket. For purposes of this Section
4.5, oral dosage forms shall include, without limitation, all capsule,
caplet, tablet, and liquid formulations for oral administration.
4.6 Recordkeeping. CELGENE shall keep, and shall cause each of its AFFILIATES
and SUBLICENSEES to keep, full and accurate books of account containing
all particulars relevant to its sales of PRODUCTS that may be necessary
for the purpose of calculating all royalties payable to ENTREMED. Such
books of account shall be kept at their principal place of business and,
with all necessary supporting data shall, for the three (3) years next
following the end of the calendar year to which each shall pertain, be
open for inspection by an independent certified public accountant
reasonably acceptable to CELGENE, upon reasonable notice
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during normal business hours at ENTREMED'S expense for the sole purpose of
verifying royalty statements or compliance with this Agreement. In the
event the inspection determines that royalties due ENTREMED for any period
have been underpaid by five percent (5%) or more, then CELGENE shall pay
for all costs of the inspection. In all cases, CELGENE shall pay to
ENTREMED any underpaid royalties promptly and with interest at the prime
rate available to ENTREMED from its bank plus two percent (2%). All
information and data reviewed in the inspection shall be used only for the
purpose of verifying royalties and shall be treated as CELGENE
CONFIDENTIAL INFORMATION subject to the obligations of this Agreement. No
audit by an agent of ENTREMED shall occur more frequently than once during
any twelve (12) month period.
4.7 Quarterly Payments and Reports. In each year the amount of royalty due
shall be calculated quarterly as of the end of each CALENDAR QUARTER and
shall be paid quarterly within the forty-five (45) days next following
such date. Every such payment shall be supported by the accounting
described in Section 4.8 of this Agreement. All royalties due ENTREMED are
payable in United States dollars. When PRODUCTS are sold for currency
other than United States dollars, the earned royalties will first be
determined in the foreign currency of the country in which such PRODUCTS
were sold and then converted into equivalent United States funds. The
exchange rate will be that rate quoted in the Wall Street Journal on the
last business day of the CALENDAR QUARTER in which such sales were made.
4.8 Accounting Reports. With each quarterly payment, CELGENE shall deliver to
ENTREMED a full and accurate accounting to include at least the following
information:
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(a) Quantity of PRODUCT subject to royalty sold, by country, by CELGENE,
its AFFILIATES or SUBLICENSEES;
(b) Total receipts for each PRODUCT subject to royalty, by country and,
to the extent used in any royalty calculations during such quarter,
the exchange rate set forth in Section 4.7 of this Agreement;
(c) Compensation on PRODUCTS received from SUBLICENSEES pursuant to a
sublicense of CELGENE's rights under this Agreement; and
(c) Total royalties and/or compensation payable to ENTREMED.
SECTION 5--CONFIDENTIALITY
5.1 Confidential Information. During the term of this Agreement, it is
contemplated that each party may disclose to the other, proprietary and
confidential technology, inventions, technical information, material,
reagents, biological materials and the like which are owned or controlled
by the party providing such information or which that party is obligated
to maintain in confidence and which is designated by the party providing
such information as confidential ("CONFIDENTIAL INFORMATION"). Each party
agrees not to disclose the CONFIDENTIAL INFORMATION and to maintain the
CONFIDENTIAL INFORMATION in strict confidence, to cause all of its agents,
representatives and employees to maintain the disclosing party's
CONFIDENTIAL INFORMATION in confidence and not to disclose any such
CONFIDENTIAL INFORMATION to a THIRD PARTY without the prior written
consent of the disclosing party, and not to use such CONFIDENTIAL
INFORMATION for any purpose other than as provided under this Agreement.
The secrecy obligations of the parties with respect to
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CONFIDENTIAL INFORMATION shall continue for a period ending ten (10) years
from the termination of this Agreement.
5.2 Non-Confidential Information. The obligations of confidentiality will not
apply to information that:
(a) was known to the receiving party or generally known to the public
prior to its disclosure hereunder through no fault of the disclosing
party or any agent, representative or employee thereof; or
(b) subsequently becomes known to the public by some means other than a
breach of this Agreement, including publication and/or laying open
to inspection of any patent applications or patents;
(c) is subsequently disclosed to the receiving party by a THIRD PARTY
having a lawful right to make such disclosure and who is not under
an obligation of confidentiality to the disclosing party;
(d) is required by law, rule, regulation or bona fide legal process to
be disclosed, provided that the disclosing party takes all
reasonable stem to restrict and maintain confidentiality of such
disclosure and provides reasonable notice to the non-disclosing
party; or
(e) is approved for release by the parties.
5.3 Disclosure To THIRD PARTIES. The obligations of Section 5.1
notwithstanding, CELGENE or ENTREMED, as the case may be, may disclose the
CONFIDENTIAL INFORMATION licensed hereunder to THIRD PARTIES
(a) who need to know the same in order to obtain regulatory approval for
a PRODUCT under this Agreement, provided that the actions of such
THIRD PARTY are not in conflict with CELGENE's rights under this
Agreement,
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(b) who need to know the same in order to work towards the commercial
development of PRODUCT on behalf of CELGENE, or
(c) for whom the non-disclosing party, ENTREMED or CELGENE, as the case
may be, has given prior written approval
provided that such THIRD PARTIES are bound by obligations of
confidentiality and non-use at least as stringent as those set forth
herein.
5.4 Disclosure To Sublicensees. CELGENE may disclose ENTREMED's CONFIDENTIAL
INFORMATION to a SUBLICENSEE without ENTREMED's approval, provided that
such SUBLICENSEES are bound by obligations of confidentiality and non-use
at least as stringent as those set forth herein.
5.5 Public Statements. Neither CELGENE nor ENTREMED may issue a public
statement, including without limitation a press release, with regard to
this Agreement without the prior written consent of the other party, which
consent shall not be unreasonably withheld. In accordance with the rules
and regulations promulgated by the Securities and Exchange Commission, the
parties will request that this Agreement be treated as confidential.
SECTION 6--ADVERSE MEDICAL EXPERIENCES
6.1 Adverse Medical Experience Reporting. CELGENE shall comply fully with all
applicable medical/adverse experience reporting requirements in all
countries where CELGENE intends to carry out clinical trials and/or market
PRODUCT.
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SECTION 7--PATENTS
7.1 Patent Prosecution.
(a) ENTREMED shall use reasonable efforts to prepare, file, prosecute
and maintain patent applications and patents directed to PATENT
RIGHTS and PRODUCTS through patent counsel selected by ENTREMED and
reasonably acceptable to CELGENE, who shall consult with and keep
CELGENE advised with respect thereto.
(b) CELGENE shall reimburse ENTREMED for all reasonable costs and
expenses incurred after the EFFECTIVE DATE for the filing,
prosecution and maintenance of PATENT RIGHTS.
7.2 Cooperation In Prosecution.
(a) With respect to any PATENT RIGHTS, each patent application, office
action, response to office action, request for terminal disclaimer,
petition, and request for reissue or reexamination of any patent
issuing from such application shall be provided to CELGENE
sufficiently prior to the filing of such application, response,
petition, or request to allow for review and comment by CELGENE.
ENTREMED shall have the right to take any action that, in its
judgement, is necessary to preserve such PATENT RIGHTS.
(b) Within a reasonable time from the EFFECTIVE DATE, CELGENE and
ENTREMED will discuss each party's patent portfolio with regard to
PRODUCTS, in accordance with prior obligations of confidentiality
owed by each party to any THIRD PARTY, and will use reasonable
efforts to coordinate their respective patent portfolio, to the
extent possible, so as to maximize the patent protection for
PRODUCTS.
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7.3 Infringement and Declaratory Judgment Actions.
(a) Notification. In the event that either party learns of the
infringement of any PATENT RIGHT, or the filing of a Declaratory
Judgement action alleging the invalidity, unenforceability, or
noninfringement of any PATENT RIGHT ("DJ ACTION"), that party must
promptly notify the other party of the infringement or DJ ACTION, as
the case may be, in writing, and must provide reasonable evidence of
the infringement. Neither party will notify a THIRD PARTY of the
infringement of any PATENT RIGHT or of the filing of a DJ ACTION
directed to any PATENT RIGHT without first obtaining consent of the
other party, which consent shall not be unreasonably withheld.
(b) CELGENE's Right To File Infringement Actions. To the extent ENTREMED
has the right to bring a suit or action to compel the termination of
infringement of the PATENT RIGHTS, including to the extent provided
in Article 7 of the CMCC AGREEMENT, ENTREMED hereby grants CELGENE
the right and option, but not the obligation, to bring an action for
infringement or to defend against a DJ action, at its sole expense,
in the name of ENTREMED and/or in the name of CELGENE, and to join
ENTREMED as a party plaintiff if required. No settlement, consent
judgment or other voluntary final disposition of a suit that
adversely affects PATENT RIGHTS may be entered into without the
consent of ENTREMED, which consent shall not be unreasonably
withheld.
(c) CELGENE's Right To Defend DJ ACTIONS. In the event that a DJ ACTION
is brought naming CELGENE as a defendant, CELGENE shall have the
right to proceed with the litigation or settle such action provided,
however, that no settlement, consent
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judgment or other voluntary final disposition of a suit that
adversely affects PATENT RIGHTS may be entered into without the
consent of ENTREMED, which consent shall not be unreasonably
withheld.
(d) CELGENE's Recovery. In the event that CELGENE shall undertake the
enforcement and/or defense of the PATENT RIGHTS by litigation, any
recovery of damages by CELGENE for any such litigation shall be
applied first in satisfaction of any unreimbursed expenses and legal
fees of CELGENE relating to the suit. The balance remaining from any
such recovery shall, after ENTREMED receives its royalties from lost
sales, belong to CELGENE.
(e) ENTREMED's Right To Litigate. In the event that CELGENE elects not
to pursue an action for infringement or to defend against a DJ
action, as the case may be, CELGENE shall notify ENTREMED in writing
of such election and ENTREMED shall have the right and option, but
not the obligation, at its cost and expense, to initiate
infringement litigation and to retain any recovered damages.
(f) Cooperation. In any infringement suit either party may institute to
enforce or defend the PATENT RIGHTS pursuant to this Agreement, the
other party hereto shall, at the request of the party initiating
such suit, cooperate in all respects and, to the extent possible,
have its employees testify when requested and make available
relevant records, papers, information, samples, specimens, and the
like. All reasonable out-of-pocket costs incurred in connection with
rendering cooperation requested hereunder shall be paid by the party
requesting cooperation.
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(g) THIRD PARTY Royalty Reduction. In the event that an infringement
action is brought by a THIRD PARTY against CELGENE alleging that
CELGENE's making, using, offering to sell, selling, or importing of
PRODUCTS under the PATENT RIGHTS infringes a THIRD PARTY patent, and
results in a judgment or settlement requiring royalties to be paid
by CELGENE to such THIRD PARTY, the royalties owed by CELGENE to
ENTREMED under Section 4 of this Agreement shall be reduced by an
amount equal to "..." of the royalties owed to such THIRD PARTY,
provided that the royalties owed to ENTREMED shall not be reduced
under this Section 7.3(f) to less than "..." of NET SALES, nor shall
any specific royalty payment be reduced under this Section 7.3(g) by
more than "...".
SECTION 8--REPRESENTATIONS AND WARRANTIES.
8.1 By Both Parties. Each party hereby represents and warrants that each has
the full right and authority to enter into this Agreement and that the
entry into this Agreement does not require the consent of a THIRD PARTY
whose consent has not been obtained.
8.2 By ENTREMED. ENTREMED represents and warrants as follows:
(a) that ENTREMED has not received any notice of infringement of THIRD
PARTY patents or notice of interfering subject matter; that, without
having made any special investigation, ENTREMED is not aware of any
THIRD PARTY patents or patent applications that contain any
interfering subject matter, or any issued THIRD PARTY patents that
would be infringed by the making, using, selling, offering for sale,
or importing by CELGENE of PRODUCTS covered by the ENTREMED EXISTING
PATENT RIGHTS or the ENTREMED EXISTING TECHNOLOGY RIGHTS in any
country in the TERRITORY, or by the exercise by
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CELGENE of any right granted to it under this Agreement, aside from
those set forth in Appendix D;
(b) that the PATENT RIGHTS set forth in Appendix A and the TECHNOLOGY
RIGHTS transferred to CELGENE under this Agreement, constitute the
entirety of ENTREMED EXISTING PATENT RIGHTS and ENTREMED EXISTING
TECHNOLOGY RIGHTS;
(c) that ENTREMED presently has no rights in PRODUCTS, nor any option in
or expectation of any rights in PRODUCTS, apart from those
identified in this Agreement and set forth in the agreements listed
in Appendix B, and that ENTREMED is not in material breach or
default of any of the agreements set forth in Appendix B, and that
if ENTREMED acquires any such rights after the EFFECTIVE DATE, the
agreements setting forth those rights, including all licenses and
assignments for ENTREMED DEVELOPED PATENT RIGHTS and ENTREMED
DEVELOPED TECHNOLOGY RIGHTS, shall be redacted to the extent they do
not relate to CELGENE's rights under this Agreement, and attached
hereto as independent Exhibits and incorporated herein;
(d) that, with regard to PRODUCTS, ENTREMED has no applications filed or
pending with the FDA as of the EFFECTIVE DATE, including without
limitation any Investigational New Drug or Orphan Drug Status
applications, apart from those set forth in Appendix C;
(e) that ENTREMED will comply with all obligations and duties with
regard to PRODUCTS under the CMCC AGREEMENT and, unless and until it
is assigned to CELGENE pursuant to Section 2.5 of this Agreement,
the NCI AGREEMENT, including, without
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limitation, any notification provisions necessary to maintain in
effect this Agreement or preserve CELGENE's exclusive or
non-exclusive rights under this Agreement, including without
limitation the preservation of CELGENE's rights hereunder in the
event that ENTREMED shall breach or default on its obligations under
the CMCC AGREEMENT or the NCI AGREEMENT;
(f) that ENTREMED understands and agrees that it has not retained any
rights under the ENTREMED INTELLECTUAL PROPERTY to PRODUCTS in the
TERRITORY, and that the licenses and assignments granted in Sections
2.1, 2.2, 2.4, and 2.5 of this Agreement are exclusive of any
continuing right of ENTREMED, except as otherwise provided herein;
and
(g) that ENTREMED will not collaborate, negotiate, or deal with THIRD
PARTIES with respect to PRODUCTS, except as expressly provided
herein.
8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, ENTREMED MAKES NO
REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR VALIDITY OF ANY
ENTREMED PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS.
SECTION 9--INDEMNIFICATION AND INSURANCE
9.1 By CELGENE. CELGENE will defend, indemnify and hold harmless ENTREMED, its
successors, AFFILIATES and licensors and their employees, agents,
officers, trustees, shareholders and directors and each of them (the
"ENTREMED Indemnified Parties") from and against any and all THIRD PARTY
claims, causes of action and costs (including
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reasonable attorney's fees) of any nature made or lawsuits or other
proceedings filed or otherwise instituted against the ENTREMED Indemnified
Parties in connection with any claims, suits or judgments arising out of
any theory of product liability concerning the development, testing,
manufacture, sale or use of any PRODUCT by CELGENE, its AFFILIATES or its
SUBLICENSEES.
9.1.1 CELGENE's indemnification under this Section 9.1 shall not apply to
any liability, damage, loss or expense to the extent that it is
directly attributable to the negligent activity, reckless misconduct
or intentional misconduct of ENTREMED.
9.1.2 Commencing not later than the date of FIRST COMMERCIAL SALE of a
PRODUCT, CELGENE shall obtain and carry in full force and effect
product liability insurance against any claims, judgments,
liabilities and expenses for which it is obligated to indemnify
ENTREMED and others under Section 9.1 of this Agreement, in such
amounts and with such deductibles as are customary at the time for
companies engaged in a similar business, and shall provide ENTREMED
with written evidence of such insurance upon request.
9.2 By ENTREMED. ENTREMED will defend, indemnify and hold harmless CELGENE,
its successors, AFFILIATES and licensors and their employees, agents,
officers, trustees, shareholders and directors and each of them (the
"CELGENE Indemnified Parties") from and against any and all THIRD PARTY
claims, causes of action and costs (including reasonable attorney's fees)
of any nature made or lawsuits or other proceedings filed or otherwise
instituted against the CELGENE Indemnified Parties in connection with any
claims, suits or judgments arising out of any theory of product liability
concerning the development,
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testing, manufacture, sale or use of any PRODUCT by ENTREMED, its
AFFILIATES or its SUBLICENSEES prior to the EFFECTIVE DATE.
9.2.1 ENTREMED's represents and warrants that it presently carries, in
full force and effect, and will continue to carry, product liability
insurance against any claims, judgments, liabilities and expenses
incurred in connection with the use of THALIDOMIDE in clinical
trials by or on behalf of ENTREMED, and shall provide CELGENE with
written evidence of such insurance upon request.
9.3 Conditions to Indemnification. A person or entity that intends to claim
indemnification under this Section 9 (the "Indemnitee") shall promptly
notify the party from whom indemnification is sought (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
Indemnitee whether or not such claim is rightfully brought; 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
Indemnitor does not assume the defense, or 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 person represented by such counsel in such
proceedings. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, only if
prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Section 9, 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
Section 9. The Indemnitee under this Section 9, its employees and agents,
shall cooperate fully with the Indemnitor and its legal
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representatives in the investigations of any action, claim or liability
covered by this indemnification.
SECTION 10--ASSIGNMENT AND SUCCESSORS
10.1 By Either Party. This Agreement shall not be assignable by either party
without the written consent of the other party, except that either party
may assign this Agreement to an AFFILIATE, successor in interest or
transferee of all or substantially all of the portion of the business to
which this Agreement relates without the consent of the other party.
10.2 By CELGENE. If CELGENE assigns or licenses its rights under this Agreement
to a SUBLICENSEE or an AFFILIATE, such SUBLICENSEE or AFFILIATE shall be
bound by the terms and conditions of this Agreement. CELGENE shall advise
ENTREMED of any such assignment or license and provide ENTREMED with a
copy of any sublicense within thirty (30) days of execution of such
sublicense.
10.3 CELGENE As Guarantor. CELGENE shall guarantee and be responsible for the
payment of all royalties due and the making of reports under this
Agreement by reason of the development and sales of any PRODUCTS by
CELGENE, its AFFILIATES and SUBLICENSEES and their compliance with all
applicable terms of this Agreement. Performance or satisfaction of any
obligations of CELGENE under this Agreement by any of its AFFILIATES or
SUBLICENSEES shall be deemed performance or satisfaction of such
obligation by CELGENE.
10.4 Binding Effect. This agreement shall be binding upon and inure to the
benefit of said successors in interest and assignees to the parties. Any
such successor or assignee of a party's interest shall expressly assume in
writing the performance of all the terms and conditions of this Agreement
to be performed by said party and such Assignment shall not relieve the
Assignor of any of its obligations under this Agreement.
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SECTION 11--FORCE MAJEURE
11.1 Neither party shall be liable to the other party for damages or loss
occasioned by failure of performance by the defaulting party if the
failure is occasioned by war, fire, explosion, flood, strike or lockout,
embargo, or any similar cause beyond the control of the defaulting party,
provided that the party claiming this exception has exerted all reasonable
efforts to avoid or remedy such event and provided such event does not
extend for more than six (6) months.
SECTION 12--TERMINATION
12.1 Term. Unless earlier terminated as hereinafter provided, this Agreement
shall remain in full force and effect until CELGENE's obligations to pay
royalties or other compensation under Section 4 of this Agreement, either
directly or pursuant to a sublicense, terminate.
12.2 By Reason Of FDA Action. If the FDA withdraws or recalls THALIDOMIDE from
the market permanently, or in any other way revokes or terminates
CELGENE's regulatory approval to market and sell THALIDOMIDE and/or
PRODUCTS, CELGENE shall promptly notify ENTREMED in writing, and this
Agreement and all of CELGENE's and ENTREMED's rights and obligations
hereunder shall terminate upon receipt by ENTREMED of such notice.
12.3 Termination Of Royalty Obligations. Upon termination of CELGENE's
obligation to pay royalties and other compensation hereunder with respect
to a specific country and specific PRODUCT as to which CELGENE's license
is then in effect, the license granted to CELGENE with respect to such
country and such PRODUCT pursuant to Section 2 shall be deemed to be fully
paid and CELGENE shall thereafter have a royalty free, exclusive right to
use the PATENT RIGHTS to make, have made, use, offer to sell, sell and
import such PRODUCT in such country.
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12.4 Breach.
(a) By Either Party. This Agreement shall be terminable upon the
material breach or default of either party. In the event of a
material breach or default by a party ("Defaulting Party"), the
other party ("Non-Defaulting Party") shall give the Defaulting Party
written notice of the default. The Defaulting Party will then have
sixty (60) days to cure the breach. If cure has not been affected
within said sixty (60) days, the Non-Defaulting Party shall have the
right to terminate this Agreement.
(b) By CELGENE.
(i) Payments. If and only if CELGENE materially breaches this
Agreement by failure to pay royalties and/or sublicensing or
milestone payments due under Section 4 of this Agreement, and
fails to cure such material breach within sixty (60) days of
receiving written notice thereof pursuant to Section 12.4(a)
of this Agreement then:
a) CELGENE's rights under this Agreement to ENTREMED
INTELLECTUAL PROPERTY shall terminate; and
b) CELGENE shall grant to ENTREMED, to the extent not
prohibited by the United States Government or by prior
contractual obligations to any THIRD PARTY, an
exclusive, worldwide, royalty-free license, with the
right to sublicense, under CELGENE DEVELOPED
INTELLECTUAL PROPERTY to make, use, offer to sell, sell,
and import PRODUCTS in the TERRITORY.
(ii) Diligence. If and only if ENTREMED exercises its right and
option to terminate the license granted to CELGENE in
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the entire TERRITORY, pursuant to Section 3.1(f) of this
Agreement, or ENTREMED exercises its right and option to
terminate the license granted to CELGENE in Europe, Canada, or
the PACIFIC RIM, pursuant to Section 3.2(c)(i) of this
Agreement, then, either in the entire TERRITORY or in the
region in which such termination has occurred, i.e., Europe,
Canada, or the PACIFIC RIM, as applicable:
a) CELGENE's rights under this Agreement to ENTREMED
INTELLECTUAL PROPERTY shall terminate; and
b) CELGENE shall grant to ENTREMED, to the extent not
prohibited by the United States Government or by prior
contractual obligations to any THIRD PARTY, an
exclusive, worldwide, royalty-free license, with the
right to sublicense, under CELGENE DEVELOPED
INTELLECTUAL PROPERTY to make, use, offer to sell, sell,
and import PRODUCTS.
The grant of rights by CELGENE to ENTREMED under this Section 12.4
expressly excludes rights in any CELGENE EXISTING INTELLECTUAL
PROPERTY.
(c) Termination under this Section 12.4 will be effective upon the date
specified in the written notice. All termination rights shall be in
addition to and not in substitution for any other remedies that may
be available to the Non-Defaulting Party. Termination pursuant to
this Section 12.4 shall not relieve the Defaulting Party from
liability and damages to the Non-Defaulting Party for default.
Waiver by either party of a single default or a succession of
defaults shall not deprive such party of any right to terminate or
convert this Agreement arising by reason of any subsequent default.
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12.5 Insolvency. Either party to this Agreement may terminate this Agreement
upon receipt of notice that the other party has become insolvent or has
suspended business in all material respects hereof, or has consented to an
involuntary petition purporting to be pursuant to any reorganization or
insolvency law of any jurisdiction, or has made an assignment for the
benefit of creditors or has applied for or consented to the appointment of
a receiver or trustee for a substantial part of its property, by giving
written notice to the other party, and termination of this Agreement will
be effective upon receipt of such notice.
12.6 Work-In-Progress. Upon termination of this Agreement, CELGENE shall be
entitled to, but shall not be obligated to finish any work-in-progress at
the time of termination and sell the same as well as all completed
inventory of PRODUCTS which remains on hand as of the date of the
termination, so long as CELGENE pays to ENTREMED the royalties applicable
to said subsequent sales in accordance with the same terms and conditions
as set forth in this Agreement.
12.7 Survival. The obligations of Sections 5 and 9, as well as Sections 12.6,
12.7, 12.8, and 13.3, shall survive any termination of this Agreement.
12.8 Reversion of Rights. Upon termination of this Agreement or of the rights
and licenses granted to CELGENE in any country of the TERRITORY, CELGENE
agrees not to use the TECHNOLOGY RIGHTS or PATENT RIGHTS or information or
technology derived therefrom for the manufacture, use or sale of PRODUCTS
in any country other than those countries in which CELGENE retains a
license under this Agreement. In addition, all rights to the TECHNOLOGY
RIGHTS and PATENT RIGHTS in such country shall revert to ENTREMED and may
be used by ENTREMED without restriction in any country other than those
countries in which CELGENE retains a license under this Agreement.
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SECTION 13--GENERAL PROVISIONS
13.1 Relationship of Parties. The relationship between ENTREMED and CELGENE is
that of independent contractors. ENTREMED and CELGENE are not joint
venturers, partners, principal and agent, master and servant, employer or
employee, and have no relationship other than as independent contracting
parties. ENTREMED shall have no power to bind or obligate CELGENE in any
manner. Likewise, CELGENE shall have no power to bind or obligate ENTREMED
in any manner.
13.2 Entire Understanding. This Agreement sets forth the entire agreement and
understanding between the parties as to the subject matter thereof and
supersedes all prior agreements in this respect. There shall be no
amendments or modifications to these Agreements, except by a written
document which is signed by both parties.
13.3 Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the State of Delaware, U.S.A. without
reference to its choice of law principles.
13.4 Headings. The headings in this Agreement have been inserted for the
convenience of reference only and are not intended to limit or expand on
the meaning of the language contained in the particular or section or
paragraph.
13.5 No Waiver. Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute
a waiver of a party's right to the future enforcement of its rights under
this Agreement, excepting only as to an expressed written and signed
waiver as to a particular matter for a particular period of time.
13.6 Export Controls. In conducting any activities under this Agreement or in
connection with the manufacture use or sale of PRODUCT, CELGENE shall
comply with all applicable laws and regulations including, but not
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limited to, all Export Administration Regulations of the United States
Department of Commerce.
13.7 Notices. Any notices given pursuant to this Agreement shall be in writing
and shall be deemed delivered upon the earlier of (i) when received at the
address set forth below, or (ii) three (3) business days after mailed by
certified or registered mail postage prepaid and properly addressed, with
return receipt requested, or (iii) when sent, if sent by facsimile, as
confirmed by certified or registered mail. Notices shall be delivered to
the respective parties as indicated below:
If To ENTREMED EntreMed, Inc.
9610 Medical Center Drive
Rockville, MD 20850
Attn: CEO
Fax: (301) 217-9594
If To CELGENE: Celgene Corporation
6 Powder Horn Drive
Warren, NJ 07059
Attn: President
Fax: (732) 805-3931
13.8 Original Counterparts. This Agreement may be executed in any number of
separate counterpart, each of which shall be deemed to be an original, but
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
ENTREMED, INC. CELGENE CORPORATION
By: /s/ Edward R. Gubish By: /s/ John W. Jackson
----------------------- ----------------------
Name: Edward R. Gubish Name: John W. Jackson
----------------------- ----------------------
Title: Sr. V.P. R & D Title: Chairman & CEO
----------------------- ----------------------
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APPENDIX A
----------
United States Patent No. 5,629,327
United States Patent No. 5,593,990
United States Patent Application Serial No. 08/025,046
United States Patent Application Serial No. 08/168,817
United States Patent Application Serial No. 08/371,987
United States Patent Application Serial No. 08/468,792
United States Patent Application Serial No. 08/918,610
United States Patent Application Serial No. 08/955,638
United States Patent Provisional Application Serial No. 60/028,708
United States Patent Application Serial No. 08/963,058
United States Patent Application Serial No. 09/107,578
United States Patent Application Serial No. 09/126,542
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APPENDIX B
----------
1. That certain License Agreement entered into by and between ENTREMED and
Children's Medical Center Corporation ("CMCC"), dated May 26, 1994, as
amended to the date hereof, attached as Exhibit A to this Agreement.
2. That certain Agreement by and between the Division of Cancer Treatment at
the National Cancer Institute ("NCI") and ENTREMED, dated November 16,
1994, and executed on behalf of ENTREMED on November 23, 1994, and on
behalf of NCI on November 18, 1994, attached as Exhibit C to this
Agreement.
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APPENDIX C
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Orphan Drug Designation Application (ODA) 97-1011 Primary Brain Malignancies
Orphan Drug Designation Application (ODA) 98-1149 Kaposis Sarcoma
Orphan Drug Designation Application (ODA) 98-1143 Prostate Cancer
Investigational New Drug Application 46,591 Ophthalmology
Investigational New Drug Application 55,966 Oncology
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APPENDIX D
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United States Patent No. 5,605,684 to Piacquadio
United States Patent No. 5,443,824 to Piacquadio
United States Patent No. 5,731,325 to Andrulis, Jr. et al.
United States Patent No. 5,654,312 to Andrulis, Jr. et al.
United States Patent No. 5,643,915 to Andrulis, Jr. et al.
United States Patent No. 5,434,170 to Andrulis, Jr.
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<PAGE>
EXHIBIT A
CMCC AGREEMENT
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<PAGE>
EXHIBIT B
NCI AGREEMENT
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<PAGE>
EXHIBIT C
LETTER TO FDA INDICATING TRANSFER OF
RIGHTS IN INVESTIGATIONAL NEW DRUG
AND ORPHAN DRUG APPLICATIONS TO CELGENE
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