<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): August 5, 1997
--------------
TEXAS BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction
of incorporation)
1-12574 13-3532643
(Commission File Number) (IRS Employer Identification No.)
7000 FANNIN, SUITE 1920, HOUSTON, TEXAS 77030
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (713)796-8822
-------------
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS.
Mitsubishi
Texas Biotechnology Corporation ("TBC") has entered into an agreement
with Mitsubishi Chemical Corporation ("Mitsubishi") to license
Mitsubishi's rights and technology relating to NOVASTAN(R) and to license
Mitsubishi's own proprietary technology developed with respect to
NOVASTAN(R) (the "Mitsubishi Agreement"). Under the Mitsubishi Agreement,
the Company has an exclusive license to use and sell NOVASTAN(R) in the
United States ("U.S.") and Canada for all cardiovascular, renal,
neurological and immunological purposes other than use for the coating of
stents. The Company is required to pay Mitsubishi specified royalties on
net sales of NOVASTAN(R) by the Company and its sublicensees after its
commercial introduction in the U.S. and Canada. Either party may terminate
the Mitsubishi Agreement on 60 days notice if the other party defaults in
its material obligations under the agreement, declares bankruptcy or is
insolvent, or if a substantial portion of its property is subject to levy.
Unless terminated sooner pursuant to the above described termination
provisions, the Mitsubishi Agreement expires on the later of termination of
patent rights in a particular country or 20 years after first commercial
sale of products in a particular country. Under the Mitsubishi Agreement,
TBC has access to an improved formulation patent granted in the U.S. in
1993 which expires in 2010 and a use patent in the U.S. which expires in
2009. The Company has agreed to pay a consultant involved in the
negotiation of these agreements a royalty based on net sales of products.
SmithKline
In connection with TBC's development and commercialization of
NOVASTA(R), on August 5, 1997, TBC entered into the Product Development,
License and Co-Promotion Agreement ("SmithKline Agreement") whereby
SmithKline Beecham plc ("SmithKline") was granted an exclusive sublicense
in the U.S. and Canada for the indications of NOVASTAN(R) that TBC has
licensed from Mitsubishi. SmithKline has paid $8.5 million in upfront
license fees and has agreed to pay up to $20.0 million in additional
milestone payments based on the clinical development and U.S. Food and Drug
Administration approval of NOVASTAN(R) for the indications of
heparin-induced thrombocytopenia ("HIT"), HIT with thrombosis syndrome
("HITTS") and acute myocardial infarction ("AMI"). TBC will be responsible
for completing the ongoing HIT/HITTS clinical trials, with SmithKline
providing 60% of the funding for any additional HIT/HITTS trials (except
that SmithKline will pay 100% of the costs of certain Phase IV trials, if
such trials are needed). SmithKline will be responsible for the marketing
of NOVASTAN(R) in the licensed territory for those indications which
SmithKline agrees to develop, subject to TBC's rights to use its own sales
force to co-promote NOVASTAN(R) on a profit sharing basis following the
regulatory approval of NOVASTAN(R) for an additional indication beyond HIT.
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The parties have also formed a joint development committee to analyze
the development of additional NOVASTAN(R) indications (such as AMI and
stroke) covered by TBC's license from Mitsubishi to be funded 60% by
SmithKline. TBC and SmithKline have agreed to make a determination to
pursue the AMI indication within three months after TBC has received data
from the AMI clinical trials (in a form practical for evaluation) being
performed by Synthelabo S.A., the pharmaceutical division of L'Oreal S.A.
TBC and SmithKline have also agreed to decide to pursue the stroke
indication by November 1998. SmithKline has the exclusive right to
commercialize all products arising out of the collaboration, subject to the
obligation to pay royalties on net sales to TBC and to the rights of TBC to
co-promote these products through its own sales force in certain
circumstances. TBC will retain the rights to any indications which
SmithKline determines it does not wish to pursue, subject to the
requirement that TBC may not grant marketing rights to any third parties
and must use its own sales force to commercialize any such indications.
Any indications which TBC and SmithKline elect not to develop will be
returned to Mitsubishi, subject to the rights of SmithKline and TBC to
commercialize these indications at their election, with SmithKline having
the first opportunity to commercialize. Mitsubishi may also request the
joint development committee to develop new indications inside or outside
the licensed field of use, and if the joint development committee
determines that it does not want to proceed with any such indication, all
rights under the Mitsubishi Agreement regarding such indication will revert
to Mitsubishi subject to the right of SmithKline and TBC to commercialize
the indication, with SmithKline having the first opportunity to
commercialize.
The SmithKline Agreement generally terminates on a country by country
basis upon the earlier of the termination of TBC's rights under the
Mitsubishi Agreement, the expiration of applicable patent rights or, in the
case of certain royalty payments, the commencement of substantial
third-party competition. SmithKline also has the right to terminate the
agreement on a country by country basis by giving TBC at least three months
written notice based on a reasonable determination by SmithKline that the
commercial profile of the product in question would not justify continued
development or marketing in that country. In addition, either party may
terminate the SmithKline Agreement on 60 days notice if the other party
defaults in its obligations under the agreement, declares bankruptcy or is
insolvent. The Company has agreed to pay an agent involved in the
negotiation of the SmithKline Agreement a fee based on a percentage of all
consideration received by TBC including royalties.
At present, Mitsubishi is the only manufacturer of NOVASTAN(R), and
has entered into the Mitsubishi Supply Agreement with SmithKline to
supply NOVASTAN(R) in bulk in order to meet SmithKline's and TBC's needs
under the SmithKline Agreement. Should Mitsubishi fail during any
consecutive nine-month period to supply SmithKline at least 80% of its
requirements, and such requirements cannot be satisfied by existing
inventories, the Mitsubishi Supply Agreement provides for the nonexclusive
transfer of the production technology to SmithKline. If SmithKline cannot
commence manufacturing of
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NOVASTAN(R) in a timely manner or if alternate sources of supply are
unavailable or uneconomic, the Company's results of operations would be
materially and adversely affected.
In connection with the execution of the SmithKline Agreement, and
pursuant to the terms and conditions of the Common Stock Purchase
Agreement, dated August 5, 1997, between TBC and SmithKline, SmithKline
purchased 176,922 shares of TBC's common stock, par value $.005 per share
(the "Common Stock"), for $1.0 million and agreed to purchase, at TBC's
option, an additional $2.0 million in Common Stock on or before August 5,
1998, based on the average trading price for the Common Stock for the
period beginning ten days before and ending on the ninth day after TBC's
exercise of the option. TBC granted limited piggyback registration rights
regarding these shares which expire when the shares may be sold pursuant to
Rule 144(k) under the Securities Act of 1933, as amended.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired: Not Applicable.
(b) Pro Forma Financial Information: Not Applicable.
(c) Exhibits:
The following exhibits are filed with this report on Form 8-K:
99.1 Agreement between Mitsubishi Chemical Corporation, Texas
Biotechnology Corporation and SmithKline Beecham plc dated
August 5, 1997.
99.2 Product Development, License and Co-Promotion Agreement
between Texas Biotechnology Corporation and SmithKline Beecham
plc dated August 5, 1997.
99.3 Common Stock Purchase Agreement between Texas Biotechnology
Corporation and SmithKline Beecham plc dated August 5, 1997.
4
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEXAS BIOTECHNOLOGY CORPORATION
By: /s/ Stephen L. Mueller
-----------------------------------
Stephen L. Mueller,
Vice President of Administration,
Secretary and Treasurer
Date: August 25, 1997
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EXHIBIT LIST
<TABLE>
<CAPTION>
Exhibit No. Document
----------- --------
<S> <C>
99.1 Agreement between Texas Biotechnology Corporation, Mitsubishi
Chemical Corporation and SmithKline Beecham plc dated
August 5, 1997.
99.2 Product Development, License and Co-Promotion Agreement
between Texas Biotechnology Corporation and SmithKline Beecham
plc dated August 5, 1997.
99.3 Common Stock Purchase Agreement between Texas Biotechnology
Corporation and SmithKline Beecham plc dated August 5, 1997.
</TABLE>
6
<PAGE> 1
AGREEMENT
BETWEEN
MITSUBISHI CHEMICAL CORPORATION
AND
TEXAS BIOTECHNOLOGY CORPORATION
AND
SMITHKLINE BEECHAM PLC
<PAGE> 2
MITSUBISHI-TBC-SB AGREEMENT
THIS MITSUBISHI-TBC-SB AGREEMENT, made as of the date of execution by
all parties hereof, between Mitsubishi Chemical Corporation, a company
organized under the laws of the country of Japan, having a principal place of
business at Tennoz Central Tower, 2-24 Higashishinagawa 2-chome, Shinagawa-Ku,
Tokyo 140 Japan ("Mitsubishi"), Texas Biotechnology Corporation, a company
organized under the laws of the state of Delaware and having a place of
business at 7000 Fannin, Houston, Texas 77030, U.S.A. ("TBC"), and SmithKline
Beecham plc, a company organized under English law and having its registered
office at New Horizons Court, Brentford, Middlesex TW8 9EP, England ("SB"),
WITNESSETH THAT:
WHEREAS, an assignment agreement ("Assignment Agreement") was entered
into on April 30, 1997 between TBC, Mitsubishi, and Genentech, Inc., a Delaware
corporation having a principal place of business at 460 Point San Bruno Blvd.,
South San Francisco, California 94080 ("Genentech") under which:
(a) Genentech and Mitsubishi have terminated all of Genentech's
rights and obligations under the June 30, 1987 MG Agreement between Mitsubishi
and Genentech, as amended by the parties on June 25, 1992 and May 27, 1993 ("MG
Agreement") with respect to Prior Licensed Product (as defined in the
Assignment Agreement), and
(b) Genentech has assigned to Mitsubishi all of Genentech's rights
and obligations under the May 27, 1993 Sublicense and License Agreement between
Genentech, Inc. and Texas Biotechnology Corporation, as subsequently amended by
Genentech and TBC ("GT Agreement").
WHEREAS, as a result of such Assignment Agreement, TBC has the right
to grant certain licenses or sublicenses thereunder, in the United States of
America and Canada ("Territory") relating to a composition of matter known as
argatroban; and
WHEREAS, SB desires to obtain certain licenses and sublicensees in the
Territory from TBC under the aforesaid patents and know-how, and TBC is willing
to grant to SB such licenses and sublicenses, upon terms which have been
mutually agreed by the TBC and SB ("License");
WHEREAS, SB desires to obtain the supply of argatroban, in bulk active
ingredient form, in the Territory from Mitsubishi, which SB will require to
fully exercise its rights under such License, upon terms which have been
mutually agreed by Mitsubishi and SB ("Supply Agreement");
WHEREAS, in view of the Assignment Agreement, SB has concluded that
TBC and Mitsubishi will need to agree to the following warrants,
representations, waivers and consents as a condition for SB's execution of the
License and the Supply Agreement;
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WHEREAS, TBC and Mitsubishi are willing to agree to such warrants,
representations, waivers and consents.
NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, and otherwise to be bound
by proper and reasonable conduct, the parties agree as follows:
SECTION 1-WARRANTS/REPRESENTATIONS/WAIVERS/CONSENTS WITH RESPECT TO THE MG
AGREEMENT
1.1 EXCLUSIVITY AND TERM OF MG AGREEMENT-Mitsubishi and TBC each expressly
waive Section 2.04 of the MG Agreement and expressly consent to the
application of the Exclusivity Period to the entirety of the term of
the MG Agreement. In addition, Mitsubishi and TBC each expressly
waive the term expiration provisions of Section 12.01 of the MG
Agreement and each expressly consent that the term of the MG Agreement
shall expire, on a per country basis, upon the later of expiration of
Patent Rights in a particular country of the Territory, or 20 years
after first commercial introduction of Licensed Product by TBC (or its
sublicensee) in such country.
1.2 RIGHT TO GRANT SUBLICENSE TO SB-Mitsubishi expressly consents to the
grant of a sublicense to SB under TBC's rights under the MG Agreement.
TBC shall guarantee full performance by SB for all obligations under
such sublicense. Such sublicense substantially complies with the MG
Agreement, the GT Agreement and this MITSUBISHI-TBC-SB AGREEMENT.
1.3 LICENSED PRODUCT-Mitsubishi and TBC each expressly consent to the
amendment of the definition of "Licensed Product" in the MG Agreement
to mean the chemical compound known as argatroban, also known as
MCI-9038, whose more specific chemical name is
(2R,4R)-4-methyl-l-[N2-(3-methyl-1,2,3,4-tetrahydro-8-quinolinesulfony
1)-L- arginyl]2-piperidinecarboxylic acid monohydrate, its prodrugs
and metabolites, and all pharmaceutically active derivatives thereof,
such as, but not limited to, esters, salts, hydrates, solvates,
polymorphs and isomers thereof, and shall include compositions
comprising such compound, prodrug or metabolites, or esters, salts,
hydrates, solvates, polymorphs and isomers.
1.4 FIELD-Mitsubishi and TBC each expressly consent that each of the terms
"Field" and "TBC Field" as used in the MG Agreement and/or any
amendment thereof encompass any use of Licensed Product, other than
the use of Licensed Product for the coating of stents, related to the
therapeutic, palliative, or prophylactic treatment of any human
condition for any cardiovascular, renal, neurological, or
immunological purpose, including, but not limited to, the indications
of anti-coagulant therapy in heparin-induced or heparin-associated
thrombocytopenia ("HIT"), anti-coagulant therapy in heparin induced or
heparin-associated thrombocytopenia and thrombosis syndrome ("HITTS")
and anti-coagulation therapy in acute myocardial infarction ("AMI"),
[*]
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed separately
with the Securities and Exchange Commission.
Page 2
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as well as cerebral ischemic stroke, provided, however, that if
Mitsubishi should terminate the GT Agreement and the MG Agreement with
respect to an indication in accordance with Paragraph 1.9 of this
MITSUBISHI-TBC-SB AGREEMENT, such indication shall automatically be
excluded from the scope of the term 'Field'.
1.5 FIRST [*] RIGHT TO LICENSE TO USE PRODUCT OUTSIDE OF THE
FIELD-Mitsubishi agrees that, during the term of the License, SB has
the first [*] right to an exclusive license, under patents and
know-how owned or controlled by Mitsubishi, to use, sell, offer for
sale and import Licensed Product in the Territory for use outside of
the Field, upon terms and conditions to be negotiated in good faith by
the parties. [*] of Licensed Product in the Territory shall be
excluded from the aforesaid first [*] right, provided that Mitsubishi
shall first provide SB with all protocols for any preclinical or
clinical trials of Licensed Product which will be carried out for [*]
for the purpose of regulatory filings in the Territory (regardless of
where in the world such trials are carried out), [*]
1.6 SUPPLY AFTER TERM-Mitsubishi expressly consents that after the term of
the MG Agreement, it shall be willing to provide supply of Licensed
Product to SB upon terms and conditions to be negotiated between
Mitsubishi and SB in good faith, which terms shall be no less
favorable to SB as the terms which exist in the Supply Agreement, and
which terms shall be agreed upon by SB and Mitsubishi within a
reasonable period of time prior to the expiration of the term of the
MG Agreement to ensure that there is no interruption in SB's
distribution of Licensed Product to the marketplace.
1.7 PATENT RIGHTS-Mitsubishi expressly warrants and represents that the
definition 'Patent Rights' as used in the MG Agreement shall mean (a)
all patents and patent applications which are or become owned by
Mitsubishi, or to which Mitsubishi otherwise has, now or in the
future, the right to grant licenses, which generically or specifically
claim Licensed Product, a process for formulating Licensed Product, an
intermediate used in such process or a use of Licensed Product in the
Field, (b) all continuations, continuations-in-part, divisions,
patents of addition, reissues, renewals or extensions thereof and all
SPCs (i.e., a right based upon a Patent Right to exclude others from
making, using or selling Licensed Product, such as a Supplementary
Protection Certificate), and (c) any patents or patent applications
which generically or specifically claim any improvements on Licensed
Product or intermediates or formulation processes required or useful
for production of Licensed Product which are developed by Mitsubishi,
or which Mitsubishi otherwise has the right to grant licenses, now or
in the future, during the term of the MG Agreement.
1.8 NO GENENTECH PATENT RIGHTS WITH RESPECT TO ARGATROBAN-Mitsubishi and
TBC expressly warrant and represent that Genentech has warranted and
represented to them that, as of April 30, 1997, Genentech had no
pending or issued patents in the Territory which would be
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
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infringed by the making, having made, use, sale, offer for sale or
importation of Licensed Product in the Territory for any purpose
contemplated by this MITSUBISHI-TBC-SB AGREEMENT.
1.9 FAILURE TO [*]
(a) In the event that TBC and SB fail to have determined
a 'go' position for proceeding to clinical trials in AMI on or before
three (3) months after TBC and SB have received all the data from
Synthelabo related to the clinical trials for AMI being conducted by
Synthelabo as of the date of last written below, in a form which is
practicable for evaluation, [*] In the event that [*] but not with
respect to [*] by written notification to TBC, and provided that [*]
(b) Within four (4) months after the execution of the
License, the Joint Development Committee (as defined in the License)
will meet to consider the development of the Licensed Product for the
indication of cerebral ischemic stroke. Mitsubishi shall be entitled
to attend all meetings of the Joint Development Committee and the
Joint Marketing Team contemplated by the License, provided that such
meetings shall be held at the convenience of only SB and TBC,
Mitsubishi shall be a non-voting observer, and such attendance shall
be at Mitsubishi's expense. Within one (1) year after the initial
meeting of the Joint Development Committee regarding development of
Licensed Product for the cerebral ischemic stroke indication, the
Joint Development Committee will [*] decision with respect to a
decision [*] unless Mitsubishi agrees to extend such one (1) year
period. In the event that the Joint Development Committee makes a [*]
(c) At any time after the [*] of the Effective Date (as
defined in the License), Mitsubishi may present to the Joint
Development Committee proposals for the development of Licensed
Product for indications, applications or formulations in the Field [*]
or for indications, applications or formulations outside the Field [*]
Such proposals shall be in the English language and shall contain
sufficient data and information reasonably supporting the clinical use
and commercial potential of Licensed Product for the proposed
indication, application or formulation to enable an appropriate
consideration of such indication, application or formulation by the
Joint Development Committee. Within [*] of a proposal Product for the
proposed indication, application or formulation to enable an
appropriate consideration of such indication, application or
formulation by the Joint Development Committee. Within [*] of a
proposal which meets all of the qualifications outlined in this
Paragraph, the Joint Development Committee will make a 'go' or 'no go'
decision [*] If the Joint Development Committee makes a [*] with
respect to an indication, application or formulation in the Field, [*]
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission
Page 4
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(d) In the event that [*] or in the event that the Joint
Development Committee makes a 'no go' decision with respect to an
indication, application or formulation outside of the Field [*]
Mitsubishi may develop Licensed Product for the Terminated Item in the
Territory [*] provided that SB shall have the first [*] right to
commercialize Licensed Product in the Territory for the Terminated
Item [*] In the event that [*] or in the event that the parties [*]
In the event that [*] or in the event that [*] and in no event may [*]
1.10 TERMINATION OF RIGHT TO TERMINATE FOR FAILURE TO ACHIEVE MILESTONES IN
THE MG AGREEMENT AND THE GT AGREEMENT- Mitsubishi hereby waives any
and all rights to terminate the MG Agreement and the GT Agreement due
to TBC or its sublicensee's failure to comply with the milestone
timeline requirements set forth in Section 5.1 of the GT Agreement, or
the milestone timeline requirements set forth in the June 30, 1995
Extension Agreement between Mitsubishi, Genentech and TBC
("Extension") and the July 10, 1996 Understanding between Mitsubishi
and TBC ("Understanding"), or the milestone timeline requirements of
the MG Agreement as they relate to the filing for U.S. marketing
approval by January 1, 1996, provided that TBC shall diligently pursue
filing of a NDA in cooperation with SB and in accordance with SB's
business, legal, medical and scientific judgment and SB's normal
practices and procedures for compounds having similar technical and
commercial potential. Said waiver is expressly understood to include
any failure of TBC or its sublicensee to meet any of the requirements
set forth in the preceding sentence whether they occur before or after
the date of full execution of this MITSUBISHI-TBC-SB AGREEMENT.
Mitsubishi further expressly consents that TBC has completely
fulfilled the requirements set forth in the Understanding within the
timelines set forth therein. Once the New Drug Application ("NDA")
for HIT has been filed, TBC shall thereafter provide Mitsubishi with
quarterly written updates on the progress of the NDA and all clinical
studies in the Field.
1.11 TRADEMARK-Mitsubishi expressly warrants and represents that it owns
the trademark NOVASTAN in the U.S. and Canada, and their respective
territories and possessions, and that it will promptly apply for the
trademark NOVASTAN in Puerto Rico.
1.12 RIGHT TO GRANT LICENSE TO TRADEMARK-Mitsubishi expressly warrants and
represents that it has the right to license the trademark NOVASTAN
exclusively to TBC, and that it has not licensed NOVASTAN to any other
party, in the U.S., Canada, and their respective territories and
possessions.
1.13 NO TRADEMARK INFRINGEMENT-Mitsubishi expressly warrants and represents
that, to the best of its knowledge, the trademark NOVASTAN does not
infringe any trademark rights, and is available for use and
registration in the U.S., Canada and their respective territories and
possessions.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission
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1.14 IDENTITY OF LICENSOR OF TRADEMARK-Mitsubishi expressly warrants and
represents that it is the Licensor in the Trademark License Agreement
("Trademark Agreement") between Mitsubishi Kasei Corporation and Texas
Biotechnology Corporation ("TBC"), in that Mitsubishi Kasei
Corporation changed its name to Mitsubishi Chemical Corporation.
1.15 RIGHT TO EXCLUSIVE USE OF TRADEMARK-Mitsubishi expressly consents to
the amendment of the April 20, 1994 Trademark License Agreement
between Mitsubishi Kasei Corporation and TBC ("Trademark Agreement")
such that TBC's right to use the trademark NOVASTAN is exclusive in
the Territory.
1.16 FIELD OF USE FOR TRADEMARK-Mitsubishi expressly consents that (i) the
term "Field" as used in the Trademark Agreement is the same as
outlined in Paragraph 1.4 of this MITSUBISHI-TBC-SB AGREEMENT, and
(ii) the definition of the chemical compound set forth in Exhibit B of
the Trademark Agreement will conform to the definition set forth in
Section 1.3 of this MITSUBISHI-TBC-SB AGREEMENT.
1.17 RIGHT TO LICENSE TO USE TRADEMARK OUTSIDE OF THE FIELD-Mitsubishi
agrees that, in the event that SB has obtained a license to use
Licensed Product outside of the Field as a result of SB's exercise of
its first [*] right, SB, at its election, shall have a royalty-free
exclusive license to use Trademark with respect to Licensed Product in
the Territory for such uses outside of the Field for which SB has
exercised such rights.
1.18 USE OF TRADEMARK AFTER TERM-Mitsubishi expressly consents that after
the term of the MG Agreement, SB shall have an exclusive license to
use Trademark with respect to Licensed Product in the Field (and with
respect to areas outside of the Field for which SB has exercised its
first [*] right), provided that such license shall be [*] for so long
as Mitsubishi is providing supply of Licensed Product to SB in the
Territory, and in the event that [*] such license shall be [*]
1.19 NO RIGHTS OUTSIDE FIELD IN THE TERRITORY-Mitsubishi expressly consents
that it shall not use the trademark NOVASTAN for any use outside of
the Field in the Territory, either on its own, or through any
arrangement with any Third Party, including, but not limited to, any
licensing, distribution or comarketing arrangement.
1.20 RIGHT TO GRANT SUBLICENSE TO TRADEMARK-Mitsubishi expressly consents
to the grant of an exclusive, royalty free, sublicense to SB under
TBC's rights under the Trademark Agreement, subject to TBC's right to
copromote Licensed Product in the event that SB determines it wants
such a sublicense.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission
Page 6
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1.21 TERM OF SUBLICENSE RIGHT TO USE TRADEMARK-Mitsubishi expressly
consents that the term of SB's right to a sublicense under the
Trademark Agreement shall correspond to the term of the MG Agreement,
except as otherwise provided in Section 1. 18 of this
MITSUBISHI-TBC-SB AGREEMENT. Mitsubishi expressly states that as the
owner of the trademark NOVASTAN, it controls the nature and quality of
the product on which SB will use the trademark NOVASTAN under a
sublicense from TBC. SB agrees to provide samples of the finished
product, labels, and packaging to Mitsubishi and TBC, upon request,
for their review of the nature and quality of the product and the
proper use of the NOVASTAN trademark by SB.
1.22 USE OF TRADEMARK-All warrants, representations and agreements by
Mitsubishi with respect to the NOVASTAN trademark hereunder shall be
subject to the actual use of such trademark for Licensed Product by SB
and TBC in a given country of the Territory.
SECTION 2-WARRANTS/REPRESENTATIONS/WAIVERS/CONSENTS WITH RESPECT TO THE GT
AGREEMENT
2.1 ACKNOWLEDGMENT THAT WARRANTS/REPRESENTATIONS/WAIVERS/CONSENTS RELATED
TO MG AGREEMENT ARE EQUALLY APPLICABLE TO GT AGREEMENT-Mitsubishi and
TBC each expressly consent that all warrants, representations, waivers
and consents outlined in Section I of this letter are equally
applicable to the GT Agreement.
2.2 TRANSFER OF GENENTECH KNOW-HOW AND GENENTECH ARGATROBAN IND-Mitsubishi
and TBC each expressly warrant and represent that all Genentech
Know-How (as defined in the Assignment Agreement) and the complete
Genentech Argatroban IND (as defined in the Assignment Agreement) have
been transferred to Mitsubishi and/or TBC.
2.3 TERM OF GT AGREEMENT-Mitsubishi and TBC each expressly waive the term
expiration provisions of Section 8.1 of the GT Agreement and expressly
consent that the term of the GT Agreement shall expire, on a per
country basis, upon the later of expiration of Patent Rights in a
particular country of the Territory, or 20 years after first
commercial introduction of Licensed Product by TBC (or its
sublicensee) in such country.
2.4 ARGATROBAN DEFINITION-Mitsubishi expressly consents that the
definition of "Argatroban" in the GT Agreement shall be amended to
have the same meaning as that outlined in Paragraph 1.3 of this
MITSUBISHI-TBC-SB AGREEMENT.
2.5 WAIVER OF RIGHT TO CO-MARKET-Mitsubishi expressly waives its exclusive
right of first negotiation with regard to co-marketing Licensed
Product in the Territory under Section 2.3 of the GT Agreement.
2.6 SUBLICENSE TO SB-Mitsubishi expressly waives the requirements outlined
in Paragraph 2.4(a) of the GT Agreement, as well as the last sentence
of Paragraph 2.4 with respect to these requirements. In addition,
Mitsubishi expressly waives the requirements outlined in
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Paragraph 2.4(d) of the GT Agreement, as well as the last sentence of
Paragraph 2.4 with respect to these requirements. Mitsubishi
expressly grants its consent under Section 2.4 of the GT Agreement to
TBC's grant of a sublicense to SB with respect to SB's exclusive
marketing of Licensed Product in the Territory in the Field, subject
to TBC's retained right to co-promote Licensed Product with SB as
described in the subject agreement.
2.7 FIELD-Mitsubishi expressly consents that the term "Field" as used in
the GT Agreement has the same scope as outlined in Paragraph 1.4 of
this MITSUBISHI-TBC-SB AGREEMENT under the heading "Field", and
expressly waives all references to the term "Genentech Field" in the
GT Agreement including any rights that Mitsubishi may have with
respect to the Genentech Field.
2.8 WAIVER OF RIGHT TO TERMINATE-Mitsubishi expressly waives Paragraph 8.3
of the GT Agreement during the term of the License, but only with
respect to [*]
2.9 PAYMENT OF ROYALTIES-Mitsubishi and TBC agree that the total royalty
owed to Mitsubishi by TBC pursuant to the GT Agreement shall be [*] of
Net Sales (as defined in the License) of Licensed Product and shall be
paid [*]
SECTION 3-MISCELLANEOUS
3.1 INCONSISTENT PROVISIONS-Mitsubishi and TBC each warrant and represent
that to the extent the Warrants/Representations/Waivers/Consents
outlined in this MITSUBISHI-TBC-SB AGREEMENT are in conflict with any
provisions of the MG Agreement and/or the GT Agreement, then the
provisions of the MG Agreement and/or the GT Agreement shall be deemed
inoperative to the extent that they may conflict therewith and shall
be deemed to be modified to conform with this MITSUBISHI-TBC-SB
AGREEMENT.
3.2 GOVERNING LAW-This MITSUBISHI-TBC-SB AGREEMENT shall be deemed to have
been made in the State of New York and its form, execution, validity,
construction and effect shall be determined in accordance with the
laws of the State of New York, U. S. A.
3.3 ENTIRE AGREEMENT-This MITSUBISHI-TBC-SB AGREEMENT, entered into as of
the date written above, constitutes the entire agreement between the
parties relating to the subject matter hereof and supersedes all
previous writings and understandings. No terms or provisions of this
MITSUBISHI-TBC-SB AGREEMENT shall be varied or modified by any prior
or subsequent statement, conduct or act of either of the parties,
except that the parties may amend this MITSUBISHI-TBC-SB AGREEMENT by
written instruments specifically referring to and executed in the same
manner as this MITSUBISHI-TBC-SBN AGREEMENT.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission
Page 8
<PAGE> 10
3.4 ASSIGNMENT-This MITSUBISHI-TBC-SB AGREEMENT and the license right and
licenses herein granted shall be binding upon and inure to the benefit
of the successors in interest of the respective parties. Neither this
MITSUBISHI-TBC-SB AGREEMENT nor any interest hereunder shall be
assignable by either party without the written consent of the other
parties provided, however, that any party may assign this
MITSUBISHI-TBC-SB AGREEMENT or any part of its rights and obligations
hereunder to any affiliate of such party or to any corporation with
which such party may merge or consolidate, or to which it may transfer
all or substantially all of its assets to which this MITSUBISHI-TBC-SB
AGREEMENT relates, without obtaining the consent of the other parties.
3.5 NO PARTNERSHIP OF JOINT VENTURE-This MITSUBISHI-TBC-SB AGREEMENT shall
not be deemed to establish a joint venture or partnership between SB
and TBC.
3.6 EXECUTION IN COUNTERPARTS-This MITSUBISHI-TBC-SB AGREEMENT may be
executed in any number of 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, through their authorized officers,
have executed this MITSUBISHI-TBC-SB AGREEMENT as of the date last written
below.
MITSUBISHI CHEMICAL CORPORATION
BY: /s/ Kanji Shono
---------------------------
TITLE: Kanji Shono
---------------------------
DATE: August 5, 1997
---------------------------
SMITHKLINE BEECHAM plc
BY: /s/ A. Karabelas
---------------------------
TITLE: Executive Vice President
---------------------------
DATE: August 5, 1997
---------------------------
Page 9
<PAGE> 11
TEXAS BIOTECHNOLOGY CORPORATION
BY: /s/ David B. McWilliams
---------------------------
TITLE: President
---------------------------
DATE: August 5, 1997
---------------------------
Page 10
<PAGE> 1
PRODUCT DEVELOPMENT, LICENSE
AND COPROMOTION AGREEMENT
BETWEEN
SMITHKLINE BEECHAM PLC
AND
TEXAS BIOTECHNOLOGY CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 ADMINISTRATIVE EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 ADVERSE EXPERIENCE(S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 AGGREGATE PROJECTED DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.05 AMI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.06 AMI BASELINE SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.07 ANNUAL TACTICAL PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.08 COPROMOTION EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.09 COROMED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 COST OF GOODS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 DETAIL(S) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.12 EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 FDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 FIELD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.15 GENENTECH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 HIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 HITTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.18 JOINT DEVELOPMENT COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 JOINT MARKETING TEAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.20 KNOW HOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 MITSUBISHI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 NDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.24 NET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.25 OTHER INDICATION BASELINE SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.27 PRODUCT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.28 PSB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.29 PRODUCT STRATEGY PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.30 SB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.31 SYNTHELABO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.32 TARGET AUDIENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.33 TBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.34 TBC TRADEMARK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.35 TBC TRADEMARK ALTERNATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.36 TERRITORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.37 THIRD PARTY(IES) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.38 THIRD PARTY ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.39 U.S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
1.40 WORKING CAPITAL DEDUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.41 YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2. GRANT AND RIGHTS TO FUTURE LICENSE RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3. DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5. COMPULSORY LICENSE OR MARKETING RIGHTS AND THIRD PARTY ROYALTIES . . . . . . . . . . . . . . . . . . . . . . 19
6. COMMERCIALIZATION AND COPROMOTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7. PRODUCT SUPPLY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8. EXCHANGE OF INFORMATION AND CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
9. PATENT PROSECUTION AND LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10. TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
11. STATEMENTS AND REMITTANCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
12. TERM AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13. RIGHTS AND DUTIES UPON TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
14. WARRANTIES, REPRESENTATIONS, AND INDEMNIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
15. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
17. WAIVER OF BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
18. SEPARABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
19. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
20. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
21. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
22. RECORDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
23. NO PARTNERSHIP OR JOINT VENTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
24. EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
25. DISPUTE RESOLUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
APPENDIX A
PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
APPENDIX B
PRODUCT STRATEGY PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
APPENDIX C
ANNUAL TACTICAL PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
iii
<PAGE> 5
PRODUCT DEVELOPMENT, LICENSE,
AND COPROMOTION AGREEMENT
THIS PRODUCT DEVELOPMENT, LICENSE, AND COPROMOTION AGREEMENT
(hereinafter "AGREEMENT"), made as of the 5th day of August, 1997, between
Texas Biotechnology Corporation, a company organized under the laws of the
state of Delaware and having a place of business at 7000 Fannin, Houston, Texas
77030, U.S.A. and SmithKline Beecham plc, a company organized under English law
and having its registered office at New Horizons Court, Brentford, Middlesex
TW8 9EP, England,
W I T N E S S E T H T H A T:
WHEREAS, TBC, as defined below, is the owner of all right, title and
interest in certain patents, identified in Appendix A hereto, and know-how, or
otherwise has the right to grant certain licenses or sublicenses thereunder,
relating to a composition of matter known as argatroban; and
WHEREAS, SB, as defined below, desires to obtain certain licenses and
sublicensees in certain countries of the world from TBC under the aforesaid
patents and know-how, and TBC is willing to grant to SB such licenses and
sublicenses;
NOW, THEREFORE, in consideration of the covenants and obligations
expressed herein, and intending to be legally bound, and otherwise to be bound
by proper and reasonable conduct, the parties agree as follows:
1. DEFINITIONS
1.1 "ADMINISTRATIVE EXPENSES" shall mean those direct and/or
allocated administrative expenses which are incurred by SB and which are
allocated to PRODUCT for the particular indication in the FIELD [*] which in
the aggregate, under normal circumstances, [*]
1.2 "ADVERSE EXPERIENCE(S)" shall mean any noxious, pathological
or unintended change in anatomical, physiological or metabolic function as
indicated by physical signs, symptoms and/or laboratory changes occurring in
clinical trials, post-marketing surveillance, or clinical practice during use
of PRODUCT, or published in the medical literature, whether or not considered
causally related to the PRODUCT. This includes an exacerbation of a
pre-existing condition, intercurrent illness, drug interaction, significant
worsening of a disease under investigation or treatment, and significant
failure of expected pharmacological or biological action.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
<PAGE> 6
1.3 "AFFILIATES" shall mean any corporation, firm, partnership or
other entity, whether de jure or de facto, which directly or indirectly owns, is
owned by or is under common ownership with a party to the extent of at least
fifty percent (50%) of the equity (or, in the case of SB, such lesser percentage
which is the maximum allowed to be owned by a foreign corporation in a
particular jurisdiction) having the power to vote on or direct the affairs of
the entity and any person, firm, partnership, corporation or other entity
actually controlled by, controlling or under common control with a party.
1.4 "AGGREGATE PROJECTED DETAILS" shall mean the aggregate number
of DETAILS to be performed by SB sales representatives and TBC sales
representatives in the TERRITORY as determined by the JOINT MARKETING TEAM in
accordance with Paragraph 6.06.
1.5 "AMI" shall mean anti-coagulation therapy in acute myocardial
infarction.
1.6 "AMI BASELINE SALES" for each YEAR shall mean, the U.S. dollar
figure equal to the NET SALES of PRODUCT in the TERRITORY attributable
exclusively to AMI which [*] as such figure is determined by the JOINT
MARKETING TEAM in accordance with Paragraph 6.06(e).
1.7 "ANNUAL TACTICAL PLAN" shall mean the annual plan to be
developed for each country of the TERRITORY related to the tactics for the
promotion and sale of PRODUCT in such county, which plan shall be consistent
with the PRODUCT STRATEGY PLAN.
1.8 "COPROMOTION EXPENSES" shall mean those direct and/or
allocated expenses which are allocated to PRODUCT for the particular indication
in the FIELD that the parties are copromoting, which expenses are approved by
the JOINT MARKETING TEAM in accordance with Paragraph 6.06, and which expenses
are related to:
(a) [*]
(b) [*]
(c) [*] and
(d) [*]
In no event shall any [*] be included in COPROMOTION EXPENSES.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
2
<PAGE> 7
1.9 "COROMED" shall mean Coromed, Inc., a company organized under
the laws of the State of Delaware, having its principal place of business at
Renssalear Technology Park, 185 Jordan Road, Troy, New York 12180-7615.
1.10 "COST OF GOODS" shall mean [*] as well as [*] COST OF GOODS
shall be calculated in accordance with U. S. Generally Accepted Accounting
Procedures (GAAP).
1.11 "DETAIL(S)" shall mean a face-to-face meeting, in an
individual or group practice setting, between a health care professional with
prescribing authority and a professional representative of the applicable party
during which a Major Presentation of PRODUCT is made to such health care
professional. When used as a verb, "DETAIL" shall mean to engage in a DETAIL.
The term "Major Presentation" as used in this Paragraph shall mean a full
PRODUCT presentation during which key PRODUCT attributes are verbally
presented, provided, however, that no more than two such presentations in any
DETAIL shall be considered a Major Presentation, which shall be the two
presentations on which the most time is spent during the DETAIL.
1.12 "EFFECTIVE DATE" shall mean the date upon which this AGREEMENT
is effective and shall be the date of this AGREEMENT first written above.
1.13 "FDA" shall mean the United States Food and Drug Administration
and any successor agency thereto.
1.14 "FIELD" shall mean any use of PRODUCT, other than the use of
PRODUCT for the coating of stents, related to the therapeutic, palliative, or
prophylactic treatment of any human condition for any cardiovascular, renal,
neurological, or immunological purpose, [*] Any indication which [*]
1.15 "GENENTECH" shall mean Genentech, Inc., a Delaware corporation
having a principal place of business at 460 Point San Bruno Blvd., South San
Francisco, California 94080.
1.16 "HIT" shall mean anti-coagulant therapy in heparin-induced or
heparin-associated thrombocytopenia.
1.17 "HITTS" shall mean anti-coagulant therapy in heparin-induced
or heparin-associated thrombocytopenia and thrombosis syndrome.
1.18 "JOINT DEVELOPMENT COMMITTEE" means the group, established and
conducted in accordance with the procedures set forth in Article 3.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
3
<PAGE> 8
1.19 "JOINT MARKETING TEAM" means the group, established and
conducted in accordance with the procedures set forth in Article 6.
1.20 "KNOW HOW" shall mean all present and future technical
information and know-how which is not in the public domain which relates to
PRODUCT and shall include, without limitation, all biological, chemical,
pharmacological, toxicological, clinical, assay, control and manufacturing data
and any other information relating to PRODUCT and useful for the development
and commercialization of PRODUCT in the FIELD in the TERRITORY.
1.21 "MITSUBISHI" shall mean Mitsubishi Chemical Corporation, a
company organized under the laws of the country of Japan, having a principal
place of business at Tennoz Central Tower, 2-24 Higashishinagawa 2-chome,
Shinagawa-Ku, Tokyo 140 Japan.
1.22 "NDA" shall mean a New Drug Application in accordance with the
requirements of the FDA.
1.23 "NET OPERATING PROFIT" shall mean, with respect to a
particular indication for PRODUCT which the parties are copromoting in
accordance with Article 6, NET SALES attributable to the indication being
copromoted minus [*] minus [*] minus [*] minus [*]
1.24 "NET SALES" shall mean the gross receipts representing sales
of PRODUCT under this AGREEMENT by SB, its AFFILIATES or sublicensees ("the
Selling Party") to THIRD PARTIES less the following deductions:
(i) transportation charges [*] including insurance, for
transporting PRODUCT;
(ii) sales and excise taxes and duties [*] and any other
governmental charges imposed upon the production, importation, use or
sale of such PRODUCT;
(iii) trade, quantity and cash discounts allowed on
PRODUCT;
(iv) allowances or credits to customers on account of
rejection or return of PRODUCT or on account of retroactive price
reductions affecting such PRODUCT; and
(v) PRODUCT rebates and PRODUCT charge backs including
those granted to managed care entities and pharmaceutical benefit
management service entities.
Any sales between SB, its AFFILIATES and its or their sublicensees
shall be excluded from the computation of NET SALES and no royalties will be
payable on such sales.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
4
<PAGE> 9
Notwithstanding the immediately preceding sentence, any transactions
between SB or any of its AFFILIATES or any of its sublicensees on the one hand
and PSB (as defined below) on the other hand will be deemed to be transactions
with THIRD PARTIES for the purposes of computing NET SALES, provided that the
conditions of such sales to PSB, including any and all rebates and discounts
allocated to transactions with any such PSB, shall be on an arms length basis
and shall be fully deductible for such computation purposes. In the event that
any PSB type activity is within SB or within any of its AFFILIATES or
sublicensees as only part of its or their total activities rather than in a
separate AFFILIATE a notional NET SALES figure will be calculated on an arms
length basis to cover such activities. Such notional NET SALES figure shall
not be less than the average net sales figure to other like THIRD PARTIES
during the same calendar period.
1.25 "OTHER INDICATION BASELINE SALES" for each YEAR shall mean,
the U.S. dollar figure equal to the NET SALES of PRODUCT in the TERRITORY
attributable exclusively to an indication other than HIT/HITTS and AMI [*] as
such figure is determined by the JOINT MARKETING TEAM in accordance with
Paragraph 6.06(f).
1.26 "PATENTS" shall mean all patents and patent applications in
the TERRITORY which are or become owned by TBC, or to which TBC otherwise has,
now or in the future, the right to grant licenses and license rights or
sublicense and sublicense rights, which generically or specifically cover the
PRODUCT sold or a use of PRODUCT in the FIELD. Included within the definition
of PATENTS are all continuations, continuations-in-part, divisions, patents of
addition, reissues, renewals or extensions thereof and all SPCs (i.e., a right
based upon a PATENT to exclude others from making, using or selling PRODUCT,
such as a Supplementary Protection Certificate). Also included within the
definition of PATENTS are any patents or patent applications which generically
or specifically claim any improvements on PRODUCT which are developed by TBC,
or which TBC otherwise has the right to grant licenses and license rights or
sublicense and sublicense rights, now or in the future, during the term of this
AGREEMENT. Also included within the definition of PATENTS are (a) all patents
and patent applications which are or become owned by TBC, or to which TBC
otherwise has, now or in the future, the right to grant licenses, which
generically or specifically claim PRODUCT, a process for formulating PRODUCT,
an intermediate used in such process or a use of PRODUCT in the FIELD, (b) all
continuations, continuations-in-part, divisions, patents of addition, reissues,
renewals or extensions thereof and all SPCs, and (c) any patents or patent
applications which generically or specifically claim any improvements on
PRODUCT or intermediates or formulation processes required or useful for
production of PRODUCT which are developed by TBC, or which TBC otherwise has
the right to grant licenses, now or in the future, during the term of the June
30, 1987 Mitsubishi-Genentech Agreement between Mitsubishi and Genentech, as
amended by the parties on June 25, 1992, May 27, 1993, and April 30, 1997. The
current list of patent applications and patents encompassed within PATENTS is
set forth in Appendix
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
5
<PAGE> 10
A attached hereto. Appendix A shall be updated by TBC on at least a
semi-annual basis during the term of the AGREEMENT.
1.27 "PRODUCT" shall mean the chemical compound known as
argatroban, whose more specific chemical name is
(2R,4R)-4-methyl-l-[N2-((RS-3-methyl-1, 2, 3, 4-tetrahydro-8
quinolinesulfonyl)-L-arginyl]-2-pyperidinecarboxylic acid monohydrate, its
prodrugs and metabolites, and all esters, salts, hydrates, solvates, polymorphs
and isomers thereof, and shall include compositions comprising such compound,
prodrug, metabolite, or derivative.
1.28 "PSB" shall mean any present or future AFFILIATE of SB or its
sublicensees which conducts a Pharmaceutical Service Business for or on behalf
of THIRD PARTIES, including Pharmaceutical Benefits Management Services
(hereinafter "PBM"), wholesaler distribution, pharmacy distribution, managed
care services, disease management services, hospital services, or mail order
prescription pharmacy services. As of the EFFECTIVE DATE, an AFFILIATE of SB
which is included within the definition of PBM is Diversified Pharmaceutical
Services, a corporation of the state of Minnesota and having a place of
business at 3600 West 80th Street, Seventh Floor, Bloomington, Minnesota
55431-1085.
1.29 "PRODUCT STRATEGY PLAN" shall mean the plan to be developed to
assess the overall strategy required to exploit the commercial opportunity for
PRODUCT in the TERRITORY for HIT, HITTS, and any other indication [*]
1.30 "SB" shall mean SmithKline Beecham plc, a company organized
under English law and having its registered office at New Horizons Court,
Brentford, Middlesex TW8 9EP, England.
1.31 "SYNTHELABO" shall mean Synthelabo, a company organized under
the laws of the country of France, having a principal place of business at 22,
avenue Galilee, 92352 Le Plessis-Robinson Cedex France.
1.32 "TARGET AUDIENCE" shall mean each physician specialty
identified by the JOINT MARKETING TEAM, in accordance with Paragraph 6.06, as
being a suitable 'target' for the promotion of PRODUCT for a particular
indication of PRODUCT in the FIELD in the TERRITORY which the parties are
copromoting. A physician shall be deemed to be a member of a physician
specialty if he/she has declared that specialty as his/her primary specialty.
1.33 "TBC" shall mean Texas Biotechnology Corporation, a company
organized under the laws of the state of Delaware and having a principal place
of business at 7000 Fannin, Houston, Texas 77030, U.S.A.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
6
<PAGE> 11
1.34 "TBC TRADEMARK" shall mean NOVASTAN, a trademark owned by
MITSUBISHI and licensed to TBC, with the right to grant sublicenses, in all
countries in the TERRITORY.
1.35 "TBC TRADEMARK ALTERNATE" shall mean a trademark other than
the TBC TRADEMARK which is acceptable to SB, and which TBC has developed,
applied for or registered, or will apply for or register, at TBC's expense, in
those countries in the TERRITORY where the TBC TRADEMARK is not available for
use and registration.
1.36 "TERRITORY" shall mean the means the United States of America,
its territories and possessions, including Puerto Rico; and Canada, as well all
other countries of the world which, during the term of the AGREEMENT, become
part of the TERRITORY.
1.37 "THIRD PARTY(IES)" shall mean any party other than SB and TBC.
1.38 "THIRD PARTY ROYALTIES" shall mean [*] as a result of NET
SALES, as well as any [*]
1.39 "U.S.A." shall mean the United States of America, its
territories and possessions, such as, but not limited to, Puerto Rico.
1.40 "WORKING CAPITAL DEDUCTION" shall mean the [*] outstanding at
the end of each quarter during each YEAR. The term 'net working capital' shall
mean the [*] under this AGREEMENT. The interest charge shall [*]
1.41 "YEAR" shall mean (a) for the first YEAR, the period following
the date of initiation of copromotion of PRODUCT in the FIELD in the TERRITORY
by the parties in accordance with Article 6, the period beginning on such date
through December 31 of the year of such initiation, and (b) for all YEARS after
the first YEAR, each calendar year thereafter unless the AGREEMENT expires or
terminates earlier than the end of the calendar year in accordance with the
provisions hereof.
2. GRANT AND RIGHTS TO FUTURE LICENSE RIGHTS
2.1 TBC hereby grants to SB the exclusive right, with the right to
grant sublicenses in accordance with this Paragraph, to the extent of TBC's
rights and interests under PATENTS and KNOW-HOW, to make, have made, use, sell,
offer for sale and import PRODUCT in the FIELD in the TERRITORY, subject to [*]
TBC's right to copromote PRODUCT in the FIELD in the
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
7
<PAGE> 12
TERRITORY as provided in Article 6, and all the other terms and conditions of
this AGREEMENT. SB shall have the unfettered right to grant sublicenses to any
AFFILIATE, but [*]
2.2 In the event that, after the EFFECTIVE DATE, TBC is able to
acquire rights to make, have made, use, sell, offer for sale and import PRODUCT
outside of the FIELD in the TERRITORY, the scope of the term 'FIELD' outlined
in Paragraph 1.13, and thus, the scope of the license outlined in Paragraph
2.01, shall be immediately adjusted to fully embrace such new rights, subject
to the parties mutual agreement as to the commercial terms of such license
expansion, provided that in the event the parties do not mutually agree on such
terms:
(a) TBC shall be free to make, have made, use, sell,
offer for sale and import PRODUCT [*] but it shall not be permitted to
[*] except that TBC shall be permitted to [*] in the TERRITORY, and
(b) in the event TBC elects to make, have made, use,
sell, offer for sale and import PRODUCT [*] TBC warrants and
represents that it will not knowingly engage in any activity regarding
[*] including, but not limited to, publication of preclinical or
clinical data related to PRODUCT, which is or ought to be recognized
by TBC as [*] and TBC further warrants and represents that it will
contractually bind any THIRD PARTY with whom it engages in such [*] to
the same prohibitions.
2.3 In the event that, after the EFFECTIVE DATE, TBC is able to
acquire rights to make, have made, use, sell, offer for sale and import PRODUCT
in the FIELD outside of the TERRITORY, SB shall have the first right to an
exclusive license and sublicense under such rights in all countries outside of
the TERRITORY in which such rights are acquired upon terms and conditions to be
mutually agreed upon by the parties in good faith. TBC shall provide SB with
written notification of the availability of such rights. If the parties have
not determined such mutually acceptable terms and conditions within [*] after
SB's receipt of such notice, [*]
3. DEVELOPMENT
3.1 Promptly after the EFFECTIVE DATE, the parties shall form a
JOINT DEVELOPMENT COMMITTEE whose mandate shall be to (i) direct the regulatory
and scientific development of PRODUCT necessary to receive approval of the
PRODUCT in the TERRITORY for HIT/HITTS, and (ii) evaluate the scientific
feasibility and direct any subsequent joint development of PRODUCT for
additional indications in the FIELD in the TERRITORY such as, but not limited
to, AMI.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
8
<PAGE> 13
3.2 Within thirty (30) days following the EFFECTIVE DATE, the
parties shall each nominate up to four (4) voting representatives for membership
on the JOINT DEVELOPMENT COMMITTEE. Membership shall include representation
from each party's scientific, clinical development, commercial development, and
regulatory affairs departments. In the event that either party decides to
appoint less than four (4) representatives, such party shall nevertheless retain
four (4) votes on each matter brought before the JOINT DEVELOPMENT COMMITTEE.
At least two (2) representatives from each party shall be present to represent a
quorum for voting purposes. In addition, the JOINT DEVELOPMENT COMMITTEE may
from time to time include additional non-voting ad-hoc representatives from
either party on specific issues as the need arises.
3.3 The chairman of the JOINT DEVELOPMENT COMMITTEE shall be one
of the members of the JOINT DEVELOPMENT COMMITTEE. Chairmanship of the JOINT
DEVELOPMENT COMMITTEE shall alternate between an SB member and a TBC member on
an annual basis, with a TBC member serving as JOINT DEVELOPMENT COMMITTEE
chairman for the first year following the EFFECTIVE DATE. The first meeting of
the JOINT DEVELOPMENT COMMITTEE shall occur within thirty (30 days) after the
EFFECTIVE DATE. The purpose of the initial meeting shall be to review the
current status of the development of PRODUCT in the FIELD in the TERRITORY and
to agree on an operational charter which shall set forth the principles and
guidelines for the governance of the JOINT DEVELOPMENT COMMITTEE. Thereafter,
meetings shall be held once a quarter unless no later than thirty (30) days in
advance of any meeting there is a determination by the JOINT DEVELOPMENT
COMMITTEE that no new business or other activity has transpired since the
previous meeting, and that there is no need for a meeting. In such instance,
the next quarterly meeting will be scheduled. The location of such meetings
shall alternate between TBC's offices in Houston, Texas and SB's offices in the
Philadelphia, Pennsylvania metropolitan area unless otherwise agreed upon
between the parties, with the first meeting to be held at TBC's offices. JOINT
DEVELOPMENT COMMITTEE meetings may not necessarily be face-to- face meetings
but, upon the agreement of both parties, can be via other methods of
communication such as teleconferences and/or videoconference. Minutes of each
JOINT DEVELOPMENT COMMITTEE meeting will be transcribed and issued by the
chairman within thirty (30) days after each meeting and shall be approved as
the first order of business at the immediately succeeding JOINT DEVELOPMENT
COMMITTEE meeting.
3.4 Subject to Paragraphs 3.08 and 3.12, the [*] decision of [*]
shall be final and binding upon both parties, including all activity related to
package inserts and labeling, provided that such [*] and further provided that
any disputes which cannot be settled by the JOINT DEVELOPMENT COMMITTEE after
good faith attempts shall be referred to [*] for resolution, provided that [*]
3.5 During the term of the AGREEMENT, TBC shall carry out the
remaining preclinical and clinical development of PRODUCT in the TERRITORY for
the indications of HIT and HITTS,
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
9
<PAGE> 14
and the remaining work required for filing of regulatory applications for
PRODUCT regulatory approvals for the indications of HIT and HITTS, to the
extent necessary to achieve product registration in the TERRITORY for such
indications, and [*] All activity carried out by TBC under this Paragraph shall
be done in accordance with the recommendations of the JOINT DEVELOPMENT
COMMITTEE. TBC will exercise its reasonable efforts and diligence in carrying
out its responsibilities under this Paragraph.
3.6 TBC shall have exclusive financial responsibility for funding
all development and product registration work for PRODUCT in the FIELD in the
TERRITORY which is related to the indications of HIT and HITTS and which was
initiated as of the EFFECTIVE DATE. All out of pocket expenses associated with
additional development and product registration work for PRODUCT in the FIELD
in the TERRITORY which is related to the indications of HIT and HITTS which is
recommended by the JOINT DEVELOPMENT COMMITTEE and which is required for NDA
Approval for HIT/HITTS (as defined in Paragraph 4.01(4)) shall be funded by the
parties with SB funding sixty percent (60%) and TBC funding forty percent
(40%). SB shall provide all [*] funding for Phase IV local post regulatory
approval trials except that any Phase IV trials which are requested by the FDA
as a condition of NDA Approval (as defined in Paragraph 4.01(4)) shall be
considered development and product registration work for PRODUCT "which is
required for NDA Approval for HIT/HTTS (as defined in Paragraph 4.01(4))" for
purposes of determining the parties relative funding obligations under this
Paragraph.
3.7 TBC warrants and represents that as of the EFFECTIVE DATE, TBC
has sufficient monetary resources available to enable it to carry out its
funding obligation under Paragraph 3.06. In the event that, due to unforeseen
circumstances, TBC becomes aware that it will have significant problems in
carrying out its obligations under Paragraph 3.06, it shall [*] In the event
that [*] under Paragraph 3.06, [*] In such event, [*]
3.8 At the successful completion of all studies required by the
FDA for Phase II clinical development, the JOINT DEVELOPMENT COMMITTEE shall
review all the data to determine if such data [*] In the event that the JOINT
DEVELOPMENT COMMTTEE makes a positive determination, it shall give prompt
written notice thereof to both TBC and SB. SB shall have [*] after the date it
receives such written notice to determine if [*] Notwithstanding Paragraph
3.04, SB shall have unilateral discretion to determine if [*] In the event
that SB makes [*] in the TERRITORY, the following shall be applicable. At the
time that SB makes such [*] either TBC shall warrant and represent that at such
time, TBC has or will have sufficient [*] under Paragraph 3.08 or else the
parties shall promptly meet to determine the appropriate distribution of [*] In
the event that TBC makes such warranty and representation, all out of pocket
expenses related to development and product registration work for PRODUCT in
the FIELD in the TERRITORY which is related to the indication of AMI which is
required for NDA Approval for AMI (as defined in Paragraph 4.02(4))
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
10
<PAGE> 15
which is recommended by the JOINT DEVELOPMENT COMMITTEE shall be funded by the
parties with SB funding sixty percent (60%) and TBC funding forty percent
(40%). SB shall provide all [*] funding for Phase IV local post regulatory
approval trials except that any Phase IV trials which are requested by the FDA
as a condition of NDA Approval for AMI (as defined in Paragraph 4.02(4)) shall
be considered development and product registration work for PRODUCT "which is
required for NDA Approval for AMI (as defined in Paragraph 4.02(4))" for
purposes of determining the parties relative funding obligations under this
Paragraph. All such work which is performed after the EFFECTIVE DATE shall be
in accordance with the recommendations of the JOINT DEVELOPMENT COMMITTEE.
3.9 In the event that SB determines that it wants [*] as outlined
in Paragraph 3.08, TBC shall carry out the remaining preclinical and clinical
development of PRODUCT in the TERRITORY for the indication of AMI, and the
remaining work required for filing of regulatory applications for PRODUCT
regulatory approvals for the indication of AMI, to the extent necessary to
achieve product registration in the TERRITORY for such indication, and [*] All
such activity carried out by TBC under this Paragraph shall be done in
accordance with the recommendations of the JOINT DEVELOPMENT COMMITTEE. TBC
will exercise its reasonable efforts and diligence in carrying out its
responsibilities under this Paragraph.
3.10 In the event that, [*] it shall promptly notify SB, in
writing, and SB, [*] In the event that SB elects to [*] under Paragraph 3.08,
in excess of the sixty percent (60%) required under Paragraph 3.08, the parties
will .[*]. In such event,[*] required by Paragraph 3.08 shall be [*] provided
that, during any calendar year,[*] and further provided that [*].
3.11 In the event that SB determines that it does not want to
participate in the commercialization of PRODUCT in the TERRITORY for AMI as
outlined in Paragraph 3.08, TBC shall be free to develop, register, and
commercialize PRODUCT in the TERRITORY for the indication of AMI, on their own,
at its sole expense, utilizing sales representatives who are employees of TBC,
subject to Paragraph 21.01, provided that TBC shall not have the right to [*]
further provided that TBC warrants and represents that it will do so in such a
manner so as not to [*] and TBC shall [*] and TBC further warrants and
represents that it will contractually bind any THIRD PARTY with whom it engages
in such development to the same prohibitions. In the event that TBC decides at
the time of NDA Acceptance for AMI (as defined in Paragraph 4.02(3) that it
wants to offer SB the right to [*] with or without TBC, it shall provide
written notice thereof to SB and the following shall be applicable:
(a) in the event that SB determines that it wishes to
accept such offer:
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
11
<PAGE> 16
(i) SB must accept such offer no later than [*]
after the date SB receives written notification from TBC of the
offer; and
(ii) [*] and
(b) in the event that SB elects not to accept such offer,
or does not do so within the time period outlined in this Paragraph,
TBC shall [*], provided that TBC shall not have the right to [*],
further provided that TBC warrants and represents that it will do so
in such a manner so as not to [*], and TBC shall [*] and TBC further
warrants and represents that it will contractually bind any THIRD
PARTY with whom it engages in such development to the same
prohibitions.
3.12 The parties may at any time submit to the JOINT DEVELOPMENT
COMMITTEE a proposal to develop PRODUCT for any other indication in the FIELD
in addition to HIT/HITTS or AMI. Such proposal shall contain, at a minimum,
information supporting the rationale for developing each additional indication
of PRODUCT from a scientific, regulatory and commercial standpoint, as well as
an estimated developmental critical path and an estimate of the cost of such
development. In keeping with the collaborative spirit of this AGREEMENT, all
proposals shall be considered by the JOINT DEVELOPMENT COMMITTEE as joint
proposals without regard for which entity initiates or "champions" the
proposals. The JOINT DEVELOPMENT COMMITTEE shall approve such proposal if (i)
it determines that the program has scientific and technical merit and is likely
to result in the approval of a new indication(s) and (ii) the commercial return
from sales of PRODUCT in the TERRITORY for such new indication can reasonably
be expected to offset the cost of development within a reasonable period of
time following launch for such new indication of PRODUCT and produce an
acceptable return on investment to both parties. If the JOINT DEVELOPMENT
COMMITTEE approves a proposal, it shall give prompt written notice thereof to
SB and TBC. In the event that the JOINT DEVELOPMENT COMMITTEE approves a
proposal, it shall give prompt written notice thereof to both TBC and SB. SB
shall have [*] after the date it receives such written notice to [*].
Notwithstanding Paragraph 3.04, SB shall have unilateral discretion to
determine if it [*] for such additional indication in the TERRITORY.
3.13 In the event that SB determines that it wants to [*] as
outlined in Paragraph 3.12, the parties shall determine [*] the remaining
preclinical and clinical development of PRODUCT in the TERRITORY for the
additional indication, and the remaining work required for filing of regulatory
applications for PRODUCT regulatory approvals for the additional indication, to
the extent necessary to achieve product registration in the TERRITORY for such
additional indication. All such activity carried out under this Paragraph
shall be done in accordance with the recommendations of the JOINT DEVELOPMENT
COMMITTEE. TBC and SB will each exercise its reasonable efforts and diligence
in carrying out its respective responsibilities under this Paragraph. At the
time that SB
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
12
<PAGE> 17
makes [*] under Paragraph 3.12, either TBC shall warrant and represent that at
such time, TBC has or will have [*] or else the parties shall promptly meet to
determine the appropriate [*] as well as an appropriate [*]. In the event that
TBC makes such warranty and representation, all out of pocket expenses related
to development and product registration work for PRODUCT in the FIELD in the
TERRITORY which is related to the additional indication which is recommended by
the JOINT DEVELOPMENT COMMITTEE and which is required for FDA approval of an NDA
filed by or on behalf of TBC to market PRODUCT for such additional indication in
the U.S.A. (including any Phase IV clinical trials which are required by the
FDA as a condition of such approval) shall be funded by the parties with SB
funding sixty percent (60%) and TBC funding forty percent (40%).
3.14 In the event that, due to unforeseen circumstances, TBC [*],
it shall promptly notify SB, in writing, and SB, at its option, shall have the
right to [*], provided that [*]. In the event that SB elects to [*] under
Paragraph 3.13, the parties will [*] the remaining development and registration
of PRODUCT in the TERRITORY for the additional indication. In such event,[*].
3.15 In the event that SB determined that it [*] as outlined in
Paragraph 3.13, TBC shall [*], provided that TBC shall not have the right to
[*], further provided that TBC warrants and represents that it will do so in
such a manner so as not to [*] and TBC shall be [*] and TBC further warrants
and represents that it will contractually bind any THIRD PARTY with whom it
engages in such development to the same prohibitions.
4. PAYMENTS
4.1 In consideration for the license and sublicense under PATENTS
and KNOW-HOW granted to SB in this AGREEMENT, SB shall pay TBC eight and one
half million U.S. dollars (U.S. $8,500,000) within [*] after the EFFECTIVE
DATE, and shall make the following milestone payments (in U.S. dollars) to TBC,
in the specified amounts, within [*] after the occurrence of the following
milestones:
(a) [*] $ U.S. [*]
(b) [*] $ U.S. [*]
provided that:
(1) each such payment shall be made only one time
regardless of how many times such milestones are achieved, and
no payment shall be owed for a milestone which is not reached;
(2) each such payment shall be [*];
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
13
<PAGE> 18
(3) by the term [*]; and
(4) by the term [*].
4.2 In consideration for the license and sublicense under PATENTS
and KNOW-HOW granted to SB in this AGREEMENT, in the event that [*] in
accordance with Paragraph 3.08, SB shall make the following milestone payments
(in U.S. dollars) to TBC, in the specified amounts, within [*] after the
occurrence of the following milestones:
(a) [*] $ U.S. [*]
(b) [*] $ U.S. [*]
provided that:
(1) each such payment shall be made only one time
regardless of how many times such milestones are achieved, and
no payment shall be owed for a milestone which is not reached;
(2) each such payment shall be [*];
(3) by the term [*]; and
(4) by the term [*].
4.3 In further consideration for the license and sublicense under
PATENTS granted to SB under the AGREEMENT, SB shall make the following royalty
payments to TBC for those NET SALES which are not subject to the payment
obligation outlined in Paragraphs 4.05 or 4.07:
[*] of annual NET SALES up to and including [*]; and
[*] of annual) NET SALES in excess of [*] up to and including
[*];
provided that, in each year in which the annual NET SALES are in excess of [*],
the royalty payment on [*] NET SALES for such annual period shall be [*] of
such NET SALES, and further provided that, for purposes of this Paragraph,
achievement of the NET SALES thresholds and payment obligations recited above
shall be determined by adding the total annual NET SALES for all indications in
the FIELD for which TBC is not copromoting at least [*] of the TARGETED DETAILS
for such annual period as determined in accordance with Article 6 in all
countries of the TERRITORY where there is (i) [*] or [*], and (ii)[*] of such
NET SALES. By the term [*] as used
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
14
<PAGE> 19
in this Paragraph is meant [*]. By the term [*] is meant that a [*] in the
particular country of the TERRITORY which [*] in such country [*]. SB shall
give TBC written notice of [*].
4.4 In further consideration for the license and sublicense under
KNOW-HOW granted to SB under the AGREEMENT, royalties on annual NET SALES in
those countries of the TERRITORY which are not subject to the royalty
obligation outlined in Paragraph 4.03 or the payment obligation outlined in
Paragraphs 4.05 or 4.07 shall be calculated separately for each annual period,
at [*] the royalty rates outlined in Paragraph 4.03.
4.5 (a) If TBC does exercise the copromotion option outlined
in Article 6 in accordance with Paragraph 6.02, and during a
particular YEAR, TBC has performed at least [*] of the AGGREGATE
PROJECTED DETAILS of PRODUCT for all indications in the FIELD which
the parties are copromoting, then, in lieu of the payments to TBC
outlined in Paragraphs 4.03 and 4.04, SB shall pay TBC the following
share of NET OPERATING PROFIT for each such indication being
copromoted in accordance with Article 6:
(i) [*] of all NET OPERATING PROFIT attributable
to HIT/HITTS during such YEAR,
(ii) [*] of all NET OPERATING PROFIT attributable
to AMI during such YEAR up to the AMI BASELINE SALES;
(iii) [*] of all NET OPERATING PROFIT attributable
to AMI during such YEAR above the AMI BASELINE SALES;
(iv) [*] of all NET OPERATING PROFIT attributable
to any indication other than HIT/HITTS and AMI up to the OTHER
INDICATION BASELINE SALES attributable to such indication;
(v) [*] of all NET OPERATING PROFIT attributable
to any indication other than HIT/HITTS and AMI above the OTHER
INDICATION BASELINE SALES attributable to such indication.
(b) if, during any YEAR in which TBC is copromoting
PRODUCT as outlined in Article 6, there is a negative NET OPERATING
PROFIT for the TERRITORY, for any indication in the FIELD that the
parties are copromoting, such negative NET OPERATING PROFIT shall be
distributed between the parties in accordance with Paragraphs 4.05(a).
(c) If TBC does exercise the copromotion option outlined
in Article 6 in accordance with Paragraph 6.02 but, during a
particular YEAR, TBC has not performed at
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
15
<PAGE> 20
least [*] of the AGGREGATE PROJECTED DETAILS of PRODUCT for all
indications in the FIELD which the parties are copromoting, then TBC
shall not be entitled to any share of the NET OPERATING PROFIT for any
NET SALES for any indications which the parties are copromoting, but
SB shall pay TBC the royalties on such NET SALES during such
particular YEAR outlined in Paragraphs 4.03 or 4.04, whichever is
applicable.
(d) If TBC commercializes PRODUCT in the TERRITORY for
the indication of [*] in accordance with Paragraph 3.11, SB shall pay
TBC [*] of all NET SALES in the TERRITORY attributable to [*] during
each annual period during the term of the AGREEMENT following TBC's
commercial launch of PRODUCT for such indication minus [*] minus [*]
minus [*] minus [*] minus [*].
(e) If TBC commercializes PRODUCT in the TERRITORY for an
indication [*] in accordance with Paragraph 3.15, SB shall pay TBC [*]
of all NET SALES in the TERRITORY attributable to such indication
during each annual period during the term of the AGREEMENT following
TBC's commercial launch of PRODUCT for such indication minus [*] minus
[*] minus [*] minus [*].
4.6 In addition to the payments set forth in Paragraphs 4.01
through 4.05, SB shall purchase from TBC one million U.S. dollars (U.S.
$1,000,000) worth of TBC common stock pursuant to the terms and conditions of a
separate Common Stock Purchase Agreement to be executed simultaneously herewith
upon the closing thereof and, at TBC's option, up to two million U.S. dollars
(U.S. $2,000,000) worth of TBC common stock pursuant to such Common Stock
Purchase Agreement before the first anniversary of such closing.
4.7 In the event that TBC elects to copromote PRODUCT with SB in
accordance with Paragraph 6.02, and provided that TBC has not irrevocably lost
its right to copromote under Paragraph 6.09, then [*] in accordance with
Paragraph 12.01(d)(i), SB shall make the following payments (in U.S. dollars)
to TBC:
(a) [*] of NET SALES for the indications for which TBC
copromoted PRODUCT with SB in accordance with Paragraph 6.02 [*];
(b) [*] of NET SALES for the indications for which TBC
copromoted PRODUCT with SB in accordance with Paragraph 6.02 [*]; and
(c) [*] of NET SALES for the indications for which TBC
copromoted PRODUCT with SB in accordance with Paragraph 6.02 [*].
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
16
<PAGE> 21
Such payments shall be made to TBC in accordance with Paragraph 11.03.
4.8 In the event that SB wants to continue to employ [*], SB shall
pay TBC [*] of annual NET SALES, provided that the royalties set forth in this
Paragraph shall be applicable only with respect to those NET SALES for which SB
employed [*].
5. COMPULSORY LICENSE OR MARKETING RIGHTS AND THIRD PARTY ROYALTIES
5.1 In the event that a governmental agency in any country or
territory of the TERRITORY grants or compels TBC to grant license or marketing
rights to any THIRD PARTY for PRODUCT in the FIELD, SB shall have the benefit
in such country or territory of the terms granted to such THIRD PARTY to the
extent that such terms are more favorable to the THIRD PARTY than those of this
AGREEMENT.
5.2 (a) During the term of this AGREEMENT, the parties, in
good faith, shall mutually determine if it is necessary to seek a
license from, and make royalty or other fee payments to, any THIRD
PARTY in order to avoid infringement during the use, sale, offer for
sale or importation of PRODUCT in the FIELD anywhere in the TERRITORY,
provided that if the parties cannot agree on the need for any such
license or the commercial provisions relating to such license, the
parties shall endeavor to find a mutually acceptable resolution of
this matter, and if the parties cannot determine such a mutually
acceptable resolution, the parties shall submit the matter to a
mutually acceptable THIRD PARTY expert for a final and binding
resolution, the cost of such expert to be equally shared by the
parties.
(b) If TBC does exercise the copromotion option outlined
in Article 6 in accordance with Paragraph 6.02, and during a
particular YEAR, TBC has performed at least [*] of the AGGREGATE
PROJECTED DETAILS of PRODUCT for all indications in the FIELD which
the parties are copromoting, then [*].
(c) If TBC does exercise the copromotion option outlined
in Article 6 in accordance with Paragraph 6.02, but during a
particular YEAR TBC has not performed at [*] of the AGGREGATE
PROJECTED DETAILS of PRODUCT for all indications in the FIELD which
the parties are copromoting, or if TBC does not exercise the
copromotion option outlined in Article 6, then [*], provided that in
no event [*].
6. COMMERCIALIZATION AND COPROMOTION
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
17
<PAGE> 22
6.1 SB will commercialize PRODUCT in the FIELD in the TERRITORY in
accordance with the guidelines of the JOINT MARKETING TEAM as set forth in the
provisions of this Article 6. SB will exercise its reasonable efforts and
diligence in commercializing PRODUCT in the FIELD in the TERRITORY in
accordance with its business, legal, medical and scientific judgment and SB's
normal practices and procedures for compounds having similar technical and
commercial potential, and all such activity shall be undertaken at SB's
expense.
6.2 (a) In the event that (i) SB makes a positive election to
participate in the commercialization of PRODUCT for AMI in the
TERRITORY in accordance with either Paragraph 3.08 or Paragraph 3.11,
and (ii) NDA Approval for AMI (as defined in Paragraph 4.02(4))
occurs, TBC shall have the right to copromote PRODUCT with SB to the
TARGET AUDIENCE in the TERRITORY for HIT/HITTS and for AMI beginning
on the later of [*] or the date of [*], provided TBC must notify SB in
writing if TBC has elected to copromote PRODUCT with SB for such
indications by the later of [*] after [*] or [*]. In the event that
[*], in which event TBC's actual right to copromote shall vest on [*],
provided that any decision by TBC not to copromote PRODUCT for such
indications shall be irrevocable, and TBC's failure to provide
affirmative written notification to SB of its election to copromote
during the [*] shall irrevocably terminate TBC's right to copromote
PRODUCT with SB for such indications. TBC shall not have the right to
sublicense this copromotion right to any THIRD PARTY.
(b) In the event that (i) SB makes a positive election to
participate in the commercialization of PRODUCT for an additional
indication in the FIELD in the TERRITORY in accordance with Paragraph
3.12, and (ii) the FDA approves an NDA filed by or on behalf of TBC
for marketing PRODUCT for such additional indication in the U.S.A.,
TBC shall have the right to copromote PRODUCT with SB to the TARGET
AUDIENCE in the TERRITORY for such additional indication beginning on
the later of [*] or the date the [*] provided TBC must notify SB in
writing if TBC has elected to copromote PRODUCT with SB for such
additional indication by the later of [*] or [*] after [*]. Any
decision by TBC not to copromote PRODUCT for such indication shall be
irrevocable, and TBC's failure to provide affirmative written
notification to SB of its election to copromote during the
notification period outlined in this Paragraph shall irrevocably
terminate TBC's right to copromote PRODUCT with SB for such
indications. TBC shall not have the right to sublicense this
copromotion right to any THIRD PARTY.
6.3 No later than [*] after the EFFECTIVE DATE, SB and TBC shall
assemble a team of appropriate personnel from both SB and TBC (hereinafter
"JOINT MARKETING TEAM") to plan the pre-launch, launch, post-launch and ongoing
promotional activities for PRODUCT in the FIELD in the TERRITORY. The JOINT
MARKETING TEAM shall consist of six (6) members,
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
18
<PAGE> 23
three (3) of whom shall be appointed by SB and three (3) of whom shall be
appointed by TBC. The presence of at least four (4) members, two (2) of whom
shall have been selected by each party, shall constitute a quorum for purposes
of consideration and action by the JOINT MARKETING TEAM. Each member shall
have one vote on all matters, and whenever action is to be taken by vote of the
JOINT MARKETING TEAM, it shall be authorized by [*]. Chairmanship of the JOINT
MARKETING TEAM shall reside with SB.
Meetings of the JOINT MARKETING TEAM shall be held on a quarterly
basis commencing the quarter in which the filing of the NDA for HIT/HITTS in
the U.S.A. occurs, unless the chairman determines, no later than thirty (30)
days in advance of any meeting following the initial meeting, that no new
business or other activity has transpired since the previous meeting. In such
instance, the next quarterly meeting will be scheduled. The location of JOINT
MARKETING TEAM meetings shall alternate between SB's offices in the
Philadelphia, Pennsylvania metropolitan area and TBC's offices in Houston,
Texas, unless otherwise agreed upon between the parties, with the first meeting
to be held at SB's offices. JOINT MARKETING TEAM meetings may not necessarily
be face-to-face meetings, but upon the agreement of both parties can be via
other methods of communication such as teleconferences and/or videoconferences.
Minutes of the JOINT MARKETING TEAM shall be transcribed and issued by the
chairman within thirty (30) days after each meeting and shall be approved as
the first order of business at the immediately succeeding JOINT MARKETING TEAM
meeting.
6.4 In accordance with the standard practices of the time within
SB's U.S.A. and Canadian pharmaceuticals division, a PRODUCT STRATEGY PLAN and
an ANNUAL TACTICAL PLAN (which shall include plans related to the prelaunch,
launch, promotion and sale of PRODUCT to each TARGET AUDIENCE for each
indication that SB is promoting) for the U.S.A. and Canada shall be developed
by the JOINT MARKETING TEAM for PRODUCT on an annual basis. Such plans shall
be developed in conformance with the samples thereof attached hereto in
APPENDIX B and APPENDIX C, as such samples may be modified from time to time by
SB management in accordance with its normal practices and procedures, and will
be presented by the JOINT MARKETING TEAM to appropriate SB management for
endorsement. TBC expressly acknowledges that both the form and the content of
the samples as well as the actual plans that are developed by the parties are
SB's confidential and proprietary information and subject to the
confidentiality obligations outlined in Article 8 of this AGREEMENT. The
ANNUAL TACTICAL PLAN shall substantially conform to the PRODUCT STRATEGY PLAN.
The first PRODUCT STRATEGY PLAN for the U.S.A. shall be completed by the JOINT
MARKETING TEAM for presentation to SB management within [*] after the EFFECTIVE
DATE. The first PRODUCT STRATEGY PLAN for Canada shall be completed by the
JOINT MARKETING TEAM for presentation to SB management in accordance with [*]
within SB's Canadian pharmaceuticals division.
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
19
<PAGE> 24
6.5 The [*] decision of the JOINT MARKETING TEAM shall be final
and binding upon both parties, provided that, any disputes which cannot be
settled by the JOINT MARKETING TEAM after good faith attempts [*].
Notwithstanding the first sentence of this Paragraph 6.05 and any other
provision of this AGREEMENT, and subject to any termination of the AGREEMENT
permitted under Article 12, all decisions concerning the following aspects of
any PRODUCT promotion in the FIELD in any country of the TERRITORY or
copromotion in the FIELD in any country of the TERRITORY shall be subject to
final approval by SB management after careful consideration of all commentary
on such aspects provided to such management by the JOINT MARKETING TEAM and TBC
representatives:
(a) the entirety of the content of the PRODUCT STRATEGY
PLAN and the ANNUAL TACTICAL PLAN, including the TARGET AUDIENCE(S)
for each indication for PRODUCT in the FIELD in the TERRITORY;
(b) any issue related to the promotion or
commercialization of PRODUCT in the TERRITORY for HIT/HITTS, AMI or
any other indication which SB is promoting in the TERRITORY;
(c) pricing decisions, including the list selling price
to the trade, the terms of sale in the TERRITORY including, without
limitation, payment terms, trade relations, discount and rebate
programs and contract terms with managed health care customers;
(d) content of promotional methods (e.g., detailing,
seminars, conferences, etc.) and messages (e.g., advertising text),
provided that such approval shall be only with respect to SB's
determination of whether or not such methods or messages meet all
requisite medical, legal, and regulatory requirements, including those
requirements related to issues concerning product liability;
(e) termination of selling and/or promotion by SB;
(f) promotional spend and number of DETAILS to be made by
SB in support of PRODUCT in the TERRITORY irrespective of whether or
not the parties are COPROMOTING PRODUCT in any country of the
TERRITORY.
6.6 Subject to Paragraphs 6.02, 6.03, 6.04, and 6.05, the
following principles shall apply to any copromotion of PRODUCT by SB and TBC
for which SB has received affirmative notification from TBC in accordance with
Paragraph 6.02 hereof:
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
20
<PAGE> 25
(a) the JOINT MARKETING TEAM shall determine the TARGET
AUDIENCE(S) for each indication for PRODUCT in the FIELD in the
TERRITORY, provided that such determination shall be in accordance
with the ANNUAL TACTICAL PLAN and the PRODUCT STRATEGY PLAN.
(b) the JOINT MARKETING TEAM shall reasonably determine
[*] in advance of each calendar year (or partial year for the year in
which copromotion of PRODUCT is expected to begin) the aggregate
number of DETAILS to be performed by SB sales representatives and TBC
sales representatives ("AGGREGATE PROJECTED DETAILS") to each TARGET
AUDIENCE during such year in the TERRITORY. Such determination shall
be made considering factors including the number of physicians in each
TARGET AUDIENCE, their geographic license, the elapsed time since
product launch, and the frequency of detailing visits to the TARGET
AUDIENCE customary in pharmaceutical sales practice in TERRITORY for
products of similar technical and commercial potential as PRODUCT,
provided that such determination shall be in accordance with the
ANNUAL TACTICAL PLAN and the PRODUCT STRATEGY PLAN.
(c) the JOINT MARKETING TEAM shall reasonably determine
[*] in advance of each calendar year (or partial year for the year in
which copromotion of PRODUCT is expected to begin) the maximum number
of TBC sales representatives available during the entirety of such
year to perform DETAILS in the TERRITORY;
(d) SB shall determine the COPROMOTION EXPENSES for each
indication for PRODUCT in the FIELD in the TERRITORY that the parties
are copromoting and shall present such determination to the JOINT
MARKETING TEAM for endorsement.
(e) SB shall determine the AMI BASELINE SALES in the
event that SB makes a positive election to participate in the
commercialization of PRODUCT for AMI in the TERRITORY in accordance
with either Paragraph 3.08 or Paragraph 3.11 in accordance with the
following procedure. SB shall present to the JOINT MARKETING TEAM,
for its approval, a sales forecast for AMI in the TERRITORY covering
[*] post commercial launch for such indication in the TERRITORY, such
sales forecast to be based upon the sales which would be achievable by
SB without any copromotion for such indication by TBC. This forecast
will be the AMI BASELINE SALES and shall be updated [*].
(f) SB shall determine the OTHER INDICATION BASELINE
SALES in the event that SB makes a positive election to participate in
the commercialization of PRODUCT for another indication in the
TERRITORY in accordance with Paragraph 3.12 in accordance with the
following procedure. SB shall present to the JOINT MARKETING TEAM,
for its
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
21
<PAGE> 26
approval, a sales forecast for OTHER INDICATION in the TERRITORY
covering [*] post commercial launch for such indication in the
TERRITORY, such sales forecast to be based upon the sales which would
be achievable by SB without any copromotion for such indication by
TBC. This forecast will be the OTHER INDICATION BASELINE SALES and
shall be updated [*].
(g) SB shall determine the break out of total NET SALES
between all of the indications in the FIELD being marketed by either
or both of the parties under this AGREEMENT, such break out to be
based on [*]. SB shall present this determination to the JOINT
MARKETING TEAM for its endorsement.
(h) the JOINT MARKETING TEAM shall determine if the use
of the TBC TRADEMARK is appropriate in each country of the TERRITORY.
In the event a determination is made that the TBC TRADEMARK is not
appropriate for a particular country, the JOINT MARKETING TEAM will
select the TBC TRADEMARK ALTERNATE for such country.
6.7 With respect to indications for which SB and TBC are
copromoting in accordance with Article 6, during each YEAR, TBC shall be
entitled to perform a guaranteed number of the AGGREGATE PROJECTED DETAILS in
the TERRITORY ("TBC's Guaranteed Details"), such number to be equal to [*] of
AGGREGATE PROJECTED DETAILS. During each YEAR, SB shall be entitled to perform
a guaranteed number of the AGGREGATE PROJECTED DETAILS, such number to be equal
to [*] of the AGGREGATE PROJECTED DETAILS ("SB's Guaranteed Details").
6.8 With respect to indications for which SB and TBC are
copromoting in accordance with this Article 6, SB and TBC shall use only
promotional materials, promotional samples, advertising and literature provided
by SB, and approved by the JOINT MARKETING TEAM, subject to Paragraph 6.05
(hereinafter "SB Items") except that, in the event TBC wants to use its own
promotional materials, advertising and/or literature (hereinafter "TBC Items"),
all such TBC Items must be approved in advance by the JOINT MARKETING TEAM in
accordance with Paragraph 6.05, and TBC shall bear financial responsibility for
all such TBC Items. During the period when SB is exclusively promoting PRODUCT
in the FIELD in the TERRITORY, all promotional material and literature shall
exclusively bear the SB logo with a notation which clearly indicates that such
is sold under exclusive license from TBC, to the extent that such notation is
not prohibited by law or local regulation. During any period when the parties
are copromoting PRODUCT in the FIELD in the TERRITORY, the parties shall be
presented and described as jointly DETAILING and promoting in the TERRITORY for
the indications in the FIELD for which the parties are copromoting in all
written information disseminated to the healthcare community, and all
applicable advertising and
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
22
<PAGE> 27
promotional materials shall bear the logos of all parties, which logos shall,
subject to compliance with applicable legal requirements, be prominently
displayed in accordance with each party's specifications and be of a similar
size to each other on all such materials
6.9 Following any [*] YEARS in which TBC does not deliver at least
[*] of TBC's Guaranteed Details but during which SB has delivered at least,[*]
of SB's Guaranteed Details, TBC shall irrevocably lose its right to copromote
PRODUCT in the FIELD in the TERRITORY.
6.10 During the term of the AGREEMENT, whether or not SB and TBC
are copromoting PRODUCT in the FIELD in the TERRITORY, SB will book all NET
SALES for PRODUCT in the FIELD in each country of the TERRITORY.
6.11 (a) SB shall have no responsibility for training TBC's
professional sales personnel with respect to the promotion and
DETAILING of PRODUCT for any indication(s) in the FIELD which TBC
commercializes in the TERRITORY on its own in accordance with
Paragraph 3.11 and/or Paragraph 3.15. However, at TBC's request, and
SB's discretion, SB shall provide training specifically related to the
promotion and DETAILING of PRODUCT for the indications in the FIELD
which SB is DETAILING in the TERRITORY. SB's direct cost associated
with such training activity shall be reimbursed by TBC promptly after
receiving an invoice therefor. In no event shall SB provide training
with respect to the basics of promotion and DETAILING of
pharmaceuticals in general.
(b) During the term of the AGREEMENT after TBC has made a
positive election to copromote PRODUCT in accordance with Paragraph
6.02, at TBC's request, SB shall train TBC's professional sales
personnel with respect to the promotion and DETAILING of PRODUCT for
the relevant indication(s) in the FIELD in the TERRITORY and provide
advice to TBC in connection with hiring and managing a professional
sales force therefor. In no event shall SB provide training with
respect to the basics of promotion and DETAILING of pharmaceuticals in
general. Such training and consultation shall include, among other
things, participation by TBC sales personnel in SB's sales training
course at SB headquarters located in the Philadelphia, Pennsylvania
metropolitan area, as well as field training, assistance and support,
and specific sales training in connection with TBC's copromotion of
the PRODUCT in the TERRITORY for HIT/HITTS, AMI, and/or any other
indication in the FIELD which will be copromoted by the parties in
accordance with Paragraph 6.02. Such sales training for the PRODUCT
shall include the provision of sales raining materials. SB will bear
any internal costs it occurs in providing such training and advice to
TBC, but TBC shall be responsible for paying all room and board for
its employees, including all travel expenses, for such training, and
shall also be responsible for paying all
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
23
<PAGE> 28
room and board, including reasonable travel expenses for SB sales
training personnel who travel to TBC offices or to other non-SB
locations to conduct sales training courses.
7. PRODUCT SUPPLY
7.1 SB shall supply, or cause to be supplied all of SB's, it
AFFILIATES and its sublicensee's commercial requirements for PRODUCT in the
FIELD in the TERRITORY during the term of the AGREEMENT.
7.2 TBC warrants and represents that it shall provide SB with any
reasonable assistance SB requires in establishing and maintaining relationships
with THIRD PARTIES for the purposes of supply of PRODUCT under this AGREEMENT.
7.3 TBC shall use its best efforts to ensure that PRODUCT shall
have expiration dating approved by the FDA of no less than [*] as of the date
of launch of PRODUCT in the TERRITORY by SB, and to ensure that PRODUCT shall
have expiration dating approved by the FDA of no less than [*] as soon as
practicable after the date of launch.
7.4 MANUFACTURING REGULATORY MATTERS
(a) TBC shall use its best efforts to maintain all
regulatory and governmental permits, licenses and approvals that may
be necessary to manufacture and ship PRODUCT to SB.
(b) TBC will be responsible for any reporting of matters
regarding the manufacture of PRODUCT to the FDA and other relevant
regulatory authorities, in accordance with pertinent laws and
regulations. TBC shall immediately notify SB of any such matter and
promptly furnish complete copies of such reports to SB. SB shall
advise TBC of any occurrence or information which arise out of
manufacturing activities of PRODUCT by SB or on SB's behalf which have
or could reasonably be expected to have adverse regulatory compliance
and/or reporting consequences concerning PRODUCT.
(c) In the event TBC should become aware of information
that may require a recall, field alert, product withdrawal or field
correction arising from any defect in any PRODUCT provided under this
AGREEMENT, TBC shall immediately notify SB in Writing. In the event
that SB decides that a recall, field alert, product withdrawal, or
field correction is necessary due to any defect in any PRODUCT, SB
will notify TBC.
8. EXCHANGE OF INFORMATION AND CONFIDENTIALITY
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
24
<PAGE> 29
8.1 Promptly after the date of this AGREEMENT first written above,
TBC shall disclose and supply to SB all KNOW- HOW. Thereafter, TBC shall
promptly disclose and supply to SB any further KNOW-HOW which may become known
to TBC. SB shall not acquire any ownership rights in such KNOW-HOW by virtue of
this AGREEMENT.
8.2 With respect to ADVERSE EXPERIENCES, the following shall
apply:
(a) Promptly after the EFFECTIVE DATE, each party shall
appraise the other party of the standard operating procedures for the
investigation and reporting of ADVERSE EXPERIENCES regarding its
products. The parties shall then promptly develop and agree upon
procedures for the reporting to each other ADVERSE EXPERIENCES
concerning PRODUCT. The parties shall immediately implement such
agreed procedures and shall provide each other on a regular basis with
any appropriate information which enables the other party to meet its
regulatory obligations in the territories in which it is
commercializing or developing PRODUCT or which is relevant to the safe
use of PRODUCT. The agreed procedures will be reviewed jointly on a
regular basis or when there is a change in regulations governing
ADVERSE EXPERIENCE reporting.
(b) All ADVERSE EXPERIENCE reports and queries for SB
should be addressed to its central safety department, i.e., Associate
Director, Worldwide Clinical Safety Quality Management, SmithKline
Beecham Pharmaceuticals, 1250 S. Collegeville Road, Collegeville,
Pennsylvania 19426 (facsimile number (610) 917-4826; telephone number
(610) 917-5747) and for TBC should be addressed to its central safety
department, i.e., Vice President, Regulatory Affairs, Texas
Biotechnology Corporation, 7000 Fannin, Houston, Texas 77030, U.S.A.
(facsimile number (713) 796-8232; telephone number (713) 796-8822), or
such other safety representative as may be designated by SB for SB or
by TBC for TBC.
(c) TBC will obligate any THIRD PARTY licensees and/or
commercial partners (including TBC's licensors for PRODUCT, such as
MITSUBISHI or other THIRD PARTY contractual partners to whom ADVERSE
EXPERIENCES for PRODUCT may be reported, such as SYNTHELABO or
COROMED) to provide ADVERSE EXPERIENCES to SB and to TBC, within the
time periods the parties develop under Paragraph 8.02(a).
8.3 During the term of this AGREEMENT and for five (5) years
thereafter, irrespective of any termination earlier than the expiration of the
term of this AGREEMENT, TBC and SB shall not use or reveal or disclose to THIRD
PARTIES any confidential information received from the other party or otherwise
developed by either party in the performance of activities in furtherance of
this AGREEMENT without first obtaining the written consent of the disclosing
party, except as may be otherwise provided herein, or as may be required for
purposes of investigating, developing, manufacturing or marketing PRODUCT or
for securing essential or desirable authorizations, privileges or rights from
governmental agencies as provided under this AGREEMENT, or is required to be
disclosed to a governmental agency or is necessary to file or prosecute patent
applications concerning PRODUCT or to carry out any litigation concerning
PRODUCT. This confidentiality obligation shall not apply to such information
which is or becomes a matter of public knowledge, or is already in the
possession of the receiving party, or is disclosed to the receiving party by a
THIRD PARTY having the right to do so, or is subsequently and independently
developed by employees of the receiving party or AFFILIATES thereof who had no
knowledge of the confidential information disclosed, or is required by law to
be disclosed. This confidentiality
25
<PAGE> 30
obligation shall not apply to KNOW-HOW in any country of the TERRITORY in which
the payment obligations outlined in Paragraphs 4.03, 4.04, and 4.05(a) have
expired. The parties shall take reasonable measures to assure that no
unauthorized use or disclosure is made by others to whom access to such
information is granted.
8.4 Nothing herein shall be construed as preventing SB from
disclosing any information received from TBC to an AFFILIATE or sublicensee of
SB who is necessary for the purposes of enabling SB to fulfill its obligations
under this AGREEMENT, provided, in the case of a sublicensee, such sublicensee
has undertaken a similar obligation of confidentiality with respect to the
confidential information.
8.5 All confidential information disclosed by one party to the
other shall remain the intellectual property of the disclosing party. In the
event that a court or other legal or administrative tribunal, directly or
through an appointed master, trustee or receiver, assumes partial or complete
control over the assets of a party to this AGREEMENT based on the insolvency or
bankruptcy of such party, the bankrupt or insolvent party shall promptly notify
the court or other tribunal (i) that confidential information received from the
other party under this AGREEMENT remains the property of the other party and
(ii) of the confidentiality obligations under this AGREEMENT. In addition, the
bankrupt or insolvent party shall, to the extent permitted by law, take all
steps necessary or desirable to maintain the confidentiality of the other
party's confidential information and to insure that the court, other tribunal
or appointee maintains such information in confidence in accordance with the
terms of this AGREEMENT.
8.6 No public announcement or other disclosure to THIRD PARTIES
concerning the existence of or terms of this AGREEMENT shall be made, either
directly or indirectly, by any party to this AGREEMENT, except as may be
legally required or as may be required for recording purposes, without first
obtaining the written approval of the other party and agreement upon the nature
and text of such announcement or disclosure, provided that this requirement
shall not be applicable to any public announcement or other disclosure
concerning the existence of or terms of this AGREEMENT to the extent that the
information in such public announcement or other disclosure was already the
subject of a written approval under this provision. In no event shall any
public announcement or other disclosure be made prior to the EFFECTIVE DATE.
The party desiring to make any such public announcement or other disclosure
shall inform the other party of the proposed announcement or disclosure in
reasonably sufficient time prior to public release, and shall provide the other
party with a written copy thereof, in order to allow such other party to
comment upon such announcement or disclosure. Each party agrees that it shall
cooperate fully with the other with respect to all disclosures regarding this
AGREEMENT to the Securities Exchange
26
<PAGE> 31
Commission and any other governmental or regulatory agencies, including
requests for confidential treatment of proprietary information of either party
included in any such disclosure.
8.7 Neither party shall submit for written or oral publication any
manuscript, abstract or the like which includes data or other information
relating to PRODUCT in the FIELD without first obtaining the prior written
consent of the other party, which consent shall not be unreasonably withheld.
The contribution of each party shall be noted in all publications or
presentations by acknowledgment or coauthorship, whichever is appropriate.
8.8 Nothing in this AGREEMENT shall be construed as preventing or
in any way inhibiting SB from complying with statutory and regulatory
requirements governing the development, manufacture, use and sale or other
license of PRODUCT in any manner which it reasonably deems appropriate for
purposes of fulfilling its obligations under this AGREEMENT or for complying
with such requirements, including, for example, by disclosing to regulatory
authorities confidential or other information received from TBC or THIRD
PARTIES.
9. PATENT PROSECUTION AND LITIGATION
9.1 Each party shall have and retain sole and exclusive title to
all inventions, discoveries and KNOW-HOW which are made, conceived, reduced to
practice or generated by its employees, agents, or other persons acting under
its authority in the course of or as a result of this AGREEMENT. Each party
shall own a fifty percent (50%) undivided interest in all such inventions,
discoveries and KNOW-HOW made, conceived, reduced to practice or generated
jointly by employees, agents, or other persons acting under the authority of
both parties in the course of or as a result of this AGREEMENT. Except as
expressly provided in this AGREEMENT, each joint owner may make, use, sell,
keep, license, assign, or mortgage such jointly owned inventions, discoveries
and KNOW-HOW, and otherwise undertake all activities a sole owner might
undertake with respect to such inventions, discoveries and KNOW-HOW, without
the consent of and without accounting to the other joint owner.
9.2 TBC shall, at its expense, have responsibility for filing,
prosecution and maintenance of all PATENTS which it owns in the TERRITORY. TBC
shall disclose to SB the complete texts of all PATENTS filed by TBC in the
TERRITORY which relate to PRODUCT as well as all information received
concerning the institution or possible institution of any interference,
opposition, re-examination, reissue, revocation, nullification or any official
proceeding involving a PATENT anywhere in the TERRITORY. SB shall have the
right to review all such pending applications and other proceedings and make
recommendations to TBC concerning them and their conduct. TBC agrees to keep
SB promptly and fully informed of the course of patent prosecution or other
proceedings including by providing SB with copies of substantive
communications, search reports and third party observations submitted to or
received from patent offices throughout the TERRITORY. SB shall provide such
patent consultation to TBC at no cost to TBC. SB shall hold all information
disclosed to it under this section as confidential subject to the provisions of
Paragraphs 9.03 and 9.04.
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9.3 SB shall have the right to assume responsibility for any
PATENT or any part of a PATENT which is owned by TBC which TBC intends to
abandon or otherwise cause or allow to be forfeited. TBC shall give SB
reasonable written notice prior to abandonment or other forfeiture of any
PATENT or any part of a PATENT so as to permit SB to exercise its rights under
this Paragraph.
9.4 In the event of the institution of any suit by a PARTY against
TBC, SB or its sublicensees for patent infringement involving the manufacture,
use, sale, license or marketing of PRODUCT anywhere in the TERRITORY, the party
sued shall promptly notify the other party in writing. SB shall have the right
but not the obligation to defend such suit at its own expense. TBC and SB
shall assist one another and cooperate in any such litigation at the other's
request without expense to the requesting party.
9.5 In the event that TBC or SB becomes aware of actual or
threatened infringement of a PATENT anywhere in the TERRITORY which is owned by
TBC, that party shall promptly notify the other party in writing. SB shall
have the first right but not the obligation to bring, at its own expense, an
infringement action against any THIRD PARTY and to use TBC's name in connection
therewith and to name TBC as a party thereto. If SB does not commence a
particular infringement action within ninety (90) days of receipt of the notice
of infringement, then TBC, after notifying SB in writing, shall be entitled to
bring such infringement action at its own expense. The party conducting such
action shall have full control over its conduct, including settlement thereof
subject to Paragraph 9.09. In any event, TBC and SB shall assist one another
and cooperate in any such litigation at the other's request without expense to
the requesting party.
9.6 In any action brought pursuant to Paragraph 9.05, the party
bringing the action shall indemnify the other party, its officers, directors,
shareholders, employees, agents, successors and assigns from any loss, damage
or liability, including for attorney's fees and costs, which may result from
claims, counterclaims or crossclaims asserted by a defendant, except to the
extent that such losses, damages or liabilities result from the negligence or
willful misconduct of the other party.
9.7 TBC and SB shall recover their respective actual out-of-pocket
expenses, or equitable proportions thereof, associated with any litigation or
settlement thereof from any recovery made by any party. Any excess amount
shall be [*].
9.8 The parties shall keep one another informed of the status of
and of their respective activities regarding any litigation or settlement
thereof concerning PRODUCT, provided however that no settlement or consent
judgment or other voluntary final disposition of any suit defended or action
brought by a party pursuant to this Article 9 may be entered into without the
consent of the other party if such settlement would require the other party to
be subject to an injunction or to make a
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
28
<PAGE> 33
monetary payment or would otherwise adversely affect the other party's rights
under this AGREEMENT.
9.9 SB shall have the right but not the obligation to seek
extensions of the terms of PATENTS owned or controlled by TBC. At SB's
request, TBC shall either authorize SB to act as TBC's agent for the purpose of
making any application for any extensions of the term of any such PATENTS and
provide reasonable assistance therefor to SB or shall diligently seek to obtain
such extensions, in either event, at TBC's expense.
10. TRADEMARKS
10.1 TBC hereby grants to SB an exclusive sublicense, with the
right to grant sublicenses in accordance with this Paragraph, to use the TBC
TRADEMARK and, an exclusive license, to use, if necessary, the TBC TRADEMARK
ALTERNATE, in each country of the TERRITORY for the term of this AGREEMENT in
connection with the marketing and promotion of PRODUCT in the FIELD as
contemplated in this AGREEMENT, subject to TBC's copromotion option outlined in
Article 6, provided that during the term of SB's payment obligations under
Paragraphs 12.01(a), (b), (c) and (d)(i), such sublicense and license shall be
royalty-free, but in the event that SB wants to continue to employ such TBC
TRADEMARK or TBC TRADEMARK ALTERNATE (whichever is appropriate) for PRODUCT in
the FIELD in the TERRITORY after the end of the term of SB's payment
obligations under Paragraphs 12.01(a), (b), (c) and (d)(i), SB may do so
provided that SB shall pay TBC the payment outlined in Paragraph 4.08. SB shall
have the unfettered right to grant sublicenses to any AFFILIATE, but SB's right
to grant sublicenses to THIRD PARTIES shall be subject to TBC's prior written
consent which shall not be unreasonably withheld.
10.2 TBC agrees to search, file, register and maintain a
registration for the TBC TRADEMARK ALTERNATE in each country of the TERRITORY,
and maintain its license to the TBC TRADEMARK, for the term of this AGREEMENT,
at TBC's expense, for use with the PRODUCT in the FIELD. In those countries of
the TERRITORY where the TBC TRADEMARK is not available for use and registration
in connection with the PRODUCT in the FIELD, due to a rejection of the
trademark by a government agency, actual or threatened opposition, cancellation
or litigation as to use and/or registration of the TBC TRADEMARK by a THIRD
PARTY, and/or a decision by the JOINT MARKETING TEAM that use of the TBC
TRADEMARK is likely to cause confusion with another's trademark, TBC will
provide a TBC TRADEMARK ALTERNATE; and TBC will develop, search, file, register
and maintain the TBC TRADEMARK ALTERNATE at TBC's sole expense, provided that
the selection of the TBC TRADEMARK ALTERNATE shall be made by the JOINT
MARKETING TEAM in accordance with Paragraph 6.06.
10.3 In those countries where a trademark license must be recorded,
TBC will provide and record a separate trademark license for the TBC TRADEMARK
and/or TBC TRADEMARK ALTERNATE, at TBC's sole expense.
29
<PAGE> 34
10.4 The ownership and all goodwill from the use of the TBC
TRADEMARK shall vest in and inure to the benefit of MITSUBISHI which has duly
licensed such TBC, TRADEMARK to TBC with the right to grant a sublicense to SB.
The ownership and all goodwill from the use of the TBC TRADEMARK ALTERNATE
shall vest in and inure to the benefit of TBC.
10.5 TBC controls the nature and quality of the PRODUCT on which
the TBC TRADEMARK and/or TBC TRADEMARK ALTERNATE are used. Therefore, all
PRODUCT manufactured by SB, its AFFILIATES, or sublicensees pursuant to this
AGREEMENT shall be manufactured according to the specifications agreed to in
this AGREEMENT, or as subsequently agreed in writing by the parties and
attached to this AGREEMENT.
10.6 SB shall submit representative promotional materials,
packaging, and PRODUCT using the TBC TRADEMARK and/or TBC TRADEMARK ALTERNATE
to TBC for TBC's reasonable approval prior to their first use and thereafter
prior to implementing any change or addition to the previously approved
promotional materials as may be required under applicable law to maintain the
validity of any such trademark, provided that if TBC has not responded within
four (4) weeks after such submissions, TBC's approval will be deemed to have
been received.
10.7 SB's right to use the TBC TRADEMARK and/or the TBC TRADEMARK
ALTERNATE, whichever is applicable, shall terminate in each country of the
TERRITORY in which SB's rights to the PRODUCT are terminated in accordance with
this AGREEMENT, provided that SB shall have the right to continue to use the
TBC TRADEMARK and/or the TBC TRADEMARK ALTERNATE in each country of the
TERRITORY after the expiration of SB's payment obligations under Paragraphs
4.03 and 4.04 in each country of the TERRITORY without any further remuneration
obligation to TBC, subject to Paragraph 4.08.
10.8 TBC shall defend, indemnify and hold harmless SB, its
AFFILIATES, sublicensees, and their officers, directors, shareholders,
employees, successors and assigns from any loss, damage, or liability,
including reasonable attorney's fees resulting from any claim, complaint, suit,
proceeding or cause of action by a THIRD PARTY against any of them alleging
trademark infringement resulting from the use and/or registration of the TBC
TRADEMARK and/or TBC TRADEMARK ALTERNATE.
(a) TBC shall have no obligation under this Paragraph
unless SB (i) gives TBC prompt notice of any claim or lawsuit or other
action for which it seeks to be indemnified under this AGREEMENT, (ii)
TBC is granted full authority and control over the defense, including
settlement, against such claim or law suit or other action, and (iii)
SB cooperates fully with TBC and its agents in defense of the claims
or law suit or other action;
(b) SB shall have the right to participate in the defense
of any such claim, complaint, suit, proceeding or cause of action
referred to in this Paragraph utilizing attorneys of its choice, at
its own expense, provided however, that TBC shall have full authority
and control to handle any such claim, complaint, suit proceeding, or
cause of action, including any
30
<PAGE> 35
settlement or other disposition thereof, for which SB seeks
indemnification under this Paragraph;
10.9 In the event that TBC or SB becomes aware of actual or
threatened infringement of the TBC TRADEMARK and/or TBC TRADEMARK ALTERNATE
anywhere in the TERRITORY, that party shall promptly notify the other party in
writing. SB shall have the first right, but not the obligation, to bring, at
its own expense, an infringement and/or opposition or cancellation action
against any THIRD PARTY and to use TBC's name in connection therewith and to
name TBC as a party thereto. If SB does not commence a particular infringement
and/or opposition or cancellation action within ninety (90) days of receipt of
the notice of infringement, then TBC, after notifying SB in writing, shall have
the right, but not the obligation, to bring such infringement and/or opposition
or cancellation action at its own expense. The party conducting such action
shall have fun control over its conduct, including settlement thereof. In any
event, SB and TBC shall assist one another and cooperate in any such litigation
or action at the other's request without expense to the requesting party.
10.10 In any action brought pursuant to Paragraph 10.09, the party
bringing the action shall indemnify the other party, its AFFILIATES,
sublicensees, and their officers, directors, shareholders, employees, agents,
successors and assigns from any loss, damage or liability, including for
attorney's fees and costs, which may result from claims, counterclaims or
crossclaims asserted by a defendant, except to the extent that such losses,
damages or liabilities result from negligence or willful misconduct of the
other party.
10.11 TBC and SB shall recover their respective actual out-of-pocket
expenses, or equitable proportions thereof, associated with any litigation or
settlement thereof from any recovery made by any party. Any excess amount
shall be [*].
10.12 The parties shall keep one another informed of the status of
and of their respective activities regarding any litigation or settlement
thereof concerning TBC TRADEMARK and/or TBC TRADEMARK ALTERNATE, provided
however that no settlement or consent judgment or other voluntary final
disposition of any suit or proceeding defended or action brought by a party
pursuant to Article 10 may be entered into without the consent of the other
party if such settlement would require the other party to be subject to an
injunction or to make a monetary payment or would otherwise adversely affect
the other party's rights under the AGREEMENT.
11. STATEMENTS AND REMITTANCES
11.1 (a) SB shall keep and require its AFFILIATES and
sublicensees to keep complete and accurate records of all NET SALES
(including the calculation of the notional NET
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
31
<PAGE> 36
SALES figure, if any, provided in Paragraph 1.24), COST OF GOODS,
THIRD PARTY ROYALTIES, COPROMOTION EXPENSES and WORKING CAPITAL
DEDUCTION. TBC shall have the right, at TBC's expense, through a
certified public accountant or like person reasonably acceptable to
SB, to examine such records during regular business hours during the
life of this AGREEMENT and for six (6) months after its termination;
provided, however, that such examination shall not take place more
often than once a year and shall not cover such records for more than
the preceding two (2) years and provided further that such accountant
shall report to TBC only as to the accuracy of the calculation of NET
SALES and the payments made to TBC by SB under this AGREEMENT;
provided that, in the event that TBC exercises its copromotion right
in accordance with Article 6, such accountant shall additionally be
permitted to report to TBC as to the accuracy of the calculation of
COPROMOTION EXPENSES attributable to SB as a fair and appropriate
reflection of SB's selling and promotional expenses for PRODUCT in the
FIELD, and as to the accuracy of the calculation of WORKING CAPITAL
DEDUCTION, THIRD PARTY ROYALTIES and COST OF GOODS by SB; provided
further that, in the event that TBC commercializes any indication of
PRODUCT on its own in accordance with Paragraph 3.11 and/or 3.15, such
accountant shall additionally be permitted to report to TBC as to the
accuracy of the calculation of ADMINISTRATIVE EXPENSES by SB.
(b) In the event that TBC exercises its right to
copromote in accordance with Article 6, TBC shall keep complete and
accurate records of, THIRD PARTY ROYALTIES, and COPROMOTION EXPENSES,
and shall submit to SB, within thirty (30) days after the end of each
quarter during each YEAR, a report containing an accounting of all of
the above, as well as any other information SB reasonably deems
necessary regarding such THIRD PARTY ROYALTIES, and COPROMOTION
EXPENSES during such quarter. In addition, TBC shall submit to SB,
within thirty (30) days of the end of each quarter during each YEAR, a
report containing an accounting of all DETAILS by TBC's sales force to
the TARGET AUDIENCE in the countries in which TBC has elected to
copromote in accordance with Paragraph 6.02, as well as any other
information SB reasonably deems necessary regarding such DETAILS
performed during the preceding quarter. SB shall have the right, at
SB's expense, through a certified public accountant or like person
reasonably acceptable to TBC, to examine such records during regular
business hours during the life of this AGREEMENT and for six (6)
months after its termination; provided, however, that such examination
shall not take place more often than once a year and shall not cover
such records for more than the preceding two (2) years and provided
further that such accountant shall report to SB only (a) as to a
determination of the correctness of any report by TBC to SB of the
number of DETAILS to the TARGET AUDIENCE performed by TBC under this
AGREEMENT; and/or (b) that the calculation of COPROMOTION EXPENSES
attributable to TBC are a fair and appropriate reflection of TBC's
selling and promotional expenses for PRODUCT in the FIELD for the
indications that TBC is copromoting with SB; and/or (c) that the
calculation of PARTY ROYALTIES by TBC are fair and appropriate.
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11.2 (a) If TBC does exercise the copromotion option outlined
in Article 6, and during a particular YEAR, the JOINT MARKETING TEAM
expect TBC to perform, at least [*] of the AGGREGATE PROJECTED DETAILS
of PRODUCT during such YEAR for all indications in the FIELD which the
parties are copromoting then, within sixty (60) days after the close
of each quarter during such YEAR, SB shall deliver to TBC a true
accounting of all NET OPERATING PROFIT for each indication for PRODUCT
which the parties are copromoting, whether positive or negative,
showing on a country by country basis NET SALES (including the
calculation of the notional NET SALES figure, if any, provided in
Paragraph 1.24), COST OF GOODS, THIRD PARTY ROYALTIES, COPROMOTION
EXPENSES and WORKING CAPITAL DEDUCTION, and SB shall, at the same
time, pay, as a single payment, that amount which results in TBC
receiving the relevant share of NET OPERATING PROFIT, if any, due to
TBC in accordance with Paragraph 4.05(a). In the event that there is
no NET OPERATING PROFIT during any quarter of a YEAR (i.e., there is a
net operating loss), no payment under Paragraph 4.05 shall be due TBC
for such quarter, and any loss during such quarter shall be carried
forward into each subsequent quarter until a full credit for such loss
can be taken against any payments which may be owed to TBC under
Article 4, provided that such loss shall be distributed between the
parties as provided in Paragraph 4.05.
(b) If TBC does exercise the copromotion option outlined
in Article 6, and during a particular YEAR, TBC has not performed at
least [*] of the AGGREGATE PROJECTED DETAILS of PRODUCT for all
indications in the FIELD which the parties are copromoting, but SB has
made one or more payments under TBC during such YEAR in accordance
with Paragraph 11.02(a), then SB shall reconcile the total amount paid
to TBC under Paragraph 11.02(a) against what should have been paid to
TBC under Paragraphs 4.03 and 4.04, and the total amount of any
overpayment resulting from such reconciliation shall be carried
forward into each subsequent quarter until a full credit for such
overpayment can be taken against any payments which may be owed to TBC
under Article 4.
(c) If TBC does commercialize any indication of PRODUCT
on its own in accordance with Paragraph 3.11 and/or 3.15, SB shall
deliver to TBC a true accounting of all NET SALES in the TERRITORY for
each relevant indication for PRODUCT showing on a country by country
basis NET SALES, COST OF GOODS, THIRD PARTY ROYALTIES paid by SB,
ADMINISTRATIVE EXPENSES, and WORKING CAPITAL DEDUCTION, and SB shall,
at the same time, pay, as a single payment, the relevant share of NET
SALES, if any, due to TBC in accordance with Paragraph 4.05(d) or
4.05(e), as appropriate.
(d) In anticipation of TBC's copromotion, SB will provide
a NET OPERATING PROFIT statement for each indication of the PRODUCT on
a semi-annual basis beginning
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
33
<PAGE> 38
in the second half of the calendar year 2000 showing NET SALES, COST
OF GOODS, THIRD PARTY ROYALTIES, COPROMOTION EXPENSES and WORKING
CAPITAL DEDUCTION.
11.3 Within sixty (60) days after the close of each calendar
quarter during the term of this AGREEMENT, SB shall deliver to TBC a true
accounting of all PRODUCT sold by SB, its AFFILIATES and its sublicensees in
the FIELD in the TERRITORY during such quarter and shall at the same time pay
all royalties due under Paragraphs 4.03 and/or 4.04, and/or 4.07. Such
accounting shall show sales on a country-by-country basis. In the event that
SB continues to employ TBC TRADEMARK or TBC TRADEMARK ALTERNATE (whichever is
appropriate) after [*] under Paragraphs 12.01(a), (b), (c) and (d)(i), within
sixty (60) days after the close of each calendar quarter after the term of this
AGREEMENT, SB shall deliver to TBC a true accounting of all PRODUCT sold by SB,
its AFFILIATES and its sublicensees in the FIELD in the countries of the
TERRITORY in which either TBC TRADEMARK or TBC TRADEMARK ALTERNATE is employed
during such quarter and shall at the same time pay all payments due under
Paragraph 4.08. Such accounting shall show sales on a country-by-country
basis.
11.4 Any taxes, levies or other duties paid or required to be
withheld by SB on account of monies payable to TBC under this AGREEMENT shall
be deducted from the amount of monies otherwise due TBC under this AGREEMENT,
provided that TBC and SB shall negotiate in good faith the resolution of any
deductions made by SB for withholding taxes, if any, based on the laws of the
United Kingdom. SB shall secure and send to TBC proof of any such taxes,
levies or other duties withheld and paid by SB or its sublicensees for the
benefit of TBC.
11.5 All calculations by either party under this AGREEMENT shall be
calculated in accordance with U. S. Generally Accepted Accounting Procedures
(GAAP). All royalties and other payments due to TBC by SB under this AGREEMENT
shall be payable in United States dollars. If governmental regulations prevent
remittances from a foreign country with respect to sales made in that country,
the obligation of SB to pay royalties or other payments on sales in that
country shall be suspended until such remittances are possible. TBC shall have
the right, upon giving written notice to SB, to receive payment in that country
in local currency.
11.6 Monetary conversions from the currency of a foreign country,
in which PRODUCT is sold into United States dollars shall be calculated at the
actual average rates of exchange for the year to date as used by SB in
producing its quarterly and annual accounts, as confirmed by SB's auditors.
12. TERM AND TERMINATION
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
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<PAGE> 39
12.1 (a) Payment obligations under Paragraph 4.03 in each
country of the TERRITORY shall expire upon the earlier of: (1) the
commencement of substantial PARTY competition of PRODUCT in the FIELD
in such country (as defined in Paragraph 4.03); (2) the later of (a)
expiration of all Pending Patents (as defined in Paragraph 4.03) and
all issued, valid and enforceable PATENTS in such country which cover
the PRODUCT sold or (b) [*].
(b) Payments obligations under Paragraph 4.04 in each
country of the TERRITORY shall expire upon the earlier of [*].
(c) Expiration of SB's payment obligations to TBC under
both Paragraphs 4.03 and 4.04 in a particular country under Paragraph
12.01 shall not preclude SB from making, having made, using, selling,
offering for sale and importing PRODUCT in the FIELD, using KNOW-HOW,
and using TBC TRADEMARK or TBC TRADEMARK ALTERNATE, whichever is
applicable, in such country without further payments or other
remuneration to TBC [*].
(d) (i) TBC's right to copromote PRODUCT in the FIELD
in the TERRITORY with SB shall terminate in each country of the
TERRITORY upon the earlier of (a) the expiration of all issued, valid
and enforceable PATENTS which cover the PRODUCT sold in such country
of the TERRITORY;[*].
(ii) Payment obligations, if any, under each of Paragraphs
4.05(d), and (e) in each country of the TERRITORY shall terminate upon
the expiration or termination of the AGREEMENT.
(e) SB's payment obligations under Paragraph 4.05(a) in
each country of the TERRITORY shall terminate upon termination of
TBC's right to copromote PRODUCT in the FIELD in such country in
accordance with Paragraph 12.01(d). Expiration of SB's payment
obligations to TBC under Paragraph 4.05(a) in a particular country
shall not preclude SB from making, having made, using, selling,
offering for sale and importing PRODUCT in the FIELD, using KNOW-HOW,
and using TBC TRADEMARK or TBC TRADEMARK ALTERNATE, whichever is
applicable, in such country without further payments or other
remuneration to TBC [*].
(f) SB's payment obligations under Paragraph 4.08 shall
expire in each country of the TERRITORY upon the earlier of [*].
Expiration of SB's payment obligations to TBC under Paragraph 4.08 in
a particular country shall not preclude SB from making, having
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
35
<PAGE> 40
made, using, selling, offering for sale and importing PRODUCT in the
FIELD, and using KNOW-HOW in such country without further payments or
other remuneration to TBC [*]
12.2 (a) Unless otherwise terminated, this AGREEMENT shall
expire in each country of the TERRITORY upon the later of (a) the
expiration of SB's payment obligations to TBC under Paragraphs 4.03
and 4.04, (b) the expiration of SB's payment obligations to TBC under
Paragraph 4.07, or (c) the expiration of SB's payment obligations to
TBC under Paragraph 4.08. Expiration of the AGREEMENT in all
countries of the TERRITORY shall effectively terminate the AGREEMENT
in its entirety. Expiration of this AGREEMENT in any country of the
TERRITORY under this provision shall not preclude SB from continuing
to make, have made, use, sell, offer for sale, and import PRODUCT in
the FIELD, and use KNOW HOW in such country without further payments
or other remuneration to TBC.
(b) Unless otherwise terminated, this AGREEMENT shall
terminate upon the termination of TBC's right under any THIRD PARTY
agreement to grant the licenses outlined in Article 2 under one or
more PATENTS in all countries of the TERRITORY. Termination of this
AGREEMENT under this Paragraph 12.02(b) shall not preclude SB from
continuing to make, have made, use, sell, offer for sale, and import
PRODUCT in the FIELD under PATENTS owned or controlled by TBC and use
KNOW-HOW owned or controlled by TBC throughout the TERRITORY without
further payments or other remuneration to TBC.
12.3 If either party fails or neglects to perform covenants or
provisions of this AGREEMENT and if such default is not corrected within sixty
(60) days after receiving written notice from the other party with respect to
such default, such other party shall have the right to terminate this AGREEMENT
by giving written notice to the party in default provided the notice of
termination is given within six (6) months of the default and prior to
correction of the default.
12.4 SB may terminate this AGREEMENT, on a country by country
basis, by giving TBC at least three (3) months prior written notice thereof
based on a reasonable determination by SB, using the same standards SB would
use in assessing whether or not to continue development and marketing of a
product of its own making, that the patent, medical/scientific, technical,
regulatory or commercial profile of PRODUCT does not justify continued
development or marketing of PRODUCT in such country.
12.5 TBC may convert the license granted to SB under Article 2 to a
non-exclusive license in a particular country of the TERRITORY by giving SB at
least [*] written notice thereof in the event that SB fails to commercialize
PRODUCT in such country for HIT/HITTS within [*] after
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
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<PAGE> 41
NDA Approval for HIT/HITTS as defined in Paragraph 4.01(4) (or its equivalent
in the particular country).
12.6 Either party may terminate this AGREEMENT if, at any time, the
other party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver
or trustee of the party or of its assets, or if the other party proposes a
written agreement of composition or extension of its debts, or if the other
party shall be served with an involuntary petition against it, filed in any
insolvency proceeding, and such petition shall not be dismissed with sixty (60)
days after the filing thereof, or if the other party shall propose or be a
party to any dissolution or liquidation, or if the other party shall make an
assignment for the benefit of creditors.
12.7 Notwithstanding the bankruptcy of TBC, or the impairment of
performance by TBC of its obligations under this AGREEMENT as a result of
bankruptcy or insolvency of TBC, SB shall be entitled to retain the license
rights and licenses granted herein, subject to TBC's rights to terminate this
AGREEMENT for reasons other than bankruptcy or insolvency as expressly provided
in this AGREEMENT.
12.8 All license rights and licenses granted under or pursuant to
this AGREEMENT by TBC to SB are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101(52) of the U.S. Bankruptcy
Code. TBC agrees that SB as a licensee of such rights under this AGREEMENT,
shall retain and may fully exercise all of its rights and elections under the
U.S. Bankruptcy Code, subject to performance by SB of its preexisting
obligations under this AGREEMENT. TBC further agrees that, in the event of the
commencement of a bankruptcy proceeding by or against TBC under the U.S.
Bankruptcy Code, SB shall be entitled to a complete duplicate of (or complete
access to, as appropriate) any such intellectual property and all embodiments
of such intellectual property, and same, if not already in its possession,
shall be promptly delivered to SB (a) upon any such commencement of a
bankruptcy proceeding upon written request therefor by SB, unless TBC elects to
continue to perform all of its obligations under this AGREEMENT, or (b) if not
delivered under (a) above, upon the rejection of this AGREEMENT by or on behalf
of TBC upon written request therefor by SB, provided, however, that upon TBC's
(or its successor's) written notification to SB that it is again willing and
able to perform all of its obligations under this AGREEMENT, SB shall promptly
return all such tangible materials to TBC, but only to the extent that SB does
not require continued access to such materials to enable SB to perform its
obligations under this AGREEMENT.
37
<PAGE> 42
13. RIGHTS AND DUTIES UPON TERMINATION
13.1 Upon termination of this AGREEMENT, TBC shall have the right
to retain any sums already paid by SB hereunder, and SB and TBC shall each pay
all sums accrued hereunder which are then due.
13.2 Upon termination of this AGREEMENT in its entirety or with
respect to any PRODUCT in any country under Paragraphs 12.03, 12.04, or 12.05,
SB shall notify TBC of the amount of PRODUCT SB and its sublicensees then have
on hand. SB and its sublicensees shall thereupon be permitted to sell that
amount of PRODUCT provided that SB shall pay the royalties or other payments
thereon at the time herein provided for.
13.3 Termination of this AGREEMENT shall terminate all outstanding
obligations and liabilities between the parties arising from this AGREEMENT
except those described in Paragraphs 4.08, 5.02(b), 5.02(c), 7.03, 7.04(b),
7.04(c), 8.02, 8.03, 8.04, 8.05, 8.06, 8.07, 8.08, 9.01, 9.04, 9.07, 9.08,
10.08, 10.11, 11.04, 11.05, 11.06, 14.01, 14.02, 14.03, 14.04, 14.05, 14.06,
14.07, 14.08, 14.09, and Articles 16 through 25. In addition, any other
provision required to interpret and enforce the parties' rights and obligations
under this AGREEMENT shall also survive, but only to the extent required for
the full observation and performance of this AGREEMENT.
13.4 Termination of the AGREEMENT in accordance with the provisions
hereof shall not limit remedies which may be otherwise available in law or
equity.
14. WARRANTIES, REPRESENTATIONS, AND INDEMNIFICATIONS
14.1 TBC warrants that it owns the entire right, title and interest
in, or otherwise has the right to grant the license rights outlined in Article
2 under PATENTS and KNOW-HOW, and has the right to enter into this AGREEMENT.
TBC further warrants that there is nothing in any THIRD PARTY agreement TBC has
entered into as after the EFFECTIVE DATE which, in any way, will limit TBC's
ability to perform all of the obligations undertaken by TBC hereunder. TBC
further warrants that it will not encumber, with liens, mortgages, security
interests or otherwise, all such PATENTS and KNOW- HOW. TBC further warrants
and represents that GENENTECH has assigned to TBC the Genentech Argatroban IND
(as defined in the April 30, 1997 Assignment Agreement between TBC, GENENTECH,
and MITSUBISHI, and that TBC has a complete copy of all Genentech Knowhow (as
defined in such April 30, 1997 Agreement).
14.2 TBC warrants that it has disclosed to SB the complete texts of
all PATENTS as of the EFFECTIVE DATE as well as all information received by TBC
as of the EFFECTIVE DATE concerning the institution or possible institution of
any interference, opposition, reexamination, reissue, revocation, nullification
or any official proceeding involving a PATENT anywhere in the TERRITORY. TBC
hereby represents that it has no present knowledge from which it can be
inferred that PATENTS are invalid or unenforceable or that their exercise would
infringe valid patent rights of THIRD PARTIES. A holding of invalidity or
unenforceability of any PATENT, from which no
38
<PAGE> 43
further appeal is or can be taken, shall not affect any obligation already
accrued hereunder, except as otherwise provided by Paragraph 4.04.
14.3 TBC acknowledges that, in entering into this AGREEMENT, SB has
relied upon information supplied by TBC and information which TBC has caused to
be supplied to SB by TBC's agents and/or representatives, pursuant to that
certain Confidentiality AGREEMENT dated October 23, 1996, between the parties,
(all of such information being hereinafter referred to collectively as "Product
Information") and TBC warrants and represents that the Product Information is
timely and accurate in all material respects. TBC further warrants and
represents that it has not, up through and including the EFFECTIVE DATE,
omitted to furnish SB with any information available to TBC concerning PRODUCT
or the transactions contemplated by this AGREEMENT, which could be material to
SB's decision to enter into this AGREEMENT and to undertake the commitments and
obligations set forth herein.
14.4 TBC warrants and represents that it has no present knowledge
of the existence of any preclinical or clinical data or information concerning
PRODUCT which TBC has not disclosed to SB as of the EFFECTIVE DATE which could
materially influence SB's decision to enter into this AGREEMENT.
14.5 TBC warrants and represents that it:
(a) has received all necessary consents and waivers, in
writing, which TBC requires from MITSUBISHI, SYNTHELABO, COROMED,
and/or any other THIRD PARTY by virtue of the licenses granted to SB
under this AGREEMENT, including, but not limited to, (i) any consent
required from MITSUBISHI and/or GENENTECH to grant the licenses under
Article 2 until the expiration of the PATENTS, and (ii) any waiver
required under Paragraph 2.3 of the May 27, 1993 agreement between
GENENTECH and TBC;
(b) shall pay all royalties or other sums and other
payments which TBC may owe to MITSUBISHI, SYNTHELABO, COROMED, and any
other THIRD PARTY by virtue of this AGREEMENT, and shall perform and
observe all of the other obligations outlined in all present and
future agreements between TBC and GENENTECH, MITSUBISHI, SYNTHELABO,
COROMED, and any other THIRD PARTY which are in any way related to
TBC's ability to grant the rights granted to SB under this AGREEMENT
or to TBC's ability to perform its obligations to SB under this
AGREEMENT; and
(c) In the event that TBC receives notice from any such
THIRD PARTY that TBC has committed a breach of its obligations under
any such agreement, or if TBC anticipates such breach, such as may
give rise to a right by such THIRD PARTY to terminate or otherwise
diminish TBC's rights to PATENTS and/or KNOW-HOW and/or otherwise
diminish TBC's ability to perform its obligations to SB under this
AGREEMENT, TBC shall immediately notify SB of such situation, and TBC
shall promptly cure such breach. However,
39
<PAGE> 44
if TBC is unable to cure such breach, TBC shall, to the extent
possible, permit SB to cure such breach and to negotiate directly with
such THIRD PARTY.
14.6 SB shall defend, indemnify and hold harmless TBC and its
AFFILIATES and sublicensees and their officers, directors, shareholders,
employees, agents, representatives, successors and assigns from and against all
claims, complaints, or lawsuits for damages (hereinafter collectively referred
to as 'Claim') that arise as a result of personal injury or death that is
alleged to have been caused by any act or omission by SB or its AFFILIATES or
sublicensees or their officers, directors, shareholders, employees, agents,
representatives, successors or assigns in connection with (i) SB's promotional
efforts for PRODUCT which is dispensed, utilized, ingested, and/or administered
in the TERRITORY, or (ii) a manufacturing defect, provided:
(a) SB shall not be obligated under this Paragraph to the extent that
(i) the injury was the result of the
nonperformance, failure to act, or performance by TBC or
anyone acting on behalf of TBC, including its AFFILIATES and
sublicensees and their officers, directors, shareholders,
employees, successors and assigns, including, but not limited
to, negligence, malfeasance or willful misconduct, or
(ii) the injury was the result of any product
design defect (other than a manufacturing defect), or failure
to warn claim based on the labeling of the PRODUCT or based on
TBC's promotional efforts for PRODUCT under this AGREEMENT;
(iii) the injury was the result of a breach of any
warranty or representation, whether express or implied, made
by TBC under this Agreement;
(iv) the injury was the result of an alleged
material release or threat of release of a hazardous substance
at either: (a) the place of manufacture of PRODUCT by a THIRD
PARTY, or (b) the place at which any waste, including but not
limited to any hazardous waste, generated at the time of
manufacture of PRODUCT by a THIRD PARTY has been treated,
stored or disposed.
(b) SB's obligation under this Paragraph with respect to
manufacturing defects arising from the manufacture of PRODUCT by a
THIRD PARTY shall be limited to the amount that SB is actually
indemnified for any such Claim by any THIRD PARTY.
(c) SB shall have no obligation under this Paragraph
unless TBC
(i) gives SB written notice within thirty (30)
days of any Claim or lawsuit or other action for which it
seeks to be indemnified under this Agreement,
40
<PAGE> 45
(ii) SB is granted full authority and control
over the defense, including settlement, against such Claim or
lawsuit or other action, and
(iii) TBC cooperates fully with SB and its agents
in defense of the Claims or lawsuit or other action; and
(d) TBC shall have the right to participate in the
defense of any such Claim complaint, suit, proceeding or cause of
action referred to in this Paragraph utilizing attorneys of its
choice, at its own expense, provided, however, that SB shall have full
authority and control to handle any such Claim, complaint, suit,
proceeding or cause of action, including any settlement or other
disposition thereof, for which TBC seeks indemnification under this
Paragraph.
14.7 TBC shall defend, indemnify and hold harmless SB, its
AFFILIATES and sublicensees and their officers, directors, shareholders,
employees, agents, representatives, successors and assigns from and against all
claims, complaints, or lawsuits for damages that arise as a result of personal
injury or death that is alleged to have been caused by any act or omission by
TBC or its AFFILIATES, sublicensees, or their officers, directors,
shareholders, employees, agents, representatives, successors or assigns in
connection with any PRODUCT which is dispensed, utilized, ingested, and/or
administered in the TERRITORY, provided that:
(a) the injury was the result of any product design
defect (other than a manufacturing defect), or a failure to warn claim
based on the labeling of the PRODUCT or TBC's promotional efforts for
PRODUCT under this AGREEMENT, or the non-performance, failure to act,
or performance by any employee or agent of TBC or anyone acting on
behalf of TBC, including its AFFILIATES, sublicensees, or their
officers, directors, shareholders, employees, successors and assigns,
including, but not limited to, negligence, malfeasance or willful
misconduct, or
(b) the injury was the result of a material breach of any
warranty or representation, whether express or implied, made by TBC
under this Agreement.
(c) TBC shall not be obligated under this Paragraph if
the injury, was the result of the negligence or willful misconduct of
any employee or agent of SB or anyone acting on behalf of SB,
including its AFFILIATES, sublicensees, and their officers, directors,
shareholders, employees, agents, representatives, successors and
assigns.
(d) TBC shall have no obligation under this Paragraph
unless SB
(i) gives TBC written notice within thirty (30)
days of any claim or lawsuit or other action for which it
seeks to be indemnified under this Agreement,
41
<PAGE> 46
(ii) TBC is granted full authority and control
over the defense, including settlement, against such claim or
lawsuit or other action, and
(iii) SB cooperates fully with TBC and its agents
in defense of the claims or lawsuit or other action; and
(e) SB shall have the right to participate in the defense
of any such claim, complaint, suit, proceeding or cause of action
referred to in this Paragraph utilizing attorneys of its choice, at
its own expense, provided, however, that TBC shall have full authority
and control to handle any such claim, complaint, suit, proceeding or
cause of action, including any settlement or other disposition
thereof, for which SB seeks indemnification under this Paragraph.
14.8 Notwithstanding the provisions of Paragraphs 14.06 and 14.07,
above, SB and TBC agree and understand that, in the event of a claim,
complaint, suit, proceeding or cause of action brought against one party
containing allegations of liability based on activities for which such party
was responsible, such party shall control and bear financial responsibility for
its own defense; unless the other party agrees to control and bear financial
responsibility of such defense.
14.9 Immediately upon the launch of PRODUCT in the TERRITORY by SB,
its AFFILIATES or its sublicensees, and for a period of five (5) years after
the expiration of this Agreement or the earlier termination thereof, each party
shall obtain and/or maintain, respectively, at its sole cost and expense,
product liability insurance in amounts, respectively, which are reasonable and
customary in the U.S. pharmaceutical industry for companies of comparable size
and activities at the respective place of business of each party. Such product
liability insurance shall insure against all liability, including personal
injury, physical injury, or property damage arising out of the manufacture,
sale, distribution, or marketing of PRODUCT in the TERRITORY. Each party shall
provide written proof of the existence of such insurance to the other party
upon request. Notwithstanding the foregoing, TBC shall always maintain product
liability insurance with a minimum of [*] per occurrence (or claim) and annual
aggregate limit of liability.
15. FORCE MAJEURE
15.1 If the performance of any part of this AGREEMENT by either
party, or of any obligation under this AGREEMENT, is prevented, restricted,
interfered with or delayed by reason of any cause beyond the reasonable control
of the party liable to perform, unless conclusive evidence to the contrary is
provided, the party so affected shall, upon giving written notice to the other
party, be excused from such performance to the extent of such prevention,
restriction, interference or delay, provided that the affected party shall use
its reasonable best efforts to avoid or remove such causes
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
42
<PAGE> 47
of nonperformance and shall continue performance with the utmost
dispatch whenever such causes are removed. When such circumstances
arise, the parties shall discuss what, if any, modification of the
terms of this AGREEMENT may be required in order to arrive at an
equitable solution.
16. GOVERNING LAW
16.1 This AGREEMENT shall be deemed to have been made in the State
of New York and its form, execution, validity, construction and effect shall be
determined in accordance with the laws of the State of New York, U.S.A.
17. WAIVER OF BREACH
17.1 The failure of either party at any time or times to require
performance of any provision hereof shall in no manner affect its rights at a
later time to enforce the same. No waiver by either party of any condition or
term in any one or more instances shall be construed as a further or continuing
waiver of such condition or term or of another condition or term.
18. SEPARABILITY
18.1 In the event any portion of this AGREEMENT shall be held
illegal, void or ineffective, the remaining portions hereof shall remain in
full force and effect.
18.2 If any of the terms or provisions of this AGREEMENT are in
conflict with any applicable statute or rule of law, then such terms or
provisions shall be deemed inoperative to the extent that they may conflict
therewith and shall be deemed to be modified to conform with such statute or
rule of law.
18.3 In the event that the terms and conditions of this AGREEMENT
are materially altered as a result of Paragraphs 18.01 or 18.02, the parties
will renegotiate the terms and conditions of this AGREEMENT to resolve any
inequities.
19. ENTIRE AGREEMENT
19.1 This AGREEMENT, entered into as of the EFFECTIVE DATE, and the
agreement between MITSUBISHI, TBC, and SB made as of the first date written
above, constitutes the entire agreement between the parties relating to the
subject matter hereof and supersedes all previous writings and understandings.
No terms or provisions of this AGREEMENT shall be varied or modified by any
prior or subsequent statement, conduct or act of either of the parties, except
that the parties may amend this AGREEMENT by written instruments specifically
referring to and executed in the same manner as this AGREEMENT.
20. NOTICES
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<PAGE> 48
20.1 Any notice, request, approval or other document required or
permitted to be given under this AGREEMENT shall be in writing and shall be
deemed to have been given when delivered in person, or sent by overnight courier
service, postage prepaid, or sent by certified or registered mail, return
receipt requested, or by facsimile transmission, to the following addresses of
the parties (or to such other address or addresses as may be specified from time
to time in a written notice). Any notices given pursuant to this AGREEMENT
shall be deemed to have been given and delivered upon the earlier of (i) if sent
by overnight courier service, on the date when received at the address set forth
below as proven by a written receipt from the delivery service verifying
delivery, or (ii) if sent by certified or registered mail, three (3) business
days after mailed by certified or registered mail postage prepaid and properly
addressed, with return receipt requested, or (iii) if sent by facsimile
transmission, on the day when sent by facsimile as confirmed by automatic
transmission report coupled with certified or registered mail or overnight
courier service receipt proving delivery, or (iv) if delivered in person, on the
date of delivery to the address set forth below as proven by written signature
of the recipient.
TBC
Texas Biotechnology Corporation
7000 Fannin
Houston, Texas 77030
Attention: President & Chief Executive Officer
SB
SmithKline Beecham plc
New Horizons Court
Brentford, Middlesex TW8 9EP
England.
Attention: Senior Vice President and Director Business
Development
copy to:
SmithKline Beecham Corporation
One Franklin Plaza (Mail Code FP2225)
P.O. Box 7929
Philadelphia, Pennsylvania 19101, U.S.A.
Attention: Corporate Law-U.S.
21. ASSIGNMENT
21.1 This AGREEMENT and the license right and licenses herein
granted shall be binding upon and inure to the benefit of the successors in
interest of the respective parties, provided that it is understood that no
successor in interest to TBC shall acquire the benefit of any marketing right
or
44
<PAGE> 49
copromotion right to PRODUCT granted to TBC under this AGREEMENT without the
prior written consent of SB [*] In the event that there is a successor in
interest to TBC [*] the copromotion right outlined in Article 6 shall terminate
effective upon the date of succession of interest in TBC, but the rest of the
terms and conditions of this AGREEMENT shall survive. Neither this AGREEMENT
nor any interest hereunder shall be assignable by either party without the
written consent of the other provided, however, that either party may assign
this AGREEMENT or any part of its rights and obligations hereunder to any
AFFILIATE of such party or to any corporation with which such party may merge or
consolidate, or to which it may transfer all or substantially all of its assets
to which this AGREEMENT relates, without obtaining the consent of the other
party, provided that TBC's right to assignment shall be subject to the first
sentence of this Paragraph.
22. RECORDING
22.1 SB and TBC shall have the right, at any time, to record,
register, or otherwise notify this AGREEMENT in appropriate governmental or
regulatory offices anywhere in the TERRITORY, and each party shall provide
reasonable assistance to the other party in effecting such recording,
registering or notifying.
23. NO PARTNERSHIP OR JOINT VENTURE
23.1 This AGREEMENT shall not be deemed to establish a joint
venture or partnership between SB and TBC.
24. EXECUTION IN COUNTERPARTS
24.1 This AGREEMENT may be executed in any number of counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
25. DISPUTE RESOLUTION
25.1 Any dispute, controversy or claim arising out of or relating
to this AGREEMENT (hereinafter collectively referred to as "Dispute") shall be
attempted to be settled by the parties, in good faith, by submitting each such
Dispute to appropriate senior management representatives of each party in an
effort to effect a mutually acceptable resolution thereof.
25.2 In the event no mutually acceptable resolution of such Dispute
is achieved in accordance with Paragraph 25.01 within a reasonable period of
time, any dispute, controversy or claim that arises under, out of, or in
connection with, or relating to this AGREEMENT, or any breach, termination or
alleged invalidity of this AGREEMENT, shall be resolved by binding
__________________________________
[*] This information has been omitted in reliance on Rule 24B-2 under
the Securities Exchange Act of 1934, and has been filed
separately with the Securities and Exchange Commission.
45
<PAGE> 50
arbitration in New York, New York in accordance with the then existent
Arbitration Rules of the American Arbitration Association. The decision of the
Arbitration Tribunal in any such arbitration shall be final and not appealable,
and shall be enforceable in any court of competent jurisdiction. No punitive
damages will be recoverable by either party in such a proceeding. The PARTIES
agree that the service of any notice in the course of such arbitration
proceeding at their respective addresses as provided for in Paragraph 20.01
below shall be valid and sufficient.
The appointing authority shall be the American Arbitration
Association. Unless agreed otherwise by the PARTIES, in any arbitration
proceeding hereunder, there shall be three (3) arbitrators. Each party shall
appoint one (1) arbitrator, and the two (2) arbitrators so appointed shall, by
mutual agreement, appoint the third arbitrator, who shall be the chairman of
the Arbitration Tribunal. In the event that any party fails to appoint an
arbitrator within one (1) month after the commencement of the arbitration
proceeding, such arbitrator shall, at the written request of the party
requesting the arbitration, be appointed by the then-President or presiding
officer of the American Arbitration Association in accordance with its
then-existing rules of appointment. The decision of a majority of the
arbitrators shall be final and binding on the PARTIES, each arbitrator having
one vote.
25.3 In any arbitration proceeding, the rights of the parties shall
be determined according to the governing law set forth in Paragraph 16.01, and
the arbitrators shall apply such law.
IN WITNESS WHEREOF, the parties, through their authorized officers,
have executed this AGREEMENT as of the date first written above.
SMITHKLINE BEECHAM plc
By: /s/ A. Karabelas
----------------------------------------------
Name: A. Karabelas
--------------------------------------------
Title: Executive Vice President
-------------------------------------------
TEXAS BIOTECHNOLOGY CORPORATION
By: /s/ David B. McWilliams
----------------------------------------------
Name: David B. McWilliams
--------------------------------------------
Title: President
-------------------------------------------
46
<PAGE> 51
DEVELOPMENT, LICENSE, AND COPROMOTION AGREEMENT
SMITHKLINE BEECHAM PLC-TEXAS BIOTECHNOLOGY CORPORATION
APPENDIX A
PATENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Patent
App. Patent Date of Date of
Country Assignee No. Grant No. Grant Expiration Subject Matter
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
USA Mitsubishi 5,214,952 05/25/2010 pharm. comp for injection
comprising argatroban in
ethanol, water, and sac-
charide solvent
- ------------------------------------------------------------------------------------------------------------------
Canada same as above
- ------------------------------------------------------------------------------------------------------------------
USA Mitsubishi 5,141,947 08/25/2009 fibrinolysis-enhancing
com-position comprising
plas-minogen activator in
com-bination with argatroban
- ------------------------------------------------------------------------------------------------------------------
Genentech
- ------------------------------------------------------------------------------------------------------------------
TBC
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
47
<PAGE> 52
DEVELOPMENT, LICENSE, AND COPROMOTION AGREEMENT
SMITHKLINE BEECHAM PLC-TEXAS BIOTECHNOLOGY CORPORATION
APPENDIX B
PRODUCT STRATEGY PLAN
[*]
[*] This information has been omitted in reliance on Rule 24B-2 under the
Securities Exchange Act of 1934, and has been filed separately with
the Securities and Exchange Commission.
48
<PAGE> 53
DEVELOPMENT, LICENSE, AND COPROMOTION AGREEMENT
SMITHKLINE BEECHAM PLC-TEXAS BIOTECHNOLOGY CORPORATION
APPENDIX B
(CONTINUED)
DEVELOPMENT, LICENSE, AND COPROMOTION AGREEMENT
SMITHKLINE BEECHAM PLC-TEXAS BIOTECHNOLOGY CORPORATION
APPENDIX C
ANNUAL TACTICAL PLAN
[*]
[*] This information has been omitted in reliance on Rule 24B-2 under the
Securities Exchange Act of 1934, and has been filed separately with
the Securities and Exchange Commission.
49
<PAGE> 1
EXHIBIT 99.3
COMMON STOCK PURCHASE AGREEMENT
BETWEEN
TEXAS BIOTECHNOLOGY CORPORATION
AND
SMITHKLINE BEECHAM PLC
DATED
AUGUST 5, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Purchase and Sale of Shares . . . . . . . . . . . . . . . . . . . 1
1.1. Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Put Option . . . . . . . . . . . . . . . . . . . . . . . . 2
2. Representations of the Company . . . . . . . . . . . . . . . . . . 2
2.1. Organization and Corporate Power . . . . . . . . . . . . . 2
2.2. Authorization . . . . . . . . . . . . . . . . . . . . . . 2
2.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Commission Reports . . . . . . . . . . . . . . . . . . . . 3
2.5. No Material Adverse Change . . . . . . . . . . . . . . . . 3
2.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7. No Breach . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8. Contracts . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9. Proprietary Rights; Intellectual Property . . . . . . . . 4
2.10. Compliance with Laws . . . . . . . . . . . . . . . . . . . 5
2.11. Encumbrances . . . . . . . . . . . . . . . . . . . . . . . 5
2.12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 5
2.13. Information Supplied to Purchaser . . . . . . . . . . . . 5
3. Representations of the Purchaser . . . . . . . . . . . . . . . . . 5
3.1. Investment . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3. Experience . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Indemnification; Remedies . . . . . . . . . . . . . . . . . . . . 6
4.1. Indemnification . . . . . . . . . . . . . . . . . . . . . 6
4.2. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Closing Deliveries and Conditions . . . . . . . . . . . . . . . . 7
5.1. Representations, Warranties and Covenants . . . . . . . . 7
5.2. Certificates and Documents . . . . . . . . . . . . . . . . 7
5.3. Other Matters . . . . . . . . . . . . . . . . . . . . . . 7
6. Information to be Furnished . . . . . . . . . . . . . . . . . . . 8
7. Registration Rights . . . . . . . . . . . . . . . . . . . . . . . 8
7.1. Certain Definitions . . . . . . . . . . . . . . . . . . . 8
7.2. Sale or Transfer of Shares; Legend . . . . . . . . . . . . 8
7.3. Piggy-back Registration . . . . . . . . . . . . . . . . . 9
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
7.4. Registration Procedures . . . . . . . . . . . . . . . . 10
7.5. Allocation of Expenses . . . . . . . . . . . . . . . . . 10
7.6. Indemnification . . . . . . . . . . . . . . . . . . . . 11
7.7. Information by Holder . . . . . . . . . . . . . . . . . 13
7.8. Rule 144 Requirements . . . . . . . . . . . . . . . . . 13
7.9. Non-transferable Rights . . . . . . . . . . . . . . . . 13
8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 13
9. Survival of Representations and Warranties . . . . . . . . . . . 13
10. Dispute Resolutions . . . . . . . . . . . . . . . . . . . . . . 13
11. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 15
14. Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 15
15. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 15
16. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
17. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 15
18. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ii
<PAGE> 4
COMMON STOCK PURCHASE AGREEMENT
This Common Stock Purchase Agreement (this "Agreement") dated as of
August 5, 1997 is between Texas Biotechnology Corporation, a Delaware
corporation (the "Company"), and SmithKline Beecham plc, an English public
limited company (the "Purchaser").
In consideration of the mutual promises and covenants contained in
this Agreement, the parties hereto hereby agree as follows:
1. Purchase and Sale of Shares.
1.1. Shares. Subject to satisfaction of the conditions set forth
in Section 5, at the Closing (as defined in Section 5) the Company shall sell
and issue to the Purchaser and the Purchaser shall purchase from the Company
the number of shares (the "Purchased Shares") of the Company's common stock,
par value $.005 per share ("Common Stock"), under the terms and conditions set
forth in this Agreement. The number of Purchased Shares issuable to Purchaser
shall be equal to the number of shares of Common Stock calculated by dividing
(i) $1,000,000 by (ii) $5.65. Subject to satisfaction of the conditions set
forth in Section 5, at the Additional Closing (as defined in Section 5) the
Company shall sell and issue to the Purchaser and the Purchaser shall purchase
from the Company the number of shares (the "Additional Purchased Shares") of
the Common Stock under the terms and conditions set forth in this Agreement.
The number of Additional Purchased Shares issuable to Purchaser shall be equal
to the number of shares of Common Stock calculated by dividing (i) $2,000,000
by (ii) the Average Company Stock Price (as defined herein). Any fractional
shares resulting from the calculations set forth in this Section 1.1 shall be
rounded up to the nearest whole share. The $1,000,000 and $2,000,000 purchase
price for the Purchased Shares and Additional Purchased Shares, respectively,
shall be payable as set forth in Section 5.
(a) The term "Average Company Stock Price" shall mean the average
of the last reported sale price regular way of the Common Stock on the American
Stock Exchange as reported by the Wall Street Journal, or if not so reported,
as reported on the principal trading market on which the Common Stock is then
publicly traded (or if the principal market on which the Company's Common Stock
is then traded does not report prices on the basis of sale transactions, the
average of the closing bid and ask prices for the Common Stock) calculated for
(i) the ten (10) days immediately preceding the Put Option Date (as defined in
Section 1.2), (ii) the Put Option Date, and (iii) the nine (9) Trading Days
immediately following the Put Option Date.
(b) The term "Trading Days" shall mean the days on which the
Company's Common Stock is traded on the American Stock Exchange, or the
principal trading market on which the Common Stock is then publicly traded if
other than the American Stock Exchange.
<PAGE> 5
1.2. Put Option. Subject to completion of the Closing, the Company
shall have the option to require the Purchaser to purchase all of the
Additional Purchased Shares under the terms and conditions set forth in this
Agreement (the "Put Option"). The Put Option shall be exercisable by the
Company at any time after the execution and delivery of this Agreement until
5:00 p.m. Houston, Texas time on the one-year anniversary of the date of this
Agreement (the "Anniversary Date"); provided that the Company shall not
exercise the Put Option at any time when any of the closing prices used to
compute the Average Company Stock Price are for dates prior to the ex-dividend
date for any distribution with respect to the Common Stock unless the Purchaser
receives such distribution with respect to the Additional Purchased Shares. If
the Company wishes to exercise the Put Option, it shall do so by delivering to
the Purchaser a written notice of intent to exercise the Put Option. The "Put
Option Date" shall be the date such notice is deemed given to the Purchaser as
set forth under Section 11. The Purchaser shall not be entitled to any rights
as holder of the Additional Purchased Shares or to any rights under Section 7
of this Agreement with respect to such Additional Purchased Shares until
completion of the Additional Closing.
2. Representations of the Company. Except as set forth in the disclosure
schedule delivered to the Purchaser on the Closing Date and Additional Closing
Date hereof (the "Disclosure Schedule"), the section numbers of which are
numbered to correspond to the sections of this Agreement to which they refer,
the Company represents and warrants to the Purchaser as follows:
2.1. Organization and Corporate Power. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business as a foreign
corporation in each jurisdiction in which such qualification is required,
except where the failure to so qualify would not have a material adverse effect
on the business, assets, prospects, results of operations or financial
condition of the Company (the "Business of the Company"). The Company has full
corporate power and authority to own its property, to carry on its business as
now conducted, to enter into and perform this Agreement and to carry out the
transactions contemplated hereby. The copies of the Certificate of
Incorporation and Bylaws of the Company previously furnished by the Company to
the Purchaser were true and complete as of the dates furnished and have not
been amended or rescinded.
2.2. Authorization. The execution, delivery and performance of
this Agreement has been duly authorized by all necessary corporate or other
action of the Company and this Agreement is a valid and binding obligation of
the Company, enforceable in accordance with its terms. The issuance, sale and
delivery of the Purchased Shares and Additional Purchased Shares in accordance
with this Agreement has been duly authorized by all necessary corporate action
on the part of the Company. The Purchased Shares and Additional Purchased
Shares when so issued, sold and delivered in accordance with the provisions of
this Agreement will be duly and validly issued, fully paid and nonassessable,
and Purchaser will acquire good and valid title thereto, free and clear of any
liens, claims or encumbrances of any type other than those created or caused by
Purchaser.
2.3. Capitalization. The authorized capital stock of the Company
consists of: (i) 75,000,000 shares of Common Stock, of which 26,003,000 shares
are issued and outstanding as
2
<PAGE> 6
of June 30, 1997; and (ii) 5,000,000 shares of preferred stock, par value $.005
per share ("Preferred Stock"), of which 6,000 shares of 5% Convertible
Preferred Stock ("5% Preferred") have been designated and 4,600 shares of 5%
Preferred are issued and outstanding as of June 30, 1997. All of the issued
and outstanding shares of the Company's capital stock have been duly authorized
and validly issued and are fully paid and nonassessable. As of June 30, 1997,
the Company has reserved approximately 13.0 million shares of Common Stock for
issuance (i) pursuant to outstanding options, warrants, and other contingent
agreements, and (ii) upon conversion of the 5% Preferred. No shares of Common
Stock are entitled to preemptive rights. Except as set forth above, there are
no subscriptions, options, conversion or exchange rights, warrants, repurchase
or redemption agreements, or other agreements, claims or commitments of any
nature whatsoever obligating the Company to issue, transfer, deliver, sell,
repurchase or redeem shares of its capital stock or other securities or
obligating the Company to grant, extend or enter into any such agreement or
commitment. There are no voting trusts or other agreements or understandings
with respect to the voting of the capital stock of the Company to which the
Company is a party. Except as contemplated by this Agreement and as set forth
in the Commission Reports (as defined herein), no person has any rights with
respect to the registration of any capital stock of the Company under the
Securities Act of 1933, as amended (the "Act"). The execution, delivery and
performance of this Agreement will not trigger any anti-dilution protection
provisions given by the Company to any person or entity (including without
limitation any stockholder, lender, warrant-holder, lessor and/or licensor).
2.4. Commission Reports. The Company has previously delivered to
the Purchaser true and complete copies of (i) its annual report on Form 10-K
for the year ended December 31, 1996 as filed with the Securities and Exchange
Commission (the "Commission"), (ii) all proxy statements relating to meetings
of the Company's stockholders held during 1997 and (iii) all other reports,
registration statements and prospectuses filed by the Company with the
Commission since December 31, 1996, including the Company's Quarterly Report on
Form 10-Q for the three-month period ended March 31, 1997. As of their
respective dates, such reports, statements and prospectuses (the "Commission
Reports") complied in all material respects with applicable Commission
requirements and did not 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 therein, in light of the circumstances under which they
were made, not misleading. The Company has filed and is current in filing all
applicable securities filings with any federal or state securities authorities.
2.5. No Material Adverse Change. Since March 31, 1997, there has
not been any material adverse change in the Business of the Company, which
would require the Company to file a Form 8-K with the Commission, except as has
been previously filed or otherwise reported in the Commission Reports.
2.6. Litigation. There are no actions, suits or claims or legal,
administrative or arbitration proceedings pending or, to the knowledge of the
Company, threatened against the Company, that individually or in the aggregate
could have a material adverse effect upon the transactions contemplated hereby
or the Business of the Company, and there is no judgment, injunction, decree or
order
3
<PAGE> 7
of any court or other governmental or public authority or agency outstanding
against the Company or otherwise relating to the Business of the Company. To
the knowledge of the Company, there is no fact, event or circumstance now in
existence that reasonably could be expected to give rise to any suit, action,
claim, investigation or proceeding that individually or in the aggregate could
have a material adverse effect upon the transactions contemplated hereby or the
Business of the Company.
2.7. No Breach. The Company's execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
will not: (i) violate any provision of the charter or bylaws of the Company;
(ii) violate, conflict with or result in the breach of any of the terms or
conditions of, result in modification of the effect of, or otherwise give any
other contracting party the right to terminate, or constitute (or with notice
or lapse of time or both constitute) a default under, any material instrument,
contract or other agreement to which the Company is a party or to which it or
any of its assets or properties is bound or subject; (iii) violate any law,
ordinance or regulation or any order, judgment, injunction, decree, permit or
other requirement of any court, arbitrator or governmental or regulatory body
applicable to the Company or by which any of its assets or properties is bound;
(iv) require any filing with, notice to, or permit, consent or approval of, any
governmental or regulatory body; or (v) result in the creation of any lien or
other encumbrance on the assets or properties of the Company.
2.8. Contracts. All contracts and agreements that are material to
the Business of the Company are valid, subsisting, in full force and effect,
and are binding upon the Company, subject to bankruptcy, moratorium or other
laws affecting creditors generally. To the knowledge of the Company, but
without further inquiry, such contracts and agreements are binding upon the
other parties thereto in accordance with their terms, subject to bankruptcy,
moratorium or other laws affecting creditors generally. The Company is not in
default under any of such agreements or contracts, which default could have a
material adverse effect on the Business of the Company, nor, to the knowledge
of the Company, but without further inquiry, is any other party to any such
contract or agreement in default thereunder, nor does any condition exist that
with notice or lapse of time or both would constitute a default thereunder.
2.9. Proprietary Rights; Intellectual Property.
(a) The Company owns or possesses, directly or indirectly,
adequate license or other rights to use all trademarks, servicemarks, trade
names, patents, patent rights, inventions, copyrights, know-how, licenses,
approvals and governmental authorizations (collectively, "Proprietary Rights")
material to the conduct of the Business of the Company as now conducted or as
proposed to be conducted by it as described in the Commission Reports. Except
as disclosed in the Commission Reports, the expiration of any Proprietary Right
would not have a material adverse effect on the Business of the Company.
(b) The Company has not received any notice of infringement of or
conflict with (and knows of no such infringement of or conflict with) any
proprietary right of others which, singly or
4
<PAGE> 8
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would materially and adversely affect the Business of the Company. The
discoveries, inventions, products or processes referred to in the Commission
Reports do not, to the knowledge of the Company, infringe or conflict with any
third-party right or patent, or any discovery, invention, product or process
which is the subject of any unlicensed patent application known to the Company
which could have a material adverse effect on the Business of the Company.
(c) The Company is not aware of any infringement by any third
party on, or any competing claim of the right to use or own any of its
Proprietary Rights that could significantly impair the value of a Proprietary
Right.
2.10. Compliance with Laws. The Company currently holds and is in
compliance with the terms of all licenses, permits and authorizations necessary
for the lawful conduct of the Business of the Company, except where
noncompliance in the aggregate would not have a material adverse effect on the
Business of the Company. The Company has complied with, and is not in
violation of, or in default in any respect under, the applicable statutes,
ordinances, rules, regulations, orders or decrees of all federal, state, local
and foreign governmental bodies, agencies and authorities having or asserting
jurisdiction over it or over any part of its operations or assets (including
without limitation environmental laws and the Employee Retirement Income
Security Act of 1974, as amended), except for such violations and defaults that
in the aggregate would not have a material adverse effect on the Business of
the Company.
2.11. Encumbrances. The Company has good and valid title to all of
the properties, interests in properties and assets real, personal or mixed,
tangible, owned or reflected in its most recent financial statements contained
in the Commission Reports, free and clear of all mortgages, judgments, claims,
liens, security interests, pledges, escrows, charges or other encumbrances,
except for those which would not have a material adverse effect on the Business
of the Company.
2.12. Insurance. All the insurable properties of the Company are
insured for the benefit of the Company in amounts deemed adequate by the
Company against all risks usually insured against by persons operating similar
properties in the localities in which such properties are located under
policies in effect and issued by insurers of recognized responsibility.
2.13. Information Supplied to Purchaser. The representations,
warranties and statements made by the Company in this Agreement and in the
Disclosure Schedule and certificates delivered pursuant hereto do not contain
any untrue statement of a material fact and, when taken together, do not omit
to state any material fact necessary to make such representations, warranties
and statements, in light of the circumstances under which they are made, not
misleading.
5
<PAGE> 9
3. Representations of the Purchaser. The Purchaser represents and
warrants to the Company as follows:
3.1. Investment. The Purchaser is acquiring the Purchased Shares
and the Additional Purchased Shares for its own account for investment and not
with a view to, or for sale in connection with, any distribution thereof, nor
with any present intention of distributing or selling the same; and the
Purchaser has no present or contemplated agreement, undertaking, arrangement,
obligation, indebtedness or commitment providing for the disposition thereof.
The Purchaser acknowledges and agrees that the Purchased Shares and the
Additional Purchased Shares have been issued to Purchaser pursuant to an
exemption from registration under applicable federal and state securities laws
and may not be offered, sold or otherwise disposed of without compliance with
said laws, and that the Purchased Shares and the Additional Purchased Shares
are therefore "restricted securities" as defined in Rule 144 promulgated under
the Act. The certificate representing the Purchased Shares and the Additional
Purchased Shares will bear a restrictive legend to the foregoing effect as set
forth in Section 7.2(b) below.
3.2. Authority. The Purchaser has full power and authority to
execute, deliver and perform this Agreement in accordance with its terms. The
Purchaser has not been organized, reorganized, or recapitalized specifically
for the purpose of acquiring the Purchased Shares and the Additional Purchased
Shares. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate or other action of the Purchaser and
this Agreement is a valid and binding obligation of the Purchaser, enforceable
in accordance with its terms.
3.3. Experience. The Purchaser has adequate net worth and means to
provide for its current needs and contingencies and the financial capacity to
sustain a complete loss of its investment in the Company. The Purchaser is an
"accredited investor" within the meaning of Rule 501(a) under the Act.
4. Indemnification; Remedies
4.1. Indemnification. The Company shall indemnify, defend and hold
the Purchaser and its officers, directors, agents and representatives harmless
against all liabilities, losses and damages, together with all reasonable costs
and expenses related thereto (including legal and accounting fees and
expenses), arising from the untruth, inaccuracy or breach of any of the
representations, warranties, covenants or agreements of the Company herein.
The Purchaser shall indemnify, defend and hold the Company harmless against all
liabilities, losses or damages, together with all reasonable costs and expenses
related thereto (including legal and accounting fees and expenses) arising from
the untruth, inaccuracy or breach of any of the representations, warranties,
covenants or agreements of the Purchaser herein.
4.2. Remedies. In case the Company shall breach any one or more of
its covenants and/or agreements set forth in this Agreement, the Purchaser may
proceed to enforce its rights either by suit in equity and/or by action at law,
including, but not limited to, an action for damages as a result of any such
breach and/or an action for specific performance of any such covenant or
agreement contained herein.
6
<PAGE> 10
5. Closing Deliveries and Conditions. The closing of the sale and
purchase of the Purchased Shares and the Additional Purchased Shares (the
"Closing" and the "Additional Closing," respectively,) shall take place at the
offices of Porter & Hedges, L.L.P., counsel to the Company, in Houston, Texas.
The Closing shall occur on the same date as the execution and delivery of this
Agreement (the "Closing Date"). The Additional Closing shall occur on the date
mutually agreed to by the Company and the Purchaser (the "Additional Closing
Date"), or if the Company and the Purchaser cannot agree, then the Additional
Closing Date shall be the tenth (10th) business day following the Put Option
Date. At the Closing and the Additional Closing, the Company shall deliver to
the Purchaser a certificate representing the Purchased Shares and the
Additional Purchased Shares, respectively, registered in the name of the
Purchaser against payment of the purchase price by wire transfer, certified or
cashier's check or other method acceptable to the Company. The Purchaser's
obligation to purchase the Purchased Shares and the Additional Purchased Shares
is subject to the fulfillment of the following conditions on or before the
Closing Date and the Additional Closing Date, respectively.
5.1. Representations, Warranties and Covenants. Each
representation and warranty contained in Section 2 shall be true and correct in
all material respects on and as of the applicable Closing Date and Additional
Closing Date with the same effect as if such representation and warranty had
been made on and as of that date and, the Company shall have performed and
complied in all material respects with all covenants and agreements required to
be performed or complied with by it under this Agreement as of such Closing
Date and Additional Closing Date.
5.2. Certificates and Documents. The Purchaser shall have
received:
(a) A copy of the Certificate of Incorporation of the Company, as
in effect as of the most recent practicable date prior to the Closing and the
Additional Closing, as applicable, certified by the Secretary of State of the
State of Delaware, respectively, and a certificate, as of the most recent
practicable date, of the Secretary of State of all applicable jurisdictions as
to the Company's corporate good standing; and
(b) A certificate of the Secretary or Assistant Secretary of the
Company dated the Closing Date and the Additional Closing Date, as applicable,
certifying as to (i) the incumbency of officers of the Company executing this
Agreement and all other documents executed and delivered in connection
herewith, (ii) the Bylaws of the Company, and (iii) a copy of the resolutions
of the Board of Directors of the Company authorizing the Company's execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
5.3. Other Matters. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions, shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably request.
7
<PAGE> 11
6. Information to be Furnished. For so long as any Purchased Shares and
Additional Purchased Shares issued hereunder are held by the Purchaser and
represent more than 1% of the then outstanding Common Stock, the Company will
furnish promptly to the Purchaser copies of (i) all financial statements,
periodic and special reports, press releases and investor relations materials
as the Company may distribute generally to the holders of its Common Stock or
to securities analysts, (ii) each report and proxy statement filed by the
Company with the Commission pursuant to Section 13(a), 14 or 15(d) of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and (iii)
all press releases.
7. Registration Rights.
7.1. Certain Definitions. As used in this Section 7 and elsewhere
in this Agreement, the following terms shall have the following respective
meanings:
"Registrable Shares" means (i) the Purchased Shares and Additional
Purchased Shares when issued and (ii) any other shares of Common Stock issued
and outstanding in respect of the shares referred to in (i) because of stock
splits, stock dividends, subdivisions, combinations, reclassifications,
recapitalizations, or similar events. However, all such shares shall cease to
be Registrable Shares (i) when such shares become eligible for resale under
subsection (k) of Rule 144 by persons who are not affiliates of the Company,
(ii) upon any transfer that results in the purchaser of such shares receiving
shares that are not "restricted securities" within the meaning of Rule 144, or
(iii) upon any transfer to a person or entity that, by virtue of Section 7.9
hereof is not entitled to the rights set forth in this Section 7.
"Rule 144" means Rule 144 promulgated under the Act or any successor
provision.
7.2. Sale or Transfer of Shares; Legend.
(a) The Registrable Shares shall not be sold or transferred unless
either (i) they first shall have been registered under the Act and applicable
state securities laws, or (ii) the Company first shall have been furnished with
an opinion of legal counsel, reasonably satisfactory to the Company, to the
effect that such sale or transfer is exempt from the registration requirements
of such laws.
(b) Each certificate representing the Registrable Shares shall
bear a legend substantially in the following form:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or any state
securities law and may not be transferred except (i) pursuant to an
effective registration statement under the Act or (ii) upon first
furnishing to the Company an opinion of counsel satisfactory to it
that such transfer is not in violation of the registration
requirements of the Act or any state securities law."
8
<PAGE> 12
The foregoing legend shall be removed from the certificates
representing any Registrable Shares at the request of the holder thereof, at
such time as they become registered under the Act or eligible for resale
pursuant to subsection (k) of Rule 144 by persons who are not affiliates of the
Company.
7.3. Piggy-back Registration.
(a) If the Company proposes to register any of its Common Stock
under the Act (other than a registration statement required to be filed in
respect of employee benefit plans of the Company or any registration statement
relating to acquisitions) in an underwritten offering of Common Stock by the
Company, the Company will give written notice to the Purchaser of its intention
to do so. Upon the written request (stating the intended method of disposition
of such Common Stock) of the Purchaser, given within ten (10) days after
transmittal by the Company to the Purchaser of such notice, the Company will,
subject to the limitations contained in this Section 7.3, use all commercially
reasonable efforts to cause all such Purchased Shares and Additional Purchased
Shares, as applicable, of the Purchaser to be registered under the Act, all to
the extent requisite to permit the sale for value by the Purchaser of the
Purchased Shares and Additional Purchased Shares, as applicable, so registered.
However, if the underwriter managing such registration notifies the holders in
writing that market or economic conditions limit the amount of securities which
may reasonably be expected to be sold, the number of shares to be included in
such registration of the Purchaser and all other holders of Common Stock with
bona fide contractual registration rights shall be reduced pro rata based on
the number of shares of Common Stock with respect to which registration is
requested by the Purchaser and each other person exercising such contractual
registration rights.
(b) The Purchaser shall be entitled to participate in the sale of
Purchased Shares and Additional Purchased Shares held at such time by the
Purchaser under no more than one registration statement pursuant to Section
7.3(a) hereof. However, if the Additional Closing Date is subsequent to the
Purchaser's participation in an underwritten public offering pursuant to
Section 7.3, the Purchaser shall thereafter be entitled to participate in the
sale of Additional Purchased Shares under no more than one registration
statement pursuant to Section 7.3(a) hereof. Notwithstanding anything in this
Agreement to the contrary, the Purchaser will not be permitted to sell any
Purchased Shares or Additional Purchased Shares pursuant to the rights granted
under this Section 7.3 in the Company's first underwritten offering of Common
Stock to occur after the Closing Date. If the Purchaser disapproves of the
terms of any such registration, it may elect to withdraw therefrom by written
notice to the Company and the managing underwriter.
(c) The Company shall have the right to terminate or withdraw any
registration initiated by it under this Section 7.3 prior to the effectiveness
of such registration whether or not the Purchaser has elected to include
securities in such registration.
9
<PAGE> 13
7.4. Registration Procedures.
(a) If and whenever the Company is required by the provisions of
Section 7.3(a) to use all commercially reasonable efforts to effect the
registration of the Registrable Shares under the Act, the Company shall:
(i) as expeditiously as possible furnish to the Purchaser who so
requests such reasonable numbers of copies of a current
prospectus under the Registration Statement, including a
preliminary prospectus, in conformity with the requirements of
the Act, and such other documents as the Purchaser may
reasonably request in order to facilitate the public sale or
other disposition of the Registrable Shares owned by the
Purchaser; and
(ii) as expeditiously as possible use all commercially reasonable
efforts to register or qualify the Registrable Shares under
the securities or Blue Sky laws of such states as any
Purchaser shall reasonably request, and do any and all other
acts and things that may be necessary or desirable to enable
the public sale or other disposition in such jurisdictions of
the Registrable Shares; provided, however, that the Company
shall not be required in connection with this paragraph to
qualify as a foreign corporation in any jurisdiction.
(b) From the date of this Agreement through the Anniversary Date,
unless the Purchaser is selling Registrable Securities pursuant to the exercise
of its rights in this Section 7.3 in connection with any offering by the
Company, the Purchaser may not sell, offer, contract to sell or otherwise
dispose of any Registrable Shares during the period commencing with the date 10
days prior to and ending on the date 90 days immediately following the
effective date of, any registration statement pertaining to securities to be
sold by the Company (other than a registration of securities for Rule 145
transaction or in connection with an employee benefit plan), provided that the
Company is actively employing in good faith all commercially reasonable efforts
to cause such registration statement to become effective and has not withdrawn
such registration statement or suspended sales thereunder. Following the
Anniversary Date, and so long thereafter as the Purchaser holds Registrable
Securities, the Purchaser agrees to not sell, offer, contract to sell or
otherwise dispose of the Registrable Securities pursuant to the same terms and
conditions set forth in any lockup agreement that (i) the Company's officers
and directors and (ii) any Company shareholder, which beneficially owns no more
than the number of shares of Common Stock as the Purchaser, have executed in
connection with an underwritten public offering by the Company.
7.5. Allocation of Expenses. Except as hereinafter set forth, the
Company shall pay all expenses incurred by the Company in complying with this
Section 7, including, without limitation, all registration and filing fees,
printing expenses, accounting and consulting fees, fees and disbursements of
counsel for the Company, out-of-pocket expenses of the Company and, state Blue
Sky fees and expenses. Purchaser shall only pay brokerage commissions,
discounts, fees and expenses incurred by it (including fees of its counsel).
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7.6. Indemnification. In the event of any registration of any of
the Registrable Shares under the Act pursuant to this Section 7, then to the
extent permitted by law the Company shall indemnify and hold harmless the
Purchaser, each underwriter of such Registrable Shares and each other person,
if any, who controls Purchaser or such underwriter within the meaning of the
Act or the Exchange Act against any losses, claims, damages or liabilities,
joint or several, to which Purchaser, such underwriter or controlling person
may become subject under the Act, the Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company shall reimburse Purchaser,
such underwriter and each such controlling person for any legal or any other
expenses reasonably incurred by Purchaser, such underwriter or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or omission made
in such Registration Statement, preliminary prospectus or prospectus, or any
such amendment or supplement, in reliance upon and in conformity with
information furnished to the Company in writing, by or on behalf of Purchaser,
such underwriter or controlling person specifically for use in the preparation
thereof.
In the event of any registration of any of the Registrable Shares
under the Act pursuant to this Section 7, then to the extent permitted by law,
the Purchaser severally and not jointly, shall indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within
the meaning of the Act or the Exchange Act, against any losses, claims, damages
or liabilities joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the Act,
Exchange Act, state securities laws or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any amendment or
supplement to the Registration Statement, or arise out of or are based upon any
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if the
statement or omission was made solely in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Purchaser, specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; provided, however,
that the obligations of the Purchaser hereunder shall be limited to an amount
equal to the proceeds to the Purchaser of Registrable Shares sold as
contemplated herein.
An underwriter shall not be entitled to indemnification pursuant to
this Section 7.6 in the event that it fails to deliver to the Purchaser any
preliminary or final or revised prospectus, as
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required by the rules and regulations of the Commission. No indemnification
shall be provided pursuant to this subsection in the event that any error in a
preliminary prospectus of the Company is subsequently corrected in the final
prospectus of the Company for a particular offering, and such final prospectus
is delivered to all purchasers in the offering prior to the date of purchase of
the securities.
Each party entitled to indemnification under this Section 7.6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom; provided, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 7.6 unless the
Indemnifying Party is materially prejudiced thereby. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that
the Indemnifying Party shall pay such expense if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
If the indemnification provided for in this Section 7.6 shall for any
reason be held by a court to be unavailable to an Indemnified Party in respect
of any loss, claim, damage or liability, or any action in respect thereof,
then, in lieu of the amount paid or payable pursuant to such indemnification,
the Indemnified Party and the Indemnifying Party shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the Company
and the Purchaser which resulted in such loss, claims, damage or liability, or
action in respect thereof, with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and Purchaser from the offering of the securities
covered by such Registration Statement. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Such persons' obligations to contribute as provided in this
paragraph are several in proportion to the relative value of their respective
Registrable Shares covered by such Registration Statement and not joint. In
addition, no person shall be obligated to contribute hereunder any
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amounts of payment for any settlement of any actions or claim effected without
such person's consent, which consent shall not be unreasonably withheld.
7.7. Information by Holder. The Purchaser shall furnish to the
Company such information regarding Purchaser and the distribution proposed by
Purchaser as the Company may request in writing and as shall be required in
connection with any registration, qualification or compliance referred to in
this Section 7.
7.8. Rule 144 Requirements. With a view to making available to the
Purchaser the benefits of Rule 144 and any other rule or regulation of the
Commission that may at any time permit Purchaser to sell securities of the
Company to the public without registration, the Company agrees to use all
commercially reasonable efforts to:
(a) make and keep public information available, within the meaning
of Rule 144;
(b) file with the Commission in a timely manner all reports and
other documents required of the Company under the Act and the Exchange Act; and
(c) furnish to Purchaser upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents of the Company as such holder may reasonably
request to avail itself of any similar rule or regulation of the Commission
allowing it to sell any such securities without registration.
7.9. Non-transferable Rights. The rights granted to the Purchaser
under Section 7 may not be transferred, assigned or succeeded to except by an
affiliate (as defined in Securities Exchange Act of 1934, as amended) of the
Purchaser.
8. Successors and Assigns. Subject to Sections 3.1, 3.2 and 7.9, the
provisions of this Agreement shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto.
9. Survival of Representations and Warranties. The representations,
warranties, covenants and agreements contained in this Agreement shall survive
and remain in full force and effect for one years after Closing, without regard
to any investigation made at any time by the Purchaser or on its behalf.
10. Dispute Resolutions. All disputes under this Agreement shall be
settled, if possible, through good faith negotiations between the parties. In
the event such good faith negotiations are unsuccessful, either party may,
after 30 days' written notice to the other, submit the matter in dispute to the
American Arbitration Association ("AAA") to be settled by arbitration by a
panel of three arbitrators in New York, New York in accordance with the
commercial arbitration rules of the AAA. Each party shall appoint one
arbitrator and the two arbitrators so named will select the third, who
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<PAGE> 17
shall act as chair of the arbitration panel. If one party fails to appoint its
arbitrator or if the parties' arbitrators cannot agree on the selecting of the
third, the AAA shall make the necessary appointments. 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 may
determine. Upon reasonable notice and prior to any hearing, the parties will
allow document discovery and will disclose all materials relevant to the
subject matter of the dispute within 60 days following selection of the
arbitrators. The arbitrators shall make final determinations as to any
discovery disputes. A hearing on the matter in dispute shall commence within
90 days following selection of the arbitrators and the decision of the
arbitrators shall be rendered no later than 60 days after commencement of such
hearing. The determination of the arbitrators shall be conclusive and binding
upon the parties and judgment may be entered thereon and enforced by any court
of competent jurisdiction, including the courts of the State of New York or the
United States District Court for the Southern District of New York, and each
party hereby irrevocably consents to the jurisdiction of such courts for such
purpose.
11. Notices. Any notice or other communication hereunder shall be in
writing and shall be deemed given when so delivered in person, by overnight
courier (with receipt confirmed) or by facsimile transmission (with receipt
confirmed by telephone or by automatic transmission report) or on the tenth
business day after being sent by registered or certified mail (postage prepaid,
return receipt requested), as follows (or to such other persons' address as may
be specified in writing to the other party hereto):
(a) If to the Company, to:
Texas Biotechnology Corporation
7000 Fannin, Suite 1920
Houston, Texas 77030
Attention: President
Telephone: (713) 796-8822
Facsimile: (713) 796-8232
(b) If to the Purchaser, to:
SmithKline Beacham plc
c/o SmithKline Beecham Corporation
One Franklin Plaza
Philadelphia, Pennsylvania 19102
Attention: Mr. Graham Brazier
Telephone: (215) 751-7303
Facsimile: (215) 751-4253
12. Brokers. The Company and the Purchaser each agree that it shall
indemnify and hold harmless the other from and against any and all claims,
liabilities, or obligations with respect to
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brokerage or finders' fees or commissions or consulting fees in connection with
the transactions contemplated by this Agreement asserted by any person on the
basis of any agreement, statement or representation alleged to have been made
by such party.
13. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties hereto, and supersedes any prior agreements or
understandings between or among them, with respect to the subject matter
hereof. The Purchaser acknowledges and agrees that it is relying solely on the
representations and warranties made by the Company in this Agreement in
connection with the purchase of the Purchased Shares and the Additional
Purchased Shares, it is not relying on any other information of any type
concerning the Company, and that it has conducted its own due diligence
investigation regarding the Business of the Company.
14. Amendments and Waivers. Except as otherwise expressly set forth in
this Agreement, any term of this Agreement may be amended with the written
consent of the Company and the Purchaser. Any provision hereof may be waived by
the party entitled to the benefits thereof in the manner set forth in the
preceding sentence. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
15. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16. Captions. The captions of the sections, subsections and paragraphs of
this Agreement has been added for convenience only and shall not be deemed to
be a part of this Agreement.
17. Severability. Each provision of this Agreement shall be interpreted
in such manner as to validate and give effect thereto to the fullest lawful
extent, but if any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid or unenforceable under applicable law,
such provision shall be ineffective only to the extent so determined and such
invalidity or unenforceability shall not affect the remainder of such provision
or the remaining provisions of this Agreement.
18. Governing Law. This Agreement shall be governed by and interpreted
and construed in accordance with the laws of Delaware.
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IN WITNESS WHEREOF, the Company and the Purchaser have executed and
delivered this Agreement as of the date first above written.
TEXAS BIOTECHNOLOGY CORPORATION
By: David B. McWilliams
------------------------------
Name: /s/ David B. McWilliams
------------------------------
Title: President
------------------------------
Purchaser:
SMITHKLINE BEECHAM PLC
By: A. Karabelas
------------------------------
Name: /s/ A. Karabelas
------------------------------
Title: Executive Vice President
------------------------------
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DISCLOSURE SCHEDULE
PARAGRAPH 2.3 - CAPITALIZATION
Common Stock Purchase Option
Pursuant to the Common Stock Purchase Agreement between Texas
Biotechnology Corporation ("TBC") and LG Chemical, Ltd. ("LG"). LG
has the right to purchase $5,000,000 in common stock of TBC on
September 30, 1997 or December 31, 1997. The price of the common
stock shall be negotiated between TBC and LG, however if the price is
not negotiated prior to the deadline the option shall not be
exercisable on the exercise date.
Registration Rights
Richard A.F. Dixon - Pursuant to an agreement dated February 23, 1990,
Dr. Dixon has registration rights afforded to other Founders of the
Company. No rights have been given to other Founders other than Dr.
Willerson.
James T. Willerson - Pursuant to a letter agreement dated March 6,
1990, Dr. Willerson has registration rights afforded to other Founders
of the Company. No rights have been given to other Founders other
than Dr. Dixon.
PARAGRAPH 2.9 - PROPRIETARY RIGHTS: INTELLECTUAL PROPERTY
An interference has been declared by the U.S. Patent and Trademark
Office between a U.S. patent owned by the Company, U.S. Patent No.
5,464,853, and a patent application assigned to Bristol Myers Squibb
Corporation to determine the first inventor. The subject matter of
this interference relates to compounds that modulate the activity of
endothelin. These compounds that are the subject matter of the
interference are not currently of any potential commercial interest to
the Company.
1
