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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number 0-20954
COCENSYS, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0538836
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
213 Technology Drive, Irvine, CA 92618
(Address of principal executive offices including zip code)
(714) 753-6100
(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock $.001 par value 22,002,552
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(Class) (Outstanding at August 1, 1996)
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COCENSYS, INC.
Page
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PART II. OTHER INFORMATION
Exhibit 10.1 Development and Commercialization Agreement between the 4
Company and G.D. Searle & Co. dated May 17, 1996. *
* Confidential treatment requested.
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COCENSYS, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
CoCensys, Inc.
Date: February 12, 1997 By: /s/ Peter E. Jansen
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Peter E. Jansen
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS AND DENOTED BY AN ASTERISK, HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This Agreement is entered into as of May 17, 1996 ("Effective Date"),
between COCENSYS, INC. ("CoCensys"), and G.D. SEARLE & CO. ("Searle")
(individually a "Party" or collectively the "Parties").
WHEREAS, CoCensys and Searle wish to establish the framework for the joint
development and commercialization of Co 3-2693 or a back-up compound as set
forth in this Agreement;
NOW, THEREFORE, the Parties agree as follows:
ARTICLE 1. DEFINITIONS.
1.1 "ACT" means the U.S. Food, Drug and Cosmetics Act and applicable
regulations thereunder, as amended from time to time.
1.2 "AFFILIATE(S)" means any entity which directly or indirectly controls,
is controlled by or is under common control with a Party. "Control" shall mean
the power to direct or cause the direction of the management and policies of an
entity, whether through ownership of voting securities, by contract or
otherwise.
1.3 "BACK-UP COMPOUND" means any Back-Up Compound Candidate selected by
the JDC for Development as a replacement for the Compound.
1.4 "BACK-UP COMPOUND CANDIDATE" means any compound identified pursuant to
Section 4.1 as a potential Back-Up Compound.
1.5 "COMPOUND" means 3ALPHA-hydroxy-3BETA-tri-fluoro-methyl-19-nor-
pregnan-20-one (Co 3-2693). The term "Compound" shall include any Back-Up
Compound which replaces CO 3-2693 or a prior Back-Up Compound. The terms
"Compound", "Back-Up Compound" and "Back-Up Compound Candidate" shall also
include any metabolite, prodrug, salt form or esther thereof and any other
biologically active isomer.
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1.6 "CO-PROMOTION" means the promotion and marketing of the Product by the
Parties in the USA and the sale by Searle, all as described in Article 8.
1.7 "CO-PROMOTION EXPENSES" shall include, without limitation, the
following expenses incurred by a Party to the extent allocable to the Co-
Promotion in accordance with U.S. Generally Accepted Accounting Practices,
consistently applied ("GAAP"):
(a) the cost of Goods;
(b) any consideration paid to Third Parties for [*] approved by
the Parties after the Effective Date;
(c) pre-launch expenses and post-Regulatory Approval medical and
clinical trial costs, costs of monitoring adverse drug reactions, quality
control complaints, costs associated with maintaining the Regulatory Approval
and reasonably allocable regulatory affairs group overhead costs;
(d) costs of distributing and shipping the Product to wholesalers,
distributors and customers (including costs of returns) and costs of
collection;
(e) direct costs, specifically allocable to the Product, incurred
for the sale (including costs of sales forces, sales force incentives
specific to the Product, call reporting and other monitoring/tracking costs,
training of sales force and regional sales management and marketing
management), advertising, promotion and marketing of the Product (including
agency fees) through any means (including advertisements, promotional
literature, market research, symposia, exhibits and direct mail);
(f) costs of invoicing, of tracking and administering rebate and
chargeback programs and product returns and of establishing and maintaining
contracts with managed care organizations and governmental purchases;
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(g) costs associated with [*];
(h) costs associated with [*];
(i) expenses associated with any Product recall or any FDA mandated
communication.
Co-Promotion Expenses will not include general corporate overhead.
1.8 "COST OF GOODS" means the cost of the Product in bulk or finished form
(including samples) calculated in accordance with GAAP. Cost of Goods shall
include: (a) the Cost of Manufacture for Product manufactured by either Party
or the amount paid for Product manufactured by a Third Party; and (b) the net
cost or credit of any value-added taxes or duties actually paid or utilized
in respect of the Product.
1.9 "COST OF MANUFACTURE" means the fully allocated cost of
manufacturing the Product (calculated in accordance with GAAP), including the
direct and indirect cost of any raw materials, packaging materials and labor
(including benefits) utilized in such manufacturing (including formulating,
filling, finishing, labeling and packaging, as applicable) plus factory
overhead (fixed and variable) allocated to the Product in accordance with
normal accounting practices for all products manufactured in the applicable
facility.
1.10 "DEVELOPMENT" means: (a) the pre-clinical and clinical development
for use in the Field in the USA of the Compound through and including Regulatory
Approval; and (b) the back-up program as described in Section 4.1.
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1.11 "DEVELOPMENT COSTS" means all costs incurred by a Party
identifiable to the Development as well as overhead costs of the functions
that directly support the Development [ * ] (as calculated in accordance with
GAAP and using the same allocation methods that the Party incurring such
costs uses throughout its operations, but in all events excluding general
corporate overhead), all as specified in the Development Plan and the
Development Budget. Development Costs shall consist of Scientific FTE's (as
defined in Section 3.3) and out-of-pocket costs. Such costs shall include,
without limitation:
(a) the Cost of Goods for the Product used in the Development,
(including early batches of the Product for Regulatory Approval, to the
extent not re-used later in commercial sales);
(b) direct costs for outside professional services, including, but
not limited to, toxicology studies or clinical studies performed by Third
Parties;
(c) direct charges for materials (including chemicals, animals and
lab supplies);
(d) costs incurred in connection with regulatory submissions; and
(e) costs for the process development of the Product.
1.12 "FDA" means the Food and Drug Administration of the USA.
1.13 "FIELD" means the treament of insomnia in humans.
1.14 "IND" means an Investigational New Drug Application as defined in the
Act.
1.15 "INTELLECTUAL PROPERTY RIGHTS" means all Patent Rights, trademarks,
copyrights, Know-How and/or trade secrets owned or controlled by CoCensys or one
of its Affiliates (with the right to
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license) as of the Effective Date or acquired during the term of this Agreement
or owned or controlled jointly by the Parties, which relate to the development,
manufacture, use, marketing or sale of the Product.
1.16 "JDC" means the Joint Development Committee described in Section 2.3.
1.17 "JMT" means the Joint Marketing Team described in Section 2.4.
1.18 "KNOW-HOW" means all know-how, trade secrets, discoveries,
technology, processes, information and data (including any related copyright),
including all improvements thereto, whether patentable or otherwise, relating
to:
(a) the Compound, the Back-Up Compound or any Back-Up Compound
Candidate;
(b) any Product containing (a);
(c) any method of making or any use of (a) or (b);
(d) any component of (a) or (b);
(e) any intermediate in the making of (a) or (b); or
(f) any method of using any of (a), (b), (d) or (e).
1.19 "NDA" means a New Drug Application for the Product, as defined in
the Act.
1.20 "NET SALES" means the proceeds from sale of the Product by Searle
or its Affiliates or sublicensees to Third Parties, less the following
deductions, to the extent allocated specifically to sales of the Product (all
determined in accordance with such Party's or its Affiliate's or
sublicensee's standard accounting practices):
(a) VAT, sales, use, excise or other taxes (excluding taxes based
on income);
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(b) [ * ];
(c) trade, quantity, promotional or cash discounts or rebates
customary to the industry and actually allowed, given or accrued (including,
but not limited to, cash, governmental and managed care rebates, and
chargebacks); and
(d) credits, allowances or refunds granted or made on account of
returned, recalled, obsolete or damaged goods, or price adjustments actually
made and bad debts.
It is understood between the parties that certain amounts shall be made on an
estimated accrual basis and will be reconciled subsequently. "Net Sales" shall
be deemed to refer to CoCensys rather than Searle if CoCensys sells the Product
pursuant to sub-sections 15.2.2, 15.3.2 or 15.4.3.
1.21 "PATENT RIGHTS" means all patents or patent applications and all
divisions, continuations, continuations-in-part, reissues, extensions, renewals,
supplementary protection certificates and foreign counterparts thereof, existing
as of the Effective Date or filed or issuing during the term of this Agreement,
at least one claim of which covers the Know-How.
The Patent Rights owned or controlled by CoCensys (with the right to license)
existing as of the Effective Date are set forth in Exhibit A.
1.22 "PHASE I", "PHASE II" AND "PHASE III" means the phases of clinical
development of pharmaceuticals as defined in the Act.
1.23 "PRODUCT" means any pharmaceutical product(s) containing the
Compound.
1.24 "REGULATORY APPROVAL" means all authorizations by the competent
authorities required for marketing, promoting, pricing, reimbursement and
selling of the Product in a given country.
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1.25 "RoW" means all countries except the USA and Japan.
1.26 "THIRD PARTY" means any person or entity other than CoCensys, Searle
or their Affiliates.
1.27 "TRADEMARK" means the trademark which the Product shall be marketed
under in the USA as set out in Article 11.
1.28 "USA" means the United States of America, its territories and
possessions.
ARTICLE 2. MANAGEMENT.
2.1 COMMITTEES. The Parties agree that the relationship hereunder in the
USA will be managed by an executive committee (the "Executive Committee"), the
JDC and the JMT.
2.2 EXECUTIVE COMMITTEE.
2.2.1 COMPOSITION. Promptly after the Effective Date, Searle will
appoint [ * ] representatives and CoCensys will appoint [ * ] representatives
to the Executive Committee. The chairperson will be a [ * ]representative.
A Party may change any of its representatives at any time by giving written
notice to the other Party.
2.2.2 RESPONSIBILITIES. The Executive Committee will oversee and
manage the relationship hereunder in the USA, including the JDC and the JMT. In
particular, the Executive Committee will:
(a) approve the Development Plan and the Development Budget
(both as defined in Section 3.2) and the Marketing Plan and the Marketing Budget
(both as defined in Section 8.2);
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(b) approve any deviation of [ * ] or more in the Development
Budget or the Marketing Budget;
(c) approve any material change in the Development Plan or the
Marketing Plan;
(d) coordinate the Parties' activities hereunder;
(e) resolve budget disputes referred by the JDC or JMT pursuant
to Section 2.7;
(f) decide whether to abandon for any reason the Development of
the Compound or the Back-Up Compound and substitute a Back-Up Compound or a
Back-Up Compound Candidate, as applicable;
(g) approve filing of the NDA; and
(h) perform such other functions as determined by the Parties.
2.2.3 MEETINGS AND VOTING. The Executive Committee will meet at such
times as a Party may request, but in no event less frequently than twice per
year, alternating between the principal places of business of the Parties and
will otherwise communicate regularly by telephone, facsimile and video
conference. Each Party recognizes the importance of the Executive Committee in
the success of the Co-Promotion and will use diligent efforts to cause all its
representatives to attend all meetings. The Executive Committee shall make
decisions by [ * ]. Voting by proxy is permissible. All decisions of the
Executive Committee shall be final and non-appealable. Additional
participants may be invited by any member to attend meetings where
appropriate (e.g., representatives of regulatory affairs or outside
consultants). Such additional participants shall have no vote.
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2.3 JOINT DEVELOPMENT COMMITTEE ("JDC").
2.3.1 COMPOSITION. Promptly after the Effective Date,
[ * ] representatives to the JDC. [ * ] will appoint the chairperson of the
JDC. A Party may change any of its representatives at any time by giving
written notice to the other Party.
2.3.2 RESPONSIBILITIES. The JDC shall be responsible for overseeing
and directing all aspects of the Development. In particular, the JDC shall:
(a) resolve problems and issues;
(b) facilitate the exchange of all Development information and
data;
(c) designate the individuals responsible for preparing the
Development Plan and the Development Budget (both as defined in Section 3.2);
(d) submit the Development Plan and the Development Budget to
the Executive Committee for approval together with any deviation in the
Development Budget of [ * ] or more and any material change in the Development
Plan;
(e) monitor compliance with the Development Plan and the
Development Budget and approve any deviation in the Development Budget of less
than [ * ] and any immaterial change in the Development Plan;
(f) allocate the Development activities among CoCensys, Searle
and Third Parties in accordance with this Agreement;
(g) agree on specifications for the Product and the processes
for manufacturing the Product;
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(h) oversee, directly or indirectly, all FDA filings and
recommend to the Executive Committee when it is appropriate to file the NDA;
(i) evaluate and select as the Back-Up Compound a Back-Up
Compound Candidate meeting the criteria set forth in Exhibit B; and
(j) approve and monitor the Development activities with respect
to the Back-Up Compound conducted pursuant to Article 4.
2.4 JOINT MARKETING TEAM ("JMT").
2.4.1 COMPOSITION. At least two (2) years before anticipated
Regulatory Approval in the USA, Searle will appoint [ * ] or more
representatives to the JMT [ * ] and CoCensys will appoint [ * ]. If Searle
appoints more than [ * ] representatives, CoCensys shall be entitled to
appoint [ * ]. [ * ] will appoint the chairperson of the JMT. [ * ] may add
more representatives and a Party may change any of its representatives at any
time by giving written notice to the other Party.
2.4.2 RESPONSIBILITIES. The JMT will:
(a) designate the individuals responsible for preparing the
Marketing Plan and the Marketing Budget (both as defined in Section 8.2);
(b) submit the Marketing Plan and the Marketing Budget to the
Executive Committee for approval together with any deviation in the Marketing
Budget of [ * ] or more and any material change in the Marketing Plan;
(c) monitor compliance with the Marketing Plan and the Marketing
Budget and approve any deviation in the Marketing Budget of
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less than [ * ] and any immaterial change in the Marketing Plan;
(d) review and approve Co-Promotion Expenses; and
(e) oversee the Co-Promotion as discussed in Article 8.
2.5 MEETINGS OF THE JDC AND THE JMT. The chairperson of the JDC or the
JMT shall call meetings when deemed appropriate, currently anticipated to be
no less frequently than once every three (3) months for the JDC and [ * ] for
the JMT. If possible, the meetings shall be held in person, or where
appropriate, by video or telephone conference. The chairperson shall
determine the form of the meeting. Additional participants may be invited by
any member to attend meetings where appropriate (E.G., representatives of
regulatory affairs or outside consultants). Such additional participants
shall have no vote. Minutes of each meeting of the JDC shall be exchanged
for review and comment by the members. Thereafter, they shall be signed by
the chairperson. CoCensys, [ * ] may have its representative(s) on the JMT
occupy space at Searle on a full-time basis in order to participate in JMT
activities.
2.6 VOTING OF THE JDC AND THE JMT. The JDC and the JMT shall make
decisions by [ * ]. Voting by proxy is permissible. Urgent matters
(including regulatory and adverse event matters) may be decided by unanimous
vote of the relevant chairperson and a representative designated by [ * ].
2.7 BUDGET DISPUTES. Any dispute arising in the JDC or the JMT
concerning the Development Budget or the Marketing Budget will be referred to
the Executive Committee if the JDC or the JMT is unable to resolve such
dispute to the satisfaction of all representatives within thirty (30) days.
All other decisions of the JDC or the JMT shall be final and non-appealable.
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ARTICLE 3. DEVELOPMENT.
3.1 GENERAL PRINCIPLES. The Parties agree to use diligent efforts to
develop the Compound for use in the Field, making use of each Party's special
expertise with the intent of obtaining world-wide Regulatory Approval and
bringing the Product to the market as soon as reasonably practicable. Each
Party shall ensure that its Development tasks are carried out adhering to the
highest ethical and safety standards. Each Party shall have the right to
decline to conduct any Development activity assigned to it. In such case, the
JDC shall determine whether the other Party is able to conduct such activity or
whether it will be contracted out to a Third Party. Although the JDC will have
no responsibilities for development or registration of the Compound or the
Product outside the USA, Searle shall keep the JDC reasonably informed
concerning its activities outside the USA.
3.2 DEVELOPMENT PLAN AND BUDGET. Promptly following the Effective Date,
the JDC shall initiate preparation of the development plan for the Development
(the "Development Plan") and a budget for proposed Development Costs (the
"Development Budget"). The Development Plan shall set time lines and priorities
for the various Development activities and identify which Party, or whether a
Third Party, is to be responsible for each activity. The Development Plan will
also include, to the extent practicable, the then-expected profile for the
Product, the desired labelling and the criteria for determining acceptable
requirements for filing the NDA. In preparing the Development Plan and the
Development Budget, the JDC shall ensure that there is adequate marketing input
and shall give due consideration to worldwide development of the Product. The
Development Budget and the Development Plan shall be updated as deemed
appropriate by the JDC, but in no event less frequently than [ * ]. The
Development Plan and the Development Budget and certain changes therein shall
be subject to approval of the Executive Committee as provided in sub-section
2.2.2.
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3.3 SCIENTIFIC FTE. In preparing the Development Budget and
determining Development Costs, the Parties will use a rate of [ * ].
"Scientific FTE" means the fully-loaded costs, including ordinary lab
supplies and any reasonable travel costs, but excluding general corporate
overhead, of a full-time scientific/technical person (or in the case of less
than a full-time dedicated person, a full-time equivalent
scientific/technical person year) dedicated to the Development as carried out
by an employee of either Party having skills in a biological, chemical or
physical science or in the areas of clinical research, statistics, project
management or regulatory affairs. Such rate shall be adjusted annually for
inflation based on changes in the Bureau of Labor Statistics Consumer Price
Index for Urban Wage Earners -- U.S. City Average, from the prior January 1st.
3.4 OTHER DEVELOPMENT. CoCensys shall not do any development work
(including development work [ * ]) on [ * ], except with the approval of the
Executive Committee. During the term of this Agreement, CoCensys will not
develop, have developed, license or collaborate with respect to any [ * ].
3.5 RIGHT OF FIRST OFFER. If CoCensys decides to grant rights in any
[ * ] in the Field, CoCensys shall first offer such rights to Searle and the
Parties shall negotiate the applicable terms in good faith. If the Parties
are unable to agree upon such terms within one hundred eighty (180) days
after Searle has received all such information in CoCensys' possession as is
reasonably necessary for Searle to make a decision, CoCensys shall be free to
offer such rights to a Third Party, provided such rights are [ * ]. This
Section shall not apply to any [ * ] to the extent the rights granted
hereunder are inconsistent with rights previously granted under the Research
and Development Agreement between CoCensys, Acea Pharmaceuticals, Inc. and
Ciba-Geigy Limited, dated December 23, 1994, or under the Research,
Development and Marketing Collaboration Agreement between CoCensys, Acea
Pharmaceuticals, Inc. and Warner-Lambert Company, dated October 26, 1995, as
such agreements are in effect as of the Effective Date.
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ARTICLE 4. DEVELOPMENT OF BACK-UP COMPOUND.
4.1 BACK-UP PROGRAM. Until the end of Phase I for the Compound, CoCensys
shall use its best efforts to present to the JDC for evaluation at least
[ * ] Back-Up Compound Candidates meeting the criteria set forth in Exhibit
B. During such time period, CoCensys shall submit to the JDC on an ongoing
basis all Back-Up Compound Candidates which meet such criteria and shall
provide the JDC periodic reports on the status of the Back-Up Program.
4.2 BACK-UP COMPOUND SELECTION AND DEVELOPMENT. The JDC shall evaluate
the Back-Up Compound Candidates and select one (1) as the Back-Up Compound.
Concurrently with the Development of the Compound, the JDC will conduct
pre-clinical Development of the Back-Up Compound as deemed appropriate by the
JDC.
4.3 MILESTONE PAYMENTS FOR BACK-UP COMPOUNDS. Each milestone payment
payable pursuant to Section 6.3 shall [ * ].
ARTICLE 5. FINANCING OF THE DEVELOPMENT.
5.1 SHARING OF DEVELOPMENT COSTS.
5.1.1 USA. CoCensys shall be responsible for [ * ] of the
Development Costs for pre-clinical and clinical studies deemed appropriate by
the JDC for obtaining Regulatory
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Approval in the USA and Searle shall be responsible for [ * ] thereof.
5.1.2 EX-USA. Searle shall bear all other costs for such Regulatory
Approvals outside the USA. Searle shall have the right to use all data,
studies and analyses from the Development for such Regulatory Approvals [ * ].
5.2 PAYMENT OF DEVELOPMENT COSTS. Each Party shall be responsible for
paying its Development Costs as set forth in the Development Plan and the
Development Budget. Within thirty (30) days after each calendar quarter,
each Party shall provide the JDC detailed information concerning the
Development Costs incurred by such Party during such quarter. Promptly after
receipt thereof, the JDC will determine the amount, if any, which either
Party has paid in excess of the amount to be borne by such Party for such
quarter pursuant to sub-section 5.1.1 (an "Overpayment"). In the event of an
Overpayment, the other Party shall pay the amount thereof to the Party making
the Overpayment within thirty (30) days after receipt of notice from the JDC,
but in no event shall such payment be due earlier than sixty (60) days after
the end of the relevant quarter.
ARTICLE 6. PAYMENTS TO COCENSYS.
6.1 UPFRONT FEE. Simultaneous with signature of this Agreement, Searle
shall pay CoCensys Three Million Dollars (US$3,000,000) which amount shall be
non-refundable.
6.2 EQUITY INVESTMENT. Simultaneously with signature of this Agreement,
Searle shall enter into the Stock Purchase Agreement in the form of Exhibit C
with CoCensys pursuant to which Searle shall purchase Seven Million Dollars
(US$7,000,000) worth of capital stock of CoCensys.
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6.3 MILESTONE PAYMENTS
6.3.1 [ * ]. Upon [ * ], Searle shall pay CoCensys [ * ].
6.3.2 [ * ]. At the date upon which [ * ], Searle shall pay
CoCensys [ * ].
6.3.3 [ * ]. At the date upon which [ * ], Searle shall pay
CoCensys [ * ].
6.3.4 [ * ]. Upon the first to occur of [ * ], Searle shall pay
CoCensys [ * ].
6.3.5 [ * ]. Upon [ * ], Searle shall pay CoCensys [ * ].
6.3.6 [ * ]. Upon [ * ], Searle shall pay CoCensys [ * ].
6.3.7 NON-REFUNDABILITY AND METHOD OF PAYMENT. All milestone
payments shall be non-refundable and shall be made by wire transfer to CoCensys
within thirty (30) days after the date of the event triggering the payment.
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ARTICLE 7. LICENSE GRANTS.
7.1 LICENSES TO SEARLE. CoCensys hereby grants Searle a license, with the
right to sub-license, under the Intellectual Property Rights to make, have made,
use, offer for sale, import and sell the Product in the Field in the USA, Japan
and the RoW. Such license shall be sole in the USA (i.e., exclusive except as
to CoCensys so long as the Parties are co-promoting the Product under Article 8)
and shall be exclusive in Japan and the RoW. Any sub-licensee of rights in the
USA shall be [ * ].
7.2 If either Party identifies, or becomes aware of, a therapeutic use
for the Product outside the Field [ * ], then Searle's license rights granted
under this Article shall be deemed [ * ] the Product for such indication
outside the Field. In addition to the foregoing, CoCensys and Searle may [ * ]
under terms and conditions to be negotiated by the Parties in good faith,
provided that such terms and conditions shall [ * ]. If CoCensys, elects [ * ]
to be negotiated by the Parties in good faith.
7.3 LICENSES UPON EXPIRATION. Upon expiration of the royalty obligations
in the USA set forth in Section 8.9 and upon expiration of the royalty
obligations in Japan and the RoW set forth in Section 9.3 or 9.4, as applicable,
on a country by country basis, Searle shall have [ * ] under any remaining
Intellectual Property Rights.
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ARTICLE 8. CO-PROMOTION.
8.1 CO-PROMOTION RIGHTS. CoCensys shall co-promote the Product with
Searle in the USA from initiation of pre-launch activities for the Product in
the USA until the expiration of the last to expire of the CoCensys Patent Rights
in the USA claiming the Compound per se. Each Party shall work diligently and
use the same effort such Party puts forth to promote other products of similar
commercial value to co-promote the Product.
8.2 MARKETING PLAN AND BUDGET. No later than six (6) months after
filing of the NDA, the JMT shall initiate preparation of a marketing plan
(the "Marketing Plan") and a marketing budget (the "Marketing Budget"). The
Marketing Plan and the Marketing Budget will describe, to the extent
practicable, the proposed plan for commercialization of the Product,
including overall marketing strategy, anticipated marketing, sales and
promotion efforts by each Party, market and sales forecasts, pricing and
discounting analysis and estimated launch date, as well as advertising and
other promotional materials to be used in the Co-Promotion. The Marketing
Budget will include projected Co-Promotion Expenses. The Marketing Plan and
the Marketing Budget shall be updated as deemed appropriate by the JMT, but
in no event less frequently than annually. The Marketing Plan and the
Marketing Budget and certain changes therein shall be subject to approval of
the Executive Committee as provided in sub-section 2.2.2.
8.3 CO-PROMOTION EXPENSES. CoCensys shall be responsible for
[ * ] of all Co-Promotion Expenses and Searle shall be responsible for [ * ]
thereof.
8.4 CO-PROMOTION PROFITS AND LOSSES.
8.4.1 PROFITS. If Net Sales during any calendar quarter exceed Co-
Promotion Expenses during such quarter, such excess shall be allocated [ * ]
and then to pay each Party an amount equal to
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[ * ].
8.4.2 LOSSES. If Net Sales are less than Co-Promotion Expenses
during any calendar quarter, Net Sales shall be allocated to partially
reimburse each Party so that [ * ].
8.5 PAYMENT AND REPORTING. Within thirty (30) days after each calendar
quarter, or earlier if possible, during the Co-Promotion, CoCensys shall
furnish Searle a statement setting forth its Co-Promotion Expenses incurred
in such quarter. Within sixty (60) days after each calendar quarter, or
earlier if possible, during the Co-Promotion, Searle shall furnish CoCensys a
statement (the "P&L Statement") setting forth Net Sales in the USA and all
data on which the determination of Co-Promotion Profit was calculated. If
either Party owes an amount to the other Party pursuant to Section 8.4, it
shall make such payment within thirty (30) days after receipt of the P&L
Statement, but in no event shall such payment be due earlier than sixty (60)
days after the end of the relevant quarter.
8.6 PROMOTION. Searle shall have the primary responsibility for
promoting the Product to [ * ]. CoCensys shall have the primary
responsibility for promoting the Product to [ * ] and, subject to Section
8.3, will maintain appropriate capacity in its sales force for such
promotion. In addition, CoCensys shall provide [ * ] (as defined in the
following two sentences) of the [ * ]. [ * ] means that CoCensys shall [ * ]
but in no case shall CoCensys [ * ]. Unless decided otherwise by the JMT,
CoCensys shall [ * ]. During the first year of commercialization of the
Product, Searle will assist CoCensys in [ * ]. Although Searle shall not be
responsible for [ * ], in no case shall Searle be precluded from
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[ * ].
8.7 PROMOTIONAL AND ADVERTISING MATERIALS. All promotional and
advertising materials shall be consistent with the relevant Marketing Plan and
Marketing Budget. Neither Party shall make any claim or representation in
respect of the Product that has not been approved by the JMT. In any such
materials which identify either Party, the Parties will be presented and
described to the medical communities (including, for example, the physician,
pharmacy, governmental, reimbursement and hospital sectors) as joining in the
Co-Promotion. All such materials and all documentary information, promotional
material and oral presentations (where practical) regarding the Co-Promotion
will display the Searle and CoCensys names and logos with equal prominence as
permitted by applicable law.
8.8 ORDERS AND SALES. All customer orders for and returns of the
Product shall be received and processed by Searle. CoCensys shall promptly
transmit any such orders that it receives to Searle. All sales of the
Product will be completed, distributed, accounted for, billed and booked by
Searle.
8.9 ROYALTIES UPON EXPIRATION OF CO-PROMOTION. In consideration of the
license of the remaining Intellectual Property Rights, Searle shall pay CoCensys
royalties on Net Sales in the USA beginning after
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expiration of CoCensys' right to co-promote the Product as provided in the first
sentence of Section 8.1 as follows:
Year Following Expiration Royalty Rate
------------------------- -------------
[ * ] [ * ]
Such royalties shall be subject to Section 8.10 and shall only be payable if
[ * ] (subject to Section 15.5).
8.10 ROYALTY ADJUSTMENTS. If at any time [ * ] (as defined in the
following sentence) in [ * ] is [ * ] while Searle is paying royalties under
Section 8.9, the royalty rate applicable to sales in [ * ] shall be [ * ];
provided, however, that in no event shall such royalty rate [ * ]. [ * ]
means the amount determined by [ * ] and the applicable royalty rate set
forth in Section 8.9 [ * ]. If improvements proposed by CoCensys are
implemented by either Party or any Third Party for manufacture of the Product
which [ * ] of the Product, such that [ * ] is [ * ], Searle shall pay
CoCensys, in addition to the royalty at the rate set forth in Section 8.9
above, an amount equal to [ * ] of the amount by which the [ * ] during the
relevant payment period.
ARTICLE 9. MARKETING AND ROYALTIES IN JAPAN AND THE ROW.
9.1 MARKETING BY SEARLE. Searle shall have exclusive rights and
discretion with respect to development, registration, distribution and
commercialization of the Product in Japan and the RoW. Searle shall
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use the same efforts as with its comparable products to market, sell and
distribute the Product at its discretion in such countries.
9.2 REGULATORY AND COMMERCIAL DILIGENCE.
9.2.1 JAPAN. Within [ * ] of commencing [ * ] for the Compound in
the USA or Europe, Searle will use best efforts to commence the equivalent of
[ * ] required for Regulatory Approval in Japan.
9.2.2 EX-USA. Searle will file for Regulatory Approval in the
countries in the RoW and Japan in which Searle intends to market the Product and
will use best efforts to launch the Product in such countries after receipt of
Regulatory Approval, all in such time frame as is normal and customary in the
pharmaceutical industry. Annually, Searle shall notify CoCensys of any country
in which it determines not to market the Product.
9.3 ROYALTIES IN THE RoW AND JAPAN.
9.3.1 ROYALTIES IN THE RoW. Subject to Sections 9.4 and 9.5, Searle
shall pay CoCensys royalties in the RoW on a country by country basis of [ * ]
until the [ * ].
9.3.2 ROYALTY IN JAPAN. Subject to Sections 9.4 and 9.5, Searle shall
pay CoCensys royalties in Japan of [ * ] until [ * ].
9.4 NON-PATENT COUNTRIES. If Searle sells the Product in Japan or in any
country in the RoW in which no CoCensys Patent Rights claiming the Compound per
se have issued in such country as of the date of first commercial sale, the
royalty rate payable in such country under Section 9.3 shall be [ * ]
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unless and until such a patent issues, in which case Searle shall thereafter pay
royalties in such country as provided in Section 9.3. Such royalty shall be
subject to Section 9.5 and shall be payable [ * ].
9.5 ROYALTY ADJUSTMENTS. If at any time [ * ] (as defined in the
following sentence) [ * ] is [ * ], the royalty rate applicable to sales in
such country shall [ * ]; provided, however, that in no event shall such
royalty rate [ * ] under Section 9.3 or [ * ] under Section 9.4. [ * ] means
the amount determined by [ * ] and the applicable royalty rate set forth in
Section 9.3 or Section 9.4 [ * ]. If improvements proposed by CoCensys are
implemented by either Party or any Third Party for manufacture of the Product
which [ * ] of the Product, such that [ * ] is [ * ], Searle shall pay
CoCensys, in addition to the royalty at the rate set forth in Section 9.3 or
Section 9.4 above, an amount equal to [ * ] of the amount by which the [ * ]
during the relevant payment periods.
ARTICLE 10. ACCOUNTS, RECORDS AND PAYMENT OF ROYALTIES.
10.1 RECORDS. Each Party shall keep accurate books and records in
connection with the manufacture, use and/or sale by or for it of the Product in
sufficient detail to permit accurate determination of all figures necessary for
verification of Development Costs, Co-Promotion Expenses, royalties, profits and
other amounts payable hereunder. Searle and CoCensys shall maintain such
records for three (3) years after the year in which they were generated.
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10.2 AUDITS. A Party, at its expense, through a certified public
accountant reasonably acceptable to the other Party, shall have the right to
access the books and records of the other Party, and to make copies thereof,
for the sole purpose of verifying such statements. Such access shall be
conducted after reasonable prior written notice to the Party during ordinary
business hours and shall not be more frequent than once during each calendar
year. Each Party's right to have such records examined shall survive
termination or expiry of this Agreement for three (3) calendar years. If
such audit reveals an underpayment of [ * ] or more of the amount due, the
audited Party shall reimburse the auditing Party for the costs of such audit
in addition to promptly paying the amount of the underpayment to the auditing
Party.
10.3 FOREIGN EXCHANGE. For computing Net Sales for Product sold in a
currency other than US Dollars and determining Development Costs or Co-Promotion
Expenses incurred in a currency other than US Dollars, such currency shall be
converted into US Dollars in accordance with Searle's customary and usual
translation procedures, consistently applied.
10.4 PAYMENTS OF ROYALTIES. Searle or its Affiliate(s) or CoCensys, as
applicable, shall pay the royalties due under this Agreement within [ * ] to
such bank as the receiving Party shall designate in writing. Within the same
period, the paying Party shall furnish the receiving Party a written
statement setting forth total Net Sales during the relevant calendar quarter
on a country-by-country basis and the amount of royalty due thereon. Such
royalties shall be net of all taxes, duties or other amounts which the paying
Party is required to pay on behalf of the receiving Party. The paying Party
shall provide the receiving Party certificates or receipts evidencing the
same.
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ARTICLE 11. TRADEMARKS.
11.1 TRADEMARK IN THE USA. The JMT shall select the Trademark for the
Product in the USA, taking into consideration the global marketing requirements
of the Product. Searle shall own the Trademark. Upon expiration of the
period of Co-Promotion, Searle shall have the exclusive right to use the
Trademark.
11.2 TRADEMARK(S) IN JAPAN AND THE RoW. Searle shall select and own the
trademark(s) for marketing the Product in Japan and the RoW, taking into
consideration the Trademark. All expenses for registering and defending the
trademark(s) in Japan or the RoW shall be borne by Searle. After termination of
this Agreement, Searle shall continue to have unrestricted ownership of such
trademark(s).
ARTICLE 12. MANUFACTURE
12.1 MANUFACTURE FOR CLINICAL TRIALS THROUGH PHASE II. [ * ] shall
supply the Product in bulk form for conducting the Development through Phase
II. In addition, [ * ] shall be responsible for establishing the commercial
manufacturing process for the Product in such timely way as to ensure
adequate clinical supplies for the Product to enter Phase III clinical
trials. The JDC shall be responsible for arranging for manufacture of the
Product in finished form for conducting the Development through Phase II.
12.2 MANUFACTURE FOR PHASE III CLINICAL TRIALS AND SALES. [ * ] may
manufacture the Product or have it manufactured for conducting the
Development for Phase III and/or for sale in the USA, Japan and the RoW, or
may purchase the Product in bulk or finished form from [ * ] at its Cost of
Manufacture, where [ * ] possesses such capacity. If [ * ] manufactures the
Product, it shall be provided for sale in the USA at [ * ] Cost of
Manufacture. In order to ensure an uninterrupted supply of Product under
extraordinary circumstances, the Parties intend to establish a second source
for the USA, which [ * ] shall have the right to establish. If [ * ] intends
to establish a second source for the Product to be sold in Japan and the RoW,
it shall favorably consider [ * ] facilities or sourcs for that purpose. Any
Third Party manufacturer of the Product shall be subject to approval of the
Parties, which approval shall not be unreasonably withheld. [ * ] shall
favorably consider [ * ] as a Third Party manufacturer of the Product in bulk
form.
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ARTICLE 13. INTELLECTUAL PROPERTY RIGHTS.
13.1 PATENTABLE INVENTIONS. Each Party shall own all Inventions (as
defined in this sub-section) made solely by its employees and agents and all
patent applications and patents claiming such Inventions. All Inventions made
jointly by employees or agents of the Parties and all patent applications and
patents claiming such Inventions shall be owned jointly by the Parties.
"Invention" means an invention conceived in the course of and within the scope
of the Development and reduced to practice during the term of this Agreement.
The Party owning an Invention shall make the final decision with respect to any
patent filings. With respect to jointly owned Inventions, the JDC shall
determine which Party shall file and prosecute any patent applications
thereon. The expenses therefor shall be [ * ]
13.2 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS. Each Party, [ * ],
shall be responsible for filing, prosecuting and maintaining its Patent
Rights. If a Party decides not to pursue patent protection for any invention
claimed in any patent application or patent within the Patent Rights
(including any Invention) in any country, it shall give the other Party
reasonable notice to this effect. The other Party, [ * ], may file,
prosecute or maintain a patent application or patent covering such invention
in its name in such country subject to the rights of any Third Party licensor.
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13.3 PATENT EXTENSIONS. The Party holding a Patent Right, if requested by
and with the assistance of the other Party, shall apply in a timely manner for
such patent term extensions or supplemental protection certificates for such
Patent Right as are available under any applicable legislation. All expenses
incurred in connection with such patent term extensions or supplemental
protection certificates shall be: [ * ].
13.4 COOPERATION. Each Party shall sign or have its appropriate employees
and agents sign such documents as may be necessary to obtain, perfect or
maintain any Patent Rights filed or to be filed pursuant to this Agreement, and
shall furnish all information in its possession reasonably necessary in
connection therewith.
13.5 INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.
13.5.1
(a) If either Party becomes aware of any infringement or
threatened infringement or misappropriation of any Intellectual Property Rights,
it shall promptly notify the other Party in writing. The Party holding such
Intellectual Property Rights, at its expense (subject to sub-section 13.5.1(d)),
shall have the right, but not the obligation, to institute, prosecute and
control any legal proceeding in its name and by its counsel to prevent or
restrain such infringement. The other Party, [ * ], may be represented by
its counsel. If a Party brings any such proceeding, the other Party may be
joined as a party plaintiff. In such case, the other Party will give the
first Party reasonable assistance and authority to file and prosecute such
suit.
(b) Notwithstanding the foregoing, the JDC or the JMT, as
appropriate, shall determine which party shall have the primary right and
responsibility (but not the obligation) to
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institute, prosecute, and control any proceeding with respect to infringement or
misappropriation of jointly owned Intellectual Property Rights. The other
Party, [ * ], may be represented by its counsel.
(c) If one Party alone asserts Intellectual Property Rights,
[ * ], any damages and costs recovered in any proceeding or by way of
settlement under sub-section 13.5.1(a) and (b) above or sub-section 13.5.2
shall [ * ].
(d) If both Parties participate in asserting the Intellectual
Property Rights, the costs and expenses of all suits under this sub-section
shall be [ * ]. Any remaining damages shall be [ * ].
13.5.2 If the Party having the primary right to institute,
prosecute and control any proceeding under sub-section 13.5.1 fails to do so
within one hundred twenty (120) days after receiving notice of the
infringement or if such Party, after initiating an action, determines to
discontinue such action, the other Party, at its expense, may bring and
control or take over any such action by its counsel, unless prevented from
doing so by applicable laws.
13.5.3 In connection with any proposed settlement in respect of any
infringement or threatened infringement of any Intellectual Property Rights, the
Party intending to settle shall notify and consult with the other Party as to
the terms of settlement, whose written consent shall be required prior to any
such settlement, such consent shall not be unreasonably withheld.
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13.5.4 In connection with any action taken by either Party against a
Third Party to protect or enforce any Intellectual Property Rights, the other
Party shall, if requested, consult with the Party taking such action, and make
available as witnesses its employees or as evidence any materials and/or data as
are reasonably necessary for the furtherance of such action. The expenses in
connection with the providing of witnesses and/or the making available of any
materials and/or data shall be [ * ].
13.6 INFRINGEMENT OF THIRD PARTY PATENT RIGHTS
13.6.1 If either Party believes that it cannot commercially make,
import, use, market and/or sell the Product under the Intellectual Property
Rights without infringing a Third Party's patent, it shall notify the other
Party. The Parties then shall seek an opinion of patent counsel acceptable
to both Parties. If such counsel does not concur with the notifying Party's
opinion, the Parties shall proceed in accordance with the terms of this
Agreement. If such counsel concurs with the notifying Party's opinion, they
shall jointly endeavor to secure a license from the Third Party on terms
acceptable to both Parties. Any royalties payable by Searle in Japan or the
RoW under any such Third Party license shall be [ * ]. Any royalties payable
by either Party in the USA under any such Third Party license shall be [ * ].
13.6.2 If either Party is sued for patent infringement of any Third
Party patents arising out of the manufacture, use, sale or importation of the
Product, the Parties shall promptly meet to discuss the course of action to be
taken to resolve or defend any such infringement litigation. Each Party shall
provide the other with such assistance as is reasonably necessary and shall
cooperate in the defense of any such action. Any expense of defending such
action and any damages and/or other compensation imposed shall be handled as
provided in sub-section 13.6.1 with respect to Third Party royalties in Japan
and RoW, and in the USA, respectively.
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ARTICLE 14. REGULATORY AFFAIRS.
14.1 REGULATORY APPROVALS.
14.1.1 USA. The NDA shall be filed in accordance with a decision
of the Executive Committee. Searle shall own the IND and the NDA. CoCensys
shall have the right of reference to the NDA to the extent necessary to
exercise its rights and meet its obligations hereunder.
14.1.2 JAPAN AND THE RoW. Subject to Section 9.2, the filing of
Regulatory Approvals in Japan and the RoW shall be made by decision of Searle
alone. Searle shall own such Regulatory Approvals, and CoCensys shall have the
right of reference thereto to the extent necessary to meet its manufacturing
obligations under this Agreement.
14.2 COMMUNICATIONS WITH REGULATORY AGENCIES.
14.2.1 USA. [ * ] shall be responsible for all communications
with regulatory agencies in the USA, subject to keeping the JDC or the JMT,
as appropriate, informed. [ * ] shall maintain a single database of clinical
trial material accumulated by both Parties in the course of the Development.
The JDC shall develop a procedure for exchanging such data.
14.2.2 JAPAN AND THE RoW. Searle will inform CoCensys promptly of
communications between Searle and any regulatory agencies in Japan and the RoW
insofar as such communications may affect the Regulatory Approval in the USA.
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ARTICLE 15. TERM AND TERMINATION.
15.1 TERM. Subject to Sections 15.2, 15.3, 15.4 and 15.5, this Agreement
shall be in effect from the Effective Date and shall continue in effect until
Searle is no longer obligated to pay royalties hereunder.
15.2 TERMINATION FOR BREACH.
15.2.1 NOTICE. Either Party may terminate this Agreement upon
[ * ] written notice if the other Party commits a material breach of its
obligations to pay any amount due hereunder and does not remedy such breach
within said [ * ]. Either Party may also terminate this Agreement upon [ * ]
written notice if the other Party commits a material breach of any obligation
other than to pay an amount hereunder and does not remedy such breach within
said [ * ].
15.2.2 BREACH BY SEARLE. If termination is due to a breach by
Searle, Searle's rights granted hereunder shall terminate; provided, that if
such termination occurs [ * ], [ * ] shall pay [ * ].
15.2.3 BREACH BY COCENSYS. If termination is due to a breach by
CoCensys, Searle's rights hereunder shall [ * ]:
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[ * ]
15.3 VOLUNTARY TERMINATION OF THE DEVELOPMENT.
15.3.1 NOTICE. Either Party unilaterally may terminate its
participation in the Development provided the Party so terminating gives the
other Party as much advance notice as reasonably possible. In no event shall
such notice be less than one hundred eighty (180) days. The Parties shall
cooperate in good faith to wind-down the Development in order to minimize
disruption of the Development efforts.
15.3.2 TERMINATION BY SEARLE. In the event of termination by
Searle, Searle's rights granted hereunder shall terminate; provided, that if
such termination occurs [ * ], CoCensys shall pay Searle a royalty equal to
[ * ] of its worldwide Net Sales of the Product up to an aggregate amount
equal to the [ * ].
15.3.3 TERMINATION BY COCENSYS. In the event of termination by
CoCensys, Searle's rights hereunder shall become [ * ], subject to payment to
CoCensys of royalties under Sections 9.3 and 9.4 and subject to payment to
CoCensys of a royalty on Net Sales in the USA until [ * ] per se calculated
as follows:
Effective Date of
Termination Royalty Rate
------------------ ------------
After Effective Date but
prior to [ * ] [ * ]
After [ * ] but prior to
[ * ] [ * ]
Any time thereafter [ * ]
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15.4 VOLUNTARY TERMINATION OF CO-PROMOTION.
15.4.1 NOTICE. Either Party unilaterally may terminate its
participation in the Co-Promotion upon ninety (90) days' notice.
15.4.2 TERMINATION BY COCENSYS. In the event of termination by
CoCensys, Searle's rights hereunder shall become [ * ], subject to payment to
CoCensys of royalties under Sections 9.3 and 9.4 and subject to payment to
CoCensys of a royalty on Net Sales in the USA until [ * ] per se calculated
as follows:
Effective Date of
Termination Royalty Rate
------------------ ------------
After [ * ] but prior to
[ * ] [ * ]
Any time thereafter [ * ]
15.4.3 TERMINATION BY SEARLE. In the event of termination by Searle,
Searle's rights granted hereunder shall terminate; provided, that if such
termination occurs [ * ], CoCensys shall pay Searle a royalty equal to [ * ]
of its worldwide Net Sales of the Product up to an aggregate amount equal to
the [ * ].
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15.5 CHANGE IN CONTROL.
15.5.1 In the event of a Change of Control (as defined below) of
[ * ] shall promptly notify [ * ] of such Change in Control. [ * ] shall have
the right upon written notice to [ * ] to [ * ]. "Change in Control" means:
(a) a merger or consolidation in which [ * ] is not the surviving
corporation; (b) a reverse merger in which [ * ] is the surviving corporation
but the shares of [ * ] voting stock outstanding immediately before the
merger are converted by virtue of the merger into other property, whether in
the form of securities, cash or otherwise; or (c) any person holds and/or may
vote in excess of fifty percent (50%) of [ * ] voting stock.
15.5.2 Within thirty (30) days after receipt of [ * ] notice, the
Parties shall jointly select an arbitrator (the "Arbitrator") who shall be a
Third Party with significant qualifications and experience in the
pharmaceutical industry. Within thirty (30) days after appointment of the
Arbitrator, each Party, at its expense, shall develop and submit to the
Arbitrator, and to the other Party, its [ * ]. Each such [ * ] and shall
include the methodology and data used in determining such [ * ] and any other
relevant information. Within fifteen (15) days after receipt of such
information from both Parties, the Arbitrator shall [ * ] and shall notify
the Parties of its [ * ]. The [ * ] so selected shall be deemed the [ * ].
15.5.3 Within fifteen (15) days after selection of the [ * ], [ * ]
will notify [ * ] as to whether it wishes to [ * ]. If [ * ] elects not to
[ * ], the Parties will continue to co-promote under this Agreement and [ * ]
will pay [ * ]. If [ * ] elects to [ * ], the [ * ] shall be divided by the
[ * ], subject to a maximum of [ * ]. The first such installment shall be
payable on the date [ * ] makes its election hereunder and each subsequent
installment shall be payable on each anniversary of such date until the [ * ]
is paid in full. If [ * ] elects to [ * ], the Parties will [ * ] associated
with the Arbitrator.
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15.6 ROYALTY ADJUSTMENTS. If at any time [ * ] (as defined in the
following sentence) in [ * ] is [ * ] while Searle is paying a royalty
pursuant to this Article 15, the royalty rate applicable to sales in [ * ]
shall be [ * ]; provided, however, that in no event shall such royalty rate
be [ * ]. [ * ] means the amount determined by [ * ] and the applicable
royalty rate from [ * ].
15.7 BANKRUPTCY. All rights and licenses granted pursuant to this
Agreement by CoCensys to Searle are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101(52) of the Bankruptcy Code.
Searle, as licensee of such rights, shall retain and may fully exercise all of
its rights and elections under the Bankruptcy Code. If a bankruptcy proceeding
is commenced by or against CoCensys under the Bankruptcy Code, Searle 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
Searle: (a) upon any such commencement of a bankruptcy proceeding upon written
request by Searle, unless CoCensys elects to continue to perform all its
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obligations under this Agreement pending any rejection or assumption of this
Agreement; or (b) if not delivered under (a) above, upon the rejection of this
Agreement by or on behalf of CoCensys upon written request by Searle.
15.8 SURVIVAL AND EFFECT OF TERMINATION. The provisions of Articles
7 (unless this Agreement shall be terminated by CoCensys pursuant to sub-section
15.2.1 or by Searle pursuant to sub-section 15.3.1 or 15.4.1), 15 and 18 and
Sections 10.1 and 10.2 shall survive termination or expiration of this
Agreement. Termination or expiration of this Agreement shall not deprive either
Party of any rights or remedies either at law or in equity or relieve either
Party of any of its obligations incurred prior to such termination or
expiration.
ARTICLE 16. ASSIGNMENT.
16.1 ASSIGNMENT TO AFFILIATES. Either Party may assign any of its rights
or obligations under this Agreement in any country to any of its Affiliates
provided the assigning Party guarantees performance of such obligations.
16.2 OTHER PERMITTED ASSIGNMENTS. Searle may name such distributors,
agents and co-marketing or co-promotion partners for the Product as it deems
appropriate [ * ] may assign its rights or obligations under this Agreement
in connection with a merger or reorganization or the sale of all or
substantially all of its assets.
16.3 BINDING NATURE OF ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of the Parties.
Any assignment not in accordance with this Article shall be void.
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ARTICLE 17. WARRANTIES AND REPRESENTATIONS.
17.1 WARRANTIES AND REPRESENTATIONS. Each Party warrants to the other
that:
(a) it has full power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(b) the execution and delivery by it of this Agreement and the
performance of its obligations hereunder have been duly approved by all
necessary corporate action; do not require any shareholder action or the
approval and consent of any trustee or the holders of any indebtedness which has
not been obtained; do not and will not contravene any law, regulation, rules or
order binding on it; and do not and will not contravene the provisions of, or
constitute an act of default under, any debenture, mortgage contract or other
agreement or instrument to which it is a party; and
(c) it will perform all its obligations hereunder in material
compliance with all applicable laws, including the Act.
In addition, CoCensys warrants that CoCensys is not party to any Agreement
applicable to the rights granted hereunder, [ * ]. CoCensys, [ * ], shall be
responsible for satisfying all obligations thereunder.
17.2 EXISTING PROMOTION AGREEMENTS. Searle acknowledges and understands
that CoCensys has entered into a Promotion Agreement with Ciba-Geigy
Corporation, dated May 11, 1994; a Promotion Agreement with Parke-Davis, a
division of Warner-Lambert Company, dated October 26, 1995; and a Promotion
Agreement with Somerset Pharmaceuticals, dated January 4, 1996 (collectively,
the "Existing Promotion Agreements") and that such agreements contain
obligations on the part of CoCensys
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with respect to the exclusivity of the CoCensys sales force. Given the
timeline for development and commercialization of any Product arising under
this Agreement, CoCensys believes that each of the Existing Promotion
Agreements will have expired at the time any Product is first sold
commercially. In the event such expiration has not occurred, CoCensys will
give sufficient notice of early termination under each of the Existing
Promotion Agreements so that CoCensys will not be in violation of any such
agreements at the time the Product is actually commercialized.
17.3 USC/ROCKEFELLER LICENSE. Searle acknowledges and understands that
certain technology sublicensed to Searle hereunder was licensed to CoCensys
under the terms of the Exclusive License Agreement among CoCensys, the
University of Southern California and the Rockefeller University (the
"USC/Rockefeller License"), a copy of which has been provided to Searle.
CoCensys has received a [ * ], permitting CoCensys to grant such sublicense
assuming certain conditions precedent are met. Promptly after the Effective
Date, the Parties will work together, in good faith, [ * ] with the
University of Southern California and, if deemed necessary by either Party,
the Rockefeller University, (a) to [ * ] and (b) to provide that [ * ] in the
event [ * ].
ARTICLE 18. CONFIDENTIAL INFORMATION.
18.1 INFORMATION. Each Party shall keep all information received from the
other Party (the "Information") confidential and shall not disclose nor use the
Information without the other Party's written consent except to the extent
contemplated by this Agreement.
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This restriction shall not, however, prevent disclosure of the Information if
and to the extent that disclosure is required by law, PROVIDED that the
disclosing Party informs the other Party without delay of any such requirement
to allow such other Party to object to such disclosure and to seek an
appropriate protective order or similar protection prior to disclosure. This
obligation shall survive for five (5) years after termination or expiration of
this Agreement.
18.2 EXCEPTIONS. The above obligations shall not apply or shall cease to
apply if such Information:
(a) has become generally available to the public otherwise than
through violation of this Agreement;
(b) was already in the recipient's possession prior to its
acquisition from the disclosing Party;
(c) has been received from a Third Party who did not acquire it
directly or indirectly from the disclosing Party; or
(d) has been independently developed by the receiving Party
without the aid or use of Information of the disclosing Party.
18.3 PERMITTED DISCLOSURES. Information may be disclosed to employees,
agents, consultants, sublicensees or suppliers of the recipient Party or its
Affiliates, but only to the extent required to accomplish the purposes of this
Agreement and only if the recipient Party obtains prior agreement from the
recipients to hold in confidence and not use such information for any purpose
other than those permitted by this Agreement. Each Party will use at least the
same standard of care as it uses to protect proprietary or confidential
information of its own to ensure that such recipients do not disclose or make
any unauthorized use of the Information.
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18.4 PUBLICITY AND DISCLOSURE OF AGREEMENT. All publicity relating to
this Agreement shall be subject to the approval of both Parties. Except as
required by law, neither Party shall disclose any non-public information with
respect to the terms of this Agreement or concerning the collaboration hereunder
without the prior written consent of the other Party, which consent will not be
unreasonably withheld or delayed. Notwithstanding any other provision of this
Agreement, each Party may disclose the terms of this Agreement to lenders,
investment bankers and other financial institutions solely for purposes of
financing its operations if the disclosing Party uses reasonable efforts to
obtain a signed confidentiality agreement with such financial institution with
respect to such information, upon terms substantially similar to those contained
in this Section.
18.5 PUBLICATION. The Parties shall cooperate in appropriate publication
of the results of research and development work performed pursuant to this
Agreement, subject to the predominating interest in obtaining patent protection
for any patentable subject matter. Prior to any public disclosure of such
results, the Party proposing disclosure shall send the other Party a copy of the
information to be disclosed. The other Party shall have thirty (30) days from
receipt to determine whether the information to be disclosed contains subject
matter for which patent protection should be sought prior to disclosure, or
otherwise contains Information of the reviewing Party which such Party desires
to maintain as a trade secret. If notification is not received during the
thirty (30) day period, the Party proposing disclosure shall be free to proceed
with the disclosure. If due to a valid business reason or a belief by the non-
disclosing Party that the disclosure contains subject matter for which a
patentable invention should be sought, then prior to the expiration of the
thirty (30) day period, the non-disclosing Party shall so notify the disclosing
Party, who shall then delay public disclosure of the information for an
additional period of up to [ * ] to permit the preparation and filing of a
patent application on the
[ * ] Confidential Treatment Requested
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subject matter to be disclosed or other action to be taken. The Party proposing
disclosure shall thereafter be free to publish or disclose the information. The
determination of authorship for any paper shall be in accordance with accepted
scientific practice.
ARTICLE 19. MISCELLANEOUS.
19.1 WAIVER. The failure by either Party to require performance by the
other Party of any of its obligations hereunder shall in no manner affect the
right of such Party to enforce the same at a later time. No waiver by either
Party of any condition, or of the breach of any provision of this Agreement,
whether by conduct or otherwise shall be deemed to be or construed as a further
or continuing waiver thereof.
19.2 AMENDMENTS. This Agreement may not be amended except in writing by
the Party to be charged.
19.3 SEVERABILITY. If any provision of this Agreement is held invalid or
unenforceable, such provision shall be deleted, and, if possible, replaced by a
provision which achieves the intent of the Parties.
19.4 RELATIONSHIP BETWEEN THE PARTIES. Nothing in this Agreement is
intended nor shall be construed to constitute CoCensys or Searle as partners or
joint venturers. Neither Party shall have the express or implied authority to
assume or create any obligations on behalf of or in the name of the other Party.
19.5 CORRESPONDENCE AND NOTICES. Extraordinary notices and communications
(including but not limited to notices of termination, force majeure, material
breach, change of address) shall be in writing and sent by prepaid registered or
certified air mail, or by facsimile
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confirmed by prepaid registered or certified air mail letter, and shall be
deemed to have been property served to the addressee upon receipt of such
written communication.
In the case of CoCensys, such address shall be:
CoCensys, Inc.
213 Technology Drive
Irvine, California 92718, USA
Attn: Chief Executive Officer
and in the case of Searle, such address shall be:
G. D. Searle & Co.
5200 Old Orchard Road
Skokie, Illinois 60077
Attn: Chief Executive Officer
cc: General Counsel
19.6 CHOICE OF LAW. This Agreement is subject to and governed by the laws
of Delaware (except the choice of laws rules).
19.7 FORCE MAJEURE. Neither Party shall be liable to the other for delay
or failure in performing any of its obligations if and to the extent that such
failure or delay is due to circumstances beyond its control which it could not
have avoided by the exercise of reasonable diligence. It shall notify the other
Party promptly should such circumstances arise, giving an indication of the
likely extent and duration thereof, and shall use all commercially reasonable
efforts to resume performance of its obligations as soon as practicable.
19.8 ENTIRE AGREEMENT. This Agreement together with its Exhibits and
further agreements mentioned herein constitutes the entire agreement of the
Parties with respect to the subject matter hereof as of its date, and supersedes
all prior agreements, understandings, representations and proposals, written or
oral, relating thereto.
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19.9 REGISTRATION AND FILING OF THE AGREEMENT. To the extent, if any,
that a Party concludes in good faith that it is required to file or register
this Agreement or a notification thereof with any governmental authority,
including without limitation the U.S. Securities and Exchange Commission, the
Competition Directorate of the Commission of the European Communities or the
U.S. Federal Trade Commission, in accordance with applicable laws and
regulations, such Party may do so, and the other Party shall cooperate in such
filing or notification and shall execute all documents reasonably required in
connection therewith. In such situation, the Parties will request confidential
treatment of sensitive provisions of the Agreement, to the extent permitted by
law. The Parties shall promptly inform each other as to the activities or
inquiries of any such governmental authority relating to this Agreement, and
shall cooperate to respond to any request for further information therefrom.
Without limiting the foregoing, the Parties agree to make all necessary filings
required under the Hart-Scott-Rodino Antitrust Improvements act of 1976, as
amended, and to cooperate with each other so as to comply therewith on a timely
basis in light of the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement effective as of
the year first set forth above.
G.D. SEARLE & CO. COCENSYS, INC.
By: /s/ R. U. De Schutter By: /s/ Daniel L. Korpolinski
---------------------------- ---------------------------
R. U. De Schutter Daniel L. Korpolinski
Chairman and Chief Executive President & Chief
Officer and President Executive Officer
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EXHIBIT A
CO-CENSYS PATENT RIGHTS
U.S. Patent/Application Foreign Counterparts
----------------------- --------------------
[ * ] [ * ]
__________________________
[ * ]
(continued on next page)
[ * ] Confidential Treatment Requested
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EXHIBIT A
CO-CENSYS PATENT RIGHTS
_________________________
[ * ]
[ * ] Confidential Treatment Requested
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<PAGE>
EXHIBIT B
TARGET CRITERIA FOR BACK-UP COMPOUND CANDIDATES
[ * ]
[ * ] Confidential Treatment Requested
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