<PAGE>
SECURITIES EXCHANGE AND COMMISSION
Washington, D. C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DECEMBER 15, 1996
Date of Report (DATE OF EARLIEST EVENT REPORTED)
COCENSYS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-20954 33-0538836
(Commission File Number) (IRS Employer Identification No.)
213 TECHNOLOGY DRIVE
IRVINE, CALIFORNIA 92718
(Address of principal executive offices and zip code)
(714) 753-6100
(Registrant's telephone number, including area code)
<PAGE>
Item 5. OTHER EVENTS.
On January 1, 1997, CoCensys, Inc. (the "Company") entered into a promotion
agreement with Parke-Davis, a division of the Warner-Lambert Company, to market
and sell therapeutic drugs for the treatment of certain nervous system (CNS)
disorders. Pursuant to the Promotion Agreement, the Company's sales force will
co-promote Parke-Davis' CNS drug, Cognex-Registered Trademark-, to U.S.
neurologists for the treatment of Alzheimer's disease.
On December 15, 1996, CoCensys, Inc. (the "Company") entered into a license
agreement with Massachusetts General Hospital ("MGH") pursuant to which the
Company licensed from MGH certain patent rights relating to the treatment of
migraine.
Item 7. EXHIBITS.
1. Promotion Agreement Between Parke-Davis, a Division of the
Warner-Lambert Company, and CoCensys, Inc., dated January 1,
1997.*
2. License Agreement between Massachusetts General Hospital and
CoCensys, Inc., dated December 15, 1996. *
* Confidential treatment requested
2.
<PAGE>
SIGNATURE
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, thereunto duly authorized.
COCENSYS, INC.
Dated: June 9, 1997 By: /s/ Peter E. Jansen
---------------------------
Peter E. Jansen
Vice President and Chief Financial Officer
3.
<PAGE>
INDEX TO EXHIBITS
-----------------
Sequentially
Numbered Page
-------------
1. Promotion Agreement Between Parke-Davis, a Division of 5
the Warner-Lambert Company, and CoCensys, Inc. effective
January 1, 1997.*
2. License Agreement between Massachusetts General Hospital 48
and CoCensys, Inc., dated December 15, 1996.*
* Confidential treatment requested.
<PAGE>
1997 PROMOTION AGREEMENT
BETWEEN
PARKE-DAVIS,
A DIVISION OF WARNER-LAMBERT COMPANY
AND
COCENSYS, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
"AFFILIATE" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"COCENSYS SALES FORCE". . . . . . . . . . . . . . . . . . . . . . . . . 2
"COGNEX". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"COGNEX DISEASE MANAGEMENT PRESENTATION". . . . . . . . . . . . . . . . 2
"FDA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"IMS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
"OTHER DISEASE MANAGEMENT PRESENTATION" . . . . . . . . . . . . . . . . 3
"PREPAYMENT". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"PRODUCT RELATED CALL". . . . . . . . . . . . . . . . . . . . . . . . . 3
"PROMOTIONAL MATERIALS" . . . . . . . . . . . . . . . . . . . . . . . . 3
"PROPRIETARY INFORMATION" . . . . . . . . . . . . . . . . . . . . . . . 3
"SALES QUARTER" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"SAMPLE". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"TARGETED DOCTORS". . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"TERRITORY" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
"TMOT" or "TOTAL MONTH OF THERAPY". . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
GRANT OF PROMOTION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 Rights Granted to CoCensys . . . . . . . . . . . . . . . . . . . . 4
2.2 Rights Retained by PD. . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 3
MARKETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.1 Marketing Cooperation. . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Dispute Resolution.. . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 4
PROMOTION OF COGNEX TO THE TARGETED DOCTORS. . . . . . . . . . . . . . . . . 6
4.1 CoCensys Sales Force. . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Training of CoCensys Sales Force.. . . . . . . . . . . . . . . . . 7
4.3 Conduct of the CoCensys Sales Force. . . . . . . . . . . . . . . . 8
4.4 Other Marketing Activities; Additional Targeted Doctors. . . . . . 8
4.5 Exclusivity of CoCensys Sales Force. . . . . . . . . . . . . . . . 9
4.6 Records and Reports Regarding Promotion Activities.. . . . . . . . 10
4.7 Forwarding of COGNEX Orders. . . . . . . . . . . . . . . . . . . . 10
4.8 Covenant Not to Promote Competitive Alzheimer's Disease Product. . 10
ARTICLE 5
PD RIGHTS AND OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 11
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
5.1 Targeted Doctors . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Supply and Distribution of COGNEX. . . . . . . . . . . . . . . . . 11
5.3 Regulatory Compliance. . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Promotional Materials. . . . . . . . . . . . . . . . . . . . . . . 12
5.5 New Developments Relating to COGNEX. . . . . . . . . . . . . . . . 13
5.6 Precision Marketing Data.. . . . . . . . . . . . . . . . . . . . . 14
5.7 Sales and Inventory Data.. . . . . . . . . . . . . . . . . . . . . 14
5.8 Pricing of COGNEX. . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 6
JOINT OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Assistance and Notifications to Other Party. . . . . . . . . . . . 15
6.2 Requests for Information from Targeted Doctors.. . . . . . . . . . 16
6.3 Market Surveys.. . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.4 Withdrawal of COGNEX.. . . . . . . . . . . . . . . . . . . . . . . 16
6.5 Non-Solicitation of Employees. . . . . . . . . . . . . . . . . . . 17
ARTICLE 7
COMPENSATION AND PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.2 Payment and Accounting.. . . . . . . . . . . . . . . . . . . . . . 17
7.3 Audit Rights.. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 IMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 8
TERM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.1 Term.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 9
TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.1 Termination for Breach.. . . . . . . . . . . . . . . . . . . . . . 21
9.2 Termination Without Cause. . . . . . . . . . . . . . . . . . . . . 21
9.3 Termination Upon Cessation of Sale of COGNEX.. . . . . . . . . . . 21
9.4 Payment of Amounts Due.. . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 10
WARRANTIES, REPRESENTATIONS AND COVENANTS. . . . . . . . . . . . . . . . . . 22
10.1 Warranties and Representations of Each Party.. . . . . . . . . . . 22
10.2 Warranties and Representations of PD.. . . . . . . . . . . . . . . 22
ii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
10.3 Covenants of Each Party. . . . . . . . . . . . . . . . . . . . . . 23
10.4 Disclaimer of Warranties.. . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 11
INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS . . . . . . . . . . . . . . . . 23
11.1 Notice.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.2 Conduct of Infringement Actions. . . . . . . . . . . . . . . . . . 24
ARTICLE 12
INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
12.1 Indemnification by PD. . . . . . . . . . . . . . . . . . . . . . . 25
12.2 Indemnification by CoCensys. . . . . . . . . . . . . . . . . . . . 25
12.3 Indemnification Procedure. . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 13
CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.1 Nondisclosure and Nonuse Obligations.. . . . . . . . . . . . . . . 28
13.2 Exceptions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
13.3 Authorized Disclosure. . . . . . . . . . . . . . . . . . . . . . . 29
13.4 Obligations at End of Term.. . . . . . . . . . . . . . . . . . . . 30
13.5 Retention of Proprietary Information.. . . . . . . . . . . . . . . 30
ARTICLE 14
PUBLICITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14.1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 15
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
15.1 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
15.2 Captions and Section References. . . . . . . . . . . . . . . . . . 32
15.3 Severability.. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
15.4 Entire Agreement.. . . . . . . . . . . . . . . . . . . . . . . . . 33
15.5 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.6 Counterparts.. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.7 Waiver.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.8 Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
15.9 Benefits and Binding Nature of Agreement.. . . . . . . . . . . . . 34
15.10 Assignment; Change in Control.. . . . . . . . . . . . . . . . 34
15.11 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
iii.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
15.12 Not Strictly Construed Against Either Party.. . . . . . . . . 35
15.13 Governing Law.. . . . . . . . . . . . . . . . . . . . . . . . 36
iv.
<PAGE>
1997 PROMOTION AGREEMENT
THIS 1997 PROMOTION AGREEMENT ("Agreement"), is effective this 1st day of
January, 1997 (the "Effective Date"), by and between PARKE-DAVIS, a division of
Warner-Lambert Company, with offices at 201 Tabor Road, Morris Plains, New
Jersey 07950 ("PD"), and COCENSYS, INC., with offices at 213 Technology Drive,
Irvine, California 92718 ("CoCensys"), with respect to the following:
WHEREAS, PD has the right, under its approved New Drug Application, to
market COGNEX-Registered Trademark- (tacrine hydrochloride) in the United
States; and
WHEREAS, PD and CoCensys contemplate that it is to their mutual advantage
to utilize CoCensys's marketing and sales organization in promoting COGNEX to
neurologists and certain other doctors on the terms set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and of the
mutual covenants and obligations hereinafter set forth, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
The following capitalized terms shall have the meanings indicated for
purposes of this Agreement:
<PAGE>
"AFFILIATE" shall mean any corporation, association or other entity which
directly or indirectly controls, is controlled by or is under common control
with the party in question. Solely for purposes of this definition, the term
"control" shall mean direct or indirect beneficial ownership of more than 50% of
the voting or income interest in such corporation or other business entity.
"COCENSYS SALES FORCE" shall mean those members of CoCensys' sales force
who make COGNEX Disease Management Presentations to Targeted Doctors.
"COGNEX" shall mean that prescription pharmaceutical product indicated in
the Territory for the treatment of Alzheimer's disease owned by PD and promoted
under the trademark COGNEX-Registered Trademark-, the active ingredient of which
is tacrine hydrochloride.
"COGNEX DISEASE MANAGEMENT PRESENTATION" shall mean a discussion, designed
to last an average of 15 to 20 minutes, which is held at the commencement of a
meeting between a CoCensys salesperson and a Targeted Doctor and which places
COGNEX within the context of a disease management system, such as, by way of
example, PD's proprietary Alzheimer's Family Care Program.
"FDA" shall mean the United States Food and Drug Administration.
"IMS" shall mean IMS America, Ltd. or any successor organization.
2.
<PAGE>
"OTHER DISEASE MANAGEMENT PRESENTATION" shall mean a discussion, designed
to last an average of 15 to 20 minutes, held between a CoCensys salesperson and
a physician and which places a prescription pharmaceutical product other than
COGNEX within the context of a management system for the disease for which such
product is indicated.
"PREPAYMENT" shall have the meaning set forth in Section 7.5(a).
"PRODUCT RELATED CALL" shall mean a traditional secondary sales call for a
pharmaceutical product which is not made in the context of a disease management
presentation.
"PROMOTIONAL MATERIALS" shall have the meaning set forth in SECTION 5.4.
"PROPRIETARY INFORMATION" shall mean any proprietary or confidential
information communicated by one party hereto to the other, which is so
identified as proprietary or confidential by the disclosing party, or which the
receiving party knows or has reason to know is proprietary or confidential
including, but not limited to, financial, marketing, business, technical or
scientific information or data.
"SALES QUARTER" shall mean each three (3) month period commencing on
January 1, April 1, July 1 or October 1 during the Term, PROVIDED, HOWEVER, the
first Sales Quarter hereunder shall commence on January 1, 1997, and the final
Sales Quarter hereunder shall terminate on the final day of the Term.
3.
<PAGE>
"SAMPLE" shall mean units of COGNEX distributed by the CoCensys Sales
Force, pursuant to the provisions of the Prescription Drug Marketing Act, for
complimentary distribution to patients by practitioners licensed to prescribe
COGNEX, whether packaged as individual samples or as trade packages.
"TARGETED DOCTORS" shall mean the neurologists and other doctors listed on
EXHIBIT A hereto, as such exhibit may be amended from time to time as more fully
described in Section 4.4.
"TERM" shall have the meaning set forth in SECTION 8.1.
"TERRITORY" shall mean the United States of America, the District of
Columbia and Puerto Rico, but not any other United States territories or
possessions.
"TMOT" or "TOTAL MONTH OF THERAPY" shall equal 120 capsules of COGNEX,
whether generated from new prescriptions or from refills.
ARTICLE 2
GRANT OF PROMOTION RIGHTS
2.1 RIGHTS GRANTED TO COCENSYS. PD hereby grants to CoCensys, during the
Term, the non-exclusive right and license to market, advertise and promote
COGNEX to the extent specifically directed at the Targeted Doctors in accordance
with this Agreement,
* Confidential treatment requested.
4.
<PAGE>
including the right to reference and encourage enrollment in PD's Alzheimer's
Family Care Program in connection with COGNEX Disease Management
Presentations to the Targeted Doctors. During the Term, PD will not grant
the right to any third party to market, advertise or promote COGNEX
specifically to the Targeted Doctors without the prior written consent of
CoCensys, which consent may not be unreasonably withheld.
2.2 RIGHTS RETAINED BY PD. Except as otherwise expressly provided in this
Agreement, PD shall retain all rights in and to COGNEX including, but not
limited to, the New Drug Application for COGNEX, the Drug Master File for
COGNEX, and all manufacturing, distribution, patent, copyright and trademark
rights relating to COGNEX. CoCensys acknowledges that Alzheimer's Family Care
Program is a proprietary program of PD, containing trademarks, trade secrets and
other intellectual property of PD utilized in the marketing of COGNEX and is
potentially applicable to the marketing of other products.
ARTICLE 3
MARKETING
3.1 MARKETING COOPERATION. PD and CoCensys will meet from time to time as
they mutually deem necessary to discuss CoCensys's marketing of COGNEX. Such
meetings may be held in person or telephonically. Each party will bear its own
costs for attendance at such meetings.
5.
<PAGE>
3.2 DISPUTE RESOLUTION. In the event of a disagreement between the
parties as to any matters within the scope of this Agreement, the parties will,
diligently and in good faith, seek to resolve the matter in dispute. If the
parties are unable to resolve the dispute, despite their good faith efforts,
within 15 days, they shall, within 5 days thereafter, refer such dispute to the
President of CoCensys and the President of PD, North America, for resolution.
In the event the parties are unable to resolve their dispute as provided in this
SECTION 3.2, each party shall be free to pursue any action at law or in equity;
PROVIDED, HOWEVER, that the President of PD, North America, shall have ultimate
authority to resolve all matters relating to the actual marketing, advertisement
and promotion of COGNEX.
ARTICLE 4
PROMOTION OF COGNEX TO THE TARGETED DOCTORS
4.1 COCENSYS SALES FORCE. During the Term, subject to review by PD,
CoCensys shall establish and deploy the CoCensys Sales Force for the delivery of
COGNEX Disease Management Presentations to the Targeted Doctors. The CoCensys
Sales Force will present approximately [ * ] COGNEX Disease Management
Presentations per [ * ] of each Sales Quarter and at least [ * ] COGNEX
Disease Management Presentations per [ * ] CoCensys' obligations hereunder are
subject to PD making available to CoCensys at least one appropriate tool to
place COGNEX in the context of a disease management system. The parties agree
that PD's Alzheimer's Family Care Program is such a tool and that PD has the
authority to approve any replacement or additional tools.
* Confidential treatment requested.
6.
<PAGE>
4.2 TRAINING OF COCENSYS SALES FORCE.
(a) TRAINING. PD will invite the CoCensys Sales Force to attend all
training sessions provided by PD for the purpose of upgrading information
relating to COGNEX, including, but not limited to, information relating to new
developments as set forth in SECTION 5.5. It is understood that such training
sessions will be provided on an as-needed basis by PD, at PD's discretion. PD
may require some or all of the CoCensys Sales Force to attend certain training
sessions ("Mandatory Training Sessions"). Alternatively, PD may give CoCensys
the option as to whether some or all of the CoCensys Sales Force should attend
certain other training sessions ("Optional Training Sessions").
(b) TRAINING COSTS. All costs incurred under SECTION 4.2(a)
(including, but not limited to, training costs, transportation and room and
board) for Mandatory Training Sessions will be borne [ * ]. All costs
incurred under SECTION 4.2(a) (including, but not limited to, training costs,
transportation and room and board) for Optional Training Sessions will be borne
[ * ] by PD and [ * ] by CoCensys.
(c) SALES TRAINING MATERIALS. Notwithstanding SECTION 4.2(b), PD
will supply members of the CoCensys Sales Force, at no cost to CoCensys, with
copies of all sales training material relating to COGNEX generally made
available to PD's sales representatives in PD's "Weekly Mailings".
* Confidential treatment requested.
7.
<PAGE>
4.3 CONDUCT OF THE COCENSYS SALES FORCE. In accordance with the terms and
conditions of this Agreement, and subject to the Federal Food, Drug, and
Cosmetic Act, all regulations promulgated pursuant thereto and any and all
applicable state laws and regulations, CoCensys shall use commercially diligent
efforts to direct its CoCensys Sales Force to market, advertise and promote
COGNEX to the Targeted Doctors to so persuade such Targeted Doctors to prescribe
and use COGNEX, through the giving of one or more COGNEX Disease Management
Presentations, as well as, where deemed appropriate by the parties, Samples of
COGNEX. All such presentations and materials to be utilized by CoCensys to so
market, advertise or promote COGNEX shall be subject to the prior review and
approval of PD and, if applicable, the FDA. CoCensys shall cause the CoCensys
Sales Force, and all other employees, agents and representatives of CoCensys, to
comply with all applicable laws, regulations and guidelines in connection with
the marketing, advertising and promotion of COGNEX, including the Prescription
Drug Marketing Act, the Federal Anti-Kickback Statute and AMA Guidelines. No
employee, agent or representative of CoCensys shall make any representation,
statement, warranty or guaranty with respect to COGNEX that is not consistent
with the applicable, current package insert of prescribing information or other
documentation accompanying or describing COGNEX, including PD's standard limited
warranty and disclaimers, if any.
4.4 OTHER MARKETING ACTIVITIES; ADDITIONAL TARGETED DOCTORS. During the
Term hereof, CoCensys will not make any sales calls or presentations regarding
COGNEX to anyone who is not a Targeted Doctor, except as may be approved and
coordinated by both parties. In connection therewith, CoCensys may, from time
to time, meet with neurologists
8.
<PAGE>
and other doctors who are not, as of the date of such meeting, Targeted
Doctors, for purposes of determining such doctors' interest in prescribing
COGNEX. On the basis of such meetings, CoCensys may propose in writing to PD
that additional neurologists and/or other doctors be added to EXHIBIT A as
"Targeted Doctors". Such proposal shall include the name and specialty of
the doctor(s) and the reasons for why CoCensys believes such doctor(s) should
be Targeted Doctor(s). Within fifteen (15) days of receipt of such proposal,
PD shall notify CoCensys in writing of whether it approves any or all of the
proposed additions to EXHIBIT A. Such approval may be withheld in PD's sole
discretion and may, for example, be conditioned on revisions to CoCensys'
compensation structure hereunder and/or deletion of an equal number of
doctors from EXHIBIT A. Upon CoCensys's receipt of any such approval,
EXHIBIT A will be deemed amended to include each approved additional doctor,
each of whom shall be deemed to be a Targeted Doctor as of the date of the PD
approval.
4.5 EXCLUSIVITY OF COCENSYS SALES FORCE. Except as may be agreed to by
both parties, during the Term, CoCensys shall not utilize the CoCensys Sales
Force to market, advertise, promote or otherwise sell any product to the
Targeted Doctors other than to conduct the COGNEX Disease Management
Presentations. CoCensys may, however, utilize the CoCensys Sales Force to
deliver to the Targeted Doctors a single Product Related Call
9.
<PAGE>
for a pharmaceutical product other than COGNEX, PROVIDED, HOWEVER, that under
no circumstances shall any member of the CoCensys Sales Force (or any other
employee of CoCensys or employee of any Affiliate of CoCensys) market,
advertise, promote or otherwise sell any pharmaceutical product with an
approved indication for epilepsy (an "Epilepsy Drug") during the Term.
4.6 RECORDS AND REPORTS REGARDING PROMOTION ACTIVITIES. CoCensys will
keep complete and accurate records of the Disease Management Presentations made
by the CoCensys Sales Force (including names of doctors, dates of presentations
and general responses to such presentations) and the other activities carried
out pursuant to this Agreement. CoCensys will make such records available to PD
during CoCensys' regular business hours and will provide PD a quarterly report
summarizing such matters. CoCensys will maintain such records for 3 years
following the period to which they relate.
4.7 FORWARDING OF COGNEX ORDERS. Any orders for COGNEX received by
CoCensys will be promptly forwarded to PD.
4.8 COVENANT NOT TO PROMOTE COMPETITIVE ALZHEIMER'S DISEASE PRODUCT.
During the Term and until [ * ], CoCensys shall not market, promote or
advertise any pharmaceutical product, other than COGNEX, with an approved
indication for Alzheimer's disease, nor shall CoCensys assist any other party in
doing the same.
* Confidential treatment requested.
10.
<PAGE>
ARTICLE 5
PD RIGHTS AND OBLIGATIONS
5.1 TARGETED DOCTORS. Attached hereto as EXHIBIT A is a list of each of
the Targeted Doctors. Such exhibit may be updated by the procedures described
in Section 4.4.
5.2 SUPPLY AND DISTRIBUTION OF COGNEX. PD shall use commercially diligent
efforts to perform, or cause to be performed, all manufacturing, labeling,
packaging, warehousing, distribution, order entry, customer services and all
other activities to supply and distribute COGNEX in order to fill all orders
generated by the activities of CoCensys hereunder. PD shall use commercially
diligent efforts to maintain inventory of COGNEX to satisfy reasonably
anticipated demand. In the event that supply of COGNEX falls short of actual
requirements because of PD's failure to use commercially diligent efforts to
maintain inventory of COGNEX in accordance with reasonably anticipated demand,
then CoCensys will be credited compensation pursuant to SECTION 7.1 for the
number of TMOTs that the parties reasonably forecast the Targeted Doctors would
have prescribed had supply been sufficient to meet reasonably anticipated
demands. Such compensation will be CoCensys' sole remedy for PD's failure to
supply sufficient quantities of COGNEX. PD shall accept all orders for COGNEX
that are in conformity with the pricing determined by PD pursuant to SECTION 5.8
hereof, subject to PD's standard sales conditions.
5.3 REGULATORY COMPLIANCE. Unless otherwise required by law, PD will
retain exclusive authority and responsibility for complying with all regulatory
requirements and
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maintain all government agency contacts relating to COGNEX, including, but
not limited to, maintaining and updating the New Drug Application for COGNEX;
the development and submission of regulatory filings regarding new
indications (if any, and at its sole discretion); the reporting of any
adverse drug reactions to the FDA; the filing of Promotional Materials with
the FDA; and the payment of Medicaid and other governmental rebates which in
PD's sole judgment are due and owing. Nothing herein shall obligate PD to
seek FDA approval for additional indications for COGNEX.
5.4 PROMOTIONAL MATERIALS.
(a) PD MATERIALS. PD shall, at its sole cost and expense, produce,
provide and ship to CoCensys sufficient quantities of such promotional, sales,
marketing and educational materials for COGNEX as are generally made available
to PD's sales representatives (the "Promotional Materials") to allow CoCensys to
fulfill its obligations hereunder, including materials related to the
Alzheimer's Family Care Program and any other efficacy assessment tools. Such
Promotional Materials shall include, by way of example, detailing aids; leave
items; journal advertising; educational programs; formulary binders; appropriate
reprints and reprint carriers; product monographs; patient support kits;
materials to support the handling of physician requests; convention exhibit
materials; direct mail and market research surveys and analysis. CoCensys shall
not distribute any promotional, sales, marketing or educational materials
relating to COGNEX except for the Promotional Materials.
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(b) RIGHTS TO PROMOTIONAL MATERIALS. PD shall own all right, title
and interest in and to any Promotional Materials provided to CoCensys pursuant
to this SECTION 5.4 including applicable copyrights and trademarks. PD hereby
grants to CoCensys the right, during the Term, to use all Promotional Materials
and all sales, marketing, educational and training materials produced by PD and
supplied to CoCensys with respect to COGNEX.
5.5 NEW DEVELOPMENTS RELATING TO COGNEX. PD will promptly inform CoCensys
of the following information relating to COGNEX: (i) new approved indications;
(ii) new approved dosages or administration regimens; (iii) material new studies
by the scientific community that PD becomes aware of which relate to COGNEX or a
competitive product in its therapeutic class; and, (iv) any changes in
regulations affecting COGNEX or PD's obligations with respect to this Agreement.
CoCensys will promptly inform PD of information relating to changes in
regulations affecting CoCensys' obligations with respect to this Agreement.
Based on such information, and subject to any federal, state or local laws
and/or regulations, PD shall use commercially diligent efforts to maintain the
training materials supplied to CoCensys pursuant to this Agreement current with
such new developments or information.
5.6 PRECISION MARKETING DATA. PD will provide CoCensys, on an on-going
basis, with all Precision Marketing Data and market research data that is
similar to that provided by PD to its own sales force and is relevant to
CoCensys' performance under this Agreement. As used herein, "Precision
Marketing Data" means PD's internally generated customized micro-marketing
data regarding prescriptions by individual physicians.
* Confidential treatment requested.
13.
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5.7 SALES AND INVENTORY DATA. PD will provide CoCensys with a report of
sales of COGNEX through prescriptions written by the Targeted Doctors, in PD's
standard accounting format, for each month of the Term as it becomes available
to PD employees in the normal course of business. If requested by CoCensys, PD
shall also provide CoCensys with a report of inventories and back orders of
COGNEX.
5.8 PRICING OF COGNEX. PD will provide CoCensys with the published
average wholesale price (i.e. Redbook AWP) per unit of COGNEX for each separate
package as set forth in COGNEX's current applicable package insert. CoCensys
will be notified by PD of any change in such prices per unit at a time and in a
manner consistent with notification of such price changes to PD's own sales
representatives. CoCensys may recommend price changes for COGNEX, and comment
on pricing decisions, based upon its experience in promoting COGNEX pursuant to
this Agreement. PD agrees to comment on any requests by CoCensys for pricing
changes or special pricing arrangements within 10 working days after receipt of
such request. After execution of this Agreement, PD shall designate one person
to be responsible for handling pricing requests pursuant to this SECTION 5.8.
Upon the execution of this Agreement, PD will provide CoCensys with a summary of
any discounted pricing for COGNEX, and during the Term, PD will promptly notify
CoCensys of any new discounted pricing for COGNEX agreed to by PD.
Notwithstanding the foregoing, however, the terms of sale and pricing of COGNEX,
including, but not limited to, the timing of pricing changes and any
discounting, shall be at PD's sole discretion.
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ARTICLE 6
JOINT OBLIGATIONS
6.1 ASSISTANCE AND NOTIFICATIONS TO OTHER PARTY. Each party agrees to
provide to the other all reasonable assistance and take all actions reasonably
requested by the other party that are necessary to enable the other party to
comply with its obligations hereunder and with any law or regulation applicable
to COGNEX, including, but not limited to, PD's meeting its reporting and other
obligations under SECTION 5.3. Such assistance and actions shall include, among
other things: (i) CoCensys promptly reporting to PD adverse drug reactions of
which it becomes aware, so as to permit PD to meet its FDA reporting and other
obligations in a timely fashion; (ii) each party carrying out any FDA-mandated
notifications relating to COGNEX; (iii) each party immediately notifying the
other of any inquiry or other contact by the FDA or any other governmental
agency or authority with such party or its Affiliates relating to COGNEX, except
that PD will notify CoCensys only of such inquiries or contacts which may
materially affect CoCensys's performance of its obligations relating to COGNEX
under this Agreement or which may adversely affect PD's ability to manufacture
and supply COGNEX; and (iv) PD promptly notifying CoCensys of any adverse drug
reactions to COGNEX or any regulatory action with respect to COGNEX.
6.2 REQUESTS FOR INFORMATION FROM TARGETED DOCTORS. The parties
acknowledge that each may receive requests for medical or technical information,
or reports of adverse drug reactions, concerning COGNEX from Targeted Doctors
and others. The parties agree
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that it shall be the obligation of PD to so respond and/or report, as
appropriate, and CoCensys shall ensure that its employees and agents comply
with PD's adverse event reporting procedures and policies.
6.3 MARKET SURVEYS. Each party hereto may, at its discretion and expense,
undertake such market surveys, research or analyses relating to COGNEX as it
deems fit, and such surveys, research or analyses shall remain the property of
the party undertaking same. Each party shall make such surveys, research and
analyses specifically relating to COGNEX available to the other party at no cost
to that other party.
6.4 WITHDRAWAL OF COGNEX. Each party agrees to notify the other
immediately of any pending or threatened event which may lead to withdrawal of
COGNEX from the market, including, without limitation; (i) actual or threatened
regulatory action by the FDA or other governmental entity, including, but not
limited to, the loss by PD of any right necessary to market COGNEX; or
(ii) safety concerns relating to COGNEX. The final decision as to whether to so
withdraw COGNEX shall be within PD's sole discretion, although CoCensys may make
recommendations regarding any such proposed action. In the event of such
withdrawal of COGNEX, the rights of the parties shall be governed by SECTION 9.3
hereof.
6.5 NON-SOLICITATION OF EMPLOYEES. During the Term, neither party will
solicit for the purpose of hiring the sales and marketing employees of the other
party.
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ARTICLE 7
COMPENSATION AND PREPAYMENTS
7.1 PAYMENT. In consideration for the efforts of the CoCensys Sales Force
hereunder, PD will pay CoCensys [ * ] for each TMOT written by a Targeted
Doctor during each Sales Quarter during the Term; PROVIDED, HOWEVER, that if
CoCensys performs all of its material obligations under this Agreement, in no
event will PD pay CoCensys less than $560,000 per each Sales Quarter during
the Term (which amount will be pro-rated based on the actual number of calendar
days in the event of early termination of this Agreement at any time other than
on the final day of a Sales Quarter).
7.2 PAYMENT AND ACCOUNTING. PD shall pay CoCensys the amount due under
SECTION 7.1 within 30 days of PD's receipt of sufficient IMS data to calculate
such amount and shall provide CoCensys with a written accounting showing PD's
computation of the compensation due for the applicable period.
7.3 AUDIT RIGHTS. In accordance with its standard accounting practices,
PD shall keep full and accurate books and records with respect to the amounts
payable hereunder, for no less than 3 years after the end of the Sales Quarter
in respect of which payment is to be made hereunder. PD shall permit CoCensys
to have such books and records examined by independent certified public
accountants retained by CoCensys and acceptable to PD, during regular business
hours and upon reasonable advance notice, but not later than 3 years
* Confidential treatment requested.
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following the rendering of any such reports, accounting and payments and no
more often than 1 time per year. Such independent accountants shall keep
confidential any information obtained during such examination and shall
report only the amounts which the independent accountant believes to be due
and payable hereunder. Any such information so reviewed and any such
information reported shall be considered the Proprietary Information of PD.
In the absence of material discrepancies (in excess of [ * ] of the total
amount due to CoCensys in respect of the audited Sales Quarters) in any
request for payment resulting from such audit, the accounting expense shall
be paid by CoCensys. If material discrepancies do result, PD shall bear the
accounting expense.
7.4 IMS. In the event IMS is unable or unwilling, on terms acceptable to
PD, to provide data to PD which will enable PD to make the calculations required
pursuant to SECTIONS 7.1 and 7.2, PD will notify CoCensys of such fact and PD
will, after consultation with CoCensys, select a new third party supplier of
such data. In the event CoCensys feels that the data provided by IMS (or a
third party supplier of data pursuant to the preceding sentence) is not
accurately capturing TMOT sales to the Targeted Doctors, CoCensys may make a
written request to PD that PD use a new third party supplier of such data. PD
will consider CoCensys' request in good faith and, if it agrees with CoCensys'
request, will, after consultation with CoCensys, select a new third party
supplier of such data; PROVIDED, HOWEVER, that the parties will share any costs
incurred by PD in connection with engaging a new third party supplier of such
data requested by CoCensys. The parties acknowledge that the IMS data used to
compile the list of Targeted Doctors attached as EXHIBIT A, and the data
* Confidential treatment requested.
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which will be used to make the calculations required pursuant to SECTIONS 7.1
and 7.2, are not 100% accurate, yet such data will continue to be used unless
replaced pursuant to this Section.
7.5 FINANCING OF COCENSYS SALES FORCE.
(a) PREPAYMENTS. In order to enable CoCensys to comply with its
obligations to market, advertise and promote COGNEX hereunder, including, but
not limited to, the training of the CoCensys Sales Force, PD shall, beginning
with the Sales Quarter commencing January 1, 1997, prepay to CoCensys $560,000
per Sales Quarter (each such quarterly payment, a "Prepayment"). Each such
Prepayment shall be paid quarterly, in advance of the Sales Quarter to which
such amount pertains. Notwithstanding the foregoing, if pursuant to Section
9.1, 9.2 or 9.3, the termination of this Agreement is scheduled to occur on any
day other than the final day of a Sales Quarter, and if such fact is known prior
to the first day of such Sales Quarter, the amount of the Prepayment in respect
of such Sales Quarter will be reduced and prorated based on the actual number of
calendar days in such Sales Quarter prior to such scheduled day of termination.
(b) PAYMENT OF PREPAYMENTS. All Prepayments shall be made by PD to
CoCensys by wire transfer to an account designated in writing by notice pursuant
to SECTION 15.1 hereof by CoCensys, or other mutually agreeable method. Any and
all sums prepaid under SECTION 7.5(a) shall be credited pursuant to SECTION 7.6.
* Confidential treatment requested.
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7.6 CREDITING OF PREPAYMENTS. For each Sales Quarter during the Term,
100% of the Prepayment for such Sales Quarter shall be credited against amounts
payable to CoCensys under SECTIONS 7.1 and 7.2 in respect of such Sales Quarter,
prior to any payment to CoCensys pursuant to such Sections. In the event that
the amounts payable to CoCensys under such Sections are less than the Prepayment
in respect of a given Sales Quarter, due to an early termination of this
Agreement by PD for material breach by CoCensys under Section 9.1 or an early
termination by either party under Section 9.2 or Section 9.3(a), CoCensys shall
pay PD the difference between the amount of the Prepayment and amounts payable
to CoCensys' under SECTIONS 7.1 and 7.2 in respect of such Sales Quarter. Such
payment, if any, will be made by CoCensys to PD by wire transfer to an account
designated in writing by notice pursuant to SECTION 15.1 hereof by PD, or other
mutually agreeable method, within 10 days following CoCensys' receipt of the
written accounting referred to in SECTION 7.2.
ARTICLE 8
TERM
8.1 TERM. The term of this Agreement (the "Term") shall be the period
commencing on the Effective Date and terminating December 31, 1997, unless
terminated earlier pursuant to the provisions of ARTICLE 9 hereof.
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ARTICLE 9
TERMINATION
9.1 TERMINATION FOR BREACH. Either party may terminate this Agreement for
material breach or failure to perform any material duties or obligations under
this Agreement by the other party, where such breach shall remain uncured, or
such failure to perform shall continue, for at least 30 days after the aggrieved
party shall have given written notice of the breach or failure to perform to the
other party. If after the 30 day period for cure and/or performance such breach
remains uncured or such failure to perform continues, then the aggrieved party
may, in accordance with SECTION 15.1, provide written notice to the other party
of termination of this Agreement ("Notice of Termination"). Such termination
shall be effective 7 days from receipt of said Notice of Termination.
9.2 TERMINATION WITHOUT CAUSE. PD or CoCensys may deliver written notice
to the other party that it desires to terminate this Agreement as of July 1,
1997 or thereafter, for any or no reason, such termination to be effective the
later of (i) July 1, 1997 and (ii) 3 months after the date of such notice.
9.3 TERMINATION UPON CESSATION OF SALE OF COGNEX.
(a) WITHDRAWAL BY FDA. This Agreement may be terminated at any time
without notice by either party, if, pursuant to SECTION 6.4 hereof, COGNEX is
withdrawn from the market in the Territory.
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(b) WITHDRAWAL BY PD. This Agreement may be terminated at any time
without notice by PD and without liability to CoCensys if PD decides for
business, ethical or regulatory reasons to cease the sale or promotion of COGNEX
in the Territory.
9.4 PAYMENT OF AMOUNTS DUE. Except in the case of termination by PD
pursuant to SECTION 9.1, any sums due to CoCensys by reason of its performance
through the effective date of termination will be paid by PD within 90 days of
such termination. Neither party shall have any further rights to compensation
from the other party in connection with COGNEX after the effective date of
termination.
ARTICLE 10
WARRANTIES, REPRESENTATIONS AND COVENANTS
10.1 WARRANTIES AND REPRESENTATIONS OF EACH PARTY. Each party warrants and
represents that it possesses all right, title, interest and authority necessary
to enter into this Agreement, perform its obligations hereunder and to grant the
rights embodied herein.
10.2 WARRANTIES AND REPRESENTATIONS OF PD. PD warrants and represents that
(i) all Promotional Materials supplied hereunder are in compliance with all
applicable laws and regulations and (ii) the COGNEX to be distributed by PD
during the Term of this Agreement will, at the time of shipment by or on behalf
of PD, not be misbranded or adulterated under the terms of the Federal Food,
Drug and Cosmetic Act and all applicable regulations promulgated thereunder.
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10.3 COVENANTS OF EACH PARTY. Each party covenants to the other that it
will comply with all applicable laws and regulations, including, but not limited
to, the Prescription Drug Marketing Act and the Federal Anti-Kickback Statute in
carrying out its obligations pursuant to this Agreement. In addition, each
party covenants to the other that it will conduct its activities hereunder in
accordance with all appropriate American Medical Association guidelines.
10.4 DISCLAIMER OF WARRANTIES. EXCEPT AS EXPRESSLY PROVIDED HEREIN, PD
DISCLAIMS ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH REGARD TO THE PRODUCT,
INCLUDING THE WARRANTY OF MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE.
ARTICLE 11
INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS
11.1 NOTICE. If either party learns of a claim or assertion that the
manufacture, use or sale of COGNEX infringes or otherwise violates the
intellectual or industrial property rights of any third party in the Territory,
or that any third party violates the intellectual or industrial property rights
of PD in COGNEX in the Territory, then the party becoming so informed shall
promptly, but in all events within 10 business days thereof, notify the other
party to this Agreement of the claim or assertion.
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11.2 CONDUCT OF INFRINGEMENT ACTIONS. At its sole discretion, subject to
this ARTICLE 11, PD shall conduct all infringement actions relating to COGNEX at
its own expense and shall be entitled to deduct from any recovery it receives
(whether by judgment or settlement) the costs and attorneys fees (including a
reasonable apportionment for the cost of in-house attorneys and other PD
employees who are directly related to the infringement action) incurred in
connection therewith and the punitive portion of any such recovery. CoCensys
shall be paid a portion of any remaining sums from such recovery which relate to
sales in the Territory during the period beginning on the later of (i) the
Effective Date or (ii) the date that such infringement is held to have begun and
ending on the earlier of (x) the termination or expiration of the Term and (y)
the date that such infringement is held to have stopped (the "Promotional Period
Recovery"). CoCensys will be entitled to the following:
(Promotional Period Recovery / average net amount received by PD for
each TMOT actually written during the period in question) X (the
number of TMOTs written by the Targeted Doctors during the period in
question / the number of TMOTs written in the Territory during the
period in question)
X [ * ].
* Confidential treatment requested.
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ARTICLE 12
INDEMNIFICATION
12.1 INDEMNIFICATION BY PD. PD shall defend, indemnify and hold harmless
CoCensys from all liability, loss, costs, judgments, amounts paid in settlement,
fines or penalties incurred as a direct result of any failure of COGNEX or the
Promotional Materials to comply with any applicable law or regulation or any
intellectual property infringement, product liability or other claim arising in
connection with the use or promotion of COGNEX, including, but not limited to,
reasonable attorneys' fees and all costs associated with the recall of COGNEX,
which it may suffer or sustain as a direct result of any such claim, charge,
suit or other action except to the extent CoCensys's negligence or intentional
malfeasance in connection with its use, marketing, advertising or promotion of
COGNEX shall have given rise to such claim, charge, suit or other action.
12.2 INDEMNIFICATION BY COCENSYS. CoCensys shall defend, indemnify and
hold PD harmless from all liability, loss, costs, judgments, amounts paid in
settlement, fines or penalties incurred as a direct result of any CoCensys
negligence or intentional malfeasance in connection with its use, marketing,
advertising or promotion of COGNEX, including, but not limited to, reasonable
attorneys fees, which PD may suffer or sustain as a direct result of any such
claim, charge, suit or other action.
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12.3 Indemnification Procedure. The obligations of PD and CoCensys under
this ARTICLE 12 shall be subject to the following terms and conditions:
(i) The party claiming a right to indemnification shall,
within 10 business days after receipt of any claim,
charge, suit or other action (or within 10 business days
after learning of a situation that is reasonably likely
to lead to a claim, charge, suit or other action), give,
in accordance with SECTION 15.1, written notice to the
indemnifying party, of any such claim, charge, suit or
other action received from a third party (or a
description of the situation that is reasonably likely to
lead to the same) which is governed by the indemnity
obligations of this Agreement;
(ii) The indemnifying party shall conduct, at its own expense,
the defense of any and all such claims, charges, suits or
other actions by a third party;
(iii) Neither party shall settle or admit liability with
respect to any such claims, charges, suits or other
actions which could result in liability to the other
party without the prior written consent of the other
party, which consent shall not be unreasonably withheld
or delayed;
26.
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(iv) If the indemnifying party does not take the steps
necessary against any such claims, charges, suits or
other actions by a third party, the party claiming
indemnification may defend against or settle such claims,
charges, suits or other actions provided that party may
not settle such claims, charges, suits or other actions
without prior written consent of the indemnifying party
which consent shall not be unreasonably withheld or
delayed; however, the defense and/or settlement under
this ARTICLE 12 shall not act as a waiver of rights to
indemnification under this Agreement, or any other rights
or remedies of a party claiming indemnification and shall
not excuse the indemnifying party from its obligations
hereunder and all reasonable costs and expenses incurred
by the party claiming indemnification shall be subject to
indemnity by the indemnifying party; and,
(v) Each party will offer reasonable assistance to the other
party in defending or settling the claim, charge, suit or
other action.
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ARTICLE 13
CONFIDENTIALITY
13.1 NONDISCLOSURE AND NONUSE OBLIGATIONS. During the term of this
Agreement, and for a period of 5 years after expiration or termination hereof,
each party will maintain all Proprietary Information in trust and confidence and
will not disclose any Proprietary Information to any third party or use any
Proprietary Information for any unauthorized purpose. Each party may use such
Proprietary Information only to the extent required to accomplish the purposes
of this Agreement. No Proprietary Information shall be disclosed to any
employee, agent, Affiliate or consultant who does not have a need for such
information. To the extent that disclosure is authorized by this Agreement,
such disclosure will be made subject to a written agreement to hold in
confidence and not make use of such Proprietary Information for any purpose
other than those permitted by this Agreement. Each party will promptly notify
the other upon discovery of any unauthorized use or disclosure of the
Proprietary Information.
13.2 EXCEPTIONS. Proprietary Information shall not include any information
which:
(i) is now, or hereafter becomes, through no act or failure
to act on the part of the receiving party, generally known
or available;
(ii) is known by the receiving party at the time of receiving such
information, as evidenced by its written records;
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(iii) is hereafter furnished to the receiving party by a third
party, as a matter of right and without restriction on
disclosure;
(iv) is independently developed by the receiving party without any
breach of this ARTICLE 13; or
(v) is the subject of a written permission to disclose provided by
the disclosing party.
13.3 AUTHORIZED DISCLOSURE. Notwithstanding any other provision of this
Agreement, each party may disclose Proprietary Information if such disclosure is
required (i) by an order of a court or other governmental body of the United
States or any political subdivision thereof; (ii) by law or regulation; or (iii)
to file or prosecute patent applications or prosecute or defend litigation or
otherwise establish rights or enforce obligations under this Agreement, but only
to the extent that any such disclosure is necessary. With respect to any order
of a court or other governmental body, the disclosing party shall first have
given notice to the other party hereto, shall have made a reasonable effort to
obtain a protective order requiring that the Proprietary Information so
disclosed be used only for the purposes for which the order was issued and shall
cooperate with the other party to minimize the scope and content of such
disclosure. Notwithstanding any other provision of this Agreement, each party
may disclose the terms of this Agreement to lenders, investment bankers and
other financial institutions of its choice solely for purposes of financing the
business operations of such party either (i) upon the written consent of the
other party or (ii)
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if the disclosing party obtains a signed confidentiality agreement with such
financial institution with respect to such information, upon terms
substantially similar to those contained in this ARTICLE 13.
13.4 OBLIGATIONS AT END OF TERM. Each party agrees, at the request of the
other party, at the end of the Term to either (i) return to the other party all
originals and copies of the other party's Proprietary Information; or, (ii) at
the other party's option, destroy all originals and copies of the other party's
Proprietary Information and to certify in writing such destruction to the other
party.
13.5 RETENTION OF PROPRIETARY INFORMATION. Each party may maintain 1 copy
of any document containing Proprietary Information in its legal department, or
with its counsel, solely for archival purposes.
ARTICLE 14
PUBLICITY
14.1 All publicity, press releases and other announcements relating to this
Agreement or the transaction contemplated hereby shall be reviewed in advance
by, and subject to the approval of, both parties; PROVIDED, HOWEVER, that either
party may, without the consent of the other, (i) publicize the existence and
general subject matter of this Agreement without the other party's approval and
(ii) disclose the terms of this Agreement insofar as required to comply with
applicable securities laws. Any party that determines applicable
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securities laws require it to file this Agreement shall first provide the
other party a copy of the redacted version it intends to file and shall
provide the other party the opportunity to comment thereon. Notwithstanding
the foregoing, the filing party will make the final decisions regarding the
version hereof to file.
ARTICLE 15
MISCELLANEOUS
15.1 NOTICES. All notices required or permitted hereunder shall be given
in writing and sent by facsimile transmission, or mailed postage prepaid,
certified or registered mail, return receipt requested, or sent by a nationally
recognized express courier service, or hand-delivered at the following address:
Parke-Davis
201 Tabor Road
Morris Plains, NJ 07950
Attn: President, Parke-Davis, United States and Mexico
Fax: (201) 540-4009
with a copy to:
Parke-Davis
201 Tabor Road
Morris Plains, NJ 07950
Attn: Assistant General Counsel, Pharmaceuticals, North America
Fax: (201) 540-3117
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CoCensys, Inc.
213 Technology Drive
Irvine, California 92718
Attn: Office of the President
Fax: (714) 753-6161
All notices shall be deemed made upon receipt by the addressee as evidenced by
the applicable written receipt or, in the case of a facsimile, as evidenced by
the confirmation of transmission.
15.2 CAPTIONS AND SECTION REFERENCES. The titles, headings or captions in
this Agreement do not define, limit, extend, explain or describe the scope or
extent of this Agreement or any of its terms or conditions and therefore shall
not be considered in the interpretations, construction or application of this
Agreement.
15.3 SEVERABILITY. Whenever possible, each clause, subclause, provision or
condition of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any clause, subclause,
provision or condition of this Agreement should be prohibited or invalid under
applicable law, such clause, subclause, provision or condition shall be
considered separate and severable from this Agreement to the extent of such
prohibition or invalidity without invalidating the remaining clauses,
subclauses, provisions and conditions of this Agreement, so long as the
remaining Agreement reflects the economic intentions of the parties as evidenced
by this Agreement as a whole.
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15.4 ENTIRE AGREEMENT. This Agreement sets forth the entire agreement
between the parties hereto pertaining to the subject matter hereof and
supersedes all negotiations, preliminary agreements, memoranda or letters of
proposal or intent, discussions and understandings of the parties hereto in
connection with the subject matter hereof. All discussions between the parties
have been merged into this Agreement and neither party shall be bound by any
definition, condition, understanding, representation, warranty, covenant or
provision other than as expressly stated in or contemplated by this Agreement or
as subsequently shall be set forth in writing and executed by a duly authorized
representative of the party to be bound thereby.
15.5 AMENDMENT. No amendment, change or modification of any of the terms,
provisions or conditions of this Agreement shall be effective unless made in
writing and signed on behalf of the parties hereto by their duly authorized
representatives.
15.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original document, but all
such separate counterparts shall constitute only one and the same Agreement.
15.7 WAIVER. No waiver of any term, provision or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such or
other term, provision or condition of this Agreement.
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15.8 FORCE MAJEURE. Neither party shall be liable hereunder to the other
party nor shall be in breach for failure to perform its obligations caused by
circumstances beyond the control of either party, including, but not limited to,
acts of nature; fires; earthquakes; floods; riots; wars; civil disturbances;
sabotage; accidents; labor disputes; shortages or government actions. In the
case of any such event, the affected party shall promptly notify the other
party, and shall keep the other party informed of the efforts to resume
performance. After 30 days of such inability to perform, the parties agree to
meet and in good faith discuss how to proceed. In the event that the affected
party is prevented from performing its obligations pursuant to this SECTION 15.8
for a period of 1 month, the other party shall have the right to terminate this
Agreement, subject to the provisions of SECTION 9.4.
15.9 BENEFITS AND BINDING NATURE OF AGREEMENT. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns permitted under this Agreement.
15.10 ASSIGNMENT; CHANGE IN CONTROL. This Agreement may not be
assigned by either party without the consent of the other party except to any
Affiliate or successor by merger or sale of substantially all of its business
units to which this Agreement relates. In the event of a Change of Control of
either party which results in the control of such party (the "Acquired Party")
by a Pharmaceutical Company, the Acquired Party shall notify the other party
(the "Non-Acquired Party") of such Change in Control and the Non-Acquired Party
may, in its sole discretion, [ * ]. For 15 days following receipt of
such notice,
* Confidential treatment requested.
34.
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[ * ]. For purposes of this SECTION 15.10, "Change in Control" shall mean
(1) a merger or consolidation in which a party hereto is not the surviving
corporation; (2) a reverse merger in which a party hereto is the surviving
corporation but the shares of such party's voting stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (3)
if, after giving effect to any agreements among stockholders of a party
hereto, any person holds and may vote in excess of 50% of such party's voting
stock. "Pharmaceutical Company" means any person, as such term is defined in
SECTION 13(d) of the United States Securities Exchange Act of 1934, as
amended, which is engaged in the pharmaceutical business in terms of
researching, developing, marketing, selling or distributing pharmaceutical
products for use in humans.
15.11 SURVIVAL . The provisions of SECTIONS 4.6, 4.8, 5.4(b), 9.4 and
11.2 and ARTICLES 7, 10, 12 and 13 shall survive, and remain in effect, after
termination or expiration of this Agreement.
15.12 NOT STRICTLY CONSTRUED AGAINST EITHER PARTY. This Agreement has
been prepared jointly and shall not be strictly construed against either party.
15.13 GOVERNING LAW. This Agreement shall be construed and interpreted
in accordance with the laws of the State of Delaware other than those provisions
governing conflicts of law.
* Confidential treatment requested.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the day and year first above written.
WARNER-LAMBERT COMPANY COCENSYS, INC.
By: /s/ Maurice Renshaw By: /s/ Rick A. Henson
------------------------- ------------------------------------
Title: President, Title: President,
Parke-Davis North America CoCensys Pharma
-------------------------- Sales and Marketing
---------------------------------
36.
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EXHIBIT A
[ * ]
37.
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LICENSE AGREEMENT
THIS AGREEMENT, effective as of December 15, 1996 ("EFFECTIVE DATE")
between THE GENERAL HOSPITAL CORPORATION, a not-for-profit corporation doing
business as Massachusetts General Hospital, having a place of business at Fruit
Street, Boston, Massachusetts 02114 ("GENERAL") and CoCensys, Inc., a
corporation having offices at 213 Technology Drive, Irvine, California 92618
("COMPANY").
WHEREAS, under research programs funded by the GENERAL and the U.S.
Government, the GENERAL through research conducted by Dr. Michael Moskowitz
has developed an invention pertaining to a method for treating vascular
headaches;
WHEREAS, GENERAL has filed a U.S. Patent Application covering said
invention and all [ * ] rights, title and interest in said application have
been assigned to GENERAL;
WHEREAS, GENERAL represents to the best of its knowledge and belief that it
is the owner of all rights, title and interest in said patent application and
has the right and ability to grant the license hereinafter described;
WHEREAS, as a center for research and education, GENERAL is interested in
licensing PATENT RIGHTS and thus benefiting the public and the GENERAL by
facilitating the dissemination of the results of its research in the form of
useful products, but is without capacity to commercially develop, manufacture,
and distribute any such product; and
WHEREAS, COMPANY having such capacity, desires to commercially develop,
manufacture, use and distribute such products throughout the world;
NOW THEREFORE, in consideration of the premises and of the faithful
performance of the covenants herein contained, the parties hereto agree as
follows:
1. DEFINITIONS
1.1 The term "ACCOUNTING PERIOD" shall mean each six month period ending
June 30 and December 31.
1.2 The term "AFFILIATE" shall mean any corporation or other legal entity
other than COMPANY in whatever country organized, controlling, controlled by or
under common control with COMPANY. The term "control" means possession, direct
or indirect, of the powers to direct or cause the direction of the management
and policies of an entity, whether through the ownership of voting securities,
by contract or otherwise. The term "AFFILIATE" with respect to GENERAL shall
mean any company controlling, controlled by, or under common control, directly
or indirectly, with GENERAL.
* Confidential treatment requested.
1.
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1.3 The term "FIRST COMMERCIAL SALE" shall mean in each country the first
sale by COMPANY, its AFFILIATES or SUBLICENSEES of any PRODUCT used or intended
for use in the LICENSE FIELD.
1.4 The term "LICENSE FIELD" shall mean treatment of human or animal
diseases using NEUROSTEROID PRODUCTS.
1.4A The term "NEUROSTEROID PRODUCT" shall mean a product containing a
neuroactive steroid acting as a positive modulator of GABA(A) receptors.
1.5 The term "NET SALES PRICE" shall mean the GROSS SALES PRICE as defined
in (c) below received by COMPANY or any of its AFFILIATES or SUBLICENSEES
("SELLERS") for the sale or distribution of any PRODUCT, less (to the extent
appropriately documented) the amounts set forth in clause (a) below actually
paid out by COMPANY, its AFFILIATE or SUBLICENSEE or credited against the
amounts received by them from the sale or distribution of PRODUCT:
(a) (i) credits and allowances for price adjustment, rejection, or return
of PRODUCTS previously sold;
(ii) rebates and cash discounts to purchasers allowed and taken;
(iii) amounts for transportation, insurance, handling or shipping
charges to purchasers;
(iv) taxes, duties and other governmental charges levied on or measured by
the sale of PRODUCTS, whether absorbed by COMPANY, its AFFILIATES or
SUBLICENSEES or paid by the purchaser so long as COMPANY's, its AFFILIATES' or
SUBLICENSEES' price is reduced thereby, but not franchise or income taxes of any
kind whatsoever;
(b) For any sale by COMPANY, its AFFILIATES or SUBLICENSEES to the United
States or its designee, in which the United States government, on the basis of
its royalty-free license pursuant to 35 USC Sec. 202(c) to any of the PATENT
RIGHTS, requires that the GROSS SALES PRICE be reduced by the amount of royalty
owed GENERAL pursuant to paragraph 5.1, COMPANY, its AFFILIATES or SUBLICENSEES
shall have the right, in determining NET SALES for purposes of payment of the
royalty to GENERAL on such sales to the United States or its designee, to deduct
from the invoiced price the amount of such royalty otherwise owed GENERAL as
calculated using the deductions set forth in (a) above.
(c) For any bona fide sale to a bona fide customer by COMPANY or any of
its AFFILIATES or SUBLICENSEES, the GROSS SALES PRICE shall be the invoiced
price of the PRODUCT.
(d) If COMPANY or any of its AFFILIATES or SUBLICENSEES sell any PRODUCT
in a bona fide sale as a component of a combination of active functional
elements, the GROSS SALES PRICE of the PRODUCT shall be determined by
multiplying the GROSS
2.
<PAGE>
SALES PRICE of the combination by the fraction A over A + B, in which "A" is
the GROSS SALES PRICE of the PRODUCT portion of the combination when sold
separately during the ACCOUNTING PERIOD in the country in which the sale was
made, and "B" is the gross sales price of the other active elements of the
combination sold separately during said ACCOUNTING PERIOD in said country. In
the event that no separate sale of either such PRODUCT or active elements of
the combination is made during said ACCOUNTING PERIOD in said country, the
GROSS SALES PRICE of the PRODUCT shall be determined by multiplying the gross
sales price of such combination by the fraction C over C + D, in which "C" is
the standard fully-absorbed cost of the PRODUCT portion of such combination,
and "D" is the sum of the standard fully-absorbed costs of the other active
elements component(s), such costs being arrived at using the standard
accounting procedures of COMPANY which will be in accord with generally
accepted accounting practices.
(e) If a SELLER commercially uses or disposes of any PRODUCT by itself (as
opposed to a use or disposition of the PRODUCT as a component of a combination
of active functional elements) other than in a bona fide sale to a bona fide
customer, the GROSS SALES PRICE hereunder shall be the price which would be then
payable in an arm's length transaction. If a SELLER commercially uses or
disposes of any PRODUCT as a component of a combination of active functional
elements other than in a bona fide sale to a bona fide customer, the GROSS SALES
PRICE of the PRODUCT shall be determined in accordance with paragraph (c) above,
using as the GROSS SALES PRICE of the combination that price which would be then
payable in an arm's length transaction.
(f) Transfer of a PRODUCT within COMPANY or between COMPANY and an
AFFILIATE or a PARTNERING SUBLICENSEE for sale by the transferee shall not be
considered a sale, commercial use or disposition for the purpose of the
foregoing paragraphs, in the case of such transfer the GROSS SALES PRICE shall
be based on sale of the PRODUCT by the transferee.
1.5A The term "ANNUAL NET SALES" shall mean the sum of the NET SALES
PRICE of all PRODUCTS sold in any calendar year ending December 31.
1.6 The term "PATENT RIGHT" shall mean the U.S. Patent Application
Serial Number [ * ] by Dr. Moskowitz entitled "Method for Treating
Vascular Headaches", or the equivalent of such application, including any
division, continuation or any equivalent foreign patent application or
Letters Patent or the equivalent thereof issuing thereon or reissue,
reexamination or extension thereof. PATENT RIGHTS shall also include those
claims in any continuation-in-part of the aforementioned patent application
which claim an invention described or claimed in said patent application.
1.7 The term "PRODUCT" shall mean any article, device, composition,
method or service, the manufacture, use, or sale of which, absent the
licenses granted herein, would infringe a VALID CLAIM of any PATENT RIGHT.
* Confidential treatment requested.
3.
<PAGE>
1.8 The term "SUBLICENSEE" shall mean any non-AFFILIATE third party
licensed by COMPANY or by an AFFILIATE to make, have made, use, sell, offer for
sale or import any PRODUCT.
1.8A The term "PARTNERING SUBLICENSEE" shall mean any SUBLICENSEE with whom
COMPANY has entered into a strategic partnership or other arrangement in which
COMPANY and said SUBLICENSEE agree that PRODUCTS will be developed and/or sold
by Co-development, wherein the term "Co-development" shall mean the sharing of
research, development, marketing and/or manufacturing costs by COMPANY and a
SUBLICENSEE in accordance with a predefined formula.
1.9 The term "VALID CLAIM" shall mean any claim of any PATENT RIGHT that
has not been (i) finally rejected or (ii) declared invalid by a patent office or
court of competent jurisdiction in any unappealed and unappealable decision.
2. LICENSE
2.1 GENERAL hereby grants COMPANY, to the extent not prohibited by
existing contractual obligations to any other sponsor of research at GENERAL:
(a) an exclusive, worldwide, royalty-bearing license in the LICENSE FIELD
under GENERAL's rights in PATENT RIGHTS to make, have made, use, sell, offer for
sale, and import PRODUCTS;
(b) to the extent an exclusive license is not available to COMPANY in a
country, a non-exclusive, royalty-bearing license in the LICENSE FIELD under
PATENT RIGHTS to make, have made, use, sell, offer for sale, and import
PRODUCTS;
(c) the right to sublicense PATENT RIGHTS exclusively licensed to COMPANY,
provided that, if COMPANY's exclusive license in a country is converted to a
nonexclusive license in accordance with paragraph 2.1(b), and COMPANY has a
single PARTNERING SUBLICENSEE in said country, COMPANY shall retain the right to
sublicense PATENT RIGHTS solely to said PARTNERING SUBLICENSEE in said country.
All licenses pursuant to this paragraph 2.1 are subject to the rights,
conditions and limitations imposed by U.S. law with respect to inventions made
in the performance of federally funded research.
The above licenses to sell PRODUCTS include the right to grant to the
purchaser of products from COMPANY, its AFFILIATES, and SUBLICENSEES the right
to use such purchased PRODUCTS in a method coming within the scope of the PATENT
RIGHTS.
2.2 The granting of any license hereunder is subject to GENERAL's and
GENERAL's AFFILIATES' right to make and to use the subject matter described and
claimed in PATENT RIGHT for research and clinical purposes but not for
Commercial Purposes, as hereinafter
4.
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defined. For this paragraph, "Commercial Purposes" shall mean use of the
subject matter described and claimed in PATENT RIGHT in any product, or for
the purpose of producing a product, which is sold or otherwise commercially
distributed.
2.3 GENERAL shall have the right to license any PATENT RIGHT to any other
party for the purpose of manufacturing, using or selling of any PRODUCT outside
of the LICENSE FIELD. If GENERAL proposes to grant any third party an exclusive
license to PATENT RIGHTS in a field outside the LICENSE FIELD ("the Other
Field"), GENERAL shall so notify COMPANY, and COMPANY shall have thirty (30)
days to notify GENERAL of its interest in obtaining an exclusive license in the
Other Field, to provide GENERAL with proposed terms for such a license and a
statement of its capabilities for developing a PRODUCT in said Other Field.
GENERAL will consider COMPANY's offer in good faith, and will notify COMPANY of
its decision within thirty (30) days of GENERAL's receipt of COMPANY's offer, it
being understood that GENERAL shall be under no obligation to grant COMPANY a
license in any Other Field, and that GENERAL's decision on whether to grant
COMPANY a license in any Other Field shall take into account COMPANY's access or
rights to drugs within said Other Field.
2.4 It is understood that nothing herein shall be construed to grant
COMPANY a license express or implied under any patent owned solely or jointly by
GENERAL other than the PATENT RIGHTS expressly licensed hereunder.
3. DUE DILIGENCE OBLIGATIONS
3.1 COMPANY shall itself, or through its AFFILIATES or SUBLICENSEES, use
its commercially reasonable efforts to develop and make commercially available
PRODUCTS for commercial sales and distribution throughout the world in the
LICENSE FIELD. Such efforts shall consist of achieving the following objectives
within the time period designated below following the EFFECTIVE DATE:
(a) GENERAL acknowledges that COMPANY represents that it is developing the
drug ganaxolone for indications other than migraine headaches, and COMPANY
therefore agrees that it will commence a Phase II clinical trial of a PRODUCT
comprising ganaxolone ("GANAXOLONE PRODUCT") for an indication within the
LICENSE FIELD within twelve (12) months, and that it will thereafter diligently
pursue clinical evaluations of a GANAXOLONE PRODUCT for an indication in the
LICENSE FIELD as long as a GANAXOLONE PRODUCT continues to show clinical
efficacy against an indication in the LICENSE FIELD;
(b) within [ * ], complete all animal toxicity tests required in
connection with securing U.S. Food and Drug Administration approval of clinical
evaluations of a PRODUCT not comprising ganaxolone ("SECOND GENERATION
PRODUCT").
* Confidential treatment requested.
5.
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(c) within [ * ], initiate and thereafter diligently pursue clinical
evaluations of a SECOND GENERATION PRODUCT and in connection therewith take all
actions necessary under the Food, Drug and Cosmetic Act (21 USC 301-391);
(d) within [ * ], determine whether to manufacture either a GANAXOLONE
PRODUCT or a SECOND GENERATION PRODUCT for commercial sale and to inform GENERAL
of such determination;
(e) as a result of the determination in (d) above, either introduce a
GANAXOLONE PRODUCT in the United States, Europe and Japan within [ * ] of
the EFFECTIVE DATE or introduce a SECOND GENERATION PRODUCT in the United
States, Europe and Japan within [ * ] of the EFFECTIVE DATE; and
(f) within [ * ], announce and market for general commercial sale
either a GANAXOLONE PRODUCT or a SECOND GENERATION PRODUCT on a worldwide basis;
provided, however, that GENERAL shall not unreasonably withhold its consent to
any revision in such time periods whenever requested in writing by COMPANY and
supported by evidence of technical difficulties or delays in clinical studies or
regulatory processes that the parties could not have reasonably avoided. Failure
to achieve one or more of the above objectives within the above stated time
periods or within any extension granted by GENERAL shall result in GENERAL
having the right to cancel upon sixty (60) days notice any exclusive license
granted hereunder or convert any exclusive license to a non-exclusive license.
3.2 At intervals no longer than every twelve (12) months, COMPANY shall
report in writing to GENERAL on progress made toward the foregoing objectives.
4. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHT
4.1 GENERAL shall be responsible for the preparation, filing, prosecution
and maintenance of all patent applications and patents included in PATENT
RIGHTS. As long as GENERAL has not granted any licenses under PATENT RIGHTS to
any third party, COMPANY shall reimburse GENERAL for all reasonable costs
("Costs") incurred by GENERAL for the preparation, filing, prosecution and
maintenance of all PATENT RIGHTS as follows:
(a) Subject to paragraph 4.2, for all Costs incurred by GENERAL from and
after the EFFECTIVE DATE, COMPANY shall reimburse GENERAL within thirty (30)
days of receipt of invoices from GENERAL;
(b) For all Costs incurred by GENERAL prior to the EFFECTIVE DATE, COMPANY
shall reimburse GENERAL upon execution of this Agreement.
* Confidential treatment requested.
6.
<PAGE>
In the event GENERAL grants a license under PATENT RIGHTS to one or more
third parties (each a "Third Party Licensee"), COMPANY shall only be required to
reimburse GENERAL for the CoCensys Pro Rata Percentage of those Costs incurred
by GENERAL after the effective date of such license to a Third Party Licensee.
The "CoCensys Pro Rata Percentage" at any given point in time shall equal 1
divided by the number of licensees (i.e., CoCensys plus each Third Party
Licensee) under the PATENT RIGHTS at such point in time.
4.2 With respect to any PATENT RIGHT, each document or a draft thereof
pertaining to the filing, prosecution, or maintenance of such PATENT RIGHT,
including but not limited to each patent application, office action, response to
office action, request for terminal disclaimer, and request for reissue or
reexamination of any patent issuing from such application shall be provided to
COMPANY as follows. Documents received from any patent office or counsel's
analysis thereof shall be provided promptly after receipt. For a document to be
filed in any patent office, a draft of such document shall be provided
sufficiently prior to its filing, to allow for review and comment by the other
party. If as a result of the review of any such document, COMPANY shall elect
not to pay or continue to pay the Costs for such PATENT RIGHT, COMPANY shall so
notify GENERAL within thirty (30) days of COMPANY's receipt of such document and
COMPANY shall thereafter be relieved of the obligation to pay any additional
Costs regarding such PATENT RIGHT incurred after the receipt of such notice by
GENERAL. Such U.S. or foreign patent application or patent shall thereupon cease
to be a PATENT RIGHT hereunder and GENERAL shall be free to license its rights
to that particular U.S. patent application or patent to any other party on any
terms.
5. ROYALTIES
5.1 Beginning with the FIRST COMMERCIAL SALE in any country, on all sales
of PRODUCTS anywhere in the world by COMPANY, its AFFILIATES or SUBLICENSEES,
COMPANY shall pay GENERAL royalties in accordance with the following schedule,
such undertaking and schedule having been agreed to for the purpose of
reflecting and advancing the mutual convenience of the parties. For each PRODUCT
sold by COMPANY or its AFFILIATES and SUBLICENSEES;
(a) [ * ] of the NET SALES PRICE for ANNUAL NET SALES of [ * ] or less,
and [ * ] of the NET SALES PRICE for the portion of ANNUAL NET SALES that is
greater than [ * ] so long as the PRODUCT, its manufacture, use or sale is
covered by a VALID CLAIM of any PATENT RIGHT licensed exclusively to COMPANY;
and
(b) [ * ] of the NET SALES PRICE for ANNUAL NET SALES of [ * ] or
less, and [ * ] of the NET SALES PRICE for the portion of ANNUAL NET SALES
that is greater than [ * ] whenever the PRODUCT, its manufacture, use or
sale is covered by a VALID CLAIM of any PATENT RIGHT licensed non-exclusively to
COMPANY in the country in question pursuant to either paragraph 2.7(b) or 3.1
hereunder.
* Confidential treatment requested.
7.
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5.2 (a) In the event that more than one royalty rate under paragraph 5.1
is applicable to a PRODUCT, the highest of the applicable royalties shall apply.
(b) Only one royalty under paragraph 5.1 shall be due and payable to
GENERAL by COMPANY for any PRODUCT regardless of the number of PATENT RIGHTS
covering such PRODUCT.
5.3 If any license granted pursuant to Article 2 shall be or become non-
exclusive pursuant to either paragraph 2.1(b) or 3.1 hereunder and GENERAL shall
license any PATENT RIGHT to another licensee for the purpose of making, using or
selling PRODUCTS in the LICENSE FIELD and accept a royalty or royalties more
favorable to such licensee than herein provided for COMPANY, GENERAL shall give
written notice thereof to COMPANY and as of the effective date of such more
favorable royalty or royalties, COMPANY's obligation hereunder to pay royalty or
royalties to GENERAL shall be revised to the more favorable rate.
5.4 In addition to the royalties provided for above, COMPANY shall pay
GENERAL [ * ] of any and all non-royalty income received from its AFFILIATES
and SUBLICENSEES in consideration for the sublicensing of any right or license
granted to COMPANY hereunder, including without limitation license fees and
milestone payments, but not including amounts received by COMPANY (a) for
capital stock of COMPANY, (b) in the form of a loan or advance, (c) as payment
for research and development services performed or to be performed by COMPANY,
(d) as milestone payments in consideration for past or future research and
development expense in any sublicensing arrangement with a PARTNERING
SUBLICENSEE wherein COMPANY is sharing research and development costs with the
PARTNERING SUBLICENSEE and said milestone payments are solely reimbursements for
COMPANY's research and development costs actually incurred, (e) as payment for
manufacturing services in any sublicensing arrangement wherein COMPANY retains
the right to manufacture PRODUCT which is then sold to a SUBLICENSEE provided
that GENERAL receives the full royalty due for sales of PRODUCT by said
SUBLICENSEE under paragraph 5.1 hereunder or (f) from a PARTNERING SUBLICENSEE
as payment for marketing, sales or promotional activities which COMPANY or its
AFFILIATE has agreed to undertake as part of Co-development. It is understood
that this paragraph shall not apply to running royalties for PRODUCT sales
received by COMPANY from its AFFILIATES AND SUBLICENSEES, provided GENERAL
receives the royalties specified in paragraph 5.1 for such PRODUCT sales.
5.5 In addition to the payments provided for in paragraphs 5.1 and 5.4,
COMPANY shall pay GENERAL the following amounts upon the occurrence of the
following events:
[ * ] within five (5) business days of the execution of this Agreement,
which shall include the amount payable to GENERAL for past patent Costs pursuant
to paragraph 4.1(b);
[ * ] within thirty (30) days of the filing with the FDA of the first
NDA, PMA or PMA Supplement, or comparable application with respect to a PRODUCT;
and,
* Confidential treatment requested.
8.
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[ * ] within thirty (30) days of the actual approval by the FDA of the
first NDA, PMA or PMA Supplement, or comparable application with respect to a
PRODUCT.
5.6 (a) In the event that the royalty paid to GENERAL is a significant
factor in the return realized by COMPANY so as to diminish COMPANY's capability
to respond to competitive pressures in the market, GENERAL agrees to consider a
reasonable reduction in the royalty paid to GENERAL as to each such PRODUCT for
the period during which such market condition exists. Factors determining the
size of the reduction will include profit margin on PRODUCT and on analogous
products, prices of competitive products, total prior sales by COMPANY, and
COMPANY's expenditures in PRODUCT development.
(b) With respect to the definition of "NET SALES PRICE" (as contained in
Section 1.5) and the applicable rate of exchange for foreign currency conversion
(as set forth in Section 6.2) under this Agreement, it is understood that
COMPANY may enter into one or more agreements with SUBLICENSEES (each a
"SUBLICENSE AGREEMENT") pursuant to which COMPANY will be compensated by a
SUBLICENSEE based on net sales of PRODUCT and that, for sales outside the United
States, a foreign exchange rate will be applied. When negotiating a SUBLICENSE
AGREEMENT, COMPANY will use its best efforts to have such SUBLICENSE AGREEMENT
contain (i) a definition of net sales of PRODUCT and (ii) foreign exchange
provisions which are substantially equivalent to those contained in Sections 1.5
and 6.2, respectively, of this Agreement. In the event, however, that COMPANY is
unable to have its prospective SUBLICENSEE agree to provisions that are
identical to the provisions of this Agreement, it shall so notify GENERAL and
submit for GENERAL's review the proposed versions of such provisions in the
proposed SUBLICENSE AGREEMENT. Within thirty (30) days of its receipt of such
notice and proposed revisions, GENERAL shall either notify COMPANY of its
acceptance of such proposed provisions or indicate its reasons for withholding
approval. If the SUBLICENSE AGREEMENT includes such provisions that are
acceptable to GENERAL, which acceptance shall not unreasonably be withheld, then
for sales of PRODUCT made under such SUBLICENSE AGREEMENT, (i) the "NET SALES
PRICE" in this Agreement shall be deemed amended to conform to the definition of
net sales of PRODUCT contained in such SUBLICENSE AGREEMENT and (ii) the
applicable foreign exchange rates provided for under this Agreement shall be the
same as those provided for under the SUBLICENSE AGREEMENT. In the event that the
SUBLICENSE AGREEMENT includes provisions that are not acceptable to GENERAL and
COMPANY is unable to compensate GENERAL based on the NET SALES PRICE and foreign
exchange provisions set forth herein, any conflict between the provisions of the
SUBLICENSE AGREEMENT and the provisions of this Agreement shall be settled by
the procedures of paragraph 10.9.
5.7 The payments due under this Agreement shall, if overdue, bear interest
until payment at a per annum rate equal to one percent (1%) above the prime rate
in effect at the Bank of Boston on the due date, not to exceed the maximum
permitted by law. The payment of such interest shall not preclude GENERAL from
exercising any other rights it may have as a consequence of the lateness of any
payment.
* Confidential treatment requested.
9.
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6. REPORTS AND PAYMENTS
6.1 COMPANY shall keep, and shall cause each of its AFFILIATES and
SUBLICENSEES, if any, to keep full and accurate books of accounts containing all
particulars that may be necessary for the purpose of calculating all royalties
payable to GENERAL. Such books of account shall be kept at their principal place
of business and, with all necessary supporting data shall, during all reasonable
times for the three (3) years next following the end of the calendar year to
which each shall pertain, be open for inspection at reasonable times by GENERAL
or its designee at GENERAL's expense for the purpose of verifying royalty
statements or compliance with this Agreement.
6.2 In each year the amount of royalty due shall be calculated
semiannually as of the end of each ACCOUNTING PERIOD and shall be paid
semiannually within the sixty (60) days next following such date, every such
payment to be supported by the accounting prescribed in paragraph 6.3 and to be
made in United States currency. Whenever conversion from any foreign currency
shall be required, such conversion shall be at the rate of exchange thereafter
published in the Wall Street Journal for the business day closest to the end of
the applicable ACCOUNTING PERIOD.
6.3 With each semiannual payment, COMPANY shall deliver to GENERAL a full
and accurate accounting to include at least the following information:
(a) Quantity of each PRODUCT sold or leased (by country) by COMPANY, and
its AFFILIATES or SUBLICENSEES;
(b) Total billings for each PRODUCT (by country, unless such information
is not provided to COMPANY by a SUBLICENSEE, in which case COMPANY shall list
total billings in as much detail as is available to COMPANY);
(c) Quantities of each PRODUCT used by COMPANY and its AFFILIATES or
SUBLICENSEES;
(d) Names and addresses of all SUBLICENSEES of COMPANY; and
(e) Total royalties payable to GENERAL.
7. INFRINGEMENT
7.1 GENERAL will protect its PATENT RIGHTS from infringement and prosecute
infringers when, in its sole judgement, such action may be reasonably necessary,
proper and justified.
7.2 If COMPANY shall have supplied GENERAL with written evidence
demonstrating to GENERAL's reasonable satisfaction prima facie infringement of a
claim of a PATENT RIGHT by a third party, COMPANY may by notice request GENERAL
to take steps
10.
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to protect the PATENT RIGHT. GENERAL shall notify COMPANY within three (3)
months of the receipt of such notice whether GENERAL intends to prosecute the
alleged infringement. If GENERAL notifies COMPANY that it intends to so
prosecute, GENERAL shall, within three (three) months of its notice to
COMPANY either (i) cause infringement to terminate or (ii) initiate legal
proceedings against the infringer. In the event GENERAL notifies COMPANY that
GENERAL does not intend to prosecute said infringement COMPANY may, upon
notice to GENERAL, initiate legal proceedings against the infringer at
COMPANY's expense and in GENERAL's name if so required by law. No settlement,
consent judgment or other voluntary final disposition of the suit which
invalidates or restricts the claims of such PATENT RIGHTS may be entered into
without the consent of GENERAL, which consent shall not be unreasonably
withheld. COMPANY shall indemnify GENERAL against any order for payment that
may be made against GENERAL in such proceedings.
7.3 In the event one party shall initiate or carry on legal proceedings to
enforce any PATENT RIGHT against any alleged infringer, the other party shall
fully cooperate with and supply all assistance reasonably requested by the party
initiating or carrying on such proceedings. The party which institutes any suit
to protect or enforce a PATENT RIGHT shall have sole control of that suit and
shall bear the reasonable expenses (excluding legal fees) incurred by said other
party in providing such assistance and cooperation as is requested pursuant to
this paragraph. The party initiating or carrying on such legal proceedings shall
keep the other party informed of the progress of such proceedings and said other
party shall be entitled to counsel in such proceedings but at its own expense.
Any award paid by third parties as the result of such proceedings (whether by
way of settlement or otherwise) shall first be applied to reimbursement of the
unreimbursed legal fees and expenses incurred by either party and then the
remainder shall be divided between the parties as follows:
(a) (i) If the amount is based on lost profits, COMPANY shall receive an
amount equal to the damages the court determines COMPANY has suffered as a
result of the infringement less the amount of any royalties that would have been
due GENERAL on sales of PRODUCT lost by COMPANY as a result of the infringement
had COMPANY made such sales; and
(ii) GENERAL shall receive an amount equal to the royalties it would
have received if such sales had been made by COMPANY; or
(b) As to awards other than those based on lost profits, [ * ] to the
party initiating such proceedings and [ * ] to the other party.
7.4 For the purpose of the proceedings referred to in this Article 7, the
GENERAL and COMPANY shall permit the use of their names and shall execute such
documents and carry out such other acts as may be necessary. The party
initiating or carrying on such legal proceedings shall keep the other party
informed of the progress of such proceedings and said other party shall be
entitled to counsel in such proceedings but at its own expense, said expenses
* Confidential treatment requested.
11.
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to be off-set against any damages received by the party bringing suit in
accordance with the foregoing paragraph 7.3.
8. INDEMNIFICATION
8.1 (a) COMPANY shall indemnify, defend and hold harmless GENERAL and its
trustees, officers, medical and professional staff, employees, and agents and
their respective successors, heirs and assigns (the "Indemnitees"), against any
liability, damage, loss or expense (including reasonable attorney's fees and
expenses of litigation) incurred by or imposed upon the Indemnitees or any one
of them in connection with any claims, suits, actions, demands or judgments
arising out of any theory of product liability (including, but not limited to,
actions in the form of tort, warranty, or strict liability) concerning any
product, process or service made, used or sold pursuant to any right or license
granted under this Agreement.
(b) COMPANY's indemnification under (a) above shall not apply to any
liability, damage, loss or expense to the extent that it is directly
attributable to the negligent activities, reckless misconduct or intentional
misconduct of the Indemnitees.
(c) COMPANY agrees, at its own expense to provide attorneys reasonably
acceptable to the GENERAL to defend against any actions brought or filed against
any party indemnified hereunder with respect to the subject of indemnity
contained herein, whether or not such actions are rightfully brought.
(d) This paragraph 8.1 shall survive expiration or termination of this
Agreement.
8.2 (a) Beginning at such time as any such product, process or service is
being commercially distributed or sold (other than for the purpose of obtaining
regulatory approvals) by COMPANY or by a SUBLICENSEE, AFFILIATE or agent of
COMPANY, COMPANY shall, at its sole cost and expense, procure and maintain
commercial general liability insurance in amounts not less than $2,000,000 per
incident and $2,000,000 annual aggregate and naming the Indemnitees as
additional insureds. Such commercial general liability insurance shall provide
(i) product liability coverage and (ii) broad form contractual liability
coverage for COMPANY's indemnification under paragraph 8.1 of this Agreement. If
COMPANY elects to self-insure all or part of the limits described above
(including deductibles or retentions which are in excess of $250,000 annual
aggregate) such self-insurance program must be acceptable to the GENERAL and the
Risk Management Foundation (GENERAL's current liability insurance carrier). The
minimum amounts of insurance coverage required under this paragraph 8.2 shall
not be construed to create a limit of COMPANY's liability with respect to its
indemnification under paragraph 8.1 of this Agreement.
(b) COMPANY shall provide GENERAL with written evidence of such insurance
upon request of GENERAL. COMPANY shall provide GENERAL with written notice at
least thirty (30) days prior to the cancellation, non-renewal or material change
in such insurance; if COMPANY does not obtain replacement insurance providing
comparable coverage prior to the expiration of such thirty (30) day period,
GENERAL shall have the right to terminate this
12.
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Agreement effective at the end of such thirty (30) day period without notice
or any additional waiting periods.
(c) COMPANY shall maintain such commercial general liability insurance
beyond the expiration or termination of this Agreement during (i) the period
that any such product, process, or service is being commercially distributed or
sold (other than for the purpose of obtaining regulatory approvals) by COMPANY
or by a licensee, affiliate or agent of COMPANY and (ii) a reasonable period
after the period referred to in (c) (i) above which in no event shall be less
than ten (10) years.
(d) This paragraph 8.2 shall survive expiration or termination of this
Agreement.
8.3 OTHER THAN WARRANTIES SET FORTH HEREIN, GENERAL MAKES NO WARRANTY,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE WITH
RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET, TANGIBLE RESEARCH
PROPERTY, INFORMATION OR DATA LICENSED OR OTHERWISE PROVIDED TO COMPANY
HEREUNDER AND HEREBY DISCLAIMS THE SAME.
9. TERMINATION
9.1 Unless otherwise terminated as provided for in this Agreement, the
license to PATENT RIGHT granted hereunder will continue on a country by country
basis:
(i) for two (2) years after the date COMPANY, its AFFILIATES, or
SUBLICENSEES shall last sell any PRODUCT in such country, it being understood
that GENERAL shall have the right to terminate such license upon written notice
in any country in the event that after the FIRST COMMERCIAL SALE of PRODUCT in
such country there is a continuous two (2) year period in which no PRODUCT is
sold in such country, provided such sale is not prevented by force majeure,
government regulation or intervention, or institution of a law suit by any third
party, or
(ii) until the last to expire of any PATENT RIGHT, the claims of which but
for this Agreement would be infringed by the manufacture, use or sale of any
PRODUCT in the applicable country,
whichever shall first occur.
9.2 If either party shall fail to faithfully perform any of its material
obligations under this Agreement except the due diligence milestones specified
in Article 3 herein, the nondefaulting party may give written notice of the
default to the defaulting party. Unless such default is corrected within sixty
(60) days after such notice, the notifying party may terminate this Agreement
and the license hereunder upon sixty (60) days prior written notice, provided
that only one such sixty (60) day grace period shall be available in any twelve
(12) month period
13.
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with respect to a default of any particular provision hereunder. Thereafter
notice of default of said provision shall constitute termination.
9.3 In the event that any license granted to COMPANY under this Agreement
is terminated, any sublicense under such license granted prior to termination of
said license shall remain in full force and effect, provided that:
(i) the SUBLICENSEE is not then in breach of its sublicense agreement;
(ii) the SUBLICENSEE agrees to be bound to GENERAL as the licensor under
the terms and conditions of this sublicense agreement, as modified by the
provisions of this paragraph 9.3;
(iii) the SUBLICENSEE, at GENERAL's written request, assumes in a
signed writing the same obligations to GENERAL as those assumed by COMPANY under
Articles 8 and 10 hereof;
(iv) GENERAL shall have the right to receive any payments payable to
COMPANY under such sublicense agreement to the extent they are reasonably and
equitably attributable to such SUBLICENSEE's right under such sublicense to use
and exploit PATENT RIGHTS;
(v) the SUBLICENSEE agrees to be bound by the due diligence obligations of
COMPANY pursuant to paragraph 3.1 hereof (whether set by the parties or by
arbitration) in the field and territory of the sublicense;
(vi) GENERAL has the right to terminate such sublicense upon thirty (30)
days prior written notice to COMPANY and such SUBLICENSEE in the event of any
material breach of the obligation to make the payments described in clause (iv)
of this paragraph 9.3, unless such breach is cured prior to the expiration of
such thirty (30) day period, and shall further have the right to terminate such
sublicense in the event of SUBLICENSEE's failure to meet its due diligence
obligations pursuant to clause (v) hereof;
(vii) GENERAL shall not assume, and shall not be responsible to such
SUBLICENSEE for, any representations, warranties or obligations of COMPANY to
such SUBLICENSEE, other than to permit such SUBLICENSEE to exercise any rights
to PATENT RIGHTS that are granted under such sublicense agreement consistent
with the terms of this AGREEMENT.
9.4 Upon termination of any license granted hereunder COMPANY shall pay
GENERAL all royalties due or accrued on (i) the sale of PRODUCT up to and
including the date of termination and (ii) for twelve (12) months following the
date of termination, the sale of PRODUCT manufactured prior to the termination
date.
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10. MISCELLANEOUS
10.1 This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof.
10.2 In order to facilitate implementation of this Agreement, GENERAL and
COMPANY are designating the following individuals to act on their behalf with
respect to this Agreement for the matter indicated below:
(a) with respect to all royalty payments, any correspondence pertaining to
any PATENT RIGHT, or any notice of the use of GENERAL's name, for GENERAL, the
Director, Office of Technology Affairs, and for COMPANY the Senior Vice
President, R&D; provided that correspondence relating to the billing of patent
costs shall be copied to, for GENERAL, the Business Manager, Office of
Technology Affairs; and for COMPANY, the Chief Financial Officer.
(b) any amendment of or waiver under this Agreement, any written notice
including progress reports or other communication pertaining to the Agreement:
for GENERAL, the Director, Office of Technology Affairs; and for COMPANY, the
Senior Vice President, R&D.
(c) the above designations may be superseded from time to time by
alternative designations made by: for GENERAL, the President or the Senior Vice
President for Research and Technology Affairs; and for COMPANY, the President
and CEO.
10.3 This Agreement may be amended and any of its terms or conditions may
be waived only by a written instrument executed by the parties or, in the case
of a waiver, by the party waiving compliance. 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 shall be deemed as a further or continuing waiver of such
condition or term or of any other condition or term.
10.4 This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors and
permitted assigns.
10.5 Any delays in or failures of performance by either party under this
Agreement shall not be considered a breach of this Agreement if and to the
extent caused by occurrences beyond the reasonable control of the party
affected, including but not limited to: Acts of God; acts, regulations or laws
of any government; strikes or their concerted acts of worker; fires; floods;
explosions; riots; wars; rebellion; and sabotage. Any time for performance
hereunder shall be extended by the actual time of delay caused by such
occurrence.
10.6 Neither party shall use the name of the other party or of any staff
member, officer, employee or student of the other party or any adaptation
thereof in any advertising, promotional or sales literature, publicity or in any
document employed to obtain funds or financing without the prior written
approval of the party or individual whose name is to be used.
15.
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For GENERAL, such approval shall be obtained from the Director of Public
Affairs. Notwithstanding the foregoing, GENERAL hereby consents to COMPANY's
use of the following statement regarding the existence of this license
agreement in connection with any disclosure or filing by COMPANY pursuant to
the rules and regulations of the Securities and Exchange Commission or in any
press release required by the same:
"CoCensys, Inc. has entered into an exclusive license agreement with
The General Hospital Corporation, doing business as Massachusetts
General Hospital, for certain patents and patent applications
pertaining to the use of neurosteroid drugs in the treatment of
vascular headaches"
In addition, COMPANY shall be permitted to disclose the name of GENERAL to the
extent required by federal, state or local law or regulation, including without
limitation federal and state securities laws.
10.7 This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
10.8 This Agreement shall not be assignable by GENERAL without COMPANY's
written consent except for the right to receive royalties or other payments
payable herein. COMPANY may at its own discretion and without approval by
GENERAL transfer its interest or any part thereof under this Agreement to a
wholly-owned subsidiary or any assignee or purchaser of the portion of its
business associated with the manufacture and sale of PRODUCT. In the event of
any such transfer, the transferee shall assume and be bound by the provisions of
this Agreement. Otherwise this Agreement shall be assignable by COMPANY only
with the consent in writing of GENERAL.
10.9 For any and all claims, disputes, or controversies arising under, out
of, or in connection with this Agreement, except issues relating to the
validity, construction or effect of any PATENT RIGHT, which the parties shall be
unable to resolve within sixty (60) days, the party raising such dispute shall
promptly advise the other party of such claim, dispute, or controversy in a
writing which describes in reasonable detail the nature of such dispute. By not
later than five (5) business days after the recipient has received such notice
of dispute, each party shall have selected for itself a representative who shall
have the authority to bind such party and shall additionally have advised the
other party in writing of the name and title of such representative. By not
later than ten (10) business days after the date of such notice of dispute, such
representatives shall agree upon a third party which is in the business of
providing Alternative Dispute Resolution (ADR) services (hereinafter, "ADR
Provider") and shall schedule a date with such ADR Provider to engage in ADR.
Thereafter, the representatives of the parties shall engage in good faith in an
ADR process under the auspices of the selected ADR Provider. If within the
aforesaid thirty (30) business days after the date of the notice of dispute the
representatives of the parties have not been able to agree upon an ADR Provider
and schedule a date to engage in ADR, or if they have not been able to resolve
the dispute within thirty (30) business days after the termination of ADR, the
parties shall have the right to pursue any other remedies legally available to
resolve such dispute. Notwithstanding the foregoing, nothing in this
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Paragraph 10.9 shall be construed to waive any rights or timely performance
of any obligations existing under this Agreement.
10.10 If any provision(s) of this Agreement are or become invalid, are
ruled illegal by any court of competent jurisdiction or are deemed unenforceable
under then current applicable law from time to time in effect during the term
hereof, it is the intention of the parties that the remainder of this agreement
shall not be effected thereby. It is further the intention of the parties that
in lieu of each such provision which is invalid, illegal or unenforceable, there
be substituted or added as part of this Agreement a provision which shall be as
similar as possible in economic and business objectives as intended by the
parties to such invalid, illegal or enforceable provision, but shall be valid,
legal and enforceable.
10.11 GENERAL represents that, to the best of its knowledge, it is the
owner of all rights, title and interest in PATENT RIGHTS, and it has no
obligations to other sponsors of research at GENERAL that would prevent
GENERAL from granting COMPANY the licenses granted hereunder.
THE PARTIES have duly executed this Agreement as of the date first shown
above written.
COMPANY THE GENERAL HOSPITAL
CORPORATION
BY: /s/ Eckard Weber BY: /s/ Nikki J. Zapol
--------------------------------- ----------------------------------
TITLE: Senior Vice President, TITLE: Managing Director,
------------------------------- --------------------------------
Research and Drug Discovery Office of Technology Affairs
------------------------------- --------------------------------
DATE: December 23, 1996 DATE: December 20, 1996
-------------------------------- ---------------------------------
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Exhibit A
Targeted Doctors
[ * ]
