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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 24, 1999
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LEUKOSITE, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 0-22769 04-3173859
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation File Number Identification No.)
215 First Street, Cambridge, MA 02142
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 621-9350
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ITEM 5. OTHER EVENTS.
On August 24, 1999, LeukoSite announced that L&I Partners, L.P., a joint venture
which LeukoSite has with ILEX Oncology, Inc., entered into an agreement with
Schering AG for the marketing and distribution of CAMPATH(TM) in the United
States, Europe and the rest of the world except for Japan and East Asia (where
LeukoSite and ILEX have retained rights). The Agreement is attached hereto as
Exhibit 99.1 and incorporated herein by reference. The foregoing description is
qualified by reference to such exhibit.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(C) EXHIBITS.
*99.1 Distribution and Development Agreement between L&I Partners, L.P. and
Schering AG, dated August 24, 1999
* Confidential treatment requested: material has been omitted and filed
separately with the Commission.
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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 hereunto duly authorized.
LEUKOSITE, INC.
By: /s/ Augustine Lawlor
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Augustine Lawlor,
Chief Operating and Financial Officer and
Senior Vice President, Corporate
Development
Dated: September 3, 1999
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CONFIDENTIAL TREATMENT
EXHIBIT 99.1
TO FORM 8-K FOR
LEUKOSITE, INC.
DISTRIBUTION AND DEVELOPMENT AGREEMENT
This Distribution and Development Agreement ("AGREEMENT") is entered into
as of August 24, 1999 (the "Effective Date") by and between L&I Partners, L.P.,
a Delaware partnership, having its principal place of business at 11550 1H-10
West, Suite 100, San Antonio, Texas 78230 ("L&I") and with Schering AG a German
corporation, having a principal place of business at 13342 Berlin, Germany
(hereinafter "DISTRIBUTOR").
WITNESSETH
WHEREAS, the parties hereto desire that DISTRIBUTOR engage in the
distribution in the TERRITORY (as hereinafter defined) of the PRODUCT (as
hereinafter defined); and
WHEREAS, L&I and DISTRIBUTOR desire to set forth in this AGREEMENT the
terms and conditions of such distribution.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
1.1 "AFFILIATE" shall mean with respect to a PARTY any corporation or other
business entity that directly or indirectly controls, is controlled by, or
is under common control with such PARTY. Control means ownership or other
beneficial interest in fifty percent (50%) or more of the voting stock or
other voting interest of a corporation or other business entity, or the
power to direct or cause the direction of the management or policies of an
entity. LEUKOSITE and ILEX are AFFILIATES of L&I as is any corporation or
business entity that directly or indirectly controls, is controlled by, or
is under common control with LEUKOSITE or ILEX.
1.2 "AGENCY" shall mean any governmental or regulatory authority in the
TERRITORY responsible for granting approvals or registrations for
marketing of PRODUCT in the TERRITORY.
1.3 "APLS" shall mean the Advertising and Promotional Labeling Staff (or
successor unit) of the FDA's Center for Biologics Evaluation and Research.
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1.4 "APPROPRIATE PERCENTAGE" for PRODUCT for each INDICATION means:
(i) ****** of positive EARNINGS. 1
(ii) ****** of negative EARNINGS.
1.5 "BERLEX" means DISTRIBUTOR'S US AFFILIATE, Berlex Laboratories, Inc.
1.6 "BI" shall mean Boehringer Ingelheim Pharma KG.
1.7 "BI AGREEMENT" shall mean the Supply Agreement between L&I and BI dated
June 4th, 1999 with respect to CAMPATH 1H and any amendments thereto.
1.8 "BLA" means a Biologics License Application from the Food and Drug
Administration.
1.8 "BTG" means British Technology Group Limited.
1.10 "BTG AGREEMENT" means the March 31, 1997 agreement between BTG and
LEUKOSITE with respect to Campath I-H and any amendments thereto including
but not limited to the Deed of Variation of Appendix I.
1.11 "BTG CONSENT LETTER" means the letter from BTG to DISTRIBUTOR dated as of
the Effective Date in the form set out in Appendix H to this AGREEMENT.
1.12 "BTG DEED OF VARIATION" means the Deed of Variation to the BTG Agreement
made between LEUKOSITE and BTG and dated as of the Effective Date in the
form set out in Appendix I to this AGREEMENT.
1.13 "BTG ROYALTIES" shall mean the royalties payable by L&I and/or LEUKOSITE
to British Technology Group Limited pursuant to Section 6 of the BTG
AGREEMENT in respect of PRODUCT sold or otherwise disposed of by
DISTRIBUTOR, its AFFILIATES or their SUBDISTRIBUTORS in the TERRITORY.
1.14 "CALENDAR QUARTER" shall mean the period of three consecutive calendar
months ending on March 31, June 30, September 30 or December 31, as the
case may be.
1.15 "CLINICAL TRIAL" shall mean CAM 211 pivotal study being presently
conducted by L&I.
1.16 "CLL INDICATION" means the treatment of chronic lymphocytic leukemia in
humans.
1.17 "COST OF GOODS" shall mean the aggregate of the following, determined in a
reasonable manner in accordance with GAAP (i) the amount(s) paid by L&I to
a THIRD
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1 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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PARTY(IES) or to the DISTRIBUTOR, if applicable, for (a) manufacture of
FINAL FORM PRODUCT or FILLED PRODUCT, as applicable; (b) transportation,
storage and insurance for delivery to DISTRIBUTOR of FINAL FORM PRODUCT
or, if applicable, FILLED PRODUCT ; and (c) performance of manufacturing
and quality assurance activities (if any) in relation to the PRODUCT; and
(ii) any direct expenses incurred by L&I associated with L&I's
manufacturing and quality assurance activities (if any) in relation to the
PRODUCT.
1.18 "DEVELOPMENT COMMITTEE" shall mean the Committee of Section 10.
1.19 "DEVELOPMENT EXPENSES" means the aggregate amount of expenses incurred for
developing and obtaining regulatory approval of PRODUCT for an INDICATION
in accordance with a DEVELOPMENT PLAN or PRELIMINARY WORK PLAN, as the
case may be, determined in a reasonable manner in accordance with GAAP,
including but not limited to: (i) direct labor (salaries, wages and
employee benefits but excluding any employee benefits associated with
equity incentive plans); (ii) materials and supplies; (iii) allocated
maintenance and depreciation costs for building space directly dedicated
to the development of the PRODUCT but excluding costs and charges relating
to unused capacity, development of other products, and amortization of
property, plant and equipment not directly related to development of
PRODUCT for an INDICATION in accordance with a DEVELOPMENT PLAN or
PRELIMINARY WORK PLAN; and (iv) payments made to THIRD PARTIES for
services in connection with such development which are supported by
invoices describing the work performed; and (v) insurance, telephone
expenses, training, software amortization costs, travel and supplies. Such
costs shall not include general overhead costs occurring from units that
are not directly engaged in the development of the PRODUCT for an
INDICATION in accordance with a DEVELOPMENT PLAN or PRELIMINARY WORK PLAN.
If DEVELOPMENT EXPENSES are incurred by an AFFILIATE, they shall be
determined and charged as set forth in this Section 1.19.
1.20 "DEVELOPMENT PLAN" means a plan for developing PRODUCT in the TERRITORY
for an OTHER INDICATION that has been approved by the DEVELOPMENT
COMMITTEE and that includes a budget, design of clinical studies and
timelines.
1.21 "DISTRIBUTOR BTG LETTER" means the letter from DISTRIBUTOR to BTG dated as
of the Effective Date in the form set out in Appendix A to this AGREEMENT.
1.22 "EARNINGS" means the positive or negative amount that is calculated for
PRODUCT for each INDICATION in the PROFIT SHARING TERRITORY, in accordance
with GAAP, by deducting from NET SALES (if any) thereof the following:
(i) COST OF GOODS for FINAL FORM PRODUCT that is sold in the PROFIT
SHARING TERRITORY, charged on a first-in first-out basis,
(ii) SELLING EXPENSES for PRODUCT in the PROFIT SHARING TERRITORY,
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(iii) MARKETING EXPENSES for PRODUCT in the PROFIT SHARING
TERRITORY, provided, however, that MARKETING EXPENSES for a PRODUCT for an
INDICATION in a YEAR are only deductible against EARNINGS up to the amount
agreed to by DISTRIBUTOR and L&I pursuant to Section 3.1(c),
(iv) distribution expenses for PRODUCT in the PROFIT SHARING
TERRITORY (including monies paid to THIRD PARTIES),
(v) REIMBURSABLE MARKETING EXPENSES for PRODUCT in the PROFIT
SHARING TERRITORY,
(vi) THIRD PARTY ROYALTIES for PRODUCT in the PROFIT SHARING
TERRITORY,
(vii) cost of out-of-date, spoiled, lost or destroyed FINAL FORM
PRODUCT for the PROFIT SHARING TERRITORY.
(viii) RECALL EXPENSE for PRODUCT in the PROFIT SHARING TERRITORY,
(ix) insurance premiums payable for PRODUCT for the PROFIT SHARING
TERRITORY, including product liability insurance but excluding product
liability expenses, such as the cost of defense, settlement and damage
awards.
(x) amounts paid for co-promotion under Section 3.9.
1.23 "EMEA" shall mean the European Medicines Evaluation Agency.
1.24 "FILLED PRODUCT" means PRODUCT manufactured in accordance with the
SPECIFICATIONS that is filled but not packaged and labeled.
1.25 "FINAL FORM PRODUCT" shall mean PRODUCT in accordance with the
SPECIFICATIONS that is fully formulated, in final form packaged and
labeled for ultimate consumer use.
1.26 "FIRM ORDER" means an order for PRODUCT placed with L&I that cannot be
reduced.
1.27 "FIRST COMMERCIAL SALE" of PRODUCT shall mean the first sale for use or
consumption by the general public of such PRODUCT in the United States
after AGENCY approval of the PRODUCT has been granted.
1.28 "GAAP" shall mean United States Generally Accepted Accounting Principles.
1.29 "ILEX" means ILEX Oncology, Inc., a Delaware corporation.
1.30 "INDICATION(S)" means the CLL INDICATION and OTHER INDICATIONS.
1.31 "LEUKOSITE" means LeukoSite, Inc., a Delaware corporation.
1.32 "MAJOR COUNTRIES" means Germany, France, Italy, Spain and United Kingdom.
1.33 "MARKETING COMMITTEE" shall mean the MARKETING COMMITTEE of Section
3.1(a).
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1.34 "MARKETING EXPENSES" shall mean all costs and expenses incurred by the
AFFILIATE of DISTRIBUTOR that distributes in the PROFIT SHARING TERRITORY
for marketing associated with launch, advertising and sales promotion
(including, without limitation, expenses of patient programs such as those
involving compassionate use, indigents, uninsured and underinsured,
training, disease information and management, and compliance; expenses
related to promotional publications, space or time in various media,
direct mail campaigns, samples, advertising agency fees and other
promotional activities); phase IV studies (whether or not required by a
regulatory agency). Such expenses include allocated maintenance and
depreciation costs for building space directly dedicated to the marketing
of a PRODUCT, but exclude costs and charges relating to unused capacity,
marketing of other products, and amortization of property, plant and
equipment not directly related to marketing of a PRODUCT, in each case
determined in accordance with GAAP. MARKETING EXPENSE does not include
SELLING EXPENSES. In each YEAR, MARKETING EXPENSES deductible against
EARNINGS shall not exceed the amount in the MARKETING PLAN.
1.35 "MARKETING PLAN" means the MARKETING PLAN of Section 3.1.
1.36 "MSL" means medical science liaison staff members who contact key thought
leaders in oncology to initiate or conduct medical and scientific dialog
with respect to PRODUCT.
1.37 "NET SALES" shall mean with respect to PRODUCT that sum determined by
deducting from the gross amount invoiced by DISTRIBUTOR or its AFFILIATES
or any of their SUBDISTRIBUTORs for PRODUCT sold for use in the TERRITORY
in an arms length transaction to customers who are not AFFILIATES of
DISTRIBUTOR or their SUBDISTRIBUTORs: (i) transportation charges and
insurance charges relating thereto; (ii) trade, quantity or cash
discounts, to the extent allowed; (iii) rebates, chargebacks, credits or
allowances, if any, given or made on account of price adjustments, or
returns, to the extent made; (iv) any and all Federal, state or local
government rebates, whether in existence now, or enacted at any time
during the term of this AGREEMENT, to the extent made; (v) any tax (not
including income taxes or similar taxes), customs duty, excise or other
governmental charge upon or measured by the production, sale,
transportation, delivery or use of the PRODUCT; and (vi) reasonable
allowance for bad debts not to exceed one percent of gross amount
invoiced; in each case determined in accordance with DISTRIBUTOR'S normal
internal accounting practices and GAAP (or, in the case of DISTRIBUTOR'S
non-United States business, International Accounting Standards.)
For the purpose of calculating NET SALES, the PARTIES recognize that (a) a
DISTRIBUTOR'S customers may include entities in the chain of commerce who
enter into agreements with DISTRIBUTOR as to price even though title to
the PRODUCT does not pass directly from DISTRIBUTOR to such customers, and
even though payment for such PRODUCT is not made by such customers
directly to DISTRIBUTOR; and (b) in such cases chargebacks paid by
DISTRIBUTOR to or through a THIRD PARTY (such as a wholesaler) can be
deducted by a DISTRIBUTOR from gross revenue in order to
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calculate a DISTRIBUTOR'S Net Sales. Any deductions listed above which
involve a payment by a DISTRIBUTOR shall be taken as a deduction against
aggregate sales for the period in which the payment is made or deduction
is taken.
In the event that DISTRIBUTOR or its AFFILIATES sells through or to a
SUBDISTRIBUTOR, or DISTRIBUTOR sells through an AFFILIATE, then NET SALES
shall be calculated based on the amount invoiced by DISTRIBUTOR or its
AFFILIATES or their SUBDISTRIBUTOR to an entity that is not an AFFILIATE
or SUBDISTRIBUTOR.
1.38 "OPT OUT OPTION" shall have the meaning set forth in Section 12.1 (c)
(ii).
1.39 "OTHER CANCER INDICATION(S)" means the treatment of cancer, other than a
CLL INDICATION, in humans. For the avoidance of doubt, it is agreed that
transplantation procedures in humans for the treatment of cancer
constitutes an OTHER CANCER INDICATION.
1.40 "OTHER INDICATIONS" means OTHER CANCER INDICATIONS and OTHER NON-CANCER
INDICATIONS.
1.41 "OTHER NON-CANCER INDICATION(S)" means one or more of the following
indications: the treatment of rheumatoid arthritis in humans; the
treatment of multiple sclerosis in humans; therapeutic indications in
human transplantation (other than for treatment of cancer); and any other
indications as to which L&I obtains rights under the BTG AGREEMENT, in
each case other than the CLL INDICATION or OTHER CANCER INDICATIONS.
1.42 "OTHER TERRITORY" shall mean all countries of the TERRITORY other than the
PROFIT-SHARING TERRITORY.
1.43 "PARTY(IES)" shall mean DISTRIBUTOR and/or L&I, as the case may be.
1.44 "PAYMENT AMOUNT" means for PRODUCT for an OTHER NON-CANCER INDICATION
******2 percent of the aggregate of (i) total sales for all PRODUCT for
such INDICATION in the YEAR that has the highest total sales therefor in
the United States in any YEAR of the first five YEARS after initial launch
of a PRODUCT for such INDICATION in the United States and (ii) total sales
for all PRODUCT for such INDICATION in the YEAR that has the highest total
aggregate sales therefor in countries of the TERRITORY other than the
United States in any YEAR of the first five YEARS after initial launch of
a PRODUCT for such INDICATION in Europe.
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2 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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1.45 "PRELIMINARY DEVELOPMENT PLAN" means a compilation of information and/or
data of the type that is sufficient to conduct a pre-IND meeting with the
FDA for PRODUCT for an OTHER NON-CANCER INDICATION.
1.46 "PRELIMINARY WORK PLAN" means a plan for performing non-clinical or
exploratory clinical research, including a budget, with respect to PRODUCT
for an OTHER NON-CANCER INDICATION.
1.47 "PRIME" means "prime rate" as publicly announced by the Bank of America
National Trust and Savings Association in San Francisco as its prime rate
as set forth on the REUTERS screen (USPRIME1). Interest shall be
calculated on the actual number of days elapsed over a 365 -day year.
1.48 "PRODUCT" shall mean the humanized antibody directed against CD-52 known
as Campath 1H and any product containing such antibody as an active
ingredient.
1.49 "PROFIT SHARING TERRITORY" means the United States of America.
1.50 "RECALL EXPENSE" shall mean the cost and expense for recall or market
withdrawal of PRODUCT in the PROFIT SHARING TERRITORY required or
requested by a governmental authority having jurisdiction thereover or as
a result of a decision of the MARKETING COMMITTEE, including, but not
limited to, expenses incurred for replacement of PRODUCT, all in
accordance with GAAP.
1.51 "REIMBURSABLE MARKETING EXPENSES" shall mean the MARKETING EXPENSES
incurred in the PROFIT-SHARING TERRITORY with respect to PRODUCT for an
INDICATION prior to launch thereof incurred by the AFFILIATE of
DISTRIBUTOR that is distributing PRODUCT in the PROFIT-SHARING TERRITORY,
with one-eighth (1/8) of the aggregate thereof being charged against
EARNINGS for the PRODUCT for the CLL INDICATION in each of the eight
CALENDAR QUARTERS after launch thereof. The REIMBURSABLE MARKETING
EXPENSES for the CLL INDICATION shall not exceed ****** ******3. For OTHER
INDICATIONS, the maximum amount shall be determined by the MARKETING
COMMITTEE.
1.52 "SELLING EXPENSES" means the aggregate amount of all direct incremental
expenses incurred for the sales force and sales force management by the
AFFILIATE of DISTRIBUTOR that is distributing PRODUCT in the
PROFIT-SHARING TERRITORY, all in accordance with GAAP and all only as they
relate to sale of PRODUCT for an INDICATION in the PROFIT-SHARING
TERRITORY, including but not limited to salaries, commissions, sales
incentive payments, sales training
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3 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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expenses, and travel expenses. The SELLING EXPENSES deductible against
EARNINGS for each YEAR for PRODUCT for the CLL INDICATION shall not exceed
the lesser of the amount in the MARKETING PLAN or ******3 (proportionately
adjusted for part of a YEAR) which ******4 limit shall be adjusted by
applying the following factor:
BA * CPI
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BCPI
BA = ***************************************************5;
BCPI = the Bureau of Labor Statistics Consumer Price Index for All Urban
Consumers; All cities; All Items for January 1, 2000; and CPI = the Bureau
of Labor Statistics Consumer Price Index for All Urban Consumers; All
cities; All Items for January of the current year.
For all OTHER INDICATIONS, the amount deductible in a YEAR against
EARNINGS shall not exceed the amount in the MARKETING PLAN.
1.53 "SPECIFICATIONS" shall have the meaning set forth in Section 1.9 of the BI
AGREEMENT.
1.54 "SUBDISTRIBUTOR" shall mean an entity other than an AFFILIATE through
which DISTRIBUTOR routinely conducts all of its sales business of PRODUCT
in a particular country of the TERRITORY, and which entity assumes the
marketing, promotional, distribution and sales obligations of DISTRIBUTOR
in any country. SUBDISTRIBUTOR excludes THIRD PARTIES such as wholesalers,
pharmacists, hospitals, and health management organizations.
1.55 "TERRITORY" shall mean all countries of the world except those of Appendix
C.
1.56 "THIRD PARTY" shall mean a person or entity other than DISTRIBUTOR, L&I,
LEUKOSITE, ILEX or their respective AFFILIATES.
1.57 "THIRD PARTY ROYALTIES" shall mean the BTG ROYALTIES and any other
royalties payable to THIRD PARTIES pursuant to the THIRD PARTY agreements
listed in Appendix G as of the Effective Date, or subsequently added
thereto with the consent of the DISTRIBUTOR in respect of sales of the
PRODUCT by the DISTRIBUTOR, its AFFILIATES and SUBDISTRIBUTORS
1.58 "TRADEMARK" shall mean CAMPATH(R).
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4 /"Confidential treatment requested: material has been omitted anf filed
separately with the Commission".
5"Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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1.59 "YEAR" shall mean the 12-month period beginning on January 1, except that
the initial YEAR shall extend from the Effective Date until December 31st
of the calendar year of the Effective Date (such that it may include less
than 12 months).
2. APPOINTMENT
2.1 GRANT OF DISTRIBUTION RIGHTS.
(a) L&I hereby appoints DISTRIBUTOR as the exclusive distributor of the
PRODUCT in the TERRITORY for use only in the TERRITORY for the CLL
INDICATION and for OTHER INDICATIONS, each for the term set forth in
Article 18 (unless earlier terminated pursuant to this AGREEMENT),
and DISTRIBUTOR accepts such appointment.
(b) DISTRIBUTOR agrees that DISTRIBUTOR (i) will sell and distribute
PRODUCT in the TERRITORY only for the INDICATIONS for which
DISTRIBUTOR retains distribution rights under this AGREEMENT; (ii)
will only sell in the TERRITORY PRODUCT which is purchased from L&I;
and (iii) will only sell PRODUCT in the TERRITORY under the
TRADEMARK.
(c) DISTRIBUTOR agrees to distribute the PRODUCT for an INDICATION only
in accordance with the terms, conditions and purposes of this
AGREEMENT, and, in the PROFIT-SHARING TERRITORY, only in accordance
with the MARKETING PLAN therefor.
2.2 LIMITATION ON DISCOUNTING.
DISTRIBUTOR agrees that DISTRIBUTOR will not without L&I's written consent
discount the selling price of PRODUCT in order to promote the sales of
other products of DISTRIBUTOR and that it will conduct all price
negotiations in good faith on an arms length basis provided, however, that
the foregoing should not be interpreted as permitting L&I to set prices in
countries of the European Union. It is expressly understood that L&I
cannot provide such consent unless L&I receives the consent of BTG.
2.3 SALES THROUGH SUBDISTRIBUTORS.
DISTRIBUTOR intends to sell PRODUCT through its AFFILIATES in countries
where DISTRIBUTOR has AFFILIATES in the TERRITORY and in Germany through
DISTRIBUTOR'S existing distributor Medac GmbH. L&I consents to Medac GmbH
as a SUBDISTRIBUTOR. DISTRIBUTOR can sell product in the TERRITORY through
SUBDISTRIBUTORs only as follows:
(i) Without the consent of L&I, through SUBDISTRIBUTORs of DISTRIBUTOR
that distribute FLUDARA(R) in countries of the TERRITORY (other than MAJOR
COUNTRIES) where FLUDARA(R) is sold through SUBDISTRIBUTORs; and
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(ii) With the consent of L&I, in all countries of the TERRITORY not
included in Section 2.3(i), which consent shall not be unreasonably
withheld or delayed.
3. MARKETING IN THE PROFIT-SHARING TERRITORY
3.1 MARKETING COMMITTEE.
(a) The marketing and selling of PRODUCT in the PROFIT SHARING TERRITORY
for (i) the CLL INDICATION and (ii) OTHER INDICATIONS for which
DISTRIBUTOR retains distribution rights shall be overseen by a
committee composed of four members, with DISTRIBUTOR appointing two
(2) members and L&I two (2) members (the "MARKETING COMMITTEE"),
with a member appointed by DISTRIBUTOR being Chairman of the
MARKETING COMMITTEE.
(b) The MARKETING COMMITTEE shall meet at the call of the Chairman, but
not less than once each CALENDAR QUARTER of each YEAR, at the
offices of BERLEX or such other place designated by the Chairman. A
quorum for the conduct of business at any meeting of the MARKETING
COMMITTEE shall consist of at least one representative of
DISTRIBUTOR and at least one L&I representative. L&I and DISTRIBUTOR
shall each have one vote and all decisions shall be by unanimous
vote.
(c) By no later than July 1 of each YEAR, commencing with the YEAR in
which a BLA for the PRODUCT for the CLL INDICATION is obtained,
DISTRIBUTOR shall submit to the MARKETING COMMITTEE a proposed
MARKETING PLAN for sales and marketing of each INDICATION for
PRODUCT which is to be distributed by DISTRIBUTOR in the
PROFIT-SHARING TERRITORY. The PARTIES will agree to a reasonable
timetable for the submission of the MARKETING PLAN for the YEAR in
which initial BLA approval is anticipated. Each MARKETING PLAN shall
include for the following YEAR: (i) a budget, including an estimate
of SELLING EXPENSES, MARKETING EXPENSES and other expenses for the
PRODUCT; (ii) an estimate of PRODUCT to be ordered under Section
6.1; (iii) a price range for sales of PRODUCT based on a study made
by an expert selected by the MARKETING COMMITTEE; (iv) an outline of
marketing and detail strategies and tactics; (v) Phase IV studies,
if any, for PRODUCT for each INDICATION; and (vi) any other
information reasonably requested by a member of the MARKETING
COMMITTEE that is within the possession of DISTRIBUTOR.
The MARKETING COMMITTEE shall discuss such plan, including any
proposed amendments and/or additions thereto, and shall decide upon
a final plan by the end of the third CALENDAR QUARTER of the YEAR in
which the plan is submitted. The final plan for each INDICATION for
PRODUCT approved by the MARKETING COMMITTEE is the MARKETING PLAN
for the following
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YEAR. The approved MARKETING PLAN shall provide for a national
selling effort, inclusion in the BERLEX annual action plan and in
the BERLEX annual sales incentive compensation plan in a manner that
does not disadvantage PRODUCT taking into consideration, without
limitation, PRODUCT profile, size of the market, profit potential,
approved labeling and reimbursement approval status. Once approved,
a MARKETING PLAN for a YEAR can only be amended by a decision of the
MARKETING COMMITTEE.
(d) In addition to approval of the MARKETING PLAN, the MARKETING
COMMITTEE shall discuss, review and monitor marketing of PRODUCT in
accordance with the MARKETING PLAN therefor, discuss future planning
for the marketing of PRODUCT for an INDICATION, and coordinate and
implement any required recall of PRODUCT. It is specifically
understood, however, that the management and direction of marketing
and sales activities and the implementation of the MARKETING PLAN
shall be managed by DISTRIBUTOR rather than the MARKETING COMMITTEE.
If the MARKETING COMMITTEE fails to reach agreement as to any
matter, the PARTIES agree to exert all reasonable efforts to arrive
at a mutually acceptable resolution, including a meeting between the
Head of the SBU Therapeutics of BERLEX and a manager of the General
Partner of L&I, and if such resolution is not reached within thirty
(30) days, and subject to Section 3.2(c), DISTRIBUTOR shall have the
right to make the final decision except as provided in Sections
3.1(e), 3.1(f) and 3.1(g), which decisions require the mutual
consent of DISTRIBUTOR and L&I.
(e) DISTRIBUTOR and L&I shall agree to a range of average prices of
PRODUCT for an INDICATION for a YEAR by no later than November 30th
of the previous YEAR, and the price charged by DISTRIBUTOR for
PRODUCT for an INDICATION for a YEAR shall result in an average
price therefor within the agreed to average price range for such
YEAR.
(f) DISTRIBUTOR and L&I shall agree in writing to the maximum MARKETING
EXPENSES that can be charged against EARNINGS for PRODUCT for an
INDICATION in a YEAR by no later than November 30th of the previous
YEAR.
(g) DISTRIBUTOR and L&I shall agree to the maximum PREMARKETING EXPENSES
and the MAXIMUM SELLING EXPENSES for PRODUCT for each of the OTHER
INDICATIONS for the purpose of calculating EARNINGS therefor prior
to BLA approval thereof.
3.2 Marketing Effort of DISTRIBUTOR
(a) During the term of this AGREEMENT, for each INDICATION for which there
is a MARKETING PLAN, DISTRIBUTOR shall manage and direct the marketing effort
for the PRODUCT pursuant to the MARKETING PLAN approved by the MARKETING
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COMMITTEE. DISTRIBUTOR shall exercise commercially reasonable efforts to
promote, market and sell PRODUCT in the PROFIT-SHARING TERRITORY in accordance
with the MARKETING PLAN and shall maintain, at its own cost and expense, an
adequate sales organization for this purpose. DISTRIBUTOR shall keep L&I advised
of general market, economic and regulatory developments that may affect the sale
of such PRODUCT in the PROFIT-SHARING TERRITORY.
(b) DISTRIBUTOR agrees to provide L&I with DISTRIBUTOR'S annual sales
forecast for PRODUCT to be sold in the TERRITORY for each INDICATION
as to which DISTRIBUTOR retains distribution rights for the purpose
of assisting L&I in its financial planning. Sales forecasts shall
not be binding on DISTRIBUTOR.
(c) With respect to PRODUCT for the CLL INDICATION in the PROFIT-SHARING
TERRITORY, the MARKETING PLAN shall provide for efforts with respect
to marketing and sales that are at least comparable to the efforts
with respect to FLUDARA(R) prior to expiration of patent protection
for FLUDARA(R), and in the first twelve (12) months after PRODUCT
launch for the CLL INDICATION in the PROFIT-SHARING TERRITORY, the
MARKETING PLAN shall provide for marketing and selling efforts that
are at least equal to those exerted in the industry with respect to
oncology products of equivalent potential for such period.
3.3 Earnings Reports.
(a) In the PROFIT-SHARING TERRITORY, with respect to PRODUCT for the CLL
INDICATION and for each OTHER INDICATION for which DISTRIBUTOR retains
distribution rights, after BLA approval thereof, within thirty (30) days after
the end of each CALENDAR QUARTER of each YEAR, DISTRIBUTOR shall provide L&I
with a separate report of the EARNINGS for PRODUCT for each such INDICATION
(either positive or negative) for the CALENDAR QUARTER. Within sixty (60) days
after the end of each YEAR, DISTRIBUTOR shall provide L&I with a separate report
of EARNINGS for PRODUCT for each INDICATION (either positive or negative) in the
PROFIT-SHARING TERRITORY. Each CALENDAR QUARTER and YEAR report shall contain
the following information:
(i) Quantity of PRODUCT sold by DISTRIBUTOR, and its
AFFILIATES and if applicable, its SUBDISTRIBUTORs.
(ii) Total amount invoiced for PRODUCT;
(iii) Calculation of NET SALES.
(iv) A separate calculation for each of items (i) to (x) to be
deducted from EARNINGS;
(v) Calculation of amount due to or to be paid by L&I under
Section 3.4 or 3.5, as the case may be; and
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(vi) Any other information reasonably requested by L&I and
within the possession of DISTRIBUTOR for determining amount due to
or to be paid by L&I.
(b) The reports for each YEAR shall be audited reports and shall be
charged against EARNINGS.
3.4 QUARTERLY PAYMENT OF APPROPRIATE PERCENTAGE.
(a) In the PROFIT-SHARING TERRITORY, for each CALENDAR QUARTER in which
the EARNINGS for PRODUCT for the CLL INDICATION are positive, and
subject to Section 3.7, for each CALENDAR QUARTER in which the
EARNINGS for PRODUCT for an OTHER INDICATION for which DISTRIBUTOR
retains distribution rights are positive, BERLEX shall pay to L&I
its APPROPRIATE PERCENTAGE of such positive EARNINGS for each such
INDICATION within sixty (60) days after the end of the applicable
CALENDAR QUARTER or thirty (30) days after the delivery of the
report of EARNINGS for such CALENDAR QUARTER, whichever is earlier.
(b) For the PROFIT-SHARING TERRITORY for each CALENDAR QUARTER in which
the EARNINGS for a PRODUCT for the CLL INDICATION are negative and,
subject to Section 3.7, in each CALENDAR QUARTER in which the
EARNINGS for PRODUCT for OTHER INDICATIONS for which DISTRIBUTOR
retains distribution rights are negative, L&I shall pay to
DISTRIBUTOR the APPROPRIATE PERCENTAGE of such negative EARNINGS for
each such INDICATION within sixty (60) days after L&I receives the
report under Section 3.3 that includes such negative EARNINGS.
3.5 YEARLY PAYMENT OF APPROPRIATE PERCENTAGE.
With respect to the PROFIT-SHARING TERRITORY, within sixty (60) days of
the end of each YEAR, DISTRIBUTOR shall separately determine EARNINGS for
PRODUCT for the YEAR for the CLL INDICATION and, subject to Section 3.7,
for each OTHER INDICATION as to which DISTRIBUTOR retains distribution
rights and L&I shall receive or pay the APPROPRIATE PERCENTAGE of the
EARNINGS therefor for the applicable YEAR, adjusted for the aggregate of
the amounts received and/or paid by L&I under Section 3.4 for the CALENDAR
QUARTERS of the appropriate YEAR. Any payment due from DISTRIBUTOR shall
be made within ninety (90) days of the end of the applicable YEAR, or
thirty (30) days after delivery of the report of EARNINGS for such YEAR,
whichever is earlier. Any payment due to DISTRIBUTOR shall be made within
thirty (30) days after L&I receives the yearly report under Section 3.3.
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3.6 CREDIT TOWARD LOAN BALANCE.
For each YEAR in which EARNINGS are positive, beginning five YEARS after
launch of PRODUCT for an INDICATION in the PROFIT-SHARING TERRITORY, until
the outstanding portion of the loans made pursuant to Section 9.1(a) and
the interest thereon is repaid, in addition to the amounts payable under
Section 3.4 and 3.5, L&I shall be credited with an additional ******6
percent of positive EARNINGS for PRODUCT for each INDICATION, if any,
within sixty (60) days after the end of the YEAR, which DISTRIBUTOR shall
retain and apply to repayment of the outstanding portion of the loan and
interest thereon made pursuant to Section 9^.1(a).
3.7 PAYMENT IN LIEU OF EARNINGS.
In the event that L&I does exercise its OPT OUT OPTION with regard to
development of PRODUCT for an OTHER NON-CANCER INDICATION in the PROFIT
SHARING TERRITORY, and DISTRIBUTOR continues such funding and BLA approval
for PRODUCT for such OTHER NON-CANCER INDICATION is obtained, L&I shall
not be required to make or entitled to receive payments under Sections 3.4
and 3.5 based on EARNINGS in the PROFIT SHARING TERRITORY, and in lieu
thereof, L&I shall receive ******7 percent of NET SALES of PRODUCT for
such OTHER INDICATION in the PROFIT SHARING TERRITORY which shall be due
and payable with respect to NET SALES thereof in a CALENDAR QUARTER within
sixty (60) days after the end of the CALENDAR QUARTER. In addition, the
report due under Section 3.3 for a PRODUCT for such OTHER NON-CANCER
INDICATION may only include items (i), (ii), (iii) and (vi) and a
calculation of the amount due under this Section 3.7.
3.8 RECORDKEEPING BY DISTRIBUTOR.
DISTRIBUTOR shall keep, and shall cause each of its AFFILIATES to keep,
and if applicable, their SUBDISTRIBUTORs, full and accurate books of
account containing all particulars that may be necessary for the purpose
of calculating EARNINGS and NET SALES and all payments payable to L&I in
the PROFIT-SHARING TERRITORY for PRODUCT sold in the PROFIT-SHARING
TERRITORY. Such books of account shall be kept at their principal place of
business and, with all necessary supporting data shall, for the three (3)
years next following the end of the calendar year to which each shall
pertain be open for inspection by an independent certified accountant
selected by L&I
- ------------------------
6"Confidential treatment requested: material has been omitted and filed
separately with the Commission".
7/"Confidential treatment requested: material has been omitted and filed
separately with the Commission".
14
<PAGE>
and reasonably acceptable to DISTRIBUTOR upon reasonable notice during
normal business hours at L&I's expense for the sole purpose of verifying
payments or compliance with this AGREEMENT, but in no event (subject to
Section 13.16) more than once in each YEAR. All information and data
offered shall be used only for the purpose of verifying payments. In the
event that such inspection shall indicate that in any YEAR the payments
which should have been paid by DISTRIBUTOR are at least five percent (5%)
greater than those which were actually paid by DISTRIBUTOR, or that, in
the case of negative EARNINGS, the amounts that were paid by L&I to
DISTRIBUTOR are at least five percent (5%) more than those that should
have been paid by L&I, then DISTRIBUTOR shall pay the cost of such
inspection. All underpayments and overpayments are immediately due and
payable.
3.9 CO-PROMOTION.
(a) L&I shall have the right itself and/or to designate one or more of
either LEUKOSITE or ILEX to co-promote with DISTRIBUTOR or its
AFFILIATE, as the case may be, in the PROFIT-SHARING TERRITORY,
PRODUCT for the CLL INDICATION and OTHER CANCER INDICATIONS by
written notice to DISTRIBUTOR at least six (6) months prior to the
contemplated initiation of such co-promotion.
(b) The co-promoting PARTY shall co-promote such PRODUCT in a YEAR in
accordance with the approved MARKETING PLAN for such YEAR through
MSL activities. The number of personnel employed to co-promote shall
not exceed twelve in the United States, and shall only conduct
activities similar to those conducted by BERLEX'S MSL staff.
DISTRIBUTOR and L&I will coordinate the activities of the L&I MSL
staff to optimize utilization and avoid duplication of effort.
(c) For each CALENDAR QUARTER, DISTRIBUTOR shall pay to the co-promoting
PARTY direct expenses for the MSL force and MSL force management,
all only as it relates to co-promotion of PRODUCT under this Section
3.9 which shall be due and payable sixty (60) days after submission
of an invoice therefor, but shall not exceed the average cost
incurred by BERLEX for its own MSL staff members assigned to PRODUCT
for an oncology indication. DISTRIBUTOR shall have the right to
audit the expenses charged to DISTRIBUTOR pursuant to this Section
on the same terms set forth in Section 6.12 for L&I's audits of
DISTRIBUTOR.
(d) L&I shall have the right to terminate the co-promotion by six (6)
months' prior written notice.
3.10 PAYMENT OF INSURANCE PREMIUMS
DISTRIBUTOR shall pay the cost and expense of insurance premiums for L&I
with respect to PRODUCT in the PROFIT SHARING TERRITORY, including product
15
<PAGE>
liability insurance but excluding product liability expenses, such as the
cost of defense, settlement and damage, within thirty (30) days of invoice
therefor. The payment made under this Section 3.10 shall be deductible
against EARNINGS.
4. MARKETING IN THE OTHER TERRITORY
4.1 SALES FORECAST
The DISTRIBUTOR agrees to provide L&I with DISTRIBUTOR'S annual sales
forecast for PRODUCT to be sold in the OTHER TERRITORY for each INDICATION
as to which DISTRIBUTOR retains distribution rights for the purpose of
assisting L&I in its financial planning. Sales forecasts shall not be
binding on the DISTRIBUTOR.
4.2 MARKETING EFFORTS
(a) In MAJOR COUNTRIES, DISTRIBUTOR shall exert reasonable commercial
efforts to market and sell PRODUCT for each INDICATION in each
country in which such PRODUCT is approved for sale. Such reasonable
commercial efforts shall take into consideration, without
limitation, PRODUCT profile, size of the market, profit potential,
approved labeling, reimbursement approval status, and other factors
that a reasonable business person would take into consideration in
determining the extent of effort to exert in the marketing and
selling of PRODUCT.
(b) In countries of the OTHER TERRITORY which are not MAJOR COUNTRIES,
DISTRIBUTOR shall notify L&I, in writing, as to whether it intends
to pursue commercialization of a PRODUCT for an INDICATION as to
which DISTRIBUTOR retains distribution rights no later than ninety
(90) days after regulatory approval thereof in Europe. With respect
to any countries as to which DISTRIBUTOR does not provide such
written notice, or, having given notice, subsequently notifies L&I
of an intention not to pursue commercialization, L&I or DISTRIBUTOR
shall have the right to grant distribution rights in such country to
a THIRD PARTY by sixty (60) days' prior written notice to the other,
identifying the country(ies), the THIRD PARTY and the terms and
conditions thereof. Unless the PARTY receiving the notice provides
reasonable written objection thereto within such sixty (60) day
period on the basis that the granting of such rights will adversely
affect marketing and sale of PRODUCT for such INDICATION in a
country in which PRODUCT is being, or is to be, distributed by
DISTRIBUTOR, or to the terms and conditions of the distribution
rights, then such distribution rights shall be granted to such THIRD
PARTY and L&I, and DISTRIBUTOR shall share, on a ****** ******8
basis, respectively, the costs and benefits incurred with respect to
the granting of such distribution rights.
- ------------------------
8"Confidential treatment requested: material has been omitted and filed
separately with the Commission".***
16
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(c) With respect to PRODUCT for an INDICATION to which SCHERING has
distribution rights, SCHERING agrees to provide to L&I a separate
marketing plan for PRODUCT for each INDICATION for each MAJOR
COUNTRY of the OTHER TERRITORY and an aggregate marketing plan for
all other countries of the OTHER TERRITORY for each YEAR by October
1 of the previous YEAR, which marketing plan shall contain
information similar to that included in marketing plans for
DISTRIBUTOR'S product in such countries that qualify for primary
promotion (for example FLUDARA(R)) and within sixty (60) days after
the end of each YEAR, DISTRIBUTOR shall provide L&I with a written
report with respect to the results for the applicable YEAR as
compared to the marketing plan for the applicable YEAR for each
country in the OTHER TERRITORY for PRODUCT for each INDICATION.
5. ORPHAN DRUG EXCLUSIVITY.
(a) To the fullest extent permitted by law, the PARTIES agree that
DISTRIBUTOR will have the right to claim and use any taxation
credits (accruing to DISTRIBUTOR after the Effective Date),
deductions or other taxation benefits available as a result of
funding by DISTRIBUTOR, in whole or part, of clinical studies for an
INDICATION for PRODUCT that has been designated as an orphan
indication by FDA, and similar taxation benefits available in other
countries of the TERRITORY. L&I agrees that it will take such
reasonable actions as DISTRIBUTOR may request to permit DISTRIBUTOR
to obtain such taxation benefits, including without limitation
sharing with DISTRIBUTOR ownership of orphan drug petitions,
designations, and grants of exclusivity; provided, however, that L&I
shall not be required by this Section to share with DISTRIBUTOR
ownership or sponsorship of any BLA for PRODUCT. With respect to any
transfer of rights or ownership under this Section 5, such transfer
shall be made in a manner such that such rights and/or ownership by
DISTRIBUTOR is automatically terminated when DISTRIBUTOR'S rights to
PRODUCT for the applicable INDICATION are terminated under this
AGREEMENT. For avoidance of doubt, the PARTIES state that if L&I has
complied with the requirements of this Section, L&I shall have no
liability to DISTRIBUTOR in the event that DISTRIBUTOR is unable to
avail itself of favorable taxation treatment contemplated by this
Section.
(b) DISTRIBUTOR shall have the right to nominate one or more of
DISTRIBUTOR'S AFFILIATES to exercise the rights set forth in this
section.
6. PURCHASE OF PRODUCTS
6.1 PURCHASE AND SALE REQUIREMENTS.
(a) Subject to Section 6.3 and Section 8, L&I shall sell and DISTRIBUTOR
shall purchase an amount of FINAL FORM PRODUCT or FILLED PRODUCT as
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applicable for INDICATIONS equal to DISTRIBUTOR'S requirements in
the TERRITORY.
(b) Subject to availability of FINAL FORM PRODUCT or FILLED PRODUCT as
applicable from L&I, DISTRIBUTOR shall maintain sufficient
inventories of PRODUCT to enable DISTRIBUTOR to effectively satisfy
demand for PRODUCT in the TERRITORY.
(c) Unless otherwise agreed between the PARTIES, L&I shall sell and
DISTRIBUTOR shall purchase PRODUCT as FINAL FORM PRODUCT for sale in
the PROFIT-SHARING TERRITORY and as FILLED PRODUCT for production of
FINAL FORM PRODUCT for sale in the OTHER TERRITORY.
(d) DISTRIBUTOR shall purchase from L&I 60,000 ampoules of FILLED
PRODUCT in October 1999; 90,000 ampoules of FILLED PRODUCT in
January 2000, and 60,000 ampoules of FILLED PRODUCT in April 2000.
With respect to the FILLED PRODUCT purchased under this Section
6.1(d), title to and risk of loss with respect to FILLED PRODUCT
shall pass to DISTRIBUTOR when produced by BI. BI shall maintain
possession of the FILLED PRODUCT until DISTRIBUTOR requests shipment
thereof as FINAL FORM PRODUCT or FILLED PRODUCT. DISTRIBUTOR shall
pay to L&I the COST OF GOODS for the FILLED PRODUCT that has been
incurred as of such time within thirty (30) days of invoice
therefor, which shall be no earlier than the date that FILLED
PRODUCT is produced by BI. FILLED PRODUCT purchased under this
Section 6.1(d) that is to be sold by DISTRIBUTOR in the
PROFIT-SHARING TERRITORY shall be converted to FINAL FORM PRODUCT by
BI. FILLED PRODUCT that is purchased by DISTRIBUTOR that is to be
sold in the OTHER TERRITORY shall be converted to FINAL FORM PRODUCT
by DISTRIBUTOR. At the time of shipment of PRODUCT to DISTRIBUTOR
under this Section 6.1(d), DISTRIBUTOR shall pay to L&I the COST OF
GOODS therefor, less any portion of COST OF GOODS previously paid
under this Section 6.1(d). The COST OF GOODS of such ampoules sold
in the PROFIT-SHARING TERRITORY shall be charged against EARNINGS
when sold. DISTRIBUTOR and L&I agree that they will cooperate with
each other and use all reasonable efforts to obtain the agreement of
BI to reduce the quantity that is to be purchased under this Section
6.1(d). In the event that a surcharge is paid to BI under the BI
AGREEMENT for failure to make the minimum purchases required by
Section 2.8 of the BI AGREEMENT in the first full YEAR after launch
of the PRODUCT, then as to the portion of the minimum purchase
deficiency that results from the purchase of excess inventory under
Section 6.1(d), DISTRIBUTOR shall have the right to credit
one-twentieth of the amount paid by DISTRIBUTOR for such portion
under Section 8.2(iv) against amounts to be paid to L&I under
Section 3.4(a) for the first twenty CALENDAR QUARTERS. If EARNINGS
in any such first twenty CALENDAR QUARTERS should be negative, the
amount payable by L&I to DISTRIBUTOR pursuant to Section 3.4(b) will
be increased by one-
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<PAGE>
twentieth of the amount paid by DISTRIBUTOR for such portion under
Section 8.2(iv).
6.2 CERTAIN PACKAGING AND LABELING BY DISTRIBUTOR.
(a) In view of DISTRIBUTOR'S expertise in the production and release of
pharmaceutical products, and taking into account DISTRIBUTOR'S
experience in dealing with and proximity to BI, it is agreed that
DISTRIBUTOR shall carry out the following activities in respect of
PRODUCT to be sold in the OTHER TERRITORY: (i) labeling and
packaging of FILLED PRODUCT to produce FINAL FORM PRODUCT; and (ii)
quality assurance and quality control services necessary to provide
for final release of FINAL FORM PRODUCT. Only DISTRIBUTOR'S direct
costs and expenses with respect to the activities to be performed
pursuant to this Section 6 (including loss for normal packaging
losses) shall be COST OF GOODS for Section 6.7(a)(v).
(b) With respect to the services described in Section 6.2(a),
DISTRIBUTOR warrants and represents that the FINAL FORM PRODUCT to
be produced by DISTRIBUTOR for L&I hereunder shall be labeled,
packaged and released in accordance with the SPECIFICATIONS, and
such services shall be performed according to Good Manufacturing
Practices standards and known and published standards of EMEA
applicable as of the time the activities performed by DISTRIBUTOR
are undertaken, and in accordance with all other laws, rules and
regulations applicable in the country where the activities are
performed. DISTRIBUTOR further warrants and represents that the
activities being performed by DISTRIBUTOR shall not result in any
lien or claim on PRODUCT which affects title. DISTRIBUTOR makes no
other warranties and representations with respect to the activities
to be performed by DISTRIBUTOR pursuant to this Section.
6.3 PRIORITY IN SUPPLY.
L&I shall use commercially reasonable efforts to satisfy DISTRIBUTOR'S
requirements for FINAL FORM PRODUCT or FILLED PRODUCT as applicable.
However, L&I's obligation to supply FINAL FORM PRODUCT or FILLED PRODUCT,
as applicable, under Section 6.1 hereof shall at all times be subject to
the condition that L&I is able to obtain a sufficient supply of such
PRODUCT for sale both inside and outside of the TERRITORY. In the event
that PRODUCT available to L&I is in short supply, L&I shall notify
DISTRIBUTOR of such shortage as soon as possible. In the event there is a
short supply of PRODUCT and L&I cannot supply PRODUCT to DISTRIBUTOR in an
amount equal to DISTRIBUTOR'S FIRM ORDER, then L&I shall allocate
available PRODUCT to DISTRIBUTOR in each month that such a shortfall
exists in an amount equal to the product of (i) the amount of available
PRODUCT for that month (and in each month thereafter until the shortfall
to DISTRIBUTOR is remedied) and (ii) a fraction the numerator of which is
the aggregate quantity of FIRM ORDERS made by DISTRIBUTOR over the
subsequent twelve (12) month period including the shortfall
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months and (y) the aggregate quantity of PRODUCT over the same twelve (12)
month period required by L&I outside the TERRITORY by reference to FIRM
ORDERS placed with THIRD PARTY manufacturers for L&I's requirements.
6.4 TITLE, RISK.
(a) Except as provided in Section 6.1(d), title to FINAL FORM PRODUCT or
FILLED PRODUCT sold hereunder shall pass to DISTRIBUTOR when L&I
delivers FINAL FORM PRODUCT or FILLED PRODUCT to DISTRIBUTOR. Except
as provided in Section 6.1(d), risk of loss of or damage to FINAL
FORM PRODUCT or FILLED PRODUCT shall pass to DISTRIBUTOR upon
delivery to DISTRIBUTOR. The cost of freight and insurance for
delivery of PRODUCT (either as FILLED PRODUCT or as FINAL FORM
PRODUCT to DISTRIBUTOR'S designated destination shall be paid by
L&I. The common carrier shall be designated by DISTRIBUTOR.
(b) In the United States, DISTRIBUTOR shall maintain or cause any person
or entity that is in possession of PRODUCT to maintain insurance
against loss or destruction of PRODUCT, or in the alternative have
in place a reasonable program of self insurance. Insurance premiums
for such insurance of DISTRIBUTOR may be deducted from EARNINGS.
6.5 SUPERIORITY OF AGREEMENT.
The PARTIES agree that the provisions of this AGREEMENT shall prevail over
any inconsistent statements or terms contained in any other documents
passing between the PARTIES, such as, but not limited to, any purchase
order, acknowledgement, confirmation or notice.
6.6 PRICE FOR PROFIT-SHARING TERRITORY.
The price for PRODUCT sold to DISTRIBUTOR for sale in the PROFIT SHARING
TERRITORY shall be the COST OF GOODS for FINAL FORM PRODUCT, and shall be
due and payable within thirty (30) days of invoice therefor, which shall
be no earlier than date of shipment of FINAL FORM PRODUCT.
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6.7 PRICE FOR OTHER TERRITORY.
(a) The price of PRODUCT to be sold in the OTHER TERRITORY shall be the
sum of :
(i) The COST OF GOODS for FILLED PRODUCT which shall be due
and payable within thirty (30) days of invoice therefor, which
shall be no earlier than date of shipment of FILLED PRODUCT ;
plus
(ii) Subject to sub-sections 6.7(a)(iii), (iv) and (v) below,
******9 of NET SALES of PRODUCT for an INDICATION sold in a
country in the OTHER TERRITORY.
(iii) In the event that L&I exercises its OPT-OUT OPTION in
respect of a PRODUCT for an OTHER NON-CANCER INDICATION, the
portion of the price to be paid under Section 6.7(a)(ii) shall
be reduced to ******10.
(iv) In the event that one or more THIRD PARTY(IES) sells a
generic equivalent of PRODUCT for an INDICATION in any country
of the OTHER TERRITORY in any YEAR in an aggregate amount such
that the quantity of units of PRODUCT sold by the generic
intruder is equal to at least twenty percent (20%) of
DISTRIBUTOR's sales volume of units of PRODUCT for such
INDICATION in such country for such YEAR (such test to be
calculated using an equivalent volume of PRODUCT per unit, as
measured by IMS data, or data of another market research
company agreed by the PARTIES if IMS data are not available),
the portion of the price to be paid under Section 6.7(a)(ii)
above shall be reduced to ******11 for such PRODUCT for such
INDICATION in such country of such YEAR or pro-rated part
thereof, as applicable. The adjustment required by the
preceding portion of this Section 6.7(a)(iv) shall be made by
adjusting the payment for the last CALENDAR QUARTER for the
applicable YEAR. In the event that DISTRIBUTOR can demonstrate
that the portion of the price paid for PRODUCT for an
INDICATION in a country in a YEAR under this Section
6.7(a)(iv) is more than ******12 times the amount earned by
DISTRIBUTOR (calculated in a manner similar to EARNINGS), then
the payment for that
- ------------------------
9 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
10 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
11 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
12 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
21
<PAGE>
YEAR for PRODUCT for that INDICATION in such country under
this Section 6.7(a)(iv) shall be adjusted by adjusting such
payment for the last CALENDAR QUARTER so that such payments
for that YEAR are no greater than ******13 times such
earnings. In the event that the circumstances described in
Section 6.7(a)(iii) and 6.7(a)(iv) both apply, the payment for
the relevant YEAR for PRODUCT in the relevant country and
relevant INDICATION shall be the lower of the two rates
applicable under such two Sections.
(v) In the event that in a CALENDAR QUARTER in a country
in the OTHER TERRITORY the sum of the COST OF GOODS (which
includes the limitation of Section 6.2(a)) and THIRD PARTY
ROYALTIES (including royalties paid pursuant to Section 13.14)
for a PRODUCT in such CALENDAR QUARTER exceeds ******14 of NET
SALES in such country, then the amount to be paid therefor
under Section 6.7(a)(ii) shall be reduced by subtracting
therefrom ******15 for each one percent by which such sum
exceeds ******16. For example, if the royalty rate is ******17
and the sum is ******18, then the ******19 from Section
6.7(a)(ii) is reduced to ******20. This Section 6.7(a)(iv) is
not applicable to payments under Section 6.7(a)(ii) that have
been reduced under Section 6.7(a)(iv) The adjustment required
by this Section 6.7(a)(v) shall be made within sixty (60) days
after the end of each YEAR for each applicable CALENDAR
QUARTER of such YEAR.
6.8 THIRD PARTY ROYALTIES.
(a) In addition to any other payments due under this AGREEMENT in the
TERRITORY, DISTRIBUTOR shall reimburse to L&I all THIRD PARTY
ROYALTIES for the CLL INDICATION and for OTHER INDICATIONS as to
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13 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
14 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
15 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
16 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
17 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
18 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
19 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
20 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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which DISTRIBUTOR retains distribution rights. L&I shall provide to
DISTRIBUTOR a schedule specifying when such THIRD PARTY ROYALTIES
are payable, and DISTRIBUTOR shall make such payments to L&I at
least fifteen (15) days prior to the time that L&I is required to
make such THIRD PARTY payment.
(b) In the event that it is necessary for L&I to enter into a license
agreement with a THIRD PARTY in order for DISTRIBUTOR to be able to
sell or continue to sell PRODUCT in the TERRITORY or for L&I to
supply PRODUCT to DISTRIBUTOR, L&I shall notify DISTRIBUTOR as soon
as it becomes aware of such necessity. L&I shall negotiate such
license agreement in good faith taking into account any comments
made by DISTRIBUTOR. A THIRD PARTY shall be added to Appendix G only
with the consent of DISTRIBUTOR, which consent shall not be
unreasonably withheld or delayed. Any disagreement under this
Section 6.8(b) as to the reasonableness of adding a THIRD PARTY
license to Appendix G shall be resolved by arbitration pursuant to
Section 19.6.
(c) In the TERRITORY, L&I agrees to pay royalties to a THIRD PARTY to
the extent that DISTRIBUTOR has paid L&I royalties pursuant to this
Section 6.8. Outside of the TERRITORY, L&I shall make royalty
payments that are due under any license agreement that is included
in Appendix G.
(d) In the event that a THIRD PARTY disputes any royalty payment with
respect to PRODUCT in the TERRITORY pursuant to a license of
Appendix G, until such dispute is resolved, DISTRIBUTOR shall pay
the disputed amount. DISTRIBUTOR and L&I shall cooperate in good
faith to resolve such dispute so that DISTRIBUTOR is not obliged to
pay THIRD PARTY ROYALTIES which L&I is not contractually obliged to
pay under the applicable THIRD PARTY licenses in respect of sales of
PRODUCT by DISTRIBUTOR, its AFFILIATES or their SUBDISTRIBUTORS in
the TERRITORY.
6.9 PAYMENT FOR PRODUCT.
The portion of the price for PRODUCT set forth in Section 6.7(a)(ii) shall
be paid within sixty (60) days after the CALENDAR QUARTER in which PRODUCT
is sold.
6.10 DELIVERY OF ACCOUNTING.
(a) Within sixty (60) days after the end of each CALENDAR QUARTER,
DISTRIBUTOR shall deliver to L&I a full and accurate accounting with
respect to PRODUCT sold in the OTHER TERRITORY as follows:
(i) Quantity of each PRODUCT sold by transaction type (by country)
by DISTRIBUTOR, and its AFFILIATES and if applicable, it's
SUBDISTRIBUTORs.
(ii) Gross Sales.
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(iii) Calculation of NET SALES (by country) in local currency.
(iv) Exchange rates for converting each local currency into U.S.
Dollars for each month of the CALENDAR QUARTER.
(v) NET SALES in U.S. dollars in each country.
(vi) Calculation of total compensation payable to L&I.
(vii) COST OF GOODS to the extent that DISTRIBUTOR is claiming a
reduction under Section 6.7(a)(v).
(viii) To the extent that an adjustment under Section 6.7(a)(iv) is
claimed by DISTRIBUTOR, the information and accounting that demonstrates
that the requirements of Section 6.7(a)(iv) have been met.
(ix) Any other information reasonably requested by L&I and in the
possession of DISTRIBUTOR.
(b) To the extent that CALENDAR QUARTER gross sales information of
AFFILIATES and SUBDISTRIBUTORS required by Section 6.10(a) is not
within the possession of DISTRIBUTOR, then DISTRIBUTOR shall be
excused from reporting such gross sales on a CALENDAR QUARTERLY
basis and instead for such countries the following information will
be submitted in lieu of CALENDAR QUARTERLY gross sales as part of
the accounting, with the CALENDAR QUARTERLY accounting for the
fourth CALENDAR QUARTER, DISTRIBUTOR shall report total gross sales
for the applicable YEAR for at least the MAJOR COUNTRIES and the ten
(10) additional countries of the OTHER TERRITORY with the highest
NET SALES of PRODUCT; provided, however, that if the NET SALES of
the countries of the OTHER TERRITORY for which DISTRIBUTOR reports
annual gross sales in lieu of CALENDAR QUARTERLY gross sales, and
the countries of the OTHER TERRITORY for which DISTRIBUTOR reports
gross sales on a CALENDAR QUARTERLY basis do not equal at least
seventy-five percent (75%) of the total NET SALES of the OTHER
TERRITORY, then DISTRIBUTOR shall report annual gross sales of such
additional countries of the OTHER TERRITORY as shall be necessary
such that the countries of the OTHER TERRITORY for which DISTRIBUTOR
is reporting gross sales at least on an annual basis equals or
exceeds the seventy five percent (75%) test. If the foregoing
sentence becomes operative for any country of the OTHER TERRITORY,
then DISTRIBUTOR shall promptly make available to L&I a copy of the
relevant parts of DISTRIBUTOR'S accounting handbook, which describes
how controllers within DISTRIBUTOR'S AFFILIATES are to account for
NET SALES.
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6.11 CURRENCY CONVERSION.
Payments by DISTRIBUTOR to L&I under this Agreement shall be made in U.S.
dollars. Except for NET SALES in the United States, where payments are
based on NET SALES in countries other than the member states of the
European Currency Union, the amount of such payments expressed in the
currency of each country shall be converted into Euro at the exchange rate
of the last date of the applicable CALENDAR QUARTER. The applicable
exchange rate will be the EURO foreign exchange reference spot rate
published daily by the European Central Bank, Frankfurt / Main. If no EURO
foreign exchange reference spot rate is determined for the relevant
currency, the PARTIES shall agree upon another reference rate. Finally,
the payable EURO amount shall be converted into US Dollars by the EURO
foreign exchange reference spot rate published by the European Central
Bank, Frankfurt / Main, at the last day of the applicable CALENDAR
QUARTER. These EURO foreign exchange reference spot rates are currently
published by REUTERS on screen "ECB37".
6.12 RECORDKEEPING BY DISTRIBUTOR.
(a) DISTRIBUTOR shall keep, and shall cause each of its AFFILIATES to
keep, and if applicable, their SUBDISTRIBUTORs, full and accurate
books of account containing all particulars that may be necessary
for the purpose of calculating NET SALES and all payments payable to
L&I for PRODUCT in the OTHER TERRITORY. Such books of account shall
be kept at their principal place of business and, with all necessary
supporting data shall, for the three (3) years next following the
end of the calendar year to which each shall pertain be open for
inspection by an independent certified accountant selected by L&I
and reasonably acceptable to DISTRIBUTOR upon reasonable notice
during normal business hours at L&I's expense for the sole purpose
of verifying payments or compliance with this AGREEMENT, but in no
event (subject to Section 13.16) more than once in each YEAR. All
information and data offered shall be used only for the purpose of
verifying payments. In the event that such inspection shall indicate
that in any YEAR that the payments which should have been paid by
DISTRIBUTOR are at least five percent (5%) greater than those which
were actually paid by DISTRIBUTOR, DISTRIBUTOR shall pay the cost of
such inspection. All underpayments and overpayments are immediately
due and payable.
(b) At the request of L&I, DISTRIBUTOR shall provide beginning and
ending inventories for each of up to ten (10) countries of the OTHER
TERRITORY for a requested YEAR, provided, however, that such request
shall be made no more than once each YEAR.
6.13 MANUFACTURER OTHER THAN BI.
(a) L&I is currently supplying PRODUCT to DISTRIBUTOR that is
manufactured under the BI AGREEMENT. In the event that L&I intends
to supply PRODUCT
25
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to DISTRIBUTOR manufactured by an entity other than BI (either in
place of PRODUCT manufactured by BI or in addition to PRODUCT
manufactured by BI), then L&I shall provide written notice thereof
to DISTRIBUTOR. L&I shall have the right to supply PRODUCT to
DISTRIBUTOR manufactured by the entity identified in L&I's notice
unless such entity is unsuitable for at least one of the following
reasons and within thirty (30) days after receipt of L&I's notice
DISTRIBUTOR notifies L&I that it objects to receiving PRODUCT
manufactured by the entity identified in L&I's notice for at least
one of the following reasons: the proposed manufacturer (i) has a
documented history of non-compliance with specifications, laws and
regulations governing the manufacture of pharmaceutical products; or
(ii) has a documented history of material failure to deliver
products in accordance with the customer's delivery schedule; or
(iii) is in litigation with DISTRIBUTOR, or DISTRIBUTOR, at the
time, in good faith, notifies L&I that DISTRIBUTOR expects to be in
litigation with such manufacturer . If L&I disagrees with
DISTRIBUTOR that the asserted ground or grounds is applicable, the
issue shall be submitted to arbitration under Section 19.6.
(b) L&I shall specify, in the notice provided for in sub-section 6.13(a)
above: (i) its reasons for proposing a change of and/or an
additional manufacturer; (ii) a reasonable forecast of the aggregate
cost to L&I therefor, including all costs of obtaining regulatory
approval of the manufacturer in the TERRITORY; and (iii) the
financial and other benefits which L&I expects will result from such
a change of manufacturer. Within sixty days of receipt of such
notice, DISTRIBUTOR shall notify L&I in writing whether DISTRIBUTOR
is willing to bear ******21 of the costs of effecting such a change
of and/or an additional manufacturer. If DISTRIBUTOR is not willing
to bear ******22 of such costs and L&I nevertheless proceeds to make
the proposed change, the COST OF GOODS for PRODUCT supplied by such
new manufacturer shall be deemed to be the same as the average COST
OF GOODS of PRODUCT supplied by BI in the three calendar years
preceding such change of and/or an additional manufacturer. If
DISTRIBUTOR agrees to bear ******23/ of such costs, L&I shall
consult with DISTRIBUTOR on the negotiation of the agreement with
the new manufacturer and L&I shall not, without the prior written
consent of DISTRIBUTOR, enter into any agreement which provides for
costs to L&I and DISTRIBUTOR in excess of those included in the
forecast referred to in (ii) above or which includes terms
materially more adverse in their effect on DISTRIBUTOR than the
terms of the BI Agreement.
(c) If DISTRIBUTOR has objected to the alternative or additional
manufacturer proposed by L&I pursuant to sub-section 6.13(a) above,
then the sixty day period
- ------------------------
21 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
22 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
26
<PAGE>
specified in sub-section 6.13(b) above shall not start until
DISTRIBUTOR has withdrawn such objection or an arbitrator has
decided that DISTRIBUTOR does not have grounds for such objection,
whichever is the earlier.
(d) In the event that there is a new manufacturer as a result of BI
failing to meet BI's obligations under the BI AGREEMENT and/or BI
terminating the BI AGREEMENT and/or expiration of the BI AGREEMENT
and/or BI not having the capacity to produce PRODUCT forecasted by
L&I and/or DISTRIBUTOR, then notwithstanding Section 6.13(b),
DISTRIBUTOR shall bear one-third of the cost of effecting a change
in and/or providing an additional manufacturer.
(e) In the event that L&I intends to change the process for
manufacturing PRODUCT, DISTRIBUTOR shall be provided notice thereof
as provided in Section 6.13(a). In addition to DISTRIBUTOR'S rights
under Section 6.13(a), DISTRIBUTOR shall have the right to object to
a manufacturer and/or a change to the process on the basis that it
will put the PRODUCT at risk in the marketplace by written objection
to L&I within thirty (30) days after such notice from L&I. The
PARTIES shall then exert reasonable efforts to insure that such
change in process or change in manufacturer does not put the PRODUCT
at risk in the marketplace.
6.14 ALTERNATE FORECASTING/ORDERING PROCEDURES.
In the event that L&I is supplying PRODUCT to DISTRIBUTOR that is being
manufactured for L&I by a manufacturer other than BI, then DISTRIBUTOR
shall provide forecasts and place orders under this AGREEMENT in a manner
that is consistent with the manufacturer's requirements.
7. PAYMENT
7.1 (a) All payments under this AGREEMENT shall be remitted in immediately
available funds.
(b) In the event that any payment due hereunder is not made when due,
the payment shall accrue interest beginning on the first day of the
month following the date when such payment was due, at PRIME plus
one percent, the interest being compounded on the last day of each
calendar month; provided that in no event shall said annual rate
exceed the maximum legal interest rate for corporations. Such
payment when made shall be accompanied by all interest accrued. Said
interest and the payment and acceptance thereof shall not negate or
waive the right of the receiving PARTY to any other remedy, legal or
equitable, to which the receiving PARTY may be entitled because of
the delinquency of the payment.
8. BI AGREEMENT
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8.1 ACTIVITIES UNDER BI AGREEMENT.
(a) DISTRIBUTOR has been provided with a copy of the BI AGREEMENT and
acknowledges and agrees that PRODUCT to be supplied by L&I to
DISTRIBUTOR that will be manufactured and supplied under the BI
AGREEMENT is subject to the terms and conditions of the BI
AGREEMENT.
(b) L&I and DISTRIBUTOR shall agree to Standard Operating Procedures
that will give DISTRIBUTOR responsibility for managing logistical
and operational details with BI with respect to PRODUCT to be
supplied to DISTRIBUTOR that is manufactured under the BI AGREEMENT.
(c) L&I agrees to consult with DISTRIBUTOR as material issues arise in
the relationship between L&I and BI; provided, however, that L&I
shall have the right within its sole discretion to decide and make
all decisions with respect to all aspects thereof provided, however,
that L&I shall not make any change to the SPECIFICATIONS which could
have an effect on the quality of the PRODUCT without the prior
written consent of DISTRIBUTOR, such consent not to be unreasonably
withheld or delayed. The PARTIES agree that such consultation shall
occur in the event that L&I is called upon to give its consent to a
manufacturing subcontractor pursuant to Section 2.4 of the BI
AGREEMENT, but the final decision with respect thereto is within the
sole discretion of L&I.
(d) Following execution of this AGREEMENT, the PARTIES will endeavor to
negotiate with BI lower minimum purchase requirements and shorter
lead times than those currently set forth in the BI AGREEMENT for
the submission of forecasts and purchase orders. Initiation and
timing of the approach to BI to commence such negotiations, and
management of the negotiations, shall be at the sole discretion and
under the control of L&I.
8.2 FORECASTS; ORDERS; WARRANTIES.
For the period during which PRODUCT supplied by L&I to DISTRIBUTOR is
being manufactured under the BI AGREEMENT:
(i) DISTRIBUTOR agrees to place orders and to make
forecasts for PRODUCT in accordance with the requirements of
the BI AGREEMENT and that any claims with respect to defective
or non-conforming PRODUCT shall be made in accordance with and
are governed and limited by the BI AGREEMENT. In particular
and without limitation, rolling forecasts and firm orders are
to be placed in accordance with Section 2.5 of the BI
AGREEMENT. In making orders, DISTRIBUTOR shall indicate the
quantity of PRODUCT being ordered for the PROFIT SHARING
TERRITORY and OTHER TERRITORY, respectively. DISTRIBUTOR shall
have the rights set forth in Sections 3.2 and 3.3 of the BI
AGREEMENT regarding testing of PRODUCT,
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auditing of BI (subject to the consent of BI), and rejection
of defective PRODUCT.
(ii) L&I warrants and represents that the PRODUCT to be
supplied to DISTRIBUTOR hereunder corresponds to the
SPECIFICATIONS and shall be produced according to current Good
Manufacturing Practices standards as of the date and time of
production and in accordance with all applicable laws, rules
and regulations in the country where produced. L&I further
warrants and represents that the PRODUCT shall be delivered to
DISTRIBUTOR free and clear of liens and claims which affect
title. L&I makes no other warranties and representations with
respect to the manufacture of PRODUCT. Notwithstanding
anything else to the contrary, L&I's liability with respect to
any such warranty or representation is limited to the amount
and in the manner set forth in Section 3.6 of the BI
AGREEMENT. The warranties and representations of L&I set forth
in this Section 8.2(ii) shall not apply to the activities of
DISTRIBUTOR performed pursuant to Section 6.2; in such case
the warranties and representations of L&I shall apply only to
FILLED PRODUCT.
(iii) L&I agrees to provide DISTRIBUTOR with the
documentation provided by BI to L&I under Section 3.8 of the
BI AGREEMENT.
(iv) In the event that L&I fails to purchase the minimum
quantities of PRODUCT specified in Section 2.8 of the BI
AGREEMENT and L&I is obligated to pay a surcharge under
Section 5.2 of the BI AGREEMENT, then, subject to Section
6.13, DISTRIBUTOR shall pay to L&I the amount of such
surcharge ("Surcharge"). The Surcharge paid by DISTRIBUTOR,
multiplied by the "Fraction" (as hereinafter defined), shall
be COST OF GOODS for the PROFIT SHARING TERRITORY for the
applicable YEAR and the remainder thereof shall be COST OF
GOODS for the OTHER TERRITORY under Section 6.7(b) of this
AGREEMENT. The "Fraction" has as a numerator the NET SALES of
PRODUCT by DISTRIBUTOR in the PROFIT SHARING TERRITORY in the
applicable YEAR and, as the denominator, NET SALES of PRODUCT
in the TERRITORY for the applicable YEAR. (v) In the event
that a payment is due to BI under Section 8.5 of the BI
AGREEMENT, DISTRIBUTOR shall pay ******23 of such amount.
(vi) In the event that L&I receives a credit or no
charge replacement of PRODUCT from BI for PRODUCT for which
L&I has
- ------------------------
23 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
29
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received payment from DISTRIBUTOR, L&I will credit DISTRIBUTOR
for such amount. Where DISTRIBUTOR notifies L&I of a claim for
such credit or no charge replacement under the BI AGREEMENT,
L&I will use all reasonable efforts to obtain such credit or
no charge replacement to the extent permitted under the BI
AGREEMENT.
9. LOAN.
9.1 (a) DISTRIBUTOR agrees to make a loan to L&I of Thirty million dollars
($30,000,000) in the following amounts and at the following times in order
to assist L&I in meeting L&I's financial obligations under this AGREEMENT:
(i) ******24
(ii) ******25
(iii) ******26
(iv) ******27
(v) ******28 provided, however that DISTRIBUTOR'S obligation to
make the payment contemplated by this subsection shall not
become due until DISTRIBUTOR'S option to terminate this
AGREEMENT pursuant to Section 11.1(c) has expired without
DISTRIBUTOR having terminated this AGREEMENT.
(vi) ******29 provided, however, that DISTRIBUTOR'S obligation to
make the payment contemplated by this subsection shall not
become due until DISTRIBUTOR'S option to terminate this
AGREEMENT pursuant to section 11.1(c) has expired without
DISTRIBUTOR having terminated this AGREEMENT.
- ------------------------
24 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
25 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
26 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
27 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
28 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
29 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
30
<PAGE>
(b) The loans that are made under Section 9.1(a) shall bear interest at
PRIME plus one percent (1%) PER ANNUM.
(c) To the extent that the outstanding principal of any loan made
pursuant to Section 9(a) has not been reduced under Sections 12.2
and 12.3, such outstanding principal and any accumulated interest
are repayable to DISTRIBUTOR out of L&I's portion of positive
EARNINGS payable to L&I pursuant to Section 3.6.
(d) L&I shall have no liability for repayment of the loans except in
accordance with the provisions of Sections 3.6, 12.2 and 12.3.
10. DEVELOPMENT COMMITTEE
10.1 (a) The development of PRODUCT in the TERRITORY for INDICATIONS shall be
managed and directed by a committee composed of four members, with
DISTRIBUTOR appointing two (2) members and L&I two (2) members (the
"DEVELOPMENT COMMITTEE"), with a member appointed by L&I being
Chairman of the DEVELOPMENT COMMITTEE.
(b) The DEVELOPMENT COMMITTEE shall meet at least once each CALENDAR
QUARTER at the call of the Chairman in person or by telephone. A
quorum for the conduct of business at any meeting of the DEVELOPMENT
COMMITTEE shall consist of at least one representative of
DISTRIBUTOR and at least one L&I representative. Each of L&I and
DISTRIBUTOR shall have one vote, and all decisions shall be reached
by a unanimous vote. The PARTIES shall cause the DEVELOPMENT
COMMITTEE to review and vote on each submitted DEVELOPMENT PLAN,
PRELIMINARY WORK PLAN and PRELIMINARY WORK PLAN.
(c) The DEVELOPMENT COMMITTEE shall review each approved DEVELOPMENT
PLAN at least once each YEAR or at the request of any member, and
shall decide whether or not to amend the DEVELOPMENT PLAN.
(d) If there is a tie vote in the DEVELOPMENT COMMITTEE as to a
DEVELOPMENT PLAN or any amendment thereto, or PRELIMINARY
DEVELOPMENT PLAN or PRELIMINARY WORK PLAN, L&I and DISTRIBUTOR agree
to exert all reasonable efforts to arrive at a mutually acceptable
resolution, including a meeting between the Head of the Therapeutics
SBU of DISTRIBUTOR and a manager of the General Partner of L&I. If
such a dispute relates to OTHER INDICATIONS and resolution is not
reached within thirty (30) days, then dispute resolution shall be as
set forth in Section 12 for the particular INDICATION under
discussion.
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11. DEVELOPMENT FOR CLL INDICATIONS
11.1 (a) With respect to PRODUCT for the CLL INDICATION, L&I shall bear the
cost and expense of the CLINICAL TRIAL and shall exert commercially
reasonable efforts to complete the CLINICAL TRIAL. If the CLINICAL
TRIAL is successful, L&I shall bear the cost and expense for filing
and obtaining approval of a BLA in the United States based on such
CLINICAL TRIAL, and shall exert commercially reasonable efforts to
file and obtain such BLA.
(b) If the CLINICAL TRIAL is not successful, or if a BLA is not approved
in the United States based solely on the CLINICAL TRIAL, and
DISTRIBUTOR and/or L&I reasonably believe that additional clinical
work should be done to obtain BLA approval for the CLL INDICATION,
then at the option of L&I, L&I shall either (i) pay the expense of
such additional clinical work to obtain BLA approval for the CLL
INDICATION; or (ii) L&I and DISTRIBUTOR shall initiate good-faith
negotiations to reach agreement with respect to L&I and DISTRIBUTOR
sharing the expenses of such clinical work and an appropriate
reduction in the APPROPRIATE PERCENTAGE for PRODUCT for the CLL
INDICATION.
(c) In the event that a BLA is obtained in the United States or a BLA
equivalent is obtained from the EMEA, in either case for the CLL
INDICATION, and if DISTRIBUTOR concludes that the labeling is such
that the PRODUCT that is the subject of such BLA or BLA equivalent
is not commercially viable, then DISTRIBUTOR shall have the right to
do one of the following, by written notice to L&I, within thirty
(30) days after receipt from L&I of notice of such BLA or such BLA
equivalent approval and a copy of all approval correspondence
received by L&I from the applicable AGENCY:
i) Terminate this AGREEMENT, in which case DISTRIBUTOR shall
not be required to make the loan payments under (x) Section 9(a)(v)
, if the termination is made within thirty (30) days after receipt
from L&I of the notice and correspondence described above relating
to BLA approval; or (y) under Section 9(a)(vi) if the termination is
made within thirty (30) days after receipt from L&I of the notice
and correspondence described above relating to BLA equivalent
approval; or
(ii) Request L&I to perform additional clinical work to extend
the label for the CLL INDICATION, in which case DISTRIBUTOR shall
reimburse L&I for ******30 of such DEVELOPMENT EXPENSES on a
CALENDAR QUARTER basis as such expenses are incurred, within thirty
(30) days after receipt of an invoice therefor; provided, however,
that such
- ------------------------
30 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
32
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DEVELOPMENT EXPENSES shall not exceed a total of four million
dollars ($4,000,000) without the consent of both PARTIES.
(d) With respect to PRODUCT for the CLL INDICATION, L&I shall exert
commercially reasonable efforts to obtain EMEA approval therefor in
Europe and L&I shall bear the cost and expense thereof. Pricing
approvals, if any, shall be obtained at the cost and expense of
DISTRIBUTOR.
(e) In Europe, L&I shall use commercially reasonable efforts to obtain
EMEA approval for PRODUCT for the extension of the CLL INDICATION in
accordance with Appendix D. L&I shall pay all of the DEVELOPMENT
EXPENSES therefor, provided, however, that DISTRIBUTOR shall pay to
L&I ******31 of such DEVELOPMENT EXPENSES on a quarterly basis as
such expenses are incurred, within thirty (30) days of invoice
therefor.
(f) With respect to PRODUCT for the CLL INDICATION in countries of the
TERRITORY other than the United States and those countries covered
by the EMEA, L&I shall exert commercially reasonable efforts to
develop and obtain regulatory approval therefor in any country where
DISTRIBUTOR desires to market the PRODUCT. L&I shall pay the
DEVELOPMENT EXPENSES therefor and DISTRIBUTOR shall reimburse L&I
for ******32 of such DEVELOPMENT EXPENSES on a quarterly basis as
such expenses are incurred, within thirty (30) days of receipt of an
invoice therefor. In the event that L&I materially fails to exert
commercially reasonable efforts to develop and obtain regulatory
approval of the PRODUCT for the CLL INDICATION in one or more
countries of the TERRITORY as provided in this Section 11.1(f),
DISTRIBUTOR may, after forty-five (45) days prior written notice to
L&I, undertake such development and approval and complete it at
DISTRIBUTOR'S own expense if during such notice period L&I has not
begun to carry out such work in a manner reasonably likely to
accomplish the desired objective. DISTRIBUTOR shall be entitled to
commercially reasonable assistance from L&I to accommodate
DISTRIBUTOR'S efforts, including providing data and study reports in
the possession of L&I, if necessary to permit the exercise by
DISTRIBUTOR of its rights under this Section 11.1(f). ******33 of
all costs reasonably incurred by DISTRIBUTOR in carrying out
activities under this Section shall be reimbursed to DISTRIBUTOR by
L&I on a CALENDAR QUARTER basis as such expenses are incurred
following receipt by L&I of DISTRIBUTOR'S invoice therefor, or may
be deducted by DISTRIBUTOR
- ------------------------
31 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
32 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
33 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
33
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from any payments due from DISTRIBUTOR to L&I under this AGREEMENT,
at the option of DISTRIBUTOR. The remedy provided in this Section
11.1(f) shall be the sole remedy for L&I's failure to perform L&I's
obligations under this Section 11.1(f).
12. DEVELOPMENT FOR OTHER INDICATIONS
12.1 (a) Any PARTY shall have the right to propose to the DEVELOPMENT
COMMITTEE that the PRODUCT be studied for an OTHER INDICATION.
Proposals to the DEVELOPMENT COMMITTEE concerning the study of an
OTHER CANCER INDICATION shall be initiated by submitting a
DEVELOPMENT PLAN to the DEVELOPMENT COMMITTEE. Proposals to the
DEVELOPMENT COMMITTEE concerning the study of an OTHER NON-CANCER
INDICATION shall be initiated by submitting either a PRELIMINARY
WORK PLAN or a DEVELOPMENT PLAN to the DEVELOPMENT COMMITTEE.
(b) With regard to an OTHER CANCER INDICATION, the PARTIES must both
agree to the DEVELOPMENT PLAN or the OTHER CANCER INDICATION will
not be developed. If a DEVELOPMENT PLAN for an OTHER CANCER
INDICATION is approved by the DEVELOPMENT COMMITTEE, then L&I shall
perform the work under the DEVELOPMENT PLAN and pay one hundred
percent (100%) of the DEVELOPMENT EXPENSES. DISTRIBUTOR shall pay to
L&I ******34 of such DEVELOPMENT EXPENSES on a CALENDAR QUARTER
basis as such expenses are incurred, within thirty (30) days of
receipt of L&I's invoice therefor.
(c) With regard to an OTHER NON-CANCER INDICATION:
(i) If either PARTY submits a PRELIMINARY WORK PLAN for an OTHER
NON-CANCER INDICATION to the DEVELOPMENT COMMITTEE, the
DEVELOPMENT COMMITTEE shall decide whether to approve the
PRELIMINARY WORK PLAN. For the first five (5) YEARS, if the
DEVELOPMENT COMMITTEE cannot agree whether to approve such a
PRELIMINARY WORK PLAN, then the decision of L&I shall control.
After the first five (5) YEARS, work under such a PRELIMINARY
WORK PLAN shall not proceed unless the PARTIES agree.
Aggregate funding under such PRELIMINARY WORK PLANS for the
first five (5) YEARS shall not exceed one million dollars
($1,000,000) per YEAR without the consent of both PARTIES. L&I
shall perform the work under the PRELIMINARY WORK PLAN and pay
one hundred percent (100%) of the DEVELOPMENT EXPENSES.
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34 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
34
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DISTRIBUTOR shall pay to L&I ******35 of such DEVELOPMENT
EXPENSES on a CALENDAR QUARTER basis as such expenses are
incurred, within thirty (30) days of receipt of L&I's invoice
therefor.
(ii) With respect to OTHER NON-CANCER INDICATIONS, no DEVELOPMENT
PLAN shall be submitted to the DEVELOPMENT COMMITTEE in
advance of each PARTY being supplied with a PRELIMINARY
DEVELOPMENT PLAN. If either PARTY submits such a DEVELOPMENT
PLAN to the DEVELOPMENT COMMITTEE, the DEVELOPMENT COMMITTEE
shall decide whether to approve the DEVELOPMENT PLAN. During
the first five (5) YEARS, if the PARTIES cannot agree the
decision of L&I shall control. After the first five (5) years,
both PARTIES must agree to such a DEVELOPMENT PLAN. If a
DEVELOPMENT PLAN is approved by the DEVELOPMENT COMMITTEE,
either because the DEVELOPMENT COMMITTEE reached agreement, or
during the first five (5) YEARS, because of the decision of
L&I, L&I shall perform the work under the DEVELOPMENT PLAN and
pay one hundred percent (100%) of the DEVELOPMENT EXPENSES.
DISTRIBUTOR shall pay to L&I ******36 of such DEVELOPMENT
EXPENSES on a CALENDAR QUARTER basis as such expenses are
incurred, within thirty (30) days of receipt of L&I's invoice
therefor. Within thirty (30) days of approval of the
DEVELOPMENT PLAN by the DEVELOPMENT COMMITTEE or, at any time
thereafter, by ninety (90) days' prior written notice, either
PARTY shall have the right to serve notice on the other PARTY
that it will not fund its portion of the DEVELOPMENT EXPENSES
as described in the previous two sentences (the "OPT OUT
OPTION"). If the DISTRIBUTOR chooses to fund its portion of
DEVELOPMENT EXPENSES under an approved DEVELOPMENT PLAN, then
it shall have equal participation with L&I in the design of
clinical protocols and conduct of activities under the
DEVELOPMENT PLAN.
(iii) The decisions of the PARTIES to pay their portion of
DEVELOPMENT EXPENSES or to exercise their OPT OUT OPTIONS
shall have the following consequences:
(A) In the event that DISTRIBUTOR elects to fund DEVELOPMENT EXPENSES
and L&I exercises its OPT OUT OPTION for PRODUCT for an OTHER
NON-CANCER INDICATION, then L&I shall perform the work under the
DEVELOPMENT PLAN for such INDICATION and DISTRIBUTOR shall pay for
one hundred percent (100%) of the DEVELOPMENT EXPENSES, which
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35 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
36 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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shall be due and payable on a CALENDAR QUARTER basis as such
expenses are incurred, within thirty (30) days after receipt of
L&I's invoice therefor.
(B) In the event that DISTRIBUTOR exercises its OPT OUT OPTION with
respect to such a DEVELOPMENT PLAN, then any and all rights of
DISTRIBUTOR under this AGREEMENT for PRODUCT for the OTHER
NON-CANCER INDICATION of the DEVELOPMENT PLAN shall be terminated
upon receipt of such notice.
(C) Subject to DISTRIBUTOR making the payments due from DISTRIBUTOR
under Section 12.1(b) and (c)(ii) and (c)(iii)(A), as the case may
be, L&I shall use commercially reasonable efforts to develop and
obtain regulatory approval for PRODUCT for each OTHER NON-CANCER
INDICATION in each country of the TERRITORY for which there is a
DEVELOPMENT PLAN for PRODUCT for such OTHER NON-CANCER INDICATION,
all in accordance with the applicable DEVELOPMENT PLAN.
(D) If after DISTRIBUTOR exercises it OPT OUT OPTION L&I decides to
offer rights to a THIRD PARTY for such PRODUCT for such OTHER
NON-CANCER INDICATION after completion of clinical studies, L&I
shall provide written notice thereof to DISTRIBUTOR and if
DISTRIBUTOR is interested in obtaining such rights as evidenced by
written notice from DISTRIBUTOR within thirty (30) days thereafter,
then L&I will negotiate with DISTRIBUTOR for a period of one month
in an attempt to enter into an agreement with DISTRIBUTOR with
respect to such rights, but neither DISTRIBUTOR nor L&I shall be
obligated to enter into such an agreement. If the PARTIES have not
entered into an agreement within thirty (30) days after initiating
such negotiation, L&I shall have the right to offer or grant rights
to any person or entity on any terms or conditions within the sole
discretion of L&I.
(E) If after DISTRIBUTOR exercises its OPT OUT OPTION with respect to
PRODUCT for an OTHER NON-CANCER INDICATION and if prior to
initiating clinical studies there is a substantial change to the
DEVELOPMENT PLAN in effect at the time of the election, L&I shall
provide written notice thereof to DISTRIBUTOR and if DISTRIBUTOR is
interested in developing PRODUCT for such OTHER NON-CANCER
INDICATION as evidenced by written notice from DISTRIBUTOR within
thirty (30) days thereafter, then L&I will negotiate with
DISTRIBUTOR for a period of one month in an attempt to enter into an
agreement with DISTRIBUTOR with respect to such rights, but neither
DISTRIBUTOR nor L&I shall be obligated to enter into such an
agreement. If the parties have not entered into an agreement within
thirty (30) days after initiating such negotiation, L&I shall have
the right to offer or grant rights to any person or entity on any
terms or conditions within the sole discretion of L&I.
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(F) At the time of approval of a DEVELOPMENT PLAN for PRODUCT for an
OTHER NON-CANCER INDICATION which is to be funded by both L&I and
DISTRIBUTOR, L&I and DISTRIBUTOR shall agree to a plan by which L&I
or DISTRIBUTOR is to receive a royalty for PRODUCT for such OTHER
NON-CANCER INDICATION in the event that L&I or DISTRIBUTOR
exercises, as the case may be, its right to terminate funding of a
DEVELOPMENT PLAN for PRODUCT for such OTHER INDICATION after an
agreed to amount of money has been spent under the DEVELOPMENT PLAN
for such OTHER NON-CANCER INDICATION. It is understood that if L&I
terminates funding, such royalty shall be in addition to any other
payments to which L&I is entitled under this AGREEMENT and the
determined royalty shall be the same for L&I and DISTRIBUTOR.
(G) If DISTRIBUTOR exercises its OPT OUT OPTION with respect to PRODUCT
for an OTHER NON-CANCER INDICATION, L&I's development thereof, if
any, shall not be subject to the authority of the DEVELOPMENT
COMMITTEE.
(H) Within forty-five (45) days after L&I obtains approval to market
PRODUCT for an OTHER NON-CANCER INDICATION in the United States or a
MAJOR COUNTRY of the TERRITORY, whichever is earlier, DISTRIBUTOR
shall pay to L&I, the PAYMENT AMOUNT for PRODUCT for such OTHER
NON-CANCER INDICATION, provided that at such time DISTRIBUTOR'S
right to distribute PRODUCT for such OTHER NON-CANCER INDICATION has
not been terminated. The amount paid at such time shall be based on
a good faith estimate at the time of the PAYMENT AMOUNT as made by a
THIRD PARTY agreed to by L&I and DISTRIBUTOR and the payment shall
be adjusted upwardly or downwardly at the time that the actual
PAYMENT AMOUNT can be determined by DISTRIBUTOR by either paying an
additional amount to L&I or L&I refunding any excess amount paid. It
is expressly understood that the payment of this Section
12.1(c)(iii)(H) shall be paid only once for each of the rheumatoid
arthritis, transplantation and multiple sclerosis INDICATIONS.
(I) With respect to a proposed DEVELOPMENT PLAN for an OTHER NON-CANCER
INDICATION, if the DEVELOPMENT PLAN is directed to developing
PRODUCT with the same formulation and/or with the same strength as
PRODUCT for the CLL INDICATION or an OTHER CANCER INDICATION that is
then being developed or distributed under this AGREEMENT, then L&I
shall provide objective evidence to DISTRIBUTOR that it is
commercially unreasonable to develop PRODUCT for such INDICATION
with a different strength and/or formulation, as the case may be.
Within thirty (30) days thereafter, DISTRIBUTOR shall notify L&I in
writing whether or not it agrees with L&I. If DISTRIBUTOR disagrees,
then DISTRIBUTOR shall provide with such notice the reasons for such
disagreement. If DISTRIBUTOR and L&I do not resolve such
disagreement, then either PARTY can submit the disagreement to
arbitration pursuant to Section 19.6. If DISTRIBUTOR agrees with
L&I, or L&I's position is determined to be correct in
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an arbitration pursuant to Section 19.6, and DISTRIBUTOR exercises
its OPT-OUT OPTION, the provisions of Section 13.6(a)(vi) shall not
be applicable to PRODUCT for such INDICATION, as set forth in such
DEVELOPMENT PLAN.
(J) If DISTRIBUTOR exercises its OPT-OUT OPTION with respect to a
PRODUCT for an OTHER NON-CANCER INDICATION after initiation of
development thereof under a DEVELOPMENT PLAN, then the provisions of
Section 13.6(a)(vi) shall not be applicable to PRODUCT for such
INDICATION, as set forth in such DEVELOPMENT PLAN.
12.2 LOAN REDUCTIONS
With respect to any portion of DEVELOPMENT EXPENSES paid by L&I pursuant
to Section 11 or Section 12 that DISTRIBUTOR is not obligated to reimburse
pursuant to Sections 11 or 12 ("Non-Reimbursed Portion") to the extent
that there is any unpaid principal on loans made to L&I pursuant to
Section 9, DISTRIBUTOR shall forgive the outstanding principal amount of
such loan and any interest thereon in an amount equal to such
"Non-Reimbursed Portion" upon receipt of an invoice therefor from L&I.
12.3. FURTHER LOAN REDUCTIONS
DISTRIBUTOR shall credit to L&I an amount equal to ten percent (10%) of
DEVELOPMENT EXPENSES paid by L&I under Sections 11 and 12 (whether or not
reimbursed by DISTRIBUTOR) by reducing the outstanding principal amount of
any loan made by DISTRIBUTOR to L&I pursuant to Section 9 effective upon
receipt of an invoice therefor from L&I.
12.4 DISTRIBUTOR AUDIT RIGHTS
L&I shall keep and shall cause each of its AFFILIATES and its and their
contractors to keep full and accurate records and books of account
containing all particulars that may be necessary for the purpose of
calculating DEVELOPMENT EXPENSES to be charged to DISTRIBUTOR pursuant to
this AGREEMENT. Such books of account shall be kept at their principal
places of business and, with all necessary supporting data shall, for the
three (3) years next following the end of the calendar year to which each
shall pertain be open for inspection by an independent certified
accountant selected by DISTRIBUTOR and reasonably acceptable to L&I upon
reasonable notice during normal business hours at DISTRIBUTOR'S expense
for the sole purpose of verifying charges in compliance with this
AGREEMENT, but in no event more than once each calendar year. All
information and data offered shall be used only for the purpose of
verifying charges to DISTRIBUTOR. In the event that such inspection shall
indicate that in any calendar year the charges which were paid by
DISTRIBUTOR were overstated by at least five percent (5%), then L&I shall
pay the cost of the inspection. All underpayments and overpayments are
immediately due and payable.
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12.5 L&I shall have the right to have work performed on its behalf under
Section 12 by a THIRD PARTY provided, however, that L&I shall be
responsible for the work performed by a THIRD PARTY.
13. OTHER RESPONSIBILITIES
13.1 COMPLIANCE WITH LAW.
In distributing marketing and selling of PRODUCT in the TERRITORY,
DISTRIBUTOR shall comply with all provisions of the laws, rules and
regulations applicable in the TERRITORY.
13.2 PROHIBITION ON EXPORTS.
DISTRIBUTOR agrees not to export PRODUCT outside the TERRITORY without the
express permission of L&I. L&I agrees not to sell or permit the sale in
the TERRITORY by THIRD PARTIES of PRODUCT for an INDICATION for which
DISTRIBUTOR has distribution rights in the TERRITORY.
13.3 NEGATION OF PARTNERSHIP; ETC.
The appointment of DISTRIBUTOR hereunder shall not create a joint venture,
or any employer-employee relationship or principal-agency relationship
between L&I and DISTRIBUTOR. Nothing under this AGREEMENT shall be deemed
to authorize DISTRIBUTOR to act for, represent, or bind L&I or any of its
AFFILIATES. Nothing under this AGREEMENT shall be deemed to authorize L&I
to act for, represent, or bind DISTRIBUTOR or any of its AFFILIATES. This
AGREEMENT does not create a partnership for United States federal income
tax purposes (as defined in Section 761 of the United States Internal
Revenue Code), for any United States state or local jurisdiction, or in
any country other than the United States. Therefore there is no
requirement to file Form 1065, United States Partnership Return of Income,
any similar United States state or local income tax return, or any similar
document with tax authorities in any other country .
13.4 CONFIDENTIALITY.
(a) During the term of this AGREEMENT, it is contemplated that a PARTY
will disclose to the other PARTY proprietary and confidential
technology, specifications, technical information and the like which
are owned or controlled by or licensed to a PARTY ("Confidential
Information"). The receiving PARTY agrees to retain the disclosing
PARTY's Confidential Information in confidence and not to disclose
any such Confidential Information to a THIRD PARTY without the prior
written consent of the disclosing PARTY and to use the disclosing
PARTY's Confidential Information only for the purposes of this
AGREEMENT. The obligations of confidentiality will not apply to
Confidential Information which:
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(i) was known to the receiving PARTY or generally known
to the public prior to its disclosure hereunder;
(ii) subsequently becomes known to the public by some
means other than a breach of this AGREEMENT;
(iii) is subsequently disclosed to the receiving PARTY
by a THIRD PARTY having a lawful right to make such
disclosure, or is developed by the receiving PARTY
independently of the disclosure of the disclosing PARTY;
(iv) is required by law or BONA FIDE legal process to be
disclosed provided that the receiving PARTY takes all
reasonable steps to restrict and maintain confidentiality of
such disclosure and provides reasonable prior notice to the
disclosing PARTY;
(v) is approved for release by the PARTIES; or
(vi) is preclinical or clinical data or other
information concerning PRODUCT which DISTRIBUTOR is reasonably
required to disclose to consultants (such as advertising
agencies, reimbursement experts and marketing research
companies), customers, healthcare professionals, consumers or
regulatory agencies as part of its routine advertising or
promotional activities or medical education, professional
services, adverse event investigation and reporting, or
PRODUCT quality or complaint investigation and reporting
functions, or which is disclosed by DISTRIBUTOR to AFFILIATES
and SUBDISTRIBUTORS in order to allow them to market and sell
PRODUCT in their respective countries of the TERRITORY as
permitted by this AGREEMENT (provided that such AFFILIATES and
SUBDISTRIBUTORS agree to be bound by the confidentiality
obligations set forth in this Section).
(b) Upon termination or expiration of this AGREEMENT, each PARTY shall
return to the other PARTY all tangible forms of Confidential
Information furnished by the other PARTY, including all copies
thereof and all memoranda of oral disclosure, except that each PARTY
may retain one copy in its files to ensure compliance with any legal
obligations.
(c) This Section shall survive until the tenth anniversary of the
termination or expiration of this AGREEMENT.
(d) With respect to Confidential Information that is know-how under the
BTG AGREEMENT, DISTRIBUTOR agrees to maintain the confidentiality
thereof in accordance with the DISTRIBUTOR BTG LETTER.
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(e) Publicity Review. Neither PARTY shall originate any written
publicity, news release, or other announcement or statement relating
to this AGREEMENT, performance hereunder, or the existence of an
arrangement between the PARTIES (collectively a "Written
Disclosure"), without the prompt prior review and written approval
of the other PARTY, which approval shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, either PARTY may
make any public Written Disclosure it believes in good faith based
upon the advice of counsel is required by applicable law, rule or
regulation or any listing or trading agreement concerning its or its
AFFILIATES publicly traded securities; provided, however, that such
Written Disclosure shall minimize to the extent possible the
financial information disclosed, and that prior to making such
Written Disclosure, the disclosing PARTY shall provide to the other
party a copy of the materials proposed to be disclosed and provide
the receiving PARTY with an opportunity to promptly review the
Written Disclosure.
13.5 APPOINTMENT OF AUTHORIZED AGENT.
(a) As promptly as possible following the first approval of a
BLA for PRODUCT by FDA, L&I shall, to the fullest extent
possible, authorize DISTRIBUTOR in writing to represent L&I
for purposes of dealing with APLS in regard to all of
DISTRIBUTOR'S activities with respect to the distribution of
the PRODUCT in the United States (which appointment
DISTRIBUTOR shall acknowledge in writing). DISTRIBUTOR'S
activities to market and promote the PRODUCT will continue to
be conducted as an independent contractor and not as a
promotional agent of L&I. To the extent permitted by FDA,
DISTRIBUTOR shall have authority to deal with APLS concerning
all matters regulated by APLS in connection with DISTRIBUTOR'S
activities as distributor of the PRODUCT, including without
limitation submission of advertising and promotional materials
and responding (orally and in written form) to FDA questions,
observations and complaints concerning DISTRIBUTOR'S
advertising and promotional materials for PRODUCT. In the
event that FDA contacts L&I concerning matters that have been
delegated to DISTRIBUTOR pursuant to this Section, L&I shall
attempt to refer FDA to DISTRIBUTOR (and if such attempt is
unsuccessful, shall immediately notify and, to the extent
possible in the circumstances, permit DISTRIBUTOR to intervene
with FDA and handle the matter).
(b) While acting under Section (a) above, DISTRIBUTOR shall
copy L&I on all correspondence to FDA contemporaneously with
the submission of such correspondence to FDA (including full
copies of all advertising and promotional materials), shall
promptly copy L&I on all correspondence received from FDA;
shall contact L&I the day of receipt of any communication from
FDA that relates to or threatens imposition of any penalty;
and shall promptly copy L&I on all contact reports prepared by
DISTRIBUTOR concerning any phone calls or meetings with FDA.
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(c) If at any point DISTRIBUTOR ceases to be the distributor
of PRODUCT in the United States, then DISTRIBUTOR shall
promptly resign this authority to represent L&I upon written
notice from L&I, and L&I shall promptly so notify FDA in
writing.
(d) If the PARTIES are not successful in having DISTRIBUTOR
authorized to represent L&I in these matters before ALPS as
set forth in Section 13.5 (a), then this Section 13.5 (d)
shall be applicable. L&I shall promptly inform DISTRIBUTOR of
communications with FDA concerning DISTRIBUTOR'S advertising
and promotional materials and promptly provide DISTRIBUTOR
with copies of FDA correspondence. Prior to communicating with
FDA about DISTRIBUTOR'S advertising and promotional materials,
L&I shall consult with DISTRIBUTOR, and shall transmit the
DISTRIBUTOR position on the applicable matter to FDA. To the
extent permitted by FDA, L&I shall include DISTRIBUTOR in all
meetings and conference calls with FDA relating to
DISTRIBUTOR'S advertising and promotional materials, and
during such meetings and conference calls shall not make
proposals or accede to FDA proposals which have not been
previously cleared with DISTRIBUTOR. L&I shall promptly
provide to DISTRIBUTOR copies of all L&I contact reports and
meeting minutes relating to interaction with FDA relating to
DISTRIBUTOR advertising and promotional materials. Written
submissions to FDA concerning DISTRIBUTOR'S advertising and
promotional materials shall be prepared by DISTRIBUTOR and
submitted by L&I. L&I shall keep DISTRIBUTOR promptly informed
of the status of matters at FDA involving DISTRIBUTOR'S
advertising and promotional materials.
(e) The rights and obligations of DISTRIBUTOR under this
Section 13.5 shall be exercised by DISTRIBUTOR'S United States
AFFILIATE.
13.6 EXCLUSIVITY PROTECTION FOR DISTRIBUTOR.
(a) L&I will not:
(i) except as permitted by this AGREEMENT, sell PRODUCT in a
country for an INDICATION for which DISTRIBUTOR is then
distributing the PRODUCT, or for which DISTRIBUTOR is entitled
to distribute the PRODUCT, under this AGREEMENT;
(ii) encourage in any way the off label use of the PRODUCT in a
country for any INDICATION for which DISTRIBUTOR is then
distributing the PRODUCT, or for which DISTRIBUTOR is entitled
to distribute PRODUCT, under this AGREEMENT;
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(iii) other than for the benefit of and at the express request of
DISTRIBUTOR, sponsor or otherwise support medical education or
similar programs designed to foster use of the PRODUCT in a
country for any INDICATION for which DISTRIBUTOR is then
distributing the PRODUCT, or for which DISTRIBUTOR is entitled
to distribute the PRODUCT, under this AGREEMENT;
(iv) other than for the benefit of and at the express request of
DISTRIBUTOR, seek approval in a country of the OTHER
NON-CANCER INDICATION by way of a supplement or amendment of
any BLA or foreign equivalent under which DISTRIBUTOR is
distributing the PRODUCT, or for which DISTRIBUTOR is entitled
to distribute the PRODUCT, under this AGREEMENT;
(v) market the PRODUCT under the TRADEMARK;
(vi) except for the benefit of and at the express request of
DISTRIBUTOR, sell PRODUCT for an OTHER NON-CANCER INDICATION
by way of a PRODUCT with the same package size as the PRODUCT
being distributed by DISTRIBUTOR and subject to Section
12.1(c)(iii)(I) and (J) with the same formulation or strength
as the PRODUCT being distributed by DISTRIBUTOR.
(b) In the event that DISTRIBUTOR can demonstrate by objective proof
that PRODUCT distributed by L&I or any licensee or distributor of
L&I other than DISTRIBUTOR is being used for an INDICATION for which
DISTRIBUTOR retains distribution rights granted by L&I, and that for
any CALENDAR QUARTER in a country of the TERRITORY such use exceeds
five percent (5%) of DISTRIBUTOR'S sales of PRODUCT for such
CALENDAR QUARTER, then within thirty (30) days of such demonstration
by DISTRIBUTOR and within thirty (30) days of each CALENDAR QUARTER
thereafter that such use exceeds five percent (5%), L&I shall pay to
DISTRIBUTOR, a sum equal to ******37 of the gross sales of L&I, or
the licensee or distributor of L&I, as applicable, of the amount of
such PRODUCT that is used for such INDICATION in such country for
such CALENDAR QUARTER. Any dispute arising under this Section shall
be resolved by binding arbitration pursuant to Section 19.6.
DISTRIBUTOR'S remedy hereunder is without prejudice to L&I's
obligations pursuant to Section 13.6(a).
(c) L&I will cause its distributors and licensees of any OTHER
NON-CANCER INDICATION to agree in writing to the terms of Section
13.6(a) and (b), and will provide a copy of such writing to
DISTRIBUTOR promptly following its
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37 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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execution. DISTRIBUTOR will be named a third party beneficiary of
such writing, with the right to seek legal remedies to enforce the
terms of such writing.
13.7 EXCLUSIVITY PROTECTION FOR L&I.
(a) DISTRIBUTOR will not market or sell PRODUCT other than pursuant to
the rights granted to and retained by DISTRIBUTOR under this
AGREEMENT.
(b) DISTRIBUTOR will not encourage in any way the off label use of the
PRODUCT sold by DISTRIBUTOR for any INDICATION in any country for
which DISTRIBUTOR does not have or no longer has distribution rights
under this AGREEMENT.
(c) DISTRIBUTOR will not sponsor or otherwise support medical education
or similar programs designed to foster use of the PRODUCT in any
country for any INDICATION for which DISTRIBUTOR does not have or no
longer has distribution rights under this AGREEMENT.
(d) In the event that L&I can demonstrate by objective proof that
PRODUCT distributed by DISTRIBUTOR is being used for an INDICATION
in a country for which DISTRIBUTOR no longer has distribution rights
under this AGREEMENT and that such use of such PRODUCT for such
INDICATION in such country for any CALENDAR QUARTER exceeds five
percent (5%) of L&I's (or its distributor's or licensee's) sales of
PRODUCT for such CALENDAR QUARTER in such country, then within
thirty (30) days of such demonstration by L&I and within thirty (30)
days of each CALENDAR QUARTER thereafter that such situation exists,
DISTRIBUTOR shall pay to L&I, a sum equal to ******38 of the gross
sales of DISTRIBUTOR of the amount of PRODUCT that is used for such
INDICATION in such country in such CALENDAR QUARTER. Any dispute
arising under this Section shall be resolved by binding arbitration
pursuant to Section 19.6. L&I's remedy hereunder is without
prejudice to DISTRIBUTOR'S obligations pursuant to Section 13.7(a).
13.8 OWNERSHIP OF REGULATORY LICENSES.
L&I shall own all regulatory licenses for PRODUCT in the TERRITORY.
13.9 AFFILIATES AND SUBDISTRIBUTORS.
DISTRIBUTOR and L&I may each perform its obligations and exercise its
rights under this AGREEMENT personally or thorough one or more AFFILIATES,
although DISTRIBUTOR or L&I as the case may be shall nonetheless be solely
responsible for the
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38 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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performance of its AFFILIATES with respect to such obligations performed
by an AFFILIATE. DISTRIBUTOR shall not permit any of its AFFILIATES to
commit any act (including any act of omission) which DISTRIBUTOR is
prohibited hereunder from committing directly. Subject to Section 2.3,
DISTRIBUTOR may perform its obligations and exercise its rights under this
AGREEMENT personally or through one or more SUBDISTRIBUTORS, although
DISTRIBUTOR shall nonetheless be solely responsible for the performance of
its SUBDISTRIBUTORS. DISTRIBUTOR shall not permit any SUBDISTRIBUTOR to
commit any act (including any act of omission) which DISTRIBUTOR is
prohibited hereunder from committing directly. DISTRIBUTOR warrants and
guarantees that all of its AFFILIATES, and its SUBDISTRIBUTORS will
perform in accordance with this AGREEMENT as if they were signatories to
this AGREEMENT. DISTRIBUTOR shall be liable to L&I for any breach of this
AGREEMENT by any of its AFFILIATES or SUBDISTRIBUTORS. L&I shall not
permit any of its AFFILIATES to commit any act that L&I is prohibited from
performing under this AGREEMENT.
13.10 REPORTS.
(a) In addition to the reports, record-keeping and accounting required
by other portions of this AGREEMENT, DISTRIBUTOR covenants and
agrees that DISTRIBUTOR will provide L&I with the reports,
information and forecasts required by clauses 6.6, 8.1,16.5.1, and
16.5.3 of the BTG AGREEMENT to the extent only that such reports,
information and forecasts relate to PRODUCT for INDICATIONS for
which DISTRIBUTOR has distribution rights in the TERRITORY. L&I
shall not, without the prior written consent of DISTRIBUTOR (such
consent not to be unreasonably withheld or delayed) agree with BTG
to any amendment to the BTG AGREEMENT which would increase the
obligations to be assumed by DISTRIBUTOR under this Section 13.10
beyond those existing on the EFFECTIVE DATE.
(b) As soon as practicable following signature of this AGREEMENT, L&I
shall procure for DISTRIBUTOR the opportunity (together with L&I) to
explain to BTG DISTRIBUTOR's sales accounting system. L&I and
DISTRIBUTOR agree to use reasonable commercial efforts to achieve
agreement with BTG that BTG will accept DISTRIBUTOR's reporting
of sales information pursuant to Section 6.10 of this AGREEMENT as
satisfactory performance by DISTRIBUTOR of the obligations of L&I
pursuant to Section 8.1 of the BTG Agreement.
13.11 PATENT MARKINGS.
DISTRIBUTOR agrees to include appropriate patent markings specified by L&I
on FINAL FORM PRODUCT distributed under this AGREEMENT.
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13.12 PRECLINICAL AND CLINICAL DATA.
Promptly following the Effective Date, L&I shall provide to DISTRIBUTOR
copies of all preclinical and clinical data available to L&I relating to
PRODUCT. Promptly following BLA filing, L&I shall provide a copy of the
BLA to DISTRIBUTOR, and following BLA approval, shall promptly provide to
DISTRIBUTOR any changed sections of the BLA. Thereafter, L&I shall
promptly provide to DISTRIBUTOR any supplements to the BLA and any
correspondence with FDA concerning the BLA. The requirements of this
Section shall also apply to foreign equivalents of the BLA, except that
duplicate information need not be furnished to DISTRIBUTOR more than once.
13.13 INFRINGEMENT BY THIRD PARTIES.
In the event that in a country of the TERRITORY a THIRD PARTY is selling
PRODUCT for an INDICATION for which DISTRIBUTOR retains rights under this
AGREEMENT, and such sale infringes a patent owned by or licensed to L&I,
the PARTIES shall consult with each other as to the appropriate action.
If, after such consultation, DISTRIBUTOR and L&I desire to initiate an
infringement action, to the extent that L&I has the right to do so, L&I
shall initiate and prosecute such infringement action taking into account
DISTRIBUTOR'S comments. The cost and expense of such action and any
recovery therefrom shall be split between L&I and DISTRIBUTOR on the basis
of ****** ******39 respectively. If one PARTY wishes to proceed and the
other PARTY does not, that PARTY may proceed at its own cost, retaining
all recovery therefrom. To the extent that any patent is licensed under
the BTG AGREEMENT, this Section 13.13 is subject to clause 19 of the BTG
AGREEMENT.
13.14 INFRINGEMENT OF THIRD PARTY RIGHTS.
In the event that any THIRD PARTY brings or threatens to bring an action
against L&I and/or DISTRIBUTOR (or one of their respective AFFILIATES, or
in the case of DISTRIBUTOR, a SUBDISTRIBUTOR) alleging that the
manufacture or sale or use of PRODUCT in the TERRITORY for an INDICATION
for which DISTRIBUTOR has distribution rights constitutes an infringement
of such THIRD PARTY'S patent or other intellectual property rights, L&I
and DISTRIBUTOR shall consult on how best to defend or settle such action.
L&I shall have the right to handle the defense of such action, but if L&I
fails to do so, L&I shall permit DISTRIBUTOR to handle such defense. Any
damages awarded to such THIRD PARTY and all costs of defending such action
shall be borne (i) by L&I and DISTRIBUTOR in the PROFIT SHARING TERRITORY
in the ratio of ******40 respectively and (ii) only by DISTRIBUTOR in the
OTHER
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39 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
40 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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TERRITORY, and any royalties paid by DISTRIBUTOR to a THIRD PARTY for the
OTHER TERRITORY as a result of such action shall be THIRD PARTY ROYALTIES
under Section 6.7(a)(v). Neither PARTY may enter into a settlement of such
action without the consent of the other, such consent not to be
unreasonably withheld or delayed.
13.15 SUPERIORITY OF INDEMNITY PROVISIONS.
To the extent that any provision of Section 13.14 is inconsistent with the
indemnity provisions of Section 15, the provisions of Section 13.14 shall
prevail.
13.16 COORDINATION OF INSPECTION RIGHTS.
L&I shall use reasonable efforts to coordinate the inspection rights of
Sections 3.8 and 6.12 of this AGREEMENT with BTG so that if BTG and L&I
are to each inspect in a YEAR that such inspection shall occur at the same
time, provided, however, that under each such section, L&I and BTG may
each individually and separately conduct inspection once a YEAR.
14. TRADEMARK AND TRADE DRESS
14.1 DISTRIBUTOR acknowledges L&I's ownership in or license to the TRADEMARK
and agrees that any and all uses thereof by DISTRIBUTOR in distributing
PRODUCT under this AGREEMENT shall (i)inure to the benefit of L&I and/or
its licensor; (ii)be in a manner that does not adversely affect the
TRADEMARK and/or L&I'S and/or its licensor's interest therein. .
14.2 DISTRIBUTOR agrees that DISTRIBUTOR will not use the TRADEMARK except on
PRODUCT distributed by DISTRIBUTOR under and in accordance with the terms
and conditions of this AGREEMENT.
14.3 In any country in the TERRITORY in which DISTRIBUTOR retains distribution
rights to PRODUCT under this AGREEMENT, L&I will not grant rights to a
THIRD PARTY to the TRADEMARK and will not use the TRADEMARK with respect
to any product.
14.4 The packaging and trade dress for PRODUCT shall be consistent with the
trade dress used by DISTRIBUTOR for distributing DISTRIBUTOR'S other
products and shall be approved by both L&I and DISTRIBUTOR and shall be in
accordance with all applicable laws, rules and regulations applicable
thereto.
14.5 In the event that in any country of the TERRITORY, it is required or
desirable that DISTRIBUTOR, its AFFILIATES or their SUBDISTRIBUTORS be
recorded as an authorized user of the TRADEMARK, the PARTIES shall
cooperate with each other to effect same.
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15. INDEMNITY
15.1 INDEMNIFICATION BY DISTRIBUTOR FOR NEGLIGENCE, WILLFUL MISCONDUCT, OR
BREACH.
DISTRIBUTOR shall indemnify and hold harmless L&I and its AFFILIATES
and their licensors (including, but not limited to, BTG and its licensor)
and their respective employees, agents, officers, managers, partners and
directors and each of them (an "L&I Indemnified Party") from and against
any and all THIRD PARTY claims, causes of action, losses, damages and
costs (including reasonable attorney's fees) of any nature made or
asserted against an L&I Indemnified Party or lawsuits or other proceedings
filed or otherwise instituted against a L&I Indemnified Party, in each
case by a THIRD PARTY (hereinafter individually and collectively (an) "L&I
Loss(es)") resulting from or arising out of the packaging, use, marketing
or sale by DISTRIBUTOR its AFFILIATES or their SUBDISTRIBUTORS of PRODUCT
in the TERRITORY, but solely to the extent that such L&I Loss(es) arise
out of or result from the (i) negligence or willful misconduct of
DISTRIBUTOR, or the breach by DISTRIBUTOR of any of its representations or
warranties or obligations or covenants hereunder and/or (ii) the
negligence or willful misconduct of or breach of obligations or covenants
hereunder by AFFILIATES of DISTRIBUTOR or SUBDISTRIBUTORS of DISTRIBUTOR
or its AFFILIATES in performing under or pursuant to or exercising rights
under this AGREEMENT.
15.2 INDEMNIFICATION BY L&I FOR NEGLIGENCE, WILLFUL MISCONDUCT, OR BREACH.
L&I shall indemnify and hold harmless DISTRIBUTOR and its AFFILIATES
and their SUBDISTRIBUTORS, and their respective employees, agents,
officers, managers, partners and directors and each of them (a
"DISTRIBUTOR Indemnified Party") from and against any and all THIRD PARTY
claims, causes of action, losses, damages and costs (including reasonable
attorney's fees) of any nature made or asserted against a DISTRIBUTOR
Indemnified Party, in each case by a THIRD PARTY (hereinafter individually
and collectively (a) "DISTRIBUTOR Loss(es)" resulting from or arising out
of the manufacture, use, marketing or sale of PRODUCT in the TERRITORY but
solely to the extent that such DISTRIBUTOR Loss(es) arise out of or result
from (i) the negligence or willful misconduct of L&I, or the breach by L&I
of any of its representations or warranties or obligations or covenants
hereunder and/or (ii) the negligence or willful misconduct of or breach of
obligations or covenants hereunder by AFFILIATES of L&I in performing
under or pursuant to or exercising rights under this AGREEMENT.
15.3 GENERAL INDEMNIFICATION BY DISTRIBUTOR .
DISTRIBUTOR shall indemnify and hold harmless any and all L&I Indemnified
Party(ies) from and against any and all L&I Losses resulting from or
arising out of the use, marketing or sale by DISTRIBUTOR its AFFILIATES or
their SUBDISTRIBUTORS of PRODUCT in the TERRITORY to the extent that such
L&I Loss(es) are not within the provisions of Sections 15.1 or 15.2 and to
the extent that such
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L&I Loss(es) exceed any amount recoverable by L&I Indemnified Party(ies)
under any applicable L&I Indemnified Party(ies)' insurance; provided,
however, that DISTRIBUTOR'S liability under this section 15.3 shall not
exceed ******41 of such L&I Loss(es) in the PROFIT SHARING TERRITORY and
******42 of such L&I Losses in the OTHER TERRITORY.
15.4 GENERAL INDEMNIFICATION BY L&I.
L&I shall indemnify and hold harmless any and all DISTRIBUTOR Indemnified
Party(ies) from and against any and all DISTRIBUTOR Loss(es) resulting
from or arising out of the manufacture, use, marketing, or sale of the
PRODUCT in the TERRITORY to the extent that such DISTRIBUTOR Loss(es) are
not within the provisions of Section 15.1 or 15.2 and to the extent that
such DISTRIBUTOR Loss(es) exceed any amount recoverable by DISTRIBUTOR
Indemnified Party(ies) under any applicable DISTRIBUTOR Indemnified
Party(ies) insurance; provided, however, that L&I's liability under this
section 15.4 shall not exceed ******43 of such DISTRIBUTOR Loss(es) in the
PROFIT SHARING TERRITORY and ******44 of such DISTRIBUTOR Losses in the
OTHER TERRITORY.
15.5 CONDITIONS TO INDEMNIFICATION.
A person or entity that intends to claim indemnification under this
Section 15 (the "Indemnitee") shall promptly notify the other party (the
"Indemnitor") of any DISTRIBUTOR Loss(es) or L&I Loss(es) as the case may
be in respect of which the Indemnitee intends to claim such
indemnification. Indemnitor shall have the right to control the defense of
any DISTRIBUTOR Loss(es) or L&I Loss(es) as the case may be as to which
the obligation to indemnify the Indemnitee has been acknowledged by the
Indemnitor in writing under Section 15.1 or 15.2. Under Sections 15.3 and
15.4, L&I shall have the right to control the defense in the PROFIT
SHARING TERRITORY and DISTRIBUTOR shall have such right in the OTHER
TERRITORY. The indemnity agreement in this Section 15 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action
if such settlement is effected without the consent of the Indemnitor,
which consent shall not be withheld or delayed unreasonably. The failure
to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, only if prejudicial to its ability to
defend such action, shall relieve such Indemnitor of any liability to the
Indemnitee under this Section 15, but the omission so to deliver notice to
the Indemnitor will not relieve it of any liability that it may have to
any
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41 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
42 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
43 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
44 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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Indemnitee otherwise than under this Section 15. The Indemnitee under this
Section 15, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigations and defense
of any action, claim or liability covered by this indemnification. The
Indemnitee shall have the right to participate in the defense of such
action.
15.6 INSURANCE.
Each PARTY agrees to obtain and maintain in effect a policy or policies of
insurance covering its indemnity obligations hereunder. Such policies
shall be issued by one or more reputable insurers reasonably acceptable to
the other PARTIES, and shall contain terms of coverage reasonably
acceptable to the other PARTIES. The policy limits of the policy or
policies obtained shall be at least one million dollars ($1,000,000). Upon
the request of any other PARTY to this Agreement, each PARTY shall provide
evidence of insurance coverage in compliance with this Section to the
other PARTIES. In lieu of the insurance coverage described above, any
PARTY shall have the right to undertake a program of self-insurance to
cover its indemnity obligations hereunder, with financial protection at
least equivalent to the policy limits described above; provided, however,
that such program of self-insurance shall be reasonably acceptable to the
other PARTY to this Agreement. The obligations described in this Section
shall survive the termination or expiration of this AGREEMENT and continue
to bind the PARTIES for five (5) years after the expiration date of the
last PRODUCT commercialized by DISTRIBUTOR in any country of the TERRITORY
pursuant to this AGREEMENT.
16. ADVERSE REACTIONS; COMPLAINTS
16.1 PREPARATION OF STANDARD OPERATING PROCEDURE.
(a) Promptly following the execution of this AGREEMENT the PARTIES agree
to enter into a standard operating procedure to govern collection,
investigation and reporting to regulatory authorities of PRODUCT-
related adverse drug experience reports, quality reports, and
complaint reports, such that all of the PARTIES can comply with their
legal obligations worldwide. The standard operating procedure will be
promptly amended as changes in legal obligations require.
16.2 AGENCY ACTION.
The PARTIES agree to notify each other as soon as possible of any
information received by a PARTY regarding any threatened or pending action
by an AGENCY which may affect the safety or efficacy claims of PRODUCT or
the continued marketing of such PRODUCT.
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16.3 RECALLS.
(a) If any governmental authority having jurisdiction requires or
reasonably requests any PARTY to recall any PRODUCT due to a defect
in the manufacture, processing, packaging or labeling of PRODUCT or
for any other reason whatsoever, such PARTY shall immediately notify
all of the other PARTIES to this AGREEMENT. EITHER PARTY shall also
have the right to initiate this recall procedure absent a request
from a governmental authority after consultation with the other
PARTY, provided, however, that if L&I decides to initiate a recall
in the OTHER TERRITORY and DISTRIBUTOR does not agree to such
recall, then ******45 of the cost and expense thereof shall be paid
by L&I and ******46 by DISTRIBUTOR.
(b) Prior to commencing any recall, DISTRIBUTOR shall review with
L&I the proposed manner in which the recall is to be carried out.
DISTRIBUTOR agrees to follow any reasonable advice of L&I as to the
manner of completing the recall, so long as such advice is agreeable
to the governmental authority involved, if any.
DISTRIBUTOR shall carry out the recall in the manner agreed upon
between L&I and DISTRIBUTOR in as expeditious a manner as possible
and in such a way as to cause the least disruption to the sales of
the PRODUCT and to preserve the goodwill and reputation attached to
the PRODUCT and to the names of DISTRIBUTOR, LEUKOSITE, ILEX and
L&I.
(c) DISTRIBUTOR agrees that appropriate records and procedures will be
maintained to permit a recall of PRODUCT.
(d) Subject to Section 16.3(a) and deduction against EARNINGS as a
RECALL EXPENSE, DISTRIBUTOR shall pay for and bear the cost and
expense of any recall under this Section 16.3.
17. WARRANTIES
17.1 MUTUAL WARRANTY.
Each party warrants and represents that it has the full right and
authority to enter into this AGREEMENT and that it is not aware of any
impediment which would inhibit its ability to perform the terms and
conditions imposed on it.
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45 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
46 "Confidential treatment requested: material has been omitted and filed
separately with the Commission".
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17.2 L&I WARRANTIES.
(a) L&I warrants and represents that
(i) as of the Effective Date the BTG AGREEMENT is in full force and
effect; prior to the Effective Date L&I has provided DISTRIBUTOR with an
accurate and complete copy of the BTG AGREEMENT, including all amendments
thereto and documents incorporated therein by reference.
(ii) as of the Effective Date, neither L&I nor LEUKOSITE has received
any notice from BTG that either LEUKOSITE or L&I is presently in breach of
the BTG AGREEMENT;
(iii) during the term of the AGREEMENT neither L&I nor LEUKOSITE will
amend the BTG AGREEMENT in a manner that materially affects DISTRIBUTOR'S
rights or obligations under this AGREEMENT without the prior written
consent of DISTRIBUTOR. For the avoidance of doubt, the PARTIES agree that
any charge resulting in an increase in payments payable by DISTRIBUTOR
hereunder shall constitute a change which materially affects DISTRIBUTOR'S
rights;
(iv) during the term of this AGREEMENT, L&I and LEUKOSITE will make
all payments required by the BTG AGREEMENT, when due provided that with
respect to the BTG AGREEMENT in the TERRITORY, DISTRIBUTOR has met
DISTRIBUTOR'S obligations under Section 6.8;
(v) as of the Effective Date, without having made an investigation,
L&I has no knowledge of a granted patent in the TERRITORY which would be
infringed by the manufacture, use or sale of PRODUCT for the INDICATIONS
in the TERRITORY, provided, however, that this warranty is not applicable
to the patents licensed under the BTG AGREEMENT or to those of Appendix E;
(vi) as of the Effective Date, L&I has not received any notices of
infringement of THIRD PARTY patent rights by the manufacture, use or sale
of PRODUCT for the INDICATIONS in the TERRITORY;
(vii) as of the Effective Date, L&I has not received an opinion of
counsel that any patent owned by L&I or licensed to L&I under the BTG
AGREEMENT relating to the manufacture, use or sale of PRODUCT for the
INDICATIONS in the TERRITORY is invalid or unenforceable;
(viii) as of the Effective Date of this AGREEMENT, it has made
available to DISTRIBUTOR all information in L&I's, LEUKOSITE'S and ILEX'S
possession or control or of which it is aware as of the Effective Date,
concerning safety, efficacy, side effects, or toxicity of the PRODUCT, or
sensitivity reactions to the PRODUCT, associated with any clinical use,
studies, investigations, or tests of the PRODUCT (animal or human),
whether or not determined to be attributable to the PRODUCT;
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(ix) it has conducted or has caused its contractors or consultants to
conduct and will in the future conduct, the preclinical and clinical
studies of the PRODUCT, which, in all material respects, is in accordance
with applicable United States law, known or published standards of the FDA
and EMEA, and the scientific standards applicable to the conduct of
studies in the United States and the European Union, including without
limitation for the United States Good Laboratories Practices regulations,
Good Manufacturing Practices Regulations, and Good Clinical Practices
guidelines;
(x) it has not employed (and, to the best of its knowledge, has not
used a contractor or consultant that has employed) and in the future will
not employ (or, to the best of its knowledge, use any contractor or
consultant that employs) any individual or entity debarred by the FDA (or
subject to a similar sanction of EMEA), or, to the best knowledge of L&I,
any individual who or entity which is the subject of an FDA debarment
investigation or proceeding (or similar proceeding of EMEA), in the
conduct of the preclinical or clinical studies of the PRODUCT; and
(xi) it is the owner or licensee of the TRADEMARK in the countries
set forth in Appendix F.
17.3 NEGATION OF OTHER REPRESENTATIONS AND WARRANTIES.
EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT NEITHER PARTY
MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR VALIDITY OF ANY
PATENTS ISSUED OR PENDING.
17.4 THIRD PARTY LICENSES.
In negotiating THIRD PARTY licenses , L&I will use its commercially
reasonable efforts to obtain a consent (a "Consent') from L&I's licensors
of Appendix G. Such Consent shall contain the agreement of such licensor
to (i) give reasonable written notice to DISTRIBUTOR prior to terminating
the underlying license or contract; (ii) provide DISTRIBUTOR a reasonable
period to cure any default under such license or contract; and (iii) if
the licensor seeks to terminate the license to L&I, to grant the license
to DISTRIBUTOR on the same terms as it was granted to L&I. The failure to
obtain such a consent shall not be a breach of this AGREEMENT.
17.5 DISTRIBUTOR PAYMENTS UNDER BTG AGREEMENT.
(a) In the event that L&I fails to make a payment that is due and
payable under the BTG AGREEMENT, and DISTRIBUTOR makes such payment
to BTG on behalf of L&I, then L&I shall pay such amount to
DISTRIBUTOR,
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unless such amount is an amount that DISTRIBUTOR should have paid
and did not pay to L&I under Section 6.8 of this AGREEMENT.
(b) In the event that there is a breach of the BTG AGREEMENT or a notice
of termination thereof, DISTRIBUTOR and L&I shall cooperate with
each other to cure such breach and/or obtain a withdrawal of the
notice of termination, as the case may be provided, however, that
DISTRIBUTOR shall have the right within its sole discretion to
decide if, when and how to exercise its rights under the BTG CONSENT
LETTER.
18. TERM AND TERMINATION
18.1 TERM.
This AGREEMENT is effective as of the date first above written and, unless
sooner terminated as provided herein, shall continue for as long as
DISTRIBUTOR is distributing the PRODUCT in the TERRITORY.
18.2 AGREEMENT TERMINATION.
This AGREEMENT may be terminated by either PARTY if:
(a) (i) the other PARTY fails to observe, perform or otherwise breaches
any of its material covenants, agreements or obligations under this
AGREEMENT in any material respect and (ii) such failure continues
for a period of thirty (30) days after receipt by the other party of
notice thereof from the party specifying such failure. In the event
of a non-monetary breach, if the breach is not reasonably capable of
being cured within the thirty (30) day period, and the breaching
PARTY is making a good faith effort to cure the breach, the
notifying PARTY may not terminate this AGREEMENT pursuant to this
subsection without a further ninety (90) days elapsing from the
original notice of breach without the breach having been cured.
(b) the other party files or institutes bankruptcy, reorganization,
liquidation, receivership or similar proceedings under any debt
relief laws or fails for more than sixty (60) days to take steps to
oppose the initiation of such actions against it.
18.3 USE OF PRODUCT AFTER TERMINATION.
Upon the termination of this AGREEMENT under Section 18.2 or 18.6 for any
reason other than for breach of this AGREEMENT by DISTRIBUTOR, DISTRIBUTOR
shall have the right to sell all PRODUCT in inventory at the time of
termination. All such sales of PRODUCT shall be subject to the terms of
this AGREEMENT, as in effect immediately prior to termination. If this
AGREEMENT terminates for any breach by DISTRIBUTOR, then L&I may at its
discretion buy back all or part of the PRODUCT that remain in the
possession of DISTRIBUTOR and are in good condition with a reasonable
remaining shelf life. All PRODUCT which is not repurchased by L&I within
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four (4) weeks after termination shall be immediately destroyed by
DISTRIBUTOR at DISTRIBUTOR'S expense. Upon termination of this AGREEMENT,
DISTRIBUTOR shall discontinue use of the TRADEMARK and discontinue
marketing and sale of PRODUCT, except in connection with any sale of
inventory as provided in this Section.
18.4 NO LOAN REPAYMENT.
Without limiting in any way DISTRIBUTOR's rights to recover damages from
L&I in contract or tort or otherwise arising out of any breach by L&I of
this AGREEMENT, upon termination of this AGREEMENT for any reason
whatsoever, DISTRIBUTOR shall not be entitled to repayment of any loans or
payments made to L&I under this AGREEMENT, with the outstanding loan
amounts and any unpaid interest thereon being a fee for termination of
this AGREEMENT.
18.5 REPURCHASE OF CERTAIN PRODUCT.
(a) L&I shall purchase from DISTRIBUTOR any PRODUCT that was purchased
by DISTRIBUTOR from L&I under Section 6.1(d) that is in the
possession of DISTRIBUTOR at COST OF GOODS therefor in the event
that (a) DISTRIBUTOR terminates this AGREEMENT under Section 11.1(c)
or Section 18.6 or under Section 18.2 as a result of a breach
thereof by L&I ; or, (b) if this AGREEMENT is not terminated in the
event that any such PRODUCT cannot be commercially sold.
(b) If L&I is obligated to purchase PRODUCT under Section 18.5(a), L&I
shall have the right to pay such amount in twelve (12) equal
consecutive CALENDAR QUARTERLY installments commencing on the date
that is thirty (30) days after (i) the date of DISTRIBUTOR'S
termination notice; or (ii) if the AGREEMENT is not terminated the
date of DISTRIBUTOR'S notice to L&I that the PRODUCT cannot be sold,
as applicable, plus interest on the unpaid balance at PRIME plus one
percent. If this AGREEMENT has not been terminated to the extent
that any such PRODUCT can be reworked and relabeled in accordance
with applicable law, rules or regulation, DISTRIBUTOR and L&I shall
use reasonable efforts to rework and relabel such PRODUCT (at the
expense of L&I) and if as reworked and relabeled, the PRODUCT
lawfully can be commercially sold in the United States; L&I shall
not be required to purchase such PRODUCT.
18.6 TERMINATION OF BTG AGREEMENT.
(a) In the event that the BTG AGREEMENT is terminated and DISTRIBUTOR
exercises the rights granted to DISTRIBUTOR by BTG under the BTG
CONSENT LETTER to become a licensee of BTG, then this AGREEMENT
shall remain in full force and effect and DISTRIBUTOR and L&I shall
make such amendments to this AGREEMENT as are required to meet
DISTRIBUTOR'S obligations under the BTG AGREEMENT to enable
DISTRIBUTOR to continue to sell the PRODUCT under the AGREEMENT
while preserving the economic
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terms of this AGREEMENT for both L&I and SCHERING. In the event that
the BTG Agreement is terminated and DISTRIBUTOR does not exercise
its rights to become a licensee of BTG pursuant to the BTG CONSENT
LETTER, then DISTRIBUTOR shall have the right to terminate this
AGREEMENT.
(b) A termination of the BTG AGREEMENT shall not be a breach of this
AGREEMENT and L&I shall have no liability to DISTRIBUTOR for a
termination of the BTG AGREEMENT.
(c) In the event that the BTG AGREEMENT is terminated and DISTRIBUTOR
becomes a licensee of BTG pursuant to the terms of the BTG CONSENT
LETTER, then to the extent permitted by the license between
DISTRIBUTOR and BTG, L&I shall have the right to manufacture or have
PRODUCT manufactured for sale to DISTRIBUTOR.
(d) If DISTRIBUTOR exercises its rights to become a licensee of BTG,
DISTRIBUTOR acknowledges that it is becoming such a licensee under
the terms and conditions of the BTG AGREEMENT and agrees that it
will not amend the BTG AGREEMENT in a manner that materially affects
L&I's rights or obligations under this AGREEMENT without the prior
written consent of L&I.
18.7 EFFECT ON OUTSTANDING OBLIGATIONS.
The termination of this AGREEMENT shall not affect any then outstanding
obligations of DISTRIBUTOR or L&I hereunder, including but not limited to
any payments owed under the provisions of this AGREEMENT while it was in
effect and payment for binding and partially binding orders under Section
6 and 8.2(i) (but subject to Section 18.5), nor preclude either PARTY from
pursuing all rights and remedies it may have at law or in equity with
respect to any breach of this AGREEMENT nor prejudice either PARTY's right
to obtain performance of any obligation provided for in this AGREEMENT
that survives termination of this AGREEMENT. Any such amount owed to a
party shall be paid within thirty (30) days of the termination of this
AGREEMENT. For the avoidance of doubt, DISTRIBUTOR is not required to make
any loan that is not due to be made under Section 9.1(a) as of the
effective date of termination. The provisions of Sections 3.8, 6.12, 12.4,
13.3, 13.4, 13.5(c), 13.10(a), 14.1, 14.2, 15, 18.3, 18.4, 18.5, 18.6,
18.7, and 19 and any other provisions, which by their intent are meant to
survive termination of this AGREEMENT, shall survive the termination of
this AGREEMENT for the longest period permitted by applicable law.
18.8 TERMINATION BY DISTRIBUTOR WITHOUT CAUSE.
At any time after five (5) years after the Effective Date, DISTRIBUTOR
shall have the right to terminate this AGREEMENT in the entirety or its
distribution rights with respect to PRODUCT in the PROFIT-SHARING
TERRITORY or in all countries of the OTHER TERRITORY by eighteen (18)
months' prior written notice to L&I. For avoidance of doubt the PARTIES
state that the earliest point at which DISTRIBUTOR
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may terminate this AGREEMENT pursuant to this Section 18.8 is by a
termination notice delivered to L&I forty-two months following the
Effective Date, terminating this AGREEMENT as of the fifth (5th)
anniversary of the Effective Date.
19. MISCELLANEOUS PROVISIONS
19.1 CHOICE OF LAW; VENUE.
This AGREEMENT shall be governed by and construed in accordance with the
laws of the State of Delaware without giving effect to its conflict of law
rules and regulations. Any legal action arising under this AGREEMENT shall
be brought in the United States District Court located in Delaware.
DISTRIBUTOR and L&I hereby submit and consent to jurisdiction in the State
of Delaware and hereby consent to venue in such court.
19.2 INTEGRATION; AMENDMENT.
This AGREEMENT and appendices referred to herein and the agreement of
Appendix J set forth the entire agreement and understanding between the
PARTIES as to the subject matter thereof and supersedes all prior
agreements in this respect. There shall be no amendments or modifications
to this AGREEMENT, except by a written document which is signed by both
PARTIES.
19.3 HEADINGS.
The headings in this AGREEMENT have been inserted for the convenience of
reference only and are not intended to limit or expand on the meaning of
the language contained in the particular article or section.
19.4 WAIVER.
Any delay in enforcing a party's rights under this AGREEMENT or any waiver
as to a particular default or other matter shall not constitute a waiver
of a party's right to the future enforcement of its rights under this
AGREEMENT, excepting only as to an expressed written and signed waiver as
to a particular matter for a particular period of time.
19.5 INVALIDITY.
In the event any provision of this AGREEMENT should be held invalid,
illegal or unenforceable, the remaining provisions shall not be affected
or impaired and the PARTIES will use all reasonable efforts to replace the
applicable provision with a valid, legal and enforceable provision which
insofar as practical implements the purposes hereof, provided, however,
that if the PARTIES fail to reach such agreement within sixty (60) days, a
PARTY whose rights or obligations are materially affected as a result of a
provision being held invalid, illegal or unenforceable may terminate this
AGREEMENT.
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19.6 ARBITRATION.
In the event the PARTIES are unable to reach agreement with respect to any
matter which is to be subject to arbitration in accordance with Section
6.8(b), 6.13, 12.1(c)(iii)(I), 13.6 or 13.7, such will be determined
through binding arbitration in accordance with the Commercial Rules of
Arbitration of the American Arbitration Association. The site of the
arbitration shall be New York, New York.
The arbitration panel shall be comprised of three (3) arbitrators. Each
PARTY shall be entitled to appoint one arbitrator. The PARTIES shall
appoint their respective arbitrators within thirty (30) days after
submission for arbitration. If either PARTY shall fail to make timely
appointment of its arbitrator, the arbitration shall be heard and decided
by the sole arbitrator duly appointed by the other PARTY. Where both
PARTIES have timely appointed their respective arbitrators, the two
arbitrators so appointed shall agree on the appointment of the third
arbitrator from the list of arbitrators maintained by the American
Arbitration Association. If the PARTIES' appointed arbitrators shall fail
to agree within thirty (30) days from the date both PARTIES' arbitrators
have been appointed, on the identity of the third arbitrator, then such
arbitrator shall be appointed by the appropriate administrative body of
the American Arbitration Association.
Within ten (10) days of appointment of the full arbitration panel, the
PARTIES shall exchange their final proposed positions with respect to the
matters to be arbitrated, which shall approximate as closely as possible
the closest positions of the PARTIES previously taken in the negotiations.
Within thirty (30) days of appointment of the arbitration Panel, each
PARTY shall submit to the arbitrators a copy of the proposed position
which it previously delivered to the other PARTY, together with a brief or
other written memorandum supporting the merits of its proposed position.
The arbitration panel shall promptly convene a hearing, at which time each
PARTY shall have one (1) hour to argue in support of its proposed
position. The PARTIES will not call any witnesses in support of their
arguments.
The arbitration panel shall select either of the PARTY's proposed position
on the issue as the binding final decision to be embodied as an agreement
between the PARTIES. In making their selection, the arbitrators shall not
modify the terms or conditions of either PARTY's proposed position; nor
will the arbitrators combine provisions from both proposed position. In
making their selection, the arbitrators shall consider the terms and
conditions of this AGREEMENT, the relative merits of the proposed position
and the written and oral arguments of the PARTIES. In the event the
arbitrators seek the guidance of the law of any jurisdiction, the law of
the State of Delaware shall govern.
The arbitrators shall make their decision known to the PARTIES as quickly
as possible by delivering written notice of their decision to both
PARTIES. Such written notice need not justify their decision. The PARTIES
will execute any and all papers necessary to obligate the PARTIES to the
position selected by the arbitration Panel within five (5) days of receipt
of notice of such selection. The decision of the arbitrators shall be
final
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and binding on the PARTIES, and specific performance may be ordered by any
court of competent jurisdiction.
The PARTIES will bear their own costs in preparing for the arbitration.
The costs of the arbitrators will be equally divided between the PARTIES.
20. FORCE MAJEURE
20.1 Neither party shall be liable to the other for any default hereunder,
which is not a payment default, which is due to cause beyond the control
of the party in default, including but not limited to the actions or
inactions of any government agency or instrumentality; breakdown of plant
or machinery or shortages of labor, fuel, transportation of materials,
fires, floods, earthquakes, war, riots or instructions. If either party
shall seek to rely on Force Majeure it shall give written notice to the
other indicating the details of the act which it claims has put due
performance of its obligations beyond its control. In addition, the
affected party shall exert all reasonable efforts to eliminate or cure any
Force Majeure event and to resume performance with all possible speed. In
the event this cannot be done within six (6) months, the parties shall
either resolve the matter by mutual agreement or terminate this AGREEMENT.
Each PARTY shall retain its legal remedies notwithstanding the operation
of this Section.
21. SUCCESSORS
21.1 Subject to Section 22, the rights and obligations included in this
AGREEMENT shall be binding upon the parties hereto and their successors
and assigns.
22. ASSIGNMENT
22.1 This AGREEMENT may not be assigned by either PARTY without the written
consent of the other PARTY, provided, however, that either PARTY shall
have the right to assign this AGREEMENT in connection with the sale or
transfer of all or substantially all of its assets or in the connection
with a merger or consolidation or similar transaction, and further, with
respect to L&I a transfer of its assets to one or more of its partners or
a sale of the partnership.
23. NOTICES
23.1 Any notice to be given under this AGREEMENT shall be effective when
received at the address set forth below by registered or certified mail or
an express delivery service. Notices shall be delivered to the respective
PARTIES at the addresses set forth below:
To L&I: L&I Partners, L.P.
c/o ILEX Oncology, Inc.
11550 IH-10 West, Suite 100
San Antonio, TX 78230
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and
L&I Partners, L.P.
c/o Leukosite, Inc.
215 First Street
Cambridge, MA 02142
Copy to: Carella, Byrne, Bain, Gilfillan,
Cecchi, Stewart & Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
Fax: (973) 994-1744
ATTN: Elliot M. Olstein, Esq.
To SCHERING:
Schering Aktiengesellschaft
13342 Berlin
Germany
Attention: Head of Oncology SBU
Copy to:
Schering Aktiengesellschaft
13342 Berlin
Germany
Attention: Legal Department
Each PARTY shall have the right to designate a separate address for receipt of
purchase orders, forecasts, acknowledgements, invoices and other routine
correspondence relating to supply of PRODUCT.
24. LIMITATION ON COMMITTEE ACTIVITY.
Notwithstanding the creation of the DEVELOPMENT COMMITTEE or MARKETING
COMMITTEE, or any subcommittees thereof, each PARTY to this AGREEMENT shall
retain the rights, powers, and discretion granted to it hereunder, and neither
the DEVELOPMENT COMMITTEE, MARKETING COMMITTEE, nor any subcommittees thereof
shall be delegated or vested with any such rights, powers, or discretion unless
such delegation or vesting is expressly provided for herein or the PARTIES
expressly so agree in writing. Neither the DEVELOPMENT COMMITTEE, MARKETING
COMMITTEE, nor any subcommittee shall have the power to amend or modify this
AGREEMENT which may be amended or modified only as provided in Section 19.2.
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25. AMBIGUITIES.
Ambiguities, if any, in this AGREEMENT shall not be construed against
either PARTY, irrespective of which PARTY may be deemed to have authored the
ambiguous provision.
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IN WITNESS WHEREOF, the parties hereto have caused this AGREEMENT to be
executed by their respective representatives hereunto duly authorized as of the
day and year first above-written.
SCHERING, A.G. L&I PARTNERS, L.P.
By: /s/ Klaus Pohle By: /s/ Christopher K. Mirabelli
----------------------------- ---------------------------------
Name: Klaus Pohle Name: Christopher K. Mirabelli
--------------------------- -------------------------------
Title: Vice Chairman Title: President
--------------------------- -------------------------------
Executive Board of Directors
---------------------------
By: /s/ Gunter Stock
-----------------------------
Name: Prof. Gunter Stock
---------------------------
Title: Member, Executive
---------------------------
Board of Directors
---------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. DEFINITIONS..........................................................1
2. APPOINTMENT..........................................................9
2.1 Grant of Distribution Rights................................9
2.2 Limitation on Discounting...................................9
2.3 Sales Through SUBDISTRIBUTORS...............................9
3. MARKETING IN THE PROFIT-SHARING TERRITORY...........................10
3.1 Marketing Committee........................................10
3.2 Marketing Effort of DISTRIBUTOR............................11
3.3 Earnings Reports...........................................12
3.4 QUARTERLY Payment of APPROPRIATE PERCENTAGE................13
3.5 YEARLY Payment of APPROPRIATE PERCENTAGE...................13
3.6 Credit Toward Loan Balance.................................14
3.7 Payment in Lieu of EARNINGS................................14
3.8 Recordkeeping by DISTRIBUTOR...............................14
3.9 Co-Promotion...............................................15
3.10 Payment of Insurance Premiums..............................15
4. MARKETING IN THE OTHER TERRITORY....................................16
4.1 Sales Forecast.............................................16
4.2 Marketing Efforts..........................................16
5. ORPHAN DRUG EXCLUSIVITY.............................................17
6. PURCHASE OF PRODUCTS................................................17
6.1 Purchase and Sale Requirements.............................17
6.2 Certain Packaging and Labeling by DISTRIBUTOR..............19
6.3 Priority in Supply.........................................19
6.4 Title, Risk................................................20
6.5 Superiority of AGREEMENT...................................20
6.6 Price for PROFIT-SHARING TERRITORY.........................20
6.7 Price for OTHER TERRITORY..................................21
6.8 THIRD PARTY Royalties......................................22
6.9 Payment for PRODUCT........................................23
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
6.10 Delivery of Accounting.....................................23
6.11 Currency Conversion........................................25
6.12 Recordkeeping by DISTRIBUTOR...............................25
6.13 Manufacturer other than BI.................................25
6.14 Alternate Forecasting/Ordering Procedures..................27
7. PAYMENT.............................................................27
8. BI Agreement........................................................27
8.1 Activities Under BI AGREEMENT..............................28
8.2 Forecasts; Orders; Warranties............................28
9. LOAN................................................................30
10. DEVELOPMENT COMMITTEE...............................................31
11. DEVELOPMENT FOR CLL INDICATIONS....................................32
12. DEVELOPMENT FOR OTHER INDICATIONS...................................34
12.2 Loan Reductions............................................38
12.3. Further Loan Reductions....................................38
12.4 DISTRIBUTOR Audit Rights...................................38
13. OTHER RESPONSIBILITIES..............................................39
13.1 Compliance with Law........................................39
13.2 Prohibition on Exports.....................................39
13.3 Negation of Partnership; Etc..............................39
13.4 Confidentiality............................................39
13.5 Appointment of Authorized Agent............................41
13.6 Exclusivity Protection For DISTRIBUTOR.....................42
13.7 Exclusivity Protection For L&I.............................44
13.8 Ownership of Regulatory Licenses...........................44
13.9 AFFILIATES and SUBDISTRIBUTORS.............................44
13.10 Reports....................................................45
13.11 Patent Markings............................................45
13.12 Preclinical and Clinical Data..............................46
13.13 Infringement by Third Parties..............................46
13.14 Infringement of Third Party Rights.........................46
13.15 Superiority of Indemnity Provisions........................47
13.16 Coordination of Inspection Rights..........................47
</TABLE>
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<TABLE>
<S> <C> <C>
14. TRADEMARK AND TRADE DRESS...........................................47
15. INDEMNITY...........................................................48
15.1 Indemnification by Distributor for Negligence, Willful
Misconduct, or Breach......................................48
15.2 Indemnification by L&I for Negligence, Willful
Misconduct, or Breach......................................48
15.3 General Indemnification by DISTRIBUTOR ....................48
15.4 General indemnification by L&I.............................49
15.5 Conditions to Indemnification..............................49
15.6 Insurance..................................................50
16. ADVERSE REACTIONS; COMPLAINTS.......................................50
16.1 Preparation of Standard Operating Procedure................50
16.2 Agency Action..............................................50
16.3 Recalls....................................................51
17. WARRANTIES..........................................................51
17.1 Mutual Warranty............................................51
17.2 L&I Warranties.............................................52
17.3 Negation of other Representations and Warranties...........53
17.4 Third Party Licenses.......................................53
17.5 DISTRIBUTOR Payments Under BTG AGREEMENT...................53
18. TERM AND TERMINATION................................................54
18.1 Term.......................................................54
18.2 Agreement Termination......................................54
18.3 Use of PRODUCT after Termination...........................54
18.4 No Loan Repayment..........................................55
18.5 Repurchase of Certain Product..............................55
18.6 Termination of BTG AGREEMENT...............................55
18.7 Effect on Outstanding Obligations..........................56
18.8 Termination by DISTRIBUTOR Without Cause...................56
19. MISCELLANEOUS PROVISIONS............................................57
19.1 Choice of Law; Venue.......................................57
19.2 Integration; Amendment....................................57
19.3 Headings...................................................57
19.4 Waiver.....................................................57
19.5 Invalidity.................................................57
19.6 Arbitration................................................58
20. FORCE MAJEURE.......................................................59
21. SUCCESSORS..........................................................59
22. ASSIGNMENT..........................................................59
23. NOTICES.............................................................59
24. LIMITATION ON COMMITTEE ACTIVITY....................................60
25. AMBIGUITIES.........................................................61
</TABLE>
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