<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .
COMMISSION FILE NO. 0-21905
COULTER PHARMACEUTICAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 94-32190758
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
600 GATEWAY BOULEVARD, 94080
SOUTH SAN FRANCISCO, CALIFORNIA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 650-553-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK $.001 PAR VALUE
(TITLE OF CLASS)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant based upon the closing price of the Common Stock listed on the
Nasdaq Stock Market(R) on March 12, 1999 was $253,017,897*.
The total number of shares outstanding of the Registrant's Common Stock was
16,745,797 as of March 12, 1999.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Registrant's Definitive Proxy Statement filed with the
Commission pursuant to Regulation 14A in connection with the 1999 Annual Meeting
are incorporated herein by reference into Part III of this Report.
Certain Exhibits filed with the Registrant's Registration Statement on Form
S-1 (Registration Nos. 333-17661 and 333-36607), are incorporated herein by
reference into Part IV of this Report.
* Based on a closing price of $23.50 per share. Excludes 5,979,078 shares of the
Registrant's Common Stock held by executive officers, directors and
stockholders whose ownership exceeds 5% of the Common Stock outstanding at
March 12, 1999. Exclusion of such shares should not be construed to indicate
that any such person possesses the power, direct or indirect, to direct or
cause the direction of the management or policies of the Registrant or that
such person is controlled by or under common control with the Registrant.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART I
Except for historical information contained herein, this Annual Report on
Form 10-K contains forward-looking statements which involve risks and
uncertainties. All forward-looking statements included in this document are
based upon information available to the Company as of the date hereof, and the
Company assumes no obligation to update any such forward-looking statements. It
is important to note that the Company's actual results could differ materially
from those in such forward-looking statements. Factors that might cause such a
difference include, but are not limited to, those discussed in "Risk Factors" at
the end of Item 1 Business.
ITEM 1. BUSINESS
Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company currently is
developing a family of cancer therapeutics based upon two drug discovery
programs: therapeutic antibodies and targeted oncologics. Within these broad
drug discovery programs, the Company is currently concentrating on two distinct
platform technologies: therapeutic antibodies based on conjugated antibody
technology and targeted oncologics based on tumor activated peptide ("TAP")
pro-drug technology.
The Company's most advanced product candidate, Bexxar(TM) (iodine I 131
tositumomab), consists of a monoclonal antibody conjugated with a radioisotope.
The Company intends to seek a priority review for the initial approval of Bexxar
for the treatment of low-grade and transformed low-grade non-Hodgkin's lymphoma
("NHL") in patients who have relapsed after or are refractory to chemotherapy,
while simultaneously pursuing clinical trials to expand the potential use of
Bexxar to other indications. In a Phase I/II clinical trial of Bexxar, 42
patients with low-grade or transformed low-grade NHL who had relapsed from
previous chemotherapy regimens achieved an 83% overall response rate and a 48%
complete response rate. Of those patients who experienced a complete response,
the average duration of response was 20.2 months as of July 1997, the date of
the final study report. In December 1997, the Company presented data on a multi-
center, Phase II clinical trial in heavily pre-treated low-grade and transformed
low-grade NHL patients. The patients achieved a complete response rate of 31% of
the 45 evaluable patients with the median duration of complete response not yet
reached (longest complete response of greater than twenty months). In December
1998, the Company presented data from its pivotal Phase III clinical trial on 60
NHL patients who were refractory to chemotherapy. The results showed, with
statistical significance, that more patients experienced remission with a single
therapeutic dose of Bexxar compared to their last chemotherapy regimen and that
these remissions were of longer duration. The overall response rate was 65% with
a median duration of response of 6.5 months. The Company also announced in
December 1998, that the United States Food and Drug Administration ("FDA") had
designated Bexxar as a Fast Track Product for which the agency will take
appropriate actions to expedite development and review. The designation was
awarded because one of the targeted indications for the therapy is transformed,
low-grade NHL, a life-threatening unmet medical need. The Company believes that
Bexxar, if approved, would become the first radioimmunotherapy approved in the
United States for the treatment of people with cancer. Significant uncertainty
exists as to the extent to which the Fast Track designation will result in a
priority review and approval, and this designation does not ensure product
approval. The FDA could require additional clinical trials or other information
before approving Bexxar. The Company cannot predict the ultimate impact, if any,
of the Fast Track designation on the timing or likelihood of FDA approval of
Bexxar.
The Company intends to pursue additional trials to expand the potential use
of Bexxar to other indications. The Company currently is conducting a
single-center Phase II trial in newly diagnosed low-grade NHL patients. An
interim analysis of data from the first 32 patients showed a 100% overall
response rate. Of the 24 patients for whom adequate data was available, 71%
achieved complete responses. Additionally, in nine of the patients, no evidence
of NHL could be detected at molecular levels using polymerase chain reaction
("PCR") analysis. As of April 1998, 24 patients were in on-going remission, with
the longest duration being 18.5 months.
2
<PAGE> 3
The objective of the Company's second technology platform, the TAP pro-drug
program, is to broaden significantly the therapeutic windows of conventional
chemotherapies. The Company currently is developing a pro-drug version of
doxorubicin to treat certain solid tumor cancers with the objective of filing an
Investigational New Drug ("IND") application in 1999.
The Company was incorporated under the laws of Delaware in February 1995.
The Company's conjugated antibody program is based upon the antibody
therapeutics program which originated in the late 1970s at Coulter Corporation,
a recognized leader in the field of hematology. Upon its formation in February
1995, the Company acquired worldwide rights to Bexxar and related intellectual
property, know-how and other assets from Coulter Corporation. In October 1997,
Coulter Corporation was acquired by Beckman Instruments, Inc., and is now known
as Beckman Coulter, Inc. ("Beckman Coulter"). In December 1998, the Company
announced a joint collaboration agreement with SmithKline Beecham Corporation
("SB") granting them joint marketing rights in the United States and exclusive
commercial rights internationally, except Japan, for Bexxar.
BACKGROUND
Cancer: The Disease and Its Treatment
Cancer afflicts millions of people worldwide. It is currently the second
leading cause of death in the United States and is estimated to account for more
than 560,000 deaths annually. Some forty percent of Americans are expected to
develop cancer and, despite noteworthy success in the treatment of some cancers,
about half of these cancer patients will die from the disease.
Cancer is a family of more than one hundred diseases that can be
categorized into two broad groups: (i) hematologic or blood-borne malignancies
(e.g., lymphomas and leukemias) and (ii) solid tumor cancers (e.g., lung,
prostate, breast and colon cancers). Both groups are generally characterized by
a breakdown of the cellular mechanisms that regulate cell growth and cell death
("apoptosis") in normal tissues.
Blood-borne cancers involve a disruption of the developmental processes of
blood cell formation, preventing these cells from functioning normally in the
blood and lymph systems. Death from blood-borne cancers ultimately is caused by
infection, organ failure or bleeding. While chemotherapy is the primary
treatment for blood-borne malignancies, many such malignancies are
radiosensitive and some localized lymphomas can be treated with radiation
therapy. Nonetheless, radiation therapy cannot be used in the treatment of most
blood-borne malignancies because the levels of radiation necessary to destroy
diseases that are widely disseminated within the body would result in severe
damage to the bone marrow of the patient, leading to life-threatening
suppression of the immune system, and other serious side effects.
In solid tumor cancers, malignant tumors invade and disrupt nearby tissues
and can also spread throughout the body or "metastasize." The impact of these
tumors on vital organs such as the lungs and the liver frequently leads to
death. Surgery is used to remove solid tumors that are accessible to the surgeon
and can be effective if the cancer has not metastasized. Radiation therapy also
can be employed to irradiate a solid tumor and surrounding tissues and is a
first-line therapy for inoperable tumors, but side effects are a limiting factor
in treatment. Radiation therapy is used frequently in conjunction with surgery
either to reduce the tumor mass prior to surgery or to destroy tumor cells that
may remain at the tumor site after surgery. However, radiation therapy cannot
assure that all tumor cells will be destroyed and has only limited utility for
treating widespread metastases. While surgery and radiation therapy are the
primary treatments for solid tumors, chemotherapy and hormonal treatments often
are used as adjunctive therapies and also are used as primary therapies for
inoperable or metastatic cancers.
Chemotherapy, which typically involves the intravenous administration of
drugs designed to destroy malignant cells, is used for the treatment of both
solid tumors and blood-borne malignancies. Chemotherapeutic drugs generally
interfere with cell division and are therefore more toxic to rapidly dividing
cancer cells. Since cancer cells can often survive the effect of a single drug,
several different drugs usually are given in a combination therapy designed to
target overlapping mechanisms of cellular metabolism to overwhelm the ability of
cancer cells to develop resistance to chemotherapy. Combination chemotherapy is
used widely as
3
<PAGE> 4
first-line therapy for leukemias and lymphomas and has had considerable success
in the treatment of some forms of these cancers. Nevertheless, partial and even
complete remissions obtained through chemotherapy often are not durable, and the
patient relapses when the cancer reappears and/or resumes its progression within
a few months or years of treatment. The relapsed patient's response typically
becomes shorter and shorter with each successive treatment regimen as the cancer
becomes resistant to the chemotherapy. Eventually, patients may become
"refractory" to chemotherapy, meaning that the length of their response, if any,
to treatment is so brief as to lead to the conclusion that further chemotherapy
regimens would be of little or no benefit.
Chemotherapeutic drugs are not sufficiently specific to cancer cells to
avoid affecting normal cells, especially those that are growing rapidly. As a
result, patients often experience debilitating side effects such as nausea,
vomiting, hair loss, anemia, nerve toxicity and fatigue, as well as
life-threatening side effects such as immune system suppression and cardiac
toxicity. Such side effects can limit the effectiveness of therapy because the
clinician must avoid exceeding the maximum dose of drug that the patient can
tolerate. Since dosages must be limited to avoid unacceptable side effects, it
may not be possible to administer sufficiently high doses of chemotherapeutic
drugs to overcome the natural ability of cancer cells to become resistant. A
number of chemotherapeutic agents originally thought to have promise as cancer
drugs have failed in the clinic because the minimum effective dose exceeded the
maximum tolerable dose. Ideally, a chemotherapeutic agent would have a minimum
effective dose well below the maximum tolerable dose, thereby providing
physicians with a wide "therapeutic window" or a range of doses within which all
patients could be treated effectively.
In cases of certain severe blood-borne malignancies and metastatic solid
tumor cancers, bone marrow transplants ("BMT") may be performed to treat
patients who typically have exhausted all other treatment options. Transplants
generally are performed in connection with regimens of aggressive chemotherapy
and/or radiation therapy. While techniques are improving, BMTs are associated
with side effects and high rates of mortality and morbidity and remain a very
expensive alternative.
Emerging Methods of Treatment
Scientific progress in the elucidation of the underlying molecular biology
of cancer in recent years has yielded a number of promising treatment
approaches. These approaches generally are designed to enhance the specificity
and potency of cancer therapeutics, to improve overall efficacy and to reduce
side effects. The Company believes that two of the most promising of these
approaches are (i) monoclonal antibodies that bind to targeted cells to
stimulate the body's immune system and/or to deliver cytotoxic agents to destroy
malignant cells and (ii) modifications of conventional chemotherapeutic drugs
and drug formulations to improve efficacy by expanding their therapeutic
windows.
Monoclonal Antibodies. The human immune system is comprised of specialized
cells, including B-cells and T-cells, that function in the recognition,
destruction and elimination of disease-causing foreign substances and of virally
infected or malignant cells. Human antibodies, which are produced by the
B-cells, play a vital role in the proper functioning of the immune system. They
have predetermined functions based primarily upon their ability to recognize
specific antigens, which are molecular structures on the surface of
disease-causing substances or diseased cells. Each antigen serves as a binding
site for the antibody specific to that antigen, and each disease-causing
substance or diseased cell can be identified by its antigens.
The ability of specific antibodies to bind to specific antigens that are
expressed on the surface of targeted cells, and to trigger an immune system
attack on those cells, provides the theoretical basis for the development of
cancer immunotherapeutics. In the 1970s, researchers discovered techniques to
produce unlimited supplies of identical murine (mouse-derived) antibodies,
referred to as monoclonal antibodies, by cloning antibody producing cells that
were derived from hybridization of a single B-cell. These techniques provided
researchers with the tools to identify and study specific antigens and to
produce potential therapeutics. In principle, once an antigen expressed by
malignant cells has been identified, a monoclonal antibody specific to that
antigen can be created. If an antibody could be produced that binds to an
antigen expressed exclusively by human cancer cells, the antibody would be
specific to only those cells. As a result, the use of such a monoclonal antibody
as a
4
<PAGE> 5
therapeutic would have few, if any, side effects. However, the development of
such a therapy has proven to be more problematic than originally hoped.
Immunotherapies based solely upon monoclonal antibodies have had only limited
clinical effectiveness, particularly in solid tumors where the uneven supply of
blood throughout such tumors prevents adequate exposure of monoclonal antibodies
to malignant cells.
The effectiveness of a particular monoclonal antibody in the treatment of
cancer fundamentally is linked to the characteristics of the antigen to which it
binds. For example, while researchers have identified numerous antigens on
cancer cells that can be recognized by monoclonal antibodies, most of these
antigens are also expressed to some degree by other types of cells. An antibody
to such an antigen may not be sufficiently specific to the cancer cells to avoid
or minimize unintended side effects caused by damage to normal cells. Moreover,
the behavior of antigens following binding with an antibody is quite variable:
the bound antibody-antigen complex can remain on the cell surface, can be
internalized into the cell or can be released from the cell surface. Thus, the
identification of suitable antigens to serve as targets for therapeutic
monoclonal antibodies must account for these and other complexities.
Once a suitable antigen has been identified, researchers have found that
different antibodies binding to different sites on the antigen may not have the
same biological activity, introducing another element of variability. Antibodies
also differ in the degree to which they stimulate an immune system response and
in the extent to which they have other effects on the cell. Even the most
effective antibodies have limited biological activity. In addition, research
conducted since the late 1970s has revealed the importance of selecting the
proper type of antibody for use in the intended therapy. Murine antibodies are
appropriate in treatments involving a single dose or other short treatment
regimen where it is beneficial that the antibodies, together with any
therapeutic conjugate, are metabolized and cleared from the body fairly quickly.
Chimerized or humanized antibodies are desirable for multi-dose or chronic
treatment regimens as they reduce the risk of a human immune response to the
antibodies themselves. While these manipulations of the antibodies have
permitted more extended therapeutic regimens in some circumstances, they do not
overcome the inherent limitations in the biological activity of the underlying
antibodies. Thus, despite early expectations, no monoclonal antibody has yet
been shown to be effective as a stand-alone, first-line therapy in the treatment
of cancer.
Researchers have attempted to increase the effectiveness of antibodies by
attaching radioisotopes or other cytotoxic agents for use in
"radioimmunotherapy" or "chemoimmunotherapy," respectively. By using an antibody
to deliver a radioisotope or other cytotoxic agent to the targeted cells, the
effect of the radiation or cytotoxic agent can be concentrated in the immediate
vicinity of malignant cells. Development of effective radioimmunotherapies,
however, presents an additional set of challenges, including the need to select
an appropriate radioisotope for the intended therapy, to develop a reliable
means of linking the radioisotope to the antibody and to devise a therapeutic
protocol that optimizes therapeutic effect while minimizing undesirable side
effects. The development of effective chemoimmunotherapies presents similar
challenges.
Enhancements of Conventional Chemotherapies. A number of organizations have
explored methods of improving the delivery of cytotoxic drugs to tumor cells,
with the objective of expanding the therapeutic window for these drugs in the
treatment of cancer. Approaches that have been commercialized include
encapsulation of the drug in a liposome to regulate the rate at which it is
released and impregnation of an implantable matrix with the drug to enable its
delivery locally over time as the matrix dissolves. Sustained release of
cytotoxic drugs using liposomal formulations has modestly enhanced the
therapeutic window for these compounds, but instability of the formulations and
accumulations in the skin have produced undesirable side effects. Surgical
implantation of a matrix is limited inherently to the treatment of localized
tumor masses and is not applicable to blood-borne or metastatic cancers.
Another approach, the development of pro-drugs, involves the chemical
modification of cytotoxic drugs to render them inactive until they are delivered
to, or into the proximity of, targeted cancer cells. The pro-drug is transformed
into its active form only in the presence of enzymes or other chemicals produced
by the tumor cells. The preferential activation of a pro-drug in the tumor
milieu increases its lethal effect on tumor cells while limiting side effects to
non-malignant tissues. Pro-drug versions of cytotoxic drugs offer the potential
to broaden significantly the therapeutic windows of such drugs beyond that which
can be achieved using existing
5
<PAGE> 6
approaches such as liposomal formulations. Challenges that have constrained the
development of effective pro-drugs to date have included the inability to
construct or identify suitable tumor-specific activation mechanisms and
difficulties in designing pro-drugs that will have adequate stability in
circulation.
COULTER PHARMACEUTICAL'S APPROACH
Coulter Pharmaceutical is developing a family of cancer therapeutics to
address the shortcomings of current therapies based upon two drug discovery
programs: therapeutic antibodies and targeted oncologics. Within these broad
drug discovery programs, the Company is currently concentrating on two distinct
platform technologies: therapeutic antibodies based on conjugated antibody
technology and targeted oncologics based on tumor activated peptide pro-drugs.
The Company is developing conjugated antibody therapies to overcome the
inherent limitations of monoclonal antibodies when used as stand-alone
therapeutics and to provide advantages over current chemotherapy and radiation
therapy treatments. The Company believes that Bexxar, its first product
candidate, incorporates each of the principal attributes of an effective
radioimmunotherapy for the treatment of NHL: (i) an antigen specific to B-cells,
(ii) a therapeutically active monoclonal antibody, (iii) the radioisotope
appropriate for the disease profile, and (iv) an optimized therapeutic protocol.
The Company intends to file a Biologic License Application ("BLA") with the
FDA in 1999 for the use of Bexxar for the treatment of low-grade and transformed
low-grade NHL in patients who have relapsed after or are refractory to
chemotherapy. The Company intends to seek priority review and marketing approval
for Bexxar, while simultaneously pursuing clinical trials to expand its
potential uses to other indications. The Company believes that Bexxar, if
successfully developed, would be the first radioimmunotherapy approved in the
United States for treatment of people with cancer.
The Company believes that radioimmunotherapies will emerge as important
treatments for blood-borne cancers due to the radiosensitivity of these
malignancies and the ready accessibility of the blood and lymph systems to
monoclonal antibodies. Radioimmunotherapy also may become an important
adjunctive therapy for the treatment of certain solid tumor cancers following
surgery, radiation therapy or chemotherapy, where it may be useful in
eliminating circulating and other undetected malignant cells missed by primary
therapies. In the future, the Company intends to use its expertise in conjugated
antibodies to expand beyond radioimmunotherapy to develop effective
chemoimmunotherapies for the treatment of certain cancers.
The Company's second technology platform, its TAP pro-drug technology, has
the potential to broaden significantly the therapeutic windows of conventional
chemotherapies based on the Company's understanding of biochemical mechanisms
involved in metastasis and the identification of a potential means for
exploiting these mechanisms. TAP pro-drug versions of existing cytotoxic drugs
are designed to be activated preferentially in the proximity of metastatic
cancer cells, yet stable in circulation and in normal tissues. Accordingly,
relatively larger quantities of cytotoxic agents are expected to reach and enter
malignant cells as opposed to normal cells, which could permit a significant
increase in maximum tolerated dosages, potentially overcoming drug resistance in
cancer cells. The Company also believes that cytotoxic agents currently
considered too toxic to be used in their unmodified forms may be suitable
candidates to become TAP pro-drugs.
COULTER PHARMACEUTICAL'S STRATEGY
The Company's goal is to develop and commercialize novel drugs and drug
therapies for the treatment of people with cancer based on selected insights
from the emerging understanding of the molecular biology of malignant cells. The
Company's conjugated antibody program is based upon the antibody therapeutics
program which originated in the late 1970s at Beckman Coulter, a recognized
leader in the field of hematology. Upon its formation, Coulter Pharmaceutical
obtained worldwide rights to Bexxar and related intellectual property, as well
as a significant body of expertise pertaining to the selection and development
of suitable antibodies and appropriate radioisotopes (and other cytotoxic
agents) and methods for devising optimized therapies. The Company's TAP pro-drug
program is based upon technology that has been under development at Universite
Catholique de Louvain, Belgium, since 1986 and which was exclusively licensed to
6
<PAGE> 7
the Company in 1996. Based on this foundation, the Company has established a
strategy comprised of the following primary elements:
Pursue Expedited Approval of Bexxar. The Company intends to seek expedited
FDA review for marketing approval for Bexxar for the treatment of low-grade and
transformed low-grade NHL in patients who have relapsed after or are refractory
to chemotherapy, while simultaneously pursuing clinical trials to expand the
potential use of Bexxar to other indications. The Company intends to file for
FDA marketing approval for this indication in 1999. In December 1998, the
Company announced that the FDA had designated Bexxar as a Fast Track Product for
which the agency will take appropriate actions to expedite review and
development. The Company also intends to seek approval for other NHL indications
based on additional clinical trials, and has commenced a Phase II clinical trial
of Bexxar as a stand-alone, first-line treatment for patients with newly
diagnosed low-grade NHL.
Establish Sales and Marketing Capability. The Company intends to market and
sell its products in the United States through a direct sales force and, where
appropriate, in collaboration with marketing partners. This strategy is intended
to enable the Company to establish a commercial presence in the cancer
therapeutics market with Bexxar, if approved, and to create the capability to
sell other products that it may develop or in-license. The Company believes that
an established sales and marketing capability will enable it to compete
effectively for opportunities to license or distribute later-stage product
candidates and approved products. Internationally, the Company intends to
distribute its products through marketing partners. In December 1998 the company
entered into an agreement with SB to jointly commercialize Bexxar. The two
companies will co-promote Bexxar in the United States following regulatory
approval with each company fielding its own sales force and both companies
sharing profits equally. Outside the Unites States, excluding Japan, the Company
has granted SB exclusive marketing and distribution rights for Bexxar in return
for product royalties and milestone payments.
Leverage Existing Technology Platforms. The Company intends to develop
additional products based on the lead compounds being generated in its TAP
pro-drug program and by leveraging its expertise in conjugated antibodies to
develop other immunotherapies. In its TAP pro-drug program, the Company
currently is engaged in preclinical development of Super-Leu-Dox, a pro-drug
version of doxorubicin, with the objective of filing an IND in 1999 and
commencing clinical trials in 2000. The Company also intends to apply its TAP
pro-drug technology to other classes of cytotoxic drugs to broaden significantly
the therapeutic windows of such agents. The Company is evaluating potential
conjugated antibody therapies for the treatment of other blood-borne
malignancies and selected solid tumor cancers.
Leverage Development Expertise. The Company believes that it has built
substantial product development capabilities and expertise in the cancer field
due in part to the advanced stage of the Bexxar program since the time that it
was obtained from Coulter Corporation. The Company believes it can leverage this
development expertise to accelerate the development of other products in the
cancer therapeutics field. The Company intends to pursue other product
candidates derived from sponsored research or available for in-licensing in both
blood-borne malignancies and solid tumor cancers, particularly in areas that may
be complementary to its existing technology platforms.
Utilize Contract Manufacturers. The Company intends to manufacture its
commercial products through contract manufacturers. This strategy is expected to
(i) accelerate the scale-up of manufacturing processes to commercial scale, (ii)
reduce initial capital investment, (iii) result in competitive manufacturing
costs, and (iv) provide access to a wide range of manufacturing technologies.
BEXXAR: RADIOIMMUNOTHERAPY FOR NON-HODGKIN'S LYMPHOMA
The Company plans to file a BLA with the FDA in 1999 for its first product
candidate, Bexxar. The Company believes that Bexxar, if successfully developed,
would become the first radioimmunotherapy approved in the United States for the
treatment of people with cancer.
7
<PAGE> 8
Non-Hodgkin's Lymphoma and Its Current Treatment
Non-Hodgkin's lymphomas are blood-borne cancers of the immune system, all
sharing the common feature of a proliferation of malignant B-cells. According to
statistics from the National Cancer Institute, approximately 270,000 people are
afflicted with NHL in the United States. More than 56,000 new cases are expected
to be diagnosed in 1999. NHL is currently the sixth leading cause of death among
cancers in the United States and has the second fastest growing mortality rate.
NHL is categorized by histology as either low-, intermediate- or high-grade
disease. These classifications differ significantly with respect to the speed of
disease progression, the pattern of response to and relapse after conventional
chemotherapy and the average life expectancy. In relapsed low-grade patients,
the disease can transform to an intermediate- or high-grade histology
("transformed low-grade NHL"). In the United States, the Company estimates that
approximately 140,000 patients have low-grade or transformed low-grade, 100,000
have intermediate-grade and 30,000 have high-grade NHL. Initially, the Company
is pursuing clinical development of Bexxar for the treatment of patients with
low-grade and transformed low-grade NHL. Patients with low-grade NHL have a
fairly long life expectancy from the time of diagnosis with a median survival of
more than six years. While patients with low-grade and transformed low-grade NHL
can often achieve one or more remissions with chemotherapy, these patients
eventually relapse. Relapsed patients are more difficult to treat as remissions
are harder to achieve and, if achieved, last for shorter periods of time as the
disease becomes more resistant to chemotherapy and/or transforms to an
intermediate- or high-grade histology. Patients ultimately die from the disease
or from complications of treatment. Intermediate- and high-grade NHL are more
rapidly growing forms of the disease. However, approximately one-half of all
intermediate- and high-grade cases can be treated effectively with conventional
chemotherapy.
Description of Bexxar
Bexxar consists of a radioisotope, (131)Iodine ("(131)I"), combined with a
monoclonal antibody that recognizes and binds to the CD20 antigen, an antigen
commonly expressed on the surface of B-cells primarily during that stage of
their life cycle when NHL arises. Bexxar is administered to patients in a
proprietary therapeutic protocol consisting of a single, two-dose regimen. The
Company believes that the potential benefits of Bexxar result from the following
four constituent elements:
Proprietary Protocol. Bexxar is administered intravenously in a single,
two-dose regimen consisting of a dosimetric dose, three whole body gamma counts
and a therapeutic dose. The Company has rights in two issued patents relating to
methods for radioimmunotherapy and dosing using Bexxar and other anti-CD20
antibodies. The proprietary protocol is flexible: the timing of the counts and
of the therapeutic dose can be adjusted to some extent to accommodate the
schedules of clinicians and patients. The chart below depicts the protocol being
used in the Company's current clinical trials. The dosimetric dose consists of
35 mg of Anti-B1 Antibody trace-labeled with 5 millicuries ("mCi") of (131)I.
Immediately after the dosimetric dose, the patient undergoes a whole body gamma
count. The patient returns for two additional counts on the second, third or
fourth and the seventh or eighth days of the therapy to show how much of the
radiolabeled antibody has been eliminated from the body at each point in time.
This information is used to calculate the correct individualized therapeutic
dose to achieve a total body radiation of 75 centiGray ("cGy"). The amount of
radiolabeled antibody needed to achieve this optimal dose ranges from
approximately 40 to 200 mCi of (131)I due to wide patient-to-patient variability
in the rates at which the antibody is eliminated. The therapeutic dose is
administered once from seven to fourteen days after the dosimetric dose. Both
the dosimetric dose and the therapeutic dose are preceded by a 450 mg dose of
unlabeled Anti-B1 Antibody to improve the targeting of malignant B-cells by the
radiolabeled Anti-B1 Antibody. These pre-doses of unlabeled Anti-B1 Antibody
optimize the distribution of radiolabeled antibody in patients with bulky
disease or large spleens, minimize the required dose by slowing its elimination
from the body and may also contribute to the overall efficacy of the product.
Additionally, the patient takes non-radioactive iodine drops orally during the
course of the therapy to prevent uptake of (131)I into the thyroid gland.
8
<PAGE> 9
[IMAGE]
Relying upon the dosimetric properties of (131)I to account for critical
patient-to-patient variability in the rate at which the antibody is cleared
makes it possible to deliver predictably a total body radiation dose that has
been determined to maximize therapeutic benefit with manageable side effects and
without the need for bone marrow rescue. Because Bexxar is administered in a
single, two-dose regimen and is well tolerated, it is expected to require
relatively little patient follow-up and physician intervention. In contrast,
chemotherapy requires administration of several cytotoxic agents in repeated
cycles of therapy over a six- to eight-month period during which the patient
must be monitored carefully and/or treated for side effects. Until recently,
patients have been kept in the hospital to monitor radiation levels for up to
four days following the therapeutic dose. However, under new Nuclear Regulatory
Commission ("NRC") regulations, patients are increasingly being treated with
Bexxar on an outpatient basis. Although the Company believes that Bexxar can be
administered primarily on an outpatient basis, some hospitals may be required to
administer the therapeutic dose on an inpatient basis under their own or under
applicable state or local regulations. See "-- Radioactive and Other Hazardous
Materials."
CD20 Antigen. The CD20 antigen is a highly selective cell surface marker
found on B-cells: expression of the CD20 antigen is limited to B-cells, is found
on 95% of such cells and occurs on B-cells primarily during that stage of their
life cycle when NHL arises. The CD20 antigen is not expressed by stem cells,
B-cell progenitor cells or plasma cells; thus, these cells are not targeted by
Bexxar. As a result, while Bexxar targets and destroys both normal and malignant
B-cells, unaffected plasma cells continue to function in the immune system and
B-cell populations can be regenerated after therapy by unaffected B-cell
progenitor cells.
[IMAGE]
In addition, the CD20 antigen is neither internalized by the B-cell nor
released into circulation after it has been bound to the Anti-B1 Antibody,
ensuring that the antibody-radioisotope conjugate will remain in place to
destroy the B-cell.
The Anti-B1 Antibody. The Anti-B1 Antibody exhibits very high specificity
for the CD20 antigen and, because it is a sub-class IgG(2a) antibody, is capable
of recruiting an immune response to those B-cells to which it binds. Further,
the Anti-B1 Antibody directly affects cell function, triggering apoptosis in a
portion of the B-cells to which it binds. The use of a murine antibody promotes
rapid clearance of unbound radiolabeled
9
<PAGE> 10
antibody from circulation, which reduces radiotoxicity. Due to the impaired
state of the NHL patient's immune system and the short course of therapy, the
development of antibodies to the murine antibody has been minimal to date and
has not been a limiting factor in treatment under the protocol.
The Anti-B1 Antibody used in Bexxar was generated in 1978 by the
Dana-Farber Cancer Institute in collaboration with Coulter Corporation. The
Anti-B1 Antibody has been available commercially from Coulter Corporation (now
Beckman Coulter) as a diagnostic reagent since 1982 and is generally accepted as
the reference standard for the identification of B-cells. Rights to the antibody
for therapeutic applications were transferred to Coulter Pharmaceutical from
Coulter Corporation in February 1995.
(131)Iodine Radioisotope. The (131)I radioisotope used in Bexxar was
selected over other radioisotopes because it (i) produces both gamma emissions
which permit dosimetry for dose optimization and compact beta emissions for a
concentrated therapeutic effect, (ii) provides additional commercial and
clinical benefits based on its relatively long half-life, (iii) has
characteristics which reduce the risk of bone marrow damage without sacrificing
efficacy, and (iv) has long-established medical uses in other cancer treatments.
Gamma emissions from (131)I permit dose optimization by enabling clinicians
to calculate the actual clearance rate of radiolabeled antibody for each
patient. Use of the same radioisotope for both the dosimetric and the
therapeutic dose provides assurance that the clearance rates observed in
dosimetry also will apply for the therapeutic dose. Having established the
patient's actual clearance rate, the clinician can determine reliably the
therapeutic dose which will deliver the optimized level of total body radiation.
The comparatively lower energy and shorter path length of the beta emission
of (131)I concentrate the destructive energy of the radioisotope on the B-cell
to which the antibody is bound and to adjacent microscopic clusters of malignant
cells which are common to NHL. Moreover, (131)I causes minimal damage to nearby
normal tissues in contrast to other radioisotopes that have longer path length
beta emissions which may extend too far beyond the targeted area.
The relatively long half-life of (131)I, approximately eight days, permits
radiolabeling at a centralized facility to ensure consistent quality, increase
the number of clinical sites capable of administering this radioimmunotherapy
and reduce overall manufacturing costs. The eight-day half-life also provides
the therapeutic advantage of exposing bound malignant cells to radiation over a
longer period of time than other radioisotopes with shorter half-lives.
When bound to a B-cell, (131)I's energy and short path length, together
with its relatively long half-life, minimize bone marrow damage while optimizing
the therapeutic effect of the radiation. Further, as the Anti-B1 Antibody is
metabolized, the released (131)I radioisotope is eliminated rapidly and unlike
some other radioisotopes does not concentrate naturally in the bone matrix.
(131)Iodine is currently an inexpensive radioisotope that has
long-established medical uses in other cancer treatments. Hence, medical
facilities and clinicians are accustomed to its handling, use and disposal and
already have developed the appropriate procedures and facilities for its safe
therapeutic application.
Clinical Results and Development Plan
The initial study of Bexxar was a Phase I/II dose escalation clinical trial
at the University of Michigan Medical Center which completed patient enrollment
in early 1996. This trial was used to develop and refine the proprietary
therapeutic protocol, to determine the maximum tolerated dose of total body
radiation and to assess the safety and efficacy profile of treatment with the
radiolabeled Anti-B1 Antibody in patients representing a full range of NHL
histologies. Based on the data generated in this clinical trial, the Company has
pursued clinical development of Bexxar for the treatment of low-grade and
transformed low-grade NHL.
The following definitions apply to all discussions of the results of the
Company's clinical trials: A "complete response" is defined as the disappearance
of all detectable disease and all signs and symptoms of the disease. A "partial
response" is defined as a greater than 50% reduction in tumor measurement. The
"overall response" rate combines complete response with partial response.
Complete and partial response classifications also require that there be no
progression at any disease site and no new sites of disease.
10
<PAGE> 11
Phase I/II Trial Results. A total of 59 patients were enrolled in the Phase
I/II dose escalation clinical trial. Preliminary data from this clinical trial
were first published in August 1993 in the New England Journal of Medicine and
updated, interim clinical results were reported in July 1996 in the Journal of
Clinical Oncology. Of the 59 patients enrolled in this trial, 42 had low-grade
or transformed low-grade NHL, which are the histologies the Company has pursued
in its clinical trials. These 42 patients, who had failed on average more than
four prior treatment regimens with chemotherapy, achieved an 83% overall
response rate, with a 48% complete response rate and a 35% partial response
rate. This 42-patient cohort included eight patients who previously had received
and failed an autologous bone marrow transplant prior to participation in the
clinical trial. The 42 patients in this cohort received total body radiation
doses of up to 85 cGy in this dose escalation trial. Four of the 42 patients did
not receive the therapeutic dose of radiolabeled antibody due to their rapidly
deteriorating medical condition or the presence of an antibody response to the
murine antibody, which arose prior to May 1993 in the early stages of the Phase
I/II dose escalation clinical trial under the yet to be optimized treatment
protocol. Of the 38 patients who received a therapeutic dose, 53% experienced a
complete response with an average duration of response of 20.2 months, with a
range of five to 46 months as of July 1997. As of such date, nine of these
patients were still in complete response.
On an intent-to-treat basis, which includes all enrolled patients whether
treated or not, the 59 enrolled patients achieved an overall response rate of
71%, with a complete response rate of 34% and a 37% partial response rate. Of
the 17 patients in this trial who had intermediate- or high-grade NHL, the
overall response rate was 41%, with no complete responders. While this data is
encouraging, the Company currently is pursuing clinical development of Bexxar in
low-grade and transformed low-grade NHL patients.
Bexxar was generally well tolerated by patients. Dose limiting side effects
were hematologic, consisting primarily of reversible declines in blood cell
counts. These toxicities were generally mild to moderate, with no patient
requiring stem cell rescue. Other side effects observed were mild and consisted
primarily of temporary flu-like symptoms.
As part of its phase I/II dose escalation study, 13 patients who had
responded to an initial treatment with Bexxar were retreated following relapse.
Data concerning there patients was presented at the American Society of Clinical
Oncology meeting in May 1998. Eight of the 13 patients responded to treatment
with four of the 13 patients experiencing a complete response. In patients who
had achieved a complete response after initial treatment with Bexxar, five of
six experienced an overall response and three of six achieved a second complete
response.
Phase II Dosimetry Validation Clinical Trial. The Company completed a
multi-center dosimetry validation clinical trial in a total of 47 patients with
relapsed or refractory low-grade and transformed low-grade NHL in order to
demonstrate that Bexxar's treatment protocol could be implemented consistently
at multiple clinical sites. During this trial, the Company refined its
proprietary protocol to streamline the therapeutic dose calculation,
establishing that accurate antibody elimination rates could be determined from
three gamma camera scans. Overall, 45 of the 47 enrolled patients were
evaluable, having received the protocol-specified therapy. The evaluable
patients had received on average, over four prior therapies, 42% had bulky
disease (tumor burden of greater than 500 grams), and 53% had not responded to
their last chemotherapy. Of the evaluable patients, 31% (14 patients) achieved a
complete response. Ten of the 14 patients with a complete response had not
relapsed with the longest duration of response exceeding 20 months as of
December 1997. As of that date, the median duration of complete response had not
been reached. None of the evaluable patients developed human anti-mouse
antibodies. A complete response was achieved at each clinical site involved in
the trial.
Phase III Pivotal Trial. In December 1998, the Company presented results
from its pivotal Phase III trial of 60 NHL patients refractory to chemotherapy.
The patients represented a difficult-to-treat group, having either no response
to prior chemotherapy, or disease progression within six months of their last
chemotherapy regimen. The primary clinical endpoint was the comparison between
the patient's duration of remission on Bexxar and the duration of remission on
the patient's last chemotherapy, as assessed by a masked, randomized review of
efficacy data by an independent panel of physicians. Of the 41 cases where
response durations to chemotherapy and Bexxar were not equivalent, 32 patients
(78 percent) experienced a
11
<PAGE> 12
longer duration of response to Bexxar compared to only nine patients (22
percent) who experienced a longer duration of response to prior chemotherapy.
The median duration of remission on Bexxar was 6.5 months, approximately
doubling the 3.4-month median duration of remission experienced on their last
chemotherapy. At December 1998, the longest duration of remission in this trial
with Bexxar was ongoing at 17.3 months. The overall response rate, a secondary
clinical endpoint, also was significantly greater on Bexxar with 39 of 60
patients (65 percent) responding to Bexxar compared to only 17 of 60 patients
(28 percent) responding to prior chemotherapy. In addition, ten of 60
Bexxar-treated patients (17 percent) experienced a complete remission (or
complete elimination of signs and symptoms of the disease) compared to only two
of 60 patients (3 percent) who experienced a complete remission on prior
chemotherapy. Bexxar was well tolerated with mild to moderate non-hematologic
toxicity and acceptable hematologic toxicity.
Results presented are based upon interim data which have been submitted to
the FDA, certain portions of which have not yet been published in a peer
reviewed publication. No assurance can be given that the Company's future
clinical results will be consistent with the results of the Phase I/II dose
escalation, the Phase II dosimetry validation and the Phase III pivotal clinical
trials, which were conducted at relatively few sites with a relatively small
number of patients per NHL histology and disease stage and some of which had
different clinical objectives than the Company's current or planned clinical
trials. See "Risk Factors -- Uncertainties Related to Product Development."
Clinical Development of Bexxar
Based on the foregoing results of the Phase I/II, Phase II dosimetry
validation and Phase III pivotal clinical trials, the Company will rely on three
additional clinical trials to support an application to the FDA for the initial
marketing approval of Bexxar expected to be filed in 1999; (i) interim data from
an ongoing expanded access clinical trial, (ii) interim data from an ongoing
Phase II clinical trial to evaluate the extent to which the therapeutic benefit
of Bexxar is derived from the combination of the Anti-B1 Antibody and the
radioisotope, in comparison to the Anti-B1 Antibody alone; and (iii) to expand
the use of Bexxar to other indications and to support the initial BLA, interim
data from an ongoing Phase II clinical trial of Bexxar as a first-line treatment
for patients with low-grade NHL and intends to conduct additional clinical
trials in the future. The Company's collaboration agreement with SB provides for
SB to participate in the administration, management and funding of certain
current and future clinical trials.
Expanded Access Clinical Trial. The Company currently is conducting a
multi-center expanded access trial for patients with NHL who have failed prior
chemotherapy. The program was established by the Company in response to requests
from physicians and patients for continued access to Bexxar during the period
prior to potential FDA marketing approval. The trial is expected to include
approximately 100 community and academic oncology centers across the United
States.
Phase II Unlabeled Versus Labeled Antibody Clinical Trial. The Company is
conducting a multi-center Phase II clinical trial in 78 patients with relapsed,
low-grade and transformed low-grade NHL. Patients are randomized into two
groups: one group receives Bexxar pursuant to the proprietary protocol; the
other group receives two 485 mg doses of unlabeled Anti-B1 Antibody eight days
apart in a treatment regimen that is parallel to Bexxar. The objective of this
clinical trial is to assess the incremental clinical activity from radiolabeling
the Anti-B1 Antibody as compared to the clinical activity of the unlabeled
Anti-B1 Antibody alone. Administration of the unlabeled Anti-B1 Antibody has not
been designed for use as a stand-alone therapy, nor has the treatment regimen
been optimized for such use. This trial was the subject of an abstract presented
at the 1997 American Society of Therapeutic Radiation Oncology meeting in
October 1997. The Company's objective is to complete enrollment of patients in
this clinical trial in 1999.
Phase II First-Line, Stand-Alone Treatment Clinical Trial. The Company
currently is conducting a single-center Phase II trial in up to 80 newly
diagnosed low-grade NHL patients. An interim analysis of data from the first 32
patients presented at the American Society of Clinical Oncology meeting in May
1998 showed a 100% response rate with 71% achieving a complete response.
Additionally, in nine of the patients, no evidence of NHL could be detected at
molecular levels using PCR analysis. As of April 1998, 24 patients were in
ongoing remission, with the longest duration being 18.5 months. Side effect were
generally mild to moderate
12
<PAGE> 13
and self-limited. The Company believes that its Phase II trial of Bexxar for
patients newly diagnosed with NHL is the first trial of radioimmunotherapy as a
stand alone, first-line treatment for people with cancer. The Company's
objective is to complete enrollment of patients in this clinical trial in the
first half of 1999.
The ability of the Company to conduct and complete its ongoing and planned
clinical trials in a timely manner is subject to a number of uncertainties and
risks, including the rate at which patients can be accrued in each clinical
trial, the Company's ability to obtain necessary regulatory approvals, the
capacity of the Company's contract manufacturers to supply unlabeled and
radiolabeled Anti-B1 Antibody as needed for patient treatment and the occurrence
of unanticipated adverse events. Any suspension or delay of one or more of such
clinical trials could have a material adverse effect on the Company's business,
financial condition and results of operation. See "Risk Factors -- Uncertainties
Related to Product Development," "-- Government Regulation; No Assurance of
Regulatory Approvals," and "-- Dependence on Suppliers; Manufacturing and
Scale-up Risk."
Use of Bexxar for Bone Marrow Transplantation. The radiolabeled Anti-B1
Antibody has been the subject of other clinical trials to assess the efficacy of
using the radiolabeled Anti-B1 Antibody to deliver the high levels of radiation
necessary to prepare patients for autologous bone marrow transplants. The
conventional preparation for autologous bone marrow transplants is chemotherapy
and total body irradiation. These clinical trials were designed to determine the
maximum tolerated dose, response duration and rates of response,
progression-free survival and overall survival.
The first of two clinical trials conducted at the University of Washington
Medical Center and the Fred Hutchinson Cancer Research Center tested
(131)I-labeled Anti-B1 Antibody as a single agent to prepare patients for an
autologous bone marrow transplant by achieving a total body radiation level of
up to 997 cGy (over ten times Bexxar's dose). As reported in The Lancet in
August 1995, of the 21 patients receiving the full radiotherapeutic regimen, the
overall response rate was 86%, with a 76% complete response rate and a 10%
partial response rate. Interim data from this clinical trial were published in
the New England Journal of Medicine in October 1993. The second clinical trial,
currently ongoing, is designed to test the combination of similarly high doses
of radiolabeled Anti-B1 Antibody and high doses of chemotherapy in preparation
for autologous bone marrow transplant. This clinical trial has enrolled 43
patients since its commencement in January 1995. Data from this clinical trial
was presented at the American Society of Clinical Oncology meeting in May 1998.
In this Phase I/II trial, 28 of 43 patients (65%) had low grade and 15 of 43
patients (35%) had intermediate or high grade NHL. Of the 42 evaluable patients,
31 of 42 patients (74%) are progression-free after a median follow-up of 1.5
years. All patients experienced myelosuppression by design with the high dose
combination regimen of chemotherapy and Bexxar (at a level approximately four to
ten times the mean standard dose of Bexxar). Other dose-limiting toxicities
included pulmonary and gastrointestinal toxicities.
In addition, a Phase II dose escalation clinical trial is ongoing at the
University of Nebraska for the combined use of standard dose radiolabeled
Anti-B1 Antibody and high dose chemotherapy as preparation for autologous bone
marrow transplant.
Other Clinical Trials. The Company is also conducting a Phase I
multi-center investigational trial in patients previously treated with Bexxar.
This open label trial includes low-, intermediate-, and high-grade NHL patients
who have relapsed from their initial Bexxar treatment.
13
<PAGE> 14
TAP PRO-DRUG PLATFORM
The Company's second technology platform, its tumor-activated peptide
pro-drug technology, has the potential to broaden significantly the therapeutic
window of cytotoxic agents. The TAP pro-drug technology is based upon an
understanding of the biochemical mechanisms utilized by cancer cells to
metastasize and the identification of a potential means for exploiting these
mechanisms and is being developed in collaboration with the Universite
Catholique de Louvain, Belgium. TAP pro-drugs are designed to be (i) activated
preferentially at the tumor site by enzymes secreted by the tumor, (ii) stable
in circulation and in normal tissues and (iii) unable to penetrate normal cells
or malignant cells until activated. As a result, relatively larger quantities of
cytotoxic agents are expected to reach and enter malignant cells as opposed to
normal cells, which could permit a significant increase in maximum tolerated
dosages, potentially overcoming drug resistance in cancer cells. The Company's
lead preclinical pro-drug candidate is a pro-drug version of doxorubicin known
as Super-Leu-Dox. Doxorubicin is an off-patent chemotherapeutic drug which
currently is used in the treatment of a number of solid tumor cancers, including
breast, prostate, ovarian and soft-tissue sarcoma cancers.
[IMAGE]
As depicted in the graphic above, Super-Leu-Dox is based on a proprietary
peptide of four amino acids (a "tetrapeptide") that can be linked to
doxorubicin's active site. In the two-step activation process, (1) the
extracellular tumor enzyme cleaves three amino acids from the tetrapeptide
leaving a leucine amino acid-doxorubicin conjugate that is able to penetrate
cells. (2) The resulting conjugate is then capable of entering cells. Since this
first activation step occurs in the immediate vicinity of tumor cells that are
secreting the enzyme, the probability that the cytotoxic drug will enter tumor
cells as opposed to normal cells is increased. Moreover, the conjugate remains
inactive inside the cells until (3) the remaining leucine is removed from
doxorubicin's active site by an intracellular enzyme. Although it is expressed
in both normal and tumor cells, this intracellular enzyme is present in tumor
cells in concentrations three to five times higher than in normal cells. As a
result, (4) the doxorubicin is activated to a greater extent in tumor cells
relative to normal cells.
This two-step activation process is designed to produce a significantly
higher ratio of active to inactive doxorubicin in cancer cells relative to
normal cells. In in vitro studies of Super-Leu-Dox, researchers have found that
the concentration of activated to inactivated doxorubicin in tumor cells was 40
times higher than in normal cells. These results, if confirmed in clinical
trials, offer the potential to improve significantly the therapeutic window of
doxorubicin. The Company currently plans to complete preclinical development of
Super-Leu-Dox and to commence clinical trials in 2000.
Prior to the licensing of the TAP pro-drug technology by Coulter
Pharmaceutical, an earlier generation leucine-doxorubicin conjugate was tested
as a stand-alone therapy for the treatment of solid tumors in two separate dose
escalation clinical trials in Europe. A total of 59 patients were enrolled in
these clinical trials, and patients safely tolerated doses well in excess of
those associated with unmodified doxorubicin. Results from these clinical
trials, along with data from preclinical studies, will be used by the Company to
select the initial indication to pursue in clinical trials of Super-Leu-Dox.
Selection of the particular indication or indications to be evaluated in such
clinical trials has not been finalized.
14
<PAGE> 15
While the Company will focus initially on previously approved
chemotherapeutic drugs, it also is evaluating TAP pro-drug versions of cytotoxic
agents currently considered too toxic to be used in their unmodified forms. The
Company believes that the TAP pro-drug technology potentially can be applied to
several classes of cytotoxic agents, including the vinca alkaloids, which are
used commonly to treat blood-borne malignancies and some solid tumors. The
Company also plans to develop and evaluate other peptide structures for possible
use in pro-drug versions of cytotoxic agents and other cancer therapeutics.
Under its agreement with Catholique Universite de Louvain, Belgium, the
Company has secured an exclusive license to the intellectual property underlying
the program and will pay royalties on sales of licensed products. The agreement
also provides for specified minimum payments, including one payment that will be
due if the Company should elect to relocate the program outside of Belgium. The
amounts of these payments are not material and, in any event, the Company does
not currently intend to relocate the research program. In 1997, the Company also
entered into a sponsored research agreement with Catholique Universite de
Louvain to conduct research in the area of TAP pro-drugs.
OTHER PRODUCT CANDIDATES
In 1997, the Company began a program which actively seeks to in-license
promising product development candidates in the area of cancer therapeutics with
the objective of expanding the Company's product pipeline.
RESEARCH AND DEVELOPMENT
The Company incurred research and development expenses of $13.7 million,
$21.0 million, $28.7 million and $66.0 million for the years ended December 31,
1996, 1997 and 1998, and for the period from inception (February 16, 1995) to
December 31, 1998, respectively.
MANUFACTURING
The Company intends to utilize contract manufacturers for most of the
preclinical and clinical requirements for its potential products and for all of
its commercial needs. This strategy is expected to (i) accelerate the scale-up
of manufacturing processes to commercial scale, (ii) reduce initial capital
investment, (iii) result in competitive manufacturing costs, and (iv) provide
access to a wide range of manufacturing technologies. The Company's
collaboration agreement with SB provides for SB to participate in the planning,
management and funding of manufacturing development.
Pursuant to several contracts with the Company, Lonza Biologics PLC
("Lonza") now is supplying the Anti-B1 Antibody for use in ongoing clinical
trials and to meet commercial requirements. There can be no assurance that the
material produced by Lonza will be suitable for human use and that clinical
trials or commercial supply will not be delayed or disrupted if Lonza is unable
to meet the Company's demand for product.
In addition, the Company has entered into agreements with Boehringer
Ingleheim Pharma KG ("BI Pharma KG") to manufacture and supply Anti-B1 Antibody
for use in ongoing clinical trials and to meet commercial requirements as well
as provide for fill/finish and packaging services. The Company has committed to
minimum order quantities of the Anti-B1 antibody from BI Pharma KG. The maximum
amount of the penalty which would be payable if the Company did not place orders
to purchase any antibody is approximately $5.4 million. There can be no
assurance that the material produced by BI Pharma KG will be suitable for human
use and that clinical trials or commercial supply will not be delayed or
disrupted if Pharma KG is unable to meet the Company's demand for product.
Radiolabeling currently is conducted at MDS Nordion Inc.'s ("Nordion")
centralized radiolabeling facility. The Company has several contracts with
Nordion that provide for radiolabeling services for clinical and commercial
product. There can be no assurance that material produced by Nordion will be
suitable for human use and clinical trials or commercial supply will not be
delayed or disrupted if Nordion is unable to meet the Company's demand for
product.
15
<PAGE> 16
If Bexxar is successfully developed and is approved for marketing by the
FDA, the Company expects that production for commercialization will consist of
(i) production of bulk Anti-B1 Antibody by Lonza and BI Pharma KG, (ii) filling
and labeling of individual product vials with Anti-B1 Antibody by another
third-party supplier and/or BI Pharma KG, and (iii) radiolabeling of Anti-B1
Antibody at Nordion. While the Company plans to develop additional suppliers of
these services, it expects to rely on its current suppliers for all or a
significant portion of its requirements for Bexxar for the foreseeable future.
Radiolabeled antibody cannot be stockpiled against future shortages due to the
eight-day half-life of the (131)I radioisotope. Accordingly, any change in the
Company's existing or planned contractual relationships with, or interruption in
supply from, its third-party suppliers could adversely affect the Company's
ability to complete its ongoing clinical trials and to market Bexxar, if
approved. Any such change or interruption would have a material adverse effect
on the Company's business, financial condition and results of operations. See
"Risk Factors -- Dependence on Suppliers; Manufacturing and Scale-up Risk."
The Company believes that the products it expects to develop in its TAP
pro-drug program can be produced with standard chemical synthesis processes and
expects to utilize third parties to meet clinical trial and any commercial
requirements for these products. The Company is in discussions with potential
manufacturers of Super-Leu-Dox, its initial TAP pro-drug product candidate.
There can be no assurance that agreements will be entered into in a timely
manner or under acceptable terms or that the material produced under the
agreements will be suitable for human use.
DISTRIBUTION
The unique properties of the Bexxar therapy require the distribution of the
product to be tightly controlled. Due to its radioactive component, the product
is shipped in a shielded container and must arrive at its destination within
24 - 48 hours of production. The product must also be under controlled
temperature during shipment. The company will rely on many third parties to
process orders and to package, store and ship the product. The Company is
working with these suppliers to establish a commercial scale system for the
product which will minimize risk and loss of inventory and provide efficient
service to customers. There can, however, be no assurance that these third
parties will handle the product in a manner that will minimize loss and damage
of inventory. The Company is in the process of negotiating several contracts for
the handling of the product before it is delivered to the customer. There can be
no assurance that the Company will be able to enter into such agreements on
commercially reasonable terms, on a timely basis or at all.
MARKETING AND SALES
The Company intends to market and sell its products in North America
through a direct sales force and, where appropriate, in collaboration with
marketing partners. This strategy is intended to enable the Company to establish
a commercial presence in the cancer therapeutics market with Bexxar, if
approved, and to create the capability to sell other products that it may
develop or in-license. The sales force is expected to initially call on
oncologists, hematologists and nuclear medicine physicians in connection with
the sale of Bexxar. The Company initially will focus its sales efforts on those
physicians who treat the largest volume of NHL patients. These physicians
generally are concentrated in large metropolitan areas. Because of the
characteristics of Bexxar, the target physician must have access to a facility
with radiopharmaceutical and gamma count capabilities. The Company believes such
facilities are available in large metropolitan areas such that a significant
portion of physicians who treat NHL patients will be able to prescribe Bexxar.
The Company intends to distribute its products internationally through marketing
partners.
In December 1998, the Company entered into an agreement with SB to jointly
commercialize Bexxar. The two companies will co-promote Bexxar in the United
States following regulatory approval, with each company fielding its own sales
force and both companies sharing profits equally. Outside the United States,
excluding Japan, the Company has granted SB exclusive marketing and distribution
rights in return for milestone payments and product royalties.
The current purchasers of cancer therapeutics are hospitals, clinics,
physicians, pharmacies, large HMOs and state and federal governments.
Historically, physicians made treatment decisions and prescribed
16
<PAGE> 17
therapeutics which then were dispensed through the clinic, hospital or pharmacy.
However, the United States health care system is undergoing significant changes
and the decision-making authority of the physician varies. These changes may
make it necessary for the Company to alter its marketing strategy prior to the
launch of Bexxar or even after launch and could affect adversely the ability of
the Company to generate revenues.
The Company's ability to market effectively may be affected adversely by a
number of factors including physicians' resistance to change from established
methods of treatment such as chemotherapy or radiation therapy and the special
handling and administration requirements of a radioimmunotherapy. Further, the
Company can provide no assurance as to whether Bexxar will be priced
competitively compared to existing methods of treatment such as chemotherapy and
radiation therapy. See "Risk Factors -- Uncertainty of Market Acceptance of
Bexxar."
PHARMACEUTICAL PRICING AND REIMBURSEMENT
Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. Initiatives to reduce
the federal deficit and to reform health care delivery are increasing
cost-containment efforts. The Company anticipates that Congress, state
legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Any such proposed or actual changes could cause the Company to limit or
eliminate spending on development projects and affect the Company's ultimate
profitability. Legislative debate is expected to continue in the future, and
market forces are expected to drive reductions of health care costs. The Company
cannot predict what impact that adoption of any federal or state health care
reform measures or future private sector reforms may have on its business.
In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations. In
addition, other third-party payors increasingly are challenging the price and
cost effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products.
Bexxar, as potentially the first radioimmunotherapy for cancer, faces particular
uncertainties due to the absence of a comparable, approved therapy to serve as a
model for pricing and reimbursement decisions. There can be no assurance that
the Company's product candidates will be considered cost effective or that
adequate third-party reimbursement will be available to enable the Company to
maintain price levels sufficient to realize an appropriate return on its
investment in product development. Further, there can be no assurance that
products can be manufactured on a commercial scale at a cost that will enable
the Company to price its products within reimbursable rates. Legislation and
regulations affecting the pricing of pharmaceuticals may change before the
Company's proposed products are approved for marketing. Adoption of such
legislation could further limit reimbursement for medical products. If adequate
coverage and reimbursement rates are not provided by the government and
third-party payors for the Company's products, the market acceptance of these
products would be adversely affected, which would have a material adverse effect
on the Company's business, financial condition and results of operations.
GOVERNMENT REGULATION
The testing, manufacturing, labeling, advertising, promotion, export and
marketing, among other things, of the Company's proposed products are subject to
extensive regulation by governmental authorities in the United States and other
countries. In the United States, pharmaceutical products are regulated by the
FDA under the Federal Food, Drug and Cosmetic Act and other laws, including, in
the case of biologics, the Public Health Service Act. At the present time, the
Company believes that Bexxar and other immunotherapeutics that it may develop
will be regulated by the FDA as biologics and that other products to be
developed by the Company, including Super-Leu-Dox and other TAP pro-drugs, are
likely to be regulated as drugs.
17
<PAGE> 18
The steps required before a drug or biologic may be approved for marketing
in the United States generally include (i) preclinical laboratory tests and
animal tests, (ii) the submission to the FDA of an IND for human clinical
testing, which must become effective before human clinical trials may commence,
(iii) adequate and well-controlled human clinical trials to establish the safety
and efficacy of the product, (iv) in the case of a biologic, the submission to
the FDA of a BLA, or in the case of a drug, a New Drug Application ("NDA"), (v)
FDA review of the BLA (or PLA/ELA) or NDA and (vi) satisfactory completion of an
FDA inspection of the manufacturing facilities at which the product is made to
assess compliance with Good Manufacturing Practices ("GMP"). The testing and
approval process requires substantial time, effort and financial resources, and
there can be no assurance that any approval will be granted on a timely basis,
if at all.
Preclinical studies include laboratory evaluation of the product, as well
as animal studies to assess the potential safety and efficacy of the product.
The results of the preclinical studies, together with manufacturing information
and analytical data, are submitted to the FDA as part of the IND, which must
become effective before clinical trials may be commenced. The IND automatically
will become effective thirty days after receipt by the FDA, unless the FDA
before that time raises concerns or questions about the conduct of the trials as
outlined in the IND. In such case, the IND sponsor and the FDA must resolve any
outstanding concerns before clinical trials can proceed. There can be no
assurance that submission of an IND will result in FDA authorization to commence
clinical trials.
Clinical trials involve the administration of the investigational products
to healthy volunteers or patients under the supervision of a qualified principal
investigator. Further, each clinical trial must be reviewed and approved by an
independent Institutional Review Board ("IRB") at each institution at which the
study will be conducted. The IRB will consider, among other things, ethical
factors, the safety of human subjects and the possible liability of the
institution.
Clinical trials typically are conducted in three sequential phases, but the
phases may overlap. In Phase I, the initial introduction of the drug into human
subjects, the drug is usually tested for safety (adverse effects), dosage
tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
Phase II clinical trials usually involve studies in a limited patient population
to (i) evaluate the efficacy of the drug for specific, targeted indications,
(ii) determine dosage tolerance and optimal dosage and (iii) identify possible
adverse effects and safety risks. Phase III clinical trials generally further
evaluate clinical efficacy and test further for safety within an expanded
patient population and at multiple clinical sites. Phase IV clinical trials are
conducted after approval to gain additional experience from the treatment of
patients in the intended therapeutic indication and to document a clinical
benefit in the case of drugs approved under accelerated approval regulations. If
the FDA approves a product while a company has ongoing clinical trials that were
not necessary for approval, a company may be able to use the data from these
clinical trials to meet all or part of any Phase IV clinical trial requirement.
These clinical trials are often referred to as "Phase III/IV post-approval
clinical trials." Failure to conduct promptly Phase IV clinical trials could
result in withdrawal of approval for products approved under accelerated
approval regulations.
In the case of products for severe or life-threatening diseases, the
initial clinical trials are sometimes done in patients rather than in healthy
volunteers. Since these patients are afflicted already with the target disease,
it is possible that such clinical trials may provide evidence of efficacy
traditionally obtained in Phase II clinical trials. These trials are referred to
frequently as Phase I/II trials. There can be no assurance that Phase I, Phase
II or Phase III testing will be completed successfully within any specific time
period, if at all, with respect to any of the Company's product candidates.
Furthermore, the FDA may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk.
The results of the preclinical studies and clinical trials, together with
detailed information on the manufacture and composition of the product, are
submitted to the FDA in the form of a BLA or NDA requesting approval to market
the product. Before approving a BLA or NDA, the FDA will inspect the facilities
at which the product is manufactured and will not approve the product unless the
manufacturing facility complies with GMP. The FDA may delay approval of a BLA or
NDA if applicable regulatory criteria
18
<PAGE> 19
are not satisfied, require additional testing or information, and/or require
post-marketing testing and surveillance to monitor safety or efficacy of a
product. There can be no assurance that FDA approval of any BLA or NDA submitted
by the Company will be granted on a timely basis, if at all. Also, if regulatory
approval of a product is granted, such approval may entail limitations on the
indicated uses for which such product may be marketed.
The Company also will be subject to a variety of foreign regulations
governing clinical trials and sales of its products. Whether or not FDA approval
has been obtained, approval of a product by the comparable regulatory
authorities of foreign countries must be obtained prior to the commencement of
marketing of the product in those countries. The approval process varies from
country to country and the time needed to secure approval may be longer or
shorter than that required for FDA approval.
FOOD AND DRUG ADMINISTRATION MODERNIZATION ACT OF 1997
In September 1998, the Company submitted a request to the FDA for the
designation of Bexxar (for the treatment of patients with relapsed or refractory
low-grade NHL) as a Fast Track product. The Fast Track designation means that
the FDA will take such actions as are appropriate to expedite the development
and review of the license for approval. In December 1998, the Company announced
that it was notified by the FDA that Bexxar met the criteria for Fast Track
designation. The designation was awarded because one of the targeted indications
for the therapy is transformed, low-grade NHL, a life-threatening unmet medical
need.
ORPHAN DRUG DESIGNATION
Under the Orphan Drug Act and the Orphan Drug Amendments of 1998, the FDA
may grant orphan drug designation to drugs intended to treat a "rare disease or
condition," which is generally a disease or condition that affects fewer than
200,000 individuals in the United States. Orphan drug designation must be
requested before submitting a BLA. After the FDA grants orphan drug designation,
the generic identity of the therapeutic agent and its potential orphan use are
disclosed publicly by the FDA. Orphan drug designation does not convey any
advantage in, or shorten the duration of, the regulatory review and approval
process. If a product that has orphan drug designation subsequently receives FDA
approval for the indication for which it has such designation, the product is
entitled to orphan exclusivity, i.e., the FDA may not approve any other
applications to market the same drug for the same indication, except in very
limited circumstances, for seven years. Bexxar received orphan drug designation
from the FDA in May 1994. Although the FDA recently decided to remove NHL from
the list of diseases for which orphan drug designation may be obtained, the
previous designation of Bexxar will not be affected. In any event, there can be
no assurance that competitors will not receive approval of other, different
drugs or biologics for low-grade NHL. Thus, although obtaining FDA approval to
market a product with orphan drug exclusivity can be advantageous, there can be
no assurance that it would provide the Company with a material commercial
benefit.
RADIOACTIVE AND OTHER HAZARDOUS MATERIALS
The manufacturing and administration of Bexxar requires the handling, use
and disposal of (131)I, a radioactive isotope of iodine. These activities must
comply with various state and federal regulations, regarding the handling, use
and disposal of radioactive materials. Violations of these regulations could
significantly delay completion of clinical trials and commercialization of
Bexxar. For its ongoing clinical trials and for commercial-scale production, the
Company relies on Nordion to radiolabel the Anti-B1 Antibody with (131)I at a
single location in Canada. Violations of safety regulations could occur and the
risk of accidental contamination or injury cannot be eliminated completely. In
the event of any such noncompliance or accident, the supply of radiolabeled
Anti-B1 Antibody for use in clinical trials or commercially could be
interrupted, which could have a material adverse effect on the Company's
business, financial condition and results of operations. See "-- Manufacturing."
The administration of Bexxar entails the introduction of radioactive
materials into patients. These patients emit radioactivity at levels that may
pose a safety concern to others around them, especially healthcare workers for
whom the cumulative effect of repeated exposure to radioactivity is of
particular
19
<PAGE> 20
concern. These concerns are addressed in regulations promulgated by the NRC, as
well as by various state and local governments and individual hospitals.
Generally, patients who emit radioactivity above specified levels are required
to be admitted to the hospital, where they can be isolated from others until
radiation falls to approved levels. The NRC recently modified its regulations to
make it easier for hospitals to treat patients with radioactive materials on an
outpatient basis. Under these modified regulations, Bexxar may be administered
on an outpatient basis in most cases. Although state and local governments often
follow the lead of the NRC, many currently do not, and there can be no assurance
that they will do so or that patients receiving Bexxar will not have to remain
in the hospital for one to four days following administration of the therapeutic
dose, adding to the overall cost of the therapy.
The Company also expects to use hazardous chemicals and radioactive
compounds in its ongoing research activities. Although the Company believes that
safety procedures for handling and disposing of such materials will comply with
the standards prescribed by state and federal regulations, the risk of
accidental contamination or injury from these materials cannot be completely
eliminated. The Company could be held liable for any damages that result from
such an accident, as well as for unexpected remedial costs and penalties that
may result from any violation of applicable regulations, which could result in a
material adverse effect on the Company's business, financial condition and
results of operations. In addition, the Company may incur substantial costs to
comply with environmental regulations.
PATENTS AND OTHER INTELLECTUAL PROPERTY
The Company believes that patent and trade secret protection is important
to its business and that its future will depend in part on its ability to
maintain its technology licenses, protect its trade secrets, secure additional
patents and operate without infringing the proprietary rights of others. The
Company currently holds exclusive rights to two issued United States patent and
several patent applications that relate to the Bexxar therapeutic protocol. The
Company also holds exclusive rights to a United States patent application
relating to the manufacture of Bexxar and to several patent applications
relating to the dosimetry methods employed in the administration of Bexxar. The
Company also holds an exclusive license to patent applications filed in the
United States and Europe relating to its TAP pro-drug program.
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings. A substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Research has been
conducted for many years in the monoclonal antibody field by pharmaceutical and
biotechnology companies and other organizations. Competitors may have filed
applications for or have been issued patents and may obtain additional patents
and proprietary rights related to products or processes competitive with or
similar to those of the Company. Patent applications are maintained in secrecy
for a period after filing. Publication of discoveries in the scientific or
patent literature tends to lag behind actual discoveries and the filing of
related patent applications. The Company may not be aware of all of the patents
potentially adverse to the Company's interest that may have been issued to other
companies, research or academic institutions, or others. No assurances can be
given that such patents do not exist, have not been filed, or could not be filed
or issued, which contain claims relating to the Company's technology, products
or processes.
To date, no consistent policy has emerged regarding the breadth of claims
allowed in pharmaceutical and biotechnology patents. If patents have been or are
issued to others containing preclusive or conflicting claims and such claims are
ultimately determined to be valid, the Company may be required to obtain
licenses to one or more of such patents or to develop or obtain alternative
technology. The Company is aware of various patents that have been issued to
others that pertain to a portion of the Company's prospective business; however,
the Company believes that it does not infringe any patents that ultimately would
be determined to be valid. There can be no assurance that patents do not exist
in the United States or in other foreign countries or that patents will not be
issued to third parties that contain preclusive or conflicting claims with
respect to Bexxar or any of the Company's other product candidates or programs.
Commercialization of monoclonal antibody-based products may require licensing
and/or cross-licensing of one or more patents with other organizations in the
field. There can be no assurance that the licenses that might be required for
the Company's processes or products would be available on commercially
acceptable terms, if at all.
20
<PAGE> 21
The Company's breach of an existing license or failure to obtain a license
to technology required to commercialize its product candidates may have a
material adverse effect on the Company's business, financial condition and
results of operations. Litigation, which could result in substantial costs to
the Company, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of third-party proprietary rights. If
competitors of the Company prepare and file patent applications in the United
States that claim technology also claimed by the Company, the Company may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office to determine priority of invention, which could result in
substantial cost to the Company, even if the eventual outcome is favorable to
the Company. An adverse outcome could subject the Company to significant
liabilities to third parties and require the Company to license disputed rights
from third parties or to cease using such technology.
The Company also relies on trade secrets to protect its technology,
especially where patent protection is not believed to be appropriate or
obtainable. The Company protects its proprietary technology and processes, in
part, by confidentiality agreements with its employees, consultants, advisory
board members, collaborators and certain contractors. There can be no assurance
that these agreements will not be breached, that the Company would have adequate
remedies for any breach, or that the Company's trade secrets or those of its
collaborators or contractors will not otherwise become known or be discovered
independently by competitors.
Patents issued and patent applications filed internationally relating to
biologics are numerous and there can be no assurance that current and potential
competitors and other third parties have not filed or in the future will not
file applications for, or have not received or in the future will not receive,
patents or obtain additional proprietary rights relating to products or
processes used or proposed to be used by the Company. Moreover, there is certain
subject matter which is patentable in the United States and not generally
patentable outside of the United States. Statutory differences in patentable
subject matter may limit the protection the Company can obtain on some of its
inventions outside of the United States. For example, methods of treating humans
are not patentable in many countries outside of the United States. These and/or
other issues may prevent the Company from obtaining patent protection outside of
the United States which would have a material adverse effect on the Company's
business, financial condition and results of operations.
Rights to use the name "Coulter Pharmaceutical, Inc." are licensed from
Beckman Coulter. The rights expire on October 31, 2002 or earlier upon the
occurrence of certain events.
COMPETITION
The pharmaceutical and biotechnology industries are intensely competitive.
Any product candidate developed by the Company would compete with existing drugs
and therapies. There are many pharmaceutical companies, biotechnology companies,
public and private universities and research organizations actively engaged in
research and development of products for the treatment of people with cancer.
Many of these organizations have financial, technical, manufacturing and
marketing resources greater than those of the Company. Several of them have
developed or are developing therapies that could be used for treatment of the
same diseases targeted by the Company. One competitor known to the Company has
received approval from the FDA for a non-radiolabeled chimeric antibody for the
treatment of low-grade NHL. If a competing company were to develop or acquire
rights to a more efficient or safer cancer therapy for treatment of the same
diseases targeted by the Company, or one which offers significantly lower costs
of treatment, the Company's business, financial condition and results of
operations could be materially adversely affected.
The Company believes that competition in the development and marketing of
new cancer therapies will be based primarily on product efficacy and safety,
time to market and price. To the extent the Company's product programs are
successful, it also intends to rely to some degree on patents and other
intellectual property and orphan drug designations to protect its products from
competition.
The Company believes that its product development programs will be subject
to significant competition from companies utilizing alternative technologies as
well as to increasing competition from companies that develop and apply
technologies similar to the Company's technologies. Other companies may succeed
in developing products earlier than the Company, obtaining approvals for such
products from the FDA more rapidly than the Company or developing products that
are safer, more effective and/or more cost effective
21
<PAGE> 22
than those under development or proposed to be developed by the Company. There
can be no assurance that research and development by others will not render the
Company's technology or potential products obsolete or non-competitive or result
in treatments superior to any therapy developed by the Company, or that any
therapy developed by the Company will be preferred to any existing or newly
developed technologies.
PRODUCT LIABILITY AND INSURANCE
The manufacture and sale of human therapeutic products involve an inherent
risk of product liability claims and associated adverse publicity. The Company
has only limited product liability insurance for clinical trials and no
commercial product liability insurance. There can be no assurance that the
Company will be able to maintain existing insurance or obtain additional product
liability insurance on acceptable terms or with adequate coverage against
potential liabilities. Such insurance may be expensive, difficult to obtain and
may not be available in the future on acceptable terms, if at all. An inability
to obtain sufficient insurance coverage on reasonable terms or to otherwise
protect against potential product liability claims brought against the Company
in excess of its insurance coverage, if any, or a product recall could have a
material adverse effect upon the Company's business, financial condition and
results of operations.
HUMAN RESOURCES
As of December 31, 1998 the Company had 137 employees, 77 of whom were
engaged in product development activities. Fifty-one employees hold
post-graduate degrees, including five with medical degrees and twenty-one with
Ph.D.s. The Company's employees are not represented by a collective bargaining
agreement. The Company believes its relations with its employees are good.
SCIENTIFIC ADVISORY BOARD
James O. Armitage, M.D., is Chairman of the Department of Internal Medicine
at the University of Nebraska Medical Center. He previously directed the Bone
Marrow Transplant Program at the University of Iowa, where he was an Assistant
Professor of Medicine.
Paul P. Carbone, M.D., MACP, D.Sc. (Hon.), is the Director of the
University of Wisconsin Comprehensive Cancer Center. He also is Professor
Emeritus of Medicine and Associate Dean for Program Development at the
University of Wisconsin Medical School. He previously served as a physician
scientist at the National Institutes of Health. His clinical research has
included the development of active combination chemotherapy for Hodgkin's
disease, NHL and breast cancer.
Lawrence H. Einhorn, M.D., is Distinguished Professor of Medicine at
Indiana University Medical Center. His research of germ cell tumors focused upon
the discovery of treatments for testicular and ovarian cancer. Dr. Einhorn's
work has also been directed toward the optimization of combination chemotherapy
for these cancers.
Sandra J. Horning, M.D., is Professor of Medicine (Oncology and Bone Marrow
Transplantation) at Stanford University School of Medicine. She has been an
active member of the American Society of Clinical Oncology since 1983. Dr.
Horning's research has focused in the areas of Hodgkin's disease and lymphomas.
T. Andrew Lister, is Professor of Medical Oncology at St. Bartholomew's
Hospital in London, England where he is also director of the medical oncology
unit. Professor Lister is also Honorary Consultant Physician at Broomfield
Hospital in Chelmsford, England. He is author of numerous scientific articles on
lymphomas and its clinical treatment.
Robert J. Mayer, M.D., is the President of the American Society of Clinical
Oncology, Chief of the Division of Clinical Oncology at the Dana-Farber Cancer
Institute and Professor of Medicine at Harvard Medical School. He also is an
attending physician at The Brigham and Women's Hospital, The Massachusetts
General Hospital and the Beth Israel/Deaconess Medical Center. Dr. Mayer is
known for his work in the treatment of leukemia and gastrointestinal cancers and
for developing programs to train cancer researchers and clinicians.
Saul Rosenberg, M.D., MACP, is Professor of Medicine and Radiology Emeritus
at Stanford University School of Medicine and is an oncologist known for his
contributions to advances in the treatment of Hodgkin's disease.
22
<PAGE> 23
RISK FACTORS
In this Section, the Company summarizes certain risks that should be
considered by stockholders and prospective investors in the Company. These risks
are discussed in greater detail below, and are discussed in context in other
Sections of this Report.
Uncertainties Related to Product Development. The Company's product
candidates are generally in early stages of development, with only one in
clinical trials. The development of safe and effective therapies for the
treatment of people with cancer is highly uncertain and subject to numerous
risks. Product candidates that may appear to be promising at early stages of
development may not reach the market for a number of reasons. Product candidates
may be found ineffective or cause harmful side effects during clinical trials,
may take longer to progress through clinical trials than had been anticipated,
may fail to receive necessary regulatory approvals, may prove impracticable to
manufacture in commercial quantities at reasonable cost and with acceptable
quality or may fail to achieve market acceptance.
The results of initial preclinical and clinical testing of the products
under development by the Company are not necessarily indicative of results that
will be obtained from subsequent or more extensive preclinical studies and
clinical testing. The Company's clinical data gathered to date with respect to
Bexxar are from a Phase I/II dose escalation trial which was designed to develop
and refine the therapeutic protocol, to determine the maximum tolerated dose of
total body radiation and to assess the safety and efficacy profile of treatment
with a radiolabeled antibody. Further, the data from this Phase I/II dose
escalation trial were compiled from testing conducted at a single site and with
a relatively small number of patients per NHL histology and disease stage. The
Company has since completed a multi-center Phase II dosimetry clinical trial and
a multi-center pivotal Phase III clinical trial. However, substantial additional
development, clinical testing and investment may be required prior to seeking
any regulatory approval for commercialization of this potential product. There
can be no assurance that clinical trials of Bexxar or other product candidates
under development will demonstrate the safety and efficacy of such products to
the extent necessary to obtain regulatory approvals for the indications being
studied, or at all. Companies in the pharmaceutical and biotechnology industries
have suffered significant setbacks in advanced clinical trials, even after
obtaining promising results in earlier trials. The failure to demonstrate
adequately the safety and efficacy of Bexxar or any other therapeutic product
under development could delay or prevent regulatory approval of the product and
would have a material adverse effect on the Company's business, financial
condition and results of operations.
Furthermore, the timing and completion of current and planned clinical
trials of Bexxar, as well as clinical trials of other products, are dependent
upon, among other factors, the rate at which patients are enrolled, which is a
function of many factors, including the size of the patient population, the
proximity of patients to the clinical sites, the number of clinical sites, the
eligibility criteria for the study and the existence of competing clinical
trials. There can be no assurance that delays in patient enrollment in clinical
trials will not occur, and any such delays may result in increased costs,
program delays or both, which could have a material adverse effect on the
Company's business, financial condition and results of operations.
Uncertainty of Market Acceptance of Bexxar. Even if the Company's product
candidates are approved for marketing by the FDA and other regulatory
authorities, there can be no assurance that the Company's products will be
commercially successful. If the Company's most advanced product candidate,
Bexxar, is approved, it would represent a significant departure from currently
approved methods of treatment for NHL and would require the handling of
radioactive materials. Accordingly, Bexxar may experience under-utilization by
oncologists and hematologists who are unfamiliar with the application of Bexxar
in the treatment of NHL. Further, oncologists and hematologists are not
typically licensed to administer radioimmunotherapies such as Bexxar and will
need to engage a nuclear medicine physician or receive specialty training to
administer Bexxar. Recently enacted NRC regulations permit Bexxar to be
administered on an outpatient basis in most cases as is currently contemplated
by the Company. However, market acceptance could be affected adversely because
some hospitals may be required to administer the therapeutic dose of Bexxar on
an inpatient basis under applicable state or local or individual hospital
regulations. As with any new drug, doctors may be inclined to continue to treat
patients with conventional therapies, in this case chemotherapy. Market
23
<PAGE> 24
acceptance also could be affected by the availability of third-party
reimbursement. Failure of Bexxar to achieve significant market acceptance would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "-- Uncertainty Related to Health Care Reform and
Third-Party Reimbursement," "-- Hazardous and Radioactive Materials," and
"Business -- Radioactive and Other Hazardous Materials."
Early Stage of Development. Since its inception in 1995, the Company has
been engaged in the development of drugs and related therapies for the treatment
of people with cancer. The Company's product candidates are generally in early
stages of development, with only one in clinical trials. No revenues have been
generated from product sales or product royalties; and there can be no assurance
that products resulting from the Company's research and development efforts will
be available within a specific timeframe. No assurance can be given that the
Company's product development efforts, including clinical trials, will be
successful, that required regulatory approvals for the indications being studied
can be obtained, that its products can be manufactured at acceptable cost and
with appropriate quality or that any approved products can be successfully
marketed. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Government Regulation; No Assurance of Regulatory Approvals. All new drugs
and biologics, including the Company's products under development, are subject
to extensive and rigorous regulation by the federal government, principally the
FDA under the Food, Drug and Cosmetic Act and other laws including, in the case
of biologics, the Public Health Services Act, in the case of radioactive
products, the NRC; and by state and local governments. Such regulations govern,
among other things, the development, testing, manufacture, labeling, storage,
premarket approval, criteria for release of patents relating to administration
of radioactive materials, advertising, promotion, sale and distribution, and
postmarketing surveillance of such products. If drug products are marketed
abroad, they also are subject to extensive regulation by foreign governments.
The regulatory process, which includes physicochemical studies, preclinical
studies and clinical trials of each potential product, is lengthy, expensive and
uncertain. Prior to commercial sale in the United States, most new drugs and
biologics, including the Company's products under development, must be approved
by the FDA. Securing FDA marketing approvals often requires the submission of
extensive, physicochemical preclinical and clinical data and supporting
information to the FDA. Product approvals, if granted, can be withdrawn for
failure to comply with regulatory requirements or upon the occurrence of
unforeseen problems following initial marketing. Moreover, regulatory approvals
for products such as new drugs and biologics, even if granted, may include
significant limitations on the uses for which such products may be marketed.
There can be no assurance that the Company will be able to obtain necessary
regulatory approvals on a timely basis, if at all, for any of its product
candidates, and delays in receipt or failures to receive such approvals or
failures to comply with existing or future regulatory requirements could have a
material adverse effect on the Company's business, financial condition and
results of operations. Certain material manufacturing changes to new drugs and
biologics also are subject to FDA review and approval. There can be no assurance
that any approvals that are required, once obtained, will not be withdrawn or
that compliance with other regulatory requirements can be maintained. Further,
failure to comply with applicable FDA and other regulatory requirements can
result in sanctions being imposed on the Company or the manufacturers of its
products, including warning letters, fines, product recalls or seizures,
injunctions, refusals to permit products to be imported into or exported out of
the United States, refusals of the FDA to grant premarket approval of drugs and
biologics or to allow the Company to enter into government supply contracts,
withdrawals of previously approved marketing applications and criminal
prosecutions.
Manufacturers of drugs and biologics also are required to comply with the
applicable FDA GMP regulations, which include requirements relating to quality
control and quality assurance as well as the corresponding maintenance of
records and documentation. Manufacturing facilities are subject to inspection by
the FDA, including unannounced inspection, and must be licensed before they can
be used in commercial manufacturing of the Company's products. The Company
relies on Nordion for centralized radiolabeling of the Anti-B1 Antibody at
Nordion's radiolabeling facility in Canada. To the Company's knowledge,
Nordion's radiolabeling facilities previously have not been licensed by the FDA
as suitable for commercial manufactur-
24
<PAGE> 25
ing of a drug or biologic. There can be no assurance that the Company or its
suppliers will be able to comply with the applicable GMP regulations and other
FDA regulatory requirements. Such failure could have a material adverse effect
on the Company's business, financial condition and results of operations.
In December 1998, the Company announced that it had been notified by the
FDA that Bexxar met the criteria for Fast Track designation because one of the
targeted indications is transformed low-grade NHL, a life-threatening unmet
medical need. However, significant uncertainty exists as to the extent to which
Bexxar's Fast Track designation will result in expedited review and approval.
Further, the FDA retains considerable discretion to determine eligibility for a
priority review and approval and is not bound by discussions that an applicant
may have had with FDA staff. Accordingly, the FDA could employ such discretion
to deny eligibility of Bexxar as a candidate for a priority review or to require
additional clinical trials or other information before approving Bexxar. A
determination that Bexxar is not eligible for a priority review or delays and
additional expenses associated with generating a response to any such request
for additional trials could have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Government Regulation."
Dependence on Suppliers; Manufacturing and Scale-up Risk. The Company has
no existing internal capacity or experience with respect to manufacturing
products for large-scale clinical trials or commercial purposes. The Company has
contracted with two third-party manufacturers, Lonza and BI Pharma KG to produce
unlabeled Anti-B1 Antibody and with Cytogen for filling and labeling. There can
be no assurance that any Anti-B1 antibody produced by BI Pharma will be deemed
clinically equivalent to Anti-B1 antibody produced by Lonza, which equivalence
is a prerequisite to clinical and commercial use of any Anti-B1 antibody
produced by BI Pharma. In addition, these manufacturers have limited experience
producing the Anti-B1 Antibody, and there can be no assurance that they will be
able to produce the Company's requirements in commercial quantities or with
acceptable quality.
The Company relies upon Nordion for radiolabeling of the Anti-B1 Antibody
at Nordion's centralized radiolabeling facility. The Company and Nordion have
entered into an agreement for supply of the radiolabeled Anti-B1 Antibody for
both clinical trials and commercial sale. If Bexxar is approved and is
successful in the market, there can be no assurance that Nordion's capacity to
radiolabel antibodies is sufficient to meet all of the Company's commercial
requirements.
The Company is aware of only a limited number of manufacturers capable of
producing the Anti-B1 Antibody in commercial quantities or radiolabeling the
antibody with (131)I on a commercial scale. To establish and qualify a new
facility to centrally radiolabel antibodies could take as long as two years.
Further, radiolabeled antibody cannot be stockpiled against future shortages due
to the eight-day half-life of the 131)I radioisotope. Accordingly, any change in
the Company's existing contractual relationships with, or interruption in supply
from, its producer of unlabeled antibody or its radiolabeler could affect
adversely the Company's ability to complete its ongoing clinical trials and to
market Bexxar, if approved. Any such change or interruption would have a
material adverse effect on the Company's business, financial condition and
results of operations. Although the Company is evaluating additional sources of
supply for production and radiolabeling of the Anti-B1 Antibody, no assurance
can be given that such sources will be secured on commercially reasonable terms,
on a timely basis, or at all.
Prior to August 1997, the Company obtained Anti-B1 Antibody from an
inventory produced by Beckman Coulter, and radiolabeling was performed by
radiopharmacies at the individual clinical trial sites. In order to begin using
Lonza Anti-B1 Antibody, BI Pharma KG Anti-B1 Antibody, and the centrally
radiolabeled Anti-B1 Antibody from Nordion, the Company filed and the FDA
cleared IND amendments to allow the use of these materials in clinical trials.
The Company is collecting data from its clinical trials to be filed with the FDA
to establish that Anti-B1 Antibody from these different sources and that Nordion
radiolabeled and on-site radiolabeled Anti-B1 antibody are clinically
comparable. However, there can be no assurance that it will be able to establish
clinical comparability. A failure to establish clinical comparability could lead
to a requirement that the Company conduct additional clinical trials, which
would increase costs and potentially delay regulatory approval for Bexxar.
25
<PAGE> 26
Third-party manufacturers must comply with GMP regulations prescribed by
the FDA and other standards prescribed by various federal, state and local
regulatory agencies in the United States and any other relevant country. Failure
to comply with these regulations could have a material adverse effect on the
Company's business, financial condition and results of operations.
Absence of Commercialization Resources and Experience; Reliance on
Marketing Partner. The Company intends to market and sell Bexxar in the United
States through a direct sales force and in collaboration with SB, and
internationally (except Japan) through SB. The Company currently does not
possess the resources and experience necessary to commercialize any of its
product candidates. The Company's ability to market Bexxar, if approved, will be
contingent upon recruitment, training and deployment of a sales and marketing
force as well as the performance of SB under the collaboration agreement.
Development of an effective sales force will require significant financial
resources and time. There can be no assurance that the Company will be able to
establish such a sales force in a timely or cost effective manner, if at all, or
that such a sales force will be capable of generating demand for Bexxar or other
product candidates. Failure to establish such a sales force and marketing
capability could have a material adverse effect on the Company's business,
financial condition and results of operations.
Highly Competitive Industry; Risk of Technological Obsolescence. The
pharmaceutical and biotechnology industries are intensely competitive. Any
product candidate developed by the Company would compete with existing drugs and
therapies. There are many pharmaceutical companies, biotechnology companies,
public and private universities and research organizations actively engaged in
research and development of products for the treatment of people with cancer.
Many of these organizations have financial, technical, manufacturing and
marketing resources greater than those of the Company. Several of them may have
developed or are developing therapies that could be used for treatment of the
same diseases targeted by the Company. One competitor known to the Company
recently received a approval from the FDA of its non-radiolabeled chimeric
antibody for the treatment of low-grade NHL. If a competing company were to
develop or acquire rights to a more efficacious or safer cancer therapy for
treatment of the same diseases targeted by the Company, or one which offers
significantly lower costs of treatment, the Company's business, financial
condition and results of operations could be materially adversely affected. The
Company believes that its product development programs will be subject to
significant competition from companies utilizing alternative technologies as
well as to increasing competition from companies that develop and apply
technologies similar to the Company's technologies. Other companies may succeed
in developing products earlier than the Company, obtaining approvals for such
products from the FDA more rapidly than the Company or developing products that
are safer and more effective than those under development or proposed to be
developed by the Company. There can be no assurance that research and
development by others will not render the Company's technology or product
candidates obsolete or non-competitive or result in treatments superior to any
therapy developed by the Company, or that any therapy developed by the Company
will be preferred to any existing or newly developed technologies.
Dependence Upon Proprietary Technology; Uncertainty of Patents and
Proprietary Technology. The pharmaceutical and biotechnology fields are
characterized by a large number of patent filings. A substantial number of
patents have already been issued to other pharmaceutical and biotechnology
companies. Research has been conducted for many years in the monoclonal antibody
field by pharmaceutical and biotechnology companies and other organizations.
Competitors may have filed applications for or have been issued patents and may
obtain additional patents and proprietary rights related to products or
processes competitive with or similar to those of the Company. Patent
applications are maintained in secrecy for a period after filing. Publication of
discoveries in the scientific or patent literature tends to lag behind actual
discoveries and the filing of related patent applications. The Company may not
be aware of all of the patents potentially adverse to the Company's interests
that may have been issued to other companies, research or academic institutions,
or others. No assurance can be given that such patents do not exist, have not
been filed, or could not be filed or issued, which contain claims relating to
the Company's technology, products or processes.
To date, no consistent policy has emerged regarding the breadth of claims
allowed in pharmaceutical and biotechnology patents. If patents have been or are
issued to others containing preclusive or conflicting claims and such claims are
determined ultimately to be valid, the Company may be required to obtain
licenses to one
26
<PAGE> 27
or more of such patents or to develop or obtain alternative technology. The
Company is aware of various patents that have been issued to others that pertain
to a portion of the Company's prospective business; however, the Company
believes that it does not infringe any patents that ultimately would be
determined to be valid. There can be no assurance that patents do not exist in
the United States or in other foreign countries or that patents will not be
issued to third parties that contain preclusive or conflicting claims with
respect to Bexxar or any of the Company's other product candidates or programs.
Commercialization of monoclonal antibody-based products may require licensing
and/or cross-licensing of one or more patents with other organizations in the
field. There can be no assurance that the licenses that might be required for
the Company's processes or products would be available on commercially
acceptable terms, if at all.
The Company's breach of an existing license or failure to obtain a license
to technology required to commercialize its product candidates may have a
material adverse effect on the Company's business, financial condition and
results of operations. Litigation, which could result in substantial costs to
the Company, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of third-party proprietary rights. If
competitors of the Company prepare and file patent applications in the United
States that claim technology also claimed by the Company, the Company may have
to participate in interference proceedings declared by the United States Patent
and Trademark Office to determine priority of invention, which could result in
substantial cost to the Company, even if the eventual outcome is favorable to
the Company. An adverse outcome could subject the Company to significant
liabilities to third parties and require the Company to license disputed rights
from third parties or to cease using such technology.
The Company also relies on trade secrets to protect its technology,
especially where patent protection is not believed to be appropriate or
obtainable. The Company protects its proprietary technology and processes, in
part, by confidentiality agreements with its employees, consultants, advisory
board members, collaborators and certain contractors. There can be no assurance
that these agreements will not be breached, that the Company would have adequate
remedies for any breach, or that the Company's trade secrets or those of its
collaborators or contractors will not otherwise become known or be discovered
independently by competitors.
Patents issued and patent applications filed internationally relating to
biologics are numerous and there can be no assurance that current and potential
competitors and other third parties have not filed or in the future will not
file applications for, or have not received or in the future will not receive,
patents or obtain additional proprietary rights relating to products or
processes used or proposed to be used by the Company. Moreover, there is certain
subject matter which is patentable in the United States and not generally
patentable outside of the United States. Statutory differences in patentable
subject matter may limit the protection the Company can obtain on some of its
inventions outside of the United States. For example, methods of treating humans
are not patentable in many countries outside of the United States. These and/or
other issues may prevent the Company from obtaining patent protection outside of
the United States which would have a material adverse effect on the Company's
business, financial condition and results of operations. See
"Business -- Patents and Other Intellectual Property."
Future Capital Needs; Uncertainty of Additional Funding. The Company's
operations to date have consumed substantial and increasing amounts of cash. The
negative cash flow from operations is expected to continue and to accelerate in
next several years. The development of the Company's technology and potential
products will require a commitment of substantial funds. The Company expects
that its existing capital resources will be adequate to satisfy the requirements
of its current and planned operations through 2000. However, the rate at which
the Company expends its resources is variable, may be accelerated and will
depend on many factors, including the scope and results of preclinical studies
and clinical trials, the cost, timing and outcome of regulatory approvals,
continued progress of the Company's research and development of product
candidates, the timing and cost of establishment or procurement of requisite
production radiolabeling and other manufacturing capacities, the cost involved
in preparing, filing, prosecuting, maintaining, defending and enforcing patent
claims, the expenses of establishing a sales and marketing force, the
acquisition of technology licenses, the status of competitive products and the
availability of other financing.
The Company may need to raise substantial additional capital to fund its
operations and, if needed, intends to seek such additional funding through
public or private equity or debt financings, as well as through
27
<PAGE> 28
collaborative arrangements. There can be no assurance that such additional
funding will be available on acceptable terms, if at all. If additional funds
are raised by issuing equity securities, substantial dilution to stockholders
may result. If adequate funds are not available, the Company may be required to
delay, reduce the scope of, or eliminate one or more of its research and
development programs or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies, product candidates or products that the Company would
otherwise seek to develop or commercialize. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
History of Operating Losses; Anticipated Future Losses. The Company has a
limited history of operations and has experienced significant losses since
inception. As of December 31, 1998, the Company's accumulated deficit was
approximately $46.6 million. The Company expects to incur significant additional
operating losses over the next several years and expects cumulative losses to
increase substantially due to expanded research and development efforts,
preclinical studies and clinical trials and development of manufacturing,
marketing and sales capabilities. The Company expects that losses will fluctuate
from quarter to quarter and that such fluctuations may be substantial. All of
the Company's product candidates are in development in preclinical studies and
clinical trials, and no revenues have been generated from product sales. To
achieve and sustain profitable operations, the Company, alone or with others,
must develop successfully, obtain regulatory approval for, manufacture,
introduce, market and sell its products. The time frame necessary to achieve
market success is long and uncertain. The Company does not expect to generate
product revenues for at least the next year. There can be no assurance that the
Company will ever generate sufficient product revenues to become profitable or
to sustain profitability. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
Dependence on Management and Other Key Personnel. The Company is dependent
upon a limited number of key management and technical personnel. The loss of the
services of one or more of such key employees could have a material adverse
effect on the Company's business, financial condition and results of operations.
In addition, the Company's success will be dependent upon its ability to attract
and retain additional highly qualified sales, management, manufacturing and
research and development personnel. The Company faces intense competition in its
recruiting activities, and there can be no assurance that the Company will be
able to attract and/or retain qualified personnel.
Exposure to Product Liability. The manufacture and sale of human
therapeutic products involve an inherent risk of product liability claims and
associated adverse publicity. The Company has only limited product liability
insurance for clinical trials and no commercial product liability insurance.
There can be no assurance that the Company will be able to maintain existing
insurance or obtain additional product liability insurance on acceptable terms
or with adequate coverage against potential liabilities. Such insurance is
expensive, may be difficult to obtain and may not be available in the future on
acceptable terms, if at all. An inability to obtain sufficient insurance
coverage on reasonable terms or to otherwise protect against potential product
liability claims brought against the Company in excess of its insurance
coverage, if any, or a product recall could have a material adverse effect upon
the Company's business, financial condition and results of operations.
Uncertainty Related to Health Care Reform and Third-Party
Reimbursement. Political, economic and regulatory influences are subjecting the
health care industry in the United States to fundamental change. Initiatives to
reduce the federal deficit and to reform health care delivery are increasing
cost-containment efforts. The Company anticipates that Congress, state
legislatures and the private sector will continue to review and assess
alternative benefits, controls on health care spending through limitations on
the growth of private health insurance premiums and Medicare and Medicaid
spending, the creation of large insurance purchasing groups, price controls on
pharmaceuticals and other fundamental changes to the health care delivery
system. Any such proposed or actual changes could cause the Company to limit or
eliminate spending on development projects and affect the Company's ultimate
profitability. Legislative debate is expected to continue in the future, and
market forces are expected to drive reductions of health care costs. The Company
cannot predict what impact the adoption of any federal or state health care
reform measures or future private sector reforms may have on its business.
28
<PAGE> 29
In both domestic and foreign markets, sales of the Company's proposed
products will depend in part upon the availability of reimbursement from
third-party payors, such as government health administration authorities,
managed care providers, private health insurers and other organizations.
Third-party payors are increasingly challenging the price and cost effectiveness
of medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. Bexxar, as
potentially the first radioimmunotherapy for cancer, faces particular
uncertainties due to the absence of a comparable, approved therapy to serve as a
model for pricing and reimbursement decisions. Further, if Bexxar is not
administered in most cases on an outpatient basis, as is contemplated currently
by the Company, the projected cost of the therapy will be higher than
anticipated. In addition, there can be no assurance that products can be
manufactured on a commercial scale for a cost that will enable the Company to
price its products within reimbursable rates. Consequently, there can be no
assurance that the Company's product candidates will be considered cost
effective or that adequate third-party reimbursement will be available to enable
the Company to maintain price levels sufficient to realize an appropriate return
on its investment in product development. If adequate coverage and reimbursement
rates are not provided by the government and third-party payors for the
Company's products, the market acceptance of these products could be adversely
affected, which could have a material adverse effect on the Company's business,
financial condition and results of operations.
Hazardous and Radioactive Materials. The manufacturing and administration
of Bexxar requires the handling, use and disposal of (131)I, a radioactive
isotope of iodine. These activities must comply with various state and federal
regulations. Violations of these regulations could delay significantly
completion of clinical trials and commercialization of Bexxar. For its ongoing
clinical trials and for commercial-scale production, the Company relies on
Nordion to radiolabel the Anti-B1 Antibody with (131)I at a single location in
Canada. Violations of safety regulations could occur with this manufacturer,
and, therefore, there is a risk of accidental contamination or injury. In the
event of any such noncompliance or accident, the supply of radiolabeled Anti-B1
Antibody for use in clinical trials or commercially could be interrupted, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
The Company also expects to use hazardous chemicals and radioactive
compounds in its ongoing research activities. The Company could be held liable
for any damages that result from such an accident, contamination or injury from
the handling and disposal of these materials, as well as for unexpected remedial
costs and penalties that may result from any violation of applicable
regulations, which could result in a material adverse effect on the Company's
business, financial condition and results of operations. In addition, the
Company may incur substantial costs to comply with environmental regulations.
Potential Volatility of Stock Price. The securities markets have from time
to time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. The market prices of the
common stock of many publicly held biotechnology and pharmaceutical companies
have in the past been, and can in the future be expected to be, especially
volatile. Announcements of technological innovations or new products by the
Company or its competitors, release of reports by securities analysts, sales of
stock by large holders, developments or disputes concerning patents or
proprietary rights, regulatory developments, changes in regulatory or medical
reimbursement policies, economic and other external factors, as well as
period-to-period fluctuations in the Company's financial results, may have a
significant and adverse impact on the market price of the Common Stock. See
"Price Range of Common Stock."
Potential Adverse Impact of Shares Eligible for Future Sale. Sales of
shares of Common Stock (including shares issued upon the exercise of outstanding
options) in the public market could adversely affect the market price of the
Common Stock. Such sales also might make it more difficult for the Company to
sell equity securities or equity-related securities in the future at a time and
price that the Company deems appropriate.
Adverse Impact of Possible Issuances of Preferred Stock; Anti-Takeover
Effect of Certain Charter and Bylaw Provisions. The Board of Directors has
authority to issue up to 3,000,000 shares of Preferred Stock and to fix the
price, rights, preferences, privileges and restrictions, including voting
rights, of those shares
29
<PAGE> 30
without any further vote or action by the stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. The issuance of Preferred Stock could affect adversely the voting power
of holders of Common Stock and the likelihood that such holders will receive
dividend payments and payments upon liquidation. Additionally, the issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company, may discourage bids for the Common Stock at a
premium over the market price of the Common Stock and may affect adversely the
market price of and the voting and other rights of the holders of the Common
Stock. In addition, the Company's Bylaws provide that special meetings of
stockholders may be called only by the Chairman of the Board of Directors, the
Chief Executive Officer or the Board of Directors pursuant to a resolution
approved by a majority of the Board of Directors. In July 1997, the Company
adopted a Share Purchase Rights Plan, commonly referred to as a "poison pill."
In addition, the Company is subject to the anti-takeover provisions of Section
203 of the Delaware General Corporation Law, which prohibits the Company from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in
a prescribed manner. These provisions, along with certain provisions of
California law that may be applicable to the Company, could have the effect of
discouraging certain attempts to acquire the Company which could deprive the
Company's stockholders of the opportunity to sell their shares of Common Stock
at prices higher than prevailing market prices.
30
<PAGE> 31
ITEM 2. PROPERTIES
The Company currently leases approximately 77,000 square feet of office
space in Palo Alto, Alameda and South San Francisco, California, under several
lease agreements. In November 1997, the Company entered into an agreement to
build and lease new facilities in South San Francisco, California. The first two
buildings are each approximately 50,000 square feet and contain both office and
laboratory facilities. The lease includes an option to occupy third building. In
February 1999, the Company began vacating the Palo Alto offices and moving
substantially all personnel from the Palo Alto space to the first of the two
buildings in South San Francisco. The second of these leased buildings is
currently under construction. In connection with its lease agreement, the
Company obtained a letter of credit agreement from a bank which secures the
aggregate future payments under the lease.
ITEM 3. LEGAL PROCEEDINGS
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Not Applicable.
31
<PAGE> 32
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDERS MATTERS
The Company's Common Stock is traded on The Nasdaq Stock Market(R) under
the symbol "CLTR." Trading of the Company's Common Stock commenced on January
28, 1997, following effectiveness of its initial public offering. The following
table presents quarterly information on the price range of the Company's Common
Stock, indicating the high and low sales prices reported by the Nasdaq Stock
Market(R). These prices do not include retail markups, markdowns or commissions.
<TABLE>
<CAPTION>
1998 LOW HIGH
---- ------ ------
<S> <C> <C>
First Quarter.............................................. 17.000 28.438
Second Quarter............................................. 21.625 35.125
Third Quarter.............................................. 13.250 32.125
Fourth Quarter............................................. 18.375 34.125
</TABLE>
<TABLE>
<CAPTION>
1997 LOW HIGH
---- ------ ------
<S> <C> <C>
First Quarter.............................................. 8.750 13.250
Second Quarter............................................. 6.500 12.625
Third Quarter.............................................. 7.875 15.125
Fourth Quarter............................................. 13.000 23.500
</TABLE>
As of March 12, 1999, the Company had approximately 377 holders of record
of its Common Stock.
The Company has never paid any cash dividends on its capital stock and does
not expect to pay any such dividends in the foreseeable future.
In December 1998, the Company issued to SmithKline Beecham Corporation
("SB"), 239,607 shares of its Common Stock for a purchase price of $7.25 million
in connection with the collaboration agreement with SB. The above-listed
securities were issued in reliance on an exemption to the registration
requirements of the Securities Exchange Act of 1933.
32
<PAGE> 33
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data as of December 31, 1997
and 1998 and for each of the three years in the period ended December 31, 1998
and the period from inception (February 16, 1995) to December 31, 1998 are
derived from the consolidated financial statements of Coulter Pharmaceutical,
Inc. that have been audited by Ernst & Young LLP, independent auditors, and
which are included herein. The selected consolidated financial data as of
December 31, 1995 and 1996 and for the period from inception (February 16, 1995)
to December 31, 1995 are derived from the consolidated financial statements of
Coulter Pharmaceutical, Inc. that have been audited by Ernst & Young LLP, and
which are not included herein. The selected consolidated financial data as of
December 31, 1994 and for the year ended December 31, 1994 and for the period
from January 1, 1995 to February 15, 1995 are derived from the financial
statements of the Antibody Therapeutics Business Operations of Coulter
Corporation that have been audited by Ernst & Young LLP, and which are not
included herein.
<TABLE>
<CAPTION>
FULL YEAR 1995
------------------------------
ANTIBODY THERAPEUTICS
BUSINESS OPERATIONS OF COMPANY
COULTER CORPORATION(2) ------------------------------------------------------------------------
------------------------- INCEPTION INCEPTION
YEAR ENDED JAN. 1, 1995 (FEB. 16, 1995) YEAR ENDED YEAR ENDED YEAR ENDED (FEB. 16, 1995)
DEC. 31, TO FEB. 15, TO DEC. 31, DEC. 31, DEC. 31, DEC. 31, TO DEC. 31,
1994 1995 1995 1996 1997 1998 1998
---------- ------------ --------------- ---------- ---------- ---------- ---------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Corporate partner
revenues................. -- -- -- -- -- $34,250 $ 34,250
Operating expenses:
Research and
development............ 2,798 200 2,539 13,681 21,045 28,698 65,963
Selling, general and
administrative......... 288 36 581 2,409 7,610 11,758 22,358
------- ----- ----------- -------- -------- ------- --------
Total operating
expenses......... 3,086 236 3,120 16,090 28,655 40,456 88,321
Interest income and other,
net...................... -- -- 127 752 2,327 4,248 7,454
------- ----- ----------- -------- -------- ------- --------
Net loss................... $(3,086) $(236) $ (2,993) $(15,338) $(26,328) $(1,958) $(46,617)
======= ===== =========== ======== ======== ======= ========
Basic and diluted net loss
per share(1)............. $(12,736.17) $(649.39) $ (2.58) $ (0.13) --
----------- -------- -------- -------
Shares used in computing
basic and diluted net
loss per share(1)........ 0.235 24 10,197 14,562 --
----------- -------- -------- -------
</TABLE>
<TABLE>
<CAPTION>
ANTIBODY THERAPEUTICS
BUSINESS OPERATIONS OF COMPANY
COULTER CORPORATION(2) -----------------------------------------
---------------------- DEC. 31, DEC. 31, DEC. 31, DEC. 31,
DECEMBER 31, 1994 1995 1996 1997 1998
---------------------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short-term
investments......................... $ -- $ 3,438 $ 16,443 $ 75,445 $139,778
Working capital (deficit)............. (50) 2,878 10,737 65,202 131,263
Total assets................ 135 3,628 18,321 78,671 153,430
Non-current portion of equipment
financing obligations and debt
facility............................ -- -- 1,535 2,298 6,659
Deficit accumulated during the
development stage................... -- (2,993) (18,331) (44,659) (46,617)
Total stockholders'
equity.................... -- 2,997 10,546 65,861 135,193
Coulter Corporation(2) net
investment.......................... 85 -- -- -- --
</TABLE>
- ---------------
(1) See Note 1 to the December 31, 1998 financial statements for information
regarding the calculation of net loss per share amounts.
(2) Coulter Corporation was acquired by Beckman Instruments, Inc. and is now
known as Beckman Coulter, Inc.
33
<PAGE> 34
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Coulter Pharmaceutical is engaged in the development of novel drugs and
therapies for the treatment of people with cancer. The Company currently is
developing a family of cancer therapeutics based upon two drug discovery
programs: therapeutic antibodies and targeted oncologics. Within these broad
discovery programs, the Company is currently concentrating on two distinct
platform technologies: therapeutic antibodies based on conjugated antibody
technology and targeted oncologics based on tumor activated peptide ("TAP")
pro-drugs technology.
The Company's most advanced product candidate, Bexxar(TM) (formerly known
as the "B-1 Therapy"), consists of a monoclonal antibody conjugated with a
radioisotope. The Company intends to seek initial approval of Bexxar for the
treatment of low-grade and transformed low-grade non-Hodgkin's lymphoma ("NHL")
in patients who have relapsed after, or are refractory to, chemotherapy. The
Company intends to seek expedited Biologics License Application ("BLA") review
and marketing approval for Bexxar, while simultaneously pursuing clinical trials
to expand the potential use of Bexxar to other indications. Bexxar is based upon
the antibody therapeutics program which originated at Coulter Corporation. In
1995, Coulter Pharmaceutical was incorporated and acquired worldwide rights to
Bexxar and related intellectual property, know-how and other assets from Coulter
Corporation. In 1997, Beckman Instruments, Inc. acquired Coulter Corporation,
and is now known as Beckman Coulter. In December 1998, the Company announced a
joint collaboration agreement with SmithKline Beecham Corporation ("SB")
granting them joint marketing rights in the United States and exclusive
commercial rights internationally, except Japan.
To date, the Company has devoted substantially all of its resources to
research and development programs, as well as selling, general and
administrative activities needed to support product development and potential
product sales. No revenues have been generated from product sales, and product
revenues resulting from the Company's research and development efforts will not
occur until commercial availability of such product. The Company has a limited
history of operations and has experienced significant operating losses to date.
The Company may continue to incur significant additional operating losses over
the next several years and expects cumulative losses to increase substantially
due to expanded research and development efforts, preclinical studies and
clinical trials and development of manufacturing, marketing and sales
capabilities if product sales revenues do not offset these costs. The Company
expects that losses will fluctuate from quarter to quarter and that such
fluctuations may be substantial. There can be no assurance that the Company will
successfully develop, manufacture and commercialize its products or ever achieve
or sustain product revenues or profitability. As of December 31, 1998, the
Company's accumulated deficit was approximately $46.6 million.
RESULTS OF OPERATIONS
COMPARISON OF YEARS ENDED DECEMBER 31, 1998, DECEMBER 31, 1997 AND DECEMBER
31, 1996
Corporate Partner Revenues. Corporate Partner revenues for the year ended
December 31, 1998 were $34.3 million compared with zero for the years ended
December 31, 1997 and 1996. The 1998 revenue is attributable to the license fee
payment received from SB under the joint development and commercialization
agreement for Bexxar. This was a one time, non-refundable license fee and
provides no indication as to the level of revenue that can be expected in future
periods. Revenue in future periods will depend on the achievement of contract
milestones and commercial sales of Bexxar.
Operating Expenses. Research and development expenses were $28.7 million
for the year ended December 31, 1998, compared to $21.0 million for the year
ended December 31, 1997 and $13.7 million for the year ended December 31, 1996.
The $7.7 million increase from 1997 to 1998 was due primarily to increases in
staffing and expenditures associated with the development of Bexxar, including
costs of clinical trials and manufacturing expenses. These manufacturing
expenses included certain expenses associated with scaled-up production of
monoclonal antibodies and the establishment of a centralized radiolabeling
capability. The $7.3 million increase from 1996 to 1997 was due primarily to
increases in staffing and in expenditures
34
<PAGE> 35
associated with the development of Bexxar, including costs of clinical trials
and manufacturing expenses. The Company expects its research and development
expenses to grow in 1999, reflecting anticipated increased costs related to
additions to staffing, preclinical studies, clinical trials and manufacturing.
Selling, general and administrative expenses were $11.8 million for the
year ended December 31, 1998, compared to $7.6 million for the year ended
December 31, 1997 and $2.4 million for the year ended December 31, 1996. The
$4.2 million increase from 1997 to 1998 was incurred to support the Company's
increased pre-commercialization expenses, as well as facilities and staffing
expansion, increased corporate development activities and related legal and
patent activities. The $5.2 million increase from 1996 to 1997 was incurred to
support the Company's facilities expansion, increased research and development
efforts, and related legal and patent activities. The Company expects its
selling, general and administrative expenses to continue to increase in 1999 to
support its increasing commercialization efforts in anticipation of potential
product sales, as well as to support its increased research and development,
patent and corporate development activities and facilities expansion.
Interest Income and other, net. Interest income was $4.2 million for the
year ended December 31, 1998, compared to $2.3 million for the year ended
December 31, 1997 and $0.8 million for year ended December 31, 1996. The $1.9
million increase from 1997 to 1998 was due to higher average cash, cash
equivalent and short-term investment balances as a result of the Company's
follow-on offering of common stock in July 1998 and the proceeds from SB related
to the joint development and commercialization agreement for Bexxar. The $1.5
million increase from 1996 to 1997 was due to higher average cash, cash
equivalent and short-term investment balances as a result of the Company's
initial public offering in January 1997 and follow-on offering of common stock
in October 1997. Interest expense is not material for any period presented.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception through December 31, 1998, the Company has financed its
operations primarily through private placements and public offerings of equity
securities totaling $179.8 million. In July 1998, the Company completed a
follow-on public offering of 2,400,000 shares of common stock at a price to the
public of $25.00 per share, resulting in net proceeds to the Company of
approximately $56.3 million. Also, in August 1998, the underwriters of that
offering purchased 245,000 additional shares of common stock upon a partial
exercise of their over-allotment option, raising additional net proceeds of $5.8
million. The total net proceeds from this offering were $62.1 million. In
October 1998, the Company entered into a $10.0 million revolving credit line
agreement with a bank, $5.0 million of which was available at December 31, 1998.
The Company also received $41.5 million (including $7.3 million for the purchase
239,607 shares of the Company's common stock) from SB upon the effectiveness of
the joint development and commercialization agreement for Bexxar in December
1998. The SB agreement also provides for a $15 million credit line, all of which
was available at December 31, 1998. Cash, cash equivalents and short-term
investments totaled $139.8 million at December 31, 1998.
The negative cash flow from operations in the years ended December 31,
1996, 1997 and 1998 results primarily from the Company's net operating losses
and is expected to continue and to accelerate in next several years. The Company
expects to incur substantial and increasing research and development expenses,
including expenses related to additions to personnel, preclinical studies,
clinical trials, manufacturing and commercialization efforts. The Company may
need to raise substantial additional capital to fund its operations. The Company
may seek such additional funding through public or private equity or debt
financings from time to time, as market conditions permit. There can be no
assurance that additional financing will be available on acceptable terms, if at
all. If adequate funds are not available, the Company may be required to delay,
reduce the scope of, or eliminate one or more of its research and development
programs or obtain funds through arrangements with collaborative partners or
others that may require the Company to relinquish rights to certain of its
technologies, product candidates or products that the Company would otherwise
seek to develop or commercialize.
Net cash used in operations was $3.2 million for the year ended December
31, 1998, compared to $21.1 million used in the year ended December 31, 1997.
This decrease is primarily the result of the decreased
35
<PAGE> 36
net loss for the period ended December 31, 1998. Net cash used in investing
activities decreased to $2.9 million for the year ended December 31, 1998 from
$49.0 million used in the year ended December 31, 1997, primarily resulting from
higher maturities and sales of short-term investments. The Company's capital
expenditures increased to $7.9 million for the year ended December 31, 1998 from
$1.6 million for the year ended December 31, 1997, primarily representing
investment in the Company's new corporate facilities, equipment for the central
radiolabeling facility and equipment and furniture related to increased
staffing. Net cash provided by financing activities decreased to $75.4 million
for the year ended December 31, 1998 from $81.7 million for the year ended
December 31, 1997, resulting primarily from lower proceeds from public offerings
of the Company's common stock, partially offset by a $7.5 million purchase of
common stock by SB in accordance with the joint development and
commercialization agreement. Net cash used in operations was $21.1 million for
the year ended December 31, 1997, compared to $10.4 million for the year ended
December 31, 1996. This increase is primarily the result of the increased net
loss for the period ended December 31, 1997. Net cash used in investing
activities increased to $49.0 million for the year ended December 31, 1997 from
$8.5 million for the year ended December 31, 1996, primarily resulting from the
purchase of $61.5 million in short-term investments using a portion of the
proceeds from the Company's sales of common stock in January and October 1997.
The Company's capital expenditures increased to $1.6 million for the year ended
December 31, 1997 from $0.9 million for the year ended December 31, 1996,
primarily representing investment in equipment for the central radiolabeling
facility and equipment and furniture related to increased staffing. Net cash
provided by financing activities increased to $81.7 million for the year ended
December 31, 1997 from $24.3 million for the year ended December 31, 1996,
resulting primarily from the public offerings of the Company's common stock in
January and October 1997.
The Company expects that its existing capital resources, including the net
proceeds of its public offerings and interest thereon, will be adequate to
satisfy the requirements of its current and planned operations through 2000. At
December 31, 1998, the Company had entered into a long-term lease obligation for
office and laboratory space that will require material commitments for capital
expenditures. The Company's future capital requirements will depend on a number
of factors, including: the scope and results of preclinical studies and clinical
trials; continued progress of the Company's research and development of
potential products; the cost, timing and outcome of regulatory approvals; the
expenses of establishing a sales and marketing force; the timing and cost of
establishment or procurement of requisite production, radiolabeling and other
capacities; the cost involved in preparing, filing, prosecuting, maintaining,
defending and enforcing patent claims; the need to acquire licenses to new
technology; the status of competitive products; the availability of other
financing and the ability to achieve profitability.
YEAR 2000 READINESS
The Company uses and relies on a wide variety of information technologies,
computer systems and scientific equipment containing computer related
components. Some of the Company's older computer software programs and equipment
use two digit fields rather than four digit fields to define the applicable year
(i.e., "98" in the computer code refers to the year "1998"). As a result,
time-sensitive functions of those software programs and equipment may
misinterpret dates after January 1, 2000, to refer to the twentieth century
rather than the twenty-first century (i.e., "02" could be interpreted as "1902"
rather than "2002"). This could cause system or equipment shutdowns, failures or
miscalculations resulting in inaccuracies in computer output or disruptions of
operations, including, among other things, inaccurate processing of financial
information and/or temporary inability to process transactions or engage in
other normal business activities.
The Company has developed a strategy to address the potential exposures
related to the impact on its computer systems for the Year 2000 and beyond. An
inventory of key financial, informational and operational systems is being
completed. Detailed plans for implementation and testing of any necessary
modifications to these key computer systems and equipment to ensure they are
Year 2000 compliant are being developed by a cross functional team to address
computer system and equipment problems as required by December 31, 1999. The
Company believes that with these plans and completed modifications, the Year
2000 issue will not pose significant operational problems for its computer
systems and equipment. However, if such modifications and conversions are not
made, or are not completed in a timely fashion, the Year 2000 issue could have a
material
36
<PAGE> 37
impact on the operations of the Company, the precise degree of which cannot be
known at this time. The Company currently has no contingency plans to deal with
major Year 2000 failures, though such plans, if necessary, will be developed
over the coming months. The Company does not expect the resources required to be
devoted to Year 2000 compliance to cause significant delay in other projects.
The Company is currently considering the need for external verification of its
Year 2000 readiness and that of its partners.
In addition to risks associated with the Company's own computer systems and
equipment, the Company has relationships with, and is to varying degrees
dependent upon, a large number of third parties that provide information, goods
and services to the Company. These include financial institutions, suppliers,
vendors, research partners and governmental entities. If a significant number of
these third parties experience failures in their computer systems or equipment
due to Year 2000 non-compliance, it could affect the Company's ability to
process transactions, develop, manufacture and distribute products, or engage in
similar normal business activities. While some of these risks are outside the
control of the Company, the Company has instituted programs, including internal
records review and use of external questionnaires, to identify key third
parties, assess their level of Year 2000 compliance, update contracts and
address any non-compliance issues.
The total cost of the Year 2000 systems assessments and conversions is
funded through operating cash flows, and the Company is expensing these costs.
The financial impact of making the required systems changes and ensuring that
key third-parties are Year 2000 compliant is not known precisely at this time,
but it is currently expected to be less than $1.0 million. The amount of the
cost incurred to date is less than $50,000. The actual financial impact could,
however, exceed this estimate. These costs are not expected to be material to
the Company's financial position, results of operations or cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In the normal course of business, the financial position of the Company is
routinely subjected to a variety of risks, including market risk associated with
interest rate movements and currency rate movements on non-United States dollar
denominated assets and liabilities. The Company regularly assesses these risks
and has established policies and business practices to protect against the
adverse effects of these and other potential exposures. As a result, the Company
does not anticipate material losses in these areas.
Interest Rates -- The Company's interest income is sensitive to changes in
the general level of interest rates, primarily United States interest rates. In
this regard, changes in United States interest rates affect the interest earned
on the Company's cash equivalents and short-term investments. Based on the
Company's overall interest rate exposure at December 31, 1998, a near-term
change in interest, based on historical currency rate movements, would not
materially affect the fair value of interest rate sensitive instruments.
Foreign Currency Exchange Rates -- The Company has certain liabilities
which are denominated in several European currencies. As a result, the Company's
financial results could be significantly affected by factors such as changes in
foreign currency exchange rates or economic conditions in the foreign markets in
which the Company's suppliers are located. To mitigate this risk, the Company
may enter into foreign currency forward contracts as is deemed necessary by
management. Based on the Company's overall currency rate exposure at December
31, 1998, a near-term change in currency rates, based on historical currency
rate movements, would not materially affect the fair value of foreign currency
sensitive instruments.
37
<PAGE> 38
The Company invests cash which is not currently being used for operational
purposes in accordance with its investment policy. This policy allows for the
purchase of low risk securities issued by the government agencies and very
highly rated banks and corporations subject to certain concentration limits. The
maturities of these securities are maintained at less than one year. The
following table presents the amounts and related weighted average interest rates
by year of maturity for the Company's investment portfolio and long term debt
obligations at December 31, 1998:
<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 THEREAFTER TOTAL
------- ---- ---- ---- ----- ---------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Cash Equivalent Investments:
Fixed Rate................... $84,162 -- -- -- -- -- $84,162
Average Interest Rate........ 5.3% -- -- -- -- -- --
Short Term Investments:
Fixed Rate................... 49,970 -- -- -- -- -- 49,970
Average Interest Rate........ 5.5% -- -- -- -- -- --
Long-term debt, including
current portion:
Variable Rate................ 119 714 714 714 2,739 -- 5,000
Average Interest Rate........ 8.75% 8.75% 8.75% 8.75% 8.75% -- --
</TABLE>
38
<PAGE> 39
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Coulter Pharmaceutical, Inc.
We have audited the accompanying consolidated balance sheets of Coulter
Pharmaceutical, Inc. (a development stage company) (the "Company") as of
December 31, 1997 and 1998, and the related consolidated statements of
operations and cash flows for each of the three years in the period ended
December 31, 1998 and for the period from inception (February 16, 1995) to
December 31, 1998 and the related statement of stockholders' equity for the
period from inception (February 16, 1995) to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Coulter
Pharmaceutical, Inc. at December 31, 1997 and 1998, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1998 and for the period from inception (February 16, 1995) to
December 31, 1998, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Palo Alto, California
January 27, 1999
39
<PAGE> 40
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1998
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 20,451 $ 89,808
Short-term investments.................................... 54,994 49,970
Prepaid expenses and other current assets................. 269 3,063
-------- --------
Total current assets.............................. 75,714 142,841
Property and equipment, net................................. 2,263 9,449
Employee loans receivable................................... 568 907
Other assets................................................ 126 233
-------- --------
$ 78,671 $153,430
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 1,838 $ 4,068
Accrued liabilities....................................... 7,959 6,353
Current portion of equipment financing obligations and
debt facility.......................................... 715 1,157
-------- --------
Total current liabilities......................... 10,512 11,578
Non current portion of equipment financing obligations and
debt facility............................................. 2,298 6,659
Commitments
Stockholders' equity:
Preferred stock, issuable in series, $.001 par value:
20,000,000 shares authorized; none outstanding at
December 31, 1997 and 1998............................ -- --
Common stock, $.001 par value:
30,000,000 shares authorized; 13,570,224 and 16,704,103
shares issued and outstanding at December 31, 1997 and
1998, respectively.................................... 14 17
Additional paid-in capital.................................. 111,598 182,390
Accumulated other comprehensive loss........................ (7) (32)
Deferred compensation....................................... (1,085) (565)
Deficit accumulated during the development stage............ (44,659) (46,617)
-------- --------
Total stockholders' equity........................ 65,861 135,193
-------- --------
$ 78,671 $153,430
======== ========
</TABLE>
See accompanying notes.
40
<PAGE> 41
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
YEAR ENDED DECEMBER 31, INCEPTION
------------------------------- (FEB. 16, 1995)
1996 1997 1998 TO DECEMBER 31, 1998
-------- -------- ------- --------------------
<S> <C> <C> <C> <C>
Corporate partner revenues............... $ -- $ -- $34,250 $ 34,250
Operating expenses:
Research and development............... 13,681 21,045 28,698 65,963
Selling, general and administrative.... 2,409 7,610 11,758 22,358
-------- -------- ------- --------
Total operating expenses................. 16,090 28,655 40,456 88,321
Interest income and other, net........... 752 2,327 4,248 7,454
-------- -------- ------- --------
Net loss................................. $(15,338) $(26,328) $(1,958) $(46,617)
======== ======== ======= ========
Basic and diluted net loss per share..... $(649.39) $ (2.58) $ (0.13)
-------- -------- -------
Shares used in computing basic and
diluted net loss per share............. 24 10,197 14,562
======== ======== =======
</TABLE>
See accompanying notes.
41
<PAGE> 42
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED ACCUMULATED
STOCK COMMON STOCK ADDITIONAL OTHER
---------------------- ------------------- PAID-IN COMPREHENSIVE DEFERRED
SHARES AMOUNT SHARES AMOUNT CAPITAL LOSS COMPENSATION
----------- -------- ---------- ------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of Series A
convertible preferred stock
to founders at $1.00 per
share for cash and
technology in February
1995....................... 7,500,000 $ 2,500 -- $-- $ -- $ -- $ --
Issuance of Series B
convertible preferred stock
to a founder at $1.50 per
share for cash in August
and October 1995, less
issuance costs of $11...... 2,333,333 3,489 -- -- -- -- --
Exercise of common stock
options by a consultant at
$0.30 per share for cash in
November 1995.............. -- -- 2,059 -- 1 -- --
Net loss..................... -- -- -- -- -- -- --
----------- -------- ---------- --- -------- ---- -------
Balances at December 31,
1995....................... 9,833,333 $ 5,989 2,059 -- $ 1 -- --
Issuance of Series C
convertible preferred stock
and warrants for 498,705
shares of common stock to
investors at $2.25 per
share for cash in April
1996, less issuance costs
of $55..................... 9,964,607 22,366 -- -- -- -- --
Issuance of common stock to a
prospective officer at
$0.45 per share for cash in
March 1996................. -- -- 400,000 1 179 -- --
Issuance of common stock
pursuant to stock option
exercises.................. -- -- 35,553 -- 14 -- --
Deferred compensation related
to grants of certain stock
options.................... -- -- -- -- 2,294 -- (2,294)
Amortization of deferred
compensation............... -- -- -- -- -- -- 330
Net loss..................... -- -- -- -- -- -- --
Unrealized loss on securities
available-for-sale, net.... -- -- -- -- -- (3) --
Comprehensive Loss......... -- -- -- -- -- -- --
----------- -------- ---------- --- -------- ---- -------
Balances at December 31,
1996....................... 19,797,940 $ 28,355 437,612 $ 1 $ 2,488 $ (3) $(1,964)
<CAPTION>
DEFICIT
ACCUMULATED
DURING THE TOTAL
DEVELOPMENT STOCKHOLDERS'
STAGE EQUITY
----------- -------------
<S> <C> <C>
Issuance of Series A
convertible preferred stock
to founders at $1.00 per
share for cash and
technology in February
1995....................... $ -- $ 2,500
Issuance of Series B
convertible preferred stock
to a founder at $1.50 per
share for cash in August
and October 1995, less
issuance costs of $11...... -- 3,489
Exercise of common stock
options by a consultant at
$0.30 per share for cash in
November 1995.............. -- 1
Net loss..................... (2,993) (2,993)
-------- --------
Balances at December 31,
1995....................... $ (2,993) $ 2,997
Issuance of Series C
convertible preferred stock
and warrants for 498,705
shares of common stock to
investors at $2.25 per
share for cash in April
1996, less issuance costs
of $55..................... -- 22,366
Issuance of common stock to a
prospective officer at
$0.45 per share for cash in
March 1996................. -- 180
Issuance of common stock
pursuant to stock option
exercises.................. -- 14
Deferred compensation related
to grants of certain stock
options.................... --
Amortization of deferred
compensation............... -- 330
Net loss..................... (15,338) (15,338)
Unrealized loss on securities
available-for-sale, net.... -- (3)
--------
Comprehensive Loss......... -- (15,341)
-------- --------
Balances at December 31,
1996....................... $(18,331) $ 10,546
</TABLE>
See accompanying notes.
42
<PAGE> 43
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (CONTINUED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED ACCUMULATED
STOCK COMMON STOCK ADDITIONAL OTHER
---------------------- ------------------- PAID-IN COMPREHENSIVE DEFERRED
SHARES AMOUNT SHARES AMOUNT CAPITAL LOSS COMPENSATION
----------- -------- ---------- ------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Conversion of convertible
preferred stock into common
stock...................... (19,797,940) $(28,355) 6,599,287 $ 6 $ 28,349 $ -- $ --
Issuance of 2,875,000 shares
of common stock at $12.00
per share less issuance
costs of $3,226............ -- -- 2,875,000 3 31,274 -- --
Issuance of common stock
pursuant to stock options
exercises.................. -- -- 77,358 -- 45 -- --
Issuance of common stock
pursuant to warrant
exercises.................. -- -- 385,315 1 3,127 -- --
Deferred compensation related
to grant of certain stock
options.................... -- -- -- -- 206 -- (206)
Amortization of deferred
compensation............... -- -- -- -- -- -- 1,085
Issuance of common stock
pursuant to the employee
stock purchase plan........ -- -- 33,152 -- 280 -- --
Issuance of 3,162,500 shares
of common stock at $15.50
per share less issuance
costs of $3,190............ -- -- 3,162,500 3 45,829 -- --
Net loss..................... -- -- -- -- -- -- --
Unrealized loss on securities
available-for-sale, net.... -- -- -- -- -- (4) --
Comprehensive Loss......... -- -- -- -- -- -- --
----------- -------- ---------- --- -------- ---- -------
Balance at December 31,
1997....................... -- -- 13,570,224 14 111,598 (7) (1,085)
Issuance of 239,607 shares of
common stock pursuant to
contract with corporate
partner.................... -- -- 239,607 -- 7,250 -- --
Issuance of common stock
pursuant to stock options
exercises.................. -- -- 164,785 -- 538 -- --
Issuance of common stock
pursuant to warrant
exercise................... -- -- 16,787 -- -- -- --
Deferred compensation related
to grant of certain stock
options.................... -- -- -- -- 156 -- (156)
Amortization of deferred
compensation............... -- -- -- -- -- -- 676
Issuance of common stock
pursuant to the employee
stock purchase plan........ -- -- 67,700 -- 712 -- --
Issuance of 2,645,000 shares
of common stock at $25.00
per share less issuance
costs of $3,986............ -- -- 2,645,000 3 62,136 -- --
Net loss..................... -- -- -- -- -- -- --
Unrealized loss on securities
available-for-sale, net.... -- -- -- -- -- (25) --
Comprehensive Loss......... -- -- -- -- -- -- --
----------- -------- ---------- --- -------- ---- -------
Balance at December 31,
1998....................... -- $ -- 16,704,103 $17 $182,390 $(32) $ (565)
=========== ======== ========== === ======== ==== =======
<CAPTION>
DEFICIT
ACCUMULATED
DURING THE TOTAL
DEVELOPMENT STOCKHOLDERS'
STAGE EQUITY
----------- -------------
<S> <C> <C>
Conversion of convertible
preferred stock into common
stock...................... $ -- $ --
Issuance of 2,875,000 shares
of common stock at $12.00
per share less issuance
costs of $3,226............ -- 31,277
Issuance of common stock
pursuant to stock options
exercises.................. -- 45
Issuance of common stock
pursuant to warrant
exercises.................. -- 3,128
Deferred compensation related
to grant of certain stock
options.................... -- --
Amortization of deferred
compensation............... -- 1,085
Issuance of common stock
pursuant to the employee
stock purchase plan........ -- 280
Issuance of 3,162,500 shares
of common stock at $15.50
per share less issuance
costs of $3,190............ -- 45,832
Net loss..................... (26,328) (26,328)
Unrealized loss on securities
available-for-sale, net.... -- (4)
--------
Comprehensive Loss......... -- (26,332)
-------- --------
Balance at December 31,
1997....................... (44,659) 65,861
Issuance of 239,607 shares of
common stock pursuant to
contract with corporate
partner.................... -- 7,250
Issuance of common stock
pursuant to stock options
exercises.................. -- 538
Issuance of common stock
pursuant to warrant
exercise................... -- --
Deferred compensation related
to grant of certain stock
options.................... -- --
Amortization of deferred
compensation............... -- 676
Issuance of common stock
pursuant to the employee
stock purchase plan........ -- 712
Issuance of 2,645,000 shares
of common stock at $25.00
per share less issuance
costs of $3,986............ -- 62,139
Net loss..................... (1,958) (1,958)
Unrealized loss on securities
available-for-sale, net.... -- (25)
--------
Comprehensive Loss......... -- (1,983)
-------- --------
Balance at December 31,
1998....................... $(46,617) $135,193
======== ========
</TABLE>
See accompanying notes.
43
<PAGE> 44
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM INCEPTION
(FEBRUARY 16,
YEAR ENDED DECEMBER 31, 1995) TO
----------------------------- DECEMBER 31,
1996 1997 1998 1998
-------- -------- ------- --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................................ $(15,338) $(26,328) $(1,958) $(46,617)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization..................... 49 250 712 1,023
Amortization of deferred compensation............. 330 1,085 676 2,091
Changes in operating assets and liabilities:
Prepaid expenses and other current assets......... (459) 230 (2,794) (3,063)
Employee loans receivable......................... (389) (148) (339) (907)
Other assets...................................... (9) (91) (107) (233)
Accounts payable.................................. 1,235 237 2,230 4,068
Accrued liabilities............................... 4,152 3,629 (1,604) 6,442
-------- -------- ------- --------
Net cash used in operating activities..... (10,429) (21,136) (3,184) (37,196)
-------- -------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments................. (10,879) (61,525) (82,336) (154,740)
Maturities of short-term investments................ 986 14,144 82,261 97,391
Sale of short-term investments...................... 2,270 -- 5,073 7,343
Purchases of property and equipment................. (876) (1,589) (7,899) (10,469)
-------- -------- ------- --------
Net cash used in investing activities..... (8,499) (48,970) (2,901) (60,475)
-------- -------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of equipment financing obligations and debt
facility.......................................... (44) (531) (817) (1,392)
Borrowings under equipment financing obligations and
debt facility..................................... 1,800 1,700 5,620 9,120
Proceeds from issuances of convertible preferred
stock, net........................................ 22,366 -- -- 28,355
Proceeds from issuance of common stock, net......... 194 80,562 70,639 151,396
-------- -------- ------- --------
Net cash provided by financing activities........... 24,316 81,731 75,442 187,479
-------- -------- ------- --------
Net increase in cash and cash equivalents........... 5,388 11,625 69,357 89,808
Cash and cash equivalents at beginning of period.... 3,438 8,826 20,451 --
-------- -------- ------- --------
Cash and cash equivalents at end of
period.................................. $ 8,826 $ 20,451 $89,808 $ 89,808
======== ======== ======= ========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Interest paid....................................... $ -- $ 283 $ 385 $ 668
Schedule of non-cash investing and financing
activities:
Net exercises of warrant to purchase common stock... $ -- $ 453 $ 512 $ 965
Acquisition of equipment pursuant to supplemental
lease obligation.................................. $ 78 $ -- $ -- $ 78
Deferred compensation related to grant of certain
stock options..................................... $ 2,294 $ 206 $ 156 $ 2,656
</TABLE>
See accompanying notes.
44
<PAGE> 45
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Principles of Consolidation
Coulter Pharmaceutical, Inc. (the "Company" or "Coulter") was incorporated
in the State of Delaware on February 16, 1995 to engage in the research and
development of products for the treatment of cancer. The Company's principal
activities to date have involved conducting research and development, recruiting
management and technical personnel, obtaining financing and securing operating
facilities. Therefore, the Company is classified as a development stage company.
In the course of its development activities, the Company has sustained
continuing operating losses and expects such losses to continue over the next
several years. The Company plans to continue to finance its operations with a
combination of stock sales, collaborative agreements with corporate partners,
revenues from product sales and technology licenses.
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary, Coulter Pharma Belgium, SA which was formed
under the laws of Belgium in June 1996. Intercompany balances and transactions
have been eliminated.
In connection with its formation, the Company issued 5,000,000 shares of
its Series A preferred stock (since converted to 1,666,666 shares of common
stock) to Coulter Corporation in exchange for rights to certain intellectual
property, contractual rights and other assets pertaining to Bexxar(TM). In 1997
Beckman Instruments acquired Coulter Corporation (now known as "Beckman
Coulter"). Prior to the acquisition, all shares of the Company's stock were
distributed to the members of the Coulter family. Beckman Coulter retains the
rights to the assignment agreement and under the terms of the agreement,
royalties are payable to Beckman Coulter upon commercial sale of product, if
any, derived from these licenses. Beckman Coulter also has the right, in lieu of
receiving cash, to purchase shares of the Company's equity securities at the
then current fair market value of such securities with respect to the first $4.5
million payable to Beckman Coulter under this assignment agreement. This
transaction was accounted for as an acquisition of assets from an affiliate with
the amounts brought over at their historical basis of $0.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Net Loss Per Share
Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standard No. 128, "Earnings Per Share," ("SFAS 128") and Securities
and Exchange Commission Staff Accounting Bulletin No. 98 ("SAB 98"). SFAS 128
requires the presentation of basic earnings (loss) per share and diluted
earnings (loss) per share, if dilutive, for all periods presented. Basic
earnings per share is computed by dividing income or loss applicable to common
stockholders by the weighted-average number of common shares outstanding for the
period net of certain common shares outstanding which are subject to continued
vesting and the Company's right to repurchase. Basic earnings per share excludes
any dilutive effects of options, warrants and convertible securities. Diluted
net loss per share has not been presented separately as, given the Company's net
loss position, the result would be antidilutive. SAB 98 eliminates the inclusion
in the calculation of net loss per share of common and common equivalent shares
(stock options, warrants, convertible notes and preferred stock) issued during
the 12 month period prior to an initial public offering at prices below the
initial public offering price as if they were outstanding for all periods
presented. All loss per
45
<PAGE> 46
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
share amounts for all periods presented have been presented and, where
appropriate, restated to conform to SFAS 128 and SAB 98.
The following have been excluded from the calculation of loss per share
because the effect of inclusion would be antidilutive: approximately 150,000
common shares which are outstanding but are subject to the Company's right of
repurchase which expires June 30, 2000; and options to purchase approximately
2,506,500 shares of common stock at a weighted average price of $15.46 per
share. The repurchasable shares and options will be included in the calculation
at such time as the effect is no longer antidilutive, as calculated using the
treasury stock method.
A reconciliation of shares used in the calculation of basic and diluted net
loss per share follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------
1996 1997 1998
------------ ------------ -----------
<S> <C> <C> <C>
Net loss.......................................... $(15,338,000) $(26,328,000) $(1,958,000)
============ ============ ===========
Basic and diluted
Weighted-average shares of common stock
outstanding used in computing basic and diluted
net loss per share.............................. 23,619 10,197,225 14,561,950
============ ============ ===========
Basic and diluted net loss per share.............. $ (649.39) $ (2.58) $ (0.13)
============ ============ ===========
</TABLE>
Current Vulnerability to Certain Concentrations
The Company has contracted with two third-party manufacturers, Boehringer
Ingleheim Pharma KG ("BI Pharma KG") and LONZA Biologics plc ("Lonza"), to
produce a monoclonal antibody (the "Anti-B1 Antibody"). The Company has also
contracted with a third-party manufacturer, MDS Nordion, Inc. ("Nordion") for
the radiolabeling of the Anti-B1 Antibody in a centralized facility. However,
should the Company not be able to obtain sufficient quantities of the Anti-B1
Antibody from BI Pharma KG or Lonza or radiolabeled Anti-B1 Antibody from
Nordion, or additional suppliers, certain research and development activities
may be delayed.
Cash, Cash Equivalents and Short-Term Investments
The Company considers all highly liquid investments with maturities of
three months or less from the date of purchase to be cash equivalents.
Short-term investments consist of investments with original maturities greater
than three months, but less than two years.
The Company accounts for its cash equivalents and short-term investments
under Statement of Financial Accounting Standards No. 115, "Accounting for
Certain Investments in Debt and Equity Securities" ("SFAS 115"). Under the
provisions of SFAS 115, the Company has classified its cash equivalents and
short-term investments as "available-for-sale." Such investments are recorded at
fair value and unrealized gains and losses, which are considered to be
temporary, are recorded as a separate component of stockholders' equity until
realized. Realized gains and losses and declines in value judged to be other
than temporary on available-for-sale securities are included in interest income.
The cost of securities sold is based on the specific identification method. The
Company classifies all investments in its available-for-sale portfolio as
current assets.
Revenue Recognition
Nonrefundable contract fees for which no further performance obligations
exist are recognized when the payments are received or when collection is
assured. In return for contract payments, contract partners may receive certain
marketing and manufacturing rights or products for clinical use and testing.
46
<PAGE> 47
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Foreign Currency Translation
The functional currency of Coulter Pharma Belgium, SA is the United States
Dollar. Assets and liabilities of Coulter Pharma Belgium, SA are translated at
current exchange rates, and the related revenues and expenses are translated at
average exchange rates in effect during the period. The resulting translation
adjustment is recorded in selling, general and administrative expense in the
accompanying consolidated statements of operations and has been immaterial since
the formation of the subsidiary in June 1996.
Property and Equipment
Purchased property and equipment are stated at cost less accumulated
depreciation which is calculated using the straight-line method over the
estimated useful lives of the respective assets of three to five years.
Sponsored Research and License Fees
Research and development expenses paid to third parties under sponsored
research arrangements are recognized as the related services are performed,
generally ratably over the period of service. License fees are expensed when the
related obligation is incurred.
Stock-Based Compensation
The Company generally grants stock options to employees for a fixed number
of shares with an exercise price equal to the fair value at the date of grant.
In accordance with the provisions of Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"), the Company has
elected to follow Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25"), and related interpretations in accounting
to employees under its stock option plans and to adopt the pro forma disclosure
alternative as described in SFAS 123 (See Note 10). Options granted to all
others are accounted for using the fair value method prescribed by SFAS 123.
New Accounting Standards
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130").
SFAS 130 established new rules for the reporting and display of comprehensive
income and its components; however, the adoption of SFAS 130 had no impact on
the Company's net loss or stockholder's equity. SFAS 130 requires unrealized
gains or losses on the Company's available-for-sale securities which, prior to
adoption, were reported separately in stockholders' equity, to be included in
other comprehensive income or loss. Prior year financial statements have been
reclassified to conform to the requirements of SFAS 130.
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131, "Disclosures About Segments of an Enterprise and
Related Information" ("SFAS 131"). SFAS 131 superseded SFAS 14, "Financial
Reporting for Segments of a Business Enterprise." SFAS 131 establishes standards
for the way that public business enterprises report selected information about
operating segments in annual financial statements. SFAS 131 also establishes
standards for related disclosures about products and services, geographic areas
and major customers. Because the Company operates as one reportable segment, the
adoption of SFAS 131 will have no impact on the Company's consolidated results
of operations or financial position.
In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133") was
issued. Adoption is required in fiscal years beginning after June 15, 1999.
Because the Company does not use derivatives, management does not anticipate
that the adoption of SFAS 133 will have a significant impact on the Company's
consolidated financial position or results of operations.
47
<PAGE> 48
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The following is a summary of available-for-sale securities (in thousands):
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED ESTIMATED
COST GAINS LOSSES FAIR VALUE
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1998
Money market funds...................... $ 1,719 $-- $ -- $ 1,719
Commercial paper........................ 100,897 -- (8) 100,889
Corporate Bond.......................... 17,624 4 (29) 17,599
Certificates of deposit................. 13,924 1 -- 13,925
-------- --- ---- --------
Total......................... 134,164 5 (37) 134,132
Less amounts classified as cash
equivalents........................... (84,170) -- (8) (84,162)
-------- --- ---- --------
Total short-term
investments................. $ 49,994 $ 5 $(29) $ 49,970
======== === ==== ========
December 31, 1997
Money market funds...................... $ 1,409 $-- $ -- $ 1,409
Commercial paper........................ 22,792 -- (7) 22,785
Corporate Bond.......................... 23,661 5 (8) 23,658
US Government-backed securities......... 11,061 -- (4) 11,057
Certificates of deposits................ 16,316 4 -- 16,320
-------- --- ---- --------
Total......................... 75,239 9 (19) 75,229
Less amounts classified as cash
equivalents........................... (20,238) -- (3) (20,235)
-------- --- ---- --------
Total short-term
investments................. $ 55,001 $ 9 $(16) $ 54,994
======== === ==== ========
</TABLE>
Realized gain or losses on available-for-sale securities for the years
ended December 31, 1998, 1997 and 1996 were not significant.
At December 31, 1998, the contractual maturities of short-term investments
were as follows (in thousands):
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
<S> <C> <C>
Due in one year or less........................ $42,752 $42,726
Due after one year through two years........... 7,242 7,244
------- -------
$49,994 $49,970
======= =======
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Machinery and equipment............................ $1,427 $4,737
Furniture and fixtures............................. 176 480
Construction in process............................ 967 5,252
------ ------
2,570 10,469
Less accumulated depreciation and amortization..... (307) (1,020)
------ ------
Property and Equipment............................. $2,263 $9,449
====== ======
</TABLE>
48
<PAGE> 49
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. SPONSORED RESEARCH AND LICENSE AGREEMENTS
The Company has entered into numerous agreements with research
institutions, universities, and other entities for the performance of research
and development activities and for the acquisition of licenses related to those
activities. Included in research and development expenses for 1998, 1997, 1996
and for the period from inception (February 16, 1995) to December 31, 1998 is
$0.8 million, $0.8 million, zero and $1.6 million, respectively, to fund
activities under these agreements. As of December 31, 1998, noncancelable
commitments under these arrangements were approximately $0.8 million. In order
to maintain certain of these licenses, the Company must pay specified annual
license fees. Certain of the licenses provide for the payment of royalties by
the Company on future product sales, if any.
5. COLLABORATIVE DEVELOPMENT AND COMMERCIALIZATION AGREEMENTS
In December 1998, the Company and SmithKline Beecham Corporation ("SB")
entered into a collaborative agreement for the development and commercialization
of Bexxar, which is in late-stage development for the treatment of non-Hodgkin's
lymphoma (NHL). Under the terms of the agreement, Coulter may receive milestone
payments, shared profits and royalties. The agreement also provides for the
sharing of certain costs related to clinical development, manufacturing
development, and sales & marketing costs. The Company and SB will prepare a
joint profit & loss statement to account for the sharing of sales, cost of goods
sold, and costs related to selling, marketing, distribution and certain other
Bexxar-related activities. Research and Development expenses for 1998 have been
reduced by approximately $2.2 million which has been charged to SB under the
terms of the agreement.
The agreement provides for an upfront non-refundable license fee of $34.25
million and the purchase of $7.25 million of the Company's common stock. The
license fee was recognized as corporate partner revenues in fiscal year 1998. In
addition, the agreement provides for a $15.0 million credit line. The Company
may receive additional payments based upon completion of certain milestones.
Future development expenses for Bexxar will generally be shared by both
companies, with the Company retaining responsibility for funding certain
predetermined development costs. In addition, the companies will jointly explore
the potential of other indications for the product. Upon regulatory approval,
the Company and SB will jointly market Bexxar in the United States following
regulatory approval, and the two companies will share profits and losses
equally. Outside the United States, excluding Japan, the Company has granted SB
exclusive marketing and distribution rights in return for product royalties. SB
may also have access to second generation anti-CD20 compounds.
6. ACCRUED LIABILITIES
Accrued liabilities consists of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1997 1998
------ ------
<S> <C> <C>
Accrued research and development expenses.......... $6,426 $4,028
Accrued clinical trial costs....................... 620 543
Other.............................................. 913 1,782
------ ------
Total.................................... $7,959 $6,353
====== ======
</TABLE>
7. LONG TERM DEBT
Equipment Financing
In December 1996, the Company entered into a $3,827,000 equipment lease
financing and debt facility with a financing company, none of which remain
available at December 31, 1998. The Company makes
49
<PAGE> 50
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
monthly payments plus interest on amounts borrowed over the 48-month term of the
facility followed by a balloon payment. Interest rates under the facility range
from 11.75% to 11.93%. Amounts outstanding under the equipment facility are
secured by the underlying assets. Included in property and equipment at December
31, 1998 are assets with a cost of $1,486,000 ($1,165,000 at December 31, 1997)
acquired pursuant to a fixed interest rate equipment loan. Accumulated
amortization of assets acquired pursuant to these obligations was approximately
$456,000 and $196,000 at December 31, 1998 and 1997, respectively.
Operating Lines of Credit
In November 1998, the Company entered into a $10.0 million revolving loan
facility with a commercial bank of which $5.0 million remained available at
December 31, 1998. The loan is secured by the assets of the Company. Interest is
paid each month on the outstanding balance at prime rate plus 0.5% (8.75% at
December 31, 1998) . In accordance with the agreement principal payments are due
in 48 monthly installments beginning in November 1999, followed by a balloon
payment of approximately $2.1 million due in November 2003. The agreement also
requires the maintenance of a $5 million compensating balance with the bank
until the entire amount of the facility has been drawn down.
At December 31, 1998, the Company's aggregate commitment under such
agreements, together with the net present value of the obligations, is as
follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDING DECEMBER 31:
-------------------------
<S> <C>
1999.............................................. $1,855
2000.............................................. 2,441
2001.............................................. 1,585
2002.............................................. 1,072
2003.............................................. 2,859
------
9,812
Less amounts representing interest.................. (1,996)
Less current portion................................ (1,157)
------
$6,659
======
</TABLE>
8. COMMITMENTS
The Company leases its offices under operating leases which expire at
various dates beginning in 1999 through 2010. Rent expense under these leases
totaled approximately $1,057,000, $461,000, $186,000 and $1,775,000 for the
years ended December 31, 1998, 1997 and 1996, and for the period from inception
(February 16, 1996) to December 31, 1998, respectively.
At December 31, 1998, the aggregate noncancelable future minimum payments
under the operating leases are as follows (in thousands):
<TABLE>
<CAPTION>
OPERATING
YEARS ENDING DECEMBER 31: LEASES
------------------------- ---------
<S> <C>
1999............................................. $ 2,278
2000............................................. 2,295
2001............................................. 2,316
2002............................................. 2,227
2003............................................. 2,210
Thereafter....................................... 17,510
-------
Total.................................... $28,836
=======
</TABLE>
50
<PAGE> 51
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On November 7, 1997, the Company entered into an agreement to lease
additional facilities. The lease was amended on November 10, 1998 to include a
second building. The monthly rent payments range from $78,000 to $241,000
throughout the term of the lease. In connection with this lease agreement, the
Company obtained a $2 million letter of credit agreement from a bank which
secures the aggregate future payments under the lease.
At December 31, 1998, the Company had approximately $16.1 million in
noncancelable purchase commitments with BI Pharma KG and Lonza, two of its third
party manufacturers. In the event of cancellation by Coulter prior to
fulfillment of its obligation, the agreements contain certain economic penalty
provisions which would be applied and determined at the point in time when
cancellation occurs.
9. RELATED PARTY TRANSACTIONS
The Company issued loans to employees totaling $485,000 prior to December
31, 1996. These loans were either repaid in full or converted to new loan
agreements in 1997. The Company entered into loan agreements with certain key
employees, totaling $670,000 for the period ended December 31, 1997 and $438,000
for the period ended December 31, 1998. The loans are non-interest bearing with
various terms ranging from four to ten years. The forgiven amount and the repaid
amount is calculated on a pro-rata basis over years one through ten of continued
employment. In the event an employee ceases to be employed by the Company, the
loan becomes interest-bearing and due within a reasonable period not to exceed
three months. Each loan is secured by a Second Deed of Trust on employee's
residence.
10. STOCKHOLDERS' EQUITY
Preferred Stock
In January 1997, the Company completed its initial public offering of
common stock under the Securities Act of 1933, in which approximately $31.3
million in net proceeds was realized (including net proceeds from the exercise
of the underwriter's over-allotment option). Upon the completion of the initial
public offering all of the Series A, B and C preferred stock outstanding
converted into 6,599,287 shares of common stock. Also upon the completion of the
offering, the Company's Certificate of Incorporation was amended to authorize
3,000,000 shares of preferred stock, none of which are issued or outstanding.
The Company's board of directors is authorized to determine the designation,
powers, preferences and rights of any such series. The company has reserved
200,000 shares of preferred stock for potential issuance under the Share
Purchase Rights Plan.
Common Stock
In July 1998, the Company completed a follow-on public offering of
2,400,000 shares of common stock at a price to the public of $25.00 per share,
resulting in net proceeds to the Company of approximately $56.3 million. Also,
in August 1998, the underwriters of that offering purchased 245,000 additional
shares of common stock upon a partial exercise of their over-allotment option,
raising additional net proceeds of $5.8 million. The total net proceeds from
this offering were $62.1 million.
Equity Incentive Plans
The 1995 Equity Incentive Plan (the "1995 Plan") was adopted in 1995 by the
Board of Directors and allowed for the granting of options for up to 866,666
shares of common stock to employees, consultants and directors.
In December 1996, the Board of Directors adopted the 1996 Equity Incentive
Plan (the "1996 Plan") under which a total of 1,400,000 shares of the Company's
authorized but unissued common stock has been
51
<PAGE> 52
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
reserved for issuance thereunder. In February 1998, the Board of Directors
approved an amendment to increase the number of shares of common stock
authorized from 1,400,000 to 2,800,000 shares. The amendment was approved by the
Company's stockholders in May 1998.
Stock options granted under the 1995 and 1996 Plans (collectively, the
"Plans") may be either incentive stock options or non-qualified stock options.
Incentive stock options may be granted to employees with exercise prices not
less than the fair market value at the date of grant and nonqualified stock
options may be granted at exercise prices of no less than 85% of the fair market
value of the common stock on the date of grant. The options vest over four years
pursuant to a formula determined by the Company's Board of Directors and expire
after ten years. The 1995 Plan terminated upon the closing of the Company's
initial public offering in January 1997.
Activity under the Plans was as follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
----------------------------
OPTIONS NUMBER EXERCISE WEIGHTED-
AVAILABLE OF PRICE AVERAGE
FOR GRANT SHARES PER SHARE EXERCISE PRICE
---------- --------- --------------- --------------
<S> <C> <C> <C> <C>
Shares authorized............. 333,333 -- $ -- $ --
Options granted............... (220,756) 220,756 $ 0.30 $ 0.30
Options exercised............. -- (2,059) $ 0.30 $ 0.30
---------- --------- --------------- ------
Balance at December 31,
1995........................ 112,577 218,697 $ 0.30 $ 0.30
Shares authorized............. 533,333 -- $ -- --
Options granted............... (658,492) 658,492 $ 0.30 - $12.00 $ 1.99
Options exercised............. -- (35,551) $ 0.30 - $ 2.25 $ 0.41
Options canceled.............. 19,333 (19,333) $ 0.30 - $30.75 $ 0.73
---------- --------- --------------- ------
Balance at December 31,
1996........................ 6,751 822,305 $ 0.30 - $12.00 $ 1.64
Shares authorized............. 1,400,000 -- $ -- $ --
Options granted............... (1,010,100) 1,010,100 $ 8.50 - $19.13 $10.83
Options exercised............. -- (77,358) $ 0.30 - $ 2.25 $ 0.59
Options canceled.............. 106,063 (106,063) $ 0.30 - $10.75 $ 2.04
Options terminated............ (100,314) -- $ -- --
---------- --------- --------------- ------
Balance at December 31,
1997........................ 402,400 1,648,984 $ 0.30 - $19.13 $ 7.29
Shares authorized............. 1,400,000 -- $ -- $ --
Options granted............... (1,117,800) 1,117,800 $ 19.38 - $32.38 $24.77
Options exercised............. -- (164,785) $ 0.30 - $24.13 $ 3.26
Options canceled.............. 95,505 (95,505) $ 0.30 - $24.50 $ 4.34
Options terminated............ (63,042) -- $ -- --
---------- --------- --------------- ------
Balance at December 31,
1998........................ 717,063 2,506,494 $ 0.30 - $32.38 $15.46
========== ========= =============== ======
</TABLE>
Options were exercisable to purchase 11,104 shares (at a weighted-average
exercise price of $0.30 per share), 65,440 shares (at a weighted-average
exercise price of $0.43 per share), 222,201 shares (at a weighted-average
exercise price of $6.52 per share) and 557,676 shares (at a weighted-average
exercise price of $13.30 per share) for the years ended at December 31, 1995,
1996, 1997 and 1998, respectively.
52
<PAGE> 53
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Exercise prices for options outstanding under the Plans as of December 31,
1998 ranged from $0.30 to $32.38 per share. The weighted-average remaining
contractual life of those options is 8.8 years.
<TABLE>
<CAPTION>
WEIGHTED- EXERCISABLE OPTIONS
OPTIONS OUTSTANDING AVERAGE ------------------------
-------------------------- REMAINING WEIGHTED-
WEIGHTED- CONTRACTUAL AVERAGE
EXERCISE PRICE AVERAGE LIFE EXERCISE
RANGE NUMBER EXERCISE PRICE (IN YEARS) NUMBER PRICE
- ----------------- --------- -------------- ----------- ------- --------------
<S> <C> <C> <C> <C> <C>
$ 0.30 - $ 4.50 .. 438,884 $ 1.6590 7.6 213,417 $ 1.3732
$ 8.50 - $ 8.50 .. 140,500 $ 8.5000 8.3 53,702 $ 8.5000
$ 8.625 - $ 8.625.. 480,417 $ 8.6250 8.6 155,346 $ 8.6250
$ 8.875 - $22.50 .. 418,893 $16.3155 8.8 108,745 $14.3813
$22.75 - $24.0313.. 155,000 $23.0849 9.6 1,226 $23.0000
$24.125 - $32.375.. 872,800 $25.5228 9.6 25,240 $24.1250
--------- -------- --- ------- --------
2,506,494 $15.4618 8.8 557,676 $ 7.6934
</TABLE>
The Company has reserved 3,223,557 shares of its common stock for options
to purchase common shares which may be issued under the Plans.
In March 1996, 400,000 shares of common stock were purchased at $0.45 per
share by an officer of the Company. The Company has the right to repurchase
these shares under certain conditions. At December 31, 1998, 150,000 common
shares were available for repurchase.
The Company recorded deferred compensation expense of $2.3 million for the
difference between the exercise price and the deemed fair value for financial
statement presentation purposes of the Company's common stock, as determined by
the board of directors, for common stock issued and stock options granted prior
to the Company's initial public offering in January 1997. Additionally, deferred
compensation of approximately $361,000 was recorded based on the deemed fair
values of common stock options granted subsequent to the Company's initial
public offering. The deferred compensation is being amortized over the
corresponding vesting period of each respective share purchase or option,
generally four years. Amortization of approximately $676,000, $1.1 million,
$330,000, and $2.1 million was recorded in fiscal years 1998, 1997, 1996, and
for the period from inception (February 16, 1995) to December 31, 1998,
respectively.
Pro forma information regarding net income and earnings per share is
required by SFAS 123, and has been determined as if the Company had accounted
for its employee stock options under the fair value method of that Statement.
The fair value of these options was estimated at the date of grant using the
minimum value method with weighted-average risk-free assumptions for 1996 of
6.06%. The weighted-average expected life of the options was approximately 5.1
years 1996. The fair value of employee stock options granted subsequent to
December 1996 was estimated at the date of grant using a Black-Scholes option
pricing model for the single option approach and the following weighted-average
assumptions:
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Risk-free interest rate -- options................... 5.81% 5.32%
Risk-free interest rate -- ESPP...................... 5.69% 5.50%
Volatility........................................... 68% 68%
Expected life in years (from granting
date) -- options................................... 4.1 4.0
Expected life in years -- ESPP....................... 1.2 1.2
Dividend yield....................................... 0% 0%
</TABLE>
The pro forma information required by SFAS 123 includes compensation
expenses related to the Company's employee stock purchase plan and has also been
calculated based on the fair value method using a Black-Scholes option pricing
model using the weighted-average assumptions discussed above.
53
<PAGE> 54
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the vesting period of the options. The
Company's pro forma information follows (in thousands, except for earnings per
share information):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1996 1997 1998
-------- -------- -------
<S> <C> <C> <C>
Pro forma net loss.......... $(15,378) $(27,296) $(5,482)
Pro forma net loss per
share..................... $ (2.65) $ (2.68) $ (0.38)
</TABLE>
The weighted average fair market value of options granted for the years
ended December 31, 1996, 1997 and 1998 was $1.46, $10.83 and $24.77,
respectively.
1996 Employee Stock Purchase Plan
In December 1996, the Board of Directors adopted the 1996 Employee Stock
Purchase Plan (the "Purchase Plan") under which employees can purchase shares of
the Company's common stock based on a percentage of their compensation. The
purchase price per share must be equal to at least 85% of the market value on
the date offered or the date purchased. A total of 350,000 shares of common
stock are reserved for issuance thereunder. As of December 31, 1998, 100,852
shares had been issued under the Purchase Plan (33,152 shares as of December,
1997).
The Company has reserved sufficient shares of its common stock, which may
be issued under the Purchase Plan.
Share Purchase Rights Plan
In July 1997, the Company adopted a Share Purchase Rights Plan (the "Rights
Plan"), commonly known as a "poison pill". The Rights Plan provides for the
distribution of certain rights to acquire shares of the Company's Series A
Junior Participating Preferred Stock (the "Rights") as a dividend for each share
of common stock held of record as of August 20, 1997. Under certain conditions
involving an acquisition or proposed acquisition by any person or group holding
20% or more of the common stock, the Rights permit the holders (other than the
20% holder) to purchase the Company's common stock at a 50% discount from the
market price at that time, upon payment of an exercise price of $70 per Right.
In addition, in the event of certain business combinations, the Rights permit
the purchase of shares of common stock of an acquirer at a 50% discount from the
market price at that time. The Rights have no voting privileges and are attached
to and automatically trade with the Company's common stock. The Rights expire on
July 30, 2007.
Warrants
In January 1997, the Company received approximately $3.1 million from the
cash exercise of warrants to purchase 347,530 shares of its common stock and
issued an additional 37,785 shares of its common stock upon the net exercise of
warrants to purchase 151,173 shares of its common stock.
In May 1998, the Company issued 16,787 shares of its common stock upon the
net exercise of a warrant to purchase 24,666 shares of its common stock. As of
December 31, 1998, no warrants were outstanding.
11. INCOME TAXES
As of December 31, 1998, the Company had federal net operating loss
carryforwards of approximately $42,200,000. The federal net operating loss
carryforwards will expire at various dates beginning in 2010 through 2018 if not
utilized.
54
<PAGE> 55
COULTER PHARMACEUTICAL, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets are as follows
at December 31 (in thousands):
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Net operating loss carryforwards....................... $ 14,900 $ 14,700
Capitalized research and development................... 2,100 2,200
Research credit carryforwards (expiring 2010 - 2012)... 600 1,500
Other -- net........................................... 100 200
-------- --------
Total deferred tax assets.................... 17,700 18,600
Valuation allowance.................................... (17,700) (18,600)
-------- --------
Net deferred tax assets................................ $ -- $ --
======== ========
</TABLE>
Because of the Company's lack of earnings history, the deferred tax assets
have been fully offset by a valuation allowance. The valuation allowance
increased by $10,400,000 during the year ended December 31, 1997.
55
<PAGE> 56
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL
DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors and Executive Officers
The information required by this Item concerning the Company's directors
and executive officers is incorporated by reference from the Registrant's
Definitive Proxy Statement filed with the Commission pursuant to Regulation 14A
in connection with the 1999 Annual Meeting (the "Proxy Statement") under the
headings "Nominees" and "Executive Officers."
Compliance with Section 16(a) of the Exchange Act
The information required by this Item is incorporated by reference from the
Proxy Statement under the heading "Security Ownership of Certain Beneficial
Owners and Management."
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is incorporated by reference from the
Proxy Statement under the heading "Executive Compensation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item is incorporated by reference from the
Proxy Statement under the "Certain Transactions."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item is incorporated by reference from the
Proxy Statement under the heading "Certain Transactions" and "Executive
Compensation."
56
<PAGE> 57
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) LISTING OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION OF DOCUMENT
- -------- ------- -----------------------
<C> <C> <S>
(1) 3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
(1) 3.2 Bylaws of the Registrant.
(1) 4.1 Reference is made to Exhibits 3.1 and 3.2.
(1) 4.2 Specimen stock certificate.
(1) 4.3 Amended and Restated Investors' Rights Agreement, dated
April 18, 1996, between the Registrant and certain
investors.
(1) 4.4 Warrant Agreement to purchase Common Stock, dated December
6, 1996, between the Registrant and Lease Management
Services, Inc.
(1) 10.1 Form of Indemnity Agreement to be entered into between the
Registrant and its officers and directors.
(2) 10.2 1996 Equity Incentive Plan.
(2) 10.3 Form of Equity Incentive Stock Option.
(2) 10.4 Form of Nonstatutory Stock Option.
(2) 10.5 1996 Employee Stock Purchase Plan.
(1) 10.6 Assignment Agreement, dated February 24, 1995, between the
Registrant, Beckman Coulter and certain investors.
(1) 10.7 Manufacturing Agreement, dated August 20, 1996, between
Lonza Biologics PLC and the Registrant.
(1) 10.8 Equipment Lease Financing Agreement, dated December 6, 1996,
between the Registrant and Lease Management Services, Inc.
(1) 10.9+ First Amendment to Manufacturing Agreement, dated November
21, 1996, by and between Lonza Biologics PLC and the
Registrant.
(1) 10.10+ Development Agreement, dated November 15, 1995, by and
between MDS Nordion Inc. and the Registrant.
(1) 10.11+ Patent License Agreement, dated March 15, 1996, by and
between the Region Wallone, the Universite Catholique de
Louvain and Coulter Pharma Belgium, SA.
(3) 10.12+ Second Amendment to Manufacturing Agreement, dated June 30,
1997, by and between Lonza Biologics PLC and the Registrant.
(4) 10.13+ Third Amendment to Manufacturing Agreement, date September
26, 1997, by and between Lonza Biologics PLC and the
Registrant.
(4) 10.14+ Fourth Amendment to Manufacturing Agreement, dated September
17, 1997, by and between Lonza Biologics PLC and the
Registrant
(5) 10.15+ Contract Research and Development Agreement, dated October
22, 1997, by and between Dr. Karl Thomae GmbH and the
Registrant.
(5) 10.16+ Fifth Amendment to Manufacturing Agreement, dated October
27, 1997, by and between Lonza Biologics PLC and the
Registrant.
(5) 10.17+ Lease Agreement, dated November 7, 1997, by and between HMS
Gateway Office L.P. and the Registrant.
(6) 10.18+ Commercial Supply Agreement, dated May 28, 1998, by and
between Lonza Biologics PLC and the Registrant.
</TABLE>
57
<PAGE> 58
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION OF DOCUMENT
- -------- ------- -----------------------
<C> <C> <S>
(7) 10.19+ Supply agreement, dated August 31, 1998, by and between MDS
Nordion, Inc. and the Registrant.
(7) 10.20+ Facilities agreement, dated August 31, 1998, by and between
MDS Nordion, Inc. and the Registrant.
10.21+ Stock Purchase Agreement, dated October 23, 1998, by and
between SmithKline Beecham Corporation and the Registrant.
10.22+ Security Agreement, dated October 23, 1998, by and between
SmithKline Beecham Corporation and the Registrant.
10.23+ Grant of Security Interest, dated October 23, 1998, by and
between SmithKline Beecham Corporation and the Registrant.
10.24+ Loan Agreement, dated October 23, 1998, by and between
SmithKline Beecham Corporation and the Registrant.
10.25+ Collaboration Agreement, dated October 23, 1998, by and
between SmithKline Beecham Corporation and the Registrant.
10.26+ Supply Agreement, dated November 3, 1998, by and between
Boehringer Ingelheim Pharma KG and the Registrant.
10.27+ First Amendment to Lease Agreement, dated November 10, 1998,
by and between HMS Gateway Office L.P. and the Registrant.
10.28+ Amendment #1 to the Collaboration Agreement, dated November
30, 1998 by and between SmithKline Beecham Corporation and
the Registrant.
10.29+ Loan and Security Agreement, dated October 29, 1998, by and
between Silicon Valley bank and the Registrant.
(1) 21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
27.1 Financial Data Schedule.
</TABLE>
- ---------------
(1) Incorporated by reference to the indicated exhibit in the Company's
Registration Statement on Form S-1 (File No. 333-17661), as amended.
(2) Filed as an exhibit to the Registrant's Registration Statement on Form S-8
(No. 333-23265) and incorporated herein by reference.
(3) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997 and incorporated herein by reference.
(4) Filed as an exhibit to the Registrant's Special Report on Form 8-K filed
September 29, 1997 and incorporated herein by reference.
(5) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1997 and incorporated herein by reference.
(6) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 and incorporated herein by reference.
(7) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998 and incorporated herein by reference.
+ Portions omitted pursuant to a request of confidentiality filed separately
with the Commission.
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed by the Registrant during the last
quarter covered by this Report.
58
<PAGE> 59
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COULTER PHARMACEUTICAL, INC.
BY: /s/ MICHAEL F. BIGHAM
------------------------------------
Michael F. Bigham
President and CEO
Date: March 29, 1999
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Michael F. Bigham and William G. Harris
and each of them, as his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place, and
stead, in any and all capacities, to sign any and all amendments to this Report,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming that all said
attorneys-in-fact and agents, or any of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MICHAEL F. BIGHAM President, Chief Executive March 29, 1999
- --------------------------------------------------- Officer and Director
(Michael F. Bigham) (Principal Executive Officer)
/s/ WILLIAM G. HARRIS Vice President and Chief March 29, 1999
- --------------------------------------------------- Financial Officer (Principal
(William G. Harris) Financial and Accounting
Officer)
/s/ BRIAN ATWOOD Director March 29, 1999
- ---------------------------------------------------
(Brian Atwood)
/s/ JOSEPH R. COULTER, III Director March 29, 1999
- ---------------------------------------------------
(Joseph R. Coulter, III)
/s/ DONALD L. LUCAS Director March 29, 1999
- ---------------------------------------------------
(Donald L. Lucas)
</TABLE>
59
<PAGE> 60
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROBERT MOMSEN Director March 29, 1999
- ---------------------------------------------------
(Robert Momsen)
/s/ ARNOLD ORONSKY Director March 29, 1999
- ---------------------------------------------------
(Arnold Oronsky)
/s/ GEORGE J. SELLA, JR. Director March 29, 1999
- ---------------------------------------------------
(George J. Sella, Jr.)
/s/ SUE VAN Director March 29, 1999
- ---------------------------------------------------
(Sue Van)
</TABLE>
60
<PAGE> 61
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION OF DOCUMENT
- -------- ------- -----------------------
<C> <C> <S>
(1) 3.1 Amended and Restated Certificate of Incorporation of the
Registrant.
(1) 3.2 Bylaws of the Registrant.
(1) 4.1 Reference is made to Exhibits 3.1 and 3.2.
(1) 4.2 Specimen stock certificate
(1) 4.3 Amended and Restated Investors' Rights Agreement, dated
April 18, 1996, between the Registrant and certain
investors.
(1) 4.4 Warrant Agreement to purchase Common Stock, dated December
6, 1996, between the Registrant and Lease Management
Services, Inc.
(1) 10.1 Form of Indemnity Agreement to be entered into between the
Registrant and its officers and directors.
(2) 10.2 1996 Equity Incentive Plan.
(2) 10.3 Form of Equity Incentive Stock Option.
(2) 10.4 Form of Nonstatutory Stock Option.
(2) 10.5 1996 Employee Stock Purchase Plan.
(1) 10.6 Assignment Agreement, dated February 24, 1995, between the
Registrant, Beckman Coulter and certain investors.
(1) 10.7 Manufacturing Agreement, dated August 20, 1996, between
Lonza Biologics PLC and the Registrant.
(1) 10.8 Equipment Lease Financing Agreement, dated December 6, 1996,
between the Registrant and Lease Management Services, Inc.
(1) 10.9+ First Amendment to Manufacturing Agreement, dated November
21, 1996, by and between Lonza Biologics PLC and the
Registrant.
(1) 10.10+ Development Agreement, dated November 15, 1995, by and
between MDS Nordion Inc. and the Registrant.
(1) 10.11+ Patent License Agreement, dated March 15, 1996, by and
between the Region Wallone, the Universite Catholique de
Louvain and Coulter Pharma Belgium, SA.
(3) 10.12+ Second Amendment to Manufacturing Agreement, dated June 30,
1997, by and between Lonza Biologics PLC and the Registrant.
(4) 10.13+ Third Amendment to Manufacturing Agreement, date September
26, 1997, by and between Lonza Biologics PLC and the
Registrant.
(4) 10.14+ Fourth Amendment to Manufacturing Agreement, dated September
17, 1997, by and between Lonza Biologics PLC and the
Registrant
(5) 10.15+ Contract Research and Development Agreement, dated October
22, 1997, by and between Dr. Karl Thomae GmbH and the
Registrant
(5) 10.16+ Fifth Amendment to Manufacturing Agreement, dated October
27, 1997, by and between Lonza Biologics PLC and the
Registrant.
(5) 10.17+ Lease Agreement, dated November 7, 1997, by and between HMS
Gateway Office L.P. and the Registrant.
(6) 10.18+ Commercial Supply Agreement, dated May 28, 1998 by and
between Lonza Biologics PLC and the Registrant.
(7) 10.19+ Supply agreement, dated August 31, 1998 by and between MDS
Nordion, Inc. and the Registrant
</TABLE>
61
<PAGE> 62
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
FOOTNOTE NUMBER DESCRIPTION OF DOCUMENT
- -------- ------- -----------------------
<C> <C> <S>
(7) 10.20+ Facilities agreement, dated August 31, 1998 by and between
MDS Nordion, Inc. and the Registrant
10.21+ Stock Purchase Agreement, dated October 23, 1998, by and
between SmithKline Beecham Corporation and the Registrant
10.22+ Security Agreement, dated October 23, 1998, by and between
SmithKline Beecham Corporation and the Registrant
10.23+ Grant of Security Interest, dated October 23, 1998, by and
between SmithKline Beecham Corporation and the Registrant
10.24+ Loan Agreement, dated October 23, 1998, by and between
SmithKline Beecham Corporation and the Registrant
10.25+ Collaboration Agreement, dated October 23, 1998, by and
between SmithKline Beecham Corporation and the Registrant
10.26+ Supply Agreement, dated November 3, 1998, by and between
Boehringer Ingelheim Pharma KG and the Registrant
10.27+ First Amendment to Lease Agreement, dated November 10, 1998,
by and between HMS Gateway Office L.P. and the Registrant.
10.28+ Amendment #1 to the Collaboration Agreement, dated November
30, 1998 by and between SmithKline Beecham Corporation and
the Registrant.
10.29+ Loan and Security Agreement, dated October 29, 1998, by and
between Silicon Valley bank and the Registrant.
(1) 21.1 Subsidiaries of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors
27.1 Financial Data Schedule
</TABLE>
- ---------------
(1) Incorporated by reference to the indicated exhibit in the Company's
Registration Statement on Form S-1 (File No. 333-17661), as amended.
(2) Filed as an exhibit to the Registrant's Registration Statement on Form S-8
(No. 333-23265) and incorporated herein by reference.
(3) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1997 and incorporated herein by reference.
(4) Filed as an exhibit to the Registrant's Special Report on Form 8-K filed
September 29, 1997 and incorporated herein by reference.
(5) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1997 and incorporated herein by reference.
(6) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1998 and incorporated herein by reference.
(7) Filed as an exhibit to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1998 and incorporated herein by reference.
+ Portions omitted pursuant to a request of confidentiality filed separately
with the Commission.
62
<PAGE> 1
Exhibit 10.21
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R.Sections 200.80(b)(4),
200.83 and 240.24b-2
STOCK PURCHASE AGREEMENT
COULTER PHARMACEUTICAL, INC.
OCTOBER 23, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. PURCHASE AND SALE .......................................................... 1
1.1 Sale of Shares .................................................... 1
1.2 Closing Date ...................................................... 1
1.3 Delivery .......................................................... 1
1.4 Rule 144 Reporting ................................................ 2
1.5 "Market Stand-Off" Agreements ..................................... 2
1.6 Standstill Covenant ............................................... 2
2. REPRESENTATIONS AND WARRANTIES OF COULTER .................................. 2
2.1 Organization and Standing; Certificate and Bylaws ................. 2
2.2 Authorization ..................................................... 3
2.3 Validity of Shares ................................................ 3
2.4 Offering .......................................................... 3
2.5 Full Disclosure ................................................... 3
2.6 No Conflict; No Violation ......................................... 3
2.7 Consents and Approvals ............................................ 4
2.8 Absence of Certain Developments ................................... 4
3. REPRESENTATIONS AND WARRANTIES OF SB ....................................... 4
3.1 Legal Power ....................................................... 4
3.2 Due Execution ..................................................... 4
3.3 Investment Representations ........................................ 4
4. CONDITIONS TO CLOSING ...................................................... 5
4.1 Conditions to Obligations of SB ................................... 5
4.2 Conditions to Obligations of Coulter .............................. 6
5. MISCELLANEOUS .............................................................. 7
5.1 Governing Law ..................................................... 7
5.2 Successors and Assigns ............................................ 7
5.3 Entire Agreement .................................................. 7
5.4 Severability ...................................................... 7
5.5 Amendment and Waiver .............................................. 7
5.6 Delays or Omissions ............................................... 7
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C>
5.7 Notices, etc. ..................................................... 7
5.8 Finder's Fees ..................................................... 9
5.9 Information Confidential .......................................... 9
5.10 Titles and Subtitles .............................................. 9
5.11 Counterparts ...................................................... 9
</TABLE>
ii.
<PAGE> 4
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of October 23, 1998 (the "Effective Date"), by and between COULTER
PHARMACEUTICAL, INC., a Delaware corporation ("Coulter"), and SMITHKLINE BEECHAM
CORPORATION, a Pennsylvania corporation ("SB").
RECITALS
A. Coulter and SB are entering into that certain Collaboration
Agreement dated as of the Effective Date of this Agreement (the "Collaboration
Agreement").
B. In connection with entry into the Collaboration Agreement, Coulter
desires to sell and issue to SB, and SB desires to buy, shares of Coulter's
common stock, as provided herein.
NOW, THEREFORE, the Parties hereto agree as follows:
1. PURCHASE AND SALE.
Subject to the terms and conditions hereof, and in reliance upon the
representations, warranties and agreements contained herein, Coulter hereby
agrees to issue and sell to SB, and SB hereby agrees to purchase from Coulter,
the aggregate number of shares of Coulter's Common Stock (the "Shares")
determined in accordance with Section 1.1 hereof.
1.1 SALE OF SHARES. On the Closing Date (as defined in Section 1.2),
Coulter shall issue and sell to SB, and SB shall purchase from Coulter the
number of shares of Coulter's Common Stock (the "Shares") equal to the quotient
of $7,250,000 divided by the Purchase Price (as hereinafter defined). In the
event the number of Shares includes a fraction of a share, the number of Shares
shall be increased to the nearest whole number of shares and the aggregate
Purchase Price shall be increased to equal the Purchase Price times such whole
number of Shares. The Purchase Price shall be one hundred twenty-five percent
(125%) of the average of the closing prices of Coulter's Common Stock on the
Nasdaq National Market, as reported by the Wall Street Journal, Western Edition
(the "Wall Street Journal"), for the twenty (20) trading days prior to the
Effective Date.
1.2 CLOSING DATE. The closing of the sale and purchase of the Shares
(the "Closing") shall take place on the date (the "Closing Date") that is five
(5) business days after the date on which the Collaboration Agreement becomes
effective in accordance with Section 19 of the Collaboration Agreement.
1.3 DELIVERY. At the Closing, Coulter will deliver to SB a certificate
registered in the name of SB, representing the Shares to be purchased by SB from
Coulter, dated the Closing Date, against payment of the aggregate Purchase Price
by wire transfer, a check made payable to the order of Coulter, or any
combination thereof.
1.
<PAGE> 5
1.4 RULE 144 REPORTING. With a view to making available to SB the
benefits of certain rules and regulations of the Securities and Exchange
Commission (the "SEC") which may permit the sale of the Shares to the public
without registration, Coulter agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 ("Rule 144") under the Securities Act of
1933, as amended (the 1933 Act") or any similar or analogous rule promulgated
under the 1933 Act, as long as the Shares are outstanding;
(b) File with the SEC, in a timely manner, all reports and other
documents required of Coulter under the 1933 Act and the Securities Exchange Act
of 1934, as amended (the "1934 Act");
(c) Take all such action (including without limitation the
furnishing of the information described in Rule 144(d)(4)) as may be necessary
to facilitate a sale of the shares by SB to a "qualified institutional buyer,"
as such term is defined in Rule 144A of the 1933 Act.
1.5 "MARKET STAND-OFF" AGREEMENTS. SB hereby agrees that prior to the
second anniversary of the Closing Date it shall not sell or otherwise transfer
or dispose of any of the Shares held by it. Coulter may impose stop-transfer
instructions with respect to securities subject to the foregoing restriction
until the expiration thereof. Following the second anniversary of the Closing
Date, until termination of the Collaboration Agreement, if SB desires to sell or
otherwise transfer any Shares, then SB shall first give [...***...] written
notice thereof to Coulter, describing generally the basis upon which SB proposes
to sell or otherwise transfer or dispose of such Shares.
1.6 STANDSTILL COVENANT. Other than the purchase of the Shares
contemplated by Section 1 of this Agreement, SB agrees that, during the term of
the Collaboration Agreement and for one year thereafter (for two years
thereafter in the event such agreement is terminated prior to the eighth
anniversary of the Effective Date), neither SB nor any of its affiliates will in
any manner, directly or indirectly, without the written consent of the Company
effect, propose to effect or actively and consciously participate as a partner
in (a) any acquisition of any securities or assets of Coulter or (b) any tender
or exchange offer, merger, business combination, recapitalization or other
extraordinary transaction involving Coulter.
2. REPRESENTATIONS AND WARRANTIES OF COULTER.
Except as otherwise set forth on the Schedule of Exceptions attached
hereto as Exhibit A, which shall contain Section numbers specifically
corresponding to the Section numbers in this Agreement, Coulter hereby
represents and warrants to SB as follows:
2.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. Coulter is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has full power and authority to own and operate
its properties and assets and to carry on its business as presently conducted
and as proposed to be conducted. Coulter is qualified as a
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 6
foreign corporation to do business in each jurisdiction in the United States in
which the ownership of its property or the conduct of its business requires such
qualification, except where any statutory fines or penalties or any corporate
disability imposed for the failure to qualify would not materially adversely
affect Coulter, its assets, financial condition or operations. True and correct
copies of Coulter's Restated Certificate of Incorporation and Bylaws currently
in effect have been delivered to SB.
2.2 AUTHORIZATION. All corporate action on the part of Coulter, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the performance of all Coulter's obligations
hereunder, and for the authorization, issuance, sale and delivery of the Shares
has been taken or will be taken prior to Closing. This Agreement, when executed
and delivered, shall constitute a valid and legally binding obligation of
Coulter in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and subject to
general equity principles.
2.3 VALIDITY OF SHARES. The sale of the Shares is not subject to any
preemptive rights or rights of first refusal that have not been waived and, when
issued, sold and delivered in compliance with the provisions of this Agreement,
the Shares will be validly issued, fully paid and nonassessable, and will be
free of any liens or encumbrances created by Coulter; provided, however, that
the Shares may be subject to restrictions on transfer under state and/or federal
securities laws as set forth herein or as otherwise required by such laws at the
time a transfer is proposed.
2.4 OFFERING. Assuming the accuracy of the representations and
warranties of SB contained in Section 3 hereof, the offer, issue, and sale of
Shares are exempt from the registration and prospectus delivery requirements of
the 1933 Act, and the Shares have been registered or qualified (or are exempt
from registration and qualification) under the registration, permit, or
qualification requirements of all applicable state securities laws.
2.5 FULL DISCLOSURE.
(a) As of the Closing, Coulter will have furnished to SB the
following documents, and the information contained in such documents, as of
their respective dates (or if amended, as of the date of such amendment), will
not contain any untrue statement of a material fact, and will not omit to state
any material fact necessary to make any statement, in light of the circumstances
under which such statement was made, not misleading:
Coulter's Registration Statement on Form S-3, effective July 31,
1998, Coulter's annual report on Form 10-K for the fiscal year ended December
31, 1997, Coulter's Quarterly Reports on Form 10-Q for the quarters ended March
31 and June 30, 1998, and any additional Quarterly Reports on Form 10-Q or
Current Reports on Form 8-K filed after the Effective Date but prior to the
Closing.
2.6 NO CONFLICT; NO VIOLATION. The execution, delivery and performance
of this Agreement and consummation of the transactions contemplated hereby will
not (a) conflict with any provisions of the Restated Certificate of
Incorporation or Bylaws of Coulter; (b) result in any material violation or
default of, or permit the acceleration of any obligation under (in each case,
3.
<PAGE> 7
upon the giving of notice, the passage of time, or both), any material mortgage,
indenture, lease, agreement or other instrument, permit, franchise, license,
judgment, order, decree, law, ordinance, rule or regulation applicable to
Coulter or its properties.
2.7 CONSENTS AND APPROVALS. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of Coulter in
connection with the valid execution and delivery of this Agreement, the offer,
sale or issuance of the Shares, or the consummation of any other transaction
contemplated hereby have been obtained, or will be effective at the Closing,
except for notices required or permitted to be filed with certain state and
federal securities commissions after the Closing, which notices will be filed on
a timely basis.
2.8 ABSENCE OF CERTAIN DEVELOPMENTS. With respect to the Closing, since
June 30, 1998, Coulter has not (a) incurred or become subject to any material
liabilities (absolute or contingent) except current liabilities incurred, and
liabilities under contracts entered into, in the ordinary course of business,
consistent with past practices; (b) mortgaged, pledged or subjected to lien,
charge or any other encumbrance any of its assets, tangible or intangible; (c)
sold, assigned or transferred any of its assets or canceled any debts or
obligations except in the ordinary course of business, consistent with past
practices; (d) suffered any extraordinary losses, or waived any rights of
substantial value; (e) entered into any material transaction other than in the
ordinary course of business, consistent with past practices; or (f) otherwise
had any material change in its condition, financial or otherwise, except for
changes in the ordinary course of business, consistent with past practices, none
of which individually or in the aggregate has been materially adverse to
Coulter.
3. REPRESENTATIONS AND WARRANTIES OF SB.
SB hereby represents and warrants to Coulter as follows:
3.1 LEGAL POWER. It has the requisite legal power to enter into this
Agreement, to purchase the Shares hereunder, and to carry out and perform its
obligations under the terms of this Agreement.
3.2 DUE EXECUTION. This Agreement has been duly authorized, executed
and delivered by it, and, upon due execution and delivery by Coulter, this
Agreement will be a valid and binding agreement of it.
3.3 INVESTMENT REPRESENTATIONS.
(a) It is acquiring the Shares for its own account, not as nominee
or agent, for investment and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the 1933
Act.
(b) It understands that (i) the Shares have not been registered
under the 1933 Act by reason of a specific exemption therefrom, that they must
be held by it indefinitely, and that it must, therefore, bear the economic risk
of such investment indefinitely, unless a subsequent disposition thereof is
registered under the 1933 Act or is exempt from such
4.
<PAGE> 8
registration; (ii) each certificate representing the Shares will be endorsed
with the following legend:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) PURSUANT TO SEC
RULE 144 OR (B) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
1933 ACT COVERING SUCH SECURITIES OR (C) COULTER RECEIVES AN OPINION OF
COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
COULTER, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE 1933 ACT."
and (iii) Coulter will instruct any transfer agent not to register the transfer
of any of the Shares unless the conditions specified in the foregoing legend are
satisfied.
SB shall have the right to demand removal of the foregoing legend with
respect to any or all of the Shares if, in the opinion of counsel to Coulter,
removal of such legend is permitted by the rules and regulations of the SEC.
(c) It has been furnished with such materials and has been given
access to such information relating to Coulter as it or its qualified
representative has requested and it has been afforded the opportunity to ask
questions regarding Coulter and the Shares, all as it has found necessary to
make an informed investment decision.
(d) It is an "accredited investor" within the meaning of Regulation
D under the 1933 Act.
(e) It was not formed for the specific purpose of acquiring the
Shares offered hereunder.
4. CONDITIONS TO CLOSING.
4.1 CONDITIONS TO OBLIGATIONS OF SB. SB's obligation to purchase the
Shares at the Closing is subject to the fulfillment, at or prior to the Closing,
of all of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by Coulter in Section 2
hereof shall be true and correct in all material respects on the date of the
Closing with the same force and effect as if they had been made on and as of
said date; and Coulter shall have performed all obligations and conditions
herein required to be performed by it on or prior to the Closing.
(b) OPINION OF COULTER'S COUNSEL. SB shall have received from
Cooley Godward LLP, counsel to Coulter, an opinion letter substantially in the
form attached hereto as Exhibit B, addressed to it, dated the Closing Date.
5.
<PAGE> 9
(c) PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings
in connection with the transactions contemplated at the Closing hereby and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to SB and its special counsel, and SB and its
special counsel shall have received all such counterpart originals or certified
or other copies of such documents as they may reasonably request.
(d) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the Closing. No stop
order or other order enjoining the sale of the Shares shall have been issued and
no proceedings for such purpose shall be pending or, to the knowledge of
Coulter, threatened by the SEC or any commissioner of corporations or similar
officer of any other state having jurisdiction over this transaction. At the
time of the Closing, the sale and issuance of the Shares shall be legally
permitted by all laws and regulations to which SB and Coulter are subject.
(e) COMPLIANCE CERTIFICATE. Coulter shall have delivered to SB a
Certificate, executed by the President of Coulter, dated the date of the
Closing, certifying to the fulfillment of the conditions specified in
subparagraphs (a) and (d) of this Subsection 4.1.
4.2 CONDITIONS TO OBLIGATIONS OF COULTER. Coulter's obligation to issue
and sell the Shares at the Closing is subject to the fulfillment to Coulter's
satisfaction, on or prior to the Closing, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties made by SB in Section 3 hereof shall be true and correct at the date
of the Closing, with the same force and effect as if they had been made on and
as of said date.
(b) PERFORMANCE OF OBLIGATIONS. SB shall have performed and
complied with all agreements and conditions herein required to be performed or
complied with by it on or before the Closing.
(c) QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, or permits, if any, of any governmental authority or regulatory body
of the United States or of any state that are required in connection with the
lawful sale and issuance of the Shares pursuant to this Agreement shall have
been duly obtained and shall be effective on and as of the Closing. No stop
order or other order enjoining the sale of the Shares shall have been issued and
no proceedings for such purpose shall be pending or, to the knowledge of
Coulter, threatened by the SEC or any commissioner of corporations or similar
officer of any state having jurisdiction over this transaction. At the time of
the Closing, the sale and issuance of the Shares shall be legally permitted by
all laws and regulations to which SB and Coulter are subject.
(d) COMPLIANCE CERTIFICATE. SB shall have delivered to Coulter a
Certificate, executed by the President of SB, dated the date of the Closing,
certifying to the fulfillment of the conditions specified in subparagraphs (a)
and (c) of this Subsection 4.2.
6.
<PAGE> 10
5. MISCELLANEOUS.
5.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Delaware as applied to agreements among Delaware
residents, made and to be performed entirely within the State of Delaware.
5.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto.
5.3 ENTIRE AGREEMENT. This Agreement, the Collaboration Agreement, the
Loan Agreements (as defined in the Collaboration Agreement) and the Exhibits
hereto and thereto, and the other documents delivered pursuant hereto and
thereto constitute the full and entire understanding and agreement among the
parties with regard to the subjects hereof, and no party shall be liable or
bound to any other party in any manner by any representations, warranties,
covenants, or agreements except as specifically set forth herein or therein.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto and their respective successors and
assigns, any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided herein.
5.4 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal, or unenforceable, it shall, to the extent practicable, be
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
5.5 AMENDMENT AND WAIVER. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance, either retroactively or prospectively, and either for
a specified period of time or indefinitely), with the written consent of Coulter
and SB. Any amendment or waiver effected in accordance with this Section shall
be binding upon SB, each future holder of the Shares, and Coulter.
5.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power, or remedy accruing to SB or any subsequent holder of any Shares upon any
breach, default or noncompliance of Coulter under this Agreement, shall impair
any such right, power, or remedy, nor shall it be construed to be a waiver of
any such breach, default or noncompliance, or any acquiescence therein, or of
any similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
SB's part of any breach, default or noncompliance under this Agreement or any
waiver on SB's part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing, and that all remedies, either under this Agreement, by law, or
otherwise afforded to SB, shall be cumulative and not alternative.
5.7 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
(a) upon personal delivery, (b) on report of successful transmission by
facsimile machine that automatically generates a
7.
<PAGE> 11
printed report indicating whether transmission was completed successfully, at
the conclusion of each transmission, (c) on the first business day after
receipted delivery to a courier service which guarantees next business-day
delivery, under circumstances in which such guaranty is applicable, or (d) on
the earlier of delivery or five (5) business days after mailing by United States
certified by mail, postage and fees prepaid, to the appropriate party at the
address set forth below or to such other address as the part so notifies the
other in writing:
(a) if to Coulter, to:
COULTER PHARMACEUTICAL, INC.
550 California Avenue, Suite 200
Palo Alto, CA 94306
Facsimile: (650) 842-7303
Attention: President and
Chief Executive Officer
with a copy to:
COOLEY GODWARD LLP
5 Palo Alto Square, 4th Floor
3000 El Camino Real
Palo Alto, CA 94306-2155
Facsimile: (650) 857-0663
Attention: James C. Kitch, Esq.
(b) if to SB, to:
SmithKline Beecham Corporation
One Franklin Plaza (Mail Code FP1930)
P.O. Box 7929
Philadelphia, Pennsylvania 19101
Attention: Senior Vice President,
Business Development
With copies to:
SmithKline Beecham Corporation
One Franklin Plaza (Mail Code FP2355/DP)
Philadelphia, Pennsylvania 19102
Attention: Donald F. Parman
Facsimile: (215) 751-5349
Notwithstanding the foregoing, all notices and other communications to
an address outside of the United States shall be sent by telecopy and confirmed
in writing to be sent by first class mail.
8.
<PAGE> 12
5.8 FINDER'S FEES.
(a) Coulter (i) represents and warrants that it has retained no
finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold SB harmless of and
from any liability for any commission or compensation in the nature of a
finder's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which Coulter or
any of its employees or representatives is responsible.
(b) SB (i) represents and warrants that it has retained no finder
or broker in connection with the transactions contemplated by this Agreement,
and (ii) hereby agrees to indemnify and to hold Coulter harmless of and from any
liability for any commission or compensation in the nature of a finder's fee to
any broker or other person or firm (and the costs and expenses of defending
against such liability or asserted liability) for which SB or any of its
employees or representatives are responsible.
5.9 INFORMATION CONFIDENTIAL. SB acknowledges that any non public
information received by it pursuant hereto is confidential and for SB's use
only, and it will refrain from using such information or reproducing,
disclosing, or disseminating such information to any other person (other than
its employees, affiliates, agents, or partners having a need to know the
contents of such information and its attorneys, in each case who agree to be
bound by this Section 5.9), except in connection with the exercise of rights
under this Agreement, unless such information becomes available to the public
generally or it is required by a governmental body to disclose such information.
5.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
The foregoing Agreement is hereby executed as of the date first above
written.
COULTER PHARMACEUTICAL, INC. SMITHKLINE BEECHAM CORPORATION
By: By:
--------------------------------- ---------------------------------
Printed Name: Printed Name:
----------------------- -----------------------
Title: Title:
------------------------------ ------------------------------
9.
<PAGE> 13
LIST OF EXHIBITS
EXHIBITS
Exhibit A - SCHEDULE OF EXCEPTIONS
Exhibit B - OPINION OF COMPANY'S COUNSEL
1.
<PAGE> 14
EXHIBIT A
SCHEDULE OF EXCEPTIONS
None
1.
<PAGE> 15
EXHIBIT B
OPINION OF COMPANY'S COUNSEL
1.
<PAGE> 1
EXHIBIT 10.22
*** TEXT OMITTED AND FILED SEPARATELY
CONFIDENTIAL TREATMENT REQUESTED
UNER 17C.F.R.SECTIONS 200.80(b)(4),
200.83 AND 240.24b-2
SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of October 23, 1998 ("SECURITY
AGREEMENT"), is made by COULTER PHARMACEUTICAL, INC., a corporation formed under
the laws of the State of Delaware, with its principal place of business at 550
California Avenue, Suite 200, Palo Alto, California 94306, USA ("GRANTOR"), in
favor of SMITHKLINE BEECHAM CORPORATION, with its principal place of business at
One Franklin Plaza, Philadelphia, Pennsylvania 19101, USA ("SECURED PARTY").
This Security Agreement shall not be effective until the Collaboration Agreement
Effective Date.
RECITALS
A. Pursuant to that certain Loan Agreement dated as of even date
herewith by and between Grantor and Secured Party (as the same may from time to
time be amended, modified, supplemented or restated, the "LOAN AGREEMENT"),
Secured Party has agreed to make certain advances of money and to extend certain
financial accommodation to Grantor in the amounts and manner set forth in the
Agreement (collectively, the "LOANS").
B. Secured Party is willing to make the Loans to Grantor, but only upon
the condition, among others, that Grantor shall have executed and delivered to
Secured Party this Security Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce Secured Party to make the Loans and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, Grantor hereby
represents, warrants, covenants and agrees as follows:
1. DEFINED TERMS. When used in this Security Agreement the following
terms shall have the following meanings (such meanings being equally applicable
to both the singular and plural forms of the terms defined):
"004 TRIAL" means Grantor's clinical trial with Protocol No. RIT-II-004
("Multicenter, Pivotal Phase III Study of Iodine-131 Anti-B1 Antibody (Murine)
Radioimmunotherapy for Chemotherapy-Refractory Low-Grade B-Cell Lymphomas and
Low-Grade Lymphomas That Have Transformed to Higher Grade Histologies") for
which enrollment and interim analysis was completed prior to the date first
written above.
1.
<PAGE> 2
"AFFILIATE" means, in the case of either Grantor or Secured Party, any
corporation, joint venture, or other business entity which directly or
indirectly controls, is controlled by, or is under common control with that
Party. "Control," as used in this Section, shall mean having the power to
direct, or cause the direction of, the management and policies of an entity,
whether through ownership of voting securities, by contract or otherwise.
"ANTI-CD20 ANTIBODY" means:
(i) the B1 Murine Antibody or any derivative of the B1 Murine
Antibody, including without limitation, any genetically engineered construct of
the B1 Murine Antibody;
(ii) any other anti-CD20 monoclonal antibody other than the B1
Murine Antibody including, without limitation, human, humanized, primatized, or
chimerized antibody;
(iii) any [...***...] of (i) or (ii),
(iv) any [...***...] of (i) or (ii);
(v) any [...***...] of (i) or (ii);
(vi) any [...***...] of (i) or (ii);
(vii) any [...***...].
"BEXXAR" means B1 Murine Antibody conjugated with 131Iodine or
unconjugated, depending upon context.
"B1 MURINE ANTIBODY" means the unconjugated IgG2a anti-CD20 murine
monoclonal antibody which is one of the active agents tested in the 004 Trial.
"COLLABORATION AGREEMENT" means that certain Collaboration Agreement
entered into as of the same day as this Security Agreement, between Coulter
Pharmaceutical, Inc. and SmithKline Beecham Corporation relating to Bexxar.
"COLLABORATION AGREEMENT EFFECTIVE DATE" has the meaning set forth in
the Collaboration Agreement for the term "Effective Date."
"COLLATERAL" has the meaning assigned to such term in Section 2 of this
Security Agreement.
"CURE DATE" means the date upon which Grantor cures its failure to
maintain a financial covenant set forth in Section 8 of the Loan Agreement.
"EFFECTIVE DATE" means the date upon which Grantor fails to maintain a
financial covenant set forth in Section 8 of the Loan Agreement.
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 3
"EVENT OF DEFAULT" means (i) any failure by Grantor forthwith to pay or
perform any of the Secured Obligations and (ii) any "Event of Default" as
defined in the Loan Agreement.
"INVENTION" means an invention conceived or reduced to practice in the
course of or as a result of the performance of the Collaboration Agreement by an
employee or agent of Grantor.
"KNOW-HOW" means all know-how, including development, manufacture
development and commercialization data, processes and information, including any
copyright relating thereto, owned or controlled by Grantor as of the date first
written above or acquired during the term of this Security Agreement relating
to:
(b) Anti-CD20 Antibody, including any Licensed Compound or Licensed
Product;
(c) any component of (a);
(d) any intermediate in the making of any of (a) or (b);
(e) methods of making any of (a), (b) or (c);
(f) any method of using any of (a), (b), or (c);
(g) any use of (a);
(h) any formulation or delivery system for (a); and/or
(i) any other data related to the development, manufacture,
marketing or sale of (a).
"LICENSED COMPOUND" means Bexxar and any Second Generation Licensed
Compounds.
"LICENSED PATENTS" means all patents or patent applications, throughout
the Territory and all divisionals, continuations, continuations-in-part,
reissues, extensions, supplementary protection certificates thereof, owned or
controlled by Grantor and existing as of the date first written above or filed
or issuing during the term of this Security Agreement, at least one claim of
which covers:
(j) an Anti-CD20 Antibody, including any Licensed Compound or
Licensed Product;
(k) any component of (a);
(l) any intermediate in the making of any of (a) or (b);
(m) methods of making any of (a), (b) or (c);
<PAGE> 4
(n) any method of using any of (a), (b), or (c);
(o) any use of (a);
(p) any formulation or delivery system for (a); and/or
(q) any other Invention related to the development, manufacture,
use or sale of (a).
"LICENSED PRODUCT" means any pharmaceutical product containing a
Licensed Compound in any formulation or mode of administration.
"LIEN" means any mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"NORDION KANATA FACILITY" has the meaning assigned to such term in
Section 9.10.1 of the Collaboration Agreement.
"PERMITTED LIEN" means: (a) any Liens existing on the date of this
Security Agreement or anticipated and set forth on Schedule A attached hereto;
(b) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings; (c) Liens (i) upon or in [...***...] (other than the [...***...] in
[...***...] hereof) [...***...] to secure [...***...] of such
[...***...] or [...***...] solely for the purpose of [...***...]
or (ii) existing [...***...] at the time of [...***...],
provided that [...***...] is [...***...] to [...***...], [...***...] thereon and
the [...***...] of [...***...]; (d) leases or subleases and licenses or
sublicenses granted to others in the ordinary course of Grantor's business not
interfering in any material respect with the business of Grantor; (e) Liens
securing claims or demands of materialmen, mechanics, carriers, warehousemen,
landlords and other like persons or entities imposed without action of such
parties, provided that the payment thereof is not yet required; (f) Liens
incurred or deposits made in the ordinary course of Grantor's business in
connection with worker's compensation, unemployment insurance, social security
and other like laws; (g) Liens arising from judgments, decrees or attachments
not constituting an Event of Default; (h) easements, reservations,
rights-of-way, restrictions, minor defects or irregularities in title and other
similar Liens affecting real property not interfering in any material respect
with the ordinary conduct of the business of Grantor; (i) Liens in favor of
customs and revenue authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of goods; (j) Liens which
constitute setoff rights of a customary nature; (k) Liens [...***...] on
[...***...] subject to [...***...] including [...***...] otherwise [...***...]
and Liens [...***...] pursuant to [...***...] in the [...***...]
(including [...***...] and [...***...]), all [...***...] for the purpose of
[...***...] of [...***...] (including Liens arising from [...***...]; and (l)
Liens incurred in connection with
<PAGE> 5
the extension, renewal or refinancing of the indebtedness secured by Liens of
the type described above, provided that any extension, renewal or replacement
Lien shall be limited to the property encumbered by the existing Lien and the
principal amount of the indebtedness being extended, renewed or refinanced does
not increase.
"PRODUCT ACCOUNTS" has the meaning set forth in Section 2(a)(iii) below.
"RETURN LICENSE" has the meaning set forth in Section 3 below.
"SECOND GENERATION ANTIBODY CANDIDATE" means:
(i) any derivative of the B1 Murine Antibody, including without
limitation, any genetically engineered construct of the B1 Murine Antibody;
(ii) any other anti-CD20 monoclonal antibody other than the B1
Murine Antibody including, without limitation, human, humanized, primatized, or
chimerized antibody,
(iii) any [...***...] of (i) or (ii),
(iv) any [...***...] (i) or (ii),
(v) any [...***...] of (i) or (ii),
(vi) any [...***...] of (i) or (ii),
(vii) any [...***...] of (i) or (ii), or
(viii) any [...***...].
"SECOND GENERATION LICENSED COMPOUND" means a Second Generation Licensed
Compound Candidate (i) for which an SB Option Exercise Notice has been provided
pursuant to Section 4.2.2(a) of the Collaboration Agreement or (ii) which has
become a Second Generation Licensed Compound in accordance with Section
4.2.4(a)-(b) of the Collaboration Agreement.
"SECOND GENERATION LICENSED COMPOUND CANDIDATE" means (i) an
unconjugated Second Generation Antibody Candidate; (ii) B1 Murine Antibody
conjugated to [...***...]; (iii) a
Second Generation Antibody Candidate conjugated to [...***...]; or (iv) a Second
Generation Antibody Candidate conjugated to [...***...].
"SECURED OBLIGATIONS" means (a) the obligation of Grantor to repay
Secured Party all of the unpaid principal amount of, and accrued interest on
(including any interest that accrues after the commencement of bankruptcy), the
Loans in accordance with the terms of the Loan Agreement, and (b) the obligation
of Grantor to pay any fees, costs and expenses of the Secured Party under the
Loan Agreement and under Section 6(c) hereof.
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 6
"TERRITORY" means all countries and territories of the world except for
Japan.
"TRANSFEREE" has the meaning set forth in Section 3 below.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Secured Party's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection of priority and for purposes of
definitions related to such provisions.
In addition, the following terms shall be defined terms having the
meaning set forth for such terms in the UCC (definition sections of the UCC are
noted parenthetically): "Accounts" (9106); "Equipment" (9109(2)); "Proceeds"
(9306(1)). Each of the foregoing defined terms shall include all of such items
now owned, or hereafter acquired, by Grantor.
All capitalized terms used herein and not otherwise defined herein shall
have the respective meanings given to them in the Loan Agreement.
2. GRANT OF SECURITY INTEREST.
(a) As collateral security for the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all the Secured Obligations and in order to induce Secured Party to cause the
Loans to be made, Grantor hereby assigns, conveys, mortgages, pledges,
hypothecates and transfers (and shall cause any of its present and future
Affiliates to assign, convey, mortgage, pledge, hypothecate and transfer) to
Secured Party, and hereby grants to Secured Party, a security interest in all of
Grantor's right, title and interest in, to and under the following (all of which
being collectively referred to herein as the "COLLATERAL"):
(i) The Licensed Patents and Know-How. The Licensed Patents in
existence as of the date first written above are specifically listed on Schedule
C. Schedule C shall be updated by the Grantor on a semi-annual basis;
(ii) All Equipment of Grantor located at, and relating to,
Grantor's second radiolabeling site to be located in North America; provided
that if the second radiolabeling site is the Nordion Kanata Facility, then only
such Equipment acquired in connection with the second radiolabeling site shall
be within the scope of the term Equipment as used in this Section 2(a)(ii);
<PAGE> 7
(iii) All Accounts of Grantor relating to the Licensed Compounds or
Licensed Products pursuant to the Collaboration Agreement and not previously
remitted to Grantor pursuant to Section 3.2.6, Section 3.3.3 and Section 7.1.14
of the Collaboration Agreement as well as any other payments owed to Grantor by
Secured Party under the Collaboration Agreement which have not been previously
remitted to Grantor (the "PRODUCT ACCOUNTS"); and
(iv) To the extent not otherwise included, all Proceeds of each of
the foregoing and all accessions to, substitutions and replacements for and
rents, profits and products of each of the foregoing.
(b) Notwithstanding anything contained in this Security Agreement
to the contrary, the grant of security interest in the Licensed Patents and
Know-How shall be subject to the Return License granted by Secured Party to
Grantor pursuant to Section 3 below.
(c) Notwithstanding anything contained in this Security Agreement
to the contrary, the grant of security interest in the Product Accounts shall
not be effective or otherwise deemed given until the Effective Date, at which
date the terms of this Security Agreement with respect to the Product Accounts
shall become immediately effective without notice or action by Secured Party.
Unless otherwise specified, all rights of Secured Party with respect to the
Product Accounts contained herein shall be effective only on and after the
Effective Date and until the Cure Date, and all obligations of Grantor with
respect to the Product Accounts hereunder shall accrue only on and after the
Effective Date and until the Cure Date.
(d) Secured Party acknowledges and agrees that Grantor has granted,
or shall grant, a first priority security interest in and Liens on the property
of Grantor described in Schedule A hereto.
3. RETURN LICENSE.
(a) Effective upon Secured Party taking any action to exercise any
right or remedy under this Security Agreement with respect to the Collateral
(whether by foreclosure, sale, or otherwise), Security Party hereby grants to
Grantor an exclusive, worldwide, royalty-free license, with the right to
sublicense, to practice the Licensed Patents for any and all purposes other than
those activities which have been licensed to the Secured Party under Section
5.1.2 of the Collaboration Agreement (the "RETURN LICENSE").
(b) At all times prior to the effectiveness of the Return License,
Grantor shall retain the unimpaired, worldwide, royalty-free right to practice,
and to grant licenses to third parties to practice, the Licensed Patents for any
and all purposes other than those activities which have been licensed
exclusively to the Secured Party under Section 5.1.2 of the Collaboration
Agreement, provided that such licenses shall be in accordance with Article 11 of
the Collaboration Agreement. Proceeds realized by the Grantor from licenses
permitted under this Section 3(b) shall be excluded from the definition of
Collateral.
<PAGE> 8
(c) Any transfer of any right, title or interest in or to any
Licensed Patents by Secured Party to a third party (a "TRANSFEREE"), and any
such transfer by a Transferee to any subsequent Transferee, shall at all times
be subject to the Return License. If for any reason Secured Party exercises its
rights and remedies under this Agreement in a manner that causes the right,
title or interest in or to any Licensed Patents to transfer to a Transferee
without the Secured Party first taking title to such Licensed Patents, the
transfer of such right, title or interest in or to the Licensed Patents shall be
conditioned upon, and at all times shall be subject to, the simultaneous grant
by such Transferee (and any or all subsequent Transferees) of a Return License
to Grantor. Secured Party shall not transfer, nor permit the transfer of, any
right, title or interest in or to any Licensed Patents without the simultaneous
grant by the Transferee to Grantor of a Return License, except to the extent
otherwise permitted by the Collaboration Agreement.
(d) The provisions of Article 11 of the Collaboration Agreement
with respect to certain matters related to the prosecution, maintenance and
enforcement of the Licensed Patents are hereby incorporated by reference into
this Agreement to the extent that they are relevant to the Licensed Patents as
described in such provisions.
4. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and
warrants to Secured Party that:
(a) Except for (i) the security interest granted to Secured Party
under this Security Agreement and Permitted Liens, (ii) the co-ownership of
certain Licensed Patents indicated in Schedule C by Grantor and the Regents of
the University of Michigan, (iii) the license of certain Licensed Patents
indicated in Schedule C by Grantor to the Regents of the University of Michigan,
(iv) the license of certain Licensed Patents indicated in Schedule C by Grantor
from the Regents of the University of Michigan, Grantor is the sole legal and
equitable owner of each item of the Collateral in which it purports to grant a
security interest hereunder, having good and marketable title thereto, free and
clear of any and all Liens except for Permitted Liens.
(b) No effective security agreement, financing statement,
equivalent security or lien instrument or continuation statement covering all or
any part of the Collateral exists, except such as may have been filed by Grantor
in favor of Secured Party pursuant to this Security Agreement except for
Permitted Liens.
(c) This Security Agreement creates a legal and valid security
interest on and in all of the Collateral in which Grantor now has rights and all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly taken, except to the extent necessary to
perfect and protect such security interest in the Licensed Patents registered
outside the United States. Accordingly, Secured Party has a fully perfected
first priority security interest in all of the Collateral in which Grantor now
has rights subject only to Permitted Liens, and except with respect to Licensed
Patents registered outside the United States. This Security Agreement will
create a legal and valid and first priority security interest in the Collateral
in
<PAGE> 9
which Grantor later acquires rights, when Grantor acquires those rights,
subject only to Permitted Liens.
(d) Grantor's chief executive office, principal place of business
and the place where Grantor maintains its records concerning the Collateral are
presently located at the address set forth on the signature page hereof. The
Collateral is presently located at such address and at such additional addresses
set forth on Schedule B attached hereto.
5. COVENANTS. Grantor covenants and agrees with Secured Party that from
and after the date of this Security Agreement and until the Secured Obligations
have been performed and paid in full:
5.1 DISPOSITION OF COLLATERAL. Grantor shall not sell, lease,
transfer or otherwise dispose of any of the Collateral, or attempt or contract
to do so, other than the disposal of worn-out or obsolete Equipment, all in the
ordinary course of Grantor's business, or unless otherwise authorized to do so
by the prior approval of Secured Party as evidenced in writing.
5.2 RELOCATION OF BUSINESS OR COLLATERAL. Grantor shall not
relocate its chief executive office, principal place of business or its records,
or allow the relocation of any Collateral (except as allowed pursuant to Section
4.1 immediately above) from such address(es) provided to Secured Party pursuant
to Section 3(d) above without twenty (20) days prior written notice to Secured
Party.
5.3 LIMITATION ON LIENS ON ASSETS. Grantor shall not create, incur,
assume or permit to exist any Lien (including the charge upon Property at any
time purchased or acquired under conditional sale or other title retention
agreement) upon any asset now owned or hereafter acquired by it, other than
Permitted Liens and Liens in favor of Secured Party.
5.4 INSURANCE. Maintain insurance policies insuring the Collateral
against loss or damage from such risks and in such amounts and forms and with
such companies as are customarily maintained by businesses similar to Grantor.
5.5 TAXES, ASSESSMENTS, ETC. Grantor shall pay promptly when due
all property and other taxes, assessments and government charges or levies
imposed upon, and all claims (including claims for labor, materials and
supplies) against, the Equipment, Fixtures or Inventory, except to the extent
the validity thereof is being contested in good faith and adequate reserves are
being maintained in connection therewith.
5.6 MAINTENANCE OF RECORDS. Grantor shall keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral.
5.7 FURTHER ASSURANCES. Grantor shall execute and deliver financing
and continuation statements for filing and recording under the UCC or other
applicable law, landlord waivers, mortgagee waivers and other documents which
Secured Party may request, in order to
<PAGE> 10
perfect, preserve or enforce Secured Party's security interest in the Collateral
or to enable Secured Party to exercise any of its rights hereunder, and shall
pay all reasonable attorneys' fees and expenses in connection therewith.
6. Rights and Remedies Upon Default.
(a) Beginning on the date any Event of Default (other than an Event
of Default under Section 10(d) of the Loan Agreement, which shall be subject to
the expiration of the cure period outlined in Section 13.3.1 of the
Collaboration Agreement) shall have occurred and while such Event of Default is
continuing, Secured Party may exercise in addition to all other rights and
remedies granted to it under this Security Agreement, all rights and remedies of
a secured party under the UCC; provided, however, that the exercise of any such
remedies shall in all events be subject to and limited by the provisions of
Section 3 relating to a Return License to Grantor.
(b) Secured Party and Grantor understand and agree that money
damages would not be a sufficient remedy for any breach of Article 3 of this
Security Agreement by Secured Party, and that Grantor shall be entitled to
specific performance and injunctive or other equitable relief as a remedy for
any such breach. Such remedy shall not be deemed to be the exclusive remedy for
breach of this Security Agreement, but shall be in addition to all other
remedies available at law or equity to Grantor. No failure or delay by Grantor
in exercising any right or remedy hereunder shall operate as a waiver thereof,
and no single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right or remedy hereunder.
(c) Grantor also agrees to pay all fees, costs and expenses of
Secured Party, including, without limitation, reasonable attorneys' fees,
incurred in connection with the enforcement of any of its rights and remedies
hereunder.
(d) Grantor hereby waives presentment, demand, protest or any
notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(e) The Proceeds of any sale, disposition or other realization upon
all or any part of the Collateral shall be distributed by Secured Party in the
following order of priorities:
FIRST, to Secured Party in an amount sufficient to pay in full the
reasonable costs of Secured Party in connection with such sale, disposition or
other realization, including all fees, costs, expenses, liabilities and advances
incurred or made by Secured Party in connection therewith, including, without
limitation, reasonable attorneys' fees;
SECOND, to Secured Party in an amount equal to the then unpaid Secured
Obligations; and
<PAGE> 11
FINALLY, upon payment in full of the Secured Obligations, to Grantor or
its representatives, in accordance with the UCC or as a court of competent
jurisdiction may direct.
7. INDEMNITY. Grantor agrees to defend, indemnify and hold harmless
Secured Party and its officers, employees, and agents against (a) all
obligations, demands, claims and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Security
Agreement and (b) all losses or expenses in any way suffered, incurred or paid
by Secured Party as a result of or in any way arising out of, following or
consequential to transactions between Secured Party and Grantor, whether under
this Security Agreement or otherwise (including without limitation, reasonable
attorneys fees and expenses), except for losses arising from or out of Secured
Party's gross negligence or willful misconduct.
8. LIMITATION ON SECURED PARTY'S DUTY IN RESPECT OF COLLATERAL. Secured
Party shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it takes such action as Grantor requests
in writing, but failure of Secured Party to comply with any such request shall
not in itself be deemed a failure to act reasonably and no failure of Secured
Party to do any act not so requested shall be deemed a failure to act
reasonably.
9. REINSTATEMENT. This Security Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Grantor for liquidation or reorganization, should Grantor become insolvent or
make an assignment for the benefit of creditors or should a receiver or trustee
be appointed for all or any significant part of Grantor's property and assets
and shall continue to be effective or be reinstated, as the case may be, if at
any time payment and performance of the Secured Obligations, or any part
thereof, is, pursuant to applicable law, rescinded or reduced in amount or must
otherwise be restored or returned by any obligee of the Secured Obligations,
whether as a "voidable preference," "fraudulent conveyance" or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Secured Obligations shall be reinstated and deemed reduced only by such amount
paid and not so rescinded, reduced, restored or returned.
10. MISCELLANEOUS.
10.1 NO WAIVER; CUMULATIVE REMEDIES.
(a) Secured Party shall not by any act, delay, omission or
otherwise be deemed to have waived any of its respective rights or remedies
hereunder, nor shall any single or partial exercise of any right or remedy
hereunder on any one occasion preclude the further exercise thereof or the
exercise of any other right or remedy.
(b) The rights and remedies hereunder provided are cumulative
and may be exercised singly or concurrently and are not exclusive of any rights
and remedies provided by law.
<PAGE> 12
(c) None of the terms or provisions of this Security Agreement
may be waived, altered, modified or amended except by an instrument in writing,
duly executed by Grantor and Secured Party.
10.2 TERMINATION OF THIS SECURITY AGREEMENT. Subject to Section 9
hereof, this Security Agreement shall terminate upon the payment and performance
in full of the Secured Obligations.
10.3 SUCCESSOR AND ASSIGNS. Neither party may assign or transfer
this Security Agreement or any rights or obligations hereunder without the prior
written consent of the other which shall not be unreasonably withheld, except a
party may make such an assignment without the other party's consent to
Affiliates or to a successor to substantially all of the pharmaceutical business
of such party, whether in a merger, sale of stock, sale of assets or other
transaction. Any permitted successor or assignee of rights and/or obligations
hereunder shall, in a writing to the other party, expressly assume performance
of such rights and/or obligations. Any permitted assignment shall be binding on
the successors of the assigning party. Any assignment or attempted assignment by
either party in violation of the terms of this Section 10 shall be null and void
and of no legal effect.
10.4 GOVERNING LAW. In all respects, including all matters of
construction, validity and performance, this Security Agreement and the Secured
Obligations arising hereunder shall be governed by, and construed and enforced
in accordance with, the laws of the State of Delaware applicable to contracts
made and performed in such State, excluding conflict of laws principles that
would cause the application of laws of any other jurisdiction, provided that the
laws of the State of California shall be applied to the granting and perfection
of the Secured Obligations arising hereunder.
<PAGE> 13
In Witness Whereof, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.
ADDRESS OF GRANTOR COULTER PHARMACEUTICAL, INC.
550 California Avenue, Suite 200 By:
---------------------------------
Palo Alto, California 94306 Printed Name:
-----------------------
U.S.A. Title:
------------------------------
ADDRESS OF SECURED PARTY SMITHKLINE BEECHAM CORPORATION
One Franklin Plaza By:
---------------------------------
Philadelphia, Pennsylvania 19101 Printed Name:
-----------------------
U.S.A. Title:
------------------------------
<PAGE> 14
SCHEDULE A
LIENS EXISTING OR ANTICIPATED ON THE DATE OF THIS SECURITY AGREEMENT
1. Liens to secure payment and performance of any and all Funded
Indebtedness owing by Grantor to a Senior Lender in an aggregate principal
amount not to exceed U.S. $10,000,000, which Liens shall include a first
priority security interest in certain personal property of Grantor except the
Licensed Patents and Know-How, and the Equipment of Grantor described in Section
2(a)(ii) hereof.
2. Liens to secure payment and performance of that Equipment Lease
Financing Agreement dated as of December 6, 1996, between Grantor and Lease
Management Services, Inc.
3. Letter of Credit pursuant to the Lease Agreement dated November 7, 1997,
by and between HMS Gateway Office L.P. and Grantor.
4. Liens granted pursuant to the Facilities Agreement between MDS Nordion,
Inc., and Grantor dated August 31, 1998.
1.
<PAGE> 15
[USE IF COLLATERAL IS LOCATED AT PLACES OTHER THAN ADDRESS ON SIGNATURE PAGE.]
SCHEDULE B
LOCATION OF COLLATERAL
ENTITY ADDRESS
1.
<PAGE> 16
SCHEDULE C
LICENSED PATENTS
<TABLE>
<CAPTION>
ATTORNEY SERIAL NO. / FILED/
DOCKET NO. PATENT NO. ISSUED TITLE
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
[...***...] [...***...] [...***...] [...***...]
</TABLE>
* Claims priority/effective filing date of earlier application
** ABANDONED in favor of Serial No. [...***...]
OWNERSHIP INTERESTS:
[...***...]: Co-owned by Grantor and the Regents of the University of
Michigan.
[...***...]: Owned by Grantor, with limited license back to MDS Nordion,
Inc.
[...***...]: Owned by the Regents of the University of Michigan, with
license to Grantor.
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 17
EXHIBIT A
TO
FINANCING STATEMENT BETWEEN
SMITHKLINE BEECHAM CORPORATION, AS SECURED PARTY
AND
COULTER PHARMACEUTICAL, INC., AS DEBTOR
- --------------------------------------------------------------------------------
This Financing Statement covers all right, title and interest of the
Debtor in, to and under all of the following (collectively, the "COLLATERAL"):
(a) The Licensed Patents and Know-How. The Licensed Patents in
existence as of the date first written above are specifically listed on Schedule
C. Schedule C shall be updated by the Grantor on a semi-annual basis;
(b) All Equipment of Grantor located at, and relating to,
Grantor's second radiolabeling site to be located in North America; provided if
the second radiolabeling site is located at the Nordion Kanata, Canada
radiolabeling site, then only such Equipment acquired in connection with the
second radiolabeling site shall be within the scope of the term Equipment as
used in this Section (b);
(c) All Accounts of Debtor relating to the Licensed Compounds
or Licensed Products pursuant to the Collaboration Agreement and not previously
remitted to Debtor pursuant to Section 3.2.6, Section 3.3.3 and Section 7.1.14
of the Collaboration Agreement, as well as any other payments owed to Debtor by
Secured Party under the Collaboration Agreement which have not been previously
remitted to Debtor (the "PRODUCT ACCOUNTS"); and
(d) To the extent not otherwise included, all Proceeds of each
of the foregoing and all accessions to, substitutions and replacements for and
rents, profits and products of each of the foregoing.
The grant of the security interest in the Licensed Patents and Know-How
shall be subject to the Return License granted by Secured Party to Grantor
pursuant to Section 3 of the Security Agreement dated as of October 23, 1998,
between Grantor and Secured Party (the "SECURITY AGREEMENT").
The grant of the security interest in the Product Accounts shall not be
effective or otherwise deemed given until the Effective Date (as defined in the
Security Agreement), at which date the terms of the Security Agreement with
respect to the Product Accounts shall become immediately effective without
notice or action by Secured Party. Unless otherwise specified, all rights of
Secured Party with respect to the Product Accounts contained herein shall be
effective only on and after the Effective Date and until the Cure Date (as
defined in the Security Agreement), and all obligations of Grantor with respect
to the Product Accounts shall accrue only on and after the Effective Date and
until the Cure Date.
1.
<PAGE> 18
Defined Terms. When used herein the following terms shall have the
following meanings (such meanings being equally applicable to both the singular
and plural forms of the terms defined):
"004 TRIAL" means Grantor's clinical trial with Protocol No. RIT-II-004
("Multicenter, Pivotal Phase III Study of Iodine-131 Anti-B1 Antibody (Murine)
Radioimmunotherapy for Chemotherapy-Refractory Low-Grade B-Cell Lymphomas and
Low-Grade Lymphomas That Have Transformed to Higher Grade Histologies") for
which enrollment and interim analysis was completed prior to the date first
written above.
"ANTI-CD20 ANTIBODY" means:
(i) the B1 Murine Antibody or any derivative of the B1 Murine
Antibody, including without limitation, any genetically engineered construct of
the B1 Murine Antibody;
(ii) any other anti-CD20 monoclonal antibody other than the B1
Murine Antibody including, without limitation, human, humanized, primatized, or
chimerized antibody;
(iii) any [...***...] of (i) or (ii),
(iv) any [...***...] of (i) or (ii);
(v) any [...***...] of (i) or (ii);
(vi) any [...***...] of (i) or (ii);
(vii) any [...***...].
"BEXXAR" means B1 Murine Antibody conjugated with 131Iodine or
unconjugated, depending upon context.
"B1 MURINE ANTIBODY" means the unconjugated IgG2a anti-CD20 murine
monoclonal antibody which is one of the active agents tested in the 004 Trial.
"INVENTION" means an invention conceived or reduced to practice in the
course of or as a result of the performance of the Collaboration Agreement by an
employee or agent of Grantor.
"KNOW-HOW" means all know-how, including development, manufacture
development and commercialization data, processes and information, including any
copyright relating thereto, owned or controlled by Grantor as of the date first
written above or acquired during the term of this Security Agreement relating
to:
(e) Anti-CD20 Antibody, including any Licensed Compound or
Licensed Product;
(f) any component of (a);
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 19
(g) any intermediate in the making of any of (a) or (b);
(h) methods of making any of (a), (b) or (c);
(i) any method of using any of (a), (b), or (c);
(j) any use of (a);
(k) any formulation or delivery system for (a); and/or
(l) any other data related to the development,
manufacture, marketing or sale of (a).
"LICENSED COMPOUND" means Bexxar and any Second Generation Licensed
Compounds.
"LICENSED PATENTS" means all patents or patent applications, throughout
the Territory and all divisionals, continuations, continuations-in-part,
reissues, extensions, supplementary protection certificates thereof, owned or
controlled by Grantor and existing as of the date first written above or filed
or issuing during the term of this Security Agreement, at least one claim of
which covers:
(m) an Anti-CD20 Antibody, including any Licensed Compound
or Licensed Product;
(n) any component of (a);
(o) any intermediate in the making of any of (a) or (b);
(p) methods of making any of (a), (b) or (c);
(q) any method of using any of (a), (b), or (c);
(r) any use of (a);
(s) any formulation or delivery system for (a); and/or
(t) any other Invention related to the development,
manufacture, use or sale of (a).
"LICENSED PRODUCT" means any pharmaceutical product containing a
Licensed Compound in any formulation or mode of administration.
"SECOND GENERATION ANTIBODY CANDIDATE" means:
(i) any derivative of the B1 Murine Antibody, including
without limitation, any genetically engineered construct of the B1 Murine
Antibody;
<PAGE> 20
(ii) any other anti-CD20 monoclonal antibody other than the
B1 Murine Antibody including, without limitation, human, humanized, primatized,
or chimerized antibody,
(iii) any [...***...] of (i) or (ii),
(iv) any [...***...] of (i) or (ii),
(v) any [...***...] of (i) or (ii),
(vi) any [...***...] of (i) or (ii),
(vii) any [...***...] of (i) or (ii), or
(viii) any [...***...].
"SECOND GENERATION LICENSED COMPOUND" means a Second Generation Licensed
Compound Candidate (i) for which an SB Option Exercise Notice has been provided
pursuant to Section 4.2.2(a) of the Collaboration Agreement or (ii) which has
become a Second Generation Licensed Compound in accordance with Section
4.2.4(a)-(b) of the Collaboration Agreement.
"SECOND GENERATION LICENSED COMPOUND CANDIDATE" shall mean (i) an
unconjugated Second Generation Antibody Candidate; (ii) B1 Murine Antibody
conjugated to [...***...]; (iii) a Second Generation Antibody Candidate
conjugated to [...***...]; or (iv) a Second Generation Antibody Candidate
conjugated to [...***...].
"TERRITORY" means all countries and territories of the world except for
Japan.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of California; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the attachment,
perfection or priority of Secured Party's security interest in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection of priority and for purposes of
definitions related to such provisions.
In addition, the following terms shall be defined terms having the
meaning set forth for such terms in the UCC (definition sections of the UCC are
noted parenthetically): "Accounts" (9106); "Equipment" (9109(2)); "Proceeds"
(9306(1)). Each of the foregoing defined terms shall include all of such items
now owned, or hereafter acquired, by Debtor.
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 21
SCHEDULE C TO EXHIBIT A
LICENSED PATENTS
<TABLE>
<CAPTION>
ATTORNEY SERIAL NO. / FILED/
DOCKET NO. PATENT NO. ISSUED TITLE
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
[...***...] [...***...] [...***...] [...***...]
</TABLE>
* Claims priority/effective filing date of earlier application
** ABANDONED in favor of Serial No. [...***...]
OWNERSHIP INTERESTS:
[...***...]: Co-owned by Grantor and the Regents of the University of
Michigan.
[...***...]: Owned by Grantor, with limited license back to MDS Nordion,
Inc.
[...***...]: Owned by the Regents of the University of Michigan, with
license to Grantor.
*CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE> 1
EXHIBIT 10.23
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 240.24b-2
GRANT OF SECURITY INTEREST
(PATENTS AND PATENT APPLICATIONS)
THIS GRANT OF SECURITY INTEREST (PATENTS AND PATENT APPLICATIONS) is
dated as of October 23, 1998, between COULTER PHARMACEUTICAL, INC., a
corporation formed under the laws of the State of Delaware, having its principal
place of business at 550 California Avenue, Suite 200, Palo Alto, California
94306, USA (the "Assignor"), and SMITHKLINE BEECHAM CORPORATION, with its
principal place of business at One Franklin Plaza, Philadelphia, Pennsylvania
19101, USA ( the "Assignee").
WHEREAS, pursuant to a certain Loan Agreement dated as of even date
herewith (as the same may be amended, modified, supplemented or restated from
time to time, the "Loan Agreement"), by and between the Assignor and the
Assignee, the Assignee has agreed to make certain advances of money and to
extend certain financial accommodations to Assignee in the amounts and manner
set forth in the Loan Agreement (collectively, the "Loans").
WHEREAS, pursuant to the terms of a certain Security Agreement dated as
of even date herewith (as the same may be amended, modified, supplemented or
restated, the "Security Agreement"), made by the Assignor in favor of the
Assignee, the Assignor has granted to the Assignee a security interest in all of
the Assignor's right, title and interest, whether presently existing or
hereafter arising or acquired, in, to and under all of the Assignor's
"Collateral," as defined in the Security Agreement.
WHEREAS, the Assignee is willing to make the Loans to the Assignor, but
only upon the condition, among others, that the Assignor shall grant a security
interest and assign for security purposes (and not as an absolute assignment) in
favor of and to the Assignee, all of its right, title and interest in and to all
Licensed Patents (as defined in the Security Agreement) to secure the
Obligations of the Assignee under the Loan Agreement and the other Loan
Documents.
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, as collateral security for the prompt and complete payment
when due of its Obligations under the Loan Agreement, the Note and the other
Loan Documents, the Assignor hereby represents, warrants, covenants and agrees
as follows:
1. Unless otherwise defined herein, the terms defined in the Loan
Agreement are used herein as therein defined.
2. To secure its Obligations, the Assignor does hereby mortgage and
pledge to the Assignee, and grant to the Assignee a security interest in, all of
the Assignor's right, title and interest in, to and under its Licensed Patents,
including, without limitation the patents and patent
1.
<PAGE> 2
applications listed on Schedule A attached hereto, including, without
limitation, all proceeds thereof.
The Assignee does hereby further acknowledge and affirm that the rights
and remedies of the Assignor with respect to the assignment of and security
interest in the Collateral made and granted hereby are more fully set forth in
the Security Agreement, the terms and provisions of which are hereby
incorporated herein by reference.
Following the termination of the Security Agreement in accordance with
its terms, the Licensed Patents, Know-How and any and all financing statements
filed on behalf of the Assignee will be automatically reassigned to the
Assignor, and the Assignee will execute such instruments as may be reasonably
requested to evidence such reassignment.
2.
<PAGE> 3
In Witness Whereof, each of the parties have caused this Grant of
Security Interest (Patents and Patent Applications) to be duly executed by its
officers thereunto duly authorized as of the date first written above.
ASSIGNOR:
COULTER PHARMACEUTICAL, INC.,
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
ASSIGNEE:
SMITHKLINE BEECHAM CORPORATION
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
3.
<PAGE> 4
SCHEDULE A
LICENSED PATENTS
<TABLE>
<CAPTION>
ATTORNEY SERIAL NO. / FILED/
DOCKET NO. PATENT NO. ISSUED TITLE
- ----------- ----------- ----------- -----------
<S> <C> <C> <C>
[...***...] [...***...] [...***...] [...***...]
</TABLE>
* Claims priority/effective filing date of earlier application
** ABANDONED in favor of Serial No. [...***...]
OWNERSHIP INTERESTS:
[...***...] Co-owned by Grantor and the Regents of the University of
Michigan.
[...***...] Owned by Grantor, with limited license back to MDS Nordion,
Inc.
[...***...] Owned by the Regents of the University of Michigan, with
license to Grantor.
*CONFIDENTIAL TREATMENT REQUESTED
SCHEDULE A
PAGE 1 OF 1
<PAGE> 1
Exhibit 10.24
*** Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 240.24b-2
LOAN AGREEMENT
THIS LOAN AGREEMENT is entered into as of October 23, 1998 (this "Loan
Agreement"), between COULTER PHARMACEUTICAL, INC., a corporation formed under
the laws of the State of Delaware, with its principal place of business at 550
California Avenue, Suite 200, Palo Alto, California 94306, USA ("Borrower"), and
SMITHKLINE BEECHAM CORPORATION, a corporation formed under the laws of the
Commonwealth of Pennsylvania, with its principal place of business at One
Franklin Plaza, Philadelphia, Pennsylvania 19101, USA ("Lender"). This Loan
Agreement shall not be effective until the Effective Date.
1. DEFINITIONS. As used in this Loan Agreement and unless otherwise
defined herein, all initially capitalized terms shall have the meanings set
forth on EXHIBIT A attached hereto and incorporated herein by this reference.
2. COMMITMENT. Subject to all the terms and conditions of this Loan
Agreement and prior to the termination of its commitment as hereinafter
provided, Lender hereby agrees to make loans (each a "Loan" and collectively
"Loans") to Borrower, from time to time and in such amounts as Borrower shall
request pursuant to SECTION 2(a) hereof up to, but not exceeding, an aggregate
unpaid principal balance of U.S. $15,000,000 (the "Commitment"). If at any time
or for any reason, the outstanding principal amount of the Loans is greater than
the Commitment, Borrower shall immediately pay to Lender the amount of such
excess. The Commitment of Lender, pursuant to the terms of this Loan Agreement,
to make Loans shall expire on the date that is twenty-four (24) months after the
Effective Date (the "Expiration Date"). Borrower promises to pay to Lender the
entire outstanding unpaid principal balance (and all accrued unpaid interest
thereon) of the Loans no later than the date that is sixty (60) months after the
Effective Date ("Maturity Date").
(a) LOANS. At any time from the Effective Date and prior to the
Expiration Date, Borrower may from time to time request Loans from Lender for
the purpose of clinical development, process development, manufacture, and sales
and marketing of Bexxar, in accordance with the Collaboration Agreement.
(b) PRINCIPAL PAYMENTS. (i) In the event that Borrower's EBITDA for
the twelve (12) month period ending September 30, 2001 exceeds U.S. $[...***...]
then on the date that is thirty-six (36) months after the Effective Date,
Borrower shall make a principal payment of an amount equal to [***]
percent ([...***...]%) of then outstanding principal balance of the Loans;
(ii) in the event that Borrower's EBITDA for the twelve (12) month period
ending September 30, 2002 exceeds U.S. $[...***...], then on the date that is
forty-eight (48) months after the Effective Date, Borrower shall make a
principal payment of an amount equal to [...***...]
*Confidential Treatment Requested
1.
<PAGE> 2
percent ([...***...]%) of then outstanding principal balance of the Loans; and
(iii) Borrower shall repay the entire outstanding unpaid principal balance of
the Loans, together with all accrued unpaid interest thereon, on the Maturity
Date. At the Borrower's option under this SECTION 2(B), principal payments,
together with all accrued unpaid interest thereon, may be paid in cash or the
amount of Borrower's Common Stock ("Shares") equal to the quotient of the amount
repaid divided by the Share Price (as hereinafter defined). The "Share Price"
shall be the closing price of Borrower's Common Stock on the Nasdaq National
Market, as reported by the Wall Street Journal, Western Edition (the "Wall
Street Journal"), on the last trading day preceding the payment date. In the
event the number of Shares so calculated would include a fraction of a Share,
the number of Shares shall be decreased to the nearest whole number of Shares
and the balance of the amount to be repaid shall be paid in cash. Any Shares
delivered pursuant to this SECTION 2(b) shall be issued pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and shall
be freely tradable.
(c) PREPAYMENTS. Borrower may prepay the Loans in cash, or Shares
equal to the quotient of the amount repaid divided by the Share Price, at any
time (including, without limitation, upon the occurrence of an Event of Default)
in full, or in part, in minimum amounts of U.S. $100,000. In the event the
number of Shares so calculated would include a fraction of a Share, the number
of Shares shall be decreased to the nearest whole number of Shares and the
balance of the amount to be repaid shall be paid in cash. Any Shares delivered
pursuant to this SECTION 2(c) shall be issued pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and shall
be freely tradable.
3. PAYMENT OF INTEREST ON ALL LOANS.
(a) INTEREST RATES. Each Loan shall bear interest on the outstanding
principal amount thereof from the date when made until paid in full at a fixed
rate per annum equal to the Prime Rate in effect on the date such Loan is
advanced, or the maximum permissible rate by law (which under the laws of the
State of Delaware shall be deemed to be the laws relating to the permissible
rate of interest on commercial loans), whichever is less.
(b) INTEREST PAYMENT DATES. Interest on each Loan shall be paid in
cash in arrears on the last day of each March, June, September and December.
Interest shall also be paid in cash on the date of any prepayment of any Loans
pursuant to SECTION 2(c) of this Loan Agreement for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof.
(c) CALCULATION OF INTEREST. Interest on the Loans shall be computed
on the basis of a 365/366-day year and the actual number of days elapsed.
4. CONDITIONS TO ADVANCE OF LOANS. The Borrower shall initiate an
advance under this Loan Agreement by written request to the Lender delivered not
less than three Business Days prior to the date of the requested advance. The
obligation of Lender to consummate the loan transaction contemplated under this
Loan Agreement and the other Loan Documents, and to advance each Loan hereunder
is subject to the satisfaction of the following conditions precedent:
*Confidential Treatment Requested
2.
<PAGE> 3
(a) Lender shall have received this Loan Agreement and all of the
other Loan Documents duly executed and delivered by Borrower.
(b) There shall not exist a condition which would constitute an Event
of Default.
(c) There shall not exist a breach of any of the financial covenants
set forth in SECTION 8 hereof.
(d) All representations and warranties shall be and continue to be
true and correct.
(e) Borrower shall have cash and marketable securities available for
sale in an aggregate amount not less than [...***...], net of the amount of any
Loans made during the immediately preceding ninety (90) day period.
(f) The aggregate principal amount of Loans which would be
outstanding following any requested advance shall not exceed the Borrower's
share of the expenses approved by the JDC and/or the JCC in accordance with the
provisions of the Collaboration Agreement.
(g) Borrower shall deliver a certificate in the form of Exhibit C
hereto signed by the Chief Financial Officer of the Borrower certifying
compliance by the Borrower with each of the conditions precedent set forth in
SECTIONS 4(A) through 4(E) as of the date of the requested advance.
(h) Borrower shall have established the Cash Collateral Account.
5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Lender: (a) Borrower is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware, U.S.A., and the
execution, delivery and performance of each of the Loan Documents to which it is
a party are within Borrower's powers, have been duly authorized and are not in
conflict with law or the terms of any articles of incorporation, bylaws or other
charter documents, or of any indenture, agreement or undertaking to which
Borrower is a party or by which Borrower is bound or affected; (b) this Loan
Agreement and the other Loan Documents to which it is a party constitute legal,
valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms; (c) except for Permitted Liens, Borrower
owns and has good title to or has valid leases or licenses for the use of all of
its Property free and clear of all Liens, and has not executed any security
documents or financing statements relating to such Property; (d) there is no
material litigation or other proceeding pending or threatened against or
affecting Borrower, and Borrower is not in default with respect to any order,
writ, injunction, decree or demand of any court or other governmental or
regulatory authority; (e) as of the date first written above the Borrower has no
Subsidiaries other than Coulter Pharma Belgium; (f) there exists no condition
which constitutes an Event of Default; and (g) there has been no material
adverse change in the financial condition, results or operations or
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 4
prospects of the Borrower since the date of the Borrower's annual report on Form
10-K for the year ending December 31, 1997.
6. AFFIRMATIVE COVENANTS. Borrower affirmatively covenants and agrees
that so long as any Obligations shall be outstanding or the Commitment shall be
available, it will:
(a) Promptly notify Lender in writing of any attachment or other
legal process levied against any of the Collateral and any information received
by Borrower relative to the Collateral which may in any way affect the value of
the Collateral or the rights and remedies of Lender in respect thereto;
(b) Maintain and preserve all rights, franchises and other authority
adequate and necessary for the conduct of its business and maintain and preserve
its existence in the State of its organization and any other state(s) in which
Borrower conducts its business, except with respect to such other state(s) in
which the failure to do so would not have a material adverse effect on the
business or financial condition of Borrower;
(c) Maintain public liability, property damage and workers
compensation insurance and insurance on all its insurable property against fire
and other hazards with responsible insurance carriers to the extent usually
maintained by similar businesses;
(d) Maintain its properties, equipment and facilities in good order
and repair;
(e) Use all Loan proceeds solely for the purpose of clinical
development, process development, manufacture, and sales and marketing of
Bexxar, in accordance with the Collaboration Agreement; and
(f) Cause each domestic Subsidiary of Borrower hereafter formed or
acquired to execute and deliver a Guaranty to Lender, such Guaranty to be in the
form attached hereto as Exhibit D.
7. NEGATIVE COVENANTS. Borrower covenants and agrees that so long as any
Obligations shall be outstanding or the Commitment shall be available, Borrower
will not, without the prior written consent of Lender:
(a) Create, incur, assume or permit to exist any Lien (including the
charge upon Property at any time purchased or acquired under conditional sale or
other title retention agreement) upon any asset now owned or hereafter acquired
by it, other than Permitted Liens and Liens in favor of Lender;
(b) Sell, dispose of or grant a security interest in any of the
Collateral other than to Lender (other than the disposing of tangible assets
which are obsolete or otherwise considered surplus), or execute any financing
statements covering the Collateral in favor of any Person other than Lender or
the beneficiary of a Permitted Lien; and
4.
<PAGE> 5
(c) Borrow an aggregate principal amount of Loans during any twelve
(12) month period in excess of Borrower's share of the expenses for that period
approved by the JDC and/or the JCC in accordance with the provisions of the
Collaboration Agreement.
8. FINANCIAL COVENANTS. Borrower covenants and agrees that so long as
any Obligations shall be outstanding or any Commitment shall be available,
Borrower shall maintain all of the following financial covenants; provided,
however, that in no event shall [...***...] the following financial covenants
[...***...]:
(a) MINIMUM REMAINING MONTHS LIQUIDITY. Until such time as Borrower
maintains a Debt Service Coverage Ratio of not less than [...***...] for two (2)
consecutive Fiscal Quarters, maintain as at the end of each Fiscal Quarter, a
Remaining Months Liquidity of not less than six (6) months.
(b) MINIMUM DEBT SERVICE COVERAGE RATIO. Maintain as at the end of
each Fiscal Quarter, a Debt Service Coverage Ratio of not less than [...***...];
provided, however, that Borrower shall be deemed to satisfy this covenant so
long as Borrower maintains Remaining Months Liquidity of not less than six (6)
months.
(c) MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Maintain as at the end
of each Fiscal Quarter, Consolidated Tangible Net Worth of an amount not less
than [...***...].
(d) MAXIMUM CONSOLIDATED LEVERAGE RATIO. Maintain as at the end of
each Fiscal Quarter, a Consolidated Leverage Ratio of not greater than
[...***...].
In the event that Borrower fails to maintain any of the foregoing financial
covenants, then no later than three Business Days after the date that Borrower
becomes aware of any such failure, Borrower shall deposit into the Cash
Collateral Account (as defined below) an amount of cash (the "Cash Collateral")
not less than the then-outstanding principal amount of the Loans, grant to
Lender a first priority perfected security interest in the Cash Collateral
Account, and provide to Lender any documentation required to evidence and
perfect such security interest under applicable law. The "Cash Collateral
Account" shall be a deposit account of any domestic commercial bank (or the
parent company of such bank) whose short-term commercial paper rating from
Standard & Poor's Rating Group is at least A-1 or the equivalent thereof or from
Moody's Investors Service, Inc. is at least P-1 or the equivalent thereof;
provided that the Cash Collateral Account shall be "blocked" such that Lender
shall have control, as defined under the Uniform Commercial Code of the
applicable jurisdiction, of the Cash Collateral Account at any time Borrower has
failed to maintain a financial covenant set forth in SECTION 8 hereof and until
such time as Borrower has cured such failure to maintain such financial
covenants. Notwithstanding anything to the contrary herein, so long as Borrower
has satisfied any contractual obligation to any Senior Lender to provide cash
collateral to secure such Senior Lender's Funded Indebtedness upon the failure
of Borrower to maintain financial covenants for the benefit of such Senior
Lender (and such Senior Lender has not waived such requirement prior to the date
upon which Borrower cures its failure to maintain such financial covenants),
then the
*CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 6
principal amount of the required Cash Collateral shall be reduced by the value
of Product Accounts (as defined in the Security Agreement); provided, that if
Senior Lender thereafter waives Borrower's cash collateral requirement to such
Senior Lender, no later than three Business Days thereafter Borrower shall
deposit into the Cash Collateral Account cash in a principal amount not less
than the difference between the then-outstanding principal amount of the Loans
and any then-existing Cash Collateral; provided further, on the date upon which
Borrower cures its failure to maintain any of the financial covenants set forth
in this SECTION 8, Lender shall release its security interest in all of such
Cash Collateral, and shall notify the bank maintaining the Cash Collateral
Account that the triggering event has been cured and that Lender rescinds its
control of the Cash Collateral Account.
9. FINANCIAL INFORMATION. Borrower covenants and agrees that so long as
any Obligations shall be outstanding or the Commitment shall be available,
Borrower shall provide the following financial information to Lender:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as practicable and in any
event within forty-five (45) days after and as of the end of each Fiscal
Quarter, internally-prepared consolidated balance sheets, statements of income
and cash flow of Borrower as at the end of such period, all in reasonable detail
and certified by the chief financial officer of Borrower that they (i) are
complete and fairly present the financial condition of Borrower as at the dates
indicated and the results of its operations and changes in its cash flow for the
periods indicated, (ii) disclose all liabilities that are required to be
reflected or reserved against under GAAP, whether liquidated or unliquidated,
fixed or contingent, and (iii) have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end adjustment, together
with a Compliance Certificate in the form of Exhibit B to this Loan Agreement
duly completed and certified by the chief financial officer of Borrower.
(b) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as practicable and
in any event within ninety (90) days after the end of each Fiscal Year,
consolidated balance sheets, statements of income and cash flow of Borrower as
at the end of such Fiscal Year, all in reasonable detail and accompanied by a
report thereon of independent public accountants of recognized national standing
selected by Borrower and reasonably satisfactory to Lender, which report shall
be unqualified and shall not contain an adverse opinion, or a disclaimer of
opinion, shall not express doubts about the ability of Borrower to continue as a
going concern, or be qualified or limited because of a restricted or limited
examination by such accountant of any material portion of Borrower's records and
shall state that such consolidated financial statements present fairly the
financial position of Borrower as at the dates indicated and the results of
operations and changes in financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years (except as
otherwise stated therein) and that the examination by which such auditors in
connection with such consolidated and consolidating financial statements has
been made in accordance with generally accepted auditing standards, together
with a Compliance Certificate in the form of Exhibit B to this Loan Agreement
duly completed and certified by the chief financial officer of Borrower.
6.
<PAGE> 7
10. EVENT OF DEFAULT. The occurrence of any one or more of the following
shall constitute an "Event of Default": (a) default be made in the payment of
any Obligation by Borrower under any Loan Document and such default shall not
have been cured within five (5) days after Borrower's receipt of written notice
from Lender; (b) except for any failure to pay as described in clause (a) above,
or any [.....***.....] in [.....***.....], above, breach be
made in any representation, warranty, statement, covenant, promise, term or
condition contained herein or in any other Loan Document and the same shall not
have been cured within thirty (30) days after Borrower's receipt of written
notice from Lender; (c) any statement, warranty or representation made by
Borrower at any time proves to have been false in any material aspect at the
time made; (d) there shall exist an uncured default or event of default by
Borrower in the performance of any obligation to SmithKline Beecham Corporation
(or its successors or assigns) under the Collaboration Agreement or otherwise;
(e) the Collaboration Agreement is terminated in accordance with the provisions
thereof for any reason other than a material breach by Lender; (f) Borrower
defaults in the repayment of any principal of or the payment of any interest on
any Funded Indebtedness or breaches or violates any term or provision of any
promissory note, loan agreement, mortgage, indenture or other evidence of such
Funded Indebtedness, if the effect of such breach is the acceleration of such
Funded Indebtedness; (g) Borrower becomes insolvent or makes an assignment for
the benefit of creditors; (h) any proceeding be commenced by Borrower under the
Bankruptcy Code or any reorganization, arrangement, readjustment of debt or
moratorium law or statute, or any such proceeding is commenced against Borrower
and is not dismissed or stayed within sixty (60) days; or (i) any failure to
provide the Cash Collateral to the Lender as set forth in SECTION 8, above.
11. REMEDIES. Upon the occurrence and during the continuance of an Event
of Default, Lender may, at its option and without demand first made and without
notice to Borrower, do any one or more of the following: (a) terminate its
obligation to make Loans to Borrower as provided in SECTION 2 hereof; (b)
declare all sums secured hereby immediately due and payable; or (c) exercise any
remedies pursuant to the Security Agreement or any remedies of a secured party
under the Uniform Commercial Code. Lender shall have the right to enforce one or
more remedies hereunder successively or concurrently, and any such action shall
not estop or prevent Lender from pursuing any further remedy that it may have
hereunder or by law.
12. MISCELLANEOUS PROVISIONS.
(a) ENTIRE AGREEMENT. This Loan Agreement and each of the other Loan
Documents to which it is a party, taken together, constitute and contain the
entire agreement among Borrower and Lender and supersede any and all prior
agreements, negotiations, correspondence, understandings and communications
among the parties, whether written or oral, respecting the subject matter
hereof.
(b) NO WAIVER. No failure or delay on the part of Lender in the
exercise of any power, right or privilege under this Loan Agreement or any of
the other Loan Documents shall impair such power, right or privilege or be
construed to be a waiver of any default or
*Confidential Treatment Requested
7.
<PAGE> 8
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude other or further exercise thereof or of any
other right, power or privilege.
(c) RELIANCE BY LENDER. All covenants, agreements, representations
and warranties made herein by Borrower shall, notwithstanding any investigation
by Lender be deemed to be material to and to have been relied upon by Lender.
(d) HEADINGS. Section and subsection headings in this Loan Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Loan Agreement for any other purpose or be given any substantive
effect.
(e) SEVERABILITY. Whenever possible, each provision of this Loan
Agreement and each of the other Loan Documents shall be interpreted in such a
manner as to be valid, legal and enforceable under the applicable law of any
jurisdiction. Without limiting the generality of the foregoing sentence, in case
any provision of this Loan Agreement or any of the other Loan Documents shall be
invalid, illegal or unenforceable under the applicable law of any jurisdiction,
the validity, legality and enforceability of the remaining provisions, or of
such provision in any other jurisdiction, shall not in any way be affected or
impaired thereby.
(f) GOVERNING LAW. Except as otherwise expressly provided in any of
the Loan Documents, in all respects, including all matters of construction,
validity and performance, this Loan Agreement and the Obligations arising
hereunder shall be governed by, and construed and enforced in accordance with,
the laws of the State of Delaware applicable to contracts made and performed in
such state, without regard to the principles thereof regarding conflict of laws,
and any applicable laws of the United States of America.
(g) SUCCESSORS AND ASSIGNS. Neither party may assign or transfer
this Loan Agreement or any rights or obligations hereunder without the prior
written consent of the other which shall not be unreasonably withheld, except a
party may make such an assignment without the other party's consent to an
Affiliate or to a successor to substantially all of the pharmaceutical business
of such party, whether in a merger, sale of stock, sale of assets or other
transaction. Any permitted successor or assignee of rights and/or obligations
hereunder shall, in a writing to the other party, expressly assume performance
of such rights and/or obligations. Any permitted assignment shall be binding on
the successors of the assigning party. Any assignment or attempted assignment by
either party in violation of the terms of this SECTION 12(g) shall be null and
void and of no legal effect.
COUNTERPARTS. This Loan Agreement may be executed in any number of
counterparts, each of which when so delivered shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument. Each
such agreement shall become effective upon the execution of a counterpart hereof
or thereof by each of the parties hereto and telephonic notification that such
executed counterparts has been received by Borrower and Lender.
8.
<PAGE> 9
BORROWER: LENDER:
COULTER PHARMACEUTICAL, INC. SMITHKLINE BEECHAM CORPORATION
By: By:
--------------------------------- ---------------------------------
Printed Name: Printed Name:
----------------------- -----------------------
Title: Title:
------------------------------ ------------------------------
9.
<PAGE> 10
LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A: Definitions
SCHEDULE 1 TO EXHIBIT A: List of Specific Permitted Indebtedness
SCHEDULE 2 TO EXHIBIT A: List of Specific Permitted Liens
EXHIBIT B: Form of Compliance Certificate re Financial Covenants
EXHIBIT C: Form of Compliance Certificate re Conditions Precedent to Loans
EXHIBIT D: Form of Guaranty to Be Executed by Borrower's Domestic
Subsidiaries
10.
<PAGE> 11
EXHIBIT A
DEFINITIONS
"004 TRIAL" means Borrower's clinical trial with Protocol No. RIT-II-004
("Multicenter, Pivotal Phase III Study of Iodine-131 Anti-B1 Antibody (Murine)
Radioimmunotherapy for Chemotherapy-Refractory Low-Grade B-Cell Lymphomas and
Low-Grade Lymphomas That Have Transformed to Higher Grade Histologies") for
which enrollment and interim analysis was completed prior to the Effective Date.
"AFFILIATE" means, in the case of either Borrower or Lender, any
corporation, joint venture or other business entity which directly or indirectly
controls, is controlled by, or is under common control with that party.
"CONTROL," as used in this definition, shall mean having the power to direct, or
cause the direction of, the management and policies of an entity, whether
through ownership of voting securities, by contract or otherwise.
"BANKRUPTCY CODE" means the Bankruptcy Code of 1978, as amended, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.
"BEXXAR" means B1 Murine Antibody conjugated with 131Iodine or
unconjugated, depending upon context.
"B1 MURINE ANTIBODY" means the unconjugated IgG2a anti-CD20 murine
monoclonal antibody which is one of the active agents tested in the 004 Trial.
"BUSINESS DAY" means any day which is not a Saturday, Sunday or a legal
holiday under the laws of the State of California or is not a day on which
banking institutions located in the State of California are authorized or
required by law or other governmental action to close.
"CAPITAL LEASE" means, as to any Person, any lease of any Property by
such Person as lessee that is, or should be in accordance with Financing
Accounting Standards Board Statement No. 13, classified and accounted for as a
"capital lease" on the balance sheet of such Person prepared in accordance with
GAAP.
"CAPITAL LEASE OBLIGATION" means, with respect to any Capital Lease, the
amount of the obligation of the lessee thereunder that, in accordance with GAAP,
would appear on a balance sheet of such lessee in respect of such Capital Lease
or otherwise be disclosed in a note to such balance sheet.
"CASH COLLATERAL" shall have the meaning set forth in SECTION 8.
"CASH COLLATERAL ACCOUNT" shall have the meaning set forth in SECTION 8.
1.
<PAGE> 12
"Collaboration Agreement" means that certain Collaboration Agreement entered
into as of the same day as this Loan Agreement, between Coulter Pharmaceutical,
Inc. and SmithKline Beecham Corporation relating to Bexxar.
"COLLATERAL" means any and all personal property of Borrower which is
assigned or hereafter is assigned to Lender as security or in which Lender now
has or hereafter acquires a security interest pursuant to the terms of the
Security Agreement or otherwise.
"COMMITMENT" has the meaning set forth in SECTION 2.
"CONSOLIDATED LEVERAGE RATIO" means the ratio of (a) Consolidated Total
Liabilities to (b) Consolidated Tangible Net Worth.
"CONSOLIDATED TANGIBLE ASSETS" means, on a consolidated basis, as at any
date of determination, the difference between Consolidated Total Assets and all
intangible assets of Borrower, as determined and computed in accordance with
GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means on a consolidated basis, as at
any date of determination, the difference between Consolidated Tangible Assets
and Consolidated Total Liabilities.
"CONSOLIDATED TOTAL ASSETS" means on a consolidated basis, as at any
date of determination, all assets of Borrower, as determined and computed in
accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means on a consolidated basis, as at
any date of determination, all liabilities of Borrower, determined and computed
in accordance with GAAP.
"CONTINGENT OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend, letter of credit or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), co-made or discounted or sold with recourse by that Person,
or in respect of which that Person is otherwise directly or indirectly liable,
including, without limitation, any such obligation for which that Person is in
effect liable through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, capital stock purchases, capital contributions or
otherwise), or to maintain the solvency of the obligor of such obligation, or to
make payment for any products, materials or supplies or for any transportation,
services or lease regardless of the non-delivery or non-furnishing thereof, in
any such case if the purpose or intent of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof. The amount of
any Contingent Obligation of any Person shall be deemed to be an amount equal to
the maximum amount of such Person's liability with respect to the stated or
determinable amount of the primary obligation for which such Contingent
2.
<PAGE> 13
Obligation is incurred or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder).
"DEBT SERVICE COVERAGE RATIO" means the ratio of (a) net profit plus
depreciation, amortization and other non-cash charges to (b) the current portion
of long term debt.
"EBITDA" means, as at any date of determination, for any period, an
amount equal to the sum of (i) net income (without giving effect to any
extraordinary non-cash gains or extraordinary non-cash losses), plus (ii)
interest expense, plus (iii) provisions for income taxes, plus (iv)
depreciation, plus (v) amortization, each as determined and calculated in
accordance with GAAP
"EFFECTIVE DATE" has the meaning set forth in the Collaboration
Agreement.
"EXPIRATION DATE" has the meaning set forth in SECTION 2.
"EVENT OF DEFAULT" has the meaning set forth in SECTION 10.
"FISCAL QUARTER" means each fiscal quarter of Borrower ending on each
March 31, June 30, September 30 and December 31.
"FISCAL YEAR" means each fiscal year of Borrower ending on December 31.
"FUNDED INDEBTEDNESS" means, as to any Person, without duplication, (a)
all indebtedness of such Person for borrowed money, including, without
limitation, all of such indebtedness outstanding under this Loan Agreement and
any of the other Loan Documents; (b) all Capital Lease Obligations of such
Person; (c) to the extent of the outstanding indebtedness thereunder, any
obligation of such Person representing an extension of credit to such Person,
whether or not for borrowed money; (d) any obligation of such Person for the
deferred purchase price of Property or services (other than (i) trade or other
accounts payable in the ordinary course of business in accordance with customary
industry terms and (ii) deferred franchise fees); (e) all Contingent
Obligations; (f) any obligation of such Person of the nature described in
clauses (a), (b), (c), (d) or (e) above, that is secured by a Lien on assets of
such Person and which is non-recourse to the credit of such Person, but only to
the extent of the fair market value of the assets so subject to the Lien; (g)
obligations of such Person arising under acceptance facilities or under
facilities for the discount of accounts receivable of such Person; (h) any
obligation of such Person to reimburse the issuer of any letter of credit issued
for the account of such Person upon which a draw has been made; and (i) any
lease having the effect of indebtedness, whether or not the same shall be
treated as such on the balance sheet of Borrower under GAAP.
"FUNDING DATE" means with respect to any proposed Loan hereunder, the
date funds are advanced to Borrower for such Loan.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board
3.
<PAGE> 14
or in such other statements by such other Person as may be approved by the
significant segment of the accounting profession, which are applicable to the
circumstances as of the date of determination.
"GUARANTY" means a Guaranty made by each domestic Subsidiary, in favor
of Lender.
"JCC" means the Joint Commercialization Committee as defined in Section
1.36 of the Collaboration Agreement and appointed pursuant to the Collaboration
Agreement.
"JDC" means the Joint Development Committee as defined in Section 1.37
of the Collaboration Agreement and appointed pursuant to the Collaboration
Agreement.
"LIEN" means any mortgage, pledge, security interest, lien or other
charge or encumbrance, including the lien or retained security title of a
conditional vendor, upon or with respect to any property or assets.
"LIQUIDITY" means the value of Borrower's cash, cash equivalents and
short-term investments (less restricted cash), plus [....***....]
of net trade receivables payable to Borrower by Lender, plus [...***...]
of net trade receivables payable to Borrower by Persons other than
Lender.
"LOAN" and "LOANS" has the meaning set forth in SECTION 2.
"LOAN DOCUMENTS" means this Loan Agreement, the Note and the Security
Agreement dated as of the date first written above, each as executed by Borrower
in favor of Lender, together with all other documents entered into or delivered
pursuant to any of the foregoing, including, without limitation, each Guaranty,
in each case as originally executed or as the same may from time to time be
supplemented, modified or amended.
"MATURITY DATE" has the meaning set forth in SECTION 2.
"OBLIGATIONS" means all loans, advances, debts, liabilities and
obligations, for monetary amounts owing by Borrower to Lender, whether due or to
become due, matured or unmatured, liquidated or unliquidated, contingent or
non-contingent, and all covenants and duties regarding such amounts, of any kind
or nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under any of the Loan Documents. This term includes,
without limitation, all principal, interest (including interest that accrues
after the commencement against Borrower under the Bankruptcy Code), fees,
including, without limitation, any and all arrangement fees, closing fees,
prepayment fees, commitment fees, advisory fees, agent fees and attorneys' fees
and any and all other fees, expenses, costs or other sums (including all
reasonable fees and disbursements of any law firm or other external counsel to
Lender) chargeable to Borrower under any of the Loan Documents.
*Confidential Treatment Requested
4.
<PAGE> 15
"PERMITTED INDEBTEDNESS" means the following:
(1) Indebtedness of Borrower or Subsidiaries in favor of Lender
arising under this Loan Agreement and the other Loan Documents;
(2) the existing or anticipated Funded Indebtedness disclosed on
SCHEDULE 1 attached hereto and incorporated herein by this reference; provided
that the principal amount thereof is not increased and the terms thereof are not
modified to impose more burdensome terms upon Borrower or any of its
Subsidiaries;
(3) the Subordinated Debt;
(4) extensions, renewals or refinancings of Funded Indebtedness
permitted under this Loan Agreement;
(5) accrued dividends on the preferred stock of Borrower;
(6) interest rate and currency hedging agreements;
(7) guaranties of any Subsidiary's suppliers in connection with the
purchase of supplies in the ordinary course of business;
(8) [...***...] in the [...***...] and to the extent otherwise
permitted hereunder; and
(9) Funded Indebtedness secured by Permitted Liens.
"PERMITTED LIENS" means the following:
(1) Liens existing as of this date or anticipated, and disclosed in
Schedule 2 attached hereto and incorporated herein by this reference;
(2) Liens for taxes, fees, assessments or other governmental charges
or levies, either not delinquent or being contested in good faith by appropriate
proceedings;
(3) Liens (a) upon or in [...***...] (other than [...***...] in
[...***...] of the [...***...]) [...***...] by Borrower to secure the
[...***...] of [...***...] for the purpose of [...***...] of [...***...] and in
[...***...] the [...***...] thereof or (b) existing on [...***...], provided
that the Lien is [...***...] to the [...***...] and [...***...] and the
[...***...] of such [...***...];
(4) Liens consisting of leases or subleases and licenses and
sublicenses granted to others in the ordinary course of Borrower's business not
interfering in any material respect with the business of Borrower and any
interest or title of a lessor or licensor under any lease or license, as
applicable;
*Confidential Treatment Required
5.
<PAGE> 16
(5) Liens securing claims or demands of materialmen, mechanics,
carriers, warehousemen, landlords and other like persons or entities imposed
without action of such parties, provided that the payment thereof is not yet
required;
(6) Liens incurred or deposits made in the ordinary course of
Borrower's business in connection with worker's compensation, unemployment
insurance, social security and other like laws;
(7) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default;
(8) Easements, reservations, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or encumbrances
affecting real property not interfering in any material respect with the
ordinary conduct of Borrower's business;
(9) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(10) Liens which constitute rights of set-off of a customary nature;
(11) Any interest or title of a lessor in equipment subject to any
Capital Lease otherwise permitted hereunder; and
(12) Any Liens arising from the filing of any financing statements
relating to true leases otherwise permitted hereunder.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, firm, joint stock
company, estate, entity or governmental agency.
"PRIME RATE" means the rate of interest that Bank of America N.T & S.A.
has announced as its prime lending rate on the last Business Day of the calendar
quarter immediately preceding a Loan advance, or if such rate is not available,
the prime rate of interest as printed in the Wall Street Journal, Western
Edition on the Last Business Day of such calendar quarter.
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"REMAINING MONTHS LIQUIDITY" means the ratio of (a) Liquidity to (b) the
average monthly change in net cash from Borrower's operations during the prior
three (3) month period; provided, however, that the impact of any manufacturing
or annual campaigns shall be annualized for purposes hereof.
"SECURITY AGREEMENT" means that certain Security Agreement dated of even
date herewith, made by Borrower in favor of Lender.
6.
<PAGE> 17
"SENIOR LENDER" has the meaning set forth in SCHEDULE 1 to EXHIBIT A of the Loan
Agreement.
"SUBORDINATED DEBT" means indebtedness of Borrower, the repayment of
principal of which is fully subordinated in time and right of payment to the
Loans, and has been approved in Lender's sole and absolute discretion and in
writing.
"SUBSIDIARIES" means each entity controlled, directly or indirectly, by
Borrower now existing or hereafter formed or acquired.
7.
<PAGE> 18
SCHEDULE 1 TO EXHIBIT A
SPECIFIC PERMITTED INDEBTEDNESS
1. Any and all Funded Indebtedness owing by Borrower to any Person
engaged in the lending of money in the ordinary course of business (each, a
"SENIOR LENDER"), in an aggregate principal amount with respect to all such
Senior Lenders not to exceed U.S. [...***...], which Liens may include a first
priority security interest in certain personal property of Borrower except the
Licensed Patents (as defined in the Security Agreement) and Know-How (as defined
in the Security Agreement) and the Equipment of Borrower described in Section
2(a)(ii) of the Security Agreement. This Schedule 1 shall be updated by Borrower
with respect to the identity of the Senior Lender(s) once this identity has been
established.
2. Equipment Lease Financing Agreement dated as of December 6, 1996,
between Borrower and Lease Management Services, Inc.
3. Letter of Credit pursuant to the Lease Agreement dated November 7,
1997, by and between HMS Gateway Office L.P. and Borrower.
*CONFIDENTIAL TREATMENT REQUESTED
8.
<PAGE> 19
SCHEDULE 2 TO EXHIBIT A
SPECIFIC PERMITTED LIENS
1. Liens granted to any Person or Persons to secure the Permitted
Indebtedness disclosed in SCHEDULE 1 to EXHIBIT A.
2. Liens granted pursuant to the Facilities Agreement between MDS
Nordion, Inc. and Borrower dated August 31, 1998.
1.
<PAGE> 20
EXHIBIT B
COMPLIANCE CERTIFICATE
COULTER PHARMACEUTICAL, INC. (the "Company") hereby certifies that:
This Compliance Certificate is furnished pursuant to SECTION 9 of the
Loan Agreement dated as of October 23, 1998 (the "Loan Agreement"), by and among
the Company and SmithKline Beecham Corporation ("Lender"). Unless otherwise
defined herein, the terms used in this Certificate have the meanings given them
in the Loan Agreement.
As required by SECTIONS 9(a) and 9(b), as applicable, of the Loan
Agreement, consolidated financial statements of the Company for the
[year/quarter] ended _______________ (the "Financial Statements") prepared in
accordance with generally accepted accounting principles consistently applied
accompany this Compliance Certificate. The Financial Statements present fairly
the consolidated financial position of the Company as at the date thereof and
the consolidated results of operations of the Company for the period covered
thereby (subject only to normal recurring year-end adjustments).
The figures set forth in SCHEDULE 1 attached hereto to be submitted
quarterly for determining compliance by the Company with the financial covenants
and certain other covenants contained in SECTION 8 of the Loan Agreement are
true and complete as of the date first written above.
The activities of the Company during the period covered by the Financial
Statements have been reviewed by the chief financial officer or by employees or
agents under his/her immediate supervision. Based on such review, to the best
knowledge and belief of the chief financial officer, and as of the date of this
Compliance Certificate, no Event of Default has occurred.
WITNESS my hand this _____ day of _______________, ____.
COULTER PHARMACEUTICAL, INC.
By:
---------------------------------
Printed Name:
-----------------------
Title: Chief Financial Officer
1.
<PAGE> 21
SCHEDULE 1 TO EXHIBIT B
FINANCIAL COVENANTS
A. MINIMUM REMAINING MONTHS LIQUIDITY (SECTION 8.A.)
REQUIRED: Until such time as Borrower maintains a Debt Service
Coverage Ratio of not less than [...***...] for two (2)
consecutive Fiscal Quarters, Borrower shall maintain
Remaining Months Liquidity of six (6) months.
<TABLE>
<S> <C> <C>
ACTUAL:
(1) Cash $___________
(2) Cash equivalents and short-term $___________
investments (less restricted cash)
(3) [**] of net trade receivables payable $___________
by Lender
(4) [**] of net trade receivables payable by $___________
Persons other then Lender
(5) Sum of Lines (1) - (4) $___________
(6) Average monthly change in net cash from $___________
Borrower's operations during preceding
three months
(7) Line (5) divided by Line (6) _________ MONTHS
In Compliance Yes ? No ?
B. MINIMUM DEBT SERVICE COVERAGE RATIO (SECTION 8.B.)
REQUIRED: Borrower shall maintain a Debt Service Coverage Ratio of not
less than [...***...].
ACTUAL:
(1) Net Profit $___________
(2) Depreciation $___________
(3) Amortization and other non-cash charges $___________
(4) Sum of Lines (1) - (3) $___________
(5) Current portion of long-term debt $___________
(6) Line (4) divided by Line (5) $___________
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE> 22
In Compliance Yes ? No ?
C. MINIMUM CONSOLIDATED TANGIBLE NET WORTH (SECTION 8.C.)
REQUIRED: Borrower on a consolidated basis shall not permit the
Consolidated Tangible New Worth to be an amount less
than [...***...].
<TABLE>
<S> <C> <C> <C>
ACTUAL:
(1) Consolidated Total Assets $___________
(2) Intangible assets $___________
(3) Consolidated Total Liabilities $___________
(4) Total: Line (1) minus Line (2) $___________
minus Line (3)
In Compliance Yes ? No ?
D. CONSOLIDATED LEVERAGE RATIO (SECTION 8.D.)
REQUIRED: Borrower on a consolidated basis shall not permit the
Consolidated Leverage Ratio to be greater than [...***...].
ACTUAL:
(1) Consolidated Total Liabilities $___________
(2) Consolidated Total Assets $___________
(3) Intangible assets $___________
(4) Line (2) minus Line (3) $___________
(5) Line (1) divided by Line (4) $ :
=========== [...***...]
In Compliance Yes ? No ?
</TABLE>
WITNESS my hand on this Compliance Certificate on this _____ day of
_______________,______.
*CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 23
COULTER PHARMACEUTICAL, INC.
By:
---------------------------------
Printed Name:
--------------------
Title: Chief Financial Officer
3.
<PAGE> 24
EXHIBIT C
COMPLIANCE CERTIFICATE
CONDITIONS PRECEDENT TO LOAN
COULTER PHARMACEUTICAL, INC. (the "Company") hereby certifies that:
This Compliance Certificate is furnished pursuant to SECTION 4 of the
Loan Agreement dated as of October 23, 1998 (the "Loan Agreement"), by and among
the Company and SmithKline Beecham Corporation ("Lender"). Unless otherwise
defined herein, the terms used in this Certificate have the meanings given them
in the Loan Agreement.
Concurrently with delivery of this Compliance Certificate, the Company
has requested an advance under the Loan Agreement. The activities of the Company
during the period covered by the Financial Statements for the most recently
completed calendar quarter (i.e., March 31, June 30, September 30, or December
31) have been reviewed by the chief financial officer or by employees or agents
under his/her immediate supervision. Based on such review, to the best knowledge
and belief of the chief financial officer, as of the date of this Compliance
Certificate the Borrower satisfies each of the conditions precedent to the
requested advance as set forth in SECTIONS 4(a) through 4(e) of the Loan
Agreement.
WITNESS my hand this _____ day of _______________, ____.
COULTER PHARMACEUTICAL, INC.
By:
---------------------------------
Printed Name:
-----------------------
Title: Chief Financial Officer
1.
<PAGE> 25
EXHIBIT D
FORM OF GUARANTY TO BE EXECUTED BY
BORROWER'S DOMESTIC SUBSIDIARIES
XYZ COMPANY, INC. ("GUARANTOR")
SMITHKLINE BEECHAM CORPORATION ("LENDER")
1. From and after the date hereof, Guarantor hereby unconditionally
guarantees the due and punctual payment of the principal and interest and all
other amounts due under the Loan Agreement between Coulter Pharmaceutical, Inc.
("Borrower") and Lender dated October 23, 1998 (the "Loan Agreement"), as and
when the same shall become due and payable, whether by acceleration or
otherwise, and the timely performance of all other obligations of Borrower under
the Loan Agreement (each a "Guarantee Obligation"); provided however, that
Guarantor shall not be liable to pay or perform any Guarantee Obligation until 5
business days following receipt by Guarantor of written notice from Lender that
payment or performance of such Guarantee Obligation is due.
2. Guarantor's obligations hereunder are absolute and unconditional,
irrespective of the validity, regularity or enforceability of the Loan Agreement
or any other documents or agreements between Borrower and Lender, any change
therein or amendment thereto, the absence of any action to enforce the same, any
waiver or consent by Lender with respect to any provision thereof, the recovery
of any judgment against Borrower or any action to enforce the same, or any other
circumstances which may otherwise constitute a legal or equitable discharge or
defense of a guarantor; it being the intent and purpose hereof that the
obligation and liability of Guarantor hereunder shall not be impaired,
diminished, abated or otherwise affected by any setoff, defense or counterclaim
that [Borrower] or Guarantor may have or claim to have, at any time or from time
to time, against Lender or any other person or by the commencement by or against
[Borrower] or Guarantor of any proceedings under any bankruptcy or insolvency
law or laws, that Guarantor shall not be entitled to, and does hereby waive, any
and all defenses available to guarantors, sureties and other secondary parties
at law or in equity, and that Guarantor shall pay to Lender, as a payment
obligation directly due from Guarantor to Lender, amounts equal to all amounts
which Lender shall fail to properly pay when due under the Loan Agreement. Upon
payment by Guarantor of any sums to Lender hereunder, all rights of Guarantor
against Lender for reimbursement, whether arising by way of any statutory,
contractual or other right of subrogation, exoneration, contribution,
indemnification or otherwise, shall in all respects be subordinate and junior in
right of payment to the prior indefeasible payment and performance in full of
all the Guarantee Obligations. Guarantor waives all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor, notices of acceptance of this Guaranty and of the Guarantee
Obligations; provided however, that nothing contained in this paragraph 2 shall
constitute a waiver by Guarantor of the notice requirement contained in
paragraph 1. This Guaranty will not terminate or be discharged except upon the
full and indefeasible payment and performance of the Guarantee Obligations and
the obligations of Guarantor hereunder.
1.
<PAGE> 26
3. Guarantor waives any right to require Lender to: (a) proceed against
Lender or any other guarantor of the Guarantee Obligations; (b) proceed against
or exhaust any security held from Borrower; (c) pursue any other remedy in
Lender's power whatsoever; (d) comply with any appraisement, valuation, stay,
extension, moratorium, redemption or similar law or similar rights for
marshaling; or (e) notify Guarantor as to the financial condition of Borrower or
any other guarantor of the Guarantee Obligation or of any circumstance that may
bear upon the risk of nonpayment or nonperformance of the Borrower's
obligations.
4. Guarantor agrees that, in the event any payment or transfer made by
or on behalf of Borrower in respect of any of the Guarantee Obligations, or any
portion thereof, shall at any time be avoided or be returned by Lender pursuant
to any order (whether or not final) by a court of competent jurisdiction, or any
provision of the United States Bankruptcy Code, as now existing or hereafter
amended, or other applicable law, then the Guarantee Obligations shall not be
deemed to have been satisfied to the extent of the avoided or returned payment
or transfer, and the obligations of Guarantor hereunder shall continue in full
force and effect or be revived and reinstated, as the case may be, all as though
such payment or transfer had not been made.
5. Guarantor represents and warrants that: (a) this Guaranty has been
duly executed and delivered by it and constitutes the legal, valid and binding
obligation of Guarantor, enforceable in accordance with its terms and (b)
Guarantor has, independently and without reliance on Lender and based on such
documents and information as it had deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty, and Guarantor has established
adequate means of obtaining from Lessee on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely familiar
with, the financial condition, operations, properties and prospects of Borrower.
6. Guarantor shall be liable for all reasonable attorneys' fees and
other costs and expenses incurred by reason of any default or the exercise of
Lender's remedies thereunder.
7. The obligations of Guarantor thereunder are independent of the
obligations of Borrower. A separate action or actions may be brought and
prosecuted against Guarantor, whether an action is brought against Borrower or
any other guarantor of the Guarantee Obligations or whether Borrower or any such
other guarantor be joined in any such action or actions.
8. Notices, demands and other communications hereunder shall (a) be in
writing, (b) be delivered personally or sent by mail, overnight courier or
facsimile to the intended recipient at (i) if to Lender, SMITHKLINE BEECHAM
CORPORATION, ONE FRANKLIN PLAZA (FP1935), PHILADELPHIA, PA 19102, Attention:
________________ (Fax No.: (215) 751-4253) and (ii) if to Guarantor, at the
address set forth beneath its name below, or in each case to such other address
noticed as herein provided by the recipient to the other party, and (c) be
effective on receipt if delivered personally or by facsimile, three days after
dispatch if mailed and one business day after dispatch if sent by courier.
9. Neither party may assign or transfer this Guaranty or any rights or
obligations hereunder without the prior written consent of the other which shall
not be unreasonably
2.
<PAGE> 27
withheld, except a party may make such an assignment without the other party's
consent to an Affiliate (as defined in the Loan Agreement) or to a successor to
substantially all of the pharmaceutical business of such party, whether in a
merger, sale of stock, sale of assets or other transaction. Any permitted
successor or assignee of rights and/or obligations hereunder shall, in a writing
to the other party, expressly assume performance of such rights and/or
obligations. Any permitted assignment shall be binding on the successors of the
assigning party. Any assignment or attempted assignment by either party in
violation of the terms of this Section 9 shall be null and void and of no legal
effect. This Guaranty may not be amended or modified, nor may any of its terms
be waived, except by written instruments signed by Lender and Guarantor. Each
waiver or consent shall be effective only in the specific instances for the
purpose for which given. If at any time any provision of this Guaranty is or
becomes illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the illegality, validity or enforceability of the
remaining provisions of this Guaranty nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby. This Guaranty shall be governed by,
and construed in accordance with, the laws of the Commonwealth of Delaware
(without giving effect to principles of conflicts of laws). GUARANTOR AND
LENDER, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY
WAIVE THE RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS GUARANTY.
3.
<PAGE> 28
In Witness Whereof, the undersigned has duly executed this Guaranty as
of __________________.
GUARANTOR:
[--------------------]
By:
--------------------------------
Title:
-----------------------------
Address:
---------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Attention:
-------------------------
Fax:
-------------------------------
4.
<PAGE> 1
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.25
COLLABORATION AGREEMENT
BETWEEN
COULTER PHARMACEUTICAL, INC.
AND
SMITHKLINE BEECHAM CORPORATION
MARCH 26, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 1 DEFINITIONS...................................................................1
1.1 "004 Trial"...................................................................1
1.2 "Additional Indications"......................................................1
1.3 "Affiliate(s)"................................................................1
1.4 "Anti-CD20 Antibody"..........................................................2
1.5 "B1 Murine Antibody"..........................................................2
1.6 "Bexxar"......................................................................2
1.7 "BLA".........................................................................2
1.8 "Commercially Reasonable Efforts".............................................2
1.9 "Control".....................................................................2
1.10 "Co-Promotion"................................................................3
1.11 "Cost of Goods"...............................................................3
1.12 "Coulter Patent Rights".......................................................4
1.13 "Cross-Territory Trials"......................................................4
1.14 "Development".................................................................4
1.15 "Development Costs"...........................................................4
1.16 "Distribution Costs"..........................................................5
1.17 "Europe"......................................................................5
1.18 "European Facility"...........................................................5
1.19 "Existing Third Party License"................................................5
1.20 "Existing Third Party License Costs"..........................................6
1.21 "FD&C Act"....................................................................6
1.22 "FDA".........................................................................6
1.23 "Field".......................................................................6
1.24 "Finance Subteam".............................................................6
1.25 "First Commercial Sale".......................................................6
1.26 "First Indication"............................................................6
1.27 "Force Majeure Occurrence"....................................................6
1.28 "FTE".........................................................................6
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1.29 "Good Clinical Practice" or "GCP".............................................6
1.30 "Good Laboratory Practice" or "GLP"...........................................7
1.31 "Good Manufacturing Practice" or "GMP"........................................7
1.32 "Guaranteed COGS Plus Royalties Percent"......................................7
1.33 "Guaranteed COGS Territory"...................................................7
1.34 "Intellectual Property Rights"................................................7
1.35 "Invention"...................................................................7
1.36 "Joint Commercialization Committee" or "JCC"..................................7
1.37 "Joint Development Committee" or "JDC"........................................7
1.38 "Joint Development Plan"......................................................7
1.39 "Joint Manufacture Development Plan"..........................................8
1.40 "Joint Marketing Plan"........................................................8
1.41 "Joint P&L"...................................................................8
1.42 "Know-How"....................................................................8
1.43 "Licensed Compound"...........................................................8
1.44 "Loan and Security Agreements"................................................8
1.45 "MAA".........................................................................8
1.46 "Major Indications"...........................................................9
1.47 "Major Market Country"........................................................9
1.48 "Major Markets in Territory C"................................................9
1.49 "Manufacture and Supply Chain Subteam"........................................9
1.50 "Manufacture Development".....................................................9
1.51 "Manufacture Development Costs"...............................................9
1.52 "Marketing Costs"............................................................10
1.53 "[*]"........................................................................11
1.54 "Net Sales"..................................................................11
1.55 "New Third Party Manufacture and Supply Chain Agreements"....................11
1.56 "New Third Party License"....................................................11
1.57 "New Third Party License Costs"..............................................12
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1.58 "Non-USA COGS"...............................................................12
1.59 "Non-USA Marketing Plan".....................................................12
1.60 "Non-USA Territory"..........................................................12
1.61 "North America"..............................................................12
1.62 "Operating Profit or Loss"...................................................12
1.63 "Other Operating Income/Expense".............................................12
1.64 "Out-of-Pocket Costs"........................................................12
1.65 "Patent Costs"...............................................................12
1.66 "Patent Rights"..............................................................12
1.67 "PHS Act"....................................................................13
1.68 "Planned Clinical Trials"....................................................13
1.69 "Pre-Existing Third Party Manufacture and Supply Chain Agreements"...........13
1.70 "Product"....................................................................13
1.71 "QA/QC Costs"................................................................13
1.72 "Radiolabeled Antibody"......................................................14
1.73 "Regulatory Approval"........................................................14
1.74 "Regulatory Personnel".......................................................14
1.75 "Sales Costs"................................................................14
1.76 "Sales Effort"...............................................................14
1.77 "SB Option Exercise Notice"..................................................14
1.78 "SB Patent Rights"...........................................................14
1.79 "Second Generation Antibody".................................................14
1.80 "Second Generation Antibody Candidate".......................................14
1.81 "Second Generation Licensed Compound"........................................15
1.82 "Second Generation Licensed Compound Candidate"..............................15
1.83 "Second Generation Licensed Compound Candidate Development Costs"............15
1.84 "Second Generation Licensed Compound Candidate Manufacture Development
Costs".......................................................................16
1.85 "Second Indication"..........................................................16
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
iii.
<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1.86 "Stock Purchase Agreement"...................................................16
1.87 "Term of Co-Promotion".......................................................16
1.88 "Territory"..................................................................16
1.89 "Territory A"................................................................16
1.90 "Territory B"................................................................16
1.91 "Territory C"................................................................16
1.92 "Third Indication"...........................................................16
1.93 "Third Party(ies)"...........................................................17
1.94 "Trademark"..................................................................17
1.95 "Trademark Costs"............................................................17
1.96 "Unaffiliated Expert"........................................................17
1.97 "Unconjugated Antibody"......................................................17
ARTICLE 2 MANAGEMENT OF COLLABORATION..................................................17
2.1 Joint Development Committee (JDC)............................................17
2.1.1 Formation; Membership.................................................17
2.1.2 Decision-Making.......................................................18
2.1.3 Meetings..............................................................18
2.1.4 Specific Responsibilities of the JDC..................................18
2.2 Joint Commercialization Committee (JCC)......................................19
2.2.1 Formation; Membership.................................................19
2.2.2 Decision-Making.......................................................20
2.2.3 Meetings..............................................................20
2.2.4 Specific Responsibilities of the JCC..................................20
2.3 Manufacture and Supply Chain Subteam.........................................21
2.3.1 Formation; Membership.................................................21
2.3.2 Decision-Making.......................................................22
2.3.3 Meetings..............................................................22
2.3.4 Specific Responsibilities of the Manufacture and Supply Chain
Subteam...............................................................22
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
iv.
<PAGE> 6
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
2.4 Finance Subteam..............................................................23
2.4.1 Formation; Membership.................................................23
2.4.2 Meetings..............................................................23
2.4.3 Responsibilities of the Finance Subteam...............................23
ARTICLE 3 DEVELOPMENT OF LICENSED COMPOUND.............................................24
3.1 Initial and Subsequent Focus of the Collaboration............................24
3.2 Development..................................................................24
3.2.1 Joint Development Plan................................................24
3.2.2 Implementation of Development.........................................25
3.2.3 Designation of Clinical Trials........................................26
3.2.4 Lead Party for Development............................................26
3.2.5 Development Diligence Milestones in Non-USA Territory.................27
3.2.6 Funding of Development................................................28
3.3 Manufacture Development......................................................30
3.3.1 Joint Manufacture Development Plan....................................30
3.3.2 Lead Party for Manufacture Development................................31
3.3.3 Funding of Manufacture Development....................................32
3.4 Records, Reports and Information Exchange....................................32
3.4.1 Technology and Information Transfer...................................32
3.4.2 Record Keeping........................................................33
3.5 Regulatory Compliance........................................................33
3.6 Regulatory Approvals.........................................................33
3.6.1 Territory A...........................................................33
3.6.2 Non-USA Territory.....................................................33
ARTICLE 4 ADDITIONAL INDICATIONS; SECOND GENERATION LICENSED COMPOUNDS.................34
4.1 Additional Indications.......................................................34
4.2 Second Generation Licensed Compounds.........................................35
4.2.1 Second Generation Licensed Compound Candidates; Reporting;
Notice................................................................35
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
v.
<PAGE> 7
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
4.2.2 SB Development and Commercialization Option...........................36
4.2.3 If Coulter is the Initiating Party and SB Does Not Provide an
SB Option Exercise Notice.............................................37
4.2.4 Coulter Development and Commercialization Rights; Coulter
Funding Option........................................................38
4.2.5 Modification of Joint Development Plan, Joint Manufacture
Development Plan and Joint Marketing Plan.............................39
ARTICLE 5 LICENSES.....................................................................40
5.1 Licenses to SB...............................................................40
5.2 Licenses to Coulter..........................................................41
5.3 New Third Party Licenses.....................................................42
5.3.1 Determination Regarding Need for New Third Party License..............42
5.3.2 Procedure for Obtaining...............................................42
5.3.3 New Third Party License Costs.........................................43
5.3.4 Upstream Licenses.....................................................43
5.4 Exclusivity..................................................................44
ARTICLE 6 CONSIDERATION TO COULTER.....................................................46
6.1 Upfront Fees.................................................................46
6.2 Milestone Payments on Bexxar.................................................47
6.2.1 Definitions Relating to Milestone Payments............................50
6.2.2 Delay of Commercial Launch in Non-USA Territory.......................52
6.2.3 Non-Refundable and Non-Creditable Milestone Payments..................52
6.2.4 Offset Against Milestone Payment for Regulatory Approval in
Territory B...........................................................52
6.3 Milestone Payments on Products Containing Second Generation Licensed
Compounds....................................................................52
6.4 Section 9.10.5 Milestone.....................................................53
6.5 Method of Making Milestone Payments..........................................53
6.6 Royalties and Profit Sharing.................................................53
6.7 [*] Rights...................................................................54
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
vi.
<PAGE> 8
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 7 MARKETING....................................................................55
7.1 Co-Promotion in Territory A..................................................55
7.1.1 Rights to Co-Promote..................................................55
7.1.2 Lead Party for Commercialization in Territory A.......................55
7.1.3 Joint Marketing Plan..................................................56
7.1.4 Product Team..........................................................56
7.1.5 Product Pricing.......................................................56
7.1.6 Efforts of the Parties................................................57
7.1.7 Compliance with Law...................................................58
7.1.8 Promotional and Advertising Materials.................................59
7.1.9 Samples...............................................................59
7.1.10 Orders, Distribution, Completion of Sales, Returns....................59
7.1.11 Exchange of Marketing Information.....................................60
7.1.12 Co-Promotion Expenses.................................................60
7.1.13 Allocation of Operating Profit or Loss................................60
7.1.14 Joint P&L.............................................................60
7.1.15 Election to Forego Co-Promotion Right.................................61
7.1.16 Sales Training........................................................62
7.2 Non-USA Territory............................................................63
7.2.1 General...............................................................63
7.2.2 Commercialization Milestones..........................................63
7.2.3 Third Party Distribution Agreements...................................65
7.2.4 Royalties in Non-USA Territory........................................65
7.2.5 Increase or Decrease in Royalties based on Non-USA COGS...............66
7.2.6 Decrease in Royalties Based on Substantial Competition................68
7.3 No Delegation................................................................68
7.4 Product Complaints...........................................................68
7.5 Product-Related Inquiries....................................................69
7.6 Adverse Drug Event Reporting.................................................69
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
vii.
<PAGE> 9
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE 8 ACCOUNTS AND RECORDS; WITHHOLDING TAX........................................69
8.1 No Double Counting of Costs..................................................69
8.2 Records......................................................................69
8.3 Audits.......................................................................69
8.4 Sales by Sublicensees........................................................70
8.5 Withholding..................................................................70
8.6 Currency of Payment..........................................................70
8.7 Accounting...................................................................71
ARTICLE 9 MANUFACTURING AND SUPPLY.....................................................71
9.1 Cooperation..................................................................71
9.2 Pre-Existing Third Party Manufacture and Supply Chain Agreements.............71
9.3 Conformity with Pre-Existing Third Party Manufacture and Supply Chain
Agreements and Any New Third Party Manufacture and Supply Chain
Agreements...................................................................72
9.4 Responsibility for Manufacture, Supply and Distribution......................72
9.4.1 Unconjugated Antibody.................................................72
9.4.2 Radiolabeled Antibody for Development.................................72
9.4.3 Radiolabeled Antibody for Commercial Sale.............................73
9.4.4 Specifications........................................................73
9.4.5 Non-compliance with Specifications....................................73
9.4.6 Distribution..........................................................75
9.5 Allocation in the Event of Product Shortages.................................75
9.5.1 Allocation Between Development and Commercialization..................75
9.5.2 Allocation of Shortages Between Territories (Commercial Supply).......75
9.5.3 No Liability for Product Shortages....................................75
9.6 Change in Responsibility for Manufacture and Supply..........................75
9.6.1 Unconjugated Antibody by SB...........................................75
9.6.2 Unconjugated Antibody or Radiolabeled Antibody by Coulter.............76
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
viii.
<PAGE> 10
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
9.7 Cost of Goods for Unconjugated Antibody and Radiolabeled Antibody for
Development and Manufacture Development; Manufacture Development Costs
(Including Capital Expenditures).............................................77
9.7.1 Cost of Goods for Unconjugated Antibody and Radiolabeled
Antibody for Development and Manufacture Development..................77
9.7.2 Manufacture Development Costs (Including [*]).........................77
9.8 Cost of Goods for Unconjugated Antibody and Radiolabeled Antibody for
Commercial Sale..............................................................77
9.8.1 Unconjugated Antibody.................................................77
9.8.2 Radiolabeled Antibody.................................................78
9.9 Cost of Unconjugated Antibody in Event of Transfer of Responsibility.........79
9.10 European Facility............................................................79
9.10.1 Overview..............................................................79
9.10.2 Selection of SB Option................................................80
9.10.3 Definitions...........................................................81
9.10.4 SB Performance; Coulter Remedies......................................81
9.10.5 Milestone Payment.....................................................82
9.10.6 Remainder of the Non-USA Territory....................................83
9.11 Term of Manufacture and Supply...............................................83
9.12 Forecasts....................................................................83
9.12.1 Unconjugated Antibody and Radiolabeled Antibody.......................83
9.12.2 Production Ordering Mechanism for Radiolabeled Antibody for
Development and Commercial Sale.......................................84
9.12.3 Delivery; Shipment....................................................84
9.13 Quality Control; Testing.....................................................85
9.14 Manufacturing Regulatory Compliance..........................................85
9.14.1 Territory A...........................................................85
9.14.2 Territory B and Territory C...........................................85
9.15 Recalls......................................................................85
9.16 Corrective Action for Supply of Unconjugated Antibody........................86
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
ix.
<PAGE> 11
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
9.17 Corrective Action for Supply of Radiolabeled Antibody........................87
9.18 Exchange of Information......................................................87
ARTICLE 10 TRADEMARKS...................................................................88
10.1 Selection and Ownership of Trademarks........................................88
10.1.1 Territory A...........................................................88
10.1.2 Non-USA Territory.....................................................88
10.2 Development of Trademarks....................................................88
10.3 License Grants...............................................................89
10.3.1 Territory A...........................................................89
10.3.2 Non-USA Territory.....................................................89
10.3.3 Licensed Trademarks...................................................89
10.4 Use of Trademarks............................................................89
10.4.1 Territory A Trademarks and Coulter Trademarks.........................89
10.4.2 SB Trademarks.........................................................90
10.4.3 Quality Maintenance...................................................90
10.5 Infringement of Trademarks...................................................90
10.6 Costs Related to Infringement................................................91
10.7 Trade Dress..................................................................91
ARTICLE 11 PROSECUTION, MAINTENANCE AND INFRINGEMENT OF INTELLECTUAL PROPERTY
RIGHTS.......................................................................92
11.1 Inventions...................................................................92
11.2 Prosecution And Maintenance Of Patent Rights; Allocation of Patent Costs.....93
11.3 Cooperation..................................................................93
11.4 Infringement of Intellectual Property Rights.................................93
11.4.1 Right to Bring Action; Treatment of Recovery..........................93
11.5 Defense and Settlement of Third Party Claims for Products in the
Territory; Opposition and Revocation Proceedings.............................95
11.7 Royalty Reduction in Territory B or Territory C..............................97
11.8 Foreclosure Under Security Agreement.........................................97
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
x.
<PAGE> 12
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
11.9 Covenant Regarding Existing Third Party License Agreements with [*].........100
ARTICLE 12 FORCE MAJEURE...............................................................101
ARTICLE 13 TERM AND TERMINATION........................................................101
13.1 Term........................................................................101
13.2 General Conditions of Expiration and Termination............................102
13.3 Termination for Breach......................................................104
13.3.1 General..............................................................104
13.3.2 Breach by SB.........................................................104
13.4 Early Termination License of SB's License...................................104
13.5 Non-Exclusive License.......................................................105
13.6 Early Termination of Coulter's License......................................106
13.7 No Limit on Remedies........................................................107
ARTICLE 14 ASSIGNMENT..................................................................107
14.1 Assignment..................................................................107
14.2 Performance by Affiliates and Local Operating Entities......................107
ARTICLE 15 INDEMNIFICATION AND INSURANCE...............................................107
15.1 Cross Indemnification.......................................................107
15.1.1 Indemnification in the Non-USA Territory.............................107
15.1.2 Indemnification in Territory A.......................................108
15.2 Indemnification Procedure...................................................109
15.3 Insurance...................................................................109
ARTICLE 16 WARRANTIES AND REPRESENTATIONS...........................................110
ARTICLE 17 CONFIDENTIAL INFORMATION.................................................112
17.1 Information.................................................................112
17.2 Exceptions..................................................................112
17.3 Permitted Disclosures.......................................................113
17.4 Disclosure of Agreement.....................................................113
17.5 Publicity...................................................................114
17.6 Publication.................................................................114
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
xi.
<PAGE> 13
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
17.7 Prior Confidentiality Agreements............................................114
ARTICLE 18 DISPUTE RESOLUTION..........................................................115
18.1 General.....................................................................115
18.2 [*].........................................................................115
18.3 Recommendation of [*].......................................................115
18.4 Governing Law; Jurisdiction; Venue..........................................116
18.5 Arbitration for Reasonable Royalty Determination............................116
ARTICLE 19 MISCELLANEOUS...............................................................117
19.1 Conditions to Effectiveness.................................................117
19.2 No Waiver of Contractual Rights.............................................118
19.3 Execution and Amendments....................................................118
19.4 Severability................................................................118
19.5 Relationship between the Parties............................................119
19.6 Correspondence and Notices..................................................119
19.7 Counterparts................................................................120
19.8 Waiver Of Breach............................................................120
19.9 No Intellectual Property Rights Granted.....................................120
19.10 Recording...................................................................120
19.11 Headings; Interpretation....................................................121
19.12 Expenses....................................................................121
19.13 Further Actions.............................................................121
19.14 Official Language...........................................................121
19.15 Entire Agreement; Tax Agreement.............................................121
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
xii.
<PAGE> 14
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
EXHIBIT 10.25
COLLABORATION AGREEMENT
This COLLABORATION AGREEMENT (the "Agreement") is executed by the
Parties as of October 23, 1998 to become effective on the Effective Date (as
defined in Section 19.1) hereof, by and between COULTER PHARMACEUTICAL, INC., a
company incorporated under the laws of the State of Delaware, with its principal
place of business at 550 California Avenue, Suite 200, Palo Alto, California
94306, USA ("Coulter"), and SMITHKLINE BEECHAM CORPORATION, a company
incorporated under the laws of the Commonwealth of Pennsylvania, with its
principal place of business at One Franklin Plaza, Philadelphia, Pennsylvania
19101, USA ("SB"). Both Coulter and SB are referred to individually as a "Party"
and collectively as the "Parties."
WHEREAS, Coulter has rights to and is developing that certain compound
known as BEXXAR(TM) (as such term is defined below); and
WHEREAS, SB would like to obtain the worldwide rights (except for Japan)
to develop and commercialize BEXXAR and other PRODUCTS in the FIELD (as such
terms are defined below); and
WHEREAS, Coulter and SB wish to jointly commercialize BEXXAR and other
PRODUCTS in the United States of America (excluding its territories, possessions
and the Commonwealth of Puerto Rico); and
WHEREAS, simultaneous with the execution of this Agreement, the Parties
are entering into the LOAN AGREEMENT (as such term is defined below) and the
STOCK PURCHASE AGREEMENT (as such term is defined below);
NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises, covenants and conditions contained in this Agreement, the Parties
agree as follows:
ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the terms hereunder shall have the
meanings as defined below:
1.1 "004 TRIAL" shall mean Coulter's clinical trial with Protocol No.
RIT-II-004 ("Multicenter, Pivotal Phase III Study of Iodine-131 Anti-B1 Antibody
(Murine) Radioimmunotherapy for Chemotherapy-Refractory Low-Grade B-Cell
Lymphomas and Low-
1.
<PAGE> 15
Grade Lymphomas That Have Transformed to Higher Grade Histologies") for which
enrollment and interim analysis was completed prior to the Effective Date.
1.2 "ADDITIONAL INDICATIONS" shall mean any indications in the FIELD,
other than the MAJOR INDICATIONS.
1.3 "AFFILIATE(S)" shall mean, in the case of either Coulter or SB, any
corporation, joint venture, or other business entity which directly or
indirectly controls, is controlled by, or is under common control with that
Party. "Control," as used in this Section 1.3 only, shall mean having the power
to direct, or cause the direction of, the management and policies of an entity,
whether through ownership of voting securities, by contract or otherwise.
1.4 "ANTI-CD20 ANTIBODY" shall mean:
(i) the B1 MURINE ANTIBODY or any derivative of the B1
MURINE ANTIBODY, including without limitation, any genetically engineered
construct of the B1 MURINE ANTIBODY;
(ii) any other anti-CD20 monoclonal antibody other than
the B1 MURINE ANTIBODY including, without limitation, human, humanized,
primatized, or chimerized antibody;
(iii) any [*] of (i) or (ii);
(iv) any [*] of (i) or (ii);
(v) any [*] of (i) or (ii);
(vi) any [*] of (i) or (ii);
(vii) any [*] (i) or (ii); and
(viii) any [*].
1.5 "B1 MURINE ANTIBODY" shall mean the unconjugated IgG2a anti-CD20
murine monoclonal antibody which is one of the active agents tested in the 004
TRIAL.
1.6 "BEXXAR" shall mean B1 MURINE ANTIBODY conjugated with 131Iodine or
unconjugated, depending upon context.
1.7 "BLA" shall mean a Biologics License Application, as defined by the
regulations promulgated under the United States FD&C ACT and PHS ACT and any
supplements thereunder, as amended from time to time.
1.8 "COMMERCIALLY REASONABLE EFFORTS" shall mean efforts and resources
normally used by a Party for a compound owned by it or to which it has rights,
which is of similar market
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2.
<PAGE> 16
potential at a similar stage in its product life, taking into account the [*],
the [*] of [*], the [*], the [*], and other relevant factors including, [*] or
[*].
1.9 "CONTROL" shall mean, except as otherwise provided in Section 1.3,
licensed or otherwise having rights to use, with the right to grant sublicenses,
as provided in this Agreement without violating the terms of any THIRD PARTY
agreement.
1.10 "CO-PROMOTION" shall mean the promotion, marketing and selling of
the PRODUCT, including, without limitation, the detailing of the PRODUCT to
physicians, jointly through the sales forces of Coulter and SB in TERRITORY A
under the TRADEMARK and REGULATORY APPROVAL held by Coulter.
1.11 "COST OF GOODS" shall mean the cost of UNCONJUGATED ANTIBODY or
RADIOLABELED ANTIBODY (in any form) sold and included in NET SALES or used in
DEVELOPMENT or MANUFACTURE DEVELOPMENT and shall be computed in accordance with
United States generally accepted accounting principles. COST OF GOODS shall
include, without limitation, but subject to Section 8.1:
(a) (i) in the case of UNCONJUGATED ANTIBODY or RADIOLABELED
ANTIBODY acquired from THIRD PARTIES, payments made by either Party to such
THIRD PARTIES in respect of such materials, including, but not limited to, [*]
the UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY, [*] payments, [*] payments
and [*] owed to such THIRD PARTIES, or
(ii) in the case of UNCONJUGATED ANTIBODY manufactured by
SB pursuant to an SB Supply Agreement (as defined in Section 9.6.1) which is
entered into by the Parties pursuant to Section 9.6.1, the amounts set forth on
the [*] attached to such SB Supply Agreement, or
(iii) in the case of UNCONJUGATED ANTIBODY or RADIOLABELED
ANTIBODY manufactured by Coulter pursuant to a Coulter Supply Agreement (as
defined in Section 9.6.2) which is entered into by the Parties pursuant to
Section 9.6.2, the amounts set forth on the [*] attached to such Coulter Supply
Agreement, plus
(b) QA/QC COSTS, plus
(c) EXISTING THIRD PARTY LICENSE COSTS and NEW THIRD PARTY
LICENSE COSTS, plus
(d) the cost of forward foreign currency contracts to protect
against risk of changes in foreign exchange rates, provided that such costs are
approved in advance by the Parties, plus
(e) the OUT-OF-POCKET COST of freight and tariffs associated with
transporting UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY from the source of
manufacture to the end
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
3.
<PAGE> 17
user, inclusive of interim points of delivery, but excluding (i) any such costs
which are separately invoiced to a customer, [*] involved in the [*].
COST OF GOODS shall exclude [*], which shall be separately borne by the Parties.
COST OF GOODS shall also exclude [*] and [*], although [*] incurred in TERRITORY
A shall be included as an element of the JOINT P&L. Subject to Section 1.58, [*]
incurred outside of TERRITORY A shall be borne solely by [*].
In the event SB acquires UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY for
TERRITORY A from a THIRD PARTY [*] has [*] of at [*], and if [*] has a
reasonable good faith belief that [*] in the [*] THIRD PARTY, then [*] shall
[*], and the Parties shall promptly meet to discuss the situation in good faith
to determine whether or not [*] for [*] from the [*] to be agreed between the
Parties [*], if any, in the [*] THIRD PARTY. In the event Coulter acquires
UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY for TERRITORY A from a THIRD
PARTY [*] has [*] of at [*], and if [*] has a reasonable good faith belief that
[*] in the [*] THIRD PARTY, then [*], and the Parties shall promptly meet to
discuss the situation in good faith to determine whether or not [*] for [*] from
the [*] to be agreed between the Parties [*], if any, in the [*] THIRD PARTY.
1.12 "COULTER PATENT RIGHTS" shall mean all PATENT RIGHTS owned or
CONTROLLED by Coulter as of the Effective Date or during the term of this
Agreement. A list of the COULTER PATENT RIGHTS existing as of the date of mutual
execution of this Agreement is set out in Exhibit A hereto and will be updated
by Coulter on a semi-annual basis.
1.13 "CROSS-TERRITORY TRIALS" shall have the meaning set forth in
Section 3.2.3.
1.14 "DEVELOPMENT" shall mean the following activities related to
LICENSED COMPOUNDS or PRODUCTS within the FIELD performed in accordance with [*]
JOINT DEVELOPMENT PLAN or [*] and [*] the [*] JOINT DEVELOPMENT PLAN and related
to PLANNED CLINICAL TRIALS: (i) the pre-clinical development of a LICENSED
COMPOUND for use in the FIELD; (ii) the clinical development of a PRODUCT for
use in the FIELD through and including REGULATORY APPROVAL; (iii) regulatory
activities associated with seeking REGULATORY APPROVALS of PRODUCT; and (iv) any
post-REGULATORY APPROVAL clinical studies for label expansion or publication
purposes or required by regulatory authorities for the PRODUCT for use in the
FIELD, including Phase IV clinical studies. "DEVELOPMENT" shall not include any
activities included in the definition of "MANUFACTURE DEVELOPMENT".
1.15 "DEVELOPMENT COSTS" shall mean, subject to Section 8.1, the
following costs, to the extent incurred by a Party (i) in accordance with [*]
JOINT DEVELOPMENT PLAN, or (ii) reasonably incurred by a Party [*] and [*] the
[*] of such a plan, provided that any such DEVELOPMENT COSTS [*] a PLANNED
CLINICAL TRIAL or [*] a PLANNED CLINICAL TRIAL shall be approved in advance by
the co-chairpersons of the JDC:
(a) all OUT-OF-POCKET COSTS charged to the DEVELOPMENT of any
LICENSED COMPOUND or PRODUCT for use in the FIELD [*], including, but not
limited to, [*]; plus
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
4.
<PAGE> 18
(b) an appropriate allowance of FTES as required to support the
activities outlined in Section 1.15(a), excluding, however, REGULATORY
PERSONNEL; plus
(c) COST OF GOODS for DEVELOPMENT incurred under Section 9.7.
1.16 "DISTRIBUTION COSTS" shall have the meaning set forth at Section
B.3.2 on Exhibit B-1.
1.17 "EUROPE" shall mean all countries and territories set forth on
Exhibit C.
1.18 "EUROPEAN FACILITY" shall have the meaning set forth in Section
9.10.1.
1.19 "EXISTING THIRD PARTY LICENSE" shall mean any of the following
agreements:
(i) Agreement between Sidney Farber Cancer Institute and
Coulter Electronics, Inc., dated July 23, 1981.
(ii) Modification Agreement between Dana-Farber Cancer
Institute and Coulter Electronics, Inc., dated March 1, 1983.
(iii) License Agreement between Dana-Farber Cancer
Institute and Coulter Immunology, Division of Coulter Corporation, dated April
28, 1983.
(iv) Modification Agreement No. 2 between Dana-Farber
Cancer Institute and Coulter Immunology, Division of Coulter Corporation, dated
April 1, 1987.
(v) Agreement between Coulter Corporation and Dana-Farber
Cancer Institute, Inc., dated April 1, 1994.
(vi) Assignment Agreement among Coulter Pharmaceutical,
Inc., Coulter Corporation, InterWest Partners V, L.P. and InterWest Investors V,
dated February 24, 1995.
(vii) Commercialization Agreement between Coulter
Corporation and the Regents of the University of Michigan, dated November 1,
1994.
(viii) Amendment to Commercialization Agreement between
Coulter and the Regents of the University of Michigan, dated June 1, 1997.
(ix) Any amendment to (i) through (viii) executed by
Coulter prior to the Effective Date (as defined in Section 19.1) and disclosed
to SB prior to SB's acceptance or waiver of the conditions to effectiveness set
forth in Section 19.1.
Coulter agrees to provide SB with an update of this Section 1.19 as of the
Effective Date (as defined in Section 19.1).
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
5.
<PAGE> 19
1.20 "EXISTING THIRD PARTY LICENSE COSTS" shall mean any amounts to be
paid by Coulter to a THIRD PARTY licensor under any EXISTING THIRD PARTY
LICENSE, to the extent such amounts (i) relate to LICENSED COMPOUND or PRODUCT,
and (ii) become payable after the Effective Date; provided, however, EXISTING
THIRD PARTY LICENSE COSTS shall exclude [*] and [*] which are [*] (which [*] and
[*] shall be [*] (a) in the event [*] the [*] of the [*] (or the [*] does [*] a
[*] of such [*,] or (b) in the event that [*] does [*] a [*] of [*].
1.21 "FD&C ACT" shall mean the United States Federal Food, Drug and
Cosmetic Act, as amended.
1.22 "FDA" shall mean the United States Food and Drug Administration or
its successor.
1.23 "FIELD" shall mean the treatment, prevention or palliation of any
indication in humans. [*] shall [*] of [*].
1.24 "FINANCE SUBTEAM" shall have the meaning set forth in Section 2.4.
1.25 "FIRST COMMERCIAL SALE" shall mean the first commercial sale of a
PRODUCT in a given jurisdiction after the PRODUCT has been granted REGULATORY
APPROVAL by the competent authorities in such jurisdiction.
1.26 "FIRST INDICATION" shall mean the label claim(s) which are approved
in the first REGULATORY APPROVAL for BEXXAR in a given jurisdiction, provided
that such claims are for a MAJOR INDICATION.
1.27 "FORCE MAJEURE OCCURRENCE" shall have the meaning set forth in
Article 12.
1.28 "FTE" shall mean a full-time equivalent professional employee of a
Party, other than a clerical, administrative assistant, or secretarial employee,
for whom reimbursement is to be paid under this Agreement at the applicable
rates set forth on Exhibit B-2. By way of example, (i) if an employee is a
full-time employee and spends one hundred percent (100%) of his or her time on
activities for which reimbursement is to be paid under this Agreement, such
employee shall count as one (1) FTE, and (ii) if an employee is a full-time
employee and spends forty percent (40%) of his or her time on activities for
which reimbursement is to be paid under this Agreement, such employee shall
count as four-tenths (0.4) of an FTE.
1.29 "GOOD CLINICAL PRACTICE" or "GCP" shall mean the then current
standards for clinical trials for pharmaceuticals, as set forth in (i) the FD&C
ACT and applicable regulations and guidances promulgated thereunder, including
without limitation the Code of Federal Regulations, as amended from time to time
and, as applicable, (ii) the rules and regulations of the International
Conference on Harmonization, and (iii) any other applicable requirements for
clinical trial activities under the laws, rules or regulations of TERRITORY A
and the other countries of the TERRITORY.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
6.
<PAGE> 20
1.30 "GOOD LABORATORY PRACTICE" or "GLP" shall mean the then current
standards for laboratory activities for pharmaceuticals, as set forth in the
FD&C ACT and applicable regulations and guidances promulgated thereunder,
including without limitation the Code of Federal Regulations, as amended from
time to time, and subject to Section 9.14.2, any other applicable requirements
for laboratory activities under the laws, rules or regulations of TERRITORY A
and the other countries of the TERRITORY.
1.31 "GOOD MANUFACTURING PRACTICE" or "GMP" shall mean the current
standards for the manufacture of pharmaceuticals, as set forth in the FD&C ACT
and applicable regulations and guidances promulgated thereunder, including
without limitation the Code of Federal Regulations, as amended from time to
time, and subject to Section 9.14.2, any other applicable manufacturing
requirements under the laws, rules or regulations of TERRITORY A, such as the
Nuclear Regulatory Commission Guidelines, and the other countries of the
TERRITORY.
1.32 "GUARANTEED COGS PLUS ROYALTIES PERCENT" shall have the meaning set
forth in Section 7.2.5(c).
1.33 "GUARANTEED COGS TERRITORY" shall mean [*], as may be expanded in
accordance with Section 7.2.5(g).
1.34 "INTELLECTUAL PROPERTY RIGHTS" shall mean all PATENT RIGHTS,
copyrights, regulatory filings, KNOW-HOW and/or trade secrets, or any other
intellectual property other than trademarks, which are owned or CONTROLLED as of
the Effective Date or during the term of this Agreement by one Party hereto or
jointly by the Parties, with regard to the DEVELOPMENT, manufacture, importing,
use, marketing and/or sale of the PRODUCT. INTELLECTUAL PROPERTY RIGHTS shall
include any rights obtained by either Party from a THIRD PARTY license pursuant
to Section 5.3, subject to the terms and conditions of such license. The term
"INTELLECTUAL PROPERTY RIGHTS," however, shall not include PATENT RIGHTS,
copyrights, regulatory filings, KNOW-HOW and/or trade secrets, or any other
intellectual property of [*] for the [*] whether developed prior to or after the
Effective Date.
1.35 "INVENTION" shall mean an invention conceived or reduced to
practice in the course of or as a result of the performance of this Agreement by
an employee or agent of a Party. The term "INVENTION" however, shall not include
an invention conceived or reduced to practice in the course of or as a result of
the performance of this Agreement by an employee or agent of SB, other than
jointly with an employee or agent of Coulter, for the [*].
1.36 "JOINT COMMERCIALIZATION COMMITTEE" or "JCC" shall mean the
committee appointed by the Parties as set forth in Section 2.2.
1.37 "JOINT DEVELOPMENT COMMITTEE" or "JDC" shall mean the committee
appointed by the Parties as set forth in Section 2.1.
1.38 "JOINT DEVELOPMENT PLAN" shall be the then current plan and budget
which is described in Section 3.2.1 and approved in accordance with Section
3.2.1(c). The PLANNED
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
7.
<PAGE> 21
CLINICAL TRIALS as of the Effective Date, which will be a part of the JOINT
DEVELOPMENT PLAN for BEXXAR, are attached hereto as Exhibit D.
1.39 "JOINT MANUFACTURE DEVELOPMENT PLAN" shall mean the then current
plan and budget which is described in Section 3.3.1 and approved in accordance
with Section 3.3.1(c).
1.40 "JOINT MARKETING PLAN" shall mean the then current plan and budget
which is described in Section 7.1.3 and approved in accordance therewith.
1.41 "JOINT P&L" shall have the meaning set forth in Section 7.1.14.
1.42 "KNOW-HOW" shall mean all know-how, including DEVELOPMENT,
MANUFACTURE DEVELOPMENT and commercialization data, processes and information,
including any copyright relating thereto, owned or CONTROLLED by either Party as
of the Effective Date or acquired during the term of this Agreement relating to:
(a) ANTI-CD20 ANTIBODY, including any LICENSED COMPOUND or
PRODUCT;
(b) any component of (a);
(c) any intermediate in the making of any of (a) or (b);
(d) methods of making any of (a), (b) or (c);
(e) any method of using any of (a), (b), or (c);
(f) any use of (a);
(g) any formulation or delivery system for (a); and/or
(h) any other data related to the development, manufacture,
marketing or sale of (a).
The term "KNOW-HOW," however, shall not include (i) any know-how,
processes, information and data which is, as of the Effective Date or becomes
later on, available to the public except by fault of the receiving Party, or
(ii) proprietary know-how of [*] for the [*] whether developed prior to or after
the Effective Date.
1.43 "LICENSED COMPOUND" shall mean BEXXAR and any SECOND GENERATION
LICENSED COMPOUNDS.
1.44 "LOAN AND SECURITY AGREEMENTS" shall mean the loan and security
agreements between the Parties described in Section 6.1.2(b).
1.45 "MAA" shall mean that regulatory application in the European
Community which is the equivalent of a BLA.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
8.
<PAGE> 22
1.46 "MAJOR INDICATIONS" shall mean the following indications within the
FIELD:
(a) [*];
(b) [*];
(c) [*];
(d) [*];
(e) [*];
(f) [*]; and
(g) [*].
The MAJOR INDICATIONS set forth in (a)-(f) hereof may be treated [*].
1.47 "MAJOR MARKET COUNTRY" shall mean [*].
1.48 "MAJOR MARKETS IN TERRITORY C" shall have the meaning set forth in
Section 6.2.1(d).
1.49 "MANUFACTURE AND SUPPLY CHAIN SUBTEAM" shall mean the subteam
appointed by the Parties as set forth in Section 2.3.
1.50 "MANUFACTURE DEVELOPMENT" shall mean the following activities
related to LICENSED COMPOUNDS or PRODUCTS within the FIELD performed in
accordance with the then current JOINT MANUFACTURE DEVELOPMENT PLAN: (i) PRODUCT
improvement activities, such as reformulation, whether occurring before or after
REGULATORY APPROVAL; (ii) the development of manufacturing processes for the
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY; including without limitation,
process development and optimization, manufacturing scale-up, validation,
qualification, and certification; (iii) the [*] or [*] of [*] or equipment for
the manufacture of UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY; and (iv) any
[*] associated with (i), (ii), and (iii) above. "MANUFACTURE DEVELOPMENT" shall
not include any activities included in the definition of "DEVELOPMENT".
1.51 "MANUFACTURE DEVELOPMENT COSTS" shall mean, subject to Section 8.1:
(i) the following costs to the extent incurred by a Party [*] and
[*] of [*] JOINT MANUFACTURE DEVELOPMENT PLAN: OUT-OF-POCKET COSTS (plus FTE
costs to the extent described in the last sentence of this subsection (i))
reasonably incurred by a Party [*] the [*] and directly related to:
(a) BLA preparation at the [*] manufacturing site,
(b) scale-up and BLA preparation at the [*] manufacturing
site,
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
9.
<PAGE> 23
(c) qualification of the [*] at the [*] site, and
(d) [*] at [*],
provided that any particular MANUFACTURE DEVELOPMENT COSTS incurred under this
subsection (i)
(a) shall be in accordance with the forecast provided to SB in
the [*]
(b) any individual amount for a specific program or activity is
not in excess of [*] and
(c) the total OUT-OF-POCKET COSTS prior to the adoption of such
JOINT MANUFACTURE DEVELOPMENT PLAN shall not [*]
unless such amount has received the prior written approval of the
co-chairpersons of the JDC within ten (10) business days of presentation to such
co-chairpersons of a statement describing and requesting such expenditures. To
the extent there are FTE costs, excluding REGULATORY PERSONNEL, reasonably
incurred by a Party [*] to the [*] JOINT MANUFACTURE DEVELOPMENT PLAN in direct
support of the activities mentioned under this subsection (i), such FTE costs
shall be [*] to [*] based upon [*] upon the necessary FTEs required to perform
such work under the initial JOINT MANUFACTURE DEVELOPMENT PLAN; and
(ii) the following costs to the extent incurred in accordance
with [*] JOINT MANUFACTURE DEVELOPMENT PLAN:
(a) all OUT-OF-POCKET COSTS charged to the MANUFACTURE
DEVELOPMENT of any LICENSED COMPOUND or PRODUCT for use in the FIELD [*]; plus
(b) an appropriate allowance of FTES as required to
support the activities outlined in Section 1.51(ii)(a), excluding, however,
REGULATORY PERSONNEL.
To the extent [*] are included within MANUFACTURE DEVELOPMENT COSTS, such [*]
shall be allocated in the manner provided in Section 3.3.3.
1.52 "MARKETING COSTS" shall have the meaning set forth on Exhibit B-1,
subject to Section 8.1, to the extent incurred [*] and (i) in accordance with
the then current JOINT MARKETING PLAN, or (ii) reasonably incurred by a Party
prior to the adoption of such a plan, provided, however, that, under this clause
(ii), any individual amount for a specific program or activity shall not exceed
[*] and the total amounts spent prior to the adoption of such JOINT MARKETING
PLAN shall not exceed [*], each without the prior written approval of the
co-chairpersons of the JCC within ten (10) business days of presentation of a
statement to such co-chairpersons describing and requesting such expenditures.
1.53 "[*]" shall mean a [*] filed with the [*].
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
10.
<PAGE> 24
1.54 "NET SALES" shall mean gross amounts invoiced for sales of the
PRODUCT in the FIELD in the relevant TERRITORY by either Party, its AFFILIATES
or sublicensees, as appropriate, to THIRD PARTIES, less the following items: (i)
trade, quantity and cash discounts or rebates actually allowed and taken and any
other adjustments, including, without limitation, those granted on account of
price adjustments, billing errors, rejected goods, damaged goods and recall
returns; (ii) credits, rebates, charge-back and prime vendor rebates, fees,
reimbursements or similar payments granted or given to wholesalers and other
distributors, buying groups, health care insurance carriers, pharmacy benefit
management companies, health maintenance organizations or other institutions or
health care organizations; (iii) any tax, tariff, customs duties, excise or
other duties or other governmental charge (other than an income tax) levied on
the sale, transportation or delivery of a PRODUCT and borne by the seller
thereof; (iv) payments or rebates paid in connection with sales of PRODUCTS to
any governmental or regulatory authority in respect of any state or federal
Medicare, Medicaid or similar programs; (v) any charge for freight, insurance or
other transportation costs charged to the customer; and (vi) any write-offs for
bad debt.
Sales of PRODUCT by and between a Party and its AFFILIATES are not sales to
THIRD PARTIES (except where such AFFILIATES are end users) and shall be excluded
from NET SALES calculations for all purposes. Notwithstanding the immediately
preceding sentence, it is understood that any transactions between SB or any of
its AFFILIATES or any of its or their sublicensees on the one hand and [*] on
the other hand will be deemed to be transactions with THIRD PARTIES for the
purposes of computing NET SALES, provided that the conditions of such sales to
[*], including any and all rebates and discounts allocated to transactions with
any such [*], shall be on an arms length basis and shall be fully deductible for
such computation purposes. In the event that any [*] type activity is within SB
or within any of its AFFILIATES or its or their sublicensees as only part of its
or their total activities rather than in a separate AFFILIATE, a notional NET
SALES figure will be calculated on an arms length basis to cover such
activities. [*] or [*] or [*] a [*] for or [*] including [*]. As of the
Effective Date, an [*] the [*] of [*], a [*] of [*] and [*] of [*].
1.55 "NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS" shall
have the meaning set forth in Section 9.3.
1.56 "NEW THIRD PARTY LICENSE" shall have the meaning set forth in
Section 5.3.2.
1.57 "NEW THIRD PARTY LICENSE COSTS" shall have the meaning set forth in
Section 5.3.3(d).
1.58 "NON-USA COGS" shall mean, for each country in the GUARANTEED COGS
TERRITORY:
(a) the COST OF GOODS for such country, plus
(b) SB's OUT-OF-POCKET COSTS of distributing PRODUCT in such
country not already included in Section 1.58(a); plus
(c) SB's OUT-OF-POCKET COST of [*] or [*] in [*].
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
11.
<PAGE> 25
NON-USA COGS shall exclude any UNCONJUGATED ANTIBODY [*] provided that at the
time of shipping of such UNCONJUGATED ANTIBODY by Coulter or the THIRD PARTY
manufacturer to SB there is expiration dating approved by the relevant
regulatory authority remaining of not less than [*] for such UNCONJUGATED
ANTIBODY in [*], such expiration dating to be extended, as approved by the
relevant regulatory authorities, up to a maximum of [*] as real time data
becomes available.
1.59 "NON-USA MARKETING PLAN" shall mean that marketing plan which
relates to the commercialization of PRODUCT in the NON-USA TERRITORY as produced
by SB in accordance with SB's standard internal procedures.
1.60 "NON-USA TERRITORY" shall mean TERRITORY B and TERRITORY C.
1.61 "NORTH AMERICA" shall mean [*] TERRITORY A; [*].
1.62 "OPERATING PROFIT OR LOSS" shall have the meaning set forth on
Exhibit B-1.
1.63 "OTHER OPERATING INCOME/EXPENSE" shall have the meaning set forth
on Exhibit B-1.
1.64 "OUT-OF-POCKET COSTS" shall mean any out-of-pocket payment made by
a Party to a THIRD PARTY who is not an AFFILIATE of such Party but only to the
extent such payment relates to costs which are incurred by a Party [*] with
respect to DEVELOPMENT COSTS, MANUFACTURE DEVELOPMENT COSTS, or MARKETING COSTS,
or after the Effective Date with respect to all other out-of-pocket payments.
1.65 "PATENT COSTS" shall mean the OUT-OF-POCKET COSTS incurred after
the Effective Date in connection with the filing, prosecution and maintenance of
PATENT RIGHTS, as well as the costs of any patent interference, reexamination,
reissue, opposition and revocation proceedings in connection with PATENT RIGHTS.
PATENT COSTS shall also include those costs incurred by a Party under Sections
11.4 or 11.5 with respect to TERRITORY A.
1.66 "PATENT RIGHTS" shall mean all patents or patent applications,
throughout the relevant TERRITORY and all divisionals, continuations,
continuations-in-part, reissues, extensions, supplementary protection
certificates thereof, owned or CONTROLLED by a Party or the Parties and existing
as of the Effective Date or filed or issuing during the term of this Agreement,
at least one claim of which covers:
(a) an ANTI-CD20 ANTIBODY, including any LICENSED COMPOUND or
PRODUCT;
(b) any component of (a);
(c) any intermediate in the making of any of (a) or (b);
(d) methods of making any of (a), (b) or (c);
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
12.
<PAGE> 26
(e) any method of using any of (a), (b), or (c);
(f) any use of (a);
(g) any formulation or delivery system for (a); and/or
(h) any other subject matter related to the development,
manufacture, formulation, use or sale of (a).
The term "PATENT RIGHTS" however shall not include [*] to the extent that they
cover [*] including, without limitation, [*] as a result of [*], other than [*],
related to [*].
1.67 "PHS ACT" shall mean the United States Public Health Service Act,
as amended.
1.68 "PLANNED CLINICAL TRIALS" shall mean those clinical trials of
BEXXAR which as of the Effective Date the Parties intend to complete or
undertake as part of the Development. A list and description of the PLANNED
CLINICAL TRIALS, as of the Effective Date, is attached hereto as Exhibit D. The
actual clinical trial program for PRODUCTS and budget therefor shall be defined
by the JOINT DEVELOPMENT COMMITTEE pursuant to the JOINT DEVELOPMENT PLAN
adopted from time to time in accordance with Section 3.2.1.
1.69 "PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS"
shall have the meaning set forth in Section 9.2.
1.70 "PRODUCT" shall mean any pharmaceutical PRODUCT containing a
LICENSED COMPOUND in any formulation or mode of administration.
1.71 "QA/QC COSTS" shall mean, subject to Section 8.1, OUT-OF-POCKET
COSTS and FTE costs of quality assurance and quality control work performed by
the Parties related to PRODUCT release and PRODUCT testing of the UNCONJUGATED
ANTIBODY and RADIOLABELED ANTIBODY determined in accordance with this Section
1.71, but only to the extent that such quality assurance and quality control
work is required by the FDA or other relevant regulatory authorities. QA/QC
COSTS shall include a reasonable allocation of Coulter's facility overhead, but
shall exclude [*] or any [*]. QA/QC COSTS shall be calculated on the basis of a
cost per batch to be mutually agreed by the Parties to approximate the actual
cost of such work. In any event, QA/QC COSTS shall not exceed [*] of
UNCONJUGATED ANTIBODY [*] of RADIOLABELED ANTIBODY.
1.72 "RADIOLABELED ANTIBODY" shall mean (i) the B1 MURINE ANTIBODY
conjugated to (131)Iodine [*] or (ii) any SECOND GENERATION ANTIBODY conjugated
to (131)Iodine [*], in each case in finished pharmaceutical form, packaged for
use by the end user (or for delivery to a radiopharmacy, as the case may be).
1.73 "REGULATORY APPROVAL" shall mean all authorizations by governmental
authorities which are required for the marketing, promotion, pricing and sale of
the PRODUCT in a given country or regulatory jurisdiction, including all
manufacturing, pricing and reimbursement
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
13.
<PAGE> 27
approvals. If the PRODUCT is being sold commercially in a country (other than
under a treatment Investigational New Drug application, compassionate use
program or foreign equivalent) by a Party, REGULATORY APPROVAL shall be deemed
to have occurred in any event.
1.74 "REGULATORY PERSONNEL" shall mean any individual that is primarily
involved in the preparation, filing or maintenance of a regulatory filing or
maintenance of a REGULATORY APPROVAL or any aspect of adverse event reporting,
with respect to a LICENSED COMPOUND or PRODUCT.
1.75 "SALES COSTS" shall have the meaning set forth on Exhibit B-1.
1.76 "SALES EFFORT" shall have the meaning set forth in Section
7.1.6(a).
1.77 "SB OPTION EXERCISE NOTICE" shall have the meaning set forth in
Section 4.2.2(a).
1.78 "SB PATENT RIGHTS" shall mean all PATENT RIGHTS owned or CONTROLLED
by SB during the term of this Agreement. [*] of the [*]. As such SB PATENT
RIGHTS [*], they will be added to Exhibit E as such exhibit is updated, which
update shall be on a semi-annual basis.
1.79 "SECOND GENERATION ANTIBODY" shall mean the antibody component of a
SECOND GENERATION LICENSED COMPOUND.
1.80 "SECOND GENERATION ANTIBODY CANDIDATE" shall mean:
(i) any derivative of the B1 MURINE ANTIBODY, including
without limitation, any genetically engineered construct of the B1 MURINE
ANTIBODY;
(ii) any other anti-CD20 monoclonal antibody other than
the B1 MURINE ANTIBODY including, without limitation, human, humanized,
primatized, or chimerized antibody;
(iii) any [*] of (i) or (ii);
(iv) any [*] of (i) or (ii);
(v) any [*] of (i) or (ii);
(vi) any [*] of (i) or (ii);
(vii) any [*] of (i) or (ii); or
(viii) any [*].
1.81 "SECOND GENERATION LICENSED COMPOUND" shall mean a SECOND
GENERATION LICENSED COMPOUND CANDIDATE (i) for which SB has provided an SB
OPTION EXERCISE NOTICE
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
14.
<PAGE> 28
pursuant to Section 4.2.2(a) or (ii) which has become a SECOND GENERATION
LICENSED COMPOUND in accordance with Section 4.2.4(a)-(b).
1.82 "SECOND GENERATION LICENSED COMPOUND CANDIDATE" shall mean (i) an
unconjugated SECOND GENERATION ANTIBODY CANDIDATE; (ii) B1 MURINE ANTIBODY
conjugated to [*] (iii) a SECOND GENERATION ANTIBODY CANDIDATE conjugated to
[*]; or (iv) a SECOND GENERATION ANTIBODY CANDIDATE conjugated to [*].
1.83 "SECOND GENERATION LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS"
shall mean, subject to Section 8.1, the following costs incurred by a Party
after the Effective Date and prior to the date on which a given SECOND
GENERATION LICENSED COMPOUND CANDIDATE becomes a SECOND GENERATION LICENSED
COMPOUND (pursuant to Section 4.2.2(a), 4.2.4(a) or 4.2.4(b), as applicable):
(a) all OUT-OF-POCKET COSTS reasonably charged to the
pre-clinical and clinical development of a SECOND GENERATION LICENSED COMPOUND
CANDIDATE for use in the FIELD, including, but not limited to, [*]
(b) an appropriate allowance of FTES as required to support the
activities outlined in Section 1.83(a), excluding, however, REGULATORY
PERSONNEL; plus
(c) COST OF GOODS of such SECOND GENERATION LICENSED COMPOUND
CANDIDATE for such pre-clinical and clinical development.
To the extent practical, SECOND GENERATION LICENSED COMPOUND CANDIDATE
DEVELOPMENT COSTS shall be calculated in the same manner as DEVELOPMENT COSTS;
provided, however, that there shall be no requirement that SECOND GENERATION
LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS be incurred under a
mutually-agreed plan.
1.84 "SECOND GENERATION LICENSED COMPOUND CANDIDATE MANUFACTURE
DEVELOPMENT COSTS" shall mean, subject to Section 8.1, the following costs
incurred by a Party after the Effective Date and prior to the date on which a
given SECOND GENERATION LICENSED COMPOUND CANDIDATE becomes a SECOND GENERATION
LICENSED COMPOUND (pursuant to Section 4.2.2, 4.2.4(a) or 4.2.4(b), as
applicable):
(a) all OUT-OF-POCKET COSTS reasonably charged to the development
of manufacturing processes for a SECOND GENERATION LICENSED COMPOUND CANDIDATE
for use in the FIELD, including without limitation, [*] and [*]; plus
(b) an appropriate allowance of FTES as required to support the
activities outlined in Section 1.84(a), excluding, however, REGULATORY
PERSONNEL.
To the extent practical, SECOND GENERATION LICENSED COMPOUND CANDIDATE
MANUFACTURE DEVELOPMENT COSTS shall be calculated in the same manner as
MANUFACTURE DEVELOPMENT COSTS; provided, however, that there shall be no
requirement that SECOND
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
15.
<PAGE> 29
GENERATION LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS be incurred
under a mutually-agreed plan.
1.85 "SECOND INDICATION" shall mean label claim(s), other than FIRST
INDICATION label claim(s), which are approved in a REGULATORY APPROVAL received
for BEXXAR in a given jurisdiction subsequent to the REGULATORY APPROVAL for the
FIRST INDICATION, provided that such claims are for a MAJOR INDICATION.
1.86 "STOCK PURCHASE AGREEMENT" shall mean that agreement between the
Parties described in Section 6.1.2(a).
1.87 "TERM OF CO-PROMOTION" shall mean, with respect to each PRODUCT,
the period extending from FIRST COMMERCIAL SALE of such PRODUCT in TERRITORY A
until termination or expiration of this Agreement in accordance with the
provisions hereof or termination of CO-PROMOTION of such PRODUCT pursuant to
Section 7.1.15.
1.88 "TERRITORY" shall mean all countries and territories of the world
except for Japan (i.e., the sum of TERRITORY A, TERRITORY B and TERRITORY C).
1.89 "TERRITORY A" shall mean [*].
1.90 "TERRITORY B" shall mean [*].
1.91 "TERRITORY C" shall mean [*].
1.92 "THIRD INDICATION" shall mean label claim(s), other than FIRST
INDICATION label claim(s) and SECOND INDICATION label claim(s), which are
approved in a REGULATORY APPROVAL received for BEXXAR in a given jurisdiction
subsequent to the REGULATORY APPROVAL for the FIRST INDICATION and the
REGULATORY APPROVAL for the SECOND INDICATION, provided that such claims are for
a MAJOR INDICATION.
1.93 "THIRD PARTY(IES)" shall mean any person(s) or entity(ies) other
than Coulter, SB or their respective AFFILIATES for so long as they remain
AFFILIATES.
1.94 "TRADEMARK" shall mean the trademark(s) under which the PRODUCT
shall be marketed throughout the TERRITORY, as more fully described in Article
10, as well as logos and slogans.
1.95 "TRADEMARK COSTS" shall mean the fees and expenses paid to outside
legal counsel and experts, and creation, search, prosecution, registration and
maintenance expenses, incurred after the Effective Date, in connection with the
registration and maintenance of TRADEMARKS. TRADEMARK COSTS shall also include
costs incurred by a Party under Section 10.5.
1.96 "UNAFFILIATED EXPERT" shall mean an individual who (i) is not a
current employee or director of, or consultant to, one of the Parties or of an
entity which currently has a commercial alliance with one of the Parties, (ii)
has disclosed any previous affiliation with one of
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
16.
<PAGE> 30
the Parties of the type described in clause (i) of this Section 1.96, (iii) is
mutually acceptable to the Parties, and (iv) has suitable expertise on the topic
in question.
1.97 "UNCONJUGATED ANTIBODY" shall mean the unconjugated B1 MURINE
ANTIBODY and any unconjugated SECOND GENERATION ANTIBODY. Except as otherwise
specified in this Agreement, UNCONJUGATED ANTIBODY shall mean both bulk and
filled material.
ARTICLE 2
MANAGEMENT OF COLLABORATION
2.1 JOINT DEVELOPMENT COMMITTEE (JDC).
2.1.1 FORMATION; MEMBERSHIP. Within thirty (30) days after the
Effective Date, the Parties will establish a JOINT DEVELOPMENT COMMITTEE to
oversee and coordinate DEVELOPMENT and MANUFACTURE DEVELOPMENT of the PRODUCT in
the FIELD. The JDC shall be composed of [*] of representatives appointed by each
of Coulter and SB. The JDC shall initially have [*] representatives of each
Party, but the JDC may change its size from time to time by mutual consent of
its members. In addition, the co-chairpersons of the JCC shall be members of the
JDC. Each Party may replace its JDC representatives at any time upon written
notice to the other Party. Each Party's representatives on the JDC shall be [*]
of such Party with the authority to make decisions on behalf of such Party
within the constraints of necessary internal approvals which will have been
previously obtained and at least [*] of each Party's representatives will [*] or
above for such Party. Each Party will name, from among its [*] representatives,
a co-chairperson of the JDC. The co-chairpersons of the JDC shall be responsible
for the administration of meetings (e.g., calling meetings, preparing and
circulating an agenda in advance of each meeting, running the meetings and
preparing and issuing written minutes of each meeting within thirty (30) days
thereafter) but shall have no additional powers or rights other than those held
by virtue of being a representative on the JDC. Minutes of the JDC meetings
shall be promptly reviewed by both Parties, and shall be deemed approved when
mutually accepted by the Parties as evidenced in writing.
2.1.2 DECISION-MAKING. Decisions of the JDC shall be by [*], with
each Party having [*]. Should the members of the JDC [*] on an issue, then [*]
to [*] the issue shall be [*] and the [*]. In the event that the [*] and the [*]
are [*] on the issue, the Parties shall pursue a dispute resolution process
pursuant to Section 18.3.
2.1.3 MEETINGS. The JDC shall meet at least one (1) time per
calendar quarter during the term of this Agreement, unless otherwise mutually
agreed by the Parties. Meetings of the JDC will be held at facilities
alternately selected by Coulter and by SB. Meetings of the JDC may be held by
video or audio conference with the consent of each Party. Meetings of the JDC
shall be effective only if a representative of each Party is present or
participating. Each Party shall promptly report to the JDC on all material
issues relating to DEVELOPMENT and MANUFACTURE DEVELOPMENT. Each Party shall
bear all expenses it incurs in regard to participating in such meetings of the
JDC, including all travel and living expenses, and such
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
17.
<PAGE> 31
expenses shall not be included in the calculation of the JOINT P&L, COST OF
GOODS, DEVELOPMENT COSTS or MANUFACTURE DEVELOPMENT COSTS.
2.1.4 SPECIFIC RESPONSIBILITIES OF THE JDC. In addition to its
general responsibility to oversee, monitor, review, coordinate and provide
strategic direction to the DEVELOPMENT and MANUFACTURE DEVELOPMENT according to
the JOINT DEVELOPMENT PLAN and the JOINT MANUFACTURE DEVELOPMENT PLAN and to
ensure a regular flow of DEVELOPMENT and MANUFACTURE DEVELOPMENT information
among the Parties, the JDC shall in particular:
(i) develop, approve and monitor the JOINT
DEVELOPMENT PLAN in accordance with Sections 3.2.1(b), (c) and (d);
(ii) review, approve and monitor the JOINT
MANUFACTURE DEVELOPMENT PLAN in accordance with Sections 3.3.1(b), (c) and (d);
(iii) review, coordinate and approve [*],
including, but not limited to, [*] and [*] conducted with respect to the PRODUCT
in the FIELD throughout the TERRITORY (it being understood that, by entering
into this Agreement, the Parties hereby approve the [*] as outlined on [*] as of
such date, subject to subsequent changes in the [*] by the JOINT DEVELOPMENT
COMMITTEE in accordance with Section 3.2.1);
(iv) facilitate the flow of information between the
Parties with respect to all DEVELOPMENT or MANUFACTURE DEVELOPMENT work being
conducted in the FIELD anywhere in the TERRITORY;
(v) oversee, with the MANUFACTURE AND SUPPLY CHAIN
SUBTEAM, preparation of [*] of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY
for DEVELOPMENT and MANUFACTURE DEVELOPMENT activities in accordance with
Sections 9.12.1(a) and 9.12.2;
(vi) consider whether the PRODUCT [*], as more
fully discussed in [*], and when appropriate, approve [*] DEVELOPMENT and
MANUFACTURE DEVELOPMENT and reflect in the JOINT DEVELOPMENT PLAN and JOINT
MANUFACTURE DEVELOPMENT PLAN which [*] and which tasks associated with such [*]
shall be performed by each Party;
(vii) coordinate and approve strategy for all [*]
to be made with respect to PRODUCT throughout the TERRITORY and approve [*] in
TERRITORY A in accordance with Section 3.2;
(viii) subject to clause (iii) above regarding [*]
and Section 3.2.1(c), review and approve any decision to be made [*] with
respect to DEVELOPMENT of the PRODUCT in the FIELD in the NON-USA TERRITORY
which is reasonably likely to have [*] DEVELOPMENT or commercialization of the
PRODUCT in the FIELD in TERRITORY A;
(ix) oversee the MANUFACTURING AND SUPPLY CHAIN
SUBTEAM, to the extent described in Section 2.3;
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
18.
<PAGE> 32
(x) oversee the FINANCE SUBTEAM, to the extent
described in Section 2.4; and
(xi) perform any other responsibilities set forth
for the JDC in this Agreement.
2.2 JOINT COMMERCIALIZATION COMMITTEE (JCC).
2.2.1 FORMATION; MEMBERSHIP. Within thirty (30) days after the
Effective Date, the Parties will establish a JOINT COMMERCIALIZATION COMMITTEE
to oversee and coordinate the commercialization of the PRODUCT in the FIELD in
TERRITORY A and to perform those activities described in Section 2.2.4. The JCC
shall be composed of [*] of representatives appointed by each of Coulter and SB.
The JCC shall initially have [*] representatives of each Party, but the JCC may
change its size from time to time by mutual consent of its members. In addition,
the co-chairpersons of the JDC shall be members of the JCC. Each Party may
replace its JCC representatives at any time upon written notice to the other
Party. Each Party's representatives on the JCC shall be [*] of such Party with
the authority to make decisions on behalf of such Party within the constraints
of necessary internal approvals which will have been previously obtained and at
[*] of each Party's representatives will [*] or above for such Party. Each Party
will name, from among its [*] representatives, a co-chairperson of the JCC. The
co-chairpersons shall be responsible for the administration of meetings (e.g.,
calling meetings, preparing and circulating an agenda in advance of each
meeting, running the meetings and preparing and issuing written minutes of each
meeting within thirty (30) days thereafter) but shall have no additional powers
or rights other than those held by virtue of being a representative on the JCC;
provided, however, the co-chairpersons shall be authorized, between meetings of
the JCC, to make joint operational decisions as needed with respect to TERRITORY
A, consistent with the approved JOINT MARKETING PLAN. Minutes of the JCC
meetings shall be promptly reviewed and shall be deemed approved when mutually
accepted by the Parties as evidenced in writing.
2.2.2 DECISION-MAKING. Decisions of the JCC shall be [*], with
each Party having [*]. Should the members of the JCC [*] on an issue, then after
[*] to [*] the issue shall be [*] and the [*]. In the event the [*] and the [*]
are [*] on the issue, the Parties shall pursue a dispute resolution process
pursuant to Section 18.3.
2.2.3 MEETINGS. The JCC shall meet at least one (1) time per
calendar quarter during the term of this Agreement, unless otherwise mutually
agreed by the Parties. It is anticipated that, during certain time periods
(e.g., immediately before and immediately after commercial launch in TERRITORY
A), the JCC will meet more frequently than once per calendar quarter. Meetings
of the JCC will be held at facilities alternately selected by Coulter and by SB.
Meetings of the JCC may be held by video or audio conference with the consent of
each Party. Meetings of the JCC shall be effective only if a representative of
each Party is present or participating. Each Party shall promptly report to the
JCC on all material issues relating to the commercialization of PRODUCT. Each
Party shall bear all expenses it incurs in regard to participating in such
meetings of the JCC, including all travel and living expenses, and such
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
19.
<PAGE> 33
expenses shall not be included in determining the JOINT P&L outlined in
Paragraph 7.1.14 or COST OF GOODS, DEVELOPMENT COSTS, or MANUFACTURE DEVELOPMENT
COSTS.
2.2.4 SPECIFIC RESPONSIBILITIES OF THE JCC. In addition to its
general responsibility to oversee, monitor, review, coordinate and provide
strategic direction to the commercialization of PRODUCT according to the JOINT
MARKETING PLAN and to ensure a regular flow of commercialization information
among the Parties, the JCC shall in particular:
(i) oversee and coordinate the activities of the
Parties in marketing, selling and distributing PRODUCT in TERRITORY A prior to
and following REGULATORY APPROVAL in TERRITORY A, including [*] and determining
the [*] of each Party in CO-PROMOTION of the PRODUCT, consistent with Article 7;
(ii) develop and approve the first JOINT MARKETING
PLAN (which shall [*] the [*] the [*] REGULATORY APPROVAL in TERRITORY A) in
accordance with Section 7.1.3(b), it being understood that such JOINT MARKETING
PLAN shall include at least the [*] described in Section 9.12;
(iii) develop and approve each subsequent JOINT
MARKETING Plan, in accordance with Section 7.1.3(b), the timing and structure of
such plan [*] for such development and approval, provided that such must occur
no less than [*];
(iv) monitor compliance with the JOINT MARKETING
PLAN and approve any changes to the JOINT MARKETING PLAN, in accordance with
Section 7.1.3(b);
(v) establish [*] of UNCONJUGATED ANTIBODY and
RADIOLABELED ANTIBODY for commercial sale in TERRITORY A, to be submitted to the
MANUFACTURE AND SUPPLY SUBTEAM pursuant to Section 9.12.1(b) and 9.12.2;
(vi) approve any contract by the Parties relating
to the commercialization of PRODUCT in TERRITORY A which is either (a) not
included in the JOINT MARKETING PLAN; or (b) is [*]; or (c) contains [*];
(vii) determine [*] sales force deployment by the
Parties and sales force strategy consistent with Article 7;
(viii) decide on PRODUCT pricing in TERRITORY A,
including [*], and matters related to [*], in accordance with Section 7.1.5;
(ix) oversee the MANUFACTURING AND SUPPLY CHAIN
SUBTEAM, to the extent described in Section 2.3;
(x) oversee the FINANCE SUBTEAM, to the extent
described in Section 2.4;
(xi) oversee matters related to the [*] TERRITORY
A;
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
20.
<PAGE> 34
(xii) oversee the development of procedures for the
handling of product complaints in accordance with Section 7.4; and
(xiii) perform any other responsibilities set forth
for the JCC in this Agreement.
2.3 MANUFACTURE AND SUPPLY CHAIN SUBTEAM.
2.3.1 FORMATION; MEMBERSHIP. Within thirty (30) days after the
Effective Date, the Parties will establish a "MANUFACTURE AND SUPPLY CHAIN
SUBTEAM" to oversee the logistics of the manufacture of PRODUCT, the supply and
distribution chain for PRODUCT and the MANUFACTURE DEVELOPMENT of the PRODUCT in
the FIELD. The MANUFACTURE AND SUPPLY CHAIN SUBTEAM shall be composed of [*] of
representatives appointed and replaced by each of Coulter and SB. Each Party
will name, from among its representatives, a co-chairperson of the MANUFACTURE
AND SUPPLY CHAIN SUBTEAM. The co-chairpersons of the MANUFACTURE AND SUPPLY
CHAIN SUBTEAM shall be responsible for the administration of meetings (e.g.,
calling meetings, preparing and circulating an agenda in advance of each
meeting, running the meetings and preparing and issuing written minutes of each
meeting within thirty (30) days thereafter) but shall have no additional powers
or rights other than those held by virtue of being a representative on the
MANUFACTURE AND SUPPLY CHAIN SUBTEAM. Minutes of the MANUFACTURE AND SUPPLY
CHAIN SUBTEAM meetings shall be promptly reviewed and shall be deemed approved
when mutually accepted by both Parties as evidenced in writing.
2.3.2 DECISION-MAKING. Decisions of the MANUFACTURE AND SUPPLY
CHAIN SUBTEAM shall be [*] with each Party having [*]. Should the members of the
MANUFACTURE AND SUPPLY CHAIN SUBTEAM [*] on an issue, then after [*] to [*] the
issue shall be presented to the JDC for matters relating to DEVELOPMENT or
MANUFACTURE DEVELOPMENT and to the JCC for matters relating to commercial supply
and all other matters.
2.3.3 MEETINGS. The MANUFACTURE AND SUPPLY CHAIN SUBTEAM shall
meet at such times as may be agreed to by the Parties, it being understood that
the MANUFACTURE AND SUPPLY CHAIN SUBTEAM will meet at least quarterly unless
otherwise agreed by the Parties. Meetings of the MANUFACTURE AND SUPPLY CHAIN
SUBTEAM will be held at facilities jointly selected by the Parties. Meetings of
the MANUFACTURE AND SUPPLY CHAIN SUBTEAM may be held by video or audio
conference with the consent of each Party. Meetings of the MANUFACTURE AND
SUPPLY CHAIN SUBTEAM shall be effective only if a representative of each Party
is present or participating. Each Party shall bear all expenses it incurs in
regard to participating in such meetings of the MANUFACTURE AND SUPPLY CHAIN
SUBTEAM, including all travel and living expenses, and such expenses shall not
be included in the calculation of COST OF GOODS, DEVELOPMENT COSTS, MANUFACTURE
DEVELOPMENT COSTS or included in the JOINT P&L.
2.3.4 SPECIFIC RESPONSIBILITIES OF THE MANUFACTURE AND SUPPLY
CHAIN SUBTEAM. In addition to its general responsibility to oversee the
logistics of the manufacturing of PRODUCT, the supply and distribution chain for
PRODUCT and the MANUFACTURE DEVELOPMENT of the PRODUCT in the FIELD, the
MANUFACTURE AND SUPPLY CHAIN SUBTEAM shall in particular:
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
21.
<PAGE> 35
(i) prepare, update and implement the JOINT
MANUFACTURE DEVELOPMENT PLAN, subject to the approval of the JDC (and the JCC,
to the extent the JOINT MANUFACTURE DEVELOPMENT PLAN includes elements related
to commercial supply), in accordance with Section 3.3.1;
(ii) report to the JDC on manufacture and supply
chain matters relating to DEVELOPMENT or MANUFACTURE DEVELOPMENT (excluding
commercial supply);
(iii) report to the JCC on manufacture and supply
chain matters relating to commercial supply in the TERRITORY and all other
manufacture and supply chain issues which do not relate to DEVELOPMENT or
MANUFACTURE DEVELOPMENT;
(iv) prepare an estimate of MANUFACTURE DEVELOPMENT
COSTS and QA/QC COSTS for submission to the FINANCE SUBTEAM;
(v) together with the JDC regarding supply for
DEVELOPMENT and MANUFACTURE DEVELOPMENT and the JCC regarding supply for
commercial sale, [*] UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY in the
event of [*] throughout the TERRITORY, pursuant to Section 9.5;
(vi) together with the JDC regarding supply for
DEVELOPMENT and MANUFACTURE DEVELOPMENT and the JCC regarding supply for
commercial sale, oversee the preparation of forecasts pursuant to Sections
9.12.1 and 9.12.2; and
(vii) perform any other responsibilities set forth
for the MANUFACTURE AND SUPPLY CHAIN SUBTEAM in this Agreement.
2.4 FINANCE SUBTEAM.
2.4.1 FORMATION; MEMBERSHIP. Within thirty (30) days after the
Effective Date, the Parties will establish a "FINANCE SUBTEAM" which shall be
composed of as many representatives as each of Coulter and SB shall deem to be
necessary. Each Party will name, from among its representatives, a
co-chairperson of the FINANCE SUBTEAM. The co-chairpersons of the FINANCE
SUBTEAM shall be responsible for the administration of meetings (e.g., calling
meetings, preparing and circulating an agenda in advance of each meeting,
running the meetings and preparing and issuing written minutes of each meeting
within thirty (30) days thereafter) but shall have no additional powers or
rights other than those held by virtue of being a representative on the FINANCE
SUBTEAM.
2.4.2 MEETINGS. The FINANCE SUBTEAM shall meet at such times as
may be agreed to by the members of the FINANCE SUBTEAM. Meetings of the FINANCE
SUBTEAM may be held by video or audio conference or at facilities selected by
the members of the FINANCE SUBTEAM. Meetings of the FINANCE SUBTEAM shall be
effective only if a representative of each Party is present or participating.
Each Party shall bear all expenses it incurs in regard to participating in such
meetings of the FINANCE SUBTEAM, including all travel and living expenses,
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
22.
<PAGE> 36
and such expenses shall not be included in the calculation of COST OF GOODS,
DEVELOPMENT COSTS, MANUFACTURE DEVELOPMENT COSTS or included in the JOINT P&L.
2.4.3 RESPONSIBILITIES OF THE FINANCE SUBTEAM. The
responsibilities of the FINANCE SUBTEAM shall include, without limitation, (i)
overseeing the estimation of DEVELOPMENT COSTS, MANUFACTURE DEVELOPMENT COSTS
and [*] under the JOINT P&L, consistent with the terms of this Agreement and
subject to necessary approvals by the JDC and JCC; (ii) developing, if possible,
and approving a strategy regarding [*], (iii) any other responsibilities set
forth for the FINANCE SUBTEAM in this Agreement, and (iv) to the extent
determined to be necessary by the members of the FINANCE SUBTEAM, reporting to:
(a) the JDC on financial matters relating to DEVELOPMENT
or MANUFACTURE DEVELOPMENT in the TERRITORY;
(b) the JCC on financial matters relating to commercial
sale in TERRITORY A and all other financial issues in TERRITORY A which do not
relate to DEVELOPMENT or MANUFACTURE DEVELOPMENT; and
(c) the Parties on financial matters relating to
commercial sale outside of TERRITORY A and all other financial issues outside of
TERRITORY A which do not relate to DEVELOPMENT or MANUFACTURE DEVELOPMENT.
ARTICLE 3
DEVELOPMENT OF LICENSED COMPOUND
3.1 INITIAL AND SUBSEQUENT FOCUS OF THE COLLABORATION. The initial focus
of the collaboration will be on manufacturing, developing, supplying, and
commercializing BEXXAR for the treatment of non-Hodgkin's lymphoma in those
MAJOR INDICATIONS outlined in Sections 1.46 [*]. During the term of this
Agreement, the JDC will consider, and approve as it deems appropriate, whether
the Parties should also pursue the manufacture, development, supply, and
commercialization of BEXXAR for the additional MAJOR INDICATIONS not discussed
in the preceding sentence (i.e., those outlined in Sections 1.46 [*]) or for
[*]. In addition, in the event either Party exercises its option as provided in
Sections 4.2.2 and 4.2.4 to manufacture, develop, supply, and commercialize one
or more particular SECOND GENERATION LICENSED COMPOUNDS, the Parties will pursue
manufacture, development, supply, and commercialization of such SECOND
GENERATION LICENSED COMPOUNDS in the FIELD in accordance with Sections 4.2.2 and
4.2.5.
3.2 DEVELOPMENT.
3.2.1 JOINT DEVELOPMENT PLAN.
(a) PURPOSE OF JOINT DEVELOPMENT PLAN. The DEVELOPMENT of
the PRODUCT will be governed by a "JOINT DEVELOPMENT PLAN". The JOINT
DEVELOPMENT PLAN will attempt, to the extent practicable, to describe the plan
and budget for DEVELOPMENT of the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
23.
<PAGE> 37
PRODUCT throughout the TERRITORY, including overall DEVELOPMENT strategy,
operating guidelines and estimated filing dates, guidelines for filing for
REGULATORY APPROVAL, any clinical studies to be conducted and forecasts of
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY for clinical supply or other
DEVELOPMENT requirements.
(b) PREPARATION OF JOINT DEVELOPMENT PLAN. A draft of the
initial JOINT DEVELOPMENT PLAN will be prepared by the Parties, in accordance
with the allocation of responsibilities set forth in this Section 3.2.1(b), no
later than one hundred twenty (120) days after the Effective Date. Thereafter,
an updated JOINT DEVELOPMENT PLAN will be drafted and presented to the JDC at
such times as the JDC deems appropriate, but no less frequently than annually.
[*] will draft that portion of the initial JOINT DEVELOPMENT PLAN and that
portion of each annual update of the JOINT DEVELOPMENT PLAN which covers
activities, [*] that relate to DEVELOPMENT for purposes of receiving REGULATORY
APPROVAL in TERRITORY A only. [*] will draft that portion of the initial JOINT
DEVELOPMENT PLAN and that portion of each annual update of the JOINT DEVELOPMENT
PLAN which covers activities, including [*], that relate to DEVELOPMENT for
purposes of receiving REGULATORY APPROVAL in the [*].
(c) REVIEW AND APPROVAL OF JOINT DEVELOPMENT PLAN. The JDC
will review the initial JOINT DEVELOPMENT PLAN and each update thereto and will
amend such plan as required to achieve approval by the JDC no later than sixty
(60) days after submission of the drafts prepared by the Parties pursuant to
Section 3.2.1(b). With respect to the approval of the Non-USA Territory Portion,
Coulter, through the JDC, will not withhold its approval of those parts of the
Non-USA Territory Portion which are not reasonably likely to have a material
effect on DEVELOPMENT or commercialization of PRODUCT in TERRITORY A. When
considering the components of the then current JOINT DEVELOPMENT PLAN, the JDC
will give strong consideration to the specific regulatory and market needs in
each country of the TERRITORY consistent with each Party's employment of
COMMERCIALLY REASONABLE EFFORTS with respect to such country.
(d) MONITORING OF JOINT DEVELOPMENT PLAN. The JDC will
monitor implementation of the initial JOINT DEVELOPMENT PLAN and each update
thereto. With respect to monitoring implementation of those parts of the Non-USA
Territory Portion which are not reasonably likely to have a material effect on
DEVELOPMENT or commercialization of PRODUCT in TERRITORY A, the SB
representatives on the JDC will be responsible for such monitoring, but will
report to Coulter's representative on the JDC regarding the results of such
monitoring, if reasonably requested by Coulter.
3.2.2 IMPLEMENTATION OF DEVELOPMENT.
(a) In TERRITORY A, the JDC shall determine those
operational areas relating to the DEVELOPMENT for which each Party is
responsible (e.g., those clinical trials for which Coulter will have
responsibility and those for which SB will have responsibility [*]), consistent
with the then current JOINT DEVELOPMENT PLAN and the PLANNED CLINICAL TRIALS.
The Parties agree that Coulter will have responsibility for conducting the
PLANNED CLINICAL TRIALS in TERRITORY A, unless otherwise agreed by the JDC. A
Party which has responsibility for a particular operational area relating to the
DEVELOPMENT in TERRITORY A shall make and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
24.
<PAGE> 38
implement any decisions involving such operational area ("Development
Operational Decisions"), provided that such Development Operational Decisions
and implementation thereof are consistent with the terms of this Agreement, the
then current JOINT DEVELOPMENT PLAN, any direction provided by the JDC and
Sections 3.2.2(b) and (c).
(b) Any Development Operational Decisions made by Coulter
in TERRITORY A relating to the following shall be [*] the JDC, subject to
ratification by the JDC at the next meeting of the JDC:
(i) the review of [*] to make sure that
appropriate [*] are included;
(ii) [*] to specific investigators;
(iii) determination of [*] the PRODUCT which will
be [*], and
(iv) approval of any [*] and [*] thereto.
(c) Any Development Operational Decisions made by SB in
TERRITORY A relating to the following shall be approved in advance by [*] JDC,
subject to ratification by the JDC at the next meeting of the JDC:
(i) the review of selected [*] to make sure that
[*] are included;
(ii) [*] to specific investigators;
(iii) determination of [*] the PRODUCT which will
be [*]; and
(iv) approval of any [*] and [*] thereto.
(d) The list of Development Operational Decisions set
forth in Sections 3.2.2(b) and 3.2.2(c) may be expanded or reduced as determined
by the JDC.
(e) DEVELOPMENT in the NON-USA TERRITORY shall be
conducted by the Parties as described in Sections 3.2.4(b).
(f) Each Party agrees to use its respective COMMERCIALLY
REASONABLE EFFORTS to conduct the DEVELOPMENT with the intent of obtaining
REGULATORY APPROVAL in TERRITORY A and in the NON-USA TERRITORY and bringing a
PRODUCT to market in the FIELD in the TERRITORY. Neither Party shall subcontract
any of its DEVELOPMENT obligations hereunder anywhere in the TERRITORY without
the prior approval of the JDC or co-chairpersons of the JDC.
3.2.3 DESIGNATION OF CLINICAL TRIALS. After the Effective Date,
at the time the JDC approves a clinical trial, other than a PLANNED CLINICAL
TRIAL, pursuant to Section 2.1.4(iii), (each newly approved clinical trial to be
known as a "Future Clinical Trial"), it shall decide whether the results of such
Future Clinical Trial are most likely to be used primarily in (i)
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
25.
<PAGE> 39
TERRITORY A only ("Territory A Trials"), (ii) the NON-USA TERRITORY only
("Non-USA Territory Trials") or (iii) both TERRITORY A and the NON-USA TERRITORY
("Cross-Territory Trials"), and shall designate such Future Clinical Trial
accordingly. [*] will have the [*] of [*] the [*] as [*]. The Parties have
agreed that [*].
3.2.4 LEAD PARTY FOR DEVELOPMENT.
(a) TERRITORY A. Coulter shall be the lead Party for
implementation of the DEVELOPMENT conducted in TERRITORY A, consistent with the
terms of this Agreement, the then current JOINT DEVELOPMENT PLAN and any
direction provided by the JDC. Such DEVELOPMENT work in TERRITORY A shall
include without limitation, PLANNED CLINICAL TRIALS, Territory A Trials (as
defined in Section 3.2.3), and Cross-Territory Trials (as defined in Section
3.2.3).
(b) NON-USA TERRITORY.
(i) Initially, Coulter will be the lead Party for
implementation of the DEVELOPMENT conducted in the NON-USA TERRITORY, subject to
the terms of this Section 3.2.4 and consistent with the terms of this Agreement,
the then current JOINT DEVELOPMENT PLAN and any prior direction provided by the
JDC. Such DEVELOPMENT work shall include without limitation, PLANNED CLINICAL
TRIALS and Cross-Territory Trials (as defined in Section 3.2.3) that are
approved in the then current JOINT DEVELOPMENT PLAN. SB will provide [*] FTE
assistance to Coulter in performing clinical trials or other Development work in
the NON-USA TERRITORY as identified in the JOINT DEVELOPMENT PLAN and agreed by
the JDC. Except [*], all FTE support provided by SB in connection with
DEVELOPMENT in the NON-USA TERRITORY shall be provided at [*] expense, [*].
Coulter shall not be responsible for delays in DEVELOPMENT in the NON-USA
TERRITORY arising from [*] in the NON-USA TERRITORY in accordance with the then
current JOINT DEVELOPMENT PLAN.
(ii) [*], SB will become the lead Party for
implementation of the DEVELOPMENT conducted in the NON-USA TERRITORY consistent
with the terms of this Agreement, the then current JOINT DEVELOPMENT PLAN and
any direction provided by the JDC, [*] for the [*]. If SB assumes the role of
lead Party for DEVELOPMENT in the NON-USA Territory [*], SB shall [*] the [*],
on the [*] with respect to [*].
(iii) At all times, regardless of which Party is
the lead Party for implementation of the DEVELOPMENT in the NON-USA TERRITORY,
SB shall be responsible for all regulatory work in the NON-USA TERRITORY,
including without limitation obtaining necessary approvals for all clinical
trial protocols, reporting on adverse events (subject to Section 7.6) and
managing other communications with regulatory authorities. In addition, SB shall
be at all times responsible for all Non-USA Territory Trials (as defined in
Section 3.2.3). Coulter will provide assistance to SB as reasonably requested by
SB in conducting such Non-USA Territory Trials and [*] and [*]. SB shall inform
the JDC of any significant decisions made by SB or its permitted sublicensees
regarding implementation of the then current JOINT DEVELOPMENT PLAN relating to
the NON-USA TERRITORY sufficiently in advance of such implementation to enable
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
26.
<PAGE> 40
Coulter to comment upon such decisions, and SB shall take such comments into
serious consideration but shall not be bound by them.
3.2.5 DEVELOPMENT DILIGENCE MILESTONES IN NON-USA TERRITORY.
(a) DEVELOPMENT DILIGENCE MILESTONES IN THE MAJOR MARKET
Countries. SB shall seek to file an MAA and an NDS for BEXXAR for the FIRST
INDICATION by a date no later than [*] after the BLA for BEXXAR for the FIRST
INDICATION has been accepted for review by the FDA in TERRITORY A, provided that
each such date shall be extended as required to account for delays which are
beyond SB's reasonable control, including, without limitation, [*].
(b) FAILURE TO ACHIEVE MILESTONES. In the event SB
determines that it will be unable to achieve a given milestone by [*] (the
"Milestone Achievement Date"), either because such date has occurred or because
it is reasonably apparent to SB that it will not be able to achieve such
milestone by the Milestone Achievement Date, SB shall notify Coulter within
thirty (30) days of such determination and the JDC shall meet promptly to work
out a plan (the "Milestone Achievement Plan") designed to allow SB to meet such
milestone in the given territory [*] of the Milestone Achievement Date, subject
to any extension to such date that may be permitted as outlined in [*]. In the
event SB is unable to meet such milestone in such territory within such [*] but
has made good faith efforts to do so consistent with the Milestone Achievement
Plan, provided that such date shall be extended as required to account for
delays which are beyond SB's reasonable control, the JDC shall meet promptly
after the end of such [*] period to work out an extended plan (the "Extended
Milestone Achievement Plan") designed to allow SB to meet such milestone in the
given territory within [*] of the Milestone Achievement Date, provided that such
date shall be extended as required to account for delays which are beyond SB's
reasonable control. In the event SB (i) has not made good faith efforts to meet
a milestone within [*] under the Milestone Achievement Plan in a given MAJOR
MARKET COUNTRY, subject to any extension permitted under Section 3.2.5(a) or
(ii) is unable to meet a milestone for any reason within [*] of the Milestone
Achievement Date under the Extended Milestone Achievement Plan in such MAJOR
MARKET COUNTRY, subject to any extension permitted under [*], the licenses
granted by Coulter under this Agreement shall be automatically adjusted to
exclude the MAJOR MARKET COUNTRY in which such milestone was not achieved and
the terms of Section 13.4 shall apply for such MAJOR MARKET COUNTRY.
3.2.6 FUNDING OF DEVELOPMENT. [*] shall bear the cost of [*] and
[*] aggregate [*] (including, without limitation, [*] related to [*]) [*],
provided that it is understood that no expenses of [*] shall be [*] used to [*]
unless [*] are [*] or are within [*]. [*].
(a) [*] shall be [*] and handled as set forth in [*]; and
(b) DEVELOPMENT COSTS shall be shared by the Parties as
follows:
(i) SB will bear the SB Share of Development Costs
(as defined below) and Coulter will bear the Coulter Share of Development Costs
(as defined below). [*]. No expenses of a Party shall be included within
DEVELOPMENT COSTS except as provided in Section 1.15.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
27.
<PAGE> 41
(ii) The Parties agree that:
(1) "SB Share of Development Costs" shall
equal A + B + C, where
A = [*] multiplied by all DEVELOPMENT COSTS
associated with Cross-Territory Trials (as defined
in Section 3.2.3) incurred [*]; and
B = [*] multiplied by all DEVELOPMENT COSTS
associated with Territory A Trials (as defined in
Section 3.2.3) and incurred [*]; and
C = [*] multiplied by all DEVELOPMENT COSTS
associated with Non-USA Territory Trials (as
defined in Section 3.2.3) and incurred after
October 1, 1998.
(2) "Coulter Share of Development Costs"
shall equal D + E, where
D = [*] multiplied by all DEVELOPMENT COSTS
associated with all Cross-Territory Trials (as
defined in Section 3.2.3) incurred [*]; and
E = [*] multiplied by all DEVELOPMENT COSTS
associated with Territory A Trials (as defined in
Section 3.2.3) incurred [*].
(3) Notwithstanding the foregoing, in the
event that the JDC uses data from a Non-USA Territory Trial to support a
regulatory filing to demonstrate the efficacy of the PRODUCT regarding a
previously unapproved indication for purposes of label expansion in TERRITORY A,
then upon the date of filing for such label expansion in TERRITORY A, Coulter
shall reimburse to SB [*] of the costs of such Non-USA Territory Trial even if
such filing [*]; provided, however, that the amount of such payment by Coulter
shall be included in [*] used to [*]. Further, in the event that SB uses data
from a Territory A Trial to demonstrate the efficacy of the PRODUCT regarding a
previously unapproved indication for purposes of label expansion in the NON-USA
TERRITORY, then upon the date of filing for such label expansion in the NON-USA
TERRITORY, SB shall reimburse to Coulter [*] of the costs of such Territory A
Trial (i.e., [*] from [*]).
(iii) No later than thirty (30) days after the end
of each calendar quarter, each Party shall submit to the FINANCE SUBTEAM an
accounting of all DEVELOPMENT COSTS incurred by such Party during such quarter.
The FINANCE SUBTEAM shall promptly calculate whether any payments are due from
one Party to the other Party under this Section. In the event such payment is
due, the Party which owes the payment shall make such payment to the other Party
within thirty (30) days after it has received such a determination, in writing,
from the FINANCE SUBTEAM. The Party receiving the payment shall issue an invoice
to the Party making the payment which invoice shall be in the amount to be paid.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
28.
<PAGE> 42
(c) Notwithstanding Section 3.2.4(b)(i) and Section
3.2.6(a), in the event that the actual FTE assistance provided to Coulter by SB
to support Cross-Territory Trials exceeds the FTE amounts set forth in the
initial JOINT DEVELOPMENT PLAN approved by the JDC by greater than [*], then the
total amount of such additional FTE assistance in excess of such approved
amount, to the extent approved by the JDC, [*].
3.3 MANUFACTURE DEVELOPMENT.
3.3.1 JOINT MANUFACTURE DEVELOPMENT PLAN.
(a) PURPOSE OF JOINT MANUFACTURE DEVELOPMENT PLAN. The
MANUFACTURE DEVELOPMENT of the PRODUCT will be governed by a "JOINT MANUFACTURE
DEVELOPMENT PLAN." The JOINT MANUFACTURE DEVELOPMENT PLAN will attempt, to the
extent practicable, to describe the plan and budget for the MANUFACTURE
DEVELOPMENT of the PRODUCT throughout the TERRITORY, including without
limitation, process development and optimization, manufacturing scale-up,
validation, qualification, and certification, [*] equipment for the manufacture
of UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY.
(b) PREPARATION OF JOINT MANUFACTURE DEVELOPMENT PLAN. A
draft of the initial JOINT MANUFACTURE DEVELOPMENT PLAN will be prepared and
approved by the MANUFACTURE AND SUPPLY CHAIN SUBTEAM pursuant to Section
2.3.4(i), no later than ninety (90) days after the Effective Date. Thereafter,
an updated JOINT MANUFACTURE DEVELOPMENT PLAN will be drafted and presented to
the JDC (and the JCC, to the extent such JOINT MANUFACTURE DEVELOPMENT PLAN
includes elements related to commercial supply) at such times as the JDC and/or
JCC, as applicable, deems appropriate, but no less frequently than annually.
(c) REVIEW AND APPROVAL OF JOINT MANUFACTURE DEVELOPMENT
PLAN. The JDC (and the JCC, to the extent such JOINT MANUFACTURE DEVELOPMENT
PLAN includes elements related to commercial supply) will review the initial
JOINT MANUFACTURE DEVELOPMENT PLAN and each update thereto and will amend such
plan as required to achieve approval by the JDC (and the JCC, to the extent such
JOINT MANUFACTURE DEVELOPMENT PLAN includes elements related to commercial
supply) no later than seventy-five (75) days after submission of the drafts
prepared by the MANUFACTURE AND SUPPLY CHAIN SUBTEAM pursuant to Section
3.3.1(b). When considering the components of the then current JOINT MANUFACTURE
DEVELOPMENT PLAN, the JDC will give strong consideration to the specific
regulatory and market needs in each country of the TERRITORY consistent with
each Party's employment of COMMERCIALLY REASONABLE EFFORTS with respect to such
country.
(d) MONITORING OF JOINT MANUFACTURE DEVELOPMENT PLAN. The
JDC will monitor implementation of the initial JOINT MANUFACTURE DEVELOPMENT
PLAN and each update thereto. With respect to monitoring implementation of those
parts of the JOINT MANUFACTURE DEVELOPMENT PLAN relating to the NON-USA
TERRITORY which are not reasonably likely to have a material effect on
DEVELOPMENT or commercialization of PRODUCT in TERRITORY A, the SB
representatives on the JDC will be responsible for such monitoring, but will
report to Coulter's representative on the JDC regarding the results of such
monitoring, if reasonably requested by Coulter.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
29.
<PAGE> 43
(e) INTERNAL APPROVALS. Each Party shall endeavor to
obtain all necessary internal approvals for capital expenditures in a manner
that supports the timely implementation of the JOINT DEVELOPMENT PLAN and the
JOINT MANUFACTURE DEVELOPMENT PLAN and so as not to delay PRODUCT regulatory
filings and the PRODUCT timelines in accordance with its internal procedures
normally employed for such matters and in accordance with its COMMERCIALLY
REASONABLE EFFORTS. Notwithstanding the above, each Party shall only be liable
to make [*] in accordance with the then approved JOINT MANUFACTURE DEVELOPMENT
PLAN, or in accordance with the approved expenses outlined in Section 1.51(i).
3.3.2 LEAD PARTY FOR MANUFACTURE DEVELOPMENT.
(a) UNCONJUGATED ANTIBODY MANUFACTURE DEVELOPMENT. [*]
will take the lead with respect to the MANUFACTURE DEVELOPMENT of UNCONJUGATED
ANTIBODY unless [*], at which [*]. The JDC can adjust the responsibilities of
the Parties with respect to the MANUFACTURE DEVELOPMENT of UNCONJUGATED ANTIBODY
as it deems appropriate.
(b) RADIOLABELED ANTIBODY MANUFACTURE DEVELOPMENT. [*]
will take the lead with respect to the MANUFACTURE DEVELOPMENT of any
RADIOLABELED ANTIBODY to the extent that such occurs in connection with [*]
otherwise for supply in TERRITORY A. [*] will take the lead with respect to the
MANUFACTURE DEVELOPMENT of any RADIOLABELED ANTIBODY to the extent that such
occurs in connection with a EUROPEAN FACILITY (as defined in Section 9.10.1)
other than [*]. The JDC (based on the recommendation of the MANUFACTURING AND
SUPPLY CHAIN SUBTEAM) will determine which Party shall take the lead on any
other activities related to the MANUFACTURE DEVELOPMENT of any RADIOLABELED
ANTIBODY. Further, the JDC can adjust the responsibilities of the Parties with
respect to the MANUFACTURE DEVELOPMENT of RADIOLABELED ANTIBODY as it deems
appropriate.
3.3.3 FUNDING OF MANUFACTURE DEVELOPMENT
(a) CAPITAL AND NON-CAPITAL EXPENDITURES
(i) Any MANUFACTURE DEVELOPMENT COSTS which are
incurred by either Party with respect to activities related solely to TERRITORY
A shall be borne [*].
(ii) Any MANUFACTURE DEVELOPMENT COSTS which are
incurred by either Party with respect to activities related solely to outside of
TERRITORY A shall be borne [*].
(iii) Any MANUFACTURE DEVELOPMENT COSTS which are
incurred by either Party with respect to activities both inside and outside of
TERRITORY A shall be borne [*].
(iv) No later than thirty (30) days after the end
of each calendar quarter, each Party shall submit to the FINANCE SUBTEAM
established by Section 2.4 an accounting of all MANUFACTURING DEVELOPMENT COSTS
incurred by such Party during such quarter. The FINANCE SUBTEAM shall promptly
calculate whether any payments are due from one
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
30.
<PAGE> 44
Party to the other Party under this Section. In the event such payment is due,
the Party which owes the payment shall make such payment to the other Party
within thirty (30) days after it has received such a determination, in writing,
from the FINANCE SUBTEAM. The Party receiving the payment shall issue an invoice
to the Party making the payment which invoice shall be in the amount to be paid.
(b) ECONOMIC INTEREST IN CAPITAL EXPENDITURES.
(i) Coulter [*] SB shall have [*] in any fixed
assets derived from such MANUFACTURE DEVELOPMENT COSTS incurred under Section
3.3.3(a)(i), in accordance with mechanisms to be agreed by the Parties.
(ii) SB [*] any fixed assets derived from
MANUFACTURE DEVELOPMENT COSTS incurred under Section 3.3.3(a)(ii).
(iii) Coulter [*] SB shall have [*] in any fixed
assets derived from such MANUFACTURE DEVELOPMENT COSTS incurred jointly under
Section 3.3.3(a)(iii) in the [*], such economic interest to be structured in
accordance with mechanisms to be agreed by the Parties.
3.4 RECORDS, REPORTS AND INFORMATION EXCHANGE.
3.4.1 TECHNOLOGY AND INFORMATION TRANSFER. Following the
Effective Date, Coulter will promptly provide to SB all KNOW-HOW and other
information, including, but not limited to, preclinical and clinical data, as SB
reasonably deems necessary to enable it to carry out the DEVELOPMENT and
MANUFACTURE DEVELOPMENT of LICENSED COMPOUND and PRODUCT and commercialization
of PRODUCT and to obtain REGULATORY APPROVAL throughout the TERRITORY.
Thereafter, during the term of this Agreement, each Party shall promptly make
available to the other all KNOW-HOW and other information, including, but not
limited to, preclinical and clinical data, as such Party reasonably deems
necessary to carry out the DEVELOPMENT and MANUFACTURE DEVELOPMENT of LICENSED
COMPOUND and PRODUCT and commercialization of PRODUCT and to obtain REGULATORY
APPROVAL throughout the TERRITORY. All information transferred, provided or
exchanged under this Section 3.4.1 will be subject to the confidentiality
requirements set forth in Article 17.
3.4.2 RECORD KEEPING. With respect to the DEVELOPMENT and
MANUFACTURE DEVELOPMENT work conducted by or on behalf of a given Party, such
Party will maintain records in sufficient detail and in good scientific manner
appropriate for REGULATORY APPROVAL and patent purposes.
3.5 REGULATORY COMPLIANCE. Each Party shall comply with GLP, GCP, GMP
and all other applicable governmental, regulatory and administrative laws, rules
and regulations of the FDA and other applicable authorities in the conduct of
the DEVELOPMENT, MANUFACTURE DEVELOPMENT and in preparing and filing all
regulatory dossiers for PRODUCT in the TERRITORY.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
31.
<PAGE> 45
3.6 REGULATORY APPROVALS.
3.6.1 TERRITORY A. Coulter shall file all regulatory dossiers
(e.g., the BLA) for PRODUCT in the FIELD in TERRITORY A under its name in
accordance with the use of its COMMERCIALLY REASONABLE EFFORTS. Coulter shall
own all such TERRITORY A REGULATORY APPROVALS. To the extent legally
permissible, SB shall have the right of reference to the extent necessary to
exercise its rights or to meet its obligations hereunder. Coulter shall be
responsible for undertaking all activities required of the holder of regulatory
dossiers in TERRITORY A, including, but not limited to, any adverse event
reporting (subject to Section 7.6). Coulter shall be responsible for all
communications with regulatory agencies relating to the PRODUCT in the FIELD in
TERRITORY A, subject to its obligation to keep the JDC and/or the JCC informed.
3.6.2 NON-USA TERRITORY.
(a) SB RESPONSIBILITIES. SB shall file all regulatory
dossiers, as well as any necessary or desired pricing approvals, for PRODUCT in
the FIELD in the NON-USA TERRITORY under its name in accordance with the use of
its COMMERCIALLY REASONABLE EFFORTS. SB shall own all such NON-USA TERRITORY
REGULATORY APPROVALS. To the extent legally permissible, Coulter shall have the
right of reference to the extent necessary to exercise its rights or to meet its
obligations hereunder. SB shall be responsible for undertaking all activities
required of the holder of regulatory dossiers in the NON-USA TERRITORY,
including, but not limited to, any adverse event reporting (subject to Section
7.6). SB shall be responsible for all communications with regulatory agencies
relating to the PRODUCT in the FIELD in the NON-USA TERRITORY, subject to its
obligation to keep the JDC and/or the JCC informed.
(b) COULTER RESPONSIBILITY TO PROVIDE TECHNICAL ASSISTANCE
IN THE NON-USA TERRITORY. Coulter shall provide to SB, at SB's request,
reasonable technical assistance within Coulter's area of expertise concerning
registration of PRODUCT in the NON-USA TERRITORY. Provision of such technical
assistance shall include, but not be limited to, supply of any KNOW-HOW owned or
CONTROLLED by Coulter which SB may require. Pursuant to such obligation, Coulter
shall make available to SB, Coulter's representatives as are reasonably
requested by SB in connection with regulatory and scientific matters relating to
the filing of regulatory applications in the NON-USA TERRITORY, including timely
response to questions raised by regulatory authorities regarding the MAA or
equivalent regulatory filings in the NON-USA TERRITORY, and travel as reasonably
required for meetings with regulatory authorities. In the event that SB requests
that Coulter perform work under this Section 3.6.2(b), SB shall reimburse
Coulter for [*] OUT-OF-POCKET COSTS incurred by Coulter with respect to such
performance within thirty (30) days of receipt of an invoice from Coulter,
provided that [*] incurred by Coulter under this Section 3.6.2(b) shall be based
on [*]. Such OUT-OF-POCKET COSTS shall not be deemed to be DEVELOPMENT COSTS.
All work or other assistance provided to SB under this Section 3.6.2(b), such
as, without limitation, [*], and the provision of existing Coulter reports, data
and information to assist SB with responses to questions or requests from
regulatory authorities, shall be provided to SB [*] in the case where (i) a
Coulter FTE is requested by SB [*] or (ii) Coulter is requested to undertake an
individual project that requires more than [*], provided that Coulter provides
SB [*] that the project is of such a magnitude. In the event that
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
32.
<PAGE> 46
[*], SB shall [*] Coulter, on an FTE rate basis for the [*] rendering such
assistance, at an FTE rate of [*].
ARTICLE 4
ADDITIONAL INDICATIONS;
SECOND GENERATION LICENSED COMPOUNDS
4.1 ADDITIONAL INDICATIONS. Upon the prior approval of the JDC, each of
SB and Coulter shall have the right to conduct research and pre-clinical
development of any LICENSED COMPOUND for any ADDITIONAL INDICATIONS. Unless
agreed otherwise by the Parties, the cost of such research and pre-clinical
development for an ADDITIONAL INDICATION shall be [*]. If, based on such
pre-clinical research and development, SB or Coulter discovers or determines
that any LICENSED COMPOUND may have efficacy in the treatment, prevention or
palliation of any ADDITIONAL INDICATION and if such Party desires to pursue
clinical trials of such LICENSED COMPOUND for such ADDITIONAL INDICATION, it
will promptly notify the other Party in writing and disclose to the other Party
its rationale therefor, including all relevant data. Through the JDC, the
Parties will then decide whether to go forward with the DEVELOPMENT and
commercialization of the LICENSED COMPOUND for such ADDITIONAL INDICATION
pursuant to this Agreement. In the event the JDC decides not to go forward with
the DEVELOPMENT and commercialization of the LICENSED COMPOUND for such
ADDITIONAL INDICATION, [*]. In the event the JDC does decide to go forward, [*]
will be the lead Party in pursuing DEVELOPMENT for the ADDITIONAL INDICATION in
TERRITORY A and [*] will be the lead Party in pursuing DEVELOPMENT for the
ADDITIONAL INDICATION in TERRITORY B and TERRITORY C unless otherwise determined
by the JDC.
4.2 SECOND GENERATION LICENSED COMPOUNDS.
4.2.1 SECOND GENERATION LICENSED COMPOUND CANDIDATES; REPORTING;
NOTICE.
(a) The Parties intend during the term of this Agreement
to work cooperatively to evaluate the feasibility of developing SECOND
GENERATION LICENSED COMPOUND CANDIDATES, while maintaining their independent
ability to develop such compounds, subject to the terms of this Section 4.2.
Accordingly, the Parties agree that, at any time during the term of this
Agreement, either Party may elect, [*], to pursue research and development of a
specific SECOND GENERATION LICENSED COMPOUND CANDIDATE in the FIELD. The Party
making the foregoing election shall be deemed to be the "Initiating Party".
(b) The Initiating Party shall [*] (the "Non-Initiating
Party") promptly following its commencement of any work related to a SECOND
GENERATION LICENSED COMPOUND CANDIDATE in the FIELD, and shall [*] keep the
Non-Initiating Party informed of the results of any such research and
development and shall make appropriate personnel available, at reasonable times,
to discuss with the Non-Initiating Party the attributes of the SECOND GENERATION
LICENSED COMPOUND CANDIDATE and any studies the Initiating Party has undertaken
relating to the research and development of such SECOND GENERATION LICENSED
COMPOUND CANDIDATE in the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
33.
<PAGE> 47
FIELD. The Initiating Party shall provide written [*] reports to the JDC on the
status of research and development of such SECOND GENERATION LICENSED COMPOUND
CANDIDATE in the FIELD. On a [*], subject to Section 4.2.3, the Initiating Party
shall provide the Non-Initiating Party with a summary of the SECOND GENERATION
LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS and the SECOND GENERATION LICENSED
COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS to date in developing such
SECOND GENERATION LICENSED COMPOUND CANDIDATE, with such costs [*].
(c) The Initiating Party shall provide written notice to
the Non-Initiating Party no later than [*] prior to the date on which the
Initiating Party plans to [*] for such SECOND GENERATION LICENSED COMPOUND
CANDIDATE in the FIELD. Such written notice shall include the planned filing
date, as well as all material information developed or obtained by the
Initiating Party relevant to its interest in the SECOND GENERATION LICENSED
COMPOUND CANDIDATE in the FIELD not previously provided to the Non-Initiating
Party.
(d) The Initiating Party shall provide written notice to
the Non-Initiating Party no later than [*] prior to the date on which the
Initiating Party plans to [*] for such SECOND GENERATION LICENSED COMPOUND
CANDIDATE in the FIELD. Such written notice shall include the [*] as well as all
material information developed or obtained by the Initiating Party, and not
previously provided to the Non-Initiating Party, which is relevant to the
Initiating Party's interest in the SECOND GENERATION LICENSED COMPOUND CANDIDATE
in the FIELD.
4.2.2 SB DEVELOPMENT AND COMMERCIALIZATION OPTION.
(a) In the event Coulter is the Initiating Party, at any
time after receipt of Coulter's first [*] report pursuant to Section 4.2.1(b)
and until [*] after Coulter provides notice to SB of Completion of [*], required
for such SECOND GENERATION LICENSED COMPOUND CANDIDATE (the "SB Option
Termination Date"), SB may provide written notice to Coulter indicating that it
is interested in pursuing the development and commercialization of such SECOND
GENERATION LICENSED COMPOUND CANDIDATE in the FIELD (an "SB Option Exercise
Notice"). In the event SB provides an SB Option Exercise Notice on or before the
SB Option Termination Date, such SECOND GENERATION LICENSED COMPOUND CANDIDATE
shall thereafter be deemed to be a SECOND GENERATION LICENSED COMPOUND for
purposes of this Agreement and the terms of Section 4.2.2(b) and 4.2.5 shall
apply. The SB Option Termination Date [*].
(b) Within [*] days of Coulter's receipt of an SB Option
Exercise Notice, SB shall reimburse Coulter for [*] of the SECOND GENERATION
LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS and [*] of the SECOND GENERATION
LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS associated with such
SECOND GENERATION LICENSED COMPOUND CANDIDATE; provided, however, if the SB
Option Exercise Notice is delivered by SB [*] Coulter provides SB with notice of
the Completion of Phase II Trials (as defined in Section 4.2.2(c)) for such
SECOND GENERATION LICENSED COMPOUND CANDIDATE and on or before the SB Option
Termination Date, SB shall reimburse Coulter for [*] of such SECOND GENERATION
LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS and [*] of such SECOND GENERATION
LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
34.
<PAGE> 48
(c) "Completion of Phase II Trials" shall be deemed to
have occurred with respect to a given SECOND GENERATION LICENSED COMPOUND
CANDIDATE in the FIELD when the Initiating Party has given written notice to the
Non-Initiating Party that (i) the Initiating Party has [*] which the Initiating
Party [*]; (ii) the Initiating Party has [*]; and (iii) the Initiating Party has
[*] and has [*] and [*] was [*]. Included with such notice shall be (w) a
written report containing all material information and studies developed or
obtained by the Initiating Party relevant to the SECOND GENERATION LICENSED
COMPOUND CANDIDATE in the FIELD as of such date; (x) a copy of the [*]; (y) a
summary prepared by the Initiating Party of the [*] a [*] the [*]; and (z) [*]
the SECOND GENERATION LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS and the
SECOND GENERATION LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS to
date with respect to such SECOND GENERATION LICENSED COMPOUND CANDIDATE, with
such costs [*]. In the event the Initiating Party has determined in good faith
that [*] on the [*] such [*] to [*] on [*] to the [*]. Included with such notice
shall be a written report containing all information and studies developed or
obtained by the Initiating Party relevant to the SECOND GENERATION LICENSED
COMPOUND CANDIDATE in the FIELD as of such date, [*] of the SECOND GENERATION
LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS and the SECOND GENERATION LICENSED
COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS to date with respect to such
SECOND GENERATION LICENSED COMPOUND CANDIDATE, with such costs [*].
(d) A "Second Generation Licensed Compound Candidate
Pivotal Trial" shall mean a study in humans which is prospectively designed to
demonstrate statistically whether a given SECOND GENERATION LICENSED COMPOUND
CANDIDATE is safe and effective for use in the FIELD in a manner necessary to
obtain REGULATORY APPROVAL to market such compound for use in the FIELD.
(e) A "Phase II Trial" shall mean that portion of clinical
development of pharmaceutical PRODUCTS that provides for additional assessment
of safety and preliminary assessment of efficacy at particular dosage levels of
a SECOND GENERATION LICENSED COMPOUND CANDIDATE, in human patients, which is
intended to gather information to support the pivotal human clinical trials
using the SECOND GENERATION LICENSED COMPOUND CANDIDATE, performed in accordance
with the FD&C ACT and applicable regulations promulgated thereunder (including,
without limitation, 21 CFR Part 312), as amended from time to time, or any
comparable foreign laws and regulations.
4.2.3 IF COULTER IS THE INITIATING PARTY AND SB DOES NOT PROVIDE
AN SB OPTION EXERCISE NOTICE. In the event Coulter is the Initiating Party and
SB does not provide an SB OPTION EXERCISE NOTICE with respect to a given SECOND
GENERATION LICENSED COMPOUND CANDIDATE by the SB Option Termination Date (as
such may be extended by Coulter under Section 4.2.2(a)), Coulter shall [*] with
respect to such SECOND GENERATION LICENSED COMPOUND CANDIDATE and shall [*]. In
the event Coulter, a Coulter AFFILIATE or a Coulter THIRD PARTY licensee
commences a Second Generation Licensed Compound Candidate Pivotal Trial on such
compound, Coulter shall notify SB. In the event Coulter has completed a Second
Generation Licensed Compound Candidate Pivotal Trial (as defined in Section
4.2.2(d)) and has decided to file a BLA on the basis of such trial, Coulter
shall immediately provide written notice to SB of such decision. In the event
Coulter receives REGULATORY APPROVAL to sell such SECOND
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
35.
<PAGE> 49
GENERATION LICENSED COMPOUND CANDIDATE in TERRITORY A and has not, as of the
date on which such REGULATORY APPROVAL is received, [*] an [*] to [*] in
TERRITORY A or otherwise [*] the [*] to [*] in TERRITORY A, Coulter shall
immediately provide written notice to SB of such situation. At any time within
[*] days of the date of Coulter's notice as set forth in the previous sentence,
SB may, upon written notice to Coulter, require Coulter to make the election set
forth in Section 7.1.15, provided that, in such event, Coulter's right to
participate in the CO-PROMOTION of PRODUCT in TERRITORY A will cease immediately
upon such election. In the event SB does not provide an SB OPTION EXERCISE
NOTICE on or before the SB Option Termination Date, the obligations of Coulter
contained in Section 4.2.1(b) shall terminate as of the SB Option Termination
Date, but the provisions of this Section 4.2.3 shall still apply.
4.2.4 COULTER DEVELOPMENT AND COMMERCIALIZATION RIGHTS; COULTER
FUNDING OPTION.
(a) AUTOMATIC CONVERSION OF SECOND GENERATION LICENSED
COMPOUND CANDIDATE TO SECOND GENERATION LICENSED COMPOUND. The Parties
understand that, in the event SB is the Initiating Party for a SECOND GENERATION
LICENSED COMPOUND CANDIDATE, such compound will automatically be converted to a
SECOND GENERATION LICENSED COMPOUND at the time set forth in Section 4.2.4(b).
Coulter's payment obligations and economic participation with respect to such
compound are set forth in this Section 4.2.4.
(b) EXERCISE OF FUNDING OPTION. In the event SB is the
Initiating Party, at any time after receipt of SB's first [*] report pursuant to
Section 4.2.1(b) and [*] SB discloses to Coulter the Pivotal Trial Data (as
defined in this Section 4.2.4(b)) for such SECOND GENERATION LICENSED COMPOUND
CANDIDATE (the "Coulter Funding Option Termination Date"), Coulter may provide
written notice to SB indicating that it is interested in reimbursing SB for a
portion of the SECOND GENERATION LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS
and the SECOND GENERATION LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT
COSTS (a "Coulter Funding Option Exercise Notice") as set forth in Section
4.2.4(c)(i) or 4.2.4(c)(ii). As of the date on which Coulter provides a Coulter
Funding Option Exercise Notice, such SECOND GENERATION LICENSED COMPOUND
CANDIDATE shall be deemed to be a SECOND GENERATION LICENSED COMPOUND and the
terms of Sections 4.2.4(c)(i), 4.2.4(c)(ii) and 4.2.5 shall apply. In the event
Coulter does not provide a Coulter Funding Option Exercise Notice on or before
the Coulter Funding Option Termination Date, such SECOND GENERATION LICENSED
COMPOUND CANDIDATE automatically shall be deemed to be a SECOND GENERATION
LICENSED COMPOUND as of the Coulter Funding Option Termination Date and the
terms of Sections 4.2.4(c)(iii) and 4.2.5 shall apply. "Pivotal Trial Data"
shall mean clinical data from a study in humans which [*], demonstrate
statistically that PRODUCT containing a SECOND GENERATION LICENSED COMPOUND
CANDIDATE is safe and effective for use in the FIELD in a manner necessary to
obtain REGULATORY APPROVAL to market PRODUCT in TERRITORY A for use in the
FIELD.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
36.
<PAGE> 50
(c) PAYMENT OBLIGATIONS OF COULTER.
(i) In the event SB is the Initiating Party for a
given SECOND GENERATION LICENSED COMPOUND CANDIDATE and Coulter provides the
Coulter Funding Option Exercise Notice to SB before the Completion of Phase II
Trials (as defined in Section 4.2.2(c)) for such compound, within [*] of
delivery of such notice, Coulter shall reimburse SB for [*] of the SECOND
GENERATION LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS and [*] of the SECOND
GENERATION LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS associated
with seeking REGULATORY APPROVAL for such compound in TERRITORY A.
(ii) In the event SB is the Initiating Party for a
given SECOND GENERATION LICENSED COMPOUND CANDIDATE and Coulter provides the
Coulter Funding Option Exercise Notice to SB on or after the Completion of Phase
II Trials (as defined in Section 4.2.2(c)) for such compound and on or before
the Coulter Funding Option Termination Date for such compound, within [*] days
of delivery of such notice, Coulter shall reimburse SB for [*] of the SECOND
GENERATION LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS and [*] of the SECOND
GENERATION LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS associated
with seeking REGULATORY APPROVAL for such compound in TERRITORY A.
(iii) In the event SB is the Initiating Party for a
given SECOND GENERATION LICENSED COMPOUND CANDIDATE and Coulter does not provide
the Coulter Funding Option Exercise Notice to SB on or before the Coulter
Funding Option Termination Date for such compound, (i) SB shall owe no
milestones to Coulter with respect to such compound pursuant to Section 6.3 and
(ii) SB shall pay [*] of the SECOND GENERATION LICENSED COMPOUND CANDIDATE
DEVELOPMENT COSTS and the SECOND GENERATION LICENSED COMPOUND CANDIDATE
MANUFACTURE DEVELOPMENT COSTS and any other DEVELOPMENT COSTS or MANUFACTURE
DEVELOPMENT COSTS for such compound once such SECOND GENERATION LICENSED
COMPOUND CANDIDATE becomes a SECOND GENERATION LICENSED COMPOUND pursuant to
Section 4.2.4(b), but may offset [*] of the SECOND GENERATION LICENSED COMPOUND
CANDIDATE DEVELOPMENT COSTS and [*] of the SECOND GENERATION LICENSED COMPOUND
CANDIDATE MANUFACTURE DEVELOPMENT COSTS associated with seeking REGULATORY
APPROVAL for such compound in TERRITORY A and [*] of any other DEVELOPMENT COSTS
and MANUFACTURE DEVELOPMENT COSTS associated with seeking REGULATORY APPROVAL
for such compound in TERRITORY A, against Coulter's [*] share of OPERATING
PROFIT in TERRITORY A, pursuant to Section 7.1.13, for PRODUCT containing such
compound.
4.2.5 MODIFICATION OF JOINT DEVELOPMENT PLAN, JOINT MANUFACTURE
DEVELOPMENT PLAN AND JOINT MARKETING PLAN. Promptly upon a SECOND GENERATION
LICENSED COMPOUND Candidate becoming a SECOND GENERATION LICENSED COMPOUND
pursuant to Section 4.2.2(a) or 4.2.4(b), the JDC and JCC shall modify the JOINT
DEVELOPMENT PLAN, the JOINT MANUFACTURE DEVELOPMENT PLAN and the JOINT MARKETING
PLAN then in effect as required to achieve the requisite approvals of the
modified documents by the JDC and JCC, following the procedures set forth in
Article 2, in order to incorporate the SECOND GENERATION LICENSED COMPOUND into
such documents. Consistent with this Agreement and the modified JOINT
DEVELOPMENT PLAN, the modified JOINT MANUFACTURE DEVELOPMENT PLAN and modified
JOINT
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
37.
<PAGE> 51
MARKETING PLAN, the JDC and JCC shall allocate responsibility for the
DEVELOPMENT, MANUFACTURE DEVELOPMENT and commercialization of such SECOND
GENERATION LICENSED COMPOUND, provided, however, such allocation shall be [*].
ARTICLE 5
LICENSES
5.1 LICENSES TO SB. Subject to the other provisions of this Agreement,
Coulter hereby grants to SB:
5.1.1 A license, under Coulter's INTELLECTUAL PROPERTY RIGHTS, to
develop, make, have made, use, sell, offer for sale, and import LICENSED
COMPOUND, PRODUCT and ANTI-CD20 ANTIBODY in the FIELD in TERRITORY A, subject to
Section 5.1.3 and Section 5.1.4 and the other terms and conditions set forth in
this Agreement. Such license shall be exclusive except as to Coulter and shall
be subject to the terms set forth in this Agreement.
5.1.2 A license, under Coulter's INTELLECTUAL PROPERTY RIGHTS, to
develop, make, have made, use, sell, offer for sale, and import LICENSED
COMPOUND, PRODUCT and ANTI-CD20 ANTIBODY in the FIELD in the NON-USA TERRITORY,
subject to Section 5.1.3 and Section 5.1.4 and the other terms and conditions
set forth in this Agreement (including without limitation circumstances under
which SB's rights in certain countries may terminate or become non-exclusive).
Such license shall be exclusive except as to Coulter's rights (i) to develop,
make, have made, use and import LICENSED COMPOUND and PRODUCT for SB in the
Field in the NON-USA TERRITORY as set forth in this Agreement and (ii) as
described in Section 5.1.4.
5.1.3 The license to SB outlined in Sections 5.1.1 and 5.1.2
shall be exercisable by SB only with respect to
(a) PRODUCT or LICENSED COMPOUND; and
(b) SECOND GENERATION LICENSED COMPOUND CANDIDATEs for use
in the FIELD throughout the TERRITORY, but only to the extent set forth in
Section 4.2.
5.1.4 As used in Sections 5.1.1 and 5.1.2, a license that is
"exclusive except as to Coulter" means that Coulter shall not grant any other
entity (other than Coulter AFFILIATES but only for so long as they remain
AFFILIATES) any license under Coulter's INTELLECTUAL PROPERTY RIGHTS in the
FIELD except as otherwise provided in Section 11.4.3, but that otherwise Coulter
retains all its rights of ownership in such licensed rights, including without
limitation the right to practice such property rights, subject only to the
license granted. In particular, Coulter shall retain the right to develop, make,
have made, use, sell, offer for sale and import LICENSED COMPOUND and PRODUCT in
the FIELD in TERRITORY A, and to develop, make, have made, and use SECOND
GENERATION LICENSED COMPOUND CANDIDATES and LICENSED COMPOUNDS in the FIELD
throughout the TERRITORY, in all cases subject to the terms set forth in this
Agreement. For the avoidance of doubt, nothing contained in this Section 5.1 (a)
grants SB any rights under Coulter's INTELLECTUAL PROPERTY RIGHTS outside the
FIELD, (b) grants SB the right to exercise its
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
38.
<PAGE> 52
license for products other than the PRODUCT, LICENSED COMPOUND and SECOND
GENERATION LICENSED COMPOUND CANDIDATEs (subject to Section 4.2), (c) precludes
Coulter or any licensee of Coulter from practicing such rights outside the FIELD
or for a purpose not related to ANTI-CD20 ANTIBODIES in the FIELD, or (d) grants
Coulter the right to exercise its retained rights related to ANTI-CD20
ANTIBODIES for products other than the PRODUCT, LICENSED COMPOUND and SECOND
GENERATION LICENSED COMPOUND CANDIDATEs (subject to Section 4.2).
5.1.5 Under no circumstances may SB grant sublicenses in
TERRITORY A under the licenses granted in this Section 5.1 except to AFFILIATES
of SB and only for so long as such AFFILIATES remain AFFILIATES (except in the
event that Coulter loses its rights to CO-PROMOTE PRODUCT under Section 7.1.15)
and only to develop, make, have made, use, sell, offer for sale and import
PRODUCT, LICENSED COMPOUND, and SECOND GENERATION LICENSED COMPOUND CANDIDATES.
Subject to Section 7.2.3, the licenses granted in this Section 5.1 shall only be
sublicensable by SB in the MAJOR MARKET COUNTRIES with the prior written consent
of Coulter which shall not be unreasonably withheld, except SB may grant
sublicenses in the MAJOR MARKET COUNTRIES to AFFILIATES of SB, and only for so
long as such AFFILIATES remain AFFILIATES, without the prior consent of Coulter.
In all countries other than the TERRITORY A and the MAJOR MARKET COUNTRIES, SB
may grant sublicenses under the licenses granted in this Section 5.1 without the
prior consent of Coulter, provided, however, SB shall provide written notice to
Coulter at least five (5) business days prior to entering into such sublicense
agreements. Such notice shall include the name of the THIRD PARTY sublicensee
and a brief description of the proposed agreement.
5.1.6 Unless otherwise provided in this Agreement, SB covenants
that it shall not, nor shall it cause any AFFILIATE to knowingly, use or
practice directly or indirectly any INTELLECTUAL PROPERTY RIGHTS of Coulter for
any purposes other than those set forth in Sections 5.1.1, 5.1.2 and 5.1.3.
5.2 LICENSES TO COULTER.
5.2.1 Subject to the other provisions of this Agreement, SB
hereby grants to Coulter a license under SB's INTELLECTUAL PROPERTY RIGHTS, to
develop, make, have made, use, sell, offer for sale and import LICENSED
COMPOUND, PRODUCT, and ANTI-CD20 ANTIBODY in the FIELD in the TERRITORY, subject
to Section 5.2.2 and the other terms and conditions of this Agreement. The
license granted under this Section 5.2.1 shall be (i) royalty-free, (ii)
exclusive except as to SB and any authorized sublicensee of SB under Section
5.1.5 within the scope of such sublicense, and (iii) shall not be sublicenseable
by Coulter without the consent of SB, except to AFFILIATES of Coulter, and only
for so long as such AFFILIATES remain AFFILIATES.
5.2.2 The license to Coulter set forth in Section 5.2.1 shall be
exercisable by Coulter only with respect to:
(a) the development and manufacture (including THIRD PARTY
manufacture for Coulter) of LICENSED COMPOUND, PRODUCT and SECOND GENERATION
COMPOUND CANDIDATES to the extent set forth in Section 4.2, for use in the FIELD
throughout the TERRITORY, and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
39.
<PAGE> 53
(b) the CO-PROMOTION of the PRODUCT in the FIELD in
TERRITORY A, and
(c) otherwise to comply with its obligations under this
Agreement, and
(d) in the case of SB KNOW-HOW, only to the extent such SB
KNOW-HOW has been described to Coulter under this Agreement.
5.2.3 As used in Section 5.2.1, a license that is "exclusive
except as to SB and any authorized sublicensee of SB under Section 5.1.5" means
that SB shall not grant any other entity (except such a sublicensee acting
within the scope of such sublicense) any license under SB's INTELLECTUAL
PROPERTY RIGHTS in the FIELD (except as otherwise provided in Section 11.4.3),
but that otherwise SB retains all of its rights of ownership in such licensed
rights, including without limitation, the right to practice such property
rights, subject only to the license granted.
5.2.4 The license granted to Coulter herein expressly excludes
any license under SB technology for the [*]. SB agrees, however, that during the
term of this Agreement it will not grant licenses to THIRD PARTIES for [*]
ANTI-CD20 ANTIBODIES without the prior written consent of Coulter.
5.2.5 SB hereby grants to Coulter an exclusive, royalty-free
license, with a right to sublicense, under SB's INTELLECTUAL PROPERTY RIGHTS, to
develop, make, have made, use, import, market, offer for sale and sell PRODUCT
or LICENSED COMPOUND in the FIELD in Japan.
5.2.6 Unless otherwise provided in this Agreement, Coulter
covenants that it shall not, nor shall it cause any AFFILIATE to knowingly, use
or practice directly or indirectly any INTELLECTUAL PROPERTY RIGHTS of SB for
any purposes other than those set forth in Sections 5.2.1, 5.2.2 and 5.2.5.
5.3 NEW THIRD PARTY LICENSES.
5.3.1 DETERMINATION REGARDING NEED FOR NEW THIRD PARTY LICENSE.
In the event either Coulter or SB believes that one or more licenses under
intellectual property held by a THIRD PARTY are necessary or desirable in order
to manufacture or develop or commercialize the PRODUCT anywhere in the
TERRITORY, or otherwise assure that their activities under this Agreement do not
infringe the intellectual property rights of such THIRD PARTY, then the Parties
will discuss the situation in good faith. In the event that the Parties cannot
make a unanimous decision regarding whether or not a license is necessary or
desirable, the Parties shall submit such issue promptly thereafter to an
UNAFFILIATED EXPERT who is a patent attorney. The expenses of engaging such
UNAFFILIATED EXPERT patent attorney for such determination shall be shared
equally by the Parties. If such UNAFFILIATED EXPERT patent attorney determines
that a license is needed, the determination shall be binding on the Parties and
Section 5.3.3(b) or 5.3.3(c) shall be applicable.
5.3.2 PROCEDURE FOR OBTAINING. Once a determination has been
made, in accordance with Section 5.3.1, that one or more licenses under
intellectual property held by a THIRD PARTY are necessary or desirable in order
to manufacture or develop or commercialize the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
40.
<PAGE> 54
PRODUCT anywhere in the TERRITORY, or otherwise assure that their activities
under this Agreement do not infringe the intellectual property rights of such
THIRD PARTY, the appropriate Party (i.e., Coulter for TERRITORY A and SB for the
NON-USA TERRITORY) will seek to obtain a license to such intellectual property
(a "NEW THIRD PARTY LICENSE"). In the event such NEW THIRD PARTY LICENSE imposes
costs on the Party who is not obtaining the license pursuant to Section 5.3.3
(i.e., SB for TERRITORY A and Coulter for the NON-USA TERRITORY), the economic
terms of such license [*] and such approved terms shall be included within the
NEW THIRD PARTY LICENSE COSTS. Should the Parties [*], then [*] to [*] the issue
shall be presented to the [*] and the [*]. In the event that the [*] and the [*]
are [*] on the issue, then [*] the decision regarding such economic terms
provided, however, that, [*] shall not enter into any NEW THIRD PARTY LICENSE
which [*] during the term of the guarantee set forth in Section 7.2.5.
5.3.3 NEW THIRD PARTY LICENSE COSTS.
(a) The NEW THIRD PARTY LICENSE COSTS in TERRITORY A will
be included as an element of COST OF GOODS as outlined in Section 1.11(c).
(b) In the event that the JDC (or an UNAFFILIATED EXPERT
under Section 5.3.1) determines that, in the absence of a NEW THIRD PARTY
LICENSE, SB would be blocked from making, using or selling the PRODUCT in the
NON-USA TERRITORY, then the NEW THIRD PARTY LICENSE COSTS for such NON-USA
TERRITORY license will be [*].
(c) In the event that the JDC (or an UNAFFILIATED EXPERT
under Section 5.3.1) determines that, in the absence of a NEW THIRD PARTY
LICENSE, SB would not be blocked from making, using or selling the PRODUCT in
the NON-USA TERRITORY, then SB shall have the right, at its discretion, to enter
in any such NEW THIRD PARTY LICENSE, provided that any NEW THIRD PARTY LICENSE
COSTS for such license will be borne entirely by SB.
(d) "NEW THIRD PARTY LICENSE COSTS" shall mean any amounts
paid to a THIRD PARTY licensor under a given NEW THIRD PARTY LICENSE. All NEW
THIRD PARTY LICENSE COSTS [*] under Section 5.3.3(a) or 5.3.3(b) shall be
approved in accordance with Section 5.3.2.
5.3.4 UPSTREAM LICENSES. It is understood that the licenses
granted under this Article 5 anticipate sublicenses of technology licensed from
THIRD PARTIES by Coulter to SB or by SB to Coulter, pursuant to license
agreements in effect as of the Effective Date and/or NEW THIRD PARTY LICENSES
(collectively, the "Upstream Licenses"). All such sublicenses granted hereunder
are subject to the terms and conditions, including provisions regarding
exclusivity, of any such Upstream Licenses. Each Party will [*] this Agreement
for any relevant Upstream Licenses obtained after the Effective Date (within the
scope of such new Upstream Licenses).
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
41.
<PAGE> 55
5.4 EXCLUSIVITY.
5.4.1
(a) In the event SB or an SB AFFILIATE files a BLA in
TERRITORY A or a MAA or [*] in a MAJOR MARKET COUNTRY for a MAJOR INDICATION for
a Competitive Product (as defined in Section 5.4.3) or commences marketing a
Competitive Product for a MAJOR INDICATION in TERRITORY A or a MAJOR MARKET
COUNTRY, SB shall immediately notify Coulter. At any time thereafter, Coulter
may, upon [*] prior written notice to SB, either (i) terminate the licenses
contained in this Article 5 for those countries of TERRITORY A or MAJOR MARKET
COUNTRIES in which SB or an SB AFFILIATE has filed a BLA or a MAA or an [*] for
a MAJOR INDICATION for a Competitive Product or has commenced marketing a
Competitive Product for a MAJOR INDICATION, provided, however, that if one of
the MAJOR MARKET COUNTRIES in which such regulatory or marketing events occurred
is in the European Union, then such termination shall be effective for the
entire European Union; and/or (ii) convert the licenses contained in this
Article 5 in any such country or countries to non-exclusive licenses. Upon
termination pursuant to clause (i), the terms of Section 13.4 shall apply. Upon
conversion to non-exclusive rights pursuant to clause (ii), the terms of Section
13.5 shall apply. In the event of a termination of the license in TERRITORY A or
MAJOR MARKET COUNTRIES pursuant to clause (i), Coulter will thereafter have no
obligation to make any payments to SB with respect to PRODUCT in TERRITORY A or
MAJOR MARKET COUNTRIES under this Agreement. Notwithstanding the foregoing,
Coulter will not exercise the option set forth in the second sentence of this
Section 5.4.1(a) if:
(i) the BLA in TERRITORY A or a MAA or [*] in a
MAJOR MARKET COUNTRY for the Competitive Product is not for a MAJOR INDICATION;
(ii) the Competitive Product is not being
commercialized for treatment of any MAJOR INDICATIONS;
(iii) with respect to TERRITORY A, neither Party is
then utilizing any sales representatives to support PRODUCT in TERRITORY A in
accordance with a JCC determination under Section 7.1.6(a) that such sales
effort is not desirable; or
(iv) with respect to either TERRITORY A or a MAJOR
MARKET COUNTRY, ten (10) years have passed since the date of commercial launch
of PRODUCT in the relevant country.
(b) In the event Coulter or a Coulter AFFILIATE files a
BLA in TERRITORY A for a MAJOR INDICATION for a Competitive Product or commences
marketing a Competitive Product for a MAJOR INDICATION in TERRITORY A, Coulter
shall immediately notify SB. At any time thereafter, SB may, upon six (6) months
prior written notice to Coulter, terminate Coulter's right to CO-PROMOTE PRODUCT
in TERRITORY A, and SB will thereafter have no obligation to make any payments
to Coulter with respect to PRODUCT in TERRITORY A under this Agreement.
Notwithstanding the foregoing, SB will not exercise the option set forth in the
second sentence of this Section 5.4.1(b) if:
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
42.
<PAGE> 56
(i) the BLA for the Competitive Product is not for
a MAJOR INDICATION;
(ii) the Competitive Product is not being
commercialized for treatment of any MAJOR INDICATION;
(iii) neither Party is then utilizing any sales
representatives to support PRODUCT in TERRITORY A in accordance with a JCC
determination under Section 7.1.6(a) that such sales effort is not desirable; or
(iv) ten (10) years have passed since the date of
commercial launch of PRODUCT in TERRITORY A.
5.4.2
(a) In the event that SB shall be acquired by or merge
with a THIRD PARTY who is commercializing a Competitive Product at the time of
such acquisition or merger in TERRITORY A or in a MAJOR MARKET COUNTRY for a
MAJOR INDICATION, or in the event that SB acquires a THIRD PARTY who is
commercializing a Competitive Product at the time of such acquisition in
TERRITORY A or in a MAJOR MARKET COUNTRY for a MAJOR INDICATION, the Parties
shall promptly meet to discuss, in good faith, an equitable resolution to such
situation. In the event the Parties are unable, despite good faith efforts, to
reach an equitable resolution to such situation within [*] to discuss the
situation and SB has not, within [*] of the [*] either granted an exclusive
license to a THIRD PARTY to make, use and sell such Competitive Product in
TERRITORY A and the MAJOR MARKET COUNTRIES for all MAJOR INDICATIONS or
otherwise transferred to a THIRD PARTY the exclusive right to make, use and sell
such Competitive Product in TERRITORY A and the MAJOR MARKET COUNTRIES for all
MAJOR INDICATIONS, Coulter may at any time thereafter, either (i) terminate the
licenses contained in this Article 5 for those countries of TERRITORY A or MAJOR
MARKET COUNTRIES for which SB has not taken the actions described in the
preceding sentence (or for the entire European Union, if the Competitive Product
is on the market in any MAJOR MARKET COUNTRY of the European Union); and/or (ii)
convert the licenses contained in this Article 5 in any such country or
countries to non-exclusive licenses. Upon termination pursuant to clause (i),
the terms of Section 13.4 shall apply. Upon conversion to non-exclusive rights
pursuant to clause (ii), the terms of Section 13.5 shall apply. In the event of
a termination of the license in TERRITORY A or MAJOR MARKET COUNTRIES pursuant
to clause (i), Coulter will thereafter have no obligation to make any payments
to SB with respect to PRODUCT in TERRITORY A or MAJOR MARKET COUNTRIES under
this Agreement. Notwithstanding the foregoing, Coulter will not exercise the
option set forth in the second sentence of this Section 5.4.2(a) if:
(i) the Competitive Product obtained by SB as a
result of such acquisition or merger is not being commercialized for treatment
of any MAJOR INDICATIONS;
(ii) with respect to TERRITORY A, neither Party is
then utilizing any sales representatives to support PRODUCT in TERRITORY A in
accordance with a JCC determination under Section 7.1.6(a) that such sales
effort is not desirable; or
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
43.
<PAGE> 57
(iii) with respect to either TERRITORY A or a MAJOR
MARKET COUNTRY, ten (10) years have passed since the date of commercial launch
of PRODUCT in the relevant country.
(b) In the event that Coulter shall be acquired by or
merge with a THIRD PARTY who is commercializing a Competitive Product at the
time of such acquisition or merger in TERRITORY A for a MAJOR INDICATION, or in
the event that Coulter acquires a THIRD PARTY who is commercializing a
Competitive Product at the time of such acquisition in TERRITORY A for a MAJOR
INDICATION, the Parties shall promptly meet to discuss, in good faith, an
equitable resolution to such situation. In the event the Parties are unable,
despite good faith efforts, to reach an equitable resolution to such situation
within [*] of their first meeting to discuss the situation and Coulter has not,
within [*] of the end of such [*] either granted an exclusive license to a THIRD
PARTY to make, use and sell such Competitive Product in TERRITORY A for all
MAJOR INDICATIONS or otherwise transferred to a THIRD PARTY the exclusive right
to make, use and sell such Competitive Product in TERRITORY A and the MAJOR
MARKET COUNTRIES for all MAJOR INDICATIONS, SB may at any time thereafter, upon
written notice to Coulter, terminate Coulter's right to CO-PROMOTE PRODUCT in
TERRITORY A, and SB will thereafter have no obligation to make any payments to
Coulter with respect to PRODUCT in TERRITORY A under this Agreement.
Notwithstanding the foregoing, SB will not exercise the option set forth in the
preceding sentence with respect to such Competitive Product if:
(i) the Competitive Product obtained by Coulter as
a result of such acquisition or merger is not being commercialized for treatment
of any MAJOR INDICATIONS;
(ii) neither Party is then utilizing any sales
representatives to support PRODUCT in TERRITORY A in accordance with a JCC
determination under Section 7.1.6(a) that such sales effort is not desirable; or
(iii) ten (10) years have passed since the date of
commercial launch of PRODUCT in TERRITORY A.
5.4.3 For purposes of this Section 5.4, "Competitive Product"
shall mean any product, other than a PRODUCT, LICENSED COMPOUND or a SECOND
GENERATION LICENSED COMPOUND CANDIDATE which is an ANTI-CD20 ANTIBODY.
5.4.4 For the avoidance of doubt, Section 5.4 shall not be
applicable to a Party, an AFFILIATE of a Party or any licensee of a Party with
respect to making, having made, using, selling, importing, or offering for sale
any product which is not an ANTI-CD20 ANTIBODY.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
44.
<PAGE> 58
ARTICLE 6
CONSIDERATION TO COULTER
6.1 UPFRONT FEES.
6.1.1 In consideration for the license under Coulter's
INTELLECTUAL PROPERTY RIGHTS granted to SB under this Agreement, SB shall pay to
Coulter Thirty Four Million Two Hundred Fifty Thousand U.S. Dollars (U.S.
$34,250,000) in cash within five (5) business days after the Effective Date.
6.1.2
(a) In connection with this Agreement, SB shall pay to
Coulter Seven Million Two Hundred Fifty Thousand U.S. Dollars (U.S. $7,250,000),
within five (5) business days after the Effective Date, for the purchase of
Common Stock of Coulter pursuant to a STOCK PURCHASE AGREEMENT, to be entered
into simultaneous with the execution of this Agreement. Such stock purchase is
more fully described in the STOCK PURCHASE AGREEMENT.
(b) In further consideration for the license under
Coulter's INTELLECTUAL PROPERTY RIGHTS granted to SB under this Agreement, SB
shall make available a loan to Coulter of Fifteen Million U.S. Dollars (U.S.
$15,000,000), within five (5) business days after the Effective Date pursuant to
a LOAN AND SECURITY AGREEMENT, to be entered into simultaneously with the
execution of this Agreement. Such loan is more fully described in the LOAN AND
SECURITY AGREEMENT.
6.1.3 All amounts paid under Sections 6.1.1 and 6.1.2(a) shall be
non-refundable and non-creditable, provided, however, in the event of
termination of this Agreement by SB due to material breach by Coulter, the
foregoing shall not preclude SB from seeking whatever damages are available at
law.
6.2 MILESTONE PAYMENTS ON BEXXAR. In consideration for the rights
granted hereunder with respect to BEXXAR, SB shall pay to Coulter the following
amounts in cash within twenty (20) days after the following events occur with
respect to BEXXAR (in its unconjugated and radiolabeled form) in the applicable
territories:
<TABLE>
<CAPTION>
TERRITORY A MILESTONE EVENTS
--------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT
--------------------------------------------------------------------------------
<S> <C>
Acceptance of all BLAs necessary for commercialization of BEXXAR $[*]
for the first MAJOR INDICATION in TERRITORY A.
REGULATORY APPROVAL of BEXXAR in TERRITORY A for FIRST $[*]
INDICATION.
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
45.
<PAGE> 59
<TABLE>
<S> <C>
REGULATORY APPROVAL of BEXXAR in TERRITORY A for SECOND $[*]
INDICATION.
REGULATORY APPROVAL of BEXXAR in TERRITORY A for THIRD $[*]
INDICATION.
Sub-Total for TERRITORY A $[*]
</TABLE>
<TABLE>
<CAPTION>
TERRITORY B MILESTONE EVENTS
--------------------------------------------------------------------------------
MILESTONE EVENT AMOUNT
--------------------------------------------------------------------------------
<S> <C>
Filing of all MAAs necessary for commercialization of $[*]
BEXXAR for the first MAJOR INDICATION in the European Community.
REGULATORY APPROVAL in the [*] for FIRST INDICATION $[*]
(Subject to [*], [*] REGULATORY APPROVAL is received in such country;
[*]).
Selection of EUROPEAN FACILITY (as defined in Section $[*]
9.10.1) for BEXXAR. Payment to be made according to the
payment schedule set forth in Section 9.10.5(a) and (b)
REGULATORY APPROVAL in the [*] for SECOND INDICATION ([*] $[*]
for [*] such REGULATORY APPROVAL, [*] such approval is received in
such country; [*].
REGULATORY APPROVAL in the [*] for THIRD INDICATION ([*] $[*]
for [*] such REGULATORY APPROVAL, [*] such approval is received in
such country; [*]).
Acceptance of all [*] Applications necessary for $[*]
commercialization of BEXXAR for a MAJOR INDICATION in [*].
REGULATORY APPROVAL of [*] Application in [*] for FIRST $[*]
INDICATION.
REGULATORY APPROVAL of [*] Application in [*] for SECOND $[*]
INDICATION.
REGULATORY APPROVAL of [*] Application in [*] for THIRD $[*]
INDICATION.
Outpatient [*] Guidelines (as defined in Section 6.2.1(b)) $[*]
are in effect and [*] (as defined in Section [*]) [*] (the
"Outpatient Milestone")
The one (1) year anniversary of the Outpatient Milestone $[*]
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
46.
<PAGE> 60
<TABLE>
<S> <C>
First calendar year in which NET SALES in [*] are in excess $[*]
of [*].
Sub-Total for TERRITORY B $[*]
</TABLE>
<TABLE>
<CAPTION>
TERRITORY C MILESTONE EVENTS
MILESTONE EVENT AMOUNT
--------------------------------------------------------------------------------
<S> <C>
Filing of all applications necessary for commercialization of $[*]
BEXXAR for the first MAJOR INDICATION in the MAJOR MARKETS IN
TERRITORY C ([*] for which such filing occurs, [*]).
REGULATORY APPROVAL in TERRITORY C for the FIRST INDICATION ([*] for $[*]
which such REGULATORY APPROVAL is received, [*] this milestone.).
REGULATORY APPROVAL in TERRITORY C for the SECOND INDICATION [*] for $[*]
which such REGULATORY APPROVAL is received, [*] this milestone.).
REGULATORY APPROVAL in TERRITORY C for the THIRD INDICATION ([*] for $[*]
which such REGULATORY APPROVAL is received, [*] this milestone.).
Sub-Total for TERRITORY C $[*]
</TABLE>
<TABLE>
<CAPTION>
OTHER MILESTONE EVENTS
MILESTONE EVENT AMOUNT
--------------------------------------------------------------------------------
<S> <C>
Initiation of the first Pivotal Study of BEXXAR in [*] (Study [*]) $[*]
Initiation of the first study of BEXXAR in [*] (Study [*]) $[*]
Initiation of the first Pivotal Study of BEXXAR in [*] (Study [*]) $[*]
Subtotal for DEVELOPMENT Events $[*]
TOTAL BEXXAR MILESTONE PAYMENTS $[*]
</TABLE>
No payment shall be owed for a milestone which is not achieved and in no event
shall the milestone payments made by SB to Coulter upon the occurrence of the
milestone events set forth in the tables above in this Section 6.2 exceed the
amounts set forth opposite the milestone events in such tables. In the event
that REGULATORY APPROVAL of BEXXAR is granted concurrently for the FIRST
INDICATION and the SECOND INDICATION in the FIELD in, respectively, (i)
TERRITORY A, (ii) the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
47.
<PAGE> 61
[*], (iii) [*] or (iv) any of the first four MAJOR MARKETS IN TERRITORY C, then
the applicable milestone payments set forth in this Section 6.2 for REGULATORY
APPROVAL with regard to such FIRST INDICATION and SECOND INDICATION in the
relevant geographic area shall both be due from SB to Coulter, and shall both be
paid within the time frame provided in this Section 6.2 (and the next MAJOR
INDICATION for which REGULATORY APPROVAL is granted in the relevant geographic
area shall be, and shall trigger the milestone payment for, the THIRD
INDICATION).
6.2.1 DEFINITIONS RELATING TO MILESTONE PAYMENTS.
(a) "Acceptance of all BLAs necessary for
commercialization of BEXXAR for the first MAJOR INDICATION in TERRITORY A" of a
given BLA shall be deemed to have occurred upon the earlier of (i) written
notice of acceptance from the FDA of all BLAs filed by or on behalf of Coulter
or SB under this Agreement [*] or (ii) [*] of such BLA with the FDA, [*].
"Acceptance of all [*] Applications necessary for commercialization of BEXXAR
for a MAJOR INDICATION in [*]" for a given [*] shall be deemed to have occurred
upon the date of receipt of a letter from the [*] confirming that the [*] for
BEXXAR for a MAJOR INDICATION filed by or on behalf of SB under this Agreement
has [*].
(b) The term "Outpatient [*] Guidelines" shall mean that
the [*].
(c) The term "Key [*] Cancer Centers" means the following
entities:
[*] CANCER CENTER
[*] [*]
[*]
[*]
[*]
[*]
[*]
[*] [*]
[*]
[*]
[*]
[*]
[*] [*]
[*]
[*]
(d) The term MAJOR MARKETS IN TERRITORY C consists of the
following countries: [*].
(e) The term "Initiation of a study of [*]" shall mean the
date that the [*] in the first clinical study of [*] which study is being
performed in accordance with the FD&C
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
48.
<PAGE> 62
ACT and applicable regulations promulgated thereunder (including without
limitation 21 CFR Part 312).
(f) The term "Initiation of a Pivotal Study of [*]" shall
mean the date that the [*] in the first pivotal clinical study of [*], which
pivotal study is being performed in accordance with the FD&C ACT and applicable
regulations promulgated thereunder (including without limitation 21 CFR Part
312).
(g) The term "Initiation of a Pivotal Study of [*]" shall
mean the date that the [*] in the first pivotal clinical study of [*], which
pivotal study is being performed in accordance with the FD&C ACT and applicable
regulations promulgated thereunder (including without limitation 21 CFR Part
312).
In the event that one or more of the clinical trials defined in Sections
6.2.1(e), 6.2.1(f) or 6.2.1(g) are canceled, the Parties will substitute
appropriate alternative clinical trial(s) therefor. Such alternative clinical
trial(s) must be Cross-Territory Trial(s) or Territory A Trial(s) (each as
defined in Section 3.2.3).
6.2.2 DELAY OF COMMERCIAL LAUNCH IN NON-USA TERRITORY. With
respect to any milestone outlined in this Section 6.2 which is payable upon
REGULATORY APPROVAL in any jurisdiction in the NON-USA TERRITORY, if at the time
of such REGULATORY APPROVAL, SB gives notice to Coulter that commercial launch
will be delayed in such jurisdiction due to manufacture and supply problems
beyond SB's reasonable control, then the milestone relating to the receipt of
REGULATORY APPROVAL for such jurisdiction will not be due and payable until
first commercial sale of BEXXAR in such territory.
6.2.3 NON-REFUNDABLE AND NON-CREDITABLE MILESTONE PAYMENTS. All
amounts paid under this Section 6.2 shall be non-refundable and non-creditable,
provided, however, in the event of termination of this Agreement by SB due to
material breach by Coulter, the foregoing shall not preclude SB from seeking
whatever damages are available at law.
6.2.4 OFFSET AGAINST MILESTONE PAYMENT FOR REGULATORY APPROVAL IN
TERRITORY B. The Parties acknowledge and agree that in [*] there may be costs
incurred with regard to PRODUCT due to the need for special warehousing of
radiolabeled materials and/or the use of qualified nuclear medicine personnel,
both as required by regulatory authorities. In the event that such special
warehousing and use of nuclear medicine personnel are required by the applicable
regulatory authorities in [*] and SB determines that it will incur the
additional costs for such special warehousing and/or the use of nuclear medicine
personnel, then the Parties agree that [*] of such actual costs in [*] shall be
offset against the milestone payment owed by SB to Coulter under Section 6.2 for
REGULATORY APPROVAL in the [*] for a FIRST INDICATION in the FIELD. Any amounts
so offset shall be excluded from the determination of NON-USA COGS.
6.3 MILESTONE PAYMENTS ON PRODUCTS CONTAINING SECOND GENERATION LICENSED
Compounds. In the event SB sends Coulter an SB OPTION EXERCISE NOTICE as set
forth in Section 4.2.2 with respect to a SECOND GENERATION LICENSED COMPOUND, SB
shall pay to
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
49.
<PAGE> 63
Coulter the following amounts in cash within twenty (20) days after
the first achievement of each of the following events:
<TABLE>
<CAPTION>
MILESTONE EVENT AMOUNT
-----------------------------------------------------------------------------
<S> <C>
Acceptance of BLA in TERRITORY A for the first [*] Second $[*]
Generation Product.
Filing of MAA in European Community for the first [*] $[*]
Second Generation Product
REGULATORY APPROVAL of BLA in TERRITORY A for the first $[*]
[*] Second Generation Product.
REGULATORY APPROVAL of MAA in the first MAJOR MARKET $[*]
COUNTRY in the European Community for the first [*] Second
Generation Product.
Acceptance of BLA in TERRITORY A for the first [*] Second $[*]
Generation Product.
Filing of MAA in European Community for the first [*] $[*]
Second Generation Product.
REGULATORY APPROVAL of BLA in TERRITORY A for the first $[*]
[*] Second Generation Product.
REGULATORY APPROVAL of MAA in the first MAJOR MARKET $[*]
COUNTRY in the European Community for the first [*] Second
Generation Product.
</TABLE>
"Second Generation Product" shall mean a PRODUCT containing a SECOND GENERATION
LICENSED COMPOUND. Each of the foregoing milestones shall be payable only once
under this Agreement, regardless of the number of [*] Second Generation Products
for which SB exercises its option and no payment shall be owed for a milestone
which is not achieved. All amounts paid under this Section 6.3 shall be
non-refundable and non-creditable, provided, however, in the event of
termination of this Agreement by SB due to material breach by Coulter, the
foregoing shall not preclude SB from seeking whatever damages are available at
law. Notwithstanding the above, or any other provision of this Agreement, in no
event shall SB owe Coulter any milestone payment under this Section 6.3 for the
achievement of any of the foregoing milestones by a SECOND GENERATION LICENSED
COMPOUND for which Coulter fails to provide the Coulter Funding Option Exercise
Notice (defined in Section 4.2.4(b)) on or before the Coulter Funding Option
Termination Date (defined in Section 4.2.4(b)).
6.4 SECTION 9.10.5 MILESTONE. The milestone payments outlined in Section
9.10.5 related to the selection of a EUROPEAN FACILITY (as defined in Section
9.10.1) for BEXXAR by SB shall be paid in accordance with the provisions of such
Section.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
50.
<PAGE> 64
6.5 METHOD OF MAKING MILESTONE PAYMENTS. All payments to be made to
Coulter under Sections 6.1, 6.2, 6.3 and 6.4 shall be made by SB to Coulter by
way of wire transfer to such account as Coulter shall designate before such
payment is due.
6.6 ROYALTIES AND PROFIT SHARING. SB shall, in addition to the payments
set forth above, also pay to Coulter royalties and such other amounts as set
forth in Article 7.
6.7 [*] RIGHTS. If for any reason, SB determines, in good faith, that
BEXXAR will not be able to be [*] on or before [*], SB shall have the right to
[*] with respect to [*] and to substitute in its [*] under this Agreement [*]
(the [*]), all subject to the terms and conditions of this Section 6.7. The term
[*] as used in this Section means any [*], including without limitation, any [*]
as well as any [*], including without limitation, any [*] of any [*] any [*] of
any [*] any [*], any [*] of any [*], any [*] of any [*]; or any [*]. The [*] may
be [*] by SB from [*] which: (i) are owned or [*] as of the [*] (as defined
below); (ii) may be [*] the [*] as shown by, at least, [*]; and (iii) Coulter
has not [*] in [*] as of the [*] or is not otherwise engaged as of such [*] in
advanced [*] related to [*] in [*] by Coulter to such [*] as proven by written
documentation (e.g., a non-binding letter of intent with respect to the [*] by
[*] or other similar written evidence).
The date that SB provides written notice to Coulter of SB's determination under
this Section 6.7 shall be the [*]. Within [*] after receipt of such notice,
Coulter shall provide to SB [*] the [*] together with the essential information
available to Coulter regarding [*]. If requested by SB, Coulter shall meet with
SB as soon as possible to [*] and provide such further information as SB may
request and Coulter possesses. In any event, if SB desires to proceed with the
exercise of its rights under this Section 6.7, SB shall [*] and provide notice
of such [*] within [*] from Coulter of [*] and essential information available
to Coulter regarding [*] such [*] (the [*] being referred to herein as the [*]).
Such [*] shall [*] of [*] by [*] of the [*] and the terms of Section 13.4 of
this Agreement shall be applicable with respect to such [*]. Promptly following
such [*], the Parties shall meet to negotiate in good faith [*] to [*] and [*]
with respect to the [*], such [*] within [*] the [*]. The principles of the
agreement with respect to the [*] shall be (i) [*] shall be required of SB; (ii)
[*] and [*] in [*] related to the [*] shall be [*]; (iii) in [*], SB and Coulter
shall [*] and [*] as provided in this Agreement; and (iv) SB shall not be
responsible for [*] with respect to such [*] which have been previously paid
with respect to [*], but as to any such [*] which have not been paid, SB shall
[*] for the [*] of the same [*] provided for under this Agreement in the event
the [*] is [*] in [*] existed as of the [*], and subject to a [*] in the event
that the [*] is of [*], respectively, and based on the same events [*] (with the
Parties to agree [*] to the extent such [*]. All aspects of this Section 6.7
shall be subject to any [*] that [*] to the [*]. The Parties agree that (a)
between the [*] and the [*] which [*] of [*] under this Section 6.7, Coulter
shall not [*] regarding [*] of the [*] that are on the [*] and (b) [*] the [*]
which [*] of [*] under this Section 6.7, SB shall have no further claim to [*],
if [*] hereunder, the [*] by [*] the [*]. The Parties further agree that between
the [*] and [*] the Parties mutually agree that they will [*] the [*] and [*]
for the [*], or (y) [*] the [*] if for any reason the Parties have failed to [*]
the [*] and [*] for the [*]. Coulter shall not enter into [*] with [*] regarding
the rights to such [*] prior to [*] in the event that [*] has [*] to [*] (ii)
the failure by SB to [*] within the time periods specified above, or (iii) [*]
after the [*] if for any reason the Parties have failed to [*] the [*] and [*]
of the [*].
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
51.
<PAGE> 65
ARTICLE 7
MARKETING
7.1 CO-PROMOTION IN TERRITORY A.
7.1.1 RIGHTS TO CO-PROMOTE. With respect to the commercialization
of the PRODUCT in TERRITORY A, Coulter and SB shall have the right to CO-PROMOTE
the PRODUCT during the TERM OF CO-PROMOTION. Notwithstanding the foregoing, in
no event shall Coulter have responsibility to CO-PROMOTE the PRODUCT in the
Commonwealth of Puerto Rico or any territories or possessions of the United
States.
7.1.2 LEAD PARTY FOR COMMERCIALIZATION IN TERRITORY A. SB shall
be the lead Party for implementation of, and shall make tactical decisions with
regard to, CO-PROMOTION in TERRITORY A, consistent with the terms of this
Agreement, the then current JOINT MARKETING PLAN and any prior direction
provided by the JCC.
7.1.3 JOINT MARKETING PLAN.
(a) PURPOSE OF THE JOINT MARKETING PLAN. The CO-PROMOTION
of the PRODUCT will be governed by a "JOINT MARKETING PLAN" which will be in a
form consistent with SB's marketing planning process (in terms of both timetable
and required documentation, i.e., PRODUCT strategy plans and annual tactical
plans), the current format of which is attached hereto as Exhibit G, and with
the terms of this Article 7. The JOINT MARKETING Plan will take into
consideration factors such as market conditions, regulatory factors and
competition and the respective COMMERCIALLY REASONABLE EFFORTS of each Party.
Such JOINT MARKETING PLAN will attempt, to the extent practicable, to describe
the proposed plan for commercialization of the PRODUCT in the USA, including
overall marketing strategy, budget, operating guidelines (if any), market and
sales forecasts, pricing analysis and estimated launch date, guidelines for
discounting the PRODUCT, as well as advertising and other promotional materials
to be developed and used during the CO-PROMOTION.
(b) PREPARATION, APPROVAL AND MONITORING OF JOINT
MARKETING PLAN. A draft of the initial JOINT MARKETING PLAN will be developed
and approved by the JCC no later than ninety (90) days after the Effective Date.
Thereafter, an updated JOINT MARKETING PLAN will be developed and approved by
the JCC at such times as the JCC deems appropriate, but no less frequently than
annually. SB shall take the lead in preparing the JOINT MARKETING PLAN and each
update thereto in accordance with Section 7.1.6(b)(ii). The JCC will monitor
implementation of the initial JOINT MARKETING PLAN and each update thereto.
7.1.4 PRODUCT TEAM. In the interest of facilitating the
implementation of CO-PROMOTION in TERRITORY A, no later than thirty (30) days
after the Effective Date, the Parties shall form a "Product Team" composed of
both SB and Coulter personnel. Each member of the Product Team shall participate
as an equal member, provided that the Product Team shall be chaired by the
BEXXAR Product Manager from SB who shall provide direction and oversight with
respect to the implementation of the then current JOINT MARKETING PLAN and
associated tactics
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
52.
<PAGE> 66
and programs. The Product Team shall develop objectives, strategies and
associated budgets for the implementation of the responsibilities indicated in
Exhibit F-1 in accordance with the then current JOINT MARKETING PLAN and SB's
marketing planning process. Coordination and updates should occur routinely
between the Product Team members. To facilitate the functioning of the Product
Team, each Party shall provide, promptly after the Effective Date and on an
ongoing basis throughout the term of the Agreement, all clinical, marketing, and
other related and necessary information that becomes available to such Party
which may be needed for the Product Team to function, provided that such
information shall be subject to the confidentiality requirements set forth in
Article 17. Each Party shall bear all travel and living expenses incurred by its
employees as a result of their participation in any of the meetings outlined in
this Section and such expenses shall not be included in the calculation of the
JOINT P&L outlined in Section 7.1.14.
7.1.5 PRODUCT PRICING. [*] PRODUCT pricing in TERRITORY A,
including discounting. Should [*] become [*] the issue of pricing, [*] shall be
handled according to the procedures set forth under Section 2.2.2.
7.1.6 EFFORTS OF THE PARTIES.
(a) SALES EFFORTS. Coulter and SB shall each use
COMMERCIALLY REASONABLE EFFORTS to CO-PROMOTE the PRODUCT in TERRITORY A
pursuant to the terms and conditions hereof. The JCC will agree upon and monitor
each Party's SALES EFFORT (as defined below) for each Co-promotion Year during
the TERM OF CO-PROMOTION. "Co-promotion Year" shall mean, for the calendar year
in which the Parties are first engaged in CO-PROMOTION, the portion of the
calendar year remaining beginning upon the date of the FIRST COMMERCIAL SALE of
the PRODUCT in TERRITORY A, and shall mean the relevant January 1 through
December 31 calendar year, or pro rata portion thereof, for all subsequent
calendar years during the TERM OF CO-PROMOTION. "SALES EFFORT" shall mean FTES
who [*] to [*] with [*] in TERRITORY A, in accordance with the then current
JOINT MARKETING PLAN, provided such [*] in an [*] and [*], including without
limitation, [*]. The Parties agree, as of the Effective Date, that in the first
Co-promotion Year Coulter will provide at least [*] FTES of SALES EFFORT in
connection with the CO-PROMOTION and SB shall provide at least [*] FTES of SALES
EFFORT in connection with the CO-PROMOTION. The number of FTES of SALES EFFORT
to be provided by each Party during each Co-Promotion Year shall be determined
by the JCC no later than [*] to the [*] of each subsequent Co-promotion Year,
provided that Coulter may provide at least [*] of such total SALES EFFORT during
each Co-Promotion Year. The JCC shall base its determination of the level of
SALES EFFORT provided by a Party on an FTE basis where, for example, one sales
representative spending [*] of his or her time on Product detailing is equal to
[*], and one sales representative spending [*] of his or her time on PRODUCT
detailing is equal to [*]. During any Co-Promotion Year, each Party shall use
its good faith efforts to deliver at least [*] of the number of FTES of SALES
EFFORT to be provided by such Party during each Co-Promotion Year as determined
by the JCC ("Minimum Sales Effort"). During any Co-Promotion Year in which a
Party [*], such Party [*] other Party [*] for each FTE (or the pro rata portion
thereof for each part FTE) for which [*] the [*]. By way of illustration, if the
number of FTES of SALES EFFORT to be provided by a Party
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
53.
<PAGE> 67
during a Co-Promotion Year as determined by the JCC was [*] and the number of
FTES of SALES EFFORT [*], such Party [*] Party [*] according to the following:
(i) the [*] to be delivered by the Party during
such Co-Promotion Year would be [*] (i.e., [*]); and
(ii) [*] ([*]) [*] 1. FTE multiplied by [*].
(b) ALLOCATION OF SALES AND MARKETING RESPONSIBILITIES.
(i) SALES RESPONSIBILITIES. It is expected, as of
the Effective Date, that (i) the Coulter Sales Effort personnel will take the
lead on [*] and (ii) the SB Sales Effort personnel will take the lead on [*] not
detailed by Coulter under clause (i) above. It is further understood that the
fact that the JCC decides that one Party's Sales Effort personnel takes the lead
with respect to a particular target audience does not preclude the other Party's
Sales Effort personnel from detailing such target audience or from otherwise
providing input with respect to the lead Party's activities, provided that such
is in accordance with the then current JOINT MARKETING PLAN.
(ii) MARKETING RESPONSIBILITIES. Each Party will
contribute the expertise and undertake the activities set forth under its name
on Exhibit F-2, in accordance with the then current JOINT MARKETING PLAN. It is
understood that the JCC can reallocate the responsibilities among the Parties
set forth on Exhibit F-2 as it deems appropriate and Exhibit F-2 will be updated
accordingly. It is further understood that the fact that the JCC decides that
one Party should contribute its expertise and undertake the activities set forth
under its name on Exhibit F-2 does not preclude the other Party from
contributing its expertise or undertaking such activities or from otherwise
providing input with respect to the other Party's activities, provided that such
is in accordance with the then current JOINT MARKETING PLAN.
(c) COMPENSATION AND BONUS SYSTEM FOR SALES
REPRESENTATIVES. The Parties acknowledge that in order to attract and retain
professional pharmaceutical sales representatives, [*] SB's sales
representatives and [*] Coulter's sales representatives. To ensure consistency
of effort between the sales representatives of the Parties, each Party agrees
that [*], each Party will [*], provided that each Party shall [*].
7.1.7 COMPLIANCE WITH LAW. Each Party shall cause its sales
force, and all other employees and approved agents and representatives, to
comply with all applicable laws, regulations and guidelines in connection with
the CO-PROMOTION of the PRODUCT, including, without limitation, the Prescription
Drug Marketing Act and the Federal Anti-Kickback Statute. Each Party shall cause
its sales force, in the course of its CO-PROMOTION of the PRODUCT, to (a) limit
its claims of efficacy and safety for PRODUCT to those which are consistent with
the JCC's then approved product circular for PRODUCT, (b) not delete or modify
claims of efficacy and safety in the CO-PROMOTION of PRODUCT so that they are
different in any way from those which are contained in the JCC's then approved
product circular for PRODUCT, or make any changes in promotional materials and
literature provided by the JCC, (c) conduct the CO-PROMOTION of PRODUCT in
strict adherence to the American Medical Association Gifts to Physicians From
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
54.
<PAGE> 68
Industry Guidelines, and (d) not knowingly or negligently do anything which will
jeopardize the goodwill or reputation of PRODUCT.
7.1.8 PROMOTIONAL AND ADVERTISING MATERIALS. The Parties shall
disseminate in TERRITORY A only those promotional and advertising materials
which have been approved for use by the JCC, or the Product Team (defined in
Section 7.1.4) for those items delegated to it. SB will propose the promotional
and advertising materials to the Product Team and will be responsible for
creating and procuring any promotional and advertising materials determined to
be necessary or desirable by the Product Team. The cost of such materials shall
be included in MARKETING COSTS. [*] of such promotional and advertising
materials after review of such materials by both Parties, [*]. In the event [*]
on an [*] such promotional and advertising materials, [*] to [*], the [*] if an
[*]. In the event the [*] to [*] to [*]. All such materials shall be consistent
with the JOINT MARKETING PLAN approved by the JCC and neither Party shall make
any claims or representations in respect of the PRODUCT that have not been
approved by the JCC. All such written and visual materials and all documentary
information, promotional material, and oral presentations (where practical)
regarding the promotion of the PRODUCT will display the SB and Coulter names and
logos with equal prominence, to the extent permitted by applicable law. SB shall
have the right to make the final decision regarding the selection of the
advertising agency of record for the PRODUCT, provided that reasonably in
advance of SB implementing such decision Coulter shall have the opportunity to
participate in the selection process and to provide an opinion, and SB shall
take any Coulter comments into serious consideration, but shall not be bound by
them.
7.1.9 SAMPLES. Each of the Parties will keep accurate records as
to the distribution of free clinical trial materials and samples of PRODUCTS in
TERRITORY A, if any, provided that such distribution shall be strictly in
accordance with the determinations of the JCC and JDC, as applicable, and the
then current JOINT MARKETING PLAN and JOINT DEVELOPMENT PLAN, as applicable, and
comply with all applicable laws, rules and regulations dealing with the
distribution of such goods and samples.
7.1.10 ORDERS, DISTRIBUTION, COMPLETION OF SALES, RETURNS.
Coulter will have responsibility in TERRITORY A for (i) [*]; and (iii) [*]. SB
will have responsibility in TERRITORY A for [*]. The JCC shall determine whether
[*], and in the event such functions cannot be performed effectively by [*]. SB
shall make available to Coulter, in a format [*] to [*].
7.1.11 EXCHANGE OF MARKETING INFORMATION. From time-to-time the
JCC will develop call lists, schedules, and other appropriate information for
the purpose of determining the physicians and other persons involved in the drug
purchase decision-making process to whom Coulter and SB, respectively, may
detail and otherwise promote each Product. To the extent legally permitted, the
Parties agree to cooperate in finding an efficient, economical and expeditious
way to provide a call list and other information indicating the identity of
those physicians and other persons involved in the decision-making process
regarding the purchase of pharmaceuticals.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
55.
<PAGE> 69
7.1.12 CO-PROMOTION EXPENSES.
(a) PRE-LAUNCH. Prior to commercial launch of PRODUCT in
TERRITORY A, each Party will be allowed to allocate to the JOINT P&L calculated
under Section 7.1.14 only OUT-OF-POCKET COSTS which are SALES COSTS, MARKETING
COSTS, PATENT COSTS, TRADEMARK COSTS or OTHER OPERATING INCOME/EXPENSE, all
subject to the prior approval of the JCC or in accordance with the then current
JOINT MARKETING PLAN, except that Coulter shall also be allowed to allocate to
the JOINT P&L an amount equal to [*] (i.e., [*]) for [*] the commercial launch
of PRODUCT in TERRITORY A (such amount [*]), provided that such allocation shall
not occur if the PRODUCT is not commercially launched in TERRITORY A, and such
allocation shall be made only after the PRODUCT is commercially launched in
TERRITORY A.
(b) POST-LAUNCH. After the commercial launch of PRODUCT in
TERRITORY A, those expenses outlined in Exhibit B-1 shall be allocated to the
JOINT P&L calculated under Section 7.1.14.
7.1.13 ALLOCATION OF OPERATING PROFIT OR LOSS. In consideration
for each Party's CO-PROMOTION efforts in TERRITORY A, for each calendar quarter,
SB shall be entitled to fifty percent (50%) of the OPERATING PROFIT OR LOSS for
such quarter and Coulter shall be entitled to fifty percent (50%) of the
OPERATING PROFIT OR LOSS for such quarter, such amounts to be distributed to the
Parties pursuant to Section 7.1.14.
7.1.14 JOINT P&L. Within one (1) month after the close of each
calendar quarter, or earlier if possible, during the term of this Agreement
(i.e., on or before the last day of each of the months of April, July, October
and January), Coulter shall furnish to SB a statement setting forth its COST OF
GOODS (subject to Sections 9.8.1, 9.8.2 and 9.9), MARKETING COSTS, SALES COSTS,
OTHER OPERATING INCOME/EXPENSE, DISTRIBUTION COSTS (to the extent not covered in
COST OF GOODS), PATENT COSTS and TRADEMARK COSTS (collectively, "Coulter
Operating Expenses") for such quarter in TERRITORY A, as defined in Exhibit B-1,
and all data on which the determination of such costs was calculated. Within two
(2) months after the close of each calendar quarter, or earlier if possible,
during the term of this Agreement (i.e., on or before the last day of each of
the months of May, August, November and February), SB shall furnish to Coulter a
statement (the "JOINT P&L") setting forth NET SALES in TERRITORY A during such
quarter, SB's COST OF GOODS (subject to Sections 9.8.1, 9.8.2 and 9.9),
MARKETING COSTS, SALES COSTS, OTHER OPERATING INCOME/EXPENSE, DISTRIBUTION COSTS
(to the extent not covered in COST OF GOODS), PATENT COSTS and TRADEMARK COSTS
(collectively, "SB Operating Expenses") for such quarter in TERRITORY A, as
defined in Exhibit B-1, and all data, including Coulter Operating Expenses, on
which the determination of OPERATING PROFIT OR LOSS for such quarter was
calculated. Whenever SB provides Coulter with a statement of SB Operating
Expenses, or Coulter provides SB with a statement of Coulter Operating Expenses,
the providing Party shall include supporting documentation and promptly after
request by the receiving Party, the supporting journal entries made in the
disclosing Party's books of accounts. In the event OPERATING PROFIT OR LOSS for
such quarter is a positive number, SB will submit to Coulter, with the JOINT
P&L, an amount equal to (i) Coulter Operating Expenses for such quarter plus
(ii) fifty percent (50%) of the OPERATING PROFIT OR LOSS for such quarter. In
the event OPERATING PROFIT OR LOSS for such
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
56.
<PAGE> 70
quarter is a negative number, either (a) SB will submit to Coulter, with the
JOINT P&L an amount equal to Coulter Operating Expenses for such quarter less
Coulter's fifty percent (50%) share of the OPERATING PROFIT OR LOSS for such
quarter if Coulter's Operating Expenses for such quarter exceeded Coulter's
fifty percent (50%) share of the OPERATING PROFIT OR Loss for such quarter, or
(b) Coulter will submit to SB, within thirty (30) days after receiving the JOINT
P&L an amount equal to Coulter's fifty percent (50%) share of the OPERATING
PROFIT OR LOSS for such quarter less Coulter Operating Expenses for such quarter
if Coulter's Operating Expenses for such quarter is less than Coulter's fifty
percent (50%) share of the OPERATING PROFIT OR LOSS for such quarter. If the
TERM OF CO-PROMOTION ends during an accounting quarter, the amounts due
hereunder shall be calculated for such shortened calendar quarter. In the event
that the foregoing procedure does not permit one or both of the Parties to
comply with reporting requirements under applicable United States securities
laws, rules and regulations, the JCC will modify the foregoing procedure to
permit the Parties to comply with such reporting requirements, consistent with
the general approach set forth in this Section 7.1.14. The JCC will have the
authority to amend the method utilized for determining which expenses are
included within COST OF GOODS, MARKETING COSTS, SALES COSTS, OTHER OPERATING
INCOME/EXPENSE, DISTRIBUTION COSTS (to the extent not covered in COST OF GOODS),
PATENT COSTS and TRADEMARK COSTS, as defined in Exhibit B-1 as of the Effective
Date.
7.1.15 ELECTION TO FOREGO CO-PROMOTION RIGHT. It is Coulter's
intent, at the time of execution of this Agreement, to participate in the
CO-PROMOTION during the term of this Agreement. SB understands, however, that
Coulter's corporate strategy may change over time. Accordingly, upon twelve (12)
months prior written notice to SB, or such lesser period as approved by SB in
writing, Coulter may elect to forego its right to participate in the
CO-PROMOTION of the PRODUCT in TERRITORY A. Coulter may also lose its rights to
CO-PROMOTE PRODUCT in TERRITORY A in accordance with the notice in that regard
provided to Coulter by SB under Section 4.2.3, or in accordance with the notice
provided by SB to Coulter under Section 5.4.1(b) or Section 5.4.2(b). In the
event that Coulter loses its rights to CO-PROMOTE PRODUCT in TERRITORY A in
accordance with Section 5.4.1(b), the terms and condition of Section 5.4.1(b)
shall be applicable. In the event that Coulter loses its rights to CO-PROMOTE
PRODUCT in TERRITORY A in accordance with Section 5.4.2(b), the terms and
condition of Section 5.4.2(b) shall be applicable. In the event that Coulter
loses its rights to CO-PROMOTE the PRODUCT in TERRITORY A in accordance with
Section 4.2.3 or the third sentence of this Section 7.1.15, the Parties will
promptly meet to negotiate, in good faith, appropriate amendment of this
Agreement to reflect the fact that Coulter will no longer participate in the
CO-PROMOTION of PRODUCT and such amendment shall include the payment from SB to
Coulter of a commercially reasonable royalty rate on NET SALES of PRODUCT in
TERRITORY A which occur after the effective date of such Coulter loss of its
rights to CO-PROMOTE PRODUCT in TERRITORY A. It is agreed that such royalty rate
shall be higher than the royalty rate to be paid on NET SALES of PRODUCT in
TERRITORY B but less than the amount that Coulter would have received had it
continued to CO-PROMOTE PRODUCT in TERRITORY A. In the event that the Parties
cannot agree as to the appropriate royalty rate within four (4) months after the
date that Coulter has lost its rights to CO-PROMOTE PRODUCT in TERRITORY A in
accordance with Section 4.2.3 or the third sentence of this Section 7.1.15, the
Parties shall submit such decision to the dispute resolution mechanism outlined
in Section 18.5. As of the effective date on which Coulter has foregone its
rights to CO-PROMOTE under the third
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
57.
<PAGE> 71
sentence of this Section 7.1.15 or has lost its rights under Sections 4.2.3,
5.4.1(b) or 5.4.2(b), it shall have no further obligations relating to marketing
or selling PRODUCT and shall also lose its rights to be reimbursed for any
activities undertaken after such loss which are related to Coulter Operating
Expenses (defined in Section 7.1.14) or to any share of the OPERATING PROFIT OR
LOSS after such effective date, although Coulter will still be entitled to be
reimbursed for DEVELOPMENT COSTS and MANUFACTURE DEVELOPMENT COSTS as provided
in the Agreement. In the event that the Parties have not determined a
commercially reasonable royalty rate as of the effective date of Coulter's loss
of its right to Co-Promote PRODUCT in TERRITORY A in accordance with Section
4.2.3 or the third sentence of this Section 7.1.15, then until such time as such
royalty rate has been determined by the Parties or by the procedure outlined in
Section 18.5, SB shall pay Coulter a royalty of [*] of NET SALES of PRODUCT in
TERRITORY A which occur after such effective date until the date of such royalty
rate determination. The [*] royalty rate set forth in the preceding sentence
shall not be used for evidentiary purposes under the procedure outlined in
Section 18.5. If the Parties determine a commercially reasonable royalty rate,
such rate shall be retroactive to the date of Coulter's loss of its rights to
CO-PROMOTE PRODUCT in TERRITORY A, subject to any reconciliation for payments
already made to Coulter by SB during such time period under this Section 7.1.15,
including interest to Coulter for any underpayment by SB for such time period.
7.1.16 SALES TRAINING.
(a) SB shall use its existing sales training department,
infrastructure and process to lead in the development of training materials and
programs and shall use such existing resources to execute and coordinate the
overall sales training program for the PRODUCT. SB shall provide both SB's and
Coulter's sales representatives (up to the target number for Coulter as
determined by the JCC pursuant to Section 7.1.6(a)) with promotional training
regarding the detailing and promotion of PRODUCT to target prescribers in
TERRITORY A in accordance with the then current JOINT MARKETING PLAN, provided
that such training shall be at the same level of product training as that which
would be provided to SB's own sales representatives who have previous
professional pharmaceutical sales experience. SB training of Coulter personnel
shall be timed so as to enable Coulter's detailing efforts in support of PRODUCT
to commence no later than the date provided in the then current JOINT MARKETING
PLAN.
(b) Coulter and SB shall revise SB training program
materials as needed to develop PRODUCT-specific training program materials and,
where Coulter and SB are unable to revise SB training program materials for such
purpose, Coulter and SB shall develop new PRODUCT-specific training program
materials as required. Specifically, it is expected that Coulter will develop
training program materials regarding (i) non-Hodgkin's lymphoma (where such
materials are not commercially available), (ii) the nuclear medicine aspects of
the PRODUCT and (iii) the clinical aspects of the PRODUCT, including
administration, treatment course and outcomes data. Coulter shall provide
appropriate personnel where necessary to participate in the delivery of
PRODUCT-specific training program materials in the sales training programs.
(c) The Parties expect that during the CO-PROMOTION, their
respective sales forces will receive PRODUCT training at formal meetings of all
sales representatives of both
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
58.
<PAGE> 72
Parties to be held approximately once or twice each year (each, a "National
Meeting") and at more frequent informal meetings of groups of sales
representatives composed of less than the entire sales force of both Parties
(each, a "Regional Meeting"). Additionally, the Parties may choose to hold
training activities at National Meetings relating both to the PRODUCT and to
other products promoted by such sales representatives. The travel and
subsistence expenses incurred by the attendees at such sales meetings shall be
borne directly by the Parties and are excluded from the calculation of the JOINT
P&L outlined in Section 7.1.14.
(d) During the term of the Agreement, each Party shall
train their sales representatives in TERRITORY A on the collection of data for
the reporting of adverse drug experiences to regulatory authorities and
regarding product-related inquiries and product complaints in TERRITORY A, in
accordance, respectively, with the pharmacovigilance agreement attached to this
Agreement as EXHIBIT H, the product inquiry process described on EXHIBIT I and
the product complaint procedure that the Parties adopt pursuant to Section 7.4.
7.2 NON-USA TERRITORY.
7.2.1 GENERAL. SB will market and sell the PRODUCT in the NON-USA
TERRITORY using COMMERCIALLY REASONABLE EFFORTS, subject to the diligence
provisions set forth in Section 7.2.2. SB shall cause its sales force, and all
other employees and approved agents and representatives, to comply with all
applicable laws, regulations and guidelines in connection with the sale of the
PRODUCT in the NON-USA TERRITORY. SB shall give Coulter an opportunity to review
and comment upon the NON-USA MARKETING PLAN (when available, but in any event
prior to implementation of such marketing plan), provided that while SB shall
take such comments into serious consideration, SB shall not be bound by them. SB
shall inform Coulter of any significant decisions made by SB or its permitted
sublicensees regarding implementation of the NON-USA MARKETING PLAN sufficiently
in advance of such implementation to enable Coulter to comment upon such
decisions, and SB shall take such comments into serious consideration, but shall
not be bound by them.
7.2.2 COMMERCIALIZATION MILESTONES.
(a) In addition to the obligations set forth in Section
7.2.1, in each MAJOR MARKET COUNTRY in which SB receives REGULATORY APPROVAL for
the FIRST INDICATION, SB will achieve FIRST COMMERCIAL SALE for the FIRST
INDICATION [*] months of the date it receives such REGULATORY APPROVAL. Such
time period will be extended if factors beyond SB's reasonable control
(including without limitation, [*]) preclude FIRST COMMERCIAL SALE, but such
extension shall last only for so long as such factors continue. In the event SB
does not achieve such milestone in a given MAJOR MARKET COUNTRY by such date, as
such may be extended under this Section 7.2.2(a), and is unable to convince
Coulter to further extend such date, Coulter may elect to adjust the licenses
granted by Coulter under Article 5 of this Agreement to (i) exclude such MAJOR
MARKET COUNTRY from the TERRITORY or (ii) become non-exclusive in such MAJOR
MARKET COUNTRY. In the event Coulter makes such election, it shall provide
written notice to SB and, as of the date of such notice, the terms of Sections
13.4 or 13.5, as applicable, shall apply for such MAJOR MARKET COUNTRY.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
59.
<PAGE> 73
(b) In the event that, in any calendar year following the
third anniversary of the date of FIRST COMMERCIAL SALE in a MAJOR MARKET COUNTRY
for the FIRST INDICATION, the royalty amount payable under Section 7.2.4(a) for
a given calendar year is less than the Minimum Distribution Payment (as defined
in Section 7.2.2(c)) for such MAJOR MARKET COUNTRY for such calendar year, SB
may, within [*] of the end of such calendar year, pay Coulter the difference
between the Minimum Distribution Payment for such MAJOR MARKET COUNTRY for such
year (as determined in accordance with Section 7.2.2(c)) and the royalty amount
payable under Section 7.2.4(a) for such year (the "Differential"). In the event
SB elects not to pay the Differential for such MAJOR MARKET COUNTRY for such
calendar year, SB shall explain the circumstances for the Differential to
Coulter and Coulter shall consider such circumstances in good faith. Coulter may
elect either to (i) terminate the licenses granted by Coulter under this
Agreement for such MAJOR MARKET COUNTRY or (ii) adjust the licenses granted by
Coulter under Article 5 of this Agreement to become non-exclusive for such MAJOR
MARKET COUNTRY. Prior to Coulter making such election, the Parties may mutually
agree to meet to discuss the percentage of RADIOLABELED ANTIBODY manufactured at
the EUROPEAN FACILITY (as defined in Section 9.10.1) (if such EUROPEAN FACILITY
is completed by SB and regulatory approval for such EUROPEAN FACILITY is granted
to SB) that SB shall make available to Coulter in the event Coulter makes the
election under clause (ii) above and the commercially reasonable prices at which
such RADIOLABELED ANTIBODY would be made available to Coulter. If the Parties
are unable to agree upon the terms under which SB would supply RADIOLABELED
ANTIBODY to Coulter, Coulter shall make the election set forth above regarding
the termination or non-exclusivity in such countries of the licenses granted by
Coulter under Article 5 of this Agreement. In the event Coulter makes the
election in clause (i), it shall provide written notice to SB and, as of the
date of such notice, the terms of Section 13.4 shall apply with regard to such
MAJOR MARKET COUNTRY. In the event Coulter makes the election in clause (ii), it
shall provide written notice to SB and, as of the date of such notice, the terms
of Section 13.5 shall apply for such MAJOR MARKET COUNTRY. In the event Coulter
makes the election in clause (ii) and grants a non-exclusive license to a THIRD
PARTY to sell PRODUCT in such MAJOR MARKET COUNTRY [*] are [*].
(c) A separate "Minimum Distribution Payment" will be
calculated for each MAJOR MARKET COUNTRY for each applicable calendar year
(i.e., each calendar year following the third anniversary of the date of FIRST
COMMERCIAL SALE in such country) and will equal A times B times C, where:
A = [*]; and
B = [*]; and
C = [*]
provided that (i) [*]; and (ii) [*] at [*] [*] in [*].
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
60.
<PAGE> 74
7.2.3 THIRD PARTY DISTRIBUTION AGREEMENTS.
(a) SB may enter into marketing distribution agreements
regarding the PRODUCT with THIRD PARTIES in the MAJOR MARKET COUNTRIES only upon
the prior written consent of Coulter, such consent not to be unreasonably
withheld. SB may enter into marketing distribution agreements regarding the
PRODUCT with THIRD PARTIES in those parts of the NON-USA TERRITORY which are not
MAJOR MARKET COUNTRIES without the consent of Coulter, provided, however, SB
shall provide written notice to Coulter at least fifteen (15) business days
prior to entering into such distribution agreements. Such notice shall include
the name of the THIRD PARTY distributor and a brief description of the proposed
agreement. Notwithstanding anything in this Section 7.2.3(a), SB shall not be
obligated to obtain Coulter's consent to enter into agreements solely related to
supply chain distribution, including without limitation with radiopharmacies, in
the NON-USA TERRITORY.
(b) SB's obligations under this Agreement, as reasonably
applicable, will apply to any THIRD PARTIES that enter into permitted marketing
distribution or supply chain distribution agreements and sublicenses with SB
with regard to the PRODUCT. Sales of PRODUCT by distributors or sublicensees of
SB shall be handled as set forth in Section 8.4.
7.2.4 ROYALTIES IN NON-USA TERRITORY.
(a) TERRITORY B. Subject to Sections 7.2.2(b), 7.2.5,
7.2.6 and 11.7, within forty five (45) days of the end of each calendar quarter
following FIRST COMMERCIAL SALE in TERRITORY B, SB shall pay to Coulter
royalties on NET SALES of Products by SB or its AFFILIATES and sublicensees in
TERRITORY B at a rate of [*] of such NET SALES. Included with each payment shall
be an accounting setting forth NET SALES in such territory during the applicable
quarter, on a country-by-country basis expressed in unit sales, local currency
and dollar equivalents.
(b) TERRITORY C. Subject to Sections 7.2.5, 7.2.6 and
11.7, within forty five (45) days of the end of each calendar quarter following
FIRST COMMERCIAL SALE in TERRITORY C, SB shall pay to Coulter royalties on NET
SALES of PRODUCTS by SB or its AFFILIATES and sublicensees in TERRITORY C at a
rate of [*] of such NET SALES. Included with each payment shall be an accounting
setting forth NET SALES in such territory during the applicable quarter, on a
country-by-country basis expressed in unit sales, local currency and dollar
equivalents.
(c) NON-USA DEDUCTION RATE. In the event that either (a)
the Non-USA Deduction Rate (as defined below) exceeds [*] in any given
continuous four (4) calendar quarter period (a "Rolling Year") or (b) the
Non-USA Deduction Rate for any given Rolling Year is greater than [*] and at
least [*] higher than the Non-USA Deduction Rate for the previous Rolling Year
(for example, if in one Rolling Year the Non-USA Deduction Rate is [*] and in
the next Rolling Year the Non-USA Deduction Rate is [*] or greater), SB shall,
upon the written request of Coulter, provide Coulter with a reasonably detailed
written explanation of why the Non-USA Deduction Rate was at such a level.
Coulter shall make such a request to SB no later than sixty (60) days after the
end of a given Rolling Year and SB shall provide Coulter with such an
explanation within forty-five (45) days of Coulter's request. For purposes of
this Section 7.2.4(c), "Non-USA Deduction Rate" shall equal, for any given
calendar year, [*].
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
61.
<PAGE> 75
7.2.5 INCREASE OR DECREASE IN ROYALTIES BASED ON NON-USA COGS.
(a) In the event the NON-USA COGS plus Standard Royalties
(as defined in Section 7.2.5(f)), as expressed as a percent of NET SALES, for
any given country in the GUARANTEED COGS TERRITORY is greater than the
GUARANTEED COGS PLUS ROYALTIES PERCENT (as set forth in Section 7.2.5(c)) for
such country for the applicable calendar quarter, the royalties payable by SB to
Coulter for such quarter pursuant to Section 7.2.4 shall be adjusted downward so
that the NON-USA COGS plus royalty payable to Coulter for such country divided
by NET SALES for such country for such quarter equals the GUARANTEED COGS PLUS
ROYALTIES PERCENT, provided, however, in no event shall the Adjusted Royalties
(as defined in Section 7.2.5(f)) paid to Coulter for such country for such
quarter be less than the greater of (i) [*] of NET SALES for such country for
such quarter and (ii) [*] per Bexxar Therapy (as defined in Section 7.2.5(f)
below). This Section 7.2.5(a) shall have no further effect for a given country
in the GUARANTEED COGS TERRITORY following the twentieth (20th) Quarter After
First Commercial Sale in Such Country (as defined in Section 7.2.5(c)).
(b) In the event the NON-USA COGS plus Standard Royalties,
as expressed as a percent of NET SALES, for any given country in the GUARANTEED
COGS TERRITORY is less than the GUARANTEED COGS PLUS ROYALTIES PERCENT for such
country for the applicable calendar quarter, the royalties payable by SB to
Coulter for such quarter pursuant to Section 7.2.4 shall be adjusted upward so
that [*] of any difference between GUARANTEED COGS PLUS ROYALTIES PERCENT and
NON-USA COGS plus Standard Royalties, as expressed as a percent of NET SALES, is
added to the royalties which would otherwise be payable to Coulter under Section
7.2.4; provided, however, in no event shall the Adjusted Royalty paid to Coulter
for such country for such quarter be greater than [*] of NET SALES for such
country for such quarter. This Section 7.2.5(b) shall have no further effect for
a given country in the GUARANTEED COGS TERRITORY following the twentieth (20th)
Quarter After First Commercial Sale in Such Country (as defined in Section
7.2.5(c)).
(c) "GUARANTEED COGS PLUS ROYALTIES PERCENT" shall be
calculated on a country-by-country basis and a quarter-by-quarter basis and
shall be equal to the following:
<TABLE>
<CAPTION>
Quarter After First Guaranteed COGS
Commercial Sale in Plus Royalties
Such Country Percent
<S> <C>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
For the avoidance of doubt, in the event the FIRST COMMERCIAL SALE in a
country in the GUARANTEED COGS TERRITORY occurs at any time after the first day
of a quarter, NET SALES of PRODUCT made on the remaining days in such country in
such quarter shall be subject to the [*] GUARANTEED COGS PLUS ROYALTIES PERCENT.
For purposes of this Section 7.2.5(c), the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.
62.
<PAGE> 76
subsequent quarter after such quarter during which the FIRST COMMERCIAL SALE is
made in such country shall be deemed the first "Quarter After First Commercial
Sale in Such Country."
(d) In the event that, at any time following the [*] after
FIRST COMMERCIAL SALE in a country in the GUARANTEED COGS TERRITORY, the NON-USA
COGS plus Standard Royalties, as expressed as a percent of NET SALES, for such
country is less than [*] of NET SALES for such country for such quarter, the
royalties payable by SB to Coulter for such quarter pursuant to Section 7.2.4
shall be adjusted upward so that [*] of any difference between [*] of NET SALES
for such country for such quarter and the NON-USA COGS plus Standard Royalties,
as expressed as a percent of NET SALES, for such country is added to the
royalties which would otherwise be payable to Coulter under Section 7.2.4,
provided, however, in no event shall the Adjusted Royalty paid to Coulter for
such country for such quarter be greater than [*] of NET SALES for such country
for such quarter.
(e) In the event SB assumes responsibility for
manufacturing or having manufactured UNCONJUGATED ANTIBODY for any country in
the GUARANTEED COGS TERRITORY under Section 9.6.1, for the purpose of
calculating the NON-USA COGS for such country, [*].
(f) Included with the quarterly accounting SB provides to
Coulter pursuant to Section 7.2.4 shall be, for each country in the GUARANTEED
COGS TERRITORY: (i) [*], (ii) [*] and (iii) [*]. All of the foregoing
calculations shall be performed [*] and on [*] for each country and expressed in
dollars and as a percent of NET SALES for such country for such quarter. For
purposes of this Section 7.2.5, "Bexxar Therapy" shall mean radioimmunotherapy
using BEXXAR as administered (i), [*] (ii) [*] or (iii) [*].
(g) The Parties may discuss from time to time the need to
expand the GUARANTEED COGS TERRITORY, and upon mutual agreement of the Parties,
such GUARANTEED COGS TERRITORY may be expanded to include additional countries.
7.2.6 DECREASE IN ROYALTIES BASED ON SUBSTANTIAL COMPETITION. If,
during the term of this Agreement, substantial competition occurs in a country
of TERRITORY B or TERRITORY C between PRODUCT and one or more THIRD PARTY
products which [*] as of the Effective Date, and for so long as such substantial
competition is continuing, the royalty rates payable by SB to Coulter on NET
SALES of PRODUCT under Sections 7.2.4(a) and 7.2.4(b) in the country or
countries where such competition exists shall decrease by [*]. For purposes of
this Paragraph, "substantial competition" shall mean a total sales volume of
such THIRD PARTIES combined, in the particular country of the TERRITORY, of at
least [*] of NET SALES volume of such PRODUCT in such country, and "continuing"
shall mean a period of at least [*]. SB shall give Coulter written notice of
such substantial competition with suitable and reasonable supporting
documentation, including, for example, but not limited to, copies of market
survey reports, THIRD PARTY bid activities, competitive promotional materials,
and internal financial statements. Any reduction in the payment due from SB as a
result of such THIRD PARTY competition shall be applied retroactively to the
date on which substantial competition appeared in the TERRITORY as supported by
reasonable documentation and shall be available to SB [*].
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
63.
<PAGE> 77
7.3 NO DELEGATION. Subject to Section 7.2.3, each of the Parties may use
only its own employees or the employees of one or more of its AFFILIATES in the
course of exercising sales efforts with respect to its CO-PROMOTION rights under
this Agreement in TERRITORY A, unless an alternative arrangement in TERRITORY A
is approved in advance by the JCC or, unless Coulter loses its rights to
CO-PROMOTE PRODUCT in TERRITORY A under Section 7.1.15, or unless an alternative
arrangement is approved in advance by Coulter in the event of distribution or
sublicense agreements in the MAJOR MARKET COUNTRIES under Sections 7.2.3 or
5.1.5.
7.4 PRODUCT COMPLAINTS. Each Party shall maintain a record of all
complaints it receives with respect to the PRODUCT (each, a "Product
Complaint"). For purposes of this Section 7.4, a "Product Complaint" is a report
of an actual or potential failure of the PRODUCT to meet the standards set forth
in regulatory filings or in agreements among the Parties. Such failure may
involve the finished PRODUCT or one of its intermediate stages. The
responsibilities of the Parties with respect to (a) notification of the Product
Complaint from the receiving Party to the other Party and (b) the handling of
Product Complaints shall all be performed in accordance with a procedure to be
mutually agreed by the Parties after the Effective Date.
7.5 PRODUCT-RELATED INQUIRIES. For handling any medical or technical
Product-related inquiries throughout the TERRITORY, the responsibilities of the
Parties shall be performed in accordance with the allocation set forth on
EXHIBIT I.
7.6 ADVERSE DRUG EVENT REPORTING. For the reporting of adverse drug
experiences to regulatory authorities throughout the TERRITORY, the
responsibilities of the Parties shall be performed in accordance with the
pharmacovigilance agreement attached to this Agreement as EXHIBIT H.
ARTICLE 8
ACCOUNTS AND RECORDS; WITHHOLDING TAX
8.1 NO DOUBLE COUNTING OF COSTS. For the purpose of determining any cost
or expense which is shared by the Parties under this Agreement or otherwise
invoiced by one Party to another under this Agreement, any cost or expense
allocated by either Party to a particular cost category shall be consistent with
the terms of this Agreement and shall not also be allocated to another category.
In the event a cost or expense might arguably fall into more than one category,
the FINANCE SUBTEAM shall determine which category such cost or expense most
appropriately falls into. In the event the FINANCE SUBTEAM is unable to agree on
such a determination, the JDC and/or JCC, as applicable, shall make such a
determination.
8.2 RECORDS. Each Party shall keep accurate books and accounts of record
in connection with any of the following costs which are incurred by it in
accordance with this Agreement: DEVELOPMENT COSTS, MANUFACTURE DEVELOPMENT
COSTS, SECOND GENERATION LICENSED COMPOUND CANDIDATE DEVELOPMENT COSTS, SECOND
GENERATION LICENSED COMPOUND CANDIDATE MANUFACTURE DEVELOPMENT COSTS, COST OF
GOODS, MARKETING COSTS, SALES COSTS, OTHER OPERATING INCOME/EXPENSE,
DISTRIBUTION COSTS, NET SALES, OPERATING
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
64.
<PAGE> 78
PROFIT OR LOSS, OUT-OF-POCKET COSTS, QA/QC COSTS, EXISTING THIRD PARTY LICENSE
COSTS, NEW THIRD PARTY LICENSE COSTS, PATENT COSTS, and TRADEMARK COSTS, as well
as any other costs which are relevant for determining any cost or expense which
is shared by the Parties under this Agreement, charged by one Party to the other
Party under this Agreement, or paid by one Party to the other Party under this
Agreement. Such books and accounts of record shall be kept in sufficient detail
to permit accurate determination of all figures necessary for verification of
royalties, profits and other compensation required to be paid hereunder. Each
Party shall maintain such records for a period of three (3) years after the end
of the year in which they were generated.
8.3 AUDITS. Each Party, through an independent certified public
accountant reasonably acceptable to the other Party, shall have the right, at
its own expense, to access the books and records of the other Party for the sole
purpose of verifying financial statements furnished by such Party under this
Agreement. Such access shall be permitted during the term of the Agreement and
for six (6) months after its termination; provided, however, that such
examination shall not take place more often than once a year and shall not cover
such records for more than the preceding two (2) years, unless a material
discrepancy is found, in which case such examination shall include the records
for the preceding three (3) years, provided further that such accountant shall
report to the other Party only as to the accuracy of the statements and payments
made by the Party under examination to the other Party, and further provided
that such access shall be conducted after reasonable prior written notice to the
other Party and during ordinary business hours and shall not be more frequent
than once during each calendar year. The Parties agree to keep in strict
confidence all information learned in the course of such audit, except when it
is necessary to reveal such information in order to enforce its rights under
this Agreement. In the event such audit reveals an underpayment of five percent
(5%) or more of the amount actually due, the Party subject to the audit shall
reimburse the auditing Party for the costs of such audit in addition to promptly
remitting to the auditing Party the amount of any underpayment. In the event
such audit reveals an overpayment of five percent (5%) or more of the amount
actually due, the auditing Party shall promptly reimburse such amount to the
Party subject to the audit.
8.4 SALES BY SUBLICENSEES. In the event SB grants licenses or
sublicenses to others to make or sell the PRODUCT or grants THIRD PARTIES the
right to distribute the PRODUCT, as permitted by Sections 5.1.5, 7.2.3 or 7.3,
such licenses or sublicenses or distribution agreements shall include an
obligation for the licensee, sublicensee or distributor to account for and
report its NET SALES of such PRODUCTS on the same basis as if such sales were
NET SALES by SB, and Coulter shall receive royalties in the same amounts as if
the NET SALES of the licensee, sublicensee or distributor were NET SALES of SB.
8.5 WITHHOLDING. Coulter shall pay any and all taxes levied on account
of royalties it receives under this Agreement. If laws or regulations require
that taxes be withheld, SB will (i) deduct those taxes from the remittable
royalty, (ii) pay the taxes to the proper taxing authority, and (iii) send
evidence of the obligation together with proof of payment to Coulter within
sixty (60) days following such payment. SB will cooperate to help Coulter
minimize, in any lawful manner, the foregoing taxes and will provide Coulter
with reasonable assistance to enable Coulter to recover such taxes as permitted
by law.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
65.
<PAGE> 79
8.6 CURRENCY OF PAYMENT. All dollar amounts contained in this Agreement
are in United States Dollars (US$) and all payments to be made under this
Agreement shall be made in United States Dollars to a bank account designated by
the Party to be paid. Royalties earned shall first be determined in the currency
of the country in which they are earned and then converted into United States
Dollars using the rate of exchange used by SB for AFFILIATE conversions,
provided however, that such rate of exchange shall approximate fair market value
and, in the event of rapidly changing exchange rates, SB shall consult with
Coulter and the Parties shall agree on a mechanism to assure that exchange rates
are calculated to reflect fair market values on an ongoing basis. In each
country where the local currency is blocked and cannot be removed from the
country, royalties accrued in that country shall be paid to Coulter in the
country in local currency by deposit in a local bank designated by Coulter,
unless the Parties otherwise agree.
8.7 ACCOUNTING. No later than thirty (30) days after the end of each
calendar quarter, each Party shall submit to the other Party an accounting of
all costs incurred by such Party during such quarter which are to be shared with
the other Party as provided under Sections 5.3.1, 5.3.3(b), 11.5.1, 11.5.3 or
19.15. In the event payment is due by the Party which is receiving the
accounting to the incurring Party, the Party which owes the payment shall make
such payment to the other Party within thirty (30) days after it has received
such accounting. The Party receiving the payment shall issue an invoice to the
Party making the payment which invoice shall be in the amount to be paid.
ARTICLE 9
MANUFACTURING AND SUPPLY
9.1 COOPERATION. Coulter and SB will cooperate to determine
manufacturing strategy and objectives for the supply of UNCONJUGATED ANTIBODY
and RADIOLABELED ANTIBODY, consistent with the terms of this Article 9, the
Lonza Agreements, the BI Pharma Agreements, the Cytogen Agreement and the
Nordion Agreements (as such terms are defined below) and any NEW THIRD PARTY
MANUFACTURE AND SUPPLY CHAIN AGREEMENTS. Such strategy and objectives will be
coordinated through the JDC, the JCC and the MANUFACTURE AND SUPPLY CHAIN
SUBTEAM, as more fully described in Article 2.
9.2 PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS. It
is acknowledged that, as of the Effective Date, Coulter has entered into the
following agreement with Lonza Biologics PLC relating to the B1 MURINE ANTIBODY:
Agreement between Lonza Biologics PLC and Coulter Pharmaceutical, Inc.,
dated May 28, 1998 (the "Lonza Agreement").
It is acknowledged that, as of the Effective Date Coulter will have
entered into an agreement with BI Pharma relating to the manufacture of
UNCONJUGATED ANTIBODY which is B1 MURINE ANTIBODY (the "BI Pharma Agreement").
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
66.
<PAGE> 80
It is acknowledged that, as of the Effective Date Coulter has entered
into the following agreement with Cytogen Corporation relating to vialing of the
B1 MURINE ANTIBODY:
Manufacturing Agreement between Cytogen Corporation and Coulter
Pharmaceutical, Inc., dated August 31, 1996, (the "Cytogen Agreement").
It is acknowledged that, as of the Effective Date Coulter has entered
into the following agreements with MDS Nordion Inc. relating to the
radiolabeling of the B1 MURINE ANTIBODY:
Facilities Agreement between MDS Nordion Inc. and Coulter
Pharmaceutical, Inc., dated August 31, 1998, and
Supply Agreement between MDS Nordion Inc. and Coulter Pharmaceutical,
Inc., dated August 31, 1998 (collectively, the "Nordion Agreements").
Copies of all of the foregoing agreements (collectively, the
"PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS") have been
provided to SB, except that the BI Pharma Agreement will be provided to SB prior
to the Effective Date pursuant to Section 19.1.
9.3 CONFORMITY WITH PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY
CHAIN AGREEMENTS AND ANY NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS. As of the Effective Date, the terms of this Article 9, including,
but not limited to, those relating to forecasts, ordering procedures, regulatory
communication, regulatory inspections, QA/QC, inventory and testing procedures,
are consistent with the PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS. Coulter shall not amend any of the PRE-EXISTING THIRD PARTY
MANUFACTURE AND SUPPLY CHAIN AGREEMENTS, and neither Coulter nor SB shall enter
into any other THIRD PARTY manufacturing or supply chain agreements with Lonza,
BI Pharma, Cytogen or Nordion or any other THIRD PARTY relating to the PRODUCT
(collectively, "NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS")
without the prior approval of the JDC, upon the review and recommendation of the
MANUFACTURE AND SUPPLY CHAIN SUBTEAM. In order to facilitate such review and
approval, Coulter shall provide such proposed amendments to the PRE-EXISTING
THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS and such proposed NEW THIRD
PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS to the MANUFACTURE AND SUPPLY
CHAIN SUBTEAM in a timely manner and the MANUFACTURE AND SUPPLY CHAIN SUBTEAM
and JDC shall consider such proposals in a timely manner. In the event that
Coulter, with the approval of the JDC, does enter into one or more NEW THIRD
PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS with Lonza, BI Pharma, Cytogen,
Nordion or any other THIRD PARTY and the terms of such NEW THIRD PARTY
MANUFACTURE AND SUPPLY CHAIN AGREEMENTS are inconsistent with the terms of this
Article 9, the Parties, upon the recommendation of the JDC, will amend the terms
of this Article 9 to make it consistent with the terms of such NEW THIRD PARTY
MANUFACTURE AND SUPPLY CHAIN AGREEMENTS.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
67.
<PAGE> 81
9.4 RESPONSIBILITY FOR MANUFACTURE, SUPPLY AND DISTRIBUTION.
9.4.1 UNCONJUGATED ANTIBODY. Except as set forth in Sections 9.6
and 9.16, Coulter shall manufacture or have manufactured and supply all
requirements in the TERRITORY for UNCONJUGATED ANTIBODY, whether for DEVELOPMENT
or commercial sale in accordance with the Specifications (as defined in Section
9.4.4). Except as set forth in Sections 9.6 and 9.16, SB shall obtain all
requirements in the TERRITORY for UNCONJUGATED ANTIBODY, whether for DEVELOPMENT
or commercial sale, from Coulter.
9.4.2 RADIOLABELED ANTIBODY FOR DEVELOPMENT. [*] or [*] and [*],
Coulter shall manufacture or have manufactured and supply all requirements of
RADIOLABELED ANTIBODY for DEVELOPMENT in the TERRITORY in accordance with
Specifications (as defined in Section 9.4.4). [*] and [*] and [*], SB shall
obtain all requirements for RADIOLABELED ANTIBODY for DEVELOPMENT in the
TERRITORY from Coulter, except in the event Coulter does not have sufficient
capacity, in which case the Parties shall proceed in the manner described in
Section 9.17.
9.4.3 RADIOLABELED ANTIBODY FOR COMMERCIAL SALE.
(a) Coulter shall manufacture or have manufactured and
supply all requirements of RADIOLABELED ANTIBODY for commercial sale in NORTH
AMERICA except as otherwise provided by Section 9.17. SB shall obtain all
requirements for RADIOLABELED ANTIBODY for commercial sale in NORTH AMERICA from
Coulter except as otherwise provided by Section 9.17.
(b) [*], Coulter shall manufacture or have manufactured
and supply all requirements of RADIOLABELED ANTIBODY for commercial sale in
TERRITORY B and TERRITORY C which the Parties agree Coulter is feasibly able to
supply, given transportation and distribution constraints. [*], SB shall obtain
all requirements for RADIOLABELED ANTIBODY for commercial sale in the TERRITORY
from Coulter, except in the event Coulter does not have sufficient capacity, in
which case the Parties shall proceed in the manner described in Section 9.17. In
no event will Coulter be obligated to supply RADIOLABELED ANTIBODY hereunder
[*]. In the event [*] under [*] for [*] to the [*].
9.4.4 SPECIFICATIONS. As used in this Section 9.4, and throughout
the Agreement, the term "Specifications" shall mean the requirements and
standards pertaining to UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY
(depending upon context) and consistent with filings made for REGULATORY
APPROVAL and the PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS, which Specifications shall be reduced to writing by the JDC after
the Effective Date. After the Effective Date such Specifications shall be
subject to ongoing review by the Parties and may be modified from time to time,
which modifications shall be approved by the JDC. The Specifications shall be
release or stability specifications, as applicable, and each reference to
Specifications shall mean the type of such specifications appropriate to
context.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
68.
<PAGE> 82
9.4.5 NON-COMPLIANCE WITH SPECIFICATIONS.
(a) Coulter shall provide a Certificate of Analysis and a
Certificate of Conformance (together, a "COA") from the THIRD PARTY manufacturer
to SB as well as any report of separate quality control analysis of UNCONJUGATED
ANTIBODY or RADIOLABELED ANTIBODY performed by Coulter with each shipment of
UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY specifying that such UNCONJUGATED
ANTIBODY or RADIOLABELED ANTIBODY conforms with the Specifications (as defined
in Section 9.4.4). Coulter shall provide the results of such analysis along with
any supporting data. SB shall be under no obligation to accept any shipment of
UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY without an accompanying COA. If
the quality of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY supplied by
Coulter under this Agreement is found not to conform to the Specifications as
judged by comparison of the Specifications and the COA (as well as by comparison
to information regarding the quality of UNCONJUGATED ANTIBODY and RADIOLABELED
ANTIBODY developed by SB upon re-testing of such UNCONJUGATED ANTIBODY and
RADIOLABELED ANTIBODY, such re-testing to be performed by SB only in the event
that SB is legally required to do so by the relevant regulatory authorities), SB
shall notify Coulter of such nonconformity no later than thirty (30) days after
receipt thereof in the case of UNCONJUGATED ANTIBODY and no later than three (3)
days after receipt thereof in the case of RADIOLABELED ANTIBODY, and, subject to
Section 9.4.5(b), Coulter shall replace, at no additional expense to SB, such
UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY with new UNCONJUGATED ANTIBODY or
RADIOLABELED ANTIBODY which does conform to the Specifications within the
minimum number of days after receipt of SB's notification under this Section
9.4.5 that such replacement is permitted under the relevant PRE-EXISTING THIRD
PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS and NEW THIRD PARTY MANUFACTURE
AND SUPPLY CHAIN AGREEMENTS; provided that the foregoing shall not be
interpreted to change in any way Coulter's ongoing supply obligations with
respect to other UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY ordered by SB in
conformance with the supply procedures outlined in this Agreement.
(b) If Coulter disagrees with SB's determination that the
rejected shipment did not meet the Specifications, a sample of the rejected
shipment shall be submitted to an independent, qualified THIRD PARTY laboratory
that is mutually acceptable and selected by the parties promptly in good faith.
Such laboratory shall determine whether the rejected UNCONJUGATED ANTIBODY or
RADIOLABELED ANTIBODY (as applicable) meets the Specifications, and such
laboratory's determination shall be final and determinative for purposes of this
Agreement, and Coulter's obligation to replace the non-conforming UNCONJUGATED
ANTIBODY or RADIOLABELED ANTIBODY outlined in Section 9.4.5(a) shall be stayed
pending the result of such determination. The Party against whom the laboratory
rules shall bear all costs of the laboratory testing. If the laboratory rules
that the shipment failed to meet Specifications, the replacement shipment shall
be at no charge to SB (provided SB paid for the initial shipment). If the
laboratory rules the rejected shipment met the Specifications, then SB shall
accept such batch for use and shall reimburse Coulter for the replacement
shipment (including all costs of shipping and insurance). Coulter shall give SB
written instructions as to how SB should, at Coulter's expense, dispose of the
non-conforming material, and such instructions shall comply with all appropriate
governmental requirements.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
69.
<PAGE> 83
(c) In the event that a Party assumes responsibility for
manufacturing UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY under Sections
9.6.1 or 9.6.2, the SB Supply Agreement or the Coulter Supply Agreement, as the
case may be, shall contain provisions substantially similar to those set forth
in this Section 9.4.5.
9.4.6 DISTRIBUTION. Distribution of the PRODUCT in TERRITORY A
shall be handled in the manner described in Section 7.1.10. Distribution of the
PRODUCT outside TERRITORY A shall be handled exclusively by SB.
9.5 ALLOCATION IN THE EVENT OF PRODUCT SHORTAGES.
9.5.1 ALLOCATION BETWEEN DEVELOPMENT AND COMMERCIALIZATION. In
the event of shortages of UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY,
available supplies shall be allocated first to permit any ongoing clinical
trials to continue on schedule unless the Parties otherwise agree at the time.
Supplies remaining available after that initial allocation shall be allocated as
between other DEVELOPMENT activities and commercialization activities by the
JCC. The use of additional material allocated for DEVELOPMENT activities shall
be determined by the JDC.
9.5.2 ALLOCATION OF SHORTAGES BETWEEN TERRITORIES (COMMERCIAL
SUPPLY). In the event of shortages of UNCONJUGATED ANTIBODY or RADIOLABELED
ANTIBODY, any material remaining available for commercial use after the
allocations to DEVELOPMENT activities made under Section 9.5.1 shall be
allocated by the JCC on a country-by-country basis, based upon [*] or some other
mechanism to be mutually agreed upon by the Parties, provided, however, at least
[*] of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY available for commercial
sale [*].
9.5.3 NO LIABILITY FOR PRODUCT SHORTAGES. The Parties recognize
that there is no assurance that PRODUCT supply will be sufficient to meet
demand. Neither Party shall be liable to the other for a failure to supply
UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY, provided, however, that a Party
may still be liable in the event of a failure to comply with the allocation
mechanisms of Sections 9.5.1 or 9.5.2.
9.6 CHANGE IN RESPONSIBILITY FOR MANUFACTURE AND SUPPLY.
9.6.1 UNCONJUGATED ANTIBODY BY SB. If at any time during the term
of the Agreement, SB desires to have responsibility for manufacture for supply
of UNCONJUGATED ANTIBODY, in whole or in part, for sale in the TERRITORY,
transferred from Coulter to SB, SB shall [*] to [*]. [*] in [*] for [*] (the "SB
Supply Agreement"). The SB Supply Agreement shall include [*]. [*] a [*] the [*]
to [*] of [*], the [*]. In any event, the decision whether to transfer the
responsibility for supply of UNCONJUGATED ANTIBODY from Coulter to SB pursuant
to an SB Supply Agreement [*]. If the Parties elect to enter into such SB Supply
Agreement, to the extent a transfer under such SB Supply Agreement requires a
modification of this Article 9, the Parties will promptly amend this Agreement
to facilitate such modification. If the Parties elect to transfer responsibility
for manufacture of bulk UNCONJUGATED ANTIBODY from Coulter to SB as set forth in
this Section 9.6.1, the Parties shall confer regarding assistance, [*], to be
provided to SB by Coulter to enable such transfer and the terms under which such
assistance will be
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
70.
<PAGE> 84
provided. In fulfilling any transferred manufacture obligations hereunder, SB
[*] of [*]. Any transfer under this Section 9.6.1 pursuant to [*] SB Supply
Agreement will be consistent with Coulter's obligations under the PRE-EXISTING
THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS and any NEW THIRD PARTY
MANUFACTURE AND SUPPLY CHAIN AGREEMENTS.
9.6.2 UNCONJUGATED ANTIBODY OR RADIOLABELED ANTIBODY BY COULTER.
As of the Effective Date, it is Coulter's intention that all manufacture and
supply of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY for which it has
responsibility under this Agreement will be performed by THIRD PARTIES pursuant
to PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS and/or NEW
THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS. If at any time during the
term of the Agreement, Coulter believes it is in the best interest of the
collaboration for Coulter to manufacture and supply UNCONJUGATED ANTIBODY and/or
RADIOLABELED ANTIBODY itself, in whole or in part, for sale in the TERRITORY,
Coulter shall [*]. [*] is [*] in [*]. In any event, the decision whether to have
Coulter supply UNCONJUGATED ANTIBODY and/or RADIOLABELED ANTIBODY itself [*]. If
the Parties decide Coulter should supply UNCONJUGATED ANTIBODY and/or
RADIOLABELED ANTIBODY itself, the Parties [*] one or more agreements to
accomplish such purpose (a "Coulter Supply Agreement"). If the Parties elect to
enter into such Coulter Supply Agreement, to the extent a transfer under such
Coulter Supply Agreement requires a modification of this Article 9 or the rest
of this Agreement, the Parties will promptly amend this Agreement to facilitate
such modification. In fulfilling any transferred manufacture obligations
hereunder, Coulter will [*] for [*]. Any transfer under this Section 9.6.2
pursuant to the negotiation of a Coulter Supply Agreement will be consistent
with Coulter's obligations under the PRE-EXISTING THIRD PARTY MANUFACTURE AND
SUPPLY CHAIN AGREEMENTS and any NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS.
9.6.3 If a Party incurs costs in making a proposal with regard to
the transfer of manufacturing responsibility under Sections 9.6.1 or 9.6.2, it
shall do so for its own account and without charge to the other Party under this
Agreement.
9.7 COST OF GOODS FOR UNCONJUGATED ANTIBODY AND RADIOLABELED ANTIBODY
FOR DEVELOPMENT AND MANUFACTURE DEVELOPMENT; MANUFACTURE DEVELOPMENT COSTS
(INCLUDING CAPITAL EXPENDITURES).
9.7.1 COST OF GOODS FOR UNCONJUGATED ANTIBODY AND RADIOLABELED
ANTIBODY FOR DEVELOPMENT AND MANUFACTURE DEVELOPMENT. Coulter shall provide
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY manufactured under Sections
9.4.1 and 9.4.2, respectively, for DEVELOPMENT and MANUFACTURE DEVELOPMENT in
the TERRITORY at its COST OF GOODS. Such amounts for DEVELOPMENT and MANUFACTURE
DEVELOPMENT in the TERRITORY shall be borne by the Parties in accordance with
the [*] and 3.3.3. Coulter shall not invoice SB for the percentage of COST OF
GOODS to be borne by SB for the use of UNCONJUGATED ANTIBODY and RADIOLABELED
ANTIBODY in Territory A Trials (as defined in Section 3.2.3) and Cross-Territory
Trials (as defined in Section 3.2.3) [*] the [*] (as defined in [*]) [*].
Coulter shall be reimbursed by SB for the percentage of COST OF GOODS to be
borne by SB for the use of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY in
(i) the Non-USA Territory Trials (defined in Section 3.2.3) [*] (ii) in all
clinical trials [*] the [*] and (iii) for MANUFACTURE
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
71.
<PAGE> 85
DEVELOPMENT pursuant to Section 3.3.3, each within thirty (30) days of SB's
receipt of an invoice therefor from Coulter provided such invoice is submitted
to SB after Coulter's receipt of such UNCONJUGATED ANTIBODY and RADIOLABELED
ANTIBODY from the THIRD PARTY manufacturer thereof and provided further that
such reimbursement shall be paid to the extent that such UNCONJUGATED ANTIBODY
and RADIOLABELED ANTIBODY has met the appropriate quality assurance and quality
control tests. [*], provided that SB's obligation to pay such invoice shall be
subject to Section 9.4.5.
9.7.2 MANUFACTURE DEVELOPMENT COSTS (INCLUDING [*]). Any
MANUFACTURE DEVELOPMENT COSTS, including [*], which are incurred by either Party
with respect to the MANUFACTURE DEVELOPMENT for a process to be used to
manufacture UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY shall be handled in
accordance with the provisions of Section 3.3.3.
9.8 COST OF GOODS FOR UNCONJUGATED ANTIBODY AND RADIOLABELED ANTIBODY
FOR COMMERCIAL SALE.
9.8.1 UNCONJUGATED ANTIBODY. As consideration for the manufacture
and supply of UNCONJUGATED ANTIBODY under Section 9.4.1 for commercial sale in
TERRITORY A, Coulter shall be reimbursed by SB for [*] of Coulter's COST OF
GOODS of such UNCONJUGATED ANTIBODY within thirty (30) days of SB's receipt of
an invoice therefor from Coulter. As consideration for the manufacture and
supply of UNCONJUGATED ANTIBODY under Section 9.4.1 for commercial sale in
TERRITORY B and TERRITORY C, subject to the last sentence of Section 7.2.2(b)
Coulter shall be reimbursed by SB for Coulter's COST OF GOODS of such
UNCONJUGATED ANTIBODY within thirty (30) days of SB's receipt of an invoice
therefor from Coulter. Coulter may send an invoice to SB upon Coulter's receipt
of an invoice from the THIRD PARTY supplier of the UNCONJUGATED ANTIBODY but
only to the extent that Coulter has determined that such supply of UNCONJUGATED
ANTIBODY has met all appropriate quality assurance and quality control tests.
Each such Coulter invoice provided under this Section 9.81 shall be accompanied
by [*], provided that SB's obligation to pay such invoice shall be subject to
Section 9.4.5. In TERRITORY A, such reimbursed amounts shall be included as part
of the COST OF GOODS element of SB's Operating Expenses for such quarter in
accordance with Section 7.1.14 for the quarter in which such UNCONJUGATED
ANTIBODY is sold, with Coulter's [*] ownership in the UNCONJUGATED ANTIBODY sold
during said quarter in TERRITORY A to be included in the calculation of the COST
OF GOODS element of Coulter's Operating Expenses for such quarter in accordance
with Section 7.1.14 for the quarter in which such UNCONJUGATED ANTIBODY is sold.
In TERRITORY B and TERRITORY C, such amounts shall be included in the NON-USA
COGS for the quarter in which such UNCONJUGATED ANTIBODY is sold.
9.8.2 RADIOLABELED ANTIBODY. As consideration for
(i) the manufacture and supply of RADIOLABELED
ANTIBODY under Section 9.4.3(a) for commercial sale in NORTH AMERICA, and
(ii) the manufacture and supply of RADIOLABELED
ANTIBODY under Section 9.4.3(b) for commercial sale in TERRITORY B and TERRITORY
C (under the conditions set forth in Section 9.4.3(b)),
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
72.
<PAGE> 86
Coulter shall be reimbursed by SB for (i) [*] of Coulter's COST OF GOODS for
converting UNCONJUGATED ANTIBODY into RADIOLABELED ANTIBODY related to such
RADIOLABELED ANTIBODY for commercial sale in TERRITORY A and (ii) subject to the
last sentence of Section 7.2.2(b), [*] of Coulter's COST OF GOODS for converting
UNCONJUGATED ANTIBODY into RADIOLABELED ANTIBODY related to such RADIOLABELED
ANTIBODY for commercial sale in TERRITORY B and TERRITORY C, within thirty (30)
days of SB's receipt of an invoice therefor from Coulter. Coulter may send an
invoice to SB upon Coulter's receipt of an invoice from the THIRD PARTY supplier
of the RADIOLABELED ANTIBODY but only to the extent that Coulter has determined
that such supply of RADIOLABELED ANTIBODY has met all appropriate quality
assurance and quality control tests. Each such Coulter invoice provided under
this Section 9.8.2 shall be accompanied [*], provided that SB's obligation to
pay such invoice shall be subject to Section 9.4.5. In TERRITORY A, such
reimbursed amounts shall be included as part of the COST OF GOODS element of
SB's Operating Expenses for such quarter in accordance with Section 7.1.14 for
the quarter in which such RADIOLABELED ANTIBODY is sold, with Coulter's [*]
ownership in the RADIOLABELED ANTIBODY sold during said quarter in TERRITORY A
to be included in the calculation of the COST OF GOODS element of Coulter's
Operating Expenses for such quarter in accordance with Section 7.1.14 for the
quarter in which such RADIOLABELED ANTIBODY is sold, less any corresponding COST
OF GOODS already included under Section 9.8.1. In TERRITORY B and TERRITORY C,
such amounts shall be included in the NON-USA COGS for the quarter in which such
RADIOLABELED ANTIBODY is sold.
9.9 COST OF UNCONJUGATED ANTIBODY IN EVENT OF TRANSFER OF
RESPONSIBILITY.
(a) SB RESPONSIBILITY UNDER SECTION 9.6.1. In the event
responsibility for manufacture and supply of UNCONJUGATED ANTIBODY is
transferred from Coulter to SB pursuant to Section 9.6.1, SB will provide such
UNCONJUGATED ANTIBODY for sale in TERRITORY A at the prices [*] attached to such
SB Supply Agreement. Coulter will reimburse SB for the manufacture and supply of
UNCONJUGATED ANTIBODY under Section 9.6.1 for commercial sale in TERRITORY A. In
TERRITORY A, such reimbursed amounts shall be included as part of the COST OF
GOODS element of Coulter's Operating Expenses for such quarter in accordance
with Section 7.1.14 for the quarter in which such UNCONJUGATED ANTIBODY is sold,
with [*] ownership in the UNCONJUGATED ANTIBODY sold during said quarter in
TERRITORY A to be included in the calculation of the COST OF GOODS element of
SB's Operating Expenses for such quarter in accordance with Section 7.1.14 for
the quarter in which such UNCONJUGATED ANTIBODY is sold. In TERRITORY B and
TERRITORY C, SB shall bear [*] of such cost and such amounts shall be included
in the NON-USA COGS for the quarter in which such UNCONJUGATED ANTIBODY is sold,
subject to Section 7.2.5(e).
(b) COULTER RESPONSIBILITY UNDER SECTION 9.6.2. In the event
responsibility for manufacture and supply of UNCONJUGATED ANTIBODY is
transferred from a THIRD PARTY supplier to Coulter pursuant to Section 9.6.2,
Coulter will provide such UNCONJUGATED ANTIBODY for sale in TERRITORY A at the
prices set forth on the [*] attached to such Coulter Supply Agreement. SB will
reimburse Coulter for the manufacture and supply of UNCONJUGATED ANTIBODY under
Section 9.6.2 for commercial sale in TERRITORY A according to the same
procedures outlined in Section 9.8.1 for SB reimbursement to Coulter. In
TERRITORY A, such reimbursed amounts shall be included as part of the COST OF
GOODS element of SB's Operating
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
73.
<PAGE> 87
Expenses for such quarter in accordance with Section 7.1.14 for the quarter in
which such UNCONJUGATED ANTIBODY is sold, with Coulter's [*] ownership in the
UNCONJUGATED ANTIBODY sold during said quarter in TERRITORY A to be included in
the calculation of the COST OF GOODS element of Coulter's Operating Expenses for
such quarter in accordance with Section 7.1.14 for the quarter in which such
UNCONJUGATED ANTIBODY is sold. In TERRITORY B and TERRITORY C, SB shall bear [*]
of such cost and such amounts shall be included in the NON-USA COGS for the
quarter in which such UNCONJUGATED ANTIBODY is sold.
9.10 EUROPEAN FACILITY.
9.10.1 OVERVIEW. Subject to the time periods and mechanisms
described in this Section 9.10, either SB shall establish a [*] to supply the
requirements of EUROPE for [*] (the "EUROPEAN FACILITY") or Coulter shall have
the right described in Section 9.10.4 to adjust or terminate SB's license in
EUROPE. If SB does proceed to establish a EUROPEAN FACILITY, [*]. The EUROPEAN
FACILITY, if established by SB, shall be designed and constructed to supply [*]
for commercial sale in EUROPE, in accordance with all applicable laws and
regulations, [*]. [*].
9.10.2 SELECTION OF SB OPTION.
(a) Within [*] of the Effective Date, SB (with the
reasonable assistance of Coulter, such assistance including, without limitation,
the provision of necessary information by Coulter to SB as reasonably requested
by SB) shall have identified the options for a EUROPEAN FACILITY and shall have
communicated such options, along with an analysis of the advantages and
disadvantages of each option, to the MANUFACTURE AND SUPPLY CHAIN SUBTEAM which
shall have responsibility for monitoring SB's progress in identifying options
for the EUROPEAN FACILITY and fulfilling SB's obligations under this Section
9.10. Included with such analysis shall be a determination of the applicable
European Facility Commencement Date (as defined in Section 9.10.3(ii)), relative
to FIRST COMMERCIAL SALE in [*] for each EUROPEAN FACILITY option being
considered by SB.
(b) In the event that at some point following SB's
evaluation of the options for a EUROPEAN FACILITY identified under Section
9.10.2(a), SB determines that its first choice is to supply TERRITORY B
(excluding [*]) out of the [*] (as defined in [*]), then SB shall provide notice
of such election to Coulter, specifying in such notice SB's second choice as a
supply site. Within sixty (60) days of receiving such notice from SB, Coulter
shall advise SB whether it approves such use of the [*]; provided, however, in
no event shall Coulter be obligated to advise SB of its decision regarding such
approval earlier than [*] to the European Facility Commencement Date (as defined
in Section 9.10.3(ii)) for SB's second choice as a supply site as specified in
the SB notice to Coulter. Coulter's consent, not to be unreasonably withheld,
shall be required in order to designate the [*] as the EUROPEAN FACILITY. If
Coulter does not consent to such designation, then SB shall proceed with its
second choice as a supply site, or if SB does not have a second choice, it shall
so notify Coulter. In the event Coulter does not approve the use of the [*] and
SB has notified Coulter that it has no second choice, then SB shall be deemed to
have given the notice under Section 9.10.2(c).
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
74.
<PAGE> 88
(c) At any time, SB may notify Coulter in writing that it
has determined not to construct a EUROPEAN FACILITY. In such event, Coulter's
rights under Section 9.10.4 shall immediately become effective.
(d) At the request of SB, Coulter shall provide reasonable
assistance, within Coulter's area of expertise, to help SB identify and validate
an appropriate site for the EUROPEAN FACILITY in order to allow SB to meet its
obligations under Section 9.10 to supply [*] for sale in TERRITORY B (excluding
[*]) and TERRITORY C (excluding [*]). Provision of such assistance shall
include, but not be limited to, (i) [*], and (ii) [*]. In the event that SB
requests that Coulter perform work under this Section 9.10.2(d), SB shall
reimburse Coulter for all OUT-OF-POCKET COSTS incurred by Coulter with respect
to such performance within thirty (30) days of receipt of an invoice from
Coulter, provided that travel costs incurred by Coulter under this Section
9.10.2(d) shall be based on business class airfares for travel outside the
United States, coach airfares for travel inside the United States and reasonable
business accommodations. All work or other assistance provided to SB under this
Section 9.10.2(d), such as, without limitation, [*], meetings reasonably
incidental to other business between the Parties, and the provision of existing
Coulter reports, data and information to assist SB with SB's activities under
this Section (such as the provision of information to assist SB with responses
to questions or requests from regulatory authorities) shall be provided to SB
without reimbursement for FTE resources, except in the case where (i) [*] or
(ii) Coulter is requested to undertake an individual project that requires more
than [*] of effort, provided that Coulter provides SB advance notice (which may
be verbal) that the project is of [*]. In the event that such trip is made under
clause (i) or a project is undertaken under clause (ii) by such Coulter FTE, SB
shall reimburse Coulter on an FTE rate basis for the hours spent rendering such
assistance, at an FTE rate of [*].
9.10.3 DEFINITIONS. For purposes of this Section 9.10, the
following definitions shall apply:
(i) "European Facility Completion Date" shall mean
that date which is the earlier of
(1) [*] after the later of the date of FIRST
COMMERCIAL SALE in [*] and the date of FIRST COMMERCIAL SALE in [*]; or
(2) [*] after the earlier of the date of
FIRST COMMERCIAL SALE in [*] or the date of FIRST COMMERCIAL SALE in [*].
(ii) "European Facility Commencement Date" shall
mean that date by which the MANUFACTURE AND SUPPLY CHAIN SUBTEAM determines it
would be reasonably necessary for SB to have entered into an agreement with a
THIRD PARTY pursuant to which such THIRD PARTY will commence construction of the
EUROPEAN FACILITY in such time as to finish construction and have such EUROPEAN
FACILITY available to manufacture and supply SB's estimated requirements of [*]
for commercial sale in [*], in accordance with all applicable European laws and
regulations, by the European Facility Completion Date, provided, however, in no
event will the European Facility Commencement Date be later than eighteen (18)
months prior to the European Facility Completion Date.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
75.
<PAGE> 89
9.10.4 SB PERFORMANCE; COULTER REMEDIES. Following the
determination of its facility choice, as provided above, SB shall, not later
than the European Facility Commencement Date (as defined in Section 9.10.3(ii)),
execute a binding agreement with a THIRD PARTY for the construction of the
EUROPEAN FACILITY ("European Facility Agreement"). SB shall thereafter use
COMMERCIALLY REASONABLE EFFORTS to complete the construction of such facility
and have it ready for commercial supply not later than the European Facility
Completion Date (as defined in Section 9.10.3(i)). In the event that (i) SB
notifies Coulter that it does not intend to enter into a European Facility
Agreement, (ii) SB has not entered into a European Facility Agreement by the
European Facility Commencement Date or (iii) at any time after [*] after the
European Facility Commencement Date, the MANUFACTURE AND SUPPLY CHAIN SUBTEAM
makes a good faith determination that, for reasons other than a FORCE MAJEURE
OCCURRENCE, the EUROPEAN FACILITY is not reasonably likely to be completed and
available to manufacture and supply SB's estimated requirements of [*] for
commercial sale in EUROPE by [*] after the European Facility Completion Date (as
defined in Section 9.10.3(i)), Coulter may, at any time during the [*] month
period after such occurrence described in clause (i), (ii) or (iii), give notice
to SB that Coulter intends to (A) adjust the licenses granted by Coulter under
this Agreement to exclude EUROPE from the TERRITORY or (B) adjust the licenses
granted by Coulter under Article 5 of this Agreement to become non-exclusive for
EUROPE. In the event Coulter elects option (A), it shall provide written notice
to SB and, on the [*] anniversary of the date of such notice, the terms of
Section 13.4 shall apply for EUROPE. In the event Coulter elects option (B), it
shall provide written notice to SB and, as of the date of such notice, the terms
of Section 13.5 shall apply for EUROPE.
9.10.5 MILESTONE PAYMENT.
(a) In the event that the [*] (as defined in [*]) is
selected by SB as the EUROPEAN FACILITY and new construction of less than
[*] is required to establish the [*] as the EUROPEAN FACILITY, SB will notify
Coulter of such selection and within thirty (30) days of such selection date
(which shall, in any event, be no later than thirty (30) days following the
European Facility Commencement Date) (as defined in Section 9.10.3(ii)), SB
shall pay to Coulter [*].
(b) In the event that (A) a facility other than the [*] is
selected by SB as the EUROPEAN FACILITY or (B) the [*] is selected by SB as the
EUROPEAN FACILITY but new construction in excess of [*] is required to establish
the [*] as the EUROPEAN FACILITY, SB will notify Coulter of such selection and
will have the following payment obligations to Coulter:
(i) within thirty (30) days after initiation of
construction of the EUROPEAN FACILITY, SB shall pay to Coulter [*]; and
(ii) within thirty (30) days of filing of an MAA
supplement to manufacture PRODUCT at such EUROPEAN FACILITY for commercial
supply, SB shall pay to Coulter an additional [*]; and
(iii) within thirty (30) days of receipt of
approval of an MAA supplement to manufacture PRODUCT at such EUROPEAN FACILITY
for commercial supply and other necessary REGULATORY APPROVALs, if any, SB shall
pay to Coulter an additional [*].
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
76.
<PAGE> 90
(c) All amounts paid under this Section 9.10.5 shall be
non-refundable and non-creditable, provided, however, in the event of
termination of this Agreement by SB due to material breach by Coulter, the
foregoing shall not preclude SB from seeking whatever damages are available at
law.
9.10.6 REMAINDER OF THE NON-USA TERRITORY. In the event that,
pursuant to Section 9.10.4 Coulter adjusts the licenses granted under this
Agreement to exclude EUROPE from the TERRITORY or adjusts the licenses granted
under this Agreement to become non-exclusive for EUROPE, SB shall notify Coulter
whether it intends to develop and commercialize PRODUCT for sale in the
remainder of TERRITORY B (i.e., all countries other than those of EUROPE) and
TERRITORY C. If SB elects not to develop and commercialize Product for sale in
the remainder of TERRITORY B and TERRITORY C, the licenses granted by Coulter
under this Agreement shall be automatically adjusted to exclude the remainder of
TERRITORY B and TERRITORY C and the terms of Section 13.4 shall apply to such
countries. If SB elects to develop and commercialize PRODUCT for sale in the
remainder of TERRITORY B and TERRITORY C, Coulter shall be under no obligation
to supply PRODUCT to SB for such DEVELOPMENT and commercialization (except for
Canada and Mexico) and SB shall continue to have the obligations with respect to
such countries as are set forth in Sections 7.2.1 and 7.2.2. In the event SB
elects to develop and commercialize PRODUCT for sale in the remainder of
TERRITORY B and TERRITORY C and Coulter offers to supply PRODUCT for such
countries, but SB is not using good faith efforts to obtain REGULATORY APPROVAL
in such country and sell PRODUCT in such country, the licenses granted by
Coulter under this Agreement shall be automatically adjusted to exclude such
countries and the terms of Section 13.4 shall apply to such countries.
9.11 TERM OF MANUFACTURE AND SUPPLY. The term of the manufacture and
supply of PRODUCT under this Article 9 will be the term of this Agreement.
9.12 FORECASTS.
9.12.1 UNCONJUGATED ANTIBODY AND RADIOLABELED ANTIBODY.
(a) SUPPLY FOR DEVELOPMENT PURPOSES. During the first five
(5) business days of (i) each month in the case of RADIOLABELED ANTIBODY and
(ii) every third month in the case of UNCONJUGATED ANTIBODY, the MANUFACTURE AND
SUPPLY CHAIN SUBTEAM will confer regarding each Party's requirements for
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY for use in DEVELOPMENT in the
TERRITORY for an appropriate amount of time following the date of such
conference, depending upon the lead time for ordering such UNCONJUGATED ANTIBODY
and RADIOLABELED ANTIBODY for DEVELOPMENT and MANUFACTURE DEVELOPMENT supplies
from THIRD PARTY suppliers. This approach to production planning for DEVELOPMENT
and MANUFACTURE DEVELOPMENT purposes may be modified as mutually agreed to by
the Parties based upon the Parties' experience in conducting clinical trials and
other DEVELOPMENT and MANUFACTURE DEVELOPMENT activities.
(b) COMMERCIAL SUPPLY. Upon receipt of REGULATORY APPROVAL
for a PRODUCT in any country in the TERRITORY, the Parties agree that
UNCONJUGATED ANTIBODY for commercial use will be ordered pursuant to a
forecasting mechanism developed by the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
77.
<PAGE> 91
MANUFACTURE AND SUPPLY CHAIN SUBTEAM. Such forecasting mechanism shall (i) meet
the needs of the Parties for commercial supply of UNCONJUGATED ANTIBODY and (ii)
be consistent with the terms and conditions of the applicable PRE-EXISTING THIRD
PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENT and any NEW THIRD PARTY MANUFACTURE
AND SUPPLY CHAIN AGREEMENT. In the event that one of the Parties assumes
responsibility for the manufacture and supply of the UNCONJUGATED ANTIBODY
pursuant to Section 9.6, 9.16 or 9.17, the Parties shall meet to determine an
appropriate forecasting mechanism in the event of such transfer of
responsibility. If the Parties determine that greater flexibility in forecasting
supply of UNCONJUGATED ANTIBODY is required than is permitted under the
applicable PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENT and
any NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENT, Coulter shall use
COMMERCIALLY REASONABLE EFFORTS to negotiate appropriate modifications to such
agreements. Further, the MANUFACTURE AND SUPPLY CHAIN SUBTEAM will meet to
develop a detailed procedure pursuant to which Coulter will be provided with the
information necessary to submit consolidated purchase orders to the THIRD PARTY
manufacturer of UNCONJUGATED ANTIBODY and to establish a schedule setting forth
those dates after which UNCONJUGATED ANTIBODY purchase orders may not be placed
by the Parties. Such procedure and schedule shall be in accordance with the
terms and provisions of the PRE-EXISTING THIRD Party MANUFACTURE AND SUPPLY
CHAIN AGREEMENT and any NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENT
under which UNCONJUGATED ANTIBODY will be manufactured. Once such a procedure is
established, the Parties will work together to collect such information and
provide it to Coulter in sufficient time for Coulter to submit such consolidated
purchase orders to the THIRD PARTY manufacturer of UNCONJUGATED ANTIBODY.
9.12.2 PRODUCTION ORDERING MECHANISM FOR RADIOLABELED ANTIBODY
FOR DEVELOPMENT AND COMMERCIAL SALE. The Parties acknowledge the careful
planning and detailed information required in order to provide accurate and
timely orders for RADIOLABELED ANTIBODY to the THIRD PARTY manufacturer of such
RADIOLABELED ANTIBODY given the precise time frames required for radiolabeling
of UNCONJUGATED ANTIBODY. Within ninety (90) days of the Effective Date, the
MANUFACTURE AND SUPPLY CHAIN SUBTEAM will meet to develop a detailed procedure
pursuant to which Coulter will be provided with the information necessary to
submit consolidated purchase orders to the THIRD PARTY manufacturer of
RADIOLABELED ANTIBODY and to establish a schedule setting forth those dates
after which RADIOLABELED ANTIBODY purchase orders may not be placed by the
Parties. Such procedure and schedule shall be in accordance with the terms and
provisions of the PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENT and any NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENT under
which RADIOLABELED ANTIBODY will be manufactured. Once such a procedure is
established, the Parties will work together to collect such information and
provide it to Coulter in sufficient time for Coulter to submit such consolidated
purchase orders to the THIRD PARTY manufacturer of RADIOLABELED ANTIBODY.
9.12.3 DELIVERY; SHIPMENT. The UNCONJUGATED ANTIBODY and
RADIOLABELED Antibody supplied under this Agreement will be delivered [*] the
THIRD PARTY manufacturer's facility ([*]). [*] shall be construed in accordance
with [*]. The MANUFACTURE AND SUPPLY CHAIN SUBTEAM will determine which Party
will make shipping arrangements with the carriers.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
78.
<PAGE> 92
9.13 QUALITY CONTROL; TESTING. Coulter shall maintain a quality control
and testing program consistent with GMP, as required by the FDA and/or any other
governmental entity whether in the United States or part of another applicable
foreign jurisdiction, with respect to the manufacture of UNCONJUGATED ANTIBODY
and RADIOLABELED ANTIBODY by or on behalf of Coulter hereunder. SB shall be
entitled to collaborate with Coulter to audit the quality control program for
the manufacture of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY.
9.14 MANUFACTURING REGULATORY COMPLIANCE.
9.14.1 TERRITORY A. Any manufacture of UNCONJUGATED ANTIBODY and
RADIOLABELED ANTIBODY for DEVELOPMENT and MANUFACTURE DEVELOPMENT purposes or
commercial sale in TERRITORY A, shall be performed in full compliance with GCP,
GLP and GMP and all applicable United States laws and regulations. Coulter or
its designee shall serve as the point of contact with the FDA and any other
applicable governmental entity in TERRITORY A concerning the manufacture and
supply of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY, but may, as
appropriate, request the assistance of SB or the JDC with FDA and/or other
applicable governmental entity communications.
9.14.2 TERRITORY B and TERRITORY C. Any manufacture of
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY for DEVELOPMENT and MANUFACTURE
DEVELOPMENT purposes or commercial sale in TERRITORY B or TERRITORY C shall be
performed in full compliance with GCP, GLP and GMP and all applicable United
States laws and regulations. SB will notify Coulter of any regulatory
requirements for manufacture of UNCONJUGATED ANTIBODY and/or RADIOLABELED
ANTIBODY for sale in TERRITORY B or TERRITORY C with which it wishes THIRD PARTY
manufacturers of UNCONJUGATED ANTIBODY and/or RADIOLABELED ANTIBODY to comply.
To the extent Coulter can cause such manufacturers to comply with such
regulatory requirements under the PRE-EXISTING THIRD PARTY MANUFACTURE AND
SUPPLY CHAIN AGREEMENTS and any NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS, Coulter will do so. If Coulter is unable to do so pursuant to such
agreements, the MANUFACTURE AND SUPPLY CHAIN SUBTEAM will meet to discuss how
best to address such regulatory requirements, including seeking to amend the
applicable PRE-EXISTING THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS
and/or NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN AGREEMENTS to cause such
THIRD PARTY manufacturer to be in compliance with the applicable regulatory
requirements. The Parties will seek to enter into three-way technical agreements
with such manufacturers for the purpose of defining the respective
responsibilities of the Parties and such manufacturers for quality control and
regulatory compliance. SB shall be entitled to collaborate with Coulter to audit
GCP, GLP, and GMP and any other agreed-to compliance for the manufacture of
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY. To the extent permitted by
applicable laws, SB or its designee shall serve as the point of contact with the
foreign equivalents of the FDA and any other applicable governmental entity in
TERRITORY B and TERRITORY C concerning the manufacture and supply of
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY, but may, as appropriate,
request the assistance of Coulter or the JDC with communications with such
governmental entities.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
79.
<PAGE> 93
9.15 RECALLS. The Parties shall immediately inform each other in writing
of all information related to (a) any incident relating to a PRODUCT and/or any
lot of a PRODUCT that is the subject of recall, market withdrawal or correction,
or (b) any PRODUCT that may require, whether based on manufacturing defect,
tampering, or otherwise, a recall, field alert, product withdrawal or field
correction arising from any defect in any such PRODUCT provided under this
Agreement. If either Party believes that a recall of UNCONJUGATED ANTIBODY
and/or RADIOLABELED ANTIBODY is desirable or required by law, it will promptly
notify the other Party. The Parties will then discuss reasonably and in good
faith whether such recall is appropriate or required and the manner in which any
recall shall be handled; provided, however, in the event either Party determines
that a recall is necessary, such recall shall be implemented. Coulter shall be
solely responsible for the handling and disposition of such recalls of
UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY in TERRITORY A, pursuant to
procedures set forth on EXHIBIT J. SB shall cooperate with Coulter in allowing
such recall in TERRITORY A to occur pursuant to the procedures set forth on
EXHIBIT J. SB shall be solely responsible for the handling and disposition of
such recalls of UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY in the NON-USA
TERRITORY, pursuant to procedures set forth on EXHIBIT J. Coulter shall
cooperate with SB in allowing such recall in the NON-USA TERRITORY to occur
pursuant to the procedures set forth on EXHIBIT J. EXHIBIT J may be modified at
any time by the MANUFACTURE AND SUPPLY CHAIN SUBTEAM subject to the approval of
the JDC and JCC.
9.16 CORRECTIVE ACTION FOR SUPPLY OF UNCONJUGATED ANTIBODY. In order to
ensure an uninterrupted supply of UNCONJUGATED ANTIBODY, the Parties agree that
in the event the JDC makes a good faith determination that (i) a THIRD PARTY
manufacturer which manufactures UNCONJUGATED ANTIBODY and any back-up
manufacturer to such THIRD PARTY manufacturer, or (ii) SB (in the event SB is
manufacturing UNCONJUGATED ANTIBODY under Section 9.6.1), or (iii) Coulter (in
the event Coulter is manufacturing UNCONJUGATED ANTIBODY under Section 9.6.2)
(collectively, the "Antibody Manufacturer") has been or will be an unreliable
supplier (as defined by the MANUFACTURE AND SUPPLY CHAIN SUBTEAM) of
UNCONJUGATED ANTIBODY for Development or commercial sale (a "Failure to Supply
Unconjugated Antibody") in TERRITORY A, TERRITORY B or TERRITORY C (the
"Affected Territory"), the Parties shall meet promptly to work with the
then-current Antibody Manufacturer to attempt to rectify the situation. If such
Antibody Manufacturer is unable to assure the Parties, to their reasonable
satisfaction, that it will thereafter be a reliable supplier of UNCONJUGATED
ANTIBODY, as determined by the JDC, within such Affected Territory, then,
subject to the terms of any applicable PRE-EXISTING THIRD PARTY MANUFACTURE AND
SUPPLY CHAIN AGREEMENTS and/or NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS, the JDC shall either (i) identify another THIRD PARTY manufacturer
to become a new Antibody Manufacturer for UNCONJUGATED ANTIBODY in such Affected
Territory or (ii) agree that SB or Coulter may supply such UNCONJUGATED ANTIBODY
in such Affected Territory (assuming that SB or Coulter is not the Antibody
Manufacturer who is unable to supply). In the event the JDC elects to use
another THIRD PARTY manufacturer to become a new Antibody Manufacturer for
UNCONJUGATED ANTIBODY in such Affected Territory, Coulter shall promptly enter
into a manufacture agreement with such THIRD PARTY for the Affected Territory.
If SB becomes the Antibody Manufacturer pursuant to this Section 9.16, the
Parties shall agree on the economic terms of such supply and Coulter shall
transfer all Coulter KNOW-HOW, to the extent permitted under applicable THIRD
PARTY agreements, reasonably required to
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
80.
<PAGE> 94
permit SB to manufacture UNCONJUGATED ANTIBODY for DEVELOPMENT purposes or
commercial sale in such Affected Territory. In the event a Failure to Supply
Unconjugated Antibody by a THIRD PARTY Antibody Manufacturer occurs for reasons
beyond the reasonable control of Coulter and SB itself becomes the Antibody
Manufacturer pursuant to this Section 9.16 for commercial sale in TERRITORY B or
TERRITORY C, the royalty payable by SB to Coulter for sales in TERRITORY B or
TERRITORY C, as the case may be, shall thereafter be reduced by [*] of NET SALES
of such PRODUCT, subject to a floor of [*] royalty on such sales in TERRITORY B
and TERRITORY C. In the event a Failure to Supply Unconjugated Antibody by a
Third Party Antibody Manufacturer occurs for reasons within the reasonable
control of Coulter and SB itself becomes the Antibody Manufacturer pursuant to
this Section 9.16 for commercial sale in TERRITORY B or TERRITORY C, the royalty
payable by SB to Coulter for sales in TERRITORY B or TERRITORY C, as the case
may be, shall thereafter be reduced by [*] of NET SALES of such PRODUCT, subject
to a floor of [*] royalty on such sales in TERRITORY B and TERRITORY C. For
purposes of this Section 9.16, TERRITORY A shall include Canada and Mexico and
TERRITORY B and TERRITORY C shall exclude such countries.
9.17 CORRECTIVE ACTION FOR SUPPLY OF RADIOLABELED ANTIBODY. In order to
ensure an uninterrupted supply of RADIOLABELED ANTIBODY, the Parties agree that
in the event the JDC makes a good faith determination that the THIRD PARTY
manufacturer and any back-up manufacturer to such THIRD PARTY manufacturer,
which conjugates UNCONJUGATED ANTIBODY to (131)Iodine to create RADIOLABELED
ANTIBODY for DEVELOPMENT or commercial sale in NORTH AMERICA, TERRITORY B
(during the time Coulter is obligated to supply in TERRITORY B under this
Agreement) or TERRITORY C (during the time Coulter is obligated to supply in
TERRITORY C under this Agreement) (collectively, the "Radiolabeling
Manufacturer") has been or will be an unreliable supplier (as defined by the
MANUFACTURE AND SUPPLY CHAIN SUBTEAM) of RADIOLABELED ANTIBODY, the Parties
shall meet promptly to work with the then-current Radiolabeling Manufacturer to
attempt to rectify the situation. If such Radiolabeling Manufacturer is unable
to assure the Parties, to their reasonable satisfaction, that it will thereafter
be a reliable supplier of RADIOLABELED ANTIBODY as determined by the JDC, then,
subject to the terms of any applicable PRE-EXISTING THIRD PARTY MANUFACTURE AND
SUPPLY CHAIN AGREEMENTS and/or NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS, the JDC shall either (i) identify another THIRD PARTY manufacturer
to become a new Radiolabeling Manufacturer for RADIOLABELED ANTIBODY in NORTH
AMERICA, TERRITORY B or TERRITORY C, as applicable, or (ii) agree that SB may
supply such RADIOLABELED ANTIBODY in NORTH AMERICA, TERRITORY B or TERRITORY C,
as applicable, upon terms to be agreed to by the Parties. In the event the JDC
elects to use another THIRD PARTY manufacturer to become a new Radiolabeling
Manufacturer for RADIOLABELED ANTIBODY in NORTH AMERICA, TERRITORY B or
TERRITORY C under this Section 9.17, Coulter shall promptly enter into a
manufacture agreement with such THIRD PARTY. If SB manufactures RADIOLABELED
ANTIBODY for NORTH AMERICA, TERRITORY B or TERRITORY C pursuant to this Section
9.17, Coulter shall transfer all Coulter KNOW-HOW reasonably required to permit
SB to manufacture RADIOLABELED ANTIBODY for DEVELOPMENT purposes or commercial
sale in NORTH AMERICA, TERRITORY B or TERRITORY C. For purposes of this Section
9.17, TERRITORY B shall exclude Canada. For purposes of this Section 9.17,
TERRITORY C shall exclude Mexico.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
81.
<PAGE> 95
9.18 EXCHANGE OF INFORMATION. In the event of a transfer of
manufacturing responsibility from Coulter to SB pursuant to Section 9.6.1, 9.16
or 9.17, the Parties will undertake to exchange and to use COMMERCIALLY
REASONABLE EFFORTS to cause THIRD PARTY manufacturers to exchange, on a regular
basis, all data relating to the manufacture of UNCONJUGATED ANTIBODY and
RADIOLABELED ANTIBODY, provided that such exchange shall in all cases be
consistent with the obligations under any PRE-EXISTING THIRD PARTY MANUFACTURE
AND SUPPLY CHAIN AGREEMENTS and NEW THIRD PARTY MANUFACTURE AND SUPPLY CHAIN
AGREEMENTS. All information transferred, provided or exchanged under this
Section 9.18 will be subject to the confidentiality requirements set forth in
Article 17.
ARTICLE 10
TRADEMARKS
10.1 SELECTION AND OWNERSHIP OF TRADEMARKS.
10.1.1 TERRITORY A. The Parties agree to use the TRADEMARK
Bexxar(TM) for purposes of CO-PROMOTING the PRODUCT in TERRITORY A, unless the
JCC selects a different TRADEMARK for use in TERRITORY A. SB acknowledges
Coulter's ownership of Bexxar(TM) and that Coulter shall be the owner of any
other TRADEMARK(S) selected and used for purposes of CO-PROMOTING the PRODUCT in
TERRITORY A (collectively, "Territory A Trademark(s)") and agrees that it will
do nothing inconsistent with such ownership. SB further agrees that nothing in
this Agreement shall give SB any right, title or interest in the Territory A
Trademark(s) other than the right to use the Territory A Trademark(s) in
accordance with, and during the term of, this Agreement.
10.1.2 NON-USA TERRITORY. The JCC will select the TRADEMARK(S)
for marketing the PRODUCT in the NON-USA TERRITORY. In the event that the
TRADEMARK(S) selected for use in the NON-USA TERRITORY is one which was
identified by SB to Coulter prior to the Effective Date as having already
undergone searching by SB, such TRADEMARK(S) shall be owned by SB ("SB
Trademarks"). At the termination of this Agreement, SB shall continue to have
unrestricted ownership of SB Trademarks throughout the NON-USA TERRITORY. In the
event that the TRADEMARK(S) selected for use in the NON-USA TERRITORY is not
such an SB Trademark, such TRADEMARK(S) shall be owned by Coulter ("Coulter
Trademarks"). At the termination of this Agreement, Coulter shall continue to
have unrestricted ownership of such Coulter Trademarks throughout the TERRITORY,
subject to SB's right to own such TRADEMARK in TERRITORY B and TERRITORY C after
the expiration of the Agreement as provided in Section 13.1.2. SB acknowledges
Coulter's ownership of the Coulter Trademarks, agrees that it will do nothing
inconsistent with such ownership, and agrees that nothing in this Agreement
shall give SB any right, title or interest in the Coulter Trademarks other than
the right to use the Coulter Trademarks in accordance with this Agreement.
Coulter acknowledges SB's ownership of the SB Trademarks, agrees that it will do
nothing inconsistent with such ownership, and agrees that nothing in this
Agreement shall give Coulter any right, title or interest in the SB Trademarks
other than the right to use the SB Trademarks in accordance with this Agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
82.
<PAGE> 96
10.2 DEVELOPMENT OF TRADEMARKS.
10.2.1 TERRITORY A. Coulter shall create, search, prosecute,
register and maintain any and all Territory A Trademarks. All OUT-OF-POCKET
COSTS paid by Coulter after the Effective Date for creating, searching,
registering and maintaining such Territory A Trademarks shall be included in
TRADEMARK COSTS.
10.2.2 NON-USA TERRITORY. SB shall, at its sole expense, create,
search, prosecute, register, and maintain all SB Trademarks developed for the
purposes of this Agreement that will be used in the NON-USA TERRITORY. SB will
further defend such SB Trademarks against any infringement and other claims made
by THIRD PARTIES in the NON-USA TERRITORY. Coulter shall, at its sole expense,
create, search, prosecute, register, and maintain all Coulter Trademarks
developed for the purposes of this Agreement that will be used in the NON-USA
TERRITORY. Coulter will further defend such Coulter Trademarks against any
infringement and other claims made by THIRD PARTIES in the NON-USA TERRITORY.
10.2.3 DEVELOPMENT OF ADDITIONAL TRADEMARKS IN THE NON-USA
TERRITORY. Coulter and SB agree that Coulter may, at its sole discretion and
expense, create, search, prosecute, register and maintain concurrently
TRADEMARKS not confusingly similar to the SB Trademarks, but bearing the same
description of goods, to be used in the NON-USA TERRITORY at the termination of
this Agreement or in the event Coulter otherwise obtains marketing rights for
PRODUCTS in portions of the NON-USA TERRITORY.
10.3 LICENSE GRANTS.
10.3.1 TERRITORY A. Coulter hereby agrees to grant to SB an
exclusive (except as to Coulter), royalty-free license to use the Territory A
Trademark(s) (defined in Section 10.1.1) for the making, use, sale, offer for
sale and importation of the PRODUCT in TERRITORY A for the term of the
Agreement, subject to Coulter's right to CO-PROMOTE PRODUCT in TERRITORY A in
accordance with the terms of this Agreement. Such license shall be granted
promptly after each Territory A Trademark is selected in accordance with Section
10.1.1.
10.3.2 NON-USA TERRITORY. Coulter hereby agrees to grant to SB an
exclusive, royalty-free license to use the Coulter Trademark(s) (as defined in
Section 10.1.2) for the making, use, sale, offer for sale and importation of the
PRODUCT in the NON-USA TERRITORY for the term of the Agreement, subject to the
use by Coulter of the Coulter Trademark for any purpose related to Coulter's
supply obligations under this Agreement related to the PRODUCT in the NON-USA
TERRITORY for the term of the Agreement. Such license shall be granted promptly
after each Coulter Trademark is selected in accordance with Section 10.1.2. SB
hereby agrees to grant to Coulter a non-exclusive, royalty-free license to use
the SB Trademark(s) (as defined in Section 10.1.2) for any use related to
Coulter's supply obligations under this Agreement related to the PRODUCT in the
NON-USA TERRITORY for the term of the Agreement. Such license shall be granted
promptly after each SB Trademark is selected in accordance with Section 10.1.2.
10.3.3 LICENSED TRADEMARKS. The TRADEMARKS to be licensed by the
Parties pursuant to Sections 10.3.1 and 10.3.2 shall be, collectively, the
"Licensed Trademarks."
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
83.
<PAGE> 97
10.4 USE OF TRADEMARKS.
10.4.1 TERRITORY A TRADEMARKS AND COULTER TRADEMARKS. With regard
to Territory A Trademark(s) (as defined in Section 10.1.1) or in the event that
the TRADEMARK for the PRODUCT in the NON-USA TERRITORY is a Coulter Trademark
(as defined in Section 10.1.2), SB agrees to conform with Coulter's customary
guidelines under this Article 10 with respect to manner of use, and to maintain
Coulter's quality standards with respect to the goods sold and services provided
in connection with the TRADEMARKS. Further, except when used in accordance with
any usage guidelines provided by Coulter, SB shall submit to Coulter any
materials bearing the TRADEMARKS for review and approval prior to the use
thereof and shall make no use of the TRADEMARKS without Coulter's written
consent. SB shall execute any documents required in the reasonable opinion of
Coulter to be entered as a "registered user" or recorded licensee of the
TRADEMARKS, or to be removed as registered user or licensee thereof.
10.4.2 SB TRADEMARKS. In the event that the TRADEMARK for the
PRODUCT in the NON-USA TERRITORY is a SB Trademark (as defined in Section
10.1.2), Coulter agrees to conform with SB's customary guidelines under this
Article 10 with respect to manner of use, and to maintain SB's quality standards
with respect to the goods sold and services provided in connection with the
TRADEMARKS. Further, except when used in accordance with any usage guidelines
provided by SB, Coulter shall submit to SB any materials bearing the TRADEMARKS
for review and approval prior to the use thereof and shall make no use of the
TRADEMARKS without SB's written consent. Coulter shall execute any documents
required in the reasonable opinion of SB to be entered as a "registered user" or
recorded licensee of the TRADEMARKS, or to be removed as registered user or
licensee thereof.
10.4.3 QUALITY MAINTENANCE. SB agrees to cooperate with Coulter
in facilitating Coulter's quality assurance responsibilities by permitting
reasonable inspection of SB's operations as they pertain to the Territory A
Trademarks (as defined in Section 10.1.1) and the Coulter Trademarks (as defined
in Section 10.1.2) and supplying Coulter with specimens of use of such
TRADEMARKS upon reasonable request, but in any case no more often than twice
each calendar year. SB will comply with all applicable laws and regulations and
obtain all government approvals pertaining to the sale, distribution and
advertising of PRODUCTS offered in the NON-USA TERRITORY under the Coulter
Trademarks and covered by this Agreement. Coulter agrees to cooperate with SB in
facilitating SB's quality assurance responsibilities by permitting reasonable
inspection of Coulter's operations as they pertain to the SB Trademarks (as
defined in Section 10.1.2) and supplying SB with specimens of use of the SB
Trademarks upon reasonable request, but in any case no more often than twice
each calendar year.
10.5 INFRINGEMENT OF TRADEMARKS.
10.5.1 TERRITORY A. Each Party shall notify the JCC promptly upon
learning of any actual, alleged or threatened infringement of any Territory A
Trademark or of any unfair trade practices, trade dress imitation, passing off
of counterfeit goods, or like offenses, or any such claims brought by a THIRD
PARTY against a PRODUCT in TERRITORY A (hereinafter "Infringement"). Upon
learning of such Infringement, the JCC shall confer with the Parties
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
84.
<PAGE> 98
regarding strategy and filing of an action to deal with the Infringement. In the
event the JCC determines that an action with regard to such Infringement is
necessary or desirable, Coulter shall have the first right, but not the
obligation, to institute, prosecute and control any legal proceedings in its own
name and by its own counsel to prevent or restrain such Infringement, and SB
agrees to give Coulter its reasonable cooperation and assistance. In the event
Coulter elects not to exercise such first right, SB shall have the right, but
not the obligation, to institute, prosecute and control any legal proceedings in
its own name and by its own counsel to prevent or restrain such Infringement,
and Coulter agrees to give SB its reasonable cooperation and assistance.
10.5.2 TERRITORY B; TERRITORY C. Each Party shall notify the
other Party promptly upon learning of any actual, alleged or threatened
infringement of any TRADEMARK or of any unfair trade practices, trade dress
imitation, passing off of counterfeit goods, or like offenses, or any such
claims brought by a THIRD PARTY against a PRODUCT in TERRITORY B or TERRITORY C
(hereinafter "Infringement"). If the TRADEMARK involved is an SB Trademark (as
defined in Section 10.1.2), or if the Infringement is otherwise not related to a
Coulter Trademark (as defined in Section 10.1.2), SB shall be primarily
responsible for instituting, prosecuting and controlling any legal proceedings
in its own name and by its own counsel to prevent or restrain such Infringement,
and Coulter agrees to give SB its reasonable cooperation and assistance. If the
TRADEMARK involved is a Coulter Trademark, Coulter shall be primarily
responsible for instituting, prosecuting and controlling any legal proceedings
in its own name and by its own counsel to prevent or restrain such Infringement,
and SB agrees to give Coulter its reasonable cooperation and assistance.
10.5.3 STAND-BY RIGHTS. If the Party having the primary right to
institute, prosecute, and control such Infringement action under Sections 10.5.1
or 10.5.2 fails to do so within a period of ninety (90) days after receiving
notice of the Infringement, or if that Party, after initiating an action,
determines to discontinue such action, the other Party shall have the right to
bring and control or take over any such action by counsel of its own choice,
unless prevented from doing so by the laws of the country where the Infringement
occurred or is threatened.
10.6 COSTS RELATED TO INFRINGEMENT.
10.6.1 TERRITORY A. All TRADEMARK COSTS related to TERRITORY A
and all OUT-OF-POCKET COSTS paid to outside counsel and other THIRD PARTIES
which were incurred in bringing, maintaining and prosecuting any action
described in Section 10.5.1 shall be included as part of the determination of
the JOINT P&L as outlined in Section 7.1.14 and any recovery shall be added to
NET SALES in TERRITORY A, provided that such OUT-OF-POCKET COSTS were incurred
after the Effective Date and approved by the JCC.
10.6.2 TERRITORY B; TERRITORY C. All OUT-OF-POCKET COSTS paid to
outside counsel and other THIRD PARTIES which were incurred in bringing,
maintaining and prosecuting any action described in Section 10.5.2 shall be
borne by the Party incurring the expense and any recovery shall be kept by the
Party which was responsible for bringing the action.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
85.
<PAGE> 99
10.7 TRADE DRESS.
10.7.1 TERRITORY A. In TERRITORY A, PRODUCT will be packaged in
standard Coulter packaging, subject to Section 7.1.8. If SB's rights to PRODUCT
are terminated in accordance with this Agreement in TERRITORY A, SB shall not be
permitted to use Coulter packaging with respect to PRODUCT in such territory.
10.7.2 TERRITORY B AND TERRITORY C. In TERRITORY B and TERRITORY
C, PRODUCT will be packaged in standard SB packaging, subject to Section 7.1.8.
If SB's rights to PRODUCT are terminated in accordance with this Agreement in a
particular country, Coulter shall not be permitted to use SB packaging with
respect to PRODUCT in such country, and shall not permit its subsequent
licensees to use SB packaging with respect to PRODUCT in such country.
ARTICLE 11
PROSECUTION, MAINTENANCE AND INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS
11.1 INVENTIONS.
11.1.1 Coulter shall own all INVENTIONS made solely by its
employees and agents, and all patent applications and patents claiming such
INVENTIONS. SB shall own all INVENTIONS made solely by its employees and agents,
and all patent applications and patents claiming such INVENTIONS. All INVENTIONS
made jointly by employees or agents of Coulter and employees or agents of SB and
all patent applications and patents claiming such INVENTIONS shall be owned
jointly by Coulter and SB. All determinations of inventorship under this Section
11.1.1 shall be in accordance with U.S. law. The Parties will seek to negotiate
provisions in agreements with THIRD PARTY manufacturers or suppliers of services
relating to the PRODUCT which provide the Parties with ownership or CONTROL of
any intellectual property relating to the PRODUCT which arises out of such THIRD
PARTY agreements, sufficient for Coulter or SB to be able to manufacture and
sell PRODUCT throughout the TERRITORY upon expiration of this Agreement and/or
to transfer such intellectual property to a THIRD PARTY supplier. All such
provisions shall be approved in advance by the JDC.
11.1.2 Each Party shall promptly disclose to the other Party the
complete texts of all patent applications filed by the disclosing party after
the Effective Date which relate to ANTI-CD-20 ANTIBODY as well as all
information received after the Effective Date concerning the institution or
possible institution of any interference, opposition, re-examination, reissue,
revocation, nullification or any official proceeding involving PATENT RIGHTS
anywhere in the TERRITORY. The Party reviewing such disclosure shall have the
right to review all such pending applications and other proceedings and make
recommendations concerning them and their conduct. The Parties shall keep each
other promptly and fully informed of the course of patent prosecution or other
proceedings relating to ANTI-CD-20 ANTIBODY including by providing copies of
substantive communications, search reports and THIRD PARTY observations
submitted to or received from patent offices throughout the TERRITORY. The
Parties shall provide such patent consultation at no cost except as otherwise
provided in this Agreement. In addition, SB and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
86.
<PAGE> 100
Coulter shall each disclose to the other and discuss any INVENTION relating to
ANTI-CD20 ANTIBODY and the desirability of filing a United States patent
application covering the INVENTION, as well as any foreign counterparts, except
that SB shall have no obligation to disclose to Coulter [*] other than jointly
with an employee or agent of Coulter related to [*]. To facilitate such
discussions and any decision-making with respect to jointly-owned INVENTIONS,
each Party will appoint a "patent coordinator," who will have the authority to
participate in such discussions and make such decisions on behalf of such Party.
With respect to INVENTIONS relating to ANTI-CD20 ANTIBODY owned by one Party,
the Party owning the INVENTION shall make the final decision with respect to any
such filings, provided that SB shall have the right, but not the obligation, to
assume responsibility for any COULTER PATENT RIGHT which does not cover a
jointly-owned INVENTION, or any part of such a COULTER PATENT RIGHT, which
Coulter intends to abandon or otherwise cause or allow to be forfeited (unless
Coulter has decided to abandon or forfeit such COULTER PATENT RIGHT in order to
preserve other COULTER PATENT Rights or because the substance of such claims are
covered under other COULTER PATENT RIGHTS and SB's patent coordinator has
confirmed that such decision will not diminish the patent protection for
PRODUCT). Coulter shall give SB reasonable written notice prior to abandonment
or other forfeiture of any COULTER PATENT RIGHT relating to ANTI-CD20 ANTIBODY
or any part of a COULTER PATENT RIGHT relating to ANTI-CD20 ANTIBODY so as to
permit SB to exercise its rights under this Section. With respect to
jointly-owned INVENTIONS, the patent coordinators shall jointly make the final
decision with respect to any such filings, as well as the prosecution and
maintenance of the PATENT RIGHTS which result from such filings. Each Party
shall have the right to select patent counsel and to take such other actions as
are reasonably appropriate to prepare, file, prosecute and maintain patent
protection with respect to its INVENTIONS, consistent with the terms of this
Article 11.
11.2 PROSECUTION AND MAINTENANCE OF PATENT RIGHTS; ALLOCATION OF PATENT
COSTS. Each Party shall be responsible throughout the TERRITORY for prosecuting
and maintaining its own PATENT RIGHTS, subject to Section 11.1.2, and Coulter
shall be responsible throughout the TERRITORY for prosecuting and maintaining
any jointly-owned INVENTIONS, subject to Section 11.1.2, and all such activity
shall be at the responsible Party's expense except as otherwise provided in this
Article 11. All PATENT COSTS in the TERRITORY arising after the Effective Date
for the COULTER PATENT RIGHTS or the SB PATENT RIGHTS which cover jointly-owned
INVENTIONS shall be shared equally by the Parties. All PATENT COSTS in TERRITORY
A arising after the Effective Date for the COULTER PATENT RIGHTS or the SB
PATENT RIGHTS shall be borne equally by the Parties to the extent that they
relate to ANTI-CD20 ANTIBODY, otherwise they are borne by the Party incurring
such expense. All PATENT COSTS outside of TERRITORY A arising after the
Effective Date for the COULTER PATENT RIGHTS which do not cover jointly-owned
INVENTIONS shall be borne solely by Coulter. All PATENT COSTS outside of
TERRITORY A arising after the Effective Date for the SB PATENT RIGHTS which do
not cover jointly-owned INVENTIONS shall be borne solely by SB.
11.3 COOPERATION. Each of the Parties shall execute or have executed by
its appropriate employees, representatives, agents, and contractors such
documents as may be necessary to obtain, perfect or maintain any PATENT RIGHTS
filed or to be filed pursuant to this Agreement, and shall cooperate with the
other Party so far as reasonably necessary with respect
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
87.
<PAGE> 101
to furnishing all information and data in its possession reasonably necessary to
obtain or maintain such PATENT RIGHTS.
11.4 INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS.
11.4.1 RIGHT TO BRING ACTION; TREATMENT OF RECOVERY.
(a) If either Party should become aware of any
infringement or threatened infringement or misappropriation, as the case may be,
in any country of the TERRITORY of any INTELLECTUAL PROPERTY RIGHTS of the other
Party, it shall promptly notify such other Party in writing. As soon as
practicable, the Parties shall confer on the particulars of such infringement or
misappropriation and the possible courses of action to be taken. Subject to
Sections 11.4.3 and 11.4.4, the Party holding the affected INTELLECTUAL PROPERTY
RIGHTS (or, in the case of jointly-owned INVENTIONS, Coulter) shall have the
first right, but not the obligation, to institute, prosecute and control any
legal proceedings in its own name and by its own counsel to prevent or restrain
such infringement, and the other Party shall have the right to be represented in
such action by its own counsel. If one Party brings any such action or
proceeding, whether under this Section 11.4.1(a) or under Section 11.4.2, the
other Party hereby consents to being joined as a Party plaintiff where necessary
and, in case of joining, such other Party agrees to give the Party bringing such
suit reasonable assistance and authority to file and to prosecute such suit, at
the exercise of the Party bringing such suit. All OUT-OF-POCKET COSTS of any
such action or proceeding in TERRITORY A shall be included as part of the
determination of the JOINT P&L as outlined in Section 7.1.14 to the extent that
such costs relate to ANTI-CD20 ANTIBODY. All OUT-OF-POCKET COSTS of any such
action or proceeding in TERRITORY B or TERRITORY C shall be borne by the Party
incurring such costs.
(b) In the event a Party recovers any damages or other
monetary awards in any proceedings or by way of settlement under Section
11.4.3(b) for infringement or misappropriation of INTELLECTUAL PROPERTY RIGHTS
in TERRITORY A, or royalties as a result of a license grant to a THIRD PARTY in
TERRITORY A under Section 11.4.3(b), (collectively "Recovery") such Recovery
shall be treated as NET SALES for purposes of the JOINT P&L. In the event a
Party recovers any damages or other monetary awards in any proceedings or by way
of settlement under Section 11.4.3(a) for infringement or misappropriation of
INTELLECTUAL PROPERTY RIGHTS in TERRITORY B or TERRITORY C, such recovery shall
be reimbursed first to each Party on a pro-rata basis for any OUT-OF-POCKET
COSTS incurred by such Party pursuant to the last sentence of Section 11.4.1(a)
or Section 11.4.2 and then the excess shall be distributed between the Parties
on a pro-rata basis in proportion to the estimated economic loss incurred by
each of them as a result of the reduction in NET SALES of PRODUCT in TERRITORY B
and TERRITORY C caused by the infringements, provided that the Party bringing
the action shall be entitled to at least one half of such excess, and further
provided that, in the event that SB is the Party bringing the action, in no
event shall the amount of Coulter's share exceed the royalties Coulter would
have received had the sales which were the subject of the action been NET SALES.
11.4.2 If the Party having the primary right to institute,
prosecute, and control such infringement or misappropriation action under
Section 11.4.1(a) fails to do so within a
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
88.
<PAGE> 102
period of ninety (90) days after receiving notice of the infringement or
misappropriation, or if that Party, after initiating an action, determines to
discontinue such action, the other Party shall have the right, but not the
obligation, to the extent related to ANTI-CD20 ANTIBODY, to bring and control or
take over any such action by counsel of its own choice, unless prevented from
doing so by the laws of the country where the infringement or misappropriation
occurred or is threatened, and subject to Sections 11.4.3 and 11.4.4. All
OUT-OF-POCKET COSTS of any such action or proceeding in TERRITORY A shall be
included as part of the JOINT P&L to the extent that such costs relate to
ANTI-CD20 ANTIBODY. All OUT-OF-POCKET COSTS of any such action or proceeding in
TERRITORY B or TERRITORY C shall be borne by the Party incurring such costs.
11.4.3
(a) OUTSIDE TERRITORY A. The Party conducting such
infringement or misappropriation action outside of TERRITORY A shall have full
control over its conduct, including settlement thereof provided that the Parties
shall keep one another informed of the status of and of their respective
activities regarding any litigation or settlement thereof concerning PRODUCT in
the TERRITORY and provided further that no settlement or consent judgment or
other voluntary final disposition of any suit defended or action brought by a
Party pursuant to Section 11.4.1(a) or Section 11.4.2 may be entered into
without the consent of the other Party if such settlement would require the
other Party to be subject to an injunction or to make a monetary payment or
would otherwise adversely affect the other Party's rights under this Agreement.
(b) INSIDE TERRITORY A. In the event that the Parties
decide that it is desirable to grant a license related to any ANTI-CD-20
ANTIBODY to a THIRD PARTY under Coulter's INTELLECTUAL PROPERTY RIGHTS in
TERRITORY A, or in the event that the Party controlling the action in TERRITORY
A under Section 11.4.1(a) or Section 11.4.2 desires to settle such action by
granting a license to a THIRD PARTY under Coulter's INTELLECTUAL PROPERTY RIGHTS
in TERRITORY A or in the event that the granting of a license to a THIRD PARTY
under Coulter's INTELLECTUAL PROPERTY RIGHTS in TERRITORY A is part of a
condition required by a THIRD PARTY as part of the THIRD PARTY'S forbearance to
sue Coulter and/or SB and/or any regulatory agency or otherwise forbear to
exercise or agree to waive a legal or administrative or governmental action or
right or impediment against Coulter and/or SB with respect to preventing Coulter
and/or SB from lawfully commercializing PRODUCT in TERRITORY A, the Parties will
promptly meet to determine the appropriate and lawful course of action and no
settlement or consent judgment or other voluntary final disposition of any suit
defended or action brought by a Party pursuant to Section 11.4.1(a) or Section
11.4.2 in TERRITORY A which includes the grant of such a license may be entered
into without the consent of the other Party.
11.4.4 In connection with any action taken by either Party
against a THIRD PARTY to protect or enforce any INTELLECTUAL PROPERTY RIGHTS,
the other Party shall, if requested, consult with the Party taking such action,
and make available as witnesses its employees or as evidence any materials,
and/or data as are reasonably necessary for the furtherance of such action. The
OUT-OF-POCKET COSTS in connection with the providing of witnesses and/or the
making available of any materials and/or data shall be borne by the Party
incurring them. If such OUT-OF POCKET COSTS are incurred in TERRITORY A, they
shall be included as part of the JOINT
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
89.
<PAGE> 103
P&L, and if they are incurred in TERRITORY B or TERRITORY C, they shall be borne
by the Party incurring such costs
11.5 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS FOR PRODUCTS IN THE
TERRITORY; OPPOSITION AND REVOCATION PROCEEDINGS.
11.5.1 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS IN TERRITORY
A. If a THIRD PARTY asserts that a patent or other right owned by it is
infringed by the manufacture, use or sale of any PRODUCT in TERRITORY A, the
Party first obtaining knowledge of such a claim shall immediately provide the
other Party notice of such claim and the related facts in reasonable detail. The
JDC or JCC (as appropriate) shall determine how best to control the defense of
any such claim (including the bringing of a declaratory judgment action) with
respect to PRODUCT. In the event the JDC or JCC cannot agree on the defense of
any such claim or whether or not a particular Party shall control the defense,
the Parties shall submit such issue(s) promptly thereafter to an UNAFFILIATED
EXPERT who is a patent attorney. The OUT-OF-POCKET COSTS of engaging such
UNAFFILIATED EXPERT patent attorney for such determination shall be shared
equally by the Parties. The determination of such UNAFFILIATED EXPERT patent
attorney shall be binding on the JDC or JCC. The entity that controls the
defense of a given claim with respect to PRODUCT shall also have the right to
control settlement of such claim; provided, however, that (a) if one Party
controls, no settlement or consent judgment or other voluntary final disposition
of any such claim may be entered into without the consent of the other Party if
such settlement would require the other Party to be subject to an injunction or
to make a monetary payment or would otherwise adversely affect the other Party's
rights under this Agreement, and (b) such Party shall solely bear all
OUT-OF-POCKET COSTS it incurs with respect to such defense which costs did not
receive the prior written approval of the JDC or JCC (as appropriate).
11.5.2 DEFENSE AND SETTLEMENT OF THIRD PARTY CLAIMS OUTSIDE OF
TERRITORY A. If a THIRD PARTY asserts that a patent or other right owned by it
is infringed by the manufacture, use or sale of any PRODUCT outside of TERRITORY
A, the Party first obtaining knowledge of such a claim shall immediately provide
the other Party notice of such claim and the related facts in reasonable detail.
SB shall have the right, but not the obligation, to defend such suit at its own
expense. Coulter and SB shall provide reasonable assistance to one another and
reasonably cooperate in any such litigation at the other's request without
expense to the requesting party.
11.5.3 RE-EXAMINATION, OPPOSITION AND REVOCATION PROCEEDINGS.
After the Effective Date, in the event either Coulter or SB believes that
initiating a re-examination, revocation or opposition proceeding against patent
rights held by a THIRD PARTY is necessary or desirable in order to manufacture
or develop or commercialize the PRODUCT anywhere in the TERRITORY, or otherwise
assure that their activities under this Agreement do not infringe the
intellectual property rights of such THIRD PARTY, then the JDC will discuss the
situation in good faith. In the event that the JDC cannot make a unanimous
decision regarding whether or not such revocation or opposition proceeding is
necessary or desirable or whether or not a particular Party shall conduct such
proceeding, the Parties shall submit such issue(s) promptly thereafter to an
UNAFFILIATED EXPERT who is a patent attorney. The OUT-OF-POCKET COSTS of
engaging such UNAFFILIATED EXPERT patent attorney for such determination shall
be shared equally by the
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
90.
<PAGE> 104
Parties. The determination of such UNAFFILIATED EXPERT shall be binding on the
JDC. SB shall have the first right, but not the obligation, to bring such
re-examination, opposition or revocation action outside of TERRITORY A. Coulter
and SB shall provide reasonable assistance to one another and reasonably
cooperate in any such litigation at the other's request without expense to the
requesting party. All PATENT COSTS inside TERRITORY A related to any such
re-examination, opposition and revocation proceeding brought by a Party in
accordance with this Section 11.5.3 shall be included as part of the JOINT P&L.
All PATENT COSTS outside of TERRITORY A related to any such re-examination,
opposition and revocation proceeding brought by a Party in accordance with this
Section 11.5.3 shall be borne by the Party that incurred such expense.
11.6 ALLOCATION OF EXPENSES. The OUT-OF-POCKET COSTS incurred by either
Party under Section 11.2 shall be allocated between the Parties as provided in
Section 11.2. The OUT-OF-POCKET COSTS incurred by either Party under Section
11.4 shall be allocated between the Parties as provided in Section 11.4. The
OUT-OF-POCKET COSTS incurred by either Party of engaging an UNAFFILIATED EXPERT,
patent defense, settlement and judgments pursuant to Section 11.5 with respect
to PRODUCT in TERRITORY A shall be a shared expense of the Parties. The
OUT-OF-POCKET COSTS of patent defense, settlement and judgments pursuant to
Sections 11.5.1 and 11.5.2 with respect to PRODUCT outside of TERRITORY A shall
be borne by the Party which incurred such expense. The OUT-OF-POCKET COSTS
incurred by either Party of engaging an UNAFFILIATED EXPERT pursuant to Section
11.5.3 shall be a shared expense of the Parties. All PATENT COSTS incurred by a
Party pursuant to Section 11.5.3 shall be allocated between the Parties as
provided in Section 11.5.3.
11.7 ROYALTY REDUCTION IN TERRITORY B or TERRITORY C. If, as a result of
settlement procedures or litigation under Section 11.5, SB is required to pay a
THIRD PARTY a royalty in TERRITORY B or TERRITORY C or make any payment of any
kind for the right to use the Coulter INTELLECTUAL PROPERTY RIGHTS in a
particular country in TERRITORY B or TERRITORY C, SB may deduct, from the amount
of royalties owed to Coulter in connection with the country, [*] of the amount
of the royalty or such other amount payable to the THIRD PARTY in respect of the
sale of the allegedly infringing PRODUCT, provided that (i) the balance of such
royalty or other payment obligation shall be included in NON-USA COGS, and (ii)
in any event, the net royalty payable to Coulter for that country shall not be
reduced to an amount less than [*] of NET SALES in such country or [*] per
Bexxar Therapy (as defined in Section 7.2.5(f)), whichever is greater.
11.8 FORECLOSURE UNDER SECURITY AGREEMENT. In order to grant SB a
security interest in certain collateral, the Parties have executed a Security
Agreement (the "Security Agreement") concurrent with the execution of the LOAN
AGREEMENT. Such collateral includes those COULTER PATENT RIGHTS identified in
the Security Agreement The Parties agree that the following procedures shall
apply in the event of default by Coulter under the Security Agreement and the
exercise of rights and remedies by SB thereunder. As used in this Section 11.8,
the term "Secured Patents" shall refer to all COULTER PATENT RIGHTS included
within the defined term "Collateral" under the Security Agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
91.
<PAGE> 105
11.8.1 FORECLOSURE NOT A TERMINATION OF THIS AGREEMENT. A default
by Coulter under the Security Agreement and the exercise of any rights or
remedies by SB thereunder shall not constitute a termination of this Agreement.
Such termination shall occur, if at all, only upon the events specified in
Article 13 or as otherwise provided in this Agreement. So long as this Agreement
remains in effect, the provisions of this Article 11 shall apply to the Secured
Patents, whether title is in the name of Coulter or SB. Notwithstanding the
above, in the event SB exercises its rights or remedies under the Security
Agreement, and this Agreement remains in effect, SB shall be entitled to one
hundred percent (100%) of all royalties or other remuneration generated as a
result of any license granted by the Parties to a THIRD PARTY in TERRITORY A
under Section 11.4.3(b).
11.8.2 TRANSFER OF SECURED PATENTS.
(a) If SB exercises rights or remedies under the Security
Agreement, then, so long as title to the Secured Patents remains in the name of
Coulter, Coulter shall continue to perform prosecution, maintenance, and
enforcement of such PATENT RIGHTS, subject, however, to the terms of this
Article 11, provided that in performing such work, Coulter shall at all times
keep SB fully informed of its actions with respect to the Secured Patents and
shall follow SB's instructions with respect to such matters to the extent that
they may affects rights within the field of ANTI-CD20 ANTIBODIES.
(b) If SB forecloses on the Secured Patents or otherwise
obtains title thereto, Coulter shall promptly and fully cooperate in the orderly
transfer of title from Coulter to SB of such Secured Patents and shall execute
all documents necessary to effect such transfer at its expense. Coulter shall
make available to SB , at Coulter's expense, copies of all its relevant files
regarding the creation, prosecution, maintenance, enforcement and extension of
the Secured Patents.
(c) Any transfer of the Secured Patents to any party other
than SB shall be subject to an agreement by the transferee to take such patents
subject to the terms of this Section 11.8, as if such transferee were SB.
11.8.3 MAINTENANCE OF SECURED PATENTS.
(a) If SB obtains title to the Secured Patents, it shall,
at its expense, prosecute and maintain the Secured Patents, provided that:
(i) SB shall keep Coulter promptly and fully
informed of the course of patent prosecution and other proceedings including by
providing Coulter with copies of substantive communications, search reports and
third party observations submitted to or received from patent offices throughout
the TERRITORY or Japan,
(ii) SB will disclose to Coulter all information
concerning the institution or possible institution of any interference,
opposition, re-examination, reissue, revocation, nullification or any official
proceeding involving a Secured Patent anywhere in the TERRITORY or Japan, and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
92.
<PAGE> 106
(iii) subject to Section 11.8.3(c), SB shall use
COMMERCIALLY REASONABLE EFFORTS with respect to such prosecution and
maintenance. Notwithstanding the above, Coulter shall reimburse SB for all costs
it incurs with respect to the prosecution or maintenance of Secured Patents to
the extent that such costs are not related to the field of ANTI-CD20 ANTIBODIES
within thirty (30) days following receipt from SB of an accounting for such
costs, together with a related invoice.
(b) Coulter shall have the right to review all such
pending applications and other proceedings outlined in Sections 11.8.3(a) and
(b) and make recommendations to SB concerning them and their conduct, provided
that SB shall have sole discretion with respect to all decisions related
thereto, except as otherwise provided in Section 11.8.3(d). Coulter shall
provide such patent consultation to SB at no cost to SB. Coulter shall hold all
information disclosed to it under this section as confidential subject to the
provisions of Article 17.
(c) Notwithstanding Section 11.8.3(a)(iii), SB shall have
no obligation to maintain or prosecute any claims contained in the Secured
Patents, and may abandon or otherwise cause or allow such claims to be
forfeited.
(d) If SB determines (i) to abandon any Secured Patents,
or any part of a Secured Patent, (ii) to cause or allow such patent or part
thereof to be forfeited, or (iii) to cease maintaining or prosecuting claims of
the Secured Patents, it shall provide Coulter at least sixty (60) days prior
notice of such proposed action or event and Coulter shall have the right, but
not the obligation, to assume responsibility for (a) such Secured Patent or part
thereof which SB intends to abandon or otherwise cause or allow to be forfeited,
or (b) prosecuting or maintaining claims of such Secured Patents, provided that
Coulter shall bear one hundred percent (100%) of all reasonable expenses
incurred by SB with respect to the prosecution and maintenance of such Secured
Patent or part thereof to be forfeited, whether or not outside the field of
ANTI-CD20 ANTIBODIES from the date Coulter receives such notice until the date
that either (x) Coulter assumes such responsibility, or (y) Coulter notifies SB,
in writing, that Coulter is not interested in assuming such responsibility.
(e) SB shall have the right but not the obligation to seek
extensions of the terms of any Secured Patents, at SB's expense. SB shall have
sole discretion in making any decisions related to such expenses.
11.8.4 ACTIONS SUBSEQUENT TO TERMINATION. In the event of a
termination of this Agreement at a time when SB has foreclosed on the Secured
Patents (whether such termination occurred before or after such foreclosure),
then:
(a) In the event of the institution of any suit by a THIRD
PARTY against Coulter, SB, or any sublicensee or distributor of either of them
for patent infringement involving the manufacture, use, sale, distribution or
marketing of PRODUCT anywhere in the TERRITORY or Japan, the Party sued shall
promptly notify the other Party in writing. Each Party shall have the right to
defend itself in such action, at its own expense, and the Parties shall
reasonably cooperate in any such litigation without expense to the requesting
Party.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
93.
<PAGE> 107
(b) In the event that either Party becomes aware of actual
or threatened infringement of a Secured Patent anywhere in the TERRITORY or
Japan, the Party becoming aware of such matter shall promptly inform the other
Party. SB shall have the first right, but not the obligation, to bring, at its
own expense, an infringement action against any such apparent infringer, and if
necessary to name Coulter as a party in such action, unless the actual or
threatened infringement is exclusively within the scope of Coulter's exclusive
license rights under Section 3(a) of the Security Agreement, and the outcome of
such action can not potentially affect the validity or enforceability of such
Secured Patent with respect to the field of ANTI-CD20 ANTIBODIES, in which case
Coulter shall have the first right to bring such an action and if necessary to
name SB as a party in such action. If the Party with the first right to commence
such an action does not do so within ninety (90) days of delivery or receipt of
the notice of infringement, the other Party, after notifying the first Party in
writing, shall be entitled to bring such infringement action at its own expense.
The Party conducting such action shall have full control over its conduct,
including settlement thereof subject to paragraph (d) below. In any event, the
Parties shall reasonably cooperate in any such litigation without expense to the
requesting Party.
(c) Coulter and SB shall recover their respective actual
OUT-OF-POCKET COSTS, or equitable proportions thereof, from the proceeds of any
litigation recovery or settlement under this Section 11.8.4. Any amount
recovered in excess of such costs shall be retained by the Party conducting the
action.
(d) The Parties shall keep one another informed of the
status of and their respective activities regarding any litigation or settlement
thereof concerning Secured Patents, provided, however, that no settlement or
consent judgment or other voluntary final disposition of any suit defended or
action brought by a Party pursuant to this Section 11.8 may be entered into
without the consent of the other Party if such settlement would require the
other Party to be subject to an injunction or to make a monetary payment or
would otherwise adversely affect the other Party's rights.
11.8.5 NO REPRESENTATION OR WARRANTY. SB makes no representation
or warranty, express or implied, with respect to any of SB's activities related
to the Secured Patents. Coulter agrees that SB shall have no liability to
Coulter with respect to SB's activities related to the Secured Patents provided
that SB follows the procedures outlined in this Section 11.8.
11.9 COVENANT REGARDING EXISTING THIRD PARTY LICENSE AGREEMENTS WITH
[*]. Coulter covenants that as of the date of mutual execution of this Agreement
by the Parties, it will expeditiously pursue and use COMMERCIALLY REASONABLE
EFFORTS to obtain an amendment(s) of the EXISTING THIRD PARTY LICENSE AGREEMENTS
with [*] (as defined in Section [*]) in order that:
11.9.1 [*] shall waive any right that it has under its EXISTING
THIRD PARTY LICENSE AGREEMENTS with Coulter to participate in any decisions
regarding the settlement, consent judgment or other voluntary final disposition
of any suit regarding any COULTER PATENT RIGHTS which may be owned by [*]; and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
94.
<PAGE> 108
11.9.2 the licenses granted to Coulter by [*] under the first of
the two EXISTING THIRD PARTY LICENSE AGREEMENTS between Coulter and [*] (as set
forth in Section 1.19(v)) will be consistent in scope with the licenses granted
to Coulter by [*] under the second of the two EXISTING THIRD PARTY LICENSE
AGREEMENTS between Coulter and [*] (as set forth in Section 1.19(vi)).
Coulter agrees to keep SB informed of its efforts to negotiate the amendment(s)
described in Sections 11.9.1 and 11.92. Coulter provides no assurance to SB that
such amendment(s) will be obtained despite its efforts to do so, provided that
(a) in the event such amendments are not obtained, Coulter will bear, at its
sole expense, any incremental royalties, licensing fees and legal costs incurred
by the Parties with respect to the making, having made, use or sale of PRODUCT
in the TERRITORY as a result thereof, or (b) in the event such amendment is
obtained, but requires any incremental royalties, licensing fees and legal costs
relating to the making, having made, use or sale of PRODUCT in the TERRITORY,
Coulter will bear, at its sole expense, any such incremental royalties,
licensing fees and legal costs.
ARTICLE 12
FORCE MAJEURE
Neither Party shall be liable to the other for delay or failure in the
performance of the obligations on its part contained in this Agreement if and to
the extent that such failure or delay is due to circumstances beyond its control
which it could not have avoided by the exercise of reasonable diligence (a
"FORCE MAJEURE OCCURRENCE") including but not limited to: act of God, war or
insurrection; civil commotion; destruction of essential facilities or materials
by earthquake, fire, flood or storm; labor disturbance; epidemic; or other
similar event; provided, however, that the Party so affected shall notify the
other Party promptly should such circumstances arise, giving an indication of
the likely extent and duration thereof, and shall use all COMMERCIALLY
REASONABLE EFFORTS to avoid, remove or alleviate such causes of nonperformance
and shall resume performance of its obligations hereunder with the utmost
dispatch whenever such causes are removed.
ARTICLE 13
TERM AND TERMINATION
13.1 TERM.
13.1.1 Unless earlier terminated as set out in this Agreement,
this Agreement shall expire in TERRITORY A with respect to a particular PRODUCT
upon the termination of the sale of such PRODUCT in TERRITORY A and the
availability of such PRODUCT for the end user, such termination to be determined
by the JCC. Following such expiration, neither Party shall have any rights under
the other Party's INTELLECTUAL PROPERTY RIGHTS in TERRITORY A to make, have
made, use, sell, offer for sale, and import such PRODUCT in TERRITORY A, and,
unless agreed otherwise by the Parties, both Parties shall be precluded from
selling such PRODUCT in TERRITORY A, or from licensing or otherwise enabling any
AFFILIATE or THIRD PARTY to sell such PRODUCT in
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
95.
<PAGE> 109
TERRITORY A. Furthermore, following such expiration, while Coulter shall retain
all rights to the Territory A Trademarks (as defined in Section 10.1.1) related
to such PRODUCT, unless agreed otherwise by the Parties, Coulter shall be
precluded from using such Territory A Trademarks in connection with the making,
having made, use, sale, offer for sale, and importation of such PRODUCT or any
other human pharmaceutical therapy in TERRITORY A. This Agreement shall expire
in its entirety in TERRITORY A upon the termination of sale of all PRODUCTS in
TERRITORY A.
13.1.2 Unless earlier terminated as set out in this Agreement,
this Agreement shall expire in each country of TERRITORY B and TERRITORY C with
respect to a particular PRODUCT on a country-by-country basis, on the [*]
anniversary of the date of FIRST COMMERCIAL SALE of such PRODUCT in such
country. Following such expiration in a particular country of TERRITORY B and
TERRITORY C, each Party shall have a non-exclusive, royalty-free, irrevocable
and perpetual license, under the other Party's INTELLECTUAL PROPERTY RIGHTS in
such country, to make, have made, use, sell, offer for sale, and import such
PRODUCT in such country, except that Coulter shall have no rights to any
INTELLECTUAL PROPERTY RIGHTS or INVENTIONS or other proprietary know-how of SB
related to the [*] developed [*] the [*]. Furthermore, following such
expiration, SB shall have the exclusive right to use the TRADEMARK used in
connection with such PRODUCT in connection with the making, having made, use,
sale, offer for sale, and importation of the PRODUCT in such country, and if
such TRADEMARK is a Coulter Trademark (as defined in Section 10.1.2), Coulter
shall promptly assign all rights and title to such TRADEMARK in such country to
SB. Coulter warrants and represents that after such expiration, Coulter shall no
longer use Trademark (whether an SB Trademark (as defined in Section 10.1.2) or
Coulter Trademark) for any purpose, and shall only be permitted to continue to
sell such PRODUCT under a trademark which is not confusingly similar to
Trademark. This Agreement shall expire in its entirety in a particular country
of TERRITORY B or TERRITORY C upon the termination of the fifteenth anniversary
of the FIRST COMMERCIAL SALE of the last PRODUCT in such country.
13.1.3 With respect to supply of a particular PRODUCT to the
Parties after the expiration of the Agreement in TERRITORY B and TERRITORY C
with respect to such PRODUCT, the Parties shall meet [*] months prior to the
expiration date for the first country under Section 13.1.2 in TERRITORY B, and
again [*] prior to the expiration date for the first country under Section
13.1.2 in TERRITORY C, to discuss an ongoing long-term agreement for the supply
of the relevant UNCONJUGATED ANTIBODY and RADIOLABELED ANTIBODY from whichever
Party is then manufacturing UNCONJUGATED ANTIBODY and/or RADIOLABELED ANTIBODY
(whether at its own facilities or at a THIRD PARTY manufacturer) to the other
Party in each such TERRITORY. If the Parties are unable to agree on a long-term
supply agreement within six (6) months prior to the first expiration date in any
such TERRITORY, the then supplying Party would be obligated to supply the other
Party with UNCONJUGATED ANTIBODY and/or RADIOLABELED ANTIBODY in such TERRITORY
for [*] following the date of first expiration in such TERRITORY, such supply to
be charged to the receiving Party at the supplying Party's COST OF GOODS plus a
percentage of such Party's COST OF GOODS to be negotiated in good faith between
the Parties, provided in no event shall such percentage exceed [*]. After such
[*], each Party shall be free to contract with any THIRD PARTY manufacturer for
the supply of UNCONJUGATED ANTIBODY and/or RADIOLABELED ANTIBODY, provided that
neither SB nor Coulter may enter into an exclusivity agreement with a
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
96.
<PAGE> 110
THIRD PARTY manufacturer for the supply of UNCONJUGATED ANTIBODY and/or
RADIOLABELED ANTIBODY which would preclude the other Party from being supplied
by the same manufacturer.
13.2 GENERAL CONDITIONS OF EXPIRATION AND TERMINATION.
13.2.1 The provisions of Sections 8.1, 8.2, 8.3, 8.5, 8.6, 8.7,
9.18, 10.1.1, 10.1.2, 10.2.3, 10.5 (to the extent related to actions which arose
during the term of the Agreement), 10.6 (to the extent related to actions which
arose during the term of the Agreement), 10.7, 11.1, 11.1.2 (with respect to
jointly-owned INVENTIONS), 11.2 (with respect to jointly-owned INVENTIONS), 11.3
(to the extent related to actions which arose during the term of the Agreement),
11.4 (to the extent related to actions which arose during the term of the
Agreement), 11.5 (to the extent related to actions which arose during the term
of the Agreement), 11.6 (to the extent related to actions which arose during the
term of the Agreement), 11.8 and 11.9 and Articles 12, 13, 14, 15, 16, 17, 18
and 19 (excluding Section 19.1) shall survive termination or expiration of this
Agreement.
13.2.2 Termination or expiration of this Agreement shall not
operate to deprive either Party of any rights or remedies either at law or in
equity or to relieve either Party of any of its obligations incurred prior to
the effective date of such termination or expiration.
13.2.3 SB may terminate this Agreement on a country by country
basis by giving Coulter at least [*] written notice thereof at any time before
SB first markets PRODUCT in such country based on a reasonable determination by
SB, using the same standards SB would use in assessing whether or not to
continue development or commercialization of a PRODUCT of its own making, that
the patent, medical/scientific, technical, regulatory or commercial profile of
PRODUCT does not justify continued development or future commercialization of
PRODUCT in such country. After marketing PRODUCT, SB may terminate this
Agreement on a country by country basis by giving Coulter at least [*] prior
written notice thereof based on a reasonable determination by SB, using the same
standards SB would use in assessing whether or not to continue development or
commercialization of a PRODUCT of its own making, that the patent,
medical/scientific, technical, regulatory or commercial profile of PRODUCT does
not justify continued marketing of PRODUCT in such country. If SB terminates
this Agreement pursuant to this Section 13.2.3, it shall pay to Coulter (i) in
the event that Coulter is continuing with the development or commercialization
of PRODUCT in such country(ies) in which SB is terminating the Agreement, all
sums accrued under this Agreement which are then due and owing by SB to Coulter
in such country(ies) (less any sums which are then due and owing by Coulter to
SB in such country(ies)) for [*], as applicable, up to the effective date of
termination, or (ii) in the event that Coulter determines within such [*] as the
case may be that Coulter will not continue with the development or
commercialization of PRODUCT in such country(ies) in which SB is terminating the
Agreement, [*] of all unavoidable and noncancellable OUT-OF-POCKET COSTS which
are reasonably associated with winding down the development or commercialization
of PRODUCT in such country(ies). In the event that SB terminates this Agreement
in one or more countries and becomes liable under clause (ii) hereto, then the
Parties shall consult in good faith regarding the costs associated with winding
down such development and commercialization of PRODUCT and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
97.
<PAGE> 111
the tasks to be undertaken by the Parties, and agree to use COMMERCIALLY
REASONABLE EFFORTS to minimize such costs.
13.2.4 Either Party may terminate this Agreement if, at any time,
the other Party shall file in any court or agency pursuant to any statute or
regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver or
trustee of the Party or of its assets, or if the other Party proposes a written
agreement of composition or extension of its debts, or if the other Party shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if the other Party shall propose or be a Party to
any dissolution or liquidation, or if the other Party shall make an assignment
for the benefit of creditors.
13.2.5 Notwithstanding the bankruptcy of Coulter, or the
impairment of performance by Coulter of its obligations under this Agreement as
a result of bankruptcy or insolvency of Coulter, SB shall be entitled to retain
the licenses granted herein, subject to Coulter's rights to terminate this
Agreement for reasons other than bankruptcy or insolvency as expressly provided
in this Agreement.
13.2.6 All rights and distribution rights granted under or
pursuant to this Agreement by Coulter to SB are, and shall otherwise be deemed
to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of
rights to "intellectual property" as defined under Section 101(52) of the U.S.
Bankruptcy Code. The Parties agree that SB, as a licensee of such rights under
this Agreement, shall retain and may fully exercise all of its rights and
elections under the U.S. Bankruptcy Code, subject to performance by SB of its
preexisting obligations under this Agreement. The Parties further agree that, in
the event of the commencement of a bankruptcy proceeding by or against Coulter
under the U.S. Bankruptcy Code, SB shall be entitled to a complete duplicate of
(or complete access to, as appropriate) any such intellectual property and all
embodiments of such intellectual property, and same, if not already in its
possession, shall be promptly delivered to SB (a) upon any such commencement of
a bankruptcy proceeding upon written request therefor by SB, unless Coulter
elects to continue to perform all of its obligations under this Agreement, or
(b) if not delivered under (a) above, upon the rejection of this Agreement by or
on behalf of Coulter upon written request therefor by SB, provided, however,
that upon Coulter's (or its successor's) written notification to SB that it is
again willing and able to perform all of its obligations under this Agreement,
SB shall promptly return all such tangible materials to Coulter, but only to the
extent that SB does not require continued access to such materials to enable SB
to perform its obligations under this Agreement.
13.3 TERMINATION FOR BREACH.
13.3.1 GENERAL. Except as otherwise provided in this Section
13.3.1, either Party may terminate this Agreement for material breach by the
other Party, which breach remains uncured for [*] days in the case of nonpayment
of any amount due and [*] days for all other breaches, each measured from the
date written notice of such breach is given to the breaching Party, or, if such
breach is not susceptible of cure within such [*] day period and the breaching
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
98.
<PAGE> 112
Party uses diligent good faith efforts to cure such breach, for [*] days after
written notice to the breaching Party, provided that notice of termination must
be given after the date written notice of breach is given and prior to the
expiration of such [*] period and prior to the cure of the breach by the
breaching Party.
13.3.2 BREACH BY SB. If termination is due to a material breach
by SB, all rights granted to SB under this Agreement shall revert to Coulter and
Coulter shall automatically be granted an exclusive, worldwide, royalty-free
license, with a right to sublicense, under all INTELLECTUAL PROPERTY RIGHTS held
by SB at the time of termination, to use, sell, offer for sale and import the
PRODUCT in the FIELD in the TERRITORY, but Coulter shall have no rights under
any INTELLECTUAL PROPERTY RIGHTS or INVENTIONS or other proprietary know-how
held by SB which are related to the [*], and the terms of Section 13.4 shall
apply. Coulter shall thereafter be free to develop and commercialize the PRODUCT
without limitation or further obligation to SB.
13.4 EARLY TERMINATION LICENSE OF SB'S LICENSE. In the event SB's
license terminates early in one or more countries pursuant to Section 3.2.5(b),
5.4.1(a), 5.4.2(a), 6.7, 7.2.2(a), 7.2.2(b), 9.10.4, 9.10.6, 13.2.3 or 13.3.2
all rights granted to SB under this Agreement in such countries shall revert to
Coulter and Coulter shall automatically be granted an exclusive license, with a
right to sublicense, under all INTELLECTUAL PROPERTY RIGHTS held by SB at the
time of termination in such countries, to use, sell, offer for sale and import
the PRODUCT in the FIELD in such countries, except that Coulter shall have no
rights to any INTELLECTUAL PROPERTY RIGHTS or INVENTIONS or other proprietary
know-how of [*] developed [*] the [*]. In addition, at Coulter's election,
either (i) SB will transfer to Coulter any regulatory filings made by SB or its
permitted sublicensees in such countries or (ii) Coulter and/or its THIRD PARTY
licensees will have a right of reference to any regulatory filings made by SB or
its permitted sublicensees in such countries to the extent legally permitted.
Coulter shall thereafter be free to develop and commercialize the Product
without limitation or further obligation to SB in such countries, except as
otherwise provided in this Section 13.4. In addition, SB shall promptly provide
Coulter, with the SB Transfer Documents (as defined below), which Coulter may
use as Coulter sees fit and which Coulter may provide to a THIRD PARTY licensee
for use in continuing DEVELOPMENT and commercialization of the PRODUCT in the
FIELD in such countries. Coulter shall reimburse SB for all expenses incurred by
SB in the provision of such Transfer Documents to Coulter within thirty (30)
days after receipt of SB's invoice therefor.
For purposes of this Section 13.4 and Section 13.5, "SB Transfer Documents"
shall mean [*], including but not limited to the following documents: (i) [*];
(ii) [*]; (iii) [*], and (iv) [*]. Notwithstanding the above, it is understood
that in the event that SB's exclusive license is terminated in less than the
entire European Union, and European Union regulatory or other governmental
regulations require a single company to hold a centralized marketing
authorization license for PRODUCT, SB will still be the marketing authorization
holder of the original centralized license, to which Coulter and/or its
sublicensee shall have a right of reference, and such original centralized
license will continue to be valid throughout the whole of the European Union,
and Coulter or its sublicensee will be required to obtain a second centralized
license which will be valid throughout the whole of the European Union, and
neither Coulter nor its sublicensee will be permitted to market PRODUCT under
the TRADEMARK. However, neither
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
99.
<PAGE> 113
Coulter nor its THIRD PARTY licensees shall be permitted to market, sell
or distribute PRODUCT under such second centralized license in those countries
of the European Union in which SB's license remains exclusive, provided that the
foregoing shall not be construed to otherwise limit further sale of PRODUCT put
on sale in those countries of the European Union in which Coulter and/or its
sublicensee are permitted to market PRODUCT into the other countries of the
European Union.
13.5 NON-EXCLUSIVE LICENSE. In the event SB's license becomes
non-exclusive in one or more countries pursuant to Section 5.4.1(a), 5.4.2(a),
7.2.2(a), 7.2.2(b) or 9.10.4, all rights granted to SB under this Agreement in
such countries shall become non-exclusive and Coulter shall automatically be
granted a non-exclusive license, with a right to sublicense, under all
INTELLECTUAL PROPERTY RIGHTS held by SB at the time SB's license becomes
non-exclusive in such countries, to use, sell, offer for sale and import the
PRODUCT in the FIELD in such countries, except that Coulter shall have no rights
to any INTELLECTUAL PROPERTY RIGHTS or INVENTIONS or other proprietary know-how
of SB related to the [*] developed [*] the [*]. In the event SB's license
becomes non-exclusive in one or more countries pursuant to Section 7.2.2(a) or
7.2.2(b), Coulter may only grant a sublicense under the foregoing license to
sell PRODUCT to a single THIRD PARTY in any given country. In addition, Coulter
and/or its THIRD PARTY licensees will have a right of reference to any
regulatory filings made by SB or its permitted sublicensees in such countries to
the extent legally permitted. Coulter shall thereafter be free to develop and
commercialize the Product without limitation or further obligation to SB in such
countries except as otherwise provided in this Section 13.5. In addition, SB
shall promptly provide Coulter with the SB Transfer Documents (as defined in
Section 13.4), which Coulter may use as Coulter sees fit and which Coulter may
provide to a THIRD PARTY licensee for use in continuing development and
commercialization of the PRODUCT in the FIELD in such countries. Coulter shall
reimburse SB for all expenses incurred by SB in the provision of such SB
Transfer Documents to Coulter within [*] after receipt of SB's invoice therefor.
Notwithstanding the above, it is understood that in the event that SB's
exclusive license is converted to a non-exclusive license in less than the
entire European Union, and European Union regulatory or other governmental
regulations require a single company to hold a centralized marketing
authorization license for PRODUCT, SB will still be the marketing authorization
holder of the original centralized license, to which Coulter and/or its
sublicensee shall have a right of reference, and such original centralized
license will continue to be valid throughout the whole of the European Union,
and Coulter or its sublicensee will be required to obtain a second centralized
license which will be valid throughout the whole of the European Union, neither
Coulter nor its sublicensee will be permitted to market PRODUCT under the
Trademark. However, neither Coulter nor its THIRD PARTY licensees shall be
permitted to market, sell or distribute PRODUCT under such second centralized
license in those countries of the European Union in which SB's license remains
exclusive, provided that the foregoing shall not be construed to otherwise limit
further sale of PRODUCT put on sale in those countries of the European Union in
which Coulter and/or its sublicensee are permitted to market PRODUCT into the
other countries of the European Union.
13.6 EARLY TERMINATION OF COULTER'S LICENSE. In the event Coulter's
rights to CO-PROMOTE PRODUCT terminates early in TERRITORY A pursuant to
Sections 4.2.3, 5.4.1(b), 5.4.2(b) or 7.1.15 (third sentence), all rights
granted to Coulter under this Agreement in TERRITORY A shall
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
100.
<PAGE> 114
revert to SB, and SB shall automatically be granted an exclusive license, with a
right to sublicense, under all INTELLECTUAL PROPERTY RIGHTS held by Coulter at
the time of termination in TERRITORY A, to use, sell, offer for sale and import
the PRODUCT in the FIELD in TERRITORY A. In addition, SB and/or its THIRD PARTY
licensees will have a right of reference to any regulatory filings made by
Coulter or its permitted sublicensees in TERRITORY A to the extent legally
permitted. SB shall thereafter be free to commercialize the PRODUCT in TERRITORY
A, and to use the Coulter Trademark (as defined in Section 10.1.2) in connection
therewith, without limitation or further obligation to Coulter in TERRITORY A,
except as otherwise provided in this Section 13.6 or Section 7.1.15. In
addition, Coulter shall promptly provide SB with the Coulter Transfer Documents
(as defined below) to the extent SB does not already have such Coulter Transfer
Documents, which SB may use as SB sees fit and which SB may provide to a THIRD
PARTY licensee for use in continuing commercialization of the PRODUCT in the
FIELD in TERRITORY A. SB shall reimburse Coulter for all expenses incurred by
Coulter in the provision of such Coulter Transfer Documents to Sb within thirty
(30) days after receipt of Coulter's invoice therefor.
For purposes of this Section 13.6, "Coulter Transfer Documents" shall
mean all Coulter KNOW-HOW, including but not limited to the following documents:
(i) a copy of all protocols prepared by Coulter and regulatory filings made by
Coulter under this Agreement in TERRITORY A; (ii) a copy of all reports on
non-clinical and clinical studies sponsored by Coulter in TERRITORY A or for the
benefit of TERRITORY A under this Agreement which have been filed or prepared
for filing with the regulatory authorities; (iii) the data underlying any
non-clinical and clinical database owned by Coulter in computer-readable form if
readily available in a non-proprietary format, and (iv) a copy of all case
report forms for patients enrolled in clinical studies sponsored by Coulter for
which no report has been prepared at the time of termination.
13.7 NO LIMIT ON REMEDIES. Nothing herein shall exclude or limit any
remedies or entitlements whatsoever which the law confers to either Party in the
event of a breach of contractual obligations by the other Party.
ARTICLE 14
ASSIGNMENT
14.1 ASSIGNMENT. Neither Party may assign or transfer this Agreement or
any rights or obligations hereunder without the prior written consent of the
other which shall not be unreasonably withheld, except a Party may make such an
assignment without the other Party's consent to Affiliates or to a successor to
substantially all of the pharmaceutical business of such Party, whether in a
merger, sale of stock, sale of assets or other transaction. Any permitted
successor or assignee of rights and/or obligations hereunder shall, in a writing
to the other Party, expressly assume performance of such rights and/or
obligations. Any permitted assignment shall be binding on and inure to the
benefit of the successors of the assigning Party. Any assignment or attempted
assignment by either Party in violation of the terms of this Section 14.1 shall
be null and void and of no legal effect.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
101.
<PAGE> 115
14.2 PERFORMANCE BY AFFILIATES AND LOCAL OPERATING ENTITIES. Each of
Coulter and SB acknowledge that obligations under this Agreement may be
performed by AFFILIATES of Coulter and SB, to the extent permitted by this
Agreement. Each of Coulter and SB guarantee performance of this Agreement by its
AFFILIATES. In the event of a claim arising under this Agreement with respect to
an AFFILIATE of the other Party, the aggrieved Party may seek a remedy directly
against the other Party and shall not be required to seek a remedy from the
other Party's AFFILIATE. Wherever, as permitted by this Agreement, the Parties
delegate responsibility to local operating entities, the Parties agree that such
entities have no authority to amend the terms of this Agreement or act contrary
to its terms in any way.
ARTICLE 15
INDEMNIFICATION AND INSURANCE
15.1 CROSS INDEMNIFICATION.
15.1.1 INDEMNIFICATION IN THE NON-USA TERRITORY.
(a) With respect to DEVELOPMENT, MANUFACTURE DEVELOPMENT,
manufacture or commercialization of PRODUCT sold or to be sold in TERRITORY B or
TERRITORY C, SB hereby agrees to save, defend and hold Coulter, its AFFILIATES
and their respective officers, directors, shareholders, representatives, agents,
employees, successors and assigns harmless from and against any and all suits,
claims, actions, demands, liabilities, expenses and/or losses, including
reasonable legal expense and attorneys' fees, brought by a THIRD PARTY or that
arise in connection with any claim brought by a THIRD PARTY with respect to the
PRODUCT ("Losses"), including without limitation, Losses resulting from inherent
defects in the PRODUCT, except to the extent such Losses result from (i) the
negligence or willful misconduct of Coulter or breach by Coulter of any
provision of this Agreement, including without limitation, the Coulter
warranties and representations set forth in Article 16 or (ii) Coulter's
manufacture (including its manufacture through THIRD PARTY suppliers) of
UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY which does not comply with GMP or
PRODUCT specifications (as defined in Section 9.4.4), except to the extent such
Losses result from (x) the negligence or willful misconduct of SB or breach by
SB of any provision of this Agreement, including without limitation, the SB
warranties and representations set forth in Article 16 or (y) SB's manufacture
(including its manufacture through THIRD PARTY suppliers) of UNCONJUGATED
ANTIBODY or RADIOLABELED ANTIBODY which does not comply with GMP or PRODUCT
Specifications (as defined in Section 9.4.4).
(b) With respect to DEVELOPMENT, MANUFACTURE DEVELOPMENT,
manufacture or commercialization of PRODUCT sold or to be sold in TERRITORY B or
TERRITORY C Coulter hereby agrees to save, defend and hold SB, its AFFILIATES
and their respective officers, directors, shareholders, representatives, agents,
employees, successors and assigns harmless from and against any and all Losses
(as defined in Section 15.1.1(a)) with respect to the PRODUCT to the extent such
Losses result from (i) the negligence or willful misconduct of Coulter or breach
by Coulter of any provisions of this Agreement, including without limitation,
the SB warranties
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
102.
<PAGE> 116
and representations set forth in Article 16 or (ii) Coulter's manufacture
(including its manufacture through THIRD PARTY suppliers) of UNCONJUGATED
ANTIBODY or RADIOLABELED ANTIBODY which does not comply with GMP or PRODUCT
Specifications (as defined in Section 9.4.4), except to the extent such Losses
result from (x) the negligence or willful misconduct of SB or breach by SB of
any provision of this Agreement, including without limitation, the SB warranties
and representations set forth in Article 16 or (y) SB's manufacture (including
its manufacture through THIRD PARTY suppliers) of UNCONJUGATED ANTIBODY or
RADIOLABELED ANTIBODY which does not comply with GMP or PRODUCT Specifications
(as defined in Section 9.4.4).
15.1.2 INDEMNIFICATION IN TERRITORY A. With respect to
DEVELOPMENT, MANUFACTURE DEVELOPMENT, manufacture or commercialization of
PRODUCT sold or to be sold in TERRITORY A, each Party hereby agrees to save,
defend and hold the other Party, its AFFILIATES and their respective officers,
directors, shareholders, representatives, agents, employees, successors and
assigns harmless from and against any and all Losses (as defined in Section
15.1.1(a)) resulting directly from the manufacture, use, handling, storage, sale
or other disposition of Products throughout Territory A to the extent such
Losses result from (i) the negligence or willful misconduct of the indemnifying
Party or breach by the indemnifying Party of any provision of this Agreement,
including without limitation, the warranties and representations set forth in
Article 16 (ii) a Party's manufacture (including its manufacture through THIRD
PARTY suppliers) of UNCONJUGATED ANTIBODY or RADIOLABELED ANTIBODY which does
not comply with GMP or PRODUCT Specifications (as defined in Section 9.4.4), or
(iii) marketing activities of the indemnifying Party contrary to applicable
governmental regulations or outside the approved labeling of the PRODUCT, except
to the extent such Losses result from (x) the negligence or willful misconduct
of the other Party or breach by the other Party of any provision of this
Agreement, including without limitation, the other Party's warranties and
representations set forth in Article 16 or (y) the other Party's manufacture
(including its manufacture through THIRD PARTY suppliers) of UNCONJUGATED
ANTIBODY or RADIOLABELED ANTIBODY which does not comply with GMP or PRODUCT
Specifications (as defined in Section 9.4.4). Any other Losses resulting
directly from the manufacture, use, handling, storage, sale or other disposition
of PRODUCTS throughout TERRITORY A, including Losses resulting from inherent
defects in the PRODUCT, shall be included as an OTHER OPERATING INCOME/EXPENSE
and included in the JOINT P&L as outlined in Section 7.1.14.
15.2 INDEMNIFICATION PROCEDURE.
15.2.1 In the event Coulter is seeking indemnification from SB
under Section 15.1.1(a) or 15.1.2, SB shall have no such obligation unless
Coulter:
(a) gives SB prompt notice of any claim or lawsuit or
other action for which it seeks to be indemnified under this Agreement;
(b) cooperates fully with SB and its agents in defense of
any such claim, complaint, lawsuit or other cause of action; and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
103.
<PAGE> 117
(c) SB is granted full authority and control over the
defense, including settlement or other disposition thereof, against such claim
or lawsuit or other action, provided that Coulter shall have the right to retain
counsel of its choice to participate in the defense of any such claim or lawsuit
at Coulter's own expense, provided that such counsel shall not interfere with
SB's full authority and control.
15.2.2 In the event SB is seeking indemnification under Section
15.1.1(b) or Section 15.1.2, Coulter shall have no such obligation unless SB:
(a) gives Coulter prompt notice of any claim or lawsuit or
other action for which it seeks to be indemnified under this Agreement;
(b) cooperates fully with Coulter and its agents in
defense of any such claim, complaint, lawsuit or other cause of action; and
(c) Coulter is granted full authority and control over the
defense, including settlement or other disposition thereof, against such claim
or lawsuit or other action, provided that SB shall have the right to retain
counsel of its choice to participate in the defense of any such claim or lawsuit
at SB's own expense, provided that such counsel shall not interfere with
Coulter's full authority and control.
15.3 INSURANCE. During the term of the Agreement, and for a period of
five (5) years after the expiration or termination of this Agreement or the
earlier termination thereof, each Party shall maintain, respectively, at its
sole cost and expense, and in the case of Coulter, from insurance companies
having a rating of at least "A-VIII" as published in the most recent edition of
A.M. Best's Insurance Reports, product liability insurance and contractual
liability coverage, in amounts, respectively, which are reasonable and customary
in the U.S. pharmaceutical industry for companies of comparable size and
activities at the respective place of business of each Party. Such product
liability insurance shall insure against all liability, including personal
injury, physical injury, or property damage arising out of the manufacture,
sale, distribution, or marketing of PRODUCT in the countries of the world in
which the Party is permitted to undertake such activities in accordance with
this Agreement. Each Party shall provide written proof of the existence of such
insurance to the other Party upon request. Notwithstanding the foregoing, prior
to FIRST COMMERCIAL SALE each Party shall always maintain product liability
insurance with a minimum of [*] per occurrence (or claim) and annual aggregate
limit of liability, and after FIRST COMMERCIAL SALE each Party shall always
maintain product liability insurance with a minimum of [*] per occurrence (or
claim) and annual aggregate limit of liability. The cost of obtaining and
maintaining such insurance shall not be an allowable expense under the JOINT P&L
described in Section 7.1.14.
ARTICLE 16
WARRANTIES AND REPRESENTATIONS
16.1 Each Party hereby warrants to the other:
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
104.
<PAGE> 118
16.1.1 that it has full power and authority to execute and
deliver this Agreement, the STOCK PURCHASE AGREEMENT, and the LOAN AGREEMENT and
to perform the obligations on its part under such agreements;
16.1.2 that the execution and delivery by it of this Agreement,
the STOCK PURCHASE AGREEMENT and the LOAN AGREEMENT and the performance of its
obligations under such agreements (i) have been duly approved by all necessary
corporate action and do not require any shareholder action or approval; (ii) do
not and will not conflict with or result in a material breach of any of the
terms and provisions of any THIRD PARTY agreement entered into as of the
Effective Date; and (iii) do not and will not conflict with such Party's
Certificate of Incorporation or By-Laws;
16.1.3 that it has the right to grant the licenses outlined in
this Agreement, and is not aware of any impediment, including without limitation
any THIRD PARTY agreement, which would prevent it from performing its
obligations under this Agreement; and
16.1.4 that it will not enter into any THIRD PARTY agreement
after the Effective Date which, in any way, will limit its ability to perform
all of the obligations undertaken by it hereunder.
16.2 Coulter warrants and represents that it:
16.2.1 as of the Effective Date will have received any consent
required from Dana Farber Cancer Institute, Inc., a Massachusetts non-profit
corporation, with its principal place of business at 44 Binney Street, Boston,
Massachusetts, 02115 (hereinafter, "Dana Farber"), InterWest Partners V.L.P and
InterWest Investors V (hereinafter collectively, "InterWest Partners"), the
University of Michigan, a constitutional corporation of the State of Michigan,
with offices located at 3003 South State, Room 2071, Ann Arbor, Michigan
48109-1280 (hereinafter, "Michigan") and any other THIRD PARTY to grant the
licenses under Article 5 according to the terms thereof and to perform its
obligations to SB under this Agreement;
16.2.2 as of the Effective Date will have obtained a waiver of
each and every obligation imposed by Dana Farber, InterWest Partners, Michigan
and any other THIRD PARTY (including, without limitation, the United States
Government) to manufacture PRODUCT substantially in the United States of America
consistent with federal law and policy, or in the event that such waivers have
not been obtained by the Effective Date, it will expeditiously pursue, and use
COMMERCIALLY REASONABLE EFFORTS to provide assistance to any THIRD PARTY making
application for, such waivers;
16.2.3 shall pay all royalties or other sums and other payments
which Coulter may owe to Dana Farber, InterWest Partners, Michigan and any other
THIRD PARTY by virtue of this Agreement (all subject to the cost-sharing
mechanisms set forth in this Agreement), and shall perform and observe all of
the other obligations outlined in all present and future agreements between
Coulter and Dana Farber, InterWest Partners, Michigan and any other THIRD PARTY
which are in any way related to Coulter's ability to grant the rights granted to
SB
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
105.
<PAGE> 119
under this Agreement or to Coulter's ability to perform its obligations to SB
under this Agreement; and
16.2.4 has received no notices that Coulter is in breach of its
obligations under its agreements with Dana Farber, InterWest Partners, Michigan
or any other THIRD PARTY which are in any way related to Coulter's ability to
grant the rights granted to SB under this Agreement or to Coulter's ability to
perform its obligations to SB under this Agreement. In the event that Coulter
receives notice from Dana Farber, InterWest Partners, Michigan or any other
THIRD PARTY that Coulter has committed a breach of its obligations under any
such agreement, or if Coulter anticipates such breach, such as may give rise to
a right by such THIRD PARTY to terminate, diminish Coulter's ability to grant
rights to SB contemplated by this Agreement, or otherwise diminish Coulter's
ability to perform its obligations to SB under this Agreement, Coulter shall
immediately notify SB of such situation, and Coulter shall promptly cure such
breach. However, if Coulter is unable to cure such breach, Coulter shall, to the
extent possible, permit SB to cure such breach and to negotiate directly with
such THIRD PARTY.
16.3 Coulter warrants and represents that it has disclosed to SB the
complete texts of all COULTER PATENT RIGHTS as of the Effective Date as well as
all information received by Coulter as of the Effective Date concerning the
institution or possible institution of any interference, opposition,
reexamination, reissue, revocation, nullification or any official proceeding
involving a COULTER PATENT RIGHT anywhere in the TERRITORY. Coulter hereby
warrants and represents that it has no present knowledge that the COULTER PATENT
RIGHTS are invalid or unenforceable.
16.4 Coulter warrants and represents that, to the best of its knowledge,
information related to the PRODUCT it has provided to SB prior to the Effective
Date is up-to-date, timely and accurate in all material respects. Coulter
further warrants and represents that it has not, up through and including the
Effective Date, omitted to furnish SB with any material information available to
Coulter concerning the PRODUCT.
16.5 Coulter warrants and represents that it will not knowingly engage
in any activity regarding DEVELOPMENT or MANUFACTURE DEVELOPMENT or
commercialization of PRODUCT outside of the FIELD, including, but not limited
to, publication of preclinical or clinical data related to PRODUCT, which is or
ought to be recognized by Coulter as posing a present or potential harm to the
DEVELOPMENT or MANUFACTURE DEVELOPMENT or commercialization of PRODUCT within
the FIELD.
16.6 SB 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,
including without limitation any THIRD PARTY agreement, which would prevent it
from performing its obligations under this Agreement.
16.7 SB warrants and represents that it has reviewed the information
furnished to SB by Coulter regarding PRODUCT before deciding whether to enter
into this Agreement. [*] to [*] the [*] to the [*] to [*].
16.8 EXCEPT FOR THE EXPRESS WARRANTIES AND REPRESENTATIONS CONTAINED IN
THIS AGREEMENT, NEITHER SB NOR COULTER MAKES ANY
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
106.
<PAGE> 120
OTHER WARRANTIES OR REPRESENTATIONS, EXPRESS OR IMPLIED, IN FACT OR IN LAW.
ARTICLE 17
CONFIDENTIAL INFORMATION
17.1 INFORMATION. Each Party shall keep all information received from
the other Party (the "Information") confidential and shall not disclose nor use
the Information without the other Party's written consent except to the extent
contemplated by this Agreement. This restriction shall not, however, prevent
disclosure of the Information if and to the extent that disclosure is required
by law, provided that the disclosing Party informs the other Party without delay
of any such requirement, in order to allow such other Party to object to such
disclosure and to seek an appropriate protective order or similar protection
prior to disclosure.
17.2 EXCEPTIONS. The above obligations shall not apply or shall cease to
apply to Information which:
17.2.1 is now, or hereafter becomes, through no act or failure to
act on the part of the receiving Party, generally known or available;
17.2.2 is known by the receiving Party at the time of receiving
such information, as evidenced by its written records;
17.2.3 is hereafter furnished to the receiving Party by a THIRD
PARTY, as a matter of right and without restriction on disclosure;
17.2.4 is independently developed by or for the receiving Party
without any breach of this Article 17; or
17.2.5 is the subject of a written permission to disclose
provided by the disclosing Party.
17.3 PERMITTED DISCLOSURES. Information may be disclosed to employees,
agents or consultants of the receiving Party or its AFFILIATES or sublicensees
or suppliers of LICENSED COMPOUNDS and PRODUCTS, but only to the extent required
to accomplish the purposes of this Agreement and only if the receiving Party
obtains prior agreement from its employees, agents, consultants, sublicensees or
suppliers to whom disclosure is to be made to hold in confidence and not make
use of such Information for any purpose other than those permitted by this
Agreement. Each Party will use at least the same standard of care as it uses to
protect proprietary or confidential information of its own to ensure that such
employees, agents, consultants, sublicensees or suppliers do not disclose or
make any unauthorized use of the Information.
17.4 DISCLOSURE OF AGREEMENT. Neither Coulter nor SB shall release to
any THIRD PARTY or publish in any way any non-public information with respect to
the terms of this Agreement or concerning their cooperation without the prior
written consent of the other and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
107.
<PAGE> 121
agreement upon the nature and text of such announcement or disclosure, which
consent will not be unreasonably withheld or delayed; provided; however that
either Party may disclose the terms of this Agreement to the extent required to
comply with applicable laws, including without limitation the rules and
regulations promulgated by the Securities and Exchange Commission and the Party
intending to disclose the terms of this Agreement shall provide the
nondisclosing Party an opportunity to review and comment on the intended
disclosure in reasonably sufficient time (such time period to depend on the
urgency of the intended disclosure) prior to public release, and shall provide
the other Party with a written copy thereof, in order to allow such other Party
to comment upon such announcement or disclosure. Each Party agrees that it shall
cooperate fully and in a timely manner with the other with respect to all
disclosures regarding this Agreement to the Securities Exchange Commission and
any other governmental or regulatory agencies, including requests for
confidential treatment of proprietary information of either Party included in
any such disclosure. Notwithstanding any other provision of this Agreement, each
Party may disclose the terms of this Agreement to lenders, investment bankers
and other financial institutions ("Third Party Lender") of its choice solely for
purposes of financing the business operations of such Party either (i) upon the
written consent of the other Party or (ii) if the disclosing Party obtains a
signed confidentiality agreement with such financial institution with respect to
such information, such agreement to contain, at a minimum, the following:
(i) The Third Party Lender shall hold the information
disclosed to it by such Party ("Loan Information") in strict confidence and
shall use diligent efforts, which shall not in any event be less than the Third
Party Lender uses to prevent unauthorized use or disclosure of its own valuable,
confidential information, to prevent any unauthorized use or disclosure of such
Loan Information.
(ii) The Third Party Lender shall not, without the prior
written consent of such Party, use the Loan Information disclosed to it for any
purpose of other than the use for which such Loan Information was disclosed by
such Party.
(iii) Upon completion of the authorized use by such Third
Party Lender and in the absence of any further agreement between the Parties,
the Third Party Lender shall cease all use and make no further use of the Loan
Information and shall, upon written request from such Party, promptly return all
Loan Information to such Party.
17.5 PUBLICITY. Subject to Section 17.4, all publicity, press releases
and other announcements relating to this Agreement or the transaction
contemplated hereby shall be reviewed in advance by, and shall be subject to the
approval of, both Parties.
17.6 PUBLICATION.
17.6.1 The Parties shall cooperate in appropriate publication of
the results of research and development work performed pursuant to this
Agreement, but subject to their predominating interest in obtaining patent
protection for any patentable subject matter. The determination of authorship
for any paper shall be in accordance with accepted scientific practice.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
108.
<PAGE> 122
17.6.2 Notwithstanding anything in Section 17.6.1 to the
contrary, all publication and presentations of the results of research and
development work performed pursuant to this Agreement must be approved in
advance by both Parties; provided, however, either Party may disclose such
results to the extent required to comply with applicable laws, including without
limitation the rules and regulations promulgated by the Securities and Exchange
Commission and the Party intending to disclose the terms of this Agreement shall
provide the nondisclosing Party an opportunity to review and comment on the
intended disclosure in reasonably sufficient time (such time period to depend on
the urgency of the intended disclosure) prior to public release, and shall
provide the other Party with a written copy thereof, in order to allow such
other Party to comment upon such announcement or disclosure. Each Party agrees
that it shall cooperate fully with the other with respect to all disclosures
regarding this Agreement to the Securities Exchange Commission and any other
governmental or regulatory agencies, including requests for confidential
treatment of proprietary information of either Party included in any such
disclosure. The contribution of each Party shall be noted in all publications
or presentations by acknowledgment or coauthorship, whichever is appropriate.
17.6.3 Nothing in this Agreement shall be construed as preventing
or in any way inhibiting either Party from complying with statutory and
regulatory requirements governing such Party's obligations under this Agreement
regarding the DEVELOPMENT, MANUFACTURE DEVELOPMENT, use and sale or other
distribution of PRODUCT in the FIELD in the TERRITORY in any manner which it
reasonably deems appropriate, including, for example, by disclosing to
regulatory authorities confidential or other information received from the other
Party or THIRD PARTIES.
17.7 PRIOR CONFIDENTIALITY AGREEMENTS. This Agreement, and the
obligation of confidentiality and nondisclosure under this Article 17,
supersedes all prior understandings and agreements relating thereto, including
without limitation, the Confidentiality Agreement between Coulter and SB dated
April 13, 1995, as extended by letter agreement on May 7, 1997, the
Confidentiality Agreement between Coulter and SB, dated January 21, 1998 and the
Confidentiality Agreement between Coulter and SB, dated March 30, 1998
(collectively, the "Prior Confidentiality Agreements"). The Prior
Confidentiality Agreements are null and void and have no further force or
effect.
ARTICLE 18
DISPUTE RESOLUTION
18.1 GENERAL. The Parties recognize that disputes as to certain matters
may from time to time arise during the term of this Agreement which relate to
either Party's rights or obligations hereunder. The Parties have provided in
this Agreement for procedures to facilitate the resolution of disputes arising
under this Agreement in an expedient manner by mutual cooperation and without
resort to litigation. The Parties shall seek to follow the informal dispute
resolution mechanisms set forth in this Agreement prior to pursuing any
administrative or judicial resolution mechanism. In the event no mutually
acceptable resolution of such dispute is achieved in accordance with the
informal dispute resolution mechanisms set forth in this
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
109.
<PAGE> 123
Agreement within a reasonable period of time, then either Party shall be
entitled to seek final settlement of such dispute by any administrative or
judicial resolution mechanisms which may be available.
18.2 [*]. [*], either Party may request that a recommendation be
obtained from [*] pursuant to the process set forth in Section 18.3. Such
recommendation, if obtained, shall be [*] or [*]. In the event that neither
Party desires to pursue the process set forth in Section 18.3, the last sentence
of Section 18.1 shall be applicable.
18.3 RECOMMENDATION OF [*]. If requested by either Party [*], the
Parties shall [*] within [*] of the request of the Party invoking this Section
18.3. Each Party shall have [*] after [*] to submit [*] as such Party believes
necessary to resolve the dispute in question, [*]. [*] may then hold [*] on the
issues that need to be resolved. [*] shall promptly thereafter make a
recommendation as to the resolution of the dispute, which recommendation [*].
Each Party shall bear its own expenses in connection with a procedure under this
Section 18.3, and the fees and expenses of [*] shall be borne equally by the
Parties regardless of the ultimate recommendation of such person. The results of
a procedure under this Section 18.3 shall be used by the Parties to [*].
18.4 GOVERNING LAW; JURISDICTION; VENUE. This Agreement shall be
interpreted in accordance with the laws of the State of Delaware, without regard
to the conflict of laws provisions thereof. Any claim or controversy arising out
of or related to this Agreement or any breach hereof which is brought by SB
shall be submitted to a court of competent jurisdiction and venue in [*], and
each Party hereby consents to the jurisdiction and venue of such courts for such
claim or controversy; provided, however, disputes regarding the validity or
enforceability of PATENT RIGHTS or TRADEMARKS shall be submitted to a court of
applicable jurisdiction where the PATENT RIGHT or TRADEMARK was issued. Any
claim or controversy arising out of or related to this Agreement or any breach
hereof which is brought by Coulter shall be submitted to a court of competent
jurisdiction and venue in [*], and each Party hereby consents to the
jurisdiction and venue of such courts for such claim or controversy; provided,
however, disputes regarding the validity or enforceability of PATENT RIGHTS or
TRADEMARKS shall be submitted to a court of applicable jurisdiction where the
PATENT RIGHT or TRADEMARK was issued.
18.5 ARBITRATION FOR REASONABLE ROYALTY DETERMINATION.
18.5.1 Notwithstanding the other provisions of Article 18 or this
Agreement, in the event that Coulter loses its rights to CO-PROMOTE PRODUCT in
TERRITORY A in accordance with Sections 4.2.3 or foregoes such rights in
accordance with the third sentence of Section 7.1.15, and the Parties cannot
agree to a commercially reasonable royalty rate within the time periods set
forth in Section 7.1.15, such matters shall be resolved by binding arbitration
in [*] in accordance with the then existent [*]. The payments to Coulter
provided in Section 7.1.15 pending the resolution of such commercially
reasonable royalty rate shall continue until such matter has been resolved by
such arbitration.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
110.
<PAGE> 124
18.5.2 The decision of the Arbitration Tribunal in any
arbitration conducted pursuant to Section 18.5.1 shall be final and not
appealable, and shall be enforceable in any court of competent jurisdiction. No
punitive damages will be recoverable by either Party in such a proceeding. The
Parties agree that the service of any notice in the course of such arbitration
proceeding at their respective addresses as provided for in Section 19.6 below
shall be valid and sufficient. The appointing authority shall be the American
Arbitration Association. Unless agreed otherwise by the Parties, in any
arbitration proceeding hereunder, there shall be one (1) arbitrator, appointed
by the Parties by mutual agreement. The Parties agree that in the event of an
arbitration under this Section 18.5, the arbitrator shall apply the provisions
of Section 10 of the Commercial Arbitration Rules, Revised and Effective July 1,
1996, relating to the conduct of a preliminary hearing. The Parties agree
further that at such preliminary hearing the arbitrator shall require that the
Parties provide at least the following materials related to such arbitration:
(i) the extent and schedule of the production of relevant documents and other
information; (ii) a list of any witnesses to be called, along with a brief
description of the each witness's knowledge; (iii) a list of any experts to be
called, along with a statement of the experts' backgrounds and opinions; and
(iv) a schedule for the delivery of any briefs to be filed with the arbitration
panel. A Party shall not have the right to depose the other Party's witnesses or
experts in preparation for such arbitration, except with such other Party's
consent. The Parties shall jointly share the expenses of the arbitration,
provided that each Party shall solely bear its own legal or other OUT-OF-POCKET
COSTS related to such arbitration.
18.5.3 In the case of an arbitration under Section 18.5.1, (i)
the decision of the arbitrators shall be limited to a determination of a
commercially reasonable royalty rate in the event that Coulter loses its rights
to CO-PROMOTE PRODUCT in TERRITORY A in accordance with Sections 4.2.3 or
foregoes such rights in accordance with the third sentence of Section 7.1.15,
(ii) the parameters of such determination shall be limited to sales of PRODUCT
in TERRITORY A after the effective date of such loss or relinquishment of rights
to CO-PROMOTE, and (iii) such determination shall be higher than the royalty
rate to be paid by SB to Coulter on sales of PRODUCT in TERRITORY B but less
than the amount Coulter would have received had it continued to CO-PROMOTE
PRODUCT in TERRITORY A. Such determination shall be final and binding on the
Parties. The commercially reasonable royalty rate to be paid by SB to Coulter,
as determined by such arbitrator, shall be retroactively applied to the
effective date of Coulter's loss or relinquishment of rights to CO-PROMOTE,
subject to a reconciliation by the arbitrator of the payments made by SB to
Coulter under Section 7.1.15 pending the resolution of such issue by such
arbitrator.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
111.
<PAGE> 125
ARTICLE 19
MISCELLANEOUS
19.1 CONDITIONS TO EFFECTIVENESS. The Parties agree that:
19.1.1 the Effective Date of this Agreement shall be that date
upon which the conditions set forth in this Section 19.1 are satisfied, or
waived by the Parties hereto;
19.1.2 the effectiveness of the Agreement is conditioned upon [*]
the [*]: (i) [*], and (ii) [*] and [*];
19.1.3 [*] as the Parties may mutually agree [*]. [*] if the [*]
and [*] and [*];
19.1.4 [*], SB may waive the conditions to effectiveness set
forth under this Section 19.1 and the date of such waiver shall be the Effective
Date;
19.1.5 in the event that (i) [*] or (ii) [*], this Agreement
shall be null and void and of no further force and effect, and neither Party
shall have any liability to the other arising from the execution of this
Agreement;
19.1.6 [*]; and
19.1.7 [*], all DEVELOPMENT COSTS, MANUFACTURE DEVELOPMENT COSTS,
and MARKETING COSTS incurred by either Party between October 1, 1998 and the
Effective Date under the terms of this Agreement shall be subject to all of the
terms and provisions of this Agreement related thereto, including provisions
related to reimbursement and sharing of such costs. SB shall have no liability
to reimburse or share any costs incurred by Coulter between October 1, 1998 and
the Effective Date which are not DEVELOPMENT COSTS, MANUFACTURE DEVELOPMENT
COSTS, and MARKETING COSTS.
19.2 NO WAIVER OF CONTRACTUAL RIGHTS. The failure of either Party to
require performance by the other Party of any of that other Party's obligations
hereunder shall in no manner affect the right of such Party to enforce the same
at a later time. No waiver by any Party hereto of any condition, or of the
breach of any provision, term, representation or warranty contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall
be deemed to be or construed as a further or continuing waiver of any such
condition or breach, or of any other condition or of the breach of any other
provision, term representation or warranty hereof.
19.3 EXECUTION AND AMENDMENTS.
19.3.1 Each Party shall execute and deliver all such instruments
and perform all such other acts as the other Party may reasonably request in
order to carry out the transactions contemplated by this Agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
112.
<PAGE> 126
19.3.2 This Agreement may not be amended or modified except by
written instrument signed by or on behalf of both Parties.
19.4 SEVERABILITY. If a court or other tribunal of competent
jurisdiction should hold any term or provision of this agreement to be
excessive, or invalid, void or unenforceable, the offending term or provision
shall be deemed inoperative to the extent that they may conflict therewith and
shall be deemed to be modified to the extent necessary to conform with such
statute or rule of law, while still preserving, to the extent practicable, the
legitimate aims of the Parties, provided that the remaining portions hereof
shall remain in full force and effect. In the event that the terms and
conditions of this Agreement are materially altered as a result of the above,
the Parties will renegotiate the terms and conditions of this Agreement to
resolve any inequities.
19.5 RELATIONSHIP BETWEEN THE PARTIES. Both Parties are independent
contractors under this Agreement. Nothing contained in this Agreement is
intended nor shall be construed so as to constitute Coulter or SB as partners or
joint venturers with respect to this Agreement. Neither Party shall have the
express or the implied right nor authority to assume or create any obligations
on behalf of or in the name of the other Party, nor to bind the other Party to
any other contract, agreement or undertaking with any THIRD PARTY.
19.6 CORRESPONDENCE AND NOTICES.
19.6.1 Correspondence, reports, documentation, and any other
communication in writing between the Parties in the course of ordinary
implementation of this Agreement (but not including any notice required by this
Agreement) shall be in writing and delivered by hand, sent by facsimile, or by
overnight express mail (e.g., FedEx) to any one (1) member of the JCC or JDC, as
appropriate, appointed by the Party which is to receive such written
communication, or any other way as the JCC or JDC deems appropriate.
19.6.2 Extraordinary notices and communications (including but
not limited to notices of termination, force majeure, material breach, change of
address, or any other notices required by this Agreement) shall be in writing
and sent by prepaid registered or certified air mail or by overnight express
mail (e.g., FedEx), or by facsimile confirmed by prepaid registered or certified
air mail letter or by overnight express mail (e.g., FedEx), and shall be deemed
to have been properly served to the addressee upon receipt of such written
communication.
19.6.3 In the case of Coulter, the proper address for
communications and for all payments shall be:
Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, California 94306
USA
Facsimile: (650) 849-7574
Attn: Chief Financial Officer
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
113.
<PAGE> 127
With copies to:
Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, California 94306
USA
Facsimile: (650) 849-7574
Attn: Chief Executive Officer
and
Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, California 94306
USA
Facsimile: (650) 849-7574
Attn: Vice President, Business Development
and in the case of SB, the proper address for communications and for all
payments shall be:
SmithKline Beecham Corporation
One Franklin Plaza (Mail Code FP1930)
P.O. Box 7929
Philadelphia, Pennsylvania 19101
U.S.A.
Attention: Senior Vice President,
Business Development
With copies to:
SmithKline Beecham Corporation
One Franklin Plaza (Mail Code FP2360)
P.O. Box 7929
Philadelphia, Pennsylvania 19101, U.S.A.
Attention: Corporate Law-U.S.
19.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which shall
constitute together the same document.
19.8 WAIVER OF BREACH. 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. All
rights, remedies, undertakings, obligations and agreements contained in this
Agreement shall be cumulative and except as otherwise expressly provided herein
none of them shall be a limitation of any other remedy, right, undertaking,
obligation or agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
114.
<PAGE> 128
19.9 NO INTELLECTUAL PROPERTY RIGHTS GRANTED. No rights or licenses with
respect to a Party's patents, trademarks, know-how, technical information, or
other proprietary rights are granted or deemed granted to the other Party
hereunder or in connection herewith, other than those rights expressly granted
in this Agreement.
19.10 RECORDING. Either Party shall have the right, at any time, to
record, register, or otherwise notify this Agreement in appropriate governmental
or regulatory offices anywhere in the TERRITORY, and the other Party shall
provide reasonable assistance to such Party in effecting such recording,
registering or notifying.
19.11 HEADINGS; INTERPRETATION. Headings in this Agreement are included
for ease of reference only and shall have no legal effect. This Agreement shall
be deemed to comprise the language mutually chosen by the Parties and no rule of
strict construction shall be applied against either Party. In this Agreement,
the singular shall include the plural and vice versa and the word "including"
shall be deemed to be followed by the phrase "without limitation" unless
otherwise specified.
19.12 EXPENSES. Except as otherwise provided in this Agreement, all
expenses incurred by SB in connection with its obligations under this Agreement
will be borne solely by SB and all expenses incurred by Coulter in connection
with its obligations under this Agreement will be borne solely by Coulter. Each
Party will be responsible for appointing its own employees, agents and
representatives, who will be compensated by such Party. Each Party will be
responsible for paying any finder's or broker's fee owed to a THIRD PARTY that
such Party incurs based directly or indirectly on negotiating and entering this
Agreement, and shall indemnify the other Party against any obligation to pay
such fee.
19.13 FURTHER ACTIONS. Each Party agrees to execute, acknowledge and
deliver such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent of this
Agreement.
19.14 OFFICIAL LANGUAGE. The official text of this Agreement and any
appendices, exhibits and schedules hereto, shall be made, written and
interpreted in English. Any notices, accounts, reports, documents, disclosures
of information or statements required by or made under this Agreement, whether
during its term or upon expiration or termination thereof, shall be in English.
In the event of any dispute concerning the construction or meaning of this
Agreement, reference shall be made only to this Agreement as written in English
and not to any other translation into any other language.
19.15 ENTIRE AGREEMENT; TAX AGREEMENT. This Agreement, together with its
Exhibits, the STOCK PURCHASE AGREEMENT, and the LOAN AGREEMENT, constitutes the
entire agreement of the Parties with respect to the subject matter hereof as of
the date of its execution, and supersedes all prior agreements, understandings,
representations and proposals, written or oral, relating thereto. In addition,
upon the request of either Party, the Parties will discuss whether they desire
to enter into an agreement regarding the tax treatment of their activities under
this Agreement. If the Parties mutually agree that such an agreement is
necessary or desirable, they will each bear their own expenses incurred in
connection with the preparation of such an agreement, and
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
115.
<PAGE> 129
(unless the Parties otherwise agree in the future), any mutually agreed
OUT-OF-POCKET COSTS incurred in connection with the development of tax
information pursuant to such an agreement shall be shared equally. If only one
Party believes that such an agreement is necessary or desirable, that Party
shall bear the costs of preparing such an agreement, and shall bear the
OUT-OF-POCKET COSTS of developing tax information pursuant to such an agreement.
In any event, each Party shall bear its own internal expenses in connection with
the negotiation and preparation of any such tax agreement and the preparation of
its own tax returns.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
116.
<PAGE> 130
IN WITNESS WHEREOF, the Parties, through their authorized officers, have
executed this Agreement on the date first written above, to become effective on
the Effective Date.
SMITHKLINE BEECHAM CORPORATION COULTER PHARMACEUTICAL, INC.
BY: /s/ Jean-Pierre Garnier BY: /s/ Michael F. Bigham
----------------------------- -----------------------------
TITLE: Chief Operating Officer TITLE: President and CEO
-------------------------- ---------------------------
<PAGE> 131
EXHIBITS:
EXHIBIT A COULTER PATENT RIGHTS
EXHIBIT B-1 FINANCIAL PLANNING, ACCOUNTING AND REPORTING METHODOLOGIES
EXHIBIT B-2 FTE RATES
EXHIBIT C COUNTRIES IN EUROPE
EXHIBIT D PLANNED CLINICAL TRIALS
EXHIBIT E SB PATENT RIGHTS
EXHIBIT F-1 SB/COULTER BEXXAR PRODUCT TEAM
EXHIBIT F-2 SALES EXPERTISE AND ACTIVITIES TO BE CONTRIBUTED BY EACH PARTY
EXHIBIT G SB FORM OF MARKETING PLAN
EXHIBIT H PHARMACOVIGILANCE RESPONSIBILITIES OF COULTER AND SB
EXHIBIT I PRODUCT-RELATED INQUIRIES
EXHIBIT J PRODUCT RECALL PROCEDURES
<PAGE> 132
EXHIBIT A
COULTER PATENT RIGHTS
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
[ATTORNEY [SERIAL NO. / [FILED/
DOCKET NO.] PATENT NO.] ISSUED] [TITLE]
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
[*] [*] [*] [*]
- -----------------------------------------------------------------------------------------
</TABLE>
* Claims priority/effective filing date of earlier application
** ABANDONED in favor of [*]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE> 133
EXHIBIT B-1
FINANCIAL PLANNING, ACCOUNTING AND REPORTING METHODOLOGIES
(OPERATING PROFIT OR LOSS)
This EXHIBIT B-1 addresses the financial planning, accounting policies and
procedures to be followed under the Agreement in determining sharing of revenue
and expenses and related sharing of OPERATING PROFIT OR LOSS in TERRITORY A.
Terms not defined in this EXHIBIT B-1 shall have the meanings set forth in the
Agreement.
This Exhibit sets forth the principles for reporting actual results and
budgeted plans of each Party in TERRITORY A for PRODUCT, the frequency of
reporting, [*], the methods of determining payments to the Parties, and auditing
of accounts.
OPERATING PROFIT AND LOSS will be shared by the Parties in accordance
with Section 7.1.13 of the Agreement. Pursuant to Section 7.1.14, only those
costs incurred subsequent to the Effective Date will be included in the
calculation of OPERATING PROFIT AND LOSS. Each Party's OUT-OF-POCKET COSTS that
are SALES COSTS, MARKETING COSTS and other related expenses incurred prior to
commercial launch of PRODUCT will be shared according to Section 7.1.12(a) of
the Agreement.
B.1. PRINCIPLES OF REPORTING
In accordance with Section 7.1.14 of the Agreement, the result of
operations of each Party with respect to PRODUCT in TERRITORY A will be
presented in the following format, with the categories as defined in Section B.3
below:
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
[*]
Overhead and FTE allocations are excluded from the calculation of
OPERATING PROFIT AND LOSS except as expressly provided in this Exhibit or the
Agreement.
It is the intention of the Parties that the interpretation of these
definitions will be consistent with generally accepted accounting principles in
the United States ("GAAP").
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE> 134
B.2. FREQUENCY OF REPORTING
For purposes of the requirements herein, the fiscal year will be [*].
Reporting shall occur in accordance with Section 7.1.14.
B.3. DEFINITIONS
B.3.1 "COST OF GOODS" shall have the meaning set forth in Section 1.11
of the Agreement, subject to Section 7.1.14.
B.3.2 "DISTRIBUTION COSTS" means the OUT-OF-POCKET COSTS specifically
identifiable to the distribution of a PRODUCT including [*].
B.3.3 "MARKETING COSTS" means, consistent with the JOINT MARKETING PLAN,
the OUT-OF-POCKET COSTS of marketing, promotion, advertising, [*],
PRODUCT-related public relations, [*], market research, [*], customer
services, [*], and other similar activities directly related to the
PRODUCT. Such costs will include outside services and expenses [*].
MARKETING COSTS shall also include (a) activities related to obtaining
reimbursement from payers and costs of sales and marketing data and (b)
cost of samples. MARKETING COSTS will specifically exclude (i) the costs
of activities which promote either Party's business as a whole without
being product specific [*] (ii) [*] and (iii) any FTEs associated with
supporting the activities included in the definition of MARKETING COSTS.
B.3.4 "NET SALES" shall have the meaning set forth in Section 1.54 of
the Agreement.
B.3.5 "OPERATING PROFIT OR LOSS" means the consolidated NET SALES for
PRODUCT in TERRITORY A less Coulter Operating Expenses and SB Operating
Expenses (each as defined in Section 7.1.14) for a given period.
B.3.6 "OTHER OPERATING INCOME/EXPENSE" means other operating income or
expense from or to THIRD PARTIES which is not part of the primary
business activity of the applicable Party, but is related to income or
expense generated from such Party's operations specifically attributable
to its activities under this Agreement, and, unless otherwise mutually
agreed by the Parties, limited to the following:
_ [*]
_ [*]
_ [*]
B.3.7 "PATENT COSTS" shall have the meaning set forth in Section 1.65 of
the Agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2.
<PAGE> 135
B.3.8 "SALES COSTS" means costs incurred consistent with the JOINT
MARKETING PLAN and the annual budget prepared pursuant to such JOINT
MARKETING PLAN and specifically identifiable to the SALES EFFORT (as
defined in Section 7.1.6(a) of the Agreement) in TERRITORY A including
the managed care market. SALES COSTS shall be charged on an FTE basis at
the rate specified in EXHIBIT B-2. The FTE rate shall include [*].
B.3.9 "TRADEMARK COSTS" shall have the meaning set forth in Section 1.95
of the Agreement.
B.4. AUDITS
Either Party shall have the right to conduct audits of the other Party's
books pursuant to Section 8.3 of the Agreement.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
3.
<PAGE> 136
EXHIBIT B-2
ANNUAL FTE RATES
Coulter FTE Rate for Sales Effort Personnel: $[*]
Coulter FTE Rate for All Other Personnel: $[*]
SB FTE Rate for Sales Effort Personnel: $[*]
SB FTE Rate for All Other Personnel: $[*]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE> 137
EXHIBIT C
COUNTRIES IN EUROPE
<TABLE>
<S> <C> <C> <C>
ANDORRA AUSTRIA BELGIUM BOSNIA
BULGARIA CROATIA CYPRUS CZECH REPUBLIC
DENMARK ESTONIA FINLAND FRANCE
GERMANY GREECE HUNGARY ICELAND
IRELAND ISRAEL ITALY LATVIA
LIECHTENSTEIN LITHUANIA LUXEMBOURG MONACO
NETHERLANDS NORWAY POLAND PORTUGAL
ROMANIA RUSSIA SAN MARINO SERBIA
SLOVAKIA SLOVENIA SPAIN SWEDEN
SWITZERLAND UNITED KINGDOM VATICAN CITY YUGOSLAVIA
</TABLE>
<PAGE> 138
EXHIBIT D
PLANNED CLINICAL TRIALS
<TABLE>
<CAPTION>
TRIAL NUMBER TRIAL NAME
------------ ----------
<S> <C>
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
[*] [*]
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE> 139
<TABLE>
<S> <C>
[*] [*]
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2.
<PAGE> 140
EXHIBIT E
SB PATENT RIGHTS
[*]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE> 141
EXHIBIT F-1
SB/COULTER BEXXAR PRODUCT TEAM
[*]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.
<PAGE> 142
EXHIBIT F-2
SALES EXPERTISE AND ACTIVITIES TO BE CONTRIBUTED BY EACH PARTY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COULTER SB
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
[*] [*]
[*] [*]
o [*]
o [*] o [*]
o [*] o [*]
o [*] o [*]
[*] o [*]
o [*]
[*] o [*]
o [*]
o [*]
o [*]
[*]
[*]
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.
<PAGE> 143
EXHIBIT G
[*]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.
<PAGE> 144
EXHIBIT H
PHARMACOVIGILANCE RESPONSIBILITIES OF COULTER AND SB
BACKGROUND:
As described in the Agreement, Coulter retains primary registration
responsibilities in the United States (US), while SB retains primary
registration responsibilities outside of the US. Obligations for reporting
adverse events/reactions to regulatory health authorities for clinical trial
experiences and postmarketing experiences will follow the same divisions of
responsibilities. Coulter and SB want to share relevant safety information,
within certain time frames, in order to comply with applicable regulatory
reporting requirements.
DEFINITIONS:
The following definitions reflect and are consistent with FDA and ICH
regulations/guidelines.
o ADVERSE EXPERIENCE (AE)
The ICH has defined an AE as "Any untoward medical occurrence in a
patient or clinical investigation subject administered a pharmaceutical
product and which does not necessarily have to have a causal
relationship with this treatment."
o ADVERSE DRUG REACTION (ADR)
In the PRE-APPROVAL clinical experience or in other clinical trial
experiences
The ICH has defined an ADR in clinical trials as "all noxious and
unintended responses to a medicinal product related to any dose."
The phrase "responses to a medicinal product" means that a causal
relationship between a medicinal product and an adverse event is
at least a reasonable possibility, i.e., the relationship cannot
be ruled out.
For MARKETED medical products
The ICH had defined an ADR in marketed medicinal products as "a
response to a drug which is noxious and unintended and which
occurs at doses normally used in man for prophylaxis, diagnosis
or therapy of disease or for modification of physiological
function."
o UNEXPECTED ADR
The ICH has defined an unexpected ADR as "an adverse drug reaction, the
nature or severity of which is not consistent with the applicable
product information (e.g., Investigator Brochure for an unapproved
investigational medicinal product."
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
<PAGE> 145
This definition includes an AE/ADR of which the nature, specificity, or
severity is inconsistent with the applicable PRODUCT information. For an
AE/ADR from a clinical trial, the reference document shall be the
Investigator Brochure. For an AE/ADR from a spontaneous report or other
postmarketing source, the reference documents shall be the core PRODUCT
information (PI) or local PI.
o CRITERIA FOR SERIOUS AE OR ADR
A serious AE or ADR is any untoward medical occurrence that:
o results in death,
o is life-threatening (NOTE: The term "life-threatening" in the
definition of "serious" refers to an event in which the patient
was at risk of death at the time of the event; it does not refer
to an event which hypothetically might have caused death if it
were more severe),
o requires inpatient hospitalization or a prolongation of existing
hospitalization,
o results in persistent or significant disability/incapacity, or
o is a congenital anomaly/birth defect.
Medical and scientific judgment should be exercised in deciding whether
expedited reporting is appropriate in other situations, such as
important medical events that may not be immediately life-threatening or
result in death or hospitalization but may jeopardize the patient or may
require intervention to prevent one of the other outcomes listed in the
definition above. These should also usually be considered serious.
(Examples of such events are intensive treatment in an emergency room or
at home for allergic bronchospasm; blood dyscrasias or convulsions that
do not result in hospitalization; or development of drug dependency or
drug abuse.)
o NON-SERIOUS AE
A non-serious AE is any experience which does not meet the definition of
serious as defined above.
Clinical trial experiences which are not considered "serious" include:
hospitalization for a pre-planned/elective procedure for a medical
condition present before treatment started; a pre-existing medical
condition which does not increase in severity or frequency following
treatment; or an experience which is simply a treatment failure
according to the efficacy criteria for the study.
o SPONTANEOUS REPORTS
Reports from any source other than a clinical trial source, including
regulatory agencies, health care professionals, consumers and
literature, shall be classified for reporting purposes as a spontaneous
report.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
3.
<PAGE> 146
o REPORTS OF PREGNANCY AND OVERDOSE
While such reports are not AEs or ADRs as defined herein, reports of
pregnancies should be followed up until the outcome of the pregnancy is
known.
PRODUCT has been clinically tested to define the maximally tolerated
dose. "Overdose" will be defined as when the administered dose is >10%
of the prescribed dose or any dose that the reporter of an ADR indicates
as being an overdose for the patient receiving such dose.
o MINIMAL CRITERIA FOR REPORTING
Initial reports should be submitted within the prescribed timelines as
long as the following minimum criteria are met: (1) an identifiable
patient; (2) a suspect medicinal product; (3) an identifiable reporting
source; (4) and an event or outcome.
FOLLOW-UP OF CASES:
The Party who is the initial recipient of an AE/ADR report shall be responsible
for appropriate follow-up of that AE/ADR report and timely transmission of
relevant new information to the other Party.
SAFETY DATABASE:
Coulter will hold the recognized worldwide safety database for BEXXAR.
Coulter shall have full access to SB's worldwide safety database to enter, edit,
analyze, and print AE/ADR reports for BEXXAR until such time that the JDC has
determined that (a) Coulter has established a fully validated safety database
that meets worldwide pharmacovigilance regulatory requirements and (b) a secure
electronic data exchange has been established between the Parties for the
electronic exchange of safety information. The Parties shall agree upon a
process to track any edits or amendments Coulter makes to the SB worldwide
safety database.
Coulter will hold the recognized worldwide safety database for PRODUCT other
than BEXXAR ("Additional Product"), except that SB shall hold the recognized
safety database for any Additional Product incorporating SECOND GENERATION
LICENSED COMPOUNDS that arise from SB's research.
DATA EXCHANGE:
o SB will notify Coulter electronically (or by facsimile if electronic
means is not available) of all serious AE reports (including both
clinical trial and spontaneous AEs) that SB receives within two (2)
calendar days of receipt of such reports by the SB Central Safety
Department in the United Kingdom. When the minimum information required
for reporting can not be transmitted due to translation difficulties, SB
shall notify Coulter within three (3) working days of initial receipt of
such reports.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
4.
<PAGE> 147
o SB will notify Coulter by facsimile of any fatal or life-threatening
ADRs within twenty four (24) hours of receipt.
o Non-serious spontaneous AE reports received by SB will be submitted to
Coulter within five (5) working days of receipt of such reports by the
SB Central Safety Department.
o Coulter will provide SB with CIOMS I forms electronically (or by
facsimile if electronic means is not available) for all U.S. serious AEs
within two (2) calendar days of receipt.
o Coulter will notify SB by facsimile of any fatal or life-threatening
ADRs within twenty four (24) hours of receipt by Coulter.
o Coulter is responsible for receiving and forwarding reports to and from
other Coulter licensees (if applicable).
o SB is responsible for receiving and forwarding reports to and from other
SB sublicensees (if applicable).
LITERATURE REPORTS:
Each Party shall be responsible for scanning the literature for case reports in
any territory in which it holds registration rights as set forth in this
agreement.
REGULATORY REPORTING:
o Reporting of domestic or foreign cases to the local regulatory
authorities is the responsibility of the local registration holder.
o SB shall be responsible for reporting of domestic cases to the
local regulatory authorities in those countries where SB is the
local registration holder.
o Coulter shall be responsible for reporting domestic cases to the
FDA in the United States.
o Coulter will be responsible for reporting IND safety reports to
the FDA.
o Reporting to other regulatory authorities will be the
responsibility of the local registration holder.
INVESTIGATOR NOTIFICATION:
o Notification of submitted alert reports to investigators and to the
local regulatory authorities is the responsibility of the local
registration holder.
o Coulter shall be responsible for preparing the notifications and
providing a copy to SB for review.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
5.
<PAGE> 148
o Coulter shall be responsible for notification of investigators
in the U.S. and notification of the FDA.
o SB shall be responsible for notification of investigators and the
local regulatory authorities in those countries where SB is the
local registration holder.
PERIODIC PRODUCT SAFETY UPDATE REPORT (PSUR):
The International birth date is the date of first regulatory approval in the
world. This date will determine the anniversary dates for Product Safety Update
Reports (PSURs). Coulter will produce AE/ADR listings on a semiannual basis
beginning with the International birth date of PRODUCT with consecutive
six-monthly data lock points from that date onward.
On each data lock point date, each Party will provide the other Party with the
most up-to-date available sales or usage figures from their respective
TERRITORIES. Each Party will further supply the other Party with copies of the
safety sections of any "end of study" reports associated with PRODUCT for trials
conducted by that Party. Analysis of the clinical safety information contained
in the PSUR will be done jointly by the Safety Departments of both Parties.
Coulter is responsible for forwarding the PSURs to other Coulter licensees (as
applicable) to enable them to meet their local regulatory reporting obligations.
SB is responsible for forwarding the PSURs to other SB sublicensees (as
applicable) to enable them to meet their local regulatory reporting obligations.
Coulter will be responsible for producing the U.S. Periodic AE Report, with data
provided by SB as required, until such time as the FDA accepts PSURs.
CORE PRODUCT INFORMATION CHANGES:
Safety changes to the core PRODUCT information (PI) or local PI will be made in
consultation between SB and Coulter. Each Party will then simultaneously amend
their respective package inserts (core and local). Coulter will be responsible
for communicating such changes to the other Coulter licensees, as applicable. SB
will be responsible for communicating such changes to other SB sublicensees, as
applicable. The JOINT DEVELOPMENT COMMITTEE will decide the forum in which these
changes are to be decided.
RESPONDING TO SAFETY RELATED OR PRODUCT-RELATED REGULATORY INQUIRIES:
Each Party will keep the other Party informed of any safety-related or
PRODUCT-related regulatory inquiries and cooperate in providing requested
information promptly.
TRAINING OF SALES REPRESENTATIVES:
o The Parties will collaborate in the generation of materials for training
the sales force on safety monitoring and reporting responsibilities.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
6.
<PAGE> 149
o SB will provide generic training materials to Coulter and Coulter will
provide Product-specific materials to SB.
METHOD FOR REVISING THIS PHARMACOVIGILANCE EXHIBIT:
If either Party desires to revise this Pharmacovigilance Exhibit due to changes
in definitions, regulations, or for any other reason, such Party shall contact
the other Party and the pharmacovigilance Exhibit shall be revised following
written agreement by both Parties.
PHARMACOVIGILANCE CONTACTS IN EACH PARTY:
<TABLE>
<CAPTION>
FOR SB: CONTACT ADDRESS AND NUMBERS
- -------------------------------------------------------------------------------------
<S> <C> <C>
Primary: [*] SmithKline Beecham Corporation
Associate Director New Frontiers Science Park (South)
Worldwide Clinical Safety Third Avenue, The Pinnacles
SmithKline Beecham Corporation Harlow, Essex CM19 5AG
E-mail: Tel: [*]
[*]@sbphrd.com Fax: [*]
US Contact: [*] SmithKline Beecham Corporation
Director, Safety Quality Mgmt. 1250 South Collegeville Road
SmithKline Beecham Corporation Collegeville, PA 19426-0989
Tel: [*]
E-mail: Fax: [*]
[*]@sbphrd.com
FOR COULTER: CONTACT ADDRESS AND NUMBERS
- --------------------------------------------------------------------------------
Primary: [*] Coulter Pharmaceutical, Inc.
Director, Medical Information and 550 California Avenue, Suite 200
Safety Palo Alto, CA 94306-1440
Coulter Pharmaceutical, Inc. Tel: [*]
Fax: [*]
E-mail:
[*]@coulterpharm.com
</TABLE>
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
7.
<PAGE> 150
EXHIBIT I
PRODUCT-RELATED INQUIRIES
RESPONSIBILITIES OF COULTER AND SB
BACKGROUND:
As described in the Agreement, Coulter retains primary registration
responsibilities in the United States (US), while SB retains primary
registration responsibilities outside of the US. Obligations for answering
medical or technical queries will follow the same divisions of responsibilities.
Coulter and SB want to share relevant PRODUCT information in order to provide
optimal education to individuals inquiring about the PRODUCT.
RESPONDING TO PRODUCT-RELATED INQUIRIES:
For PRODUCT-related inquires from customers who reside in the U.S.
Coulter will answer all PRODUCT-related inquiries received from customers who
reside in the US. SB shall forward all PRODUCT-related inquires received by it
to Coulter within 1 business day, unless the urgent nature of the question
necessitates a more rapid response. Members of the SB sales force will forward
PRODUCT-related inquiries directly to Coulter for response.
For PRODUCT-related inquires from customers who reside outside of the U.S.
SB will answer all PRODUCT-related inquires received from customers who reside
outside of the US. Coulter shall forward all PRODUCT-related inquires received
by it from countries outside the U.S. to SB's Central Medical Affairs Team
(CMAT) within 1 business day, unless the urgent nature of the question
necessitates a more rapid response.
DATABASE OF RESPONSES:
Coulter will prepare and maintain a database containing responses to
PRODUCT-related queries. The database, and any updates with new and/or updated
responses to queries will be made available to SB as needed to support the
commercialization of PRODUCT in countries outside of the US.
SB may also prepare a database of responses to PRODUCT-related inquiries
received from customers who reside outside of the U.S. Should SB develop such a
database, it will make the contents and all updates (new or revised responses)
available to Coulter.
METHOD FOR REVISING THIS PRODUCT-RELATED INQUIRIES EXHIBIT:
If either Party desires to revise this Product-Related Inquiries Exhibit for any
reason, such Party shall contact the other Party and the Product-Related
Inquiries Exhibit shall be revised following written agreement by both Parties.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.
<PAGE> 151
PRODUCT-RELATED INQUIRY CONTACTS IN EACH PARTY:
<TABLE>
<CAPTION>
FOR SB: CONTACT ADDRESS AND NUMBERS
- -------------------------------------------------------------------------------------
<S> <C> <C>
Ex-US: [*] SmithKline Beecham Corporation
[*] New Frontiers Science Park (South)
[*] Third Avenue, The Pinnacles
Harlow, Essex CM19 5AW
Tel: [*]
Fax: [*]
E-mail:
[*]
US Contact: [*] SmithKline Beecham Corporation
[*] FP 1010
[*]
[*] 1 Franklin Plaza
Philadelphia, PA 19101
E-mail: Tel: [*]
[*]@sb.com Fax: [*]
FOR COULTER: CONTACT ADDRESS AND NUMBERS
- ------------------------------------------------------------------------------------
Primary: [*] Coulter Pharmaceutical, Inc.
[*] 550 California Avenue
[*] Suite 200
[*] Palo Alto, CA 94306-1440
Tel: [*]
E-mail: Fax: [*]
</TABLE>
[*]
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2.
<PAGE> 152
EXHIBIT J
PRODUCT RECALL PROCEDURES
Coulter shall handle all physical aspects relating to any PRODUCT
recalls in TERRITORY A. SB shall handle all physical aspects relating to any
PRODUCT recalls in TERRITORY B and TERRITORY C. At Coulter's request, SB will
assist Coulter in obtaining and receiving any samples of PRODUCT or
PRODUCT-related items that have been recalled in TERRITORY A. Any PRODUCT or
PRODUCT-related items returned to SB in TERRITORY A shall be shipped by SB to
Coulter's facility identified by Coulter as the point for receiving returned
goods.
SB and Coulter shall [*] in the direct documented costs incurred by each
of them in TERRITORY A, TERRITORY B and TERRITORY C with respect to
participating in any withdrawal or recall, including without limitation PRODUCT
destruction, except that:
Coulter shall [*] incurred in connection with such withdrawal or recall
and [*], in cases where such withdrawal or recall was caused by Coulter by
either of the following circumstances:
(a) a defect in manufacturing (i.e. manufacturing not in
accordance with Specifications and procedures approved by the FDA or other
relevant government/regulatory agencies), including any adulteration,
mislabeling or misbranding of PRODUCT if Coulter was responsible for that stage
of manufacturing, or a PRODUCT or intermediate thereof failing to meet
applicable regulatory specifications (e.g., the regulations of the FDA and
European Commission Directive 91/356/EEC) or which will not meet applicable
regulatory specifications at the end of shelf life, or
(b) any misrepresentation or willful omission committed by
Coulter, its employees, officers, directors, agents, representatives or
AFFILIATES in connection with PRODUCT safety or efficacy data or information
submitted or omitted from submission to any regulatory agency.
(c) any misrepresentation made by Coulter or its employees,
officers, directors, agents, representatives or AFFILIATES in connection with
the promotion of PRODUCT, or
(d) any other negligence or wrongful act committed by Coulter or
its employees, officers, directors, agents, representatives or AFFILIATES in the
distribution of PRODUCT including, but not limited to, improper storage and/or
handling of PRODUCT.
SB shall [*] incurred in connection with such withdrawal or recall and
[*], in cases where such withdrawal or recall was caused by SB by either of the
following circumstances:
(a) a defect in manufacturing (i.e. manufacturing not in
accordance with Specifications and procedures approved by the FDA or other
relevant government/regulatory agencies), including any adulteration,
mislabeling or misbranding of PRODUCT if SB was responsible for that stage of
manufacturing, or a PRODUCT or intermediate thereof failing to meet
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
1.
<PAGE> 153
applicable regulatory specifications (e.g., the regulations of the FDA and
European Commission Directive 91/356/EEC) or which will not meet applicable
regulatory specifications at the end of shelf life;
(b) any misrepresentation or willful omission committed by SB,
its employees, officers, directors, agents, representatives or AFFILIATES in
connection with PRODUCT safety or efficacy data or information submitted or
omitted from submission to any regulatory agency;
(c) any misrepresentation made by SB or its employees, officers,
directors, agents, representatives or AFFILIATES in connection with the
promotion of PRODUCT; or
(d) any other negligence or wrongful act committed by SB or its
employees, officers, directors, agents, representatives or AFFILIATES in the
distribution of PRODUCT including, but not limited to, improper storage and/or
handling of PRODUCT.
[*] = CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY
BRACKETS, IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO
RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
2.
<PAGE> 1
Exhibit 10.26
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Section 200.80(b)(4),
200.83 and 240.24b-2
CSUP15f.doc
November, 3rd, 1998
SUPPLY - AGREEMENT
This Agreement is made on November 3, 1998 (the "Effective Date"), by and
between
COULTER PHARMACEUTICAL INC.,
whose registered office is at 550 California Avenue, Palo Alto, California
94306-1440, U.S.A.
(hereinafter referred to as "COULTER")
and
BOEHRINGER INGELHEIM PHARMA KG
whose registered office is at Birkendorferstrasse 65, 88397 Biberach an der
Riss, Federal Republic of Germany
(hereinafter referred to as "BI PHARMA KG").
WITNESSETH
WHEREAS the parties have previously entered into the Contract Research and
Development Agreement (as such term is defined below) regarding the research and
development of a method to produce ANTI B1 in a commercial scale; and
WHEREAS BI PHARMA KG has developed and is the owner of the Process, and
WHEREAS COULTER has all rights to the Product, and
WHEREAS COULTER wishes BI PHARMA KG, and BI PHARMA KG agrees, to manufacture and
supply COULTER with Product for commercial use, manufactured in accordance with
the Process.
NOW THEREFORE, the parties hereto agree as follows:
1. DEFINITIONS
In this Agreement the following terms shall have the meanings indicated:
1.1 "ANTI B1" means the murine antibody directed against B-cells expressing
the B-lymphoma phenotype.
1.2 "BI PHARMA KG Confidential Information" means all technical and other
information relating to the Process and to BI PHARMA KG's facilities and
associated technologies, excluding the COULTER Confidential Information,
that is disclosed or supplied to, or used
1.
<PAGE> 2
on behalf of, COULTER by BI PHARMA KG pursuant to this Agreement or the
Contract Research and Development Agreement, whether patented or
unpatented, including without limitation, trade secrets, know-how,
processes, concepts, experimental methods and results, business and
scientific plans.
1.3 "BLA" means a Biologics License Application, as defined by the
regulations promulgated under the FD&C Act and the PHS Act and any
supplements thereunder, as amended from time to time.
1.4 "Bulk Product" means ANTI B1 which has been purified to a concentrated
form and can be stored in a liquid or frozen form under appropriate
conditions in accordance with the Specifications.
1.5 "Capacity" means BI PHARMA KG'S total production capacity per year based
on the basic production assumptions (see APPENDIX 1) of [...***...] per
run, reserved for manufacture of Bulk Product, Final Product and
Finished Product in accordance with the Process. Capacity shall be
sufficient to produce a maximum of [...***...] of Bulk Product per
calendar year, unless otherwise jointly agreed upon by the parties. The
Capacity shall be subject to an increase to [...***...] according to BI
PHARMA's option as laid down in Article 3.1.4 below.
1.6 "Cell Line" means the novel and proprietary cell line [...***...]
developed by COULTER and provided to BI PHARMA KG pursuant to the terms
of the Contract Research and Development Agreement.
1.7 "Certificate of Analysis" shall mean a document describing testing
methods and results, the accuracy of which has been certified by the
issuing party.
1.8 "Certificate of Compliance" shall mean a document (a) listing the
expiration date and quantity of a particular batch of Bulk Product,
Final Product and/or Finished Product, (b) certifying that such batch
was manufactured in accordance with all Specifications, GMP, the
BLA/EMEA dossier for the Product (as applicable), and (c) certifying
that such batch is acceptable for manufacturer release. The agreed upon
format is attached hereto as APPENDIX 6.
1.9 "Compliance Policy of BI PHARMA KG for Biopharmaceutical Contract
Manufacturing for the U.S." means BI PHARMA KG's guidelines and
procedures for Product quality and Product release as set forth in
APPENDIX 7.
1.10 "Contract Research and Development Agreement" means the agreement
between COULTER and Dr. Karl Thomae GmbH dated October 22, 1997
regarding the development of the Process, which agreement was assigned
to Bl Pharma KG as of 01.01.1998.
1.11 "COULTER Confidential Information" means the Cell Line, Product and all
technical and other information relating thereto, excluding BI PHARMA
KG's Confidential Information, that is disclosed or supplied to BI
PHARMA KG by COULTER pursuant to this Agreement or the Contract Research
and Development Agreement, whether patented or unpatented, including,
without limitation, trade secrets, know-how, processes, concepts,
experimental methods and results, business and scientific plans.
1.12 "FDA" means the United States Food and Drug Administration and any
successor thereto.
*CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 3
1.13 "FD&C Act" means the United States Federal Food, Drug and Cosmetic Act,
as amended.
1.14 "Final Product" means Bulk Product that has been processed, compounded
and formulated and placed in unlabeled final containers.
1.15 "Finished Product" means Final Product that has been labeled with
commercial labels affixed to the final containers and packaged under
appropriate conditions and is ready for shipment to COULTER or its
designees.
1.16 "GMP" means the current regulatory requirements for good manufacturing
practices promulgated by the FDA under the FD&C Act, 21 C. F. R. et seq
and 21 C. F. R. Section 600-610, as applicable.
1.17 "Manufacturing Project Manager" shall have the meaning as specified in
Article 2.1 hereof.
1.18 "Manufacturing Project Team" shall have the meaning as specified in
Article 2.2 hereof.
1.19 "Process" means BI PHARMA KG's generic process for manufacturing Bulk
Product, Final Product and Finished Product, which has been adapted to
Product-requirements and agreed by the parties before producing Product
under this Agreement.
1.20 "Process [...***...] Agreement" means that agreement as further
described in Article 4.4 hereof.
1.21 "Product" means any product containing non-radiolabeled ANTI B1 as its
sole or combined active ingredient and produced according to the Process
whether as Bulk Product, Final Product or Finished Product.
1.22 "Product Price" means BI PHARMA KG's prices for Bulk Product, Final
Product and/or Finished Product (as the case may be) to be calculated on
the basis of the basic production assumptions set forth in APPENDIX 1.
1.23 "Project" means the activities performed under this Agreement.
1.24 "Specifications" means the specifications for Bulk Product, Final
Product and Finished Product as applicable and the respective test
methods attached hereto as APPENDIX 3 on the basis of the specifications
provided by COULTER.
Such Specifications may be amended from time to time by mutual agreement
of COULTER and BI PHARMA KG according to further development of the
Process and Product (e.g. according to the results of the Process
[...***...] Agreement). The Specifications may vary from country to
country as agreed upon by the parties.
2. COOPERATION BETWEEN THE PARTIES / PROJECT TEAM
2.1 DESIGNATION OF MANUFACTURING PROJECT MANAGER
Promptly after the Effective Date, BI PHARMA KG and COULTER shall each
identify a Manufacturing Project Manager who will be responsible
exclusively for communicating all instructions and information
concerning the Project to the other party.
*CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 4
Each Manufacturing Project Manager will be available on an agreed upon
[...***...] basis for consultation (e.g. face to face meetings,
telephone-conference, videoconference) at [...***...] times during the
course of the Project. In the absence of the Manufacturing Project
Manager of a party, a substitute shall be appointed by such party in due
time.
Additional modes or methods of communication and decision making may be
implemented with the mutual consent of each party.
2.2 MANUFACTURING PROJECT TEAM
Promptly after the Effective Date, BI PHARMA KG and COULTER shall each
name representatives to a Manufacturing Project Team which shall consist
of knowledgeable specialists in appropriate disciplines who shall be
responsible for overseeing all activities of the parties under this
Agreement.
During the term of this Agreement, the Manufacturing Project Team shall
meet [...***...] in a face to face meeting, for the purpose of
communicating updates and providing a forum for decision making and
rapid resolution of issues arising under this Agreement. Additional
meetings (if required) of the Manufacturing Project Team may be
conducted by telephone-conference, videoconference and/or face to face
meetings.
Meeting minutes shall be prepared jointly by the Manufacturing Project
Team to record all issues discussed and decisions made. The present list
of the members of the Manufacturing Project Team is attached hereto as
APPENDIX 4.
The members of the Manufacturing Project Team may be changed from time
to time as appropriate.
2.3 COOPERATION.
In the course of the Project, BI PHARMA KG will at all times take into
consideration and implement the recommendations of COULTER as long as
they do not adversely affect BI PHARMA KG's ability to perform other BI
PHARMA KG biotech operations and are agreed upon by the Manufacturing
Project Team. In the absence of explicit instructions from COULTER, BI
PHARMA KG shall be entitled to employ its reasonable judgment in
carrying out the Project consistent with BI PHARMA KG's overall
obligations under this Agreement and consistent with the BLA and the
EMEA application.
2.4 FDA OR OTHER AUTHORITIES INTERACTION.
BI PHARMA KG has the express right to send representatives to any
meeting of or on behalf of COULTER with the FDA for discussions
(regarding the CMC-part of BLA) involving the Product or BI PHARMA KG's
facilities. BI PHARMA KG shall have reasonable advance notice, if
possible, of at least 30 (thirty) days before any meeting scheduled with
the FDA. Any FDA and EMEA correspondence regarding the Product or
facilities shall be approved by BI PHARMA KG prior to submission, such
approval not to be unreasonably withheld.
2.5 ACCESS TO FACILITIES.
*CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 5
BI PHARMA KG shall permit COULTER and its representatives or
consultants, upon reasonable prior notice to BI PHARMA KG, to audit and
to review the originals of all batch records and other primary documents
at its facilities [...***...] as set forth in APPENDIX 7.
While at any facility, the respective COULTER personnel and its
representatives or consultants shall comply with all security and safety
policies and procedures of the facility owner.
3. SUPPLY
3.1 SUPPLY / PURCHASE OBLIGATIONS
3.1.1 Provided the Product is approved by the FDA to be biologically
equivalent to Anti-B1 product produced by Lonza, BI PHARMA KG will
manufacture and supply Product to COULTER [...***...] (where and as
approved by appropriate regulatory authorities) during the full term of
this Agreement. COULTER agrees to use all commercially reasonable
efforts to secure such approval by the FDA and other appropriate
regulatory authorities.
In case the Product is not approved by the FDA to be biologically
equivalent COULTER shall use all commercially reasonable efforts
(including if necessary a clinical study required by the FDA) to apply
for a BLA in order to qualify the BI PHARMA KG Product to be equivalent.
With respect to manufacturing issues BI PHARMA KG shall use all
commercially reasonable efforts to secure biological equivalence of the
Product on the basis of the Process. In this case [...***...] shall be
valid as of the time FDA approval of equivalence has been made.
Except as set forth in Articles 3.1.2, 3.1.3 and 3.2.2 below and
provided, the parties execute a Process [...***...] Agreement, COULTER
will purchase and [...***...] to purchase [...***...] of Product from BI
PHARMA KG throughout the world for the period of this Agreement
provided, however, COULTER may, after agreement with BI PHARMA KG which
shall not be unreasonably withheld, enter into an agreement with
[...***...] to have such [...***...].
COULTER will collaborate with BI PHARMA KG as appropriate, with respect
to the manufacturing and control section of each regulatory filing in
determining the detailed regulatory filing strategy. The parties agree
to a single BLA, unless mutually agreed upon otherwise. Further the
parties agree to cooperate in seeking regulatory approval from the
appropriate regulatory authorities in the US and with EMEA.
3.1.2 In case BI PHARMA KG is not able, despite its reasonable efforts to
supply [...***...] according to the forecast system set forth in Article
3.3 below and within its respective Capacity, then COULTER shall have
the right to establish and maintain [...***...] for additional material.
3.1.3 Notwithstanding anything in this Agreement, COULTER shall [...***...] to
have [...***...] for [...***...] of [...***...] to be [...***...] for a
[...***...].
In case registration of BI PHARMA KG as manufacturer of Product at the
FDA has [...***...], the [...***...] of COULTER shall [...***...] to
[...***...] for [...***...] the respective [...***...].
In case COULTER [...***...] COULTER shall use all commercially
reasonable efforts to ensure that and be solely responsible for a
[...***...] of BI
*CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 6
PHARMA KG Product [....***....] containing ANTI
B1 from one source with respect to treatment of an individual patient
(i. e., [...***...] of product per patient).
COULTER shall indemnify and hold harmless BI PHARMA KG from any and all
damages resulting from such [...***...].
3.1.4 Subject to Article 3.2 below BI PHARMA KG undertakes to use all
commercially reasonable efforts to supply COULTER with the quantities of
Product ordered by COULTER according to Article 3.3 below within the
Capacity.
BI PHARMA KG shall use reasonable efforts to manufacture and deliver to
COULTER all quantities of the Product beyond the binding forecasts
within its Capacity.
BI PHARMA KG shall have the option to increase the Capacity up to
[...***...] (taking effect [...***...]) by giving written notice to
COULTER not later than [...***...]. This option is subject to COULTER's
agreement in case the forecasts laid down in Appendix 5 hereto (for the
entire world) are decreased by COULTER before [...***...] by more than
[...***...] for the [...***...] and the following year.
3.1.5 If there is any loss of Product because of reasons which are out of the
reasonable control of the parties, then BI PHARMA KG shall use all
commercially reasonable efforts to manufacture within its Capacity the
missing quantities of Product at COULTER's cost.
The Product Price shall be according to the scheme laid down in APPENDIX
1 (the quantity of lost Product not to be added to the quantity per
year).
3.1.6 All manufacture of Product hereunder will be made in accordance with the
Process, GMP, BLA and EMEA requirements and will be delivered in agreed
form suitably packed as specified in the Specifications.
3.2 PRODUCTION FACILITY
3.2.1 All quantities of Product will be produced in a BI PHARMA KG production
facility that has received regulatory approval by the FDA and EMEA for
commercial scale production and deliveries. BI PHARMA KG shall take all
commercially reasonable efforts to secure approval of BI PHARMA KG's
production facility by the FDA and the EMEA and BI PHARMA KG's
obligations under Article 3.1 above are subject to such approval as the
case may be.
BI PHARMA KG will not contract out to a third party any part of the
manufacturing or the testing of Product without prior written approval
from COULTER which shall not be unreasonably withheld.
3.2.2 To the extent that COULTER requests that BI PHARMA KG participate in
securing regulatory approval of the manufactured Product in other
countries, then BI PHARMA KG shall seek regulatory approval of its
production facility unless such approval would require significant
change in the production facility and/or the respective SOP's used in
the manufacture of the Product.
COULTER shall pay any additional costs for such approval, subject to
COULTER's prior written approval.
*CONFIDENTIAL TREATMENT REQUESTED
6.
<PAGE> 7
If significant changes to the production facility are required by the
respective authority and if BI PHARMA KG does not agree to make such
changes at COULTER's expense, then COULTER shall have the right to
[...***...].
No changes relating to the Process shall be made without the prior
written consent of COULTER, such consent not to be unreasonably withheld
or delayed.
3.3 ROLLING PRODUCTION FORECASTS
3.3.1 Beginning as of [...***...] and the [...***...] COULTER will provide BI
PHARMA KG with a [...***...] Product forecast planning horizon for Bulk
Product or an update thereof. The planning horizon shall start the first
day of the [...***...] which shall be [...***...] or an [...***...]
thereof.
The forecasts for the [...***...] of the planning horizon [...***...]
have to be given as Final Product forms [...***...] and/or Bulk Product
for the remaining forecast period.
3.3.2 The forecast for [...***...] are firm orders and cannot be changed. This
forecast has to be broken down to single months.
The forecast for [...***...] is a partly binding forecast which means
that the forecast can fully be changed within this period as follows:
the forecast may be increased within the Capacity, but is limited to the
following restrictions when decreased:
[...***...]
[...***...]
The forecast for [...***...] is a non-binding forecast.
The forecasts for [...***...] of the planning horizon have to be broken
down quarterly.
The rolling forecast system (including firm orders) for Bulk Product and
Final Product are laid down in APPENDICES 2 a/b.
3.3.3 Whilst the rolling forecast system is not applicable (see Article 3.3.1
above) COULTER shall place all requirements for Bulk Product and Final
Product as firm orders.
3.4 [...***...] QUANtity
Beginning [...***...] for each calendar year during which Finished
Product is approved for commercial sale in the United States for the
entirety of such year, the [...***...] of Bulk Product to be bought by
COULTER [...***...] shall be [...***...]. If the [...***...] the
[...***...] of Bulk Product BI PHARMA KG will [...***...] according to
Article 8.2 below.
3.5 DELIVERY / RISK OF LOSS
3.5.1 BI PHARMA KG shall make deliveries by the 10th day of the month for
which a firm purchase order is made unless mutually agreed upon
otherwise.
*CONFIDENTIAL TREATMENT REQUESTED
7.
<PAGE> 8
BI PHARMA KG shall deliver or arrange for the delivery of the Product
purchased by COULTER to a carrier designated by COULTER on the basis of
EXW BI PHARMA KG's plant in Biberach, in accordance with Incoterms 1990
as published by the International Chamber of Commerce.
3.5.2 Title to the Product sold hereunder shall pass to COULTER upon payment
of invoices for Bulk Product by COULTER to BI PHARMA KG pursuant to
Article 8.3.2 hereto. In the event, that BI PHARMA KG maintains
inventory of Bulk Product ("Inventory") at a BI PHARMA KG facility after
COULTER has been invoiced and has paid for such Bulk Product, BI PHARMA
KG shall maintain such Inventory in appropriate storage conditions for
Bulk Product as set forth under the BLA for Product and as laid down in
the Specifications regarding shelf-life.
After establishing the mutually agreed stability program BI PHARMA KG
shall be [...***...] as a result of damage that occurs prior to the
expiration of the shelf-life of such Inventory while such Inventory is
being stored by BI PHARMA KG. BI PHARMA KG [...***...], if applicable,
for [...***...] as a result of damage described in the preceding
sentence [...***...]. BI PHARMA KG's liability as to risk of loss or
damage during transportation of Product shall cease upon delivery of the
Product in good condition to the carrier designated by COULTER at BI
PHARMA KG's plant in Biberach for shipment to COULTER's designee.
3.6 SUPERIORITY
No provision on COULTER's purchase order forms or in BI PHARMA KG's
General Conditions of Sale which may purport to impose different
conditions upon COULTER or BI PHARMA KG, nor any other modification of
this Agreement, will be of any force and effect, unless in writing and
signed by both parties claimed to be bound thereby. In the event of any
inconsistencies, the terms of this Agreement shall govern.
4. RECORDS / DOCUMENTATION
4.1 RECORDS
BI PHARMA KG shall maintain all records necessary to evidence compliance
with all its obligations under this Agreement and relating to the
manufacture of the Product. All such records shall be maintained for a
period of not less than 3 (three) years from the date of expiration of
each batch of Product to which such records pertain, or such longer
period as may be required by law, rule, or regulation.
Prior to the destruction of any record, BI PHARMA KG shall give written
notice to COULTER which shall have the right to request, receive and
retain such records with no further compensation to BI PHARMA KG.
4.2 DOCUMENTATION
BI PHARMA KG shall certify in writing, that each shipment lot of
Product, was produced and tested in compliance with (i) the
Specifications (including the respective test methods), (ii) GMP
requirements, (iii) all other applicable regulatory documents filed with
the BLA and the European regulatory filings with the EMEA, if any, in
accordance with procedures agreed between BI PHARMA KG and COULTER. BI
PHARMA KG shall provide COULTER upon
8.
<PAGE> 9
request with a copy of the master batch records in English as submitted
with the BLA and one copy of one executed German-language batch record
of one representative lot.
A Certificate of Analysis appropriately signed and a Certificate of
Compliance appropriately signed by BI PHARMA KG's quality assurance
representative, as are necessary to demonstrate BI PHARMA KG's
compliance with this Article 4.2 for each shipment lot, shall be
provided to COULTER with each shipment lot from BI PHARMA KG's
manufacture site.
During the [..***..] audit according to Article 2.5 above, BI PHARMA KG
shall provide to COULTER access to all documentation relating to
facilities, equipment and the Process required to enable COULTER to
evaluate BI PHARMA KG's compliance with GMP and the BLA, and the
respective regulatory filing with the EMEA in the manufacture of the
Product.
4.3 ADDITIONAL WORK.
On request of COULTER, BI PHARMA KG shall perform additional work not
currently covered by existing agreements between the parties to sustain
the progress of the Project on conditions in terms of money, time and
scope to be subject to mutual agreement of the parties hereto.
4.4 PROCESS [...***...] AGREEMENT
BI PHARMA KG and COULTER will negotiate in good faith a Process
[...***...] Agreement, subject to mutual agreement of the parties hereto
on conditions to be reasonably agreeable (with regard to timing,
capacity, cost) relating to the performance of additional work to
sustain the progress of the Project. Such Process [...***...] Agreement
shall include, but not be limited to provisions and terms relating to
[...***...], and other [...***...], however the parties agree that a
positive outcome can't be guaranteed.
5. QUALITY / INSPECTION OF PRODUCT / DEFECTIVE PRODUCT
5.1 TESTS OF THE PRODUCT AND AGREED UPON AUDITS
COULTER shall have the right to carry out agreed upon customary tests of
the Product and agreed upon annual audits (not to exceed [...***...]) at
reasonable times, of the premises and facilities where BI PHARMA KG
performs work under this Agreement, and of the premises where it stores
raw materials, auxiliary materials, intermediates, packing materials for
the Product and the Product itself. The agreed upon tests of the Product
shall be included in APPENDIX 3 hereto.
5.2 LOT NUMBERING
BI PHARMA KG shall be responsible for lot numbering of Bulk Product,
using BI PHARMA KG's lot number system. BI PHARMA KG shall be
responsible for lot numbering of all Final Product and Finished Product
using BI PHARMA KG's lot numbers and lot numbering system.
All details of lot numbering will be provided by BI PHARMA KG to COULTER
as needed. COULTER's lot number will also be included as needed.
*CONFIDENTIAL TREATMENT REQUESTED
9.
<PAGE> 10
5.3 QUALITY CONTROL PROGRAM
BI PHARMA KG shall maintain a quality control program consistent with
GMP and as agreed by the parties, with respect to BI PHARMA KG's
manufacture of the Product hereunder.
5.4 PRODUCT RELEASE AND QUALITY MANAGEMENT POLICY
BI PHARMA KG shall be responsible for manufacturer release of Bulk
Product, Final Product and Finished Product according to APPENDIX 3.
Final release shall be made by and in the responsibility of COULTER,
subject to the Compliance Policy of BI PHARMA KG for Biopharmaceutical
Contract Manufacturing for the U.S. as described in APPENDIX 7.
5.5 RETENTION OF SAMPLES
BI PHARMA KG shall retain a sufficient quantity of Product from each
batch to perform [...***...] quality control tests as described IN
APPENDIX 3. Retained repository samples shall be maintained in a
suitable storage facility for a period of [...***...] from the date of
expiration of each batch of the Product. All such samples shall be
available for inspection and testing by COULTER or, at COULTER's
request, COULTER's designee at reasonable times and upon reasonable
notice.
BI PHARMA KG shall not use these samples except for the purposes of this
Agreement.
5.6 COMPLAINTS AND ADVERSE REACTIONS
BI PHARMA KG shall notify COULTER immediately by telephone and not later
than 5 (five) working days in writing after receipt by BI PHARMA KG's
quality assurance department of any and all complaints, adverse reaction
reports, safety issues or toxicity issues relating to Product (each an
"Adverse Event Report"), regardless of the origin of such information,
BI PHARMA KG shall advise COULTER of such Adverse Event Report.
COULTER shall be responsible for adverse event notification to the
respective regulatory authorities regarding all such Adverse Event
Reports.
COULTER's obligation to notify BI PHARMA KG immediately by telephone and
no later than 5 (five) working days in writing of such Adverse Event
Reports of which COULTER becomes aware shall extend only to those that
may have relevance to the manufacturing and supply activities conducted
by BI PHARMA KG.
The parties agree to cooperate with each other and any regulatory
authority in evaluating any Adverse Event Reports related to the
manufacture and supply of the Product.
5.7 RECALLS ETC.
COULTER shall notify BI PHARMA KG immediately by telephone and within 5
(five) working days in writing if any Product is the subject of a field
alert, recall, market withdrawal or correction, and COULTER and/or its
designee shall have sole responsibility for the handling and disposition
of such field alert, recall, market withdrawal or correction.
*CONFIDENTIAL TREATMENT REQUESTED
10.
<PAGE> 11
BI PHARMA KG shall notify COULTER immediately by telephone and within 5
(five) working days in writing of any information of which it becomes
aware which might reasonably be expected to require a field alert,
recall, market withdrawal or correction relating to any Product and
COULTER and/or its designee shall have sole responsibility for the
handling and disposition of such field alert, recall, market withdrawal
or correction.
[...***...] shall bear the costs of all field alerts, recalls, market
withdrawals or corrections of Product unless otherwise provided for in
Article 6 hereof.
[...***...] shall solely bear the direct costs incurred in connection
with any such recall and [...***...] for any direct and reasonable costs
incurred by [...***...] in cases where such recall was caused by
[...***...] due to [...***...].
5.8 GOVERNMENTAL CONTACTS
COULTER will notify BI PHARMA KG in due time but in no event later than
5 (five) working days of any governmental contact with regard to
manufacture, supply and quality control of the Product manufactured at
BI PHARMA KG and, at COULTER's discretion, regarding all other Product
and BI PHARMA KG shall have the right but not the obligation to
participate in such meetings relating to BI PHARMA KG manufacturing and
testing of the Product and approve such filings prior to submission.
BI PHARMA KG will be responsible for any reporting of matters regarding
the manufacture of Product to the FDA and EMEA in accordance with
pertinent laws and regulations of the respective countries, and will
keep Coulter informed and provide COULTER with a copy of such reports
not later than the time they are filed.
BI PHARMA KG shall be responsible for handling and responding to any
appropriate German governmental agency or other regulatory authorities
inspections with respect to the manufacturing of the Product. BI PHARMA
KG shall provide to COULTER any information reasonably requested by
COULTER and all information correspondence and reports prepared by any
governmental agency or by BI PHARMA KG in connection with the Product.
BI PHARMA KG shall advise COULTER in due time of any requests by any
governmental agency for such inspections and shall - at its sole
discretion -permit COULTER or its representative to attend such
inspections/audits concerning the Product. Notwithstanding anything in
this Article 5.8 COULTER shall be permitted to be onsite at BI PHARMA KG
for Product specific briefings and debriefings of the audit, if any.
5.9 DEFECTIVE PRODUCT (INCLUDING LOSS AND INACCURATE QUANTITY)
5.9.1 Claims on account of quantity, quality (i.e. compliance with
Specifications), loss or damages to the Product shall be made by COULTER
in writing within [...***...] following receipt thereof, and BI PHARMA
KG's liability for damages resulting therefrom shall [...****...] for
the particular shipment with respect to which such claims are made. No
Product will be returned to BI PHARMA KG without BI PHARMA KG's written
permission.
5.9.2 If COULTER claims that any shipment of Product did not at time of
delivery meet the Specifications, BI PHARMA KG shall conduct an assay of
its retained sample from such shipment. If BI PHARMA KG agrees with
COULTER's claim or if the Third Party Firm (as
*CONFIDENTIAL TREATMENT REQUESTED
11.
<PAGE> 12
defined in Article 5.9.3 below) agrees with COULTER's claim and if BI
PHARMA KG has Product in existing stock, BI PHARMA KG shall replace such
shipment of Product [...***...] of COULTER's notice or the Third Party
Firm's determination. If BI PHARMA KG agrees with COULTER's claim or the
Third Party Firm agrees with COULTER's claim but BI PHARMA KG does not
have Product in existing stock, then at COULTER's option, BI PHARMA KG
shall [...***...].
BI PHARMA KG shall give COULTER written instructions as to how COULTER
should, at BI PHARMA KG's expense, either dispose of the non-conforming
material or return it to BI PHARMA KG, and such instructions shall
comply with all appropriate governmental requirements.
5.9.3 If the parties are unable to resolve their differences, then either
party may refer the matter to an independent specialized firm of
international reputation agreeable to both parties (the "Third Party
Firm") for final analysis, which shall be binding on both parties
hereto. An additional set of quality control samples will be generated
to ensure that 2 (two) full sets of retention samples are available
should the lot be released.
Any dispute resolution shall not release BI PHARMA KG from its
obligation to manufacture the required quantities of Product according
to the rolling forecast system and the Capacity.
5.10 BI PHARMA KG certifies it has not knowingly and will not knowingly use
in any capacity the services of any person, including any firm or
individual, debarred or subject to debarrment under the United States
Generic Drug Enforcement Act of 1992. BI PHARMA KG agrees to notify
COULTER immediately in the event it becomes aware of any person
providing services to BI PHARMA KG under the scope of the work of this
Agreement who is debarred or becomes subject to debarrment.
6. WARRANTY / LIMITATION / INDEMNIFICATION
6.1 WARRANT
BI PHARMA KG warrants and represents that the Product to be supplied by
BI PHARMA KG hereunder including any labeling and other packaging if any
for such Product corresponds to the Specifications and shall be
produced, handled, stored, labeled, packaged according to GMP standard,
and all applicable laws and regulations of Germany, and has been
produced consistent with the Process. The Product shall be delivered
free and clear of liens and claims which affect title.
6.2 LIMITATION OF WARRANTY / LIABILITY
Except as provided in Article 6.1 above BI PHARMA KG makes no warranty
of any kind, express or implied. BI PHARMA KG shall be liable for
[...***...] and, except for [...***...], BI PHARMA KG shall [...***...].
6.3 INDEMNIFICATION BY COULTER
COULTER shall indemnify, defend and hold BI PHARMA KG, its affiliates,
and their respective officers, employees and agents harmless from any
damage, loss, cost or expense [...****...] relating to third party
claims or suits, including injury to persons or damage to property
arising from the packaging, use,
*CONFIDENTIAL TREATMENT REQUESTED
12.
<PAGE> 13
marketing or sale of the Product by COULTER, or its licensees or other
authorized persons or entities, which (i) [...***...], or (ii)
[...***...] and provided that upon receipt of notice by BI PHARMA KG of
any claims or suits relating to such use or sale of the Product.
BI PHARMA KG shall notify COULTER thereof without delay and shall permit
COULTER to handle such claims or suits at the cost and [...***...]
including but not limited to defense, settlement and compromise thereof.
6.4 INDEMNIFICATION BY BI PHARMA KG
To the extent provided for in this Article 6 BI PHARMA KG shall
indemnify, defend and hold COULTER, its affiliates, licensee(s) and
their respective officers, employees and agents harmless from any
damage, loss, cost or expense [...***...] relating to third party claims
or suits, including injury to persons or damage to property arising from
BI PHARMA KG's activities under this Agreement which (i) [...***...]
(ii) [...***...] and provided that [...***...] by COULTER of any claims
or suits relating to such use or sale of the Product, COULTER shall
notify BI PHARMA KG thereof without delay and shall permit BI PHARMA KG
to handle such claims or suits at the cost and [...***...] including but
not limited to defense, settlement and compromise thereof.
6.5 YEAR 2000
BI PHARMA KG is currently working to ensure that the functionality and
performance of the Biberach facility and the computer systems and
computer programs which affect or may affect the manufacturing or
testing of Product hereunder will not be affected by dates prior to,
during and after the year 2000. BI PHARMA KG shall use all commercially
reasonable efforts to ensure that it will be able to fulfill the firm
orders within the Capacity under this Agreement prior to, during and
after the year 2000.
6.6 [...***...] AMOUNT
Except as set forth in Section 5.9, BI PHARMA KG's [...***...] under
this Agreement shall [...***...] the [...***...] from [...***...] and/or
COULTER's [...***...] of the respective calendar year.
7. SUPPORT REGARDING POST LICENSING ISSUES
BI PHARMA KG agrees to support COULTER and its licensee(s), if
applicable, with regard to post licensing issues (e. g. possible
registration issues in the various countries) on commercially reasonable
conditions to be agreed upon, [...***...].
8. PRICE AND PAYMENT
8.1 PRODUCT PRICE
The Product Price for the Product shall be calculated according to the
scheme laid down in APPENDIX 1.
*CONFIDENTIAL TREATMENT REQUESTED
13.
<PAGE> 14
8.2 SURCHARGE
If COULTER elects not to order for purchase [...***...] of Product in a
[...***...] (i.e. [...***...] are [...***...]) as set forth in Article
3.4 above, COULTER shall [...***...] according to [...***...].
In case BI PHARMA KG is not able to manufacture and supply for sale the
[...***...] of Product in a given calendar year, then COULTER
[...***...] according to the [...***...].
8.3 INVOICING AND PAYMENT CONDITIONS
8.3.1 INVOICING
For Bulk Product, BI PHARMA KG will release (manufacturer release) Bulk
Product, issue a Certificate of Analysis and send an invoice to COULTER.
For sterile liquid fill services as described in APPENDIX 1, BI PHARMA
KG will release (manufacturer release) Finished Product or Final
Product, issue a Certificate of Analysis and send an invoice to COULTER.
8.3.2 PAYMENT
Upon receipt of an invoice from BI PHARMA KG pursuant to Article 8.3.1
above by COULTER, COULTER will pay within [...***...]. The Product Price
for Product delivered to COULTER or according to COULTER's instructions
shall be payable by COULTER within 30 (thirty) days after deliver of
Product to the respective party in DEM (Deutsche Mark) by wire transfer
to an account to be nominated by BI PHARMA KG.
The surcharge according to Article 8.2 above shall be payable within 30
(thirty) days after receipt of the respective invoice.
8.4 PRODUCT PRICE ADJUSTMENTS
8.4.1 The Product Price set forth in Article 8.1 above [...***...] will be
[...***...] effective at [...***...] per year for [...***...]. BI PHARMA
KG shall notify COULTER of any [...***...] prior to the date such
[...***...] becomes effective.
8.4.2 In case any [...***...] (in terms of [...***...] or [...***...] for
producing Bulk Product, Final Product and/or Finished Product)
[...***...] in a given calendar year, which the requesting party must
demonstrate, the parties shall agree upon the [...***...] based on good
faith negotiations.
This amount to be [...***...] respectively to [...***...] within
[...***...] of agreement and [...***...]. Thereafter on [...***...].
8.4.3 In case that a change of the Process and/or of the Specifications
influences the basic production assumptions set forth in Appendix 1 the
Product Price shall be recalculated according to the scheme for
determining the Product Price.
8.4.4 COULTER may elect whether the [...***...] according to Article 8.4.2
above is payable pursuant to a separate invoice or by [...***...] for
Bulk Product, Final Product and/or Finished Product. If COULTER can
demonstrate to BI PHARMA KG that any materials used for producing Bulk
Product,
*CONFIDENTIAL TREATMENT REQUESTED
14.
<PAGE> 15
Final Product and/or Finished Product can be [...***...]
and [...***...] and on a regular basis than BI PHARMA KG's
[...***...], then BI PHARMA KG shall accept[...***...] for
purposes of Article 8.4. Such [...***...] must be available on
a regular basis and the same quality as the materials used by BI PHARMA
KG.
8.4.5 Changes of the Process and the Specifications due to the activities
performed under the intended Process [...***...] Agreement may influence
the Product Price and the parties shall negotiate in good faith a new
Product Price.
8.4.6 The Product Price shall also be valid for any change in quantity during
the respective firm order period. However a price recalculation shall
take place if [...***...] will be [...***...] effective as agreed upon
by the parties.
8.5 CURRENCY
All payments will be made in DEM.
"Deutsche Mark" or "DEM" means the lawful currency for the time being of
Germany or, in case of the implementation of the European Monetary
Union, the Euro on the basis of the official conversion rate.
8.6 EURO
In the event the initial conversion to the Euro will result in a Product
Price increase of [...***...] within [...***...] after that initial
conversion, the parties will meet and negotiate in good faith a solution
to the issue of a Product Price in crease due to such conversion.
9. CONFIDENTIALITY
9.1 BI PHARMA KG
BI PHARMA KG shall not disclose COULTER Confidential Information to any
person other than its employees or employees of affiliated companies of
the Boehringer Ingelheim group who have a need to know such information
in order to perform their duties in carrying out the work hereunder and
who have an obligation to maintain the confidentiality thereof under
terms at least as stringent as those provided herein.
9.2 COULTER
COULTER shall not disclose any BI PHARMA KG Confidential Information to
any person other than
9.2.1 its employees or consultants who are bound by similar obligations of
confidentiality and who have a need to know such information in order to
provide direction to BI PHARMA KG or evaluate the results of the work,
or COULTER's licensee(s), if applicable, solely for regulatory purposes
and only if such licensee(s) have an obligation to maintain the
confidentiality thereof under the terms at least as stringent as those
provided herein, or
9.2.2 regulatory authorities, for example, the FDA or foreign equivalent, that
require such information in order to review an IND, BLA or other
regulatory filing. BI PHARMA KG will
*CONFIDENTIAL TREATMENT REQUESTED
15.
<PAGE> 16
be informed and must agree prior to filing of any Bl PHARMA KG
Confidential Information to regulatory authorities. In these cases where
BI PHARMA KG restricts COULTER's ability to file BI PHARMA KG
Confidential Information, BI PHARMA KG agrees to provide the
Confidential Information directly to the regulatory authorities and will
provide a letter of authorization for cross-reference to COULTER.
9.2.3 persons or entities that manufacture Product for COULTER after
termination of this Agreement or during this Agreement as permitted
herein and who have an obligation to maintain the confidentiality
thereof under terms at least as stringent as those provided herein.
9.3 EXCEPTIONS
The obligations of confidentiality applicable to COULTER Confidential
Information and BI PHARMA KG Confidential Information shall not apply to
any information that is:
(1) known publicly or becomes known publicly through no fault of the
recipient;
(2) learned by the recipient from a third party entitled to disclose it;
(3) developed by the recipient independently of information obtained
from the disclosing party;
(4) already known to the recipient before receipt from the disclosing
party, as shown by its prior written records;
(5) required to be disclosed by law, regulation or the order of a
judicial or administrative authority; or
(6) released with the prior written consent of the disclosing party.
9.4 OTHERS
The obligations of both parties under this Article 9 shall expire ten
(10) years after expiration or termination of this Agreement.
9.5 DISCLOSURE TO THE SECURITIES AND EXCHANGE COMMISSION
In the event Securities and Exchange Commission ("SEC") rules or
regulations require COULTER to disclose BI PHARMA KG's Confidential
Information, COULTER shall provide to BI PHARMA KG a reasonable
opportunity to comment on such disclosures and shall thereafter promptly
inform BI PHARMA KG regarding any such disclosure.
10. LICENSE
10.1 LICENSE TO USE OF COULTER CELL LINE AND INTELLECTUAL PROPERTY
COULTER hereby grants BI PHARMA KG a [...***...] right and license to
use the Cell Line and COULTER Confidential Information solely for the
purposes of this Agreement.
*CONFIDENTIAL TREATMENT REQUESTED
16.
<PAGE> 17
10.2 LICENSE TO USE OF BI PHARMA KG'S INTELLECTUAL PROPERTY
BI PHARMA KG hereby grants COULTER a [...***...] license, [...***...]
under this Agreement in connection with the Cell Line, the Process
and/or the Product, to use, sell, offer for sale and import Product.
Except as provided for in Article 3.1 above this license shall extend to
the Process for production of the Product after regular expiration of
this Agreement only.
10.3 NO ADDITIONAL LICENSES
Except as granted under this Agreement, no right or license, either
express or implied, under any patent or proprietary right is granted
hereunder by virtue of the disclosure of COULTER Confidential
Information or BI PHARMA KG Confidential Information.
11. TERM AND TERMINATION
11.1 TERM; EXTENSION
This Agreement will come into force and effect as of the Effective Date,
and shall remain valid until [...***...] (the "Initial Term").
It will automatically extend for additional [...***...] year periods in
the absence of a written notice of termination by one of the parties to
the other.
Such written notice shall be given no later than [...***...] years prior
to the end of the Initial Term and/or any extension period.
11.2 EARLY TERMINATION
11.2.1 To the extent permitted by law, if either party shall become insolvent
or shall make assignment for the benefit of creditors, or proceedings in
voluntary bankruptcy shall be instituted on behalf of or against a party
or a receiver or trustee of all, or substantially all of the property of
a party shall be appointed, the other party shall be entitled to
terminate this Agreement by giving written notice to this effect to the
first party whereupon this Agreement shall so terminate, unless such
situation is rectified within a period of 60 (sixty) days.
11.2.2 Either party may terminate this Agreement for any material breach of
this Agreement, if such breach is not cured within 60 (sixty) days
following receipt by the party committing the breach of written notice
of the intent to terminate. Such termination shall become effective
immediately upon further notice to the defaulting party.
11.2.3 This Agreement may be terminated by COULTER at any time if COULTER shall
withdraw the Product from the US market. In this case COULTER will pay
to BI PHARMA KG the Product Price for the firm ordered quantities (see
Article 3.3 above) of the Product. Moreover, COULTER will pay to BI
PHARMA KG [...***...] as follows: for the [...***...] (which is
[...***...]) COULTER will pay [...***...] (according to
[...***...])[...***...]
[...***...]
[...***...]
*CONFIDENTIAL TREATMENT REQUESTED
17.
<PAGE> 18
These payments shall be due [...***...] after receipt by BI
PHARMA KG of the notice of premature termination from COULTER and
receipt by COULTER of the respective invoice from BI PHARMA KG.
11.2.4 COULTER shall have the right to terminate this Agreement upon the date
when [...***...] increases to [...***...] according to APPENDIX 1.
11.3 INTRODUCTION OF THE EURO
The introduction of the Euro as the legal currency or legal tender in
Germany (see Articles 8.5 and 8.6 above) shall in no way affect the
validity of this Agreement and shall not entitle any party hereto to
terminate, or to require any amendment to, this Agreement.
11.4 EFFECT OF TERMINATION
Upon the expiration or termination of this Agreement:
11.4.1 At the request of COULTER, BI PHARMA KG shall either destroy the Cell
Line as well as the material derived from its culture or deliver the
same to COULTER or a party nominated by COULTER [...***...] and
shall promptly return all COULTER Confidential Information to COULTER;
except for a single copy and/or sample of each material for
documentation purposes only. BI PHARMA KG'S responsibility to keep and
store the Cell Line and any other materials shall terminate six (6)
months after expiration or termination of this Agreement and
11.4.2 COULTER shall promptly return all BI PHARMA KG Confidential Information
to BI PHARMA KG, except for a single copy and/or sample for
documentation purposes only.
The respective rights of BI PHARMA KG and COULTER to indemnification as
set forth in Article 6 hereof and Articles 4.1 and 5.5 shall survive
termination of this Agreement with respect to any claims that relate to
or derive from the Project, or any acts or failures to act, of either BI
PHARMA KG or COULTER in connection with the Project that occur prior to
termination. Article 9 shall survive termination of this Agreement as
laid down herein.
12. MISCELLANEOUS
12.1 FORCE MAJEURE.
Neither party shall be in breach of this Agreement if there is any
failure of performance under this Agreement occasioned by any act of
God, fire, act of government or state, war, civil commotion,
insurrection, embargo, prevention from or hindrance in obtaining energy
or other utilities, labor disputes of whatever nature or any other
reason beyond the control of either party. In the event the Force
Majeure lasts 1 (one) year, the other party may terminate this
Agreement.
12.2 PUBLICITY.
Except as required by law, no press release or other form of publicity
regarding the work performed hereunder or this Agreement shall be
permitted by either party to be published unless both parties have
indicated their consent to the form of the release in writing.
*CONFIDENTIAL TREATMENT REQUESTED
18.
<PAGE> 19
12.3 NOTICES.
Any notice required or permitted to be given hereunder by either party
shall be in writing and shall be (i) delivered personally, (ii) sent by
registered mail, return receipt requested, postage prepaid or (iii)
delivered by facsimile with immediate telephonic confirmation of
receipt, to the addresses or facsimile numbers set forth below:
If to BI PHARMA KG: Boehringer Ingelheim Pharma KG
Birkendorfer Strasse 65
88397 Biberach an der Riss
Federal Republic of Germany
Attention: Dr. Wolfram Carius
(cc: Dr. Wolfgang Noe)
Fax: ++49 73 51/54-4862
Phone: ++49 73 51/54-5134
If to COULTER: Coulter Pharmaceutical Inc.
550 California Avenue, Suite 200
Palo Alto, California 94306-1440
U.S.A.,
Attention: Vice President, Manufacturing
(cc: Chief Financial Officer
Fax: 001-650-849-7500
Phone: 001-650-849-7530
Each notice shall be deemed given (i) on the date it is received if it
is delivered personally, (ii) one (1) day after the date it is
postmarked if it is sent by certified United States mail, return receipt
requested, postage prepaid or (iii) on the date it is received if it is
sent by facsimile with immediate telephonic confirmation of receipt.
12.4 APPLICABLE LAW/JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of the place of domicile of the party sued and the courts of the
place of domicile of the party sued shall have exclusive jurisdiction
over all legal matters and proceedings hereunder.
12.5 COMPLIANCE WITH LAWS
BI PHARMA KG shall perform the work hereunder in conformance with GMP,
as applicable, and all German and/or European Economic Community (EEC)
laws, ordinances and governmental rules or regulations pertaining
thereto.
12.6 INDEPENDENT CONTRACTORS
Each of the parties hereto is an independent contractor and nothing
herein contained shall be deemed to constitute the relationship of
partners, joint venture, nor of principal and agent between the parties
hereto. Neither party shall hold itself out to third persons as
purporting to act on behalf of, or serving as the agent of, the other
party.
12.7 WAIVER
No waiver of any term, provision or condition of this Agreement whether
by conduct or otherwise in any one or more instances shall be deemed to
be or construed as a further or
19.
<PAGE> 20
continuing waiver of any such term, provision or condition or of any
other term, provision or condition of this Agreement.
12.8 SEVERABILITY
If any provision of this Agreement is held to be invalid or
unenforceable by a court of competent jurisdiction all other provisions
shall continue in full force and effect.
The parties hereby agree to attempt to substitute for any invalid or
unenforceable provision a valid or enforceable provision which achieves
to the greatest extent possible the economic, legal and commercial
objectives of the invalid or unenforceable provision.
12.9 ENTIRETY
This Agreement, including any exhibits and appendices attached hereto
and referenced herein, constitutes the full understanding of the parties
and a complete and exclusive statement of the terms of their agreement,
and no terms, conditions, understandings or agreements purporting to
modify or vary the terms thereof shall be binding unless they are
hereafter made in writing and signed by both parties.
12.10 ASSIGNMENT
This Agreement shall be binding upon the successors and assigns of the
parties and the name of a party appearing herein shall be deemed to
include the names of its successors and assigns provided always that
nothing herein shall permit any assignment by either party, except as BI
PHARMA KG may assign this Agreement to an affiliated company taking over
the operative biotech business of BI PHARMA KG and COULTER may assign in
the case of a merger or acquisition or transfer of its assets related to
this Agreement.
20.
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives on the day and year first above
written.
<TABLE>
<S> <C>
COULTER PHARMACEUTICAL, INC. BOEHRINGER INGELHEIM PHARMA KG
PPA. PPA.
/s/ WILLIAM G. HARRIS /s/ DR. WOLFRAM CARIUS /s/ PROF. ROLF WERNER
- ---------------------------- ---------------------------- -------------------------------
Vice President and CFO Dr. Wolfram Carius Prof. Rolf Werner
(Head of Biopharmaceutical (Head of Industrial
Manufacture) Biopharmaceuticals world-wide)
</TABLE>
Appendix 1: Product Price and Basic Production Assumptions
Appendix 2 a: Firm Orders (preapproval phase)
Appendix 2 b: Rolling Forecast (post approval phase)
Appendix 3: Specifications for Product
Appendix 4: Manufacturing Project Managers and Manufacturing Project Team
Members
Appendix 5: Manufacturing Forecast
Appendix 6: Certificate of Compliance
Appendix 7: Compliance Policy of BI PHARMA KG for Biopharmaceutical Contract
Manufacturing for the U.S.
21.
<PAGE> 22
Boehringer Ingelheim
APPENDIX 7
COMPLIANCE POLICY OF BI PHARMA KG FOR
BIOPHARMACEUTICAL CONTRACT MANUFACTURING FOR THE US
Goal:
To define BI policy for establishing compliance oversight for contract
manufacturing of products were the third party is the owner of a product for
marketing in the United States of America.
Several measures are offered by BI to a third party in order to establish
compliance oversight of the license holder over its product manufactured at BI:
1.0 CONTRACT
The basic GMP Compliance aspects are laid down in a written contract
between the parties (license holder and BI).
2.0 AUDITS
The license holder has the right to conduct annual audits at the
facilities of BI to inspect GMP-status of the facility with respect to
its product. BI is committed to resolve relevant GMP- deficiencies
observed by the license holder or is consultants.
3.0 DOCUMENT CONTROL/APPROVAL
3.1 Master Batch Records
The license holder has to approve the master batch records for
commercial production of its product. All changes of the batch
records which impact regulatory filings identified by BI QA
require written approval of the license holder prior to revision
of the batch records and implementation of the changes.
3.2 Testing Records
The license holder has to approve the product specific testing
records for manufacturer release testing of its product. All
changes of the records which impact regulatory filings identified
by BI QA require written approval of the license holder prior to
revision of the document.
3.3 Process and Method Validation
The license holder has to approve the validation for process and
method validation.
22.
<PAGE> 23
Appendix 6
Boehringer Ingelheim
CERTIFICATE OF COMPLIANCE
Page 1 of 1
PRODUCT:
Lot No.:
MANUFACTURING DATE:
EXPIRATION DATE:
It is hereby certified that all manufacturing documents including batch
manufacturing records and in-process control sheets have been inspected and
found to be in compliance with current specifications and that the analyses
carried out in our control laboratory have revealed the results of the attached
analytical certificates and are in compliance with current specifications.
If occurred, deviations during manufacturing and testing of the product are
documented in the batch manufacturing and testing records and have been assessed
and found to be acceptable.
The batch was manufactured in accordance with cGMP's and with the product's.
The lot is approved and released.
BOEHRINGER INGELHEIM PHARMA KG
QUALITY ASSURANCE
Signature:
------------------------
Date:
-----------------------------
(day/month/year)
23.
<PAGE> 24
Boehringer Ingelheim
4.0 PRODUCT RELEASE
4.1 BI-Manufacturers release
Bl certifies to the license holder that manufacturing and testing
of a batch has been performed according cGMP and according the
BLA. BI certifies the analytical results of a batch. BI provides
a summary of all deviations which might have occurred during
manufacturing and testing.
4.2 Final product release
The final release of product for marketing is the responsibility
of the license holder.
5.0 FACILITY CHANGES
BI notifies the license holder of significant facility changes.
24.
<PAGE> 25
Appendix 5
Manufacturing Forecast for Coulter B 1 Therapy
Years
<TABLE>
<S> <C> <C> <C> <C> <C>
[...***...] [...***...] [...***...] [...***...] [...***...] [...***...]
US Demand [...***...] [...***...] [...***...] [...***...] [...***...]
European Demand [...***...] [...***...] [...***...] [...***...] [...***...]
Total Demand [...***...] [...***...] [...***...] [...***...] [...***...]
Assumes:
[...***...]
[...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
25.
<PAGE> 26
Appendix 4
MASTER-PROJECT PLAN: ANT-B1
COULTER PHARMACEUTICALS INC./B1 PHARMA KG
MANUFACTURING PROJECT MANAGERS AND
MANUFACTURING PROJECT TEAM MEMBERS
[...***...]
*CONFIDENTIAL TREATMENT REQUESTED
26.
<PAGE> 27
Appendix 3.1
Product Specification Doc. Number: PSP/PCP XXXXX
ANTI-B1 ANTIBODY BULK Effective Date: DRAFT
Manufactured by BI Pharma KG Page Number: 1 of 3
PRODUCT DESCRIPTION
Purified Monoclonal Antibody Bulk directed against CD20 Antigen formulated in
[...***...]
<TABLE>
<S> <C> <C>
PART NUMBER: LOT NUMBER: Storage Conditions [...***...]
MANUFACTURER: THOMAE MANUFACTURE DATE EXPIRATION DATE [...***...]
ATTRIBUTE TEST METHOD Specification
Quality
[...***...] [...***...] [...***...]
Identity
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
Composition
[...***...] [...***...] [...***...]
Purity
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
Potency
[...***...] [...***...] [...***...]
Safety
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
27.
<PAGE> 28
Appendix 3.1
FOR INFORMATION ONLY
<TABLE>
<S> <C> <C>
ATTRIBUTE TEST METHOD SPECIFICATION
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
28.
<PAGE> 29
Appendix 3.2
FOR INFORMATION ONLY
<TABLE>
<CAPTION>
ATTRIBUTE TEST METHOD SPECIFICATION
<S> <C> <C>
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...] [...***...]
POTENCY
[...***...] [...***...] [...***...]
SAFETY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...]
[...***...]
</TABLE>
<TABLE>
<CAPTION>
Product Specification Doc. Number PSP/PCA
<S> <C>
ANTI-B1 ANTIBODY FINAL BAGGED PRODUCT XXXX
for further manufacturing Effective Date: DRAFT
Manufactured by BI Pharma KG Page Number: 1 of 3
PRODUCT DESCRIPTION Purified
Monoclonal Antibody directed
against CD20 Antigen
formulated in [...***...]
PART NUMBER: LOT NUMBER: STORAGE CONDITIONS [...***...]
MANUFACTURER: THOMAE MANUFACTURE DATE EXPIRATION DATE [...***...]
ATTRIBUTE TEST METHOD SPECIFICATION
QUALITY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
IDENTITY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
29.
<PAGE> 30
<TABLE>
<S> <C> <C>
COMPOSITION
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
PURITY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
Product Specification Doc. Number: PSP/PCA
ANTI-BI ANTIBODY FINAL VIALED PRODUCT xxxx
Manufactured by BI Pharma KG Effective Date: DRAFT
Page Number; 1 of 2
PRODUCT DESCRIPTION: Purified Monoclonal Antibody directed against CD20 Antigen
formulated in
[...***...]
ATTRIBUTE TEST METHOD SPECIFICATION
QUALITY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
IDENTITY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
COMPOSITION
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
PURITY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
POTENCY
[...***...] [...***...] [...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
30.
<PAGE> 31
<TABLE>
<S> <C> <C>
SAFETY
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...]
[...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
31.
<PAGE> 32
Appendix 3.3
<TABLE>
<CAPTION>
FOR INFORMATION ONLY
ATTRIBUTE TEST METHOD SPECIFICATION
<S> <C> <C>
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
[...***...] [...***...] [...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
32.
<PAGE> 33
Appendix 2a
FIRM ORDER PLANNING SYSTEM OF ANTI-B1 COMMERCIAL SUPPLY
PRE FDA APPROVAL
<TABLE>
<CAPTION>
Year [......***.....]
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[..........*******...........]
</TABLE>
[...***...]
*CONFIDENTIAL TREATMENT REQUESTED
33.
<PAGE> 34
Appendix 2b
ROLLING FORECAST PLANNING SYSTEM OF BULK PRODUCT AND
FINAL PRODUCT ANTI-B1 COMMERCIAL SUPPLY
<TABLE>
<CAPTION>
1998 1999 2000 2001 2002
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
IQ IIQ IIIQ IVQ IQ IIQ IIIQ IVQ IQ IIQ IIIQ IVQ IQ IIQ IIIQ IVQ IQ IIQ IIIQ IVQ
</TABLE>
[...***...]
*CONFIDENTIAL TREATMENT REQUESTED
34.
<PAGE> 35
Appendix 1 Page 1 of 2
Master Project plan : ANTI B1
COULTER PHARMACEUTICAL BI Pharma KG
Basic Production Assumptions and Pricing System for
Commercial Supply
BASIC PRODUCTION ASSUMPTIONS OF BULK DRUG SUBSTANCE
<TABLE>
<S> <C>
Scale [...***...]
Titer [...***...]
Overall Yield [...***...]
Total amount per run [...***...]
PRICE [...***...]
Quantity per year Price [...***...]
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
[...***...] [...***...]
STERILE LIQUID FILL [...***...]
Batch Size [...***...]
Final Dosage [...***...]
Fill Volume [...***...]
Price [...***...] [...***...]
STERILE LIQUID FILL [...***...]
Batch Size [...***...]
Final Dosage [...***...]
Fill Volume [...***...]
Price[...***...] [...***...]
FILL [...***...]
Bulk Drug Substance approximately [...***...]
Fill Volume [...***...]
Price [...***...] [...***...]
</TABLE>
*CONFIDENTIAL TREATMENT REQUESTED
35.
<PAGE> 36
APPENDIX 1 PAGE 2 OF 2
Master Project plan : Anti B1
COULTER PHARMACEUTICAL / BI Pharma KG
Basic Production Assumptions and Pricing System for
Commercial Supply
S = SURCHARGE
The surcharge system is effective, [...***...]
If the annual placed firm order Quantity falls below [...***...], BI Pharma KG
will charge
[...***...]
Calculated as follows:
[...***...]
[...***...]
Surcharge= [...***...]
PRICE CALCULATION FINAL PRODUCT
PB= Bulk Drug price [...***...]
[...***...]
Price = [...***...]
[...***...]
Price = [...***...]
BAG OR APPROPRIATE CONTAINER FILL
[...***...]
Price = [...***...]
*CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 1
Exhibit 10.27
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 240.24b-2
FIRST AMENDMENT TO LEASE AGREEMENT
THIS FIRST AMENDMENT TO LEASE AGREEMENT (this "Amendment") is made as of
November 10, 1998, by and between HMS GATEWAY OFFICE L.P., a Delaware limited
partnership ("Landlord"), and COULTER PHARMACEUTICAL, INC., a Delaware
corporation. ("Tenant").
RECITALS
A. Landlord and Tenant have previously entered into that certain Lease
Agreement dated November 7, 1997 (the "Lease").
B. Pursuant to the Lease, Tenant leased from Landlord approximately
[...***...]* square feet (the "Original Premises"), which Original Premises
constitute the entire building commonly known as 600 Gateway Boulevard, South
San Francisco, California (the "Building").
C. Landlord and Tenant desire to amend the Lease to reflect the
expansion of the Original Premises, all upon and subject to the terms, covenants
and conditions hereinafter set forth.
AGREEMENT
NOW THEREFORE, in consideration of the agreements of Landlord and Tenant
herein contained and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Landlord and Tenant hereby agree as follows:
1. DEFINED TERMS. Except as otherwise defined herein, capitalized terms
shall have the meaning ascribed to them in the Lease.
2. PREMISES.
Landlord shall lease to Tenant, and Tenant shall lease from Landlord,
the Premises on the terms and conditions set forth in the Lease and herein. From
and after the Expansion Space Commencement Date (as defined in Exhibit B-FA
attached hereto), the Premises shall mean the Original Premises and an
additional approximately [...***...] square feet (the "Expansion Space"), which
Expansion Space shall constitute the entire building to be conducted in
accordance with Exhibit A-FA and Exhibit B-FA hereto and to be commonly known as
650 Gateway Boulevard, South San Francisco, California (the "Expansion
Building").
1.
<PAGE> 2
3. MONTHLY BASE RENT FOR THE EXPANSION SPACE.
Monthly Base Rent for the Expansion Space shall, as of the Expansion
Space Commencement Date, be [...***...]* to the applicable rate per square foot
being charged from time to time under the Lease for the Original Premises
multiplied by the square footage of the Expansion Space. The rate per square
foot being charged under the Lease for the Original Premises shall be determined
by dividing the Monthly Base Rent due for the Original Premises by the Premises
Square Footage for the Original Premises. Nothing in this Paragraph 2 shall
alter or amend the Monthly Base Rent payable under the Lease for the Original
Premises.
4. TENANT'S PROPORTIONATE SHARE; PARKING.
As of the Expansion Space Commencement Date and subject to the terms and
conditions set forth in the Lease, (i) Tenant's Proportionate Share of the
Project shall be [...***...], (ii) Tenant's Proportionate Share of the Building
shall remain 100% and (iii) the number of unreserved parking spaces shall be
increased to [...***...] non-exclusive and undesignated parking spaces.
5. SECURITY DEPOSIT.
Prior to execution of this Amendment and in satisfaction of the
condition set forth in Paragraph 52 of the Lease, Tenant has increased the
Security Deposit by [...***...] such that the total Security Deposit held by
Landlord under the Lease is [...***...]. Such increased Security Deposit is
subject to the terms and conditions of the Lease, including without limitation,
Paragraph 7 of the Lease.
6. EXPANSION CONSTRUCTION AGREEMENTS.
Attached hereto as Exhibit A-FA and Exhibit B-FA, respectively, are the
Expansion Construction Agreements that set forth the rights and obligations of
Landlord and Tenant with respect to the construction of the Expansion Building
and the Expansion Space. These Expansion Construction Agreements amend and
restate the Base Building Construction Agreement and the Premises Construction
Agreement currently attached to the Lease with respect to the construction of
the Expansion Building and Expansion Space only.
7. TIME FOR PERFORMANCE.
With respect to construction of the Expansion Space, the parties have
set forth on Exhibit H-FA hereto certain events which must occur prior to or
during the construction of the Expansion Space (each a "Condition"), together
with certain dates upon which each condition must be satisfied ("Initial Window
Date"); provided however, if Landlord is delayed in satisfying any Condition due
to Tenant Delays or Force Majeure Events (as defined in Exhibit B-FA hereto),
all of the Initial Window Dates set forth on Exhibit H-FA shall be extended for
a period equal to the length of such delay. If any Condition is not satisfied on
or before its respective Initial Window Date, as such may be so extended, Tenant
shall have the right to terminate this Lease, as to both the Original Premises
and Expansion Space, by delivering written notice to
2.
<PAGE> 3
Landlord within [...***...]* business days after expiration of the applicable
Initial Window Date. If Tenant does not deliver written notice of termination to
Landlord within such [...***...] period, time being of the essence, Tenant shall
have waived its right to terminate as a result of Landlord's failure to satisfy
the particular Condition in question. If Tenant timely elects to terminate the
Lease as set forth above, the Lease, as to the Original Premises and the
Expansion Space, shall terminate.
If Tenant timely exercises its right to terminate the Lease as provided
above, Landlord shall have the right to nullify Tenant's election to terminate
the Lease as to the Original Premises by notifying Tenant, within [...***...]
days after receipt of Tenant's election to terminate, of Landlord's election to
pay to Tenant the Relocation Costs (as defined below). In the event Landlord
nullifies Tenant's election to terminate the Lease as to the Original Premises
and Tenant (i) gives Landlord written notice within [...***...] months of such
nullification that Tenant will vacate the Original Premises and (ii) vacates the
Original Premises, Tenant shall have the right to sublease the Original Premises
as otherwise provided under Paragraph 23 of the Lease; provided however, Tenant,
in this instance, shall not be required to pay the Additional Rent required to
be paid to Landlord under Paragraph 23(c) of the Lease. Notwithstanding this
paragraph, Tenant and any guarantor or surety of Tenant's obligations under the
Lease shall at all times remain fully responsible and liable for payment of the
Rent and for compliance with all of Tenant's obligations under the Lease, as
provided in Paragraph 23(d) of the Lease.
"RELOCATION COSTS" are defined as [...***...] of the reasonable
out-of-pocket costs that Tenant incurs to relocate from the Original Premises to
a new location. Relocation Costs shall not include any payment of rent or any
cost of tenant improvements. Prior to reimbursement of Relocation Costs by
Landlord, Tenant shall provide Landlord with back-up invoices evidencing the
costs incurred by Tenant in relocating to Tenant's new location. In no event
shall Landlord pay Relocation Costs in excess of [...***...]. Relocation Costs
shall be paid by Landlord within [...***...] days after receipt of the
above-referenced back-up invoices.
8. CARRY COSTS.
Notwithstanding anything in Paragraph 52(e) of the Lease to the
contrary, except for any delays in the Phase II Commencement Date due to Force
Majeure Events, Tenant shall continue to pay to Landlord the Carry Costs on the
first day of each month up to and including [...***...]. In the event of a delay
in the Phase II Commencement Date due to Force Majeure Events, Tenant shall
continue payment (prorated as appropriate) of Carry Costs for the time
attributable to such delay.
9. TENANT MAINTENANCE.
Notwithstanding anything in the Paragraph 13 of the Lease to the
contrary, Tenant shall be responsible for maintaining the heating, ventilating
and air-conditioning systems and the life-safety systems serving the Premises.
Tenant shall maintain these systems in good order and condition and shall, at a
minimum, follow Landlord's standard servicing guidelines for such systems.
3.
<PAGE> 4
10. R&D SPACE.
Notwithstanding anything in Paragraph 11 of the Lease to the contrary,
Tenant shall be permitted [...***...]* square feet of R&D Space in the Expansion
Space. Tenant may not exceed such maximum square footage for R&D Space in the
Expansion Space and therefore no Conversion Allowance shall be payable by Tenant
nor shall any Converted Office Space be available to Tenant with respect to the
Expansion Space. The terms and conditions of Paragraph 11 shall remain
unmodified and continue to apply in full force and effect with respect to the
Original Premises.
11. BROKERS.
Landlord and Tenant each represents and warrants to the other that
neither it nor its officers or agents nor anyone acting on its behalf has dealt
with any real estate broker except the Broker(s) specified in the Basic Lease
Information in the negotiating or making of this Amendment, and each party
agrees to indemnify and hold harmless the other from any claim or claims, and
costs and expenses, including attorneys' fees, incurred by the indemnified party
in conjunction with any such claim or claims of any other broker or brokers to a
commission in connection with this Amendment as a result of the actions of the
indemnifying party. Landlord shall pay the brokerage commissions due to the
Brokers listed in the Basic Lease Information.
12. BASIC LEASE INFORMATION.
As of the Expansion Space Commencement Date, the Basic Lease Information
in the Lease shall be amended and restated pursuant to the Basic Lease
Information attached as Exhibit Z.
13. RATIFICATION.
As amended hereby, the Lease is hereby ratified and confirmed in all
respects. In the event of any inconsistencies between the terms of this
Amendment and the Lease, the terms of this Amendment shall prevail.
14. SUCCESSORS AND ASSIGNS.
This Amendment shall bind and inure to the benefit of Landlord and
Tenant and their respective legal representatives and successors and assigns.
SIGNATURES ON NEXT PAGE
* CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 5
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment to
Lease as of the date first above written.
LANDLORD: HMS GATEWAY OFFICE, L.P.,
a Delaware limited liability company
By: Hines Gateway Office, L.P.,
General Partner
By: Hines Interests Limited Partnership,
General Partner
By: Hines Holdings, Inc.,
General Partner
By: /s/ James Buie
-------------------------------------
Name: James Buie
------------------------------------
Its: EVP
-------------------------------------
TENANT: COULTER PHARMACEUTICAL, INC.,
a Delaware corporation
By: /s/ William G. Harris
----------------------------------
Name: William G. Harris
----------------------------------
Its: Vice President and CFO
----------------------------------
<PAGE> 6
EXHIBIT A-FA
BASE BUILDING CONSTRUCTION AGREEMENT
This exhibit, entitled "Base Building Construction Agreement", is and
shall constitute Exhibit A-FA to the First Amendment to Lease Agreement, dated
as of November 10, 1998, by and between Landlord and Tenant (the "First
Amendment"). The terms and conditions of this Exhibit A-FA are hereby
incorporated into and are made a part of the First Amendment. As used in this
Exhibit, the term "Lease" shall include the original Lease Agreement and the
First Amendment.
Subject to the terms and conditions set forth herein and in the Lease,
Landlord shall cause construction of the Building in accordance with the
procedures set forth below:
(A) DEFINITIONS.
(1) "BASE BUILDING IMPROVEMENTS" shall mean a [...***...] story
building, containing approximately [...***...]* square feet, all exterior
surfaces, utilities, landscaping and paved parking, all in substantial
compliance with those items listed on the Preliminary Specifications as "Base
Building" and located substantially in accordance with the Site Plan.
(2) "BASE BUILDING PLANS AND SPECIFICATIONS" is defined in Section
B. 1 below.
(3) "BUILDING WORK COST" is defined in Section B.3 below.
(4) "CONTRACTOR" shall mean Rudolph & Sletten.
(5) "CONSTRUCTION WARRANTIES" is defined in Section D.2 below.
(6) "LANDLORD'S ARCHITECT" shall mean DES Architects/Engineers or
any replacement architect selected by Landlord in Landlord's reasonable
discretion.
(7) "LANDLORD'S CONTRACT" shall mean the construction contract
entered into by and between Landlord and the Contractor for the construction of
the Base Building Improvements and any Tenant Requested Base Building
Improvements.
(8) "PRELIMINARY SPECIFICATIONS" shall mean those preliminary
specifications for construction of the Base Building Improvements categorized as
"Base Building" and more particularly described on the attached Schedule A-1.
(9) "650 GATEWAY PRELIMINARY SPECIFICATIONS" shall mean those
preliminary specifications for construction of the Base Building Improvements
categorized as "Base Building" and more particularly described on the attached
Schedule A-1.
(10) "SITE PLAN" shall mean the site plan set forth on the attached
Schedule A-2 establishing the approximate location of the Building. All details
relating to the Project
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 7
contained on the Site Plan, including without limitation, location of the
Building, parking areas, ingress, egress, direction of driveways, and entrances
are from time to time subject to change in Landlord's discretion, upon written
consent from Tenant, which consent shall not be unreasonably withheld,
conditioned or delayed and provided further that if Tenant fails to respond
within five (5) business days following Landlord's request for consent, Tenant
shall be conclusively deemed to have given its approval to any such change.
Notwithstanding the foregoing, Landlord may, without the written consent of
Tenant, change any details relating to the Project as may be required by any
governmental agency or as necessary to comply with any governmental requirements
or to address structural or unanticipated field conditions or which, in the
reasonable discretion of Landlord, will not have a material effect on Tenant's
use of the Premises or a material effect on the aesthetic appearance or
impression relating to the area covered by the Site Plan.
(11) "TENANT'S COSTS" is defined in Section B.6 below.
(12) "TENANT REQUESTED BASE BUILDING IMPROVEMENTS" shall mean those
improvements requested by Tenant in accordance with this Exhibit A-FA that are
to be incorporated into the Base Building Plans and Specifications.
Capitalized terms not otherwise defined in this Exhibit A shall have the
meanings ascribed to them in the Lease.
(B) SCHEDULE.
(1) PLANS AND SPECIFICATIONS. At Landlord's sole cost and expense,
Landlord's Architect shall prepare, on or before November 15, 1998, plans and
specifications (the "Base Building Plans and Specifications") for construction
of the Base Building Improvements substantially in accordance with the 650
Gateway Preliminary Specifications. Tenant shall have the right to approve the
Base Building Plans and Specifications only to the extent of any material
deviations from the 650 Gateway Preliminary Specifications; provided, however,
that such approval shall not be unreasonably withheld, conditioned, or delayed
and, provided further that if Tenant fails to respond within [...***...]*
business days following Landlord's request for approval, Tenant shall be
conclusively deemed to have given its approval to the matter submitted by
Landlord. Notwithstanding the foregoing, the Base Building Plans and
Specifications are, from time to time, subject to change in Landlord's
discretion, upon written consent from Tenant, which consent shall not be
unreasonably withheld, conditioned or delayed and provided further that if
Tenant fails to respond within [...***...] business days following Landlord's
request for consent, Tenant shall be conclusively deemed to have given its
consent to any such change. Landlord may without the written consent of the
Tenant change the Base Building Plans and Specifications as may be required by
any governmental agency or as necessary to comply with any governmental
requirements or to address structural or unanticipated field conditions or
which, in the reasonable discretion of Landlord, will not have a material effect
on Tenant's use of the Premises or a material effect on the aesthetic appearance
or impression relating to the Base Building Improvements.
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 8
(2) TENANT REQUESTED BASE BUILDING IMPROVEMENTS. On or before the
date that is [...***...]* weeks after the date of this Lease, Tenant shall
deliver to Landlord's Architect detailed specifications for any Tenant Requested
Base Building Improvements. All Tenant Requested Base Building Improvements
shall be subject to review and approval by Landlord, which approval may be given
or withheld in Landlord's reasonable discretion, to ensure, among other things,
that the Tenant Requested Base Building Improvements are compatible with all
other construction and all electrical, mechanical, life safety, and other
systems within the Building. If Landlord disapproves the Tenant Requested Base
Building Improvements, then within five (5) business days thereafter, Landlord
shall meet with the Tenant's Architect (as defined in Exhibit B-FA) and Tenant
to discuss, or shall submit to Tenant's Architect and Tenant in writing, the
reasons for Landlord's disapproval. Within five (5) business days following such
meeting or submission, Tenant shall cause Tenant's Architect to revise the same
and to submit new Tenant Requested Base Building Improvements to Landlord. The
procedure set forth in this paragraph will be repeated as set forth above until
Landlord has approved the Tenant Requested Base Building Improvements.
(3) ESTIMATE OF BUILDING WORK COSTS. Promptly after approval of the
Tenant Requested Base Building Improvements, Landlord shall furnish Tenant with
an estimate of the cost of the Tenant Requested Base Building Improvements (the
"Building Work Cost").
(4) TENANT'S REVIEW OF BUILDING WORK COSTS. The Building Work Cost
shall be subject to Tenant's approval, which approval shall not be unreasonably
withheld, conditioned or delayed and provided further that if Tenant fails to
respond within five (5) business days following Landlord's request for consent,
Tenant shall be conclusively deemed to have given its approval to the Building
Work Costs. If Tenant timely disapproves the Building Work Cost, then within
five (5) business days thereafter, Tenant shall meet with Landlord, Contractor,
Landlord's Architect and Tenant's Architect to discuss value engineering changes
to the Tenant Requested Base Building Improvements. Within five (5) business
days following such meeting, Tenant shall cause Tenant's Architect to revise the
Tenant Requested Base Building Improvements and to submit revised Tenant
Requested Base Building Improvements for approval by Landlord in accordance with
the procedure set forth above and for a new Building Work Cost to be prepared by
Landlord. The procedure set forth in this paragraph will be repeated until
Tenant has approved the Building Work Cost.
(5) REVISION OF PLANS & SPECIFICATIONS. Following Landlord's
approval of the Tenant Requested Base Building Improvements and Tenant's
approval of the Building Work Cost, Landlord shall cause Landlord's Architect to
revise the Base Building Plans and Specifications to incorporate the Tenant
Requested Base Building Improvements within fifteen (15) days after receipt of
Tenant's approval of the Building Work Cost.
(6) TENANT'S RESPONSIBILITY FOR COST OF TENANT REQUESTED BASE
BUILDING IMPROVEMENTS. All costs associated with incorporating the Tenant
Requested Base Building Improvements into the Base Building Plans and
Specifications and all costs of constructing (including without limitation the
cost of obtaining all necessary city approvals and permits) the Tenant Requested
Base Building Improvements (the "Tenant's Costs") shall be the responsibility
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 9
of Tenant and shall not be credited against Tenant's Allowance, as defined in
Exhibit B-FA. Tenant shall make progress payments to Landlord from time to time
as the Tenant Requested Base Building Improvements are constructed. Tenant shall
pay the portion of such progress payments attributable to Tenant's Costs to
Landlord within ten (10) days of delivery of statements from Landlord to Tenant
therefor. Upon receipt of such payments, Landlord shall make all progress
payments directly to Contractor or subcontractors, as appropriate. Landlord
shall be entitled to suspend or terminate construction of the Base Building
Improvements and to declare Tenant in default in accordance with the terms of
the Lease, if payment by Tenant to Landlord of Tenant's Costs has not been
received as required hereunder.
(C) CONSTRUCTION.
The Base Building Improvements shall be constructed, at Landlord's sole
cost and expense, by Contractor in accordance with the Base Building Plans and
Specifications, as the same may be amended or modified from time to time by
Landlord and, if required, as approved by Tenant in accordance with this Exhibit
A-FA. All changes to the Base Building Plans and Specifications requiring
Tenant's approval must be evidenced by a written change order executed by
Landlord and by Tenant or each of their agents, describing the change required
in the Base Building Improvements and, the cost of such changes shall be paid in
accordance with the terms of this Exhibit A-FA.
(D) GENERAL.
(1) RIGHT OF TERMINATION. Landlord and Tenant acknowledge that
construction of the Base Building Improvements and all matters relating thereto
are subject to Landlord obtaining all necessary governmental and private
approvals to commence construction of the Base Building Improvements. Landlord
shall use commercially reasonable efforts to obtain such approvals; however, if
Landlord is unable to obtain such approvals by [...***...], either party shall
have the right to terminate' this Lease, as to the Expansion Space only, by
delivering written notice of termination to the other party on or before
[...***...]. The Lease as to the Original Premises shall remain in full force
and effect and shall be unmodified by any termination pursuant hereto. If no
such notice of termination is given, the Lease shall remain in full force and
effect as to the Original Premises and the Expansion Space. Notwithstanding
anything herein to the contrary, Landlord shall not be liable to Tenant for any
loss or damage resulting from any delay in constructing or developing the Base
Building Improvements, nor shall such failure affect the obligations of Tenant
under the Lease, except as otherwise set forth in the Lease.
(2) CONSTRUCTION WARRANTIES. Landlord shall obtain from Contractor,
and shall request Contractor to obtain from all subcontractors and material
suppliers, warranties (collectively, "Construction Warranties") for all
components of the Base Building Improvements for which warranties are
customarily provided in the construction industry and Landlord shall enforce the
Construction Warranties as reasonably requested by Tenant.
(3) LANDLORD'S COVENANTS. Subject to the terms and conditions of the
Lease, Landlord covenants that (a) the Base Building Improvements shall be
constructed in compliance with all applicable building code requirements in
effect and being actively enforced by the City
4.
<PAGE> 10
of South San Francisco on the date the applicable building permits for
construction of the Base Building Improvements were issued to Contractor and
substantially in accordance with the Base Building Plans and Specifications and
(b) that the Base Building Improvements shall be free from material latent
defects in design, materials and workmanship; provided however, Landlord shall
have no liability under this paragraph unless failure to comply with the terms
hereof materially adversely affect Tenant's use of the Premises. Any claims by
Tenant under clause (a) above, shall be made in writing not later than one (1)
year after the Expansion Commencement Date and any claims by Tenant under clause
(b) above, shall be made in writing not later than the earlier of [...***...]*
years after the Expansion Commencement Date or termination of the Lease. In the
event Tenant fails to deliver a written claim to Landlord on or before such
dates, then Landlord shall be conclusively deemed to have satisfied its
obligations under this paragraph. The covenants contained in this paragraph are
subject to Paragraph 39 of the Lease and are made specifically and exclusively
for the benefit of the original Tenant.
INITIALS:
TENANT: /s/
---------------------------------
LANDLORD: /s/
-------------------------------
* CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 11
COULTER PHARMACEUTICAL - SCHEDULE A1
PRELIMINARY SPECIFICATIONS
COST RESPONSIBILITY
<TABLE>
<CAPTION>
Base
Description Building Tenant
- --------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Sitework
- All necessary fees and permits for Base Building Works. [...***...] [...***...]
- All grading of the site to predetermined grades per DES [...***...] [...***...]
Architects plans.
- Installation of all necessary underground utilities, storm drain, [...***...] [...***...]
sewer, catch basins, drain inlets, common trench, water,
electricity, cable televisions and gas meter per DES Architects
documents.
- Installation of all offsite and onsite curbs, gutters and [...***...] [...***...]
sidewalks as shown on Des Architect construction documents.
- Installation of all irrigation and landscaping per DES [...***...] [...***...]
Architect's plans.
o All area drains in landscaping areas, which shall be connected to [...***...] [...***...]
the storm drain system if required by DES Architect
- Installation of separate water and electrical meters for all [...***...] [...***...]
common area landscaping
- Installation of code required informational and directional [...***...] [...***...]
signage.
- Illuminated and non-illuminated interior signage by tenant. [...***...]
- Illuminated monument signage and on building identification [...***...] [...***...]
signage as reviewed by Tenant.
- Striping of all parking areas per DES Architects documents. [...***...] [...***...]
- Installation of all trash screens as required by Planning [...***...] [...***...]
Department of the City of South San Francisco
- Installation of all exterior lighting with a minimum coverage in [...***...] [...***...]
both parking areas and walkways of not less than one foot candle.
Structure
- All necessary fees and permits for Base Building work. [...***...] [...***...]
- All work necessary per code to make the Base Building handicap [...***...] [...***...]
accessible.
- Minimum 5" slab on grade in conformance with specifications and [...***...] [...***...]
recommendations of Base Building geotechnical and engineering
consultants. Finish shall be smooth.
- Sand fill and moisture barrier under slab on grade as recommended [...***...] [...***...]
by DES Architects.
- Exterior concrete walls shall be sandblasted and sealed. [...***...] [...***...]
- All structural steel shall be erected per DES Architect's [...***...] [...***...]
specifications.
- All structural steel shall not be fireproofed unless required by [...***...] [...***...]
local codes.
- Second floor decking shall be galvanized metal with a lightweight [...***...] [...***...]
concrete topping slab. Finish shall be smooth.
- All exterior vision glass shall be 1/4" thick with reflective [...***...] [...***...]
coating.
- Roof membrane shall be 4-ply built-up system with a mineral fiber [...***...] [...***...]
cap sheet.
- All required condensate lines to be installed and terminated at [...***...] [...***...]
the nearest roof drain for Base Building equipment.
- Roof drains per plan with drain lines tying into the storm drain [...***...] [...***...]
system. Scuppers for overflow to be provided if required by code.
- Convenience outlets, as required by code, on the roof. [...***...] [...***...]
- Floor systems shall be designed to a minimum of 45 lbs. Per [...***...] [...***...]
square foot for office space and a minimum of 100 lbs. Per square
foot on ground floor for lab space.
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
<PAGE> 12
COULTER PHARMACEUTICAL - SCHEDULE A1
PRELIMINARY SPECIFICATIONS
COST RESPONSIBILITY
<TABLE>
<S> <C> <C>
- Roof insulation to meet minimum energy code. [...***...] [...***...]
- Roof live load to accommodate 50 lb. dead load and necessary [...***...] [...***...]
reinforcement for additional lab related mechanical equipment in
areas indicated on plan.
- Required second floor penetrations, including blockouts, as shown [...***...] [...***...]
on Tenant Improvement drawings for mechanical, electrical and
plumbing trades and roof hatch.
- Required roof penetrations, including blockouts, as shown on base [...***...] [...***...]
building for mechanical, electrical and plumbing work.
- Top of slab on grade to top of second floor slab shall be [...***...] [...***...]
15'-0". Top of second floor slab to top of roof trusses shall be
13'-0".
- All exterior doors, except entrance doors, shall be hollow core [...***...] [...***...]
metal with metal jambs as shown in schematic documents with
hardware as required by Tenant.
- One 12'-0" x 12'-0" steel rollup door shall be installed per [...***...] [...***...]
Tenant specifications for delivery area.
- Front entry doors shall be a pair of 3'-0" x 8'-0" fully [...***...] [...***...]
supported, balanced aluminum and glass doors with hardware
approved as required by Tenant.
- All interior stairs as required by code, but not less than two [...***...] [...***...]
per building. All stairs shall be metal pan stairs with concrete
fill.
- Stair carpeting, if required, to be provided tenant. [...***...] [...***...]
- All interior stair handrails shall be primed. Proper backing [...***...] [...***...]
shall be installed.
- All stairwells shall be sheetrocked, taped and ready for paint. [...***...] [...***...]
- All stairwells shall include code required lighting. [...***...] [...***...]
- All required base building life safety signage as required by [...***...] [...***...]
code.
- All equipment platforms shall have a sheetmetal cap and minimum [...***...] [...***...]
3" apron around the perimeter. Six bay equipment platform as
indicated on plan ready to receive framing for equipment.
- One hydraulic passenger elevator, including all necessary wiring [...***...] [...***...]
and equipment, with a capacity of not less than 2,500 lbs. and
minimum speed of 100' per minute.
- A complete elevator cab that is the manufacturer's standard. [...***...] [...***...]
- Base Building to accommodate a 9'-0" finished ceiling height on [...***...] [...***...]
both floors.
- All exterior concrete walls shall be finished on the interior [...***...] [...***...]
with lightweight metal studs, insulation and sheetrock, taped
with a smooth finish.
- Master keyed exterior locks. [...***...] [...***...]
- Individual keying per tenant specifications. [...***...] [...***...]
- A complete fire sprinkler system, sized to meet code per the [...***...] [...***...]
interior improvement design. This system shall be complete and
operational including required drops to the suspended ceiling in tenant
finished areas. The system shall include, but is not limited to, valves,
dry stand pipes, monitoring stations, aennciators, horns and storage
tanks, if required by code.
- Roof access ladder and hatch in one stairwell. [...***...] [...***...]
- Patio furniture [...***...] [...***...]
UTILITIES AND BACKBONE SYSTEMS [...***...] [...***...]
- 2,000 amp. 277/480 volt, 3 phase electrical service switchgear [...***...] [...***...]
and meter and switch center room.
- Separate electrical meter, panel and time clock for Parking lot [...***...] [...***...]
lighting and irrigation.
- Telephone trunk lines to the interior telephone room sufficient [...***...] [...***...]
in size to accommodate the buildings.
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 13
COULTER PHARMACEUTICAL - SCHEDULE A1
PRELIMINARY SPECIFICATIONS
COST RESPONSIBILITY
<TABLE>
<S> <C> <C>
- Two PVC conduits, minimum of 4" between the first and option [...***...] [...***...]
buildings for telephone and data.
- Required water service for sprinkler system. [...***...] [...***...]
- A minimum of 2" domestic water service to building. There shall [...***...] [...***...]
be a separate meter for this water line and it shall terminate inside
the building below the second floor.
- A minimum 4" natural gas service building. There shall be a [...***...] [...***...]
separate meter for this service and it shall terminate inside the
building below the second floor.
- As required, a 6" cast iron, sanitary sewer gut line the entire [...***...] [...***...]
length of the building. This gut line shall have, at a minimum,
one cleanout at the end of its run, one in the restroom core and
one cleanout at the entrance to the building. Exact location of
this gut line shall be determined by tenant.
- All necessary electrical and fire sprinkler rooms, sized to [...***...] [...***...]
accommodate Tenant requirements, shall be completed with light
weight metal studs, metal doors and jambs, required ventilation
through the roof membrane, lighting, convenience outlets and
sheetrock, taped and textured.
MEP
- All required electrical to base building equipment. [...***...] [...***...]
- All backboards as required by Tenant. [...***...] [...***...]
- All required electrical outlets and lighting to complete base [...***...] [...***...]
building requirements.
- Smoke detectors as required by code for Base Building [...***...] [...***...]
- All required roof walk pads, conduit supports, and penetrations [...***...] [...***...]
for Base Building equipment.
- All sheetmetal necessary to provide moisture protection and [...***...] [...***...]
flashing details for Base Building equipment. (None anticipated)
- All necessary seismic restraints on Base Building equipment. [...***...] [...***...]
(None anticipated)
- A centrally located, gas hot water heater large enough to [...***...] [...***...]
accommodate all of the tenant requirements including hot water to
all labs.
- A mechanical chiller system, sized to accommodate [...***...] [...***...] [...***...]
square feet of office space.
- All ductwork and penetrations necessary to provide both supply [...***...] [...***...]
and return air to each floor, elevator cores and lobby restrooms
shall be provided. All necessary fire and smoke dampers shall be
included for Base Building work. Restrooms, elevator cores,
lobby and stairwells shall be complete.
- All ductwork and roof mounted fans necessary to provide proper [...***...] [...***...]
ventilation in the restrooms, electrical closets and elevator
machine room.
- Screening of roof mounted equipment. Roof screen as shown on [...***...] [...***...]
roof plan.
- Exhaust ducts, through the roof, for lab ventilating as specified [...***...] [...***...]
by Tenant.
- Hose bib near delivery areas. [...***...] [...***...]
LOBBY AREA
- Architect design fees associated with the lobby area. [...***...] [...***...]
- [...***...] story height with skylight, visibility to stairwell [...***...] [...***...]
and a catwalk and overlook at the second floor level.
- Area of Lobby to be 30' x 30'. Landlord to contribute [...***...] [...***...] [...***...]
- All walls sheetrocked, taped with a smooth finish. If Tenant so [...***...] [...***...]
desires, all walls will be prepared and ready to accept
wallcovering.
- Electrical outlets, telephone outlets and data outlets necessary [...***...] [...***...]
to accommodate the
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 14
COULTER PHARMACEUTICAL - SCHEDULE A1
PRELIMINARY SPECIFICATIONS
COST RESPONSIBILITY
<TABLE>
<S> <C> <C>
Tenant's proposed lobby layout.
- Ceramic tile entry, 8'-0" wide, from the front doors to the [...***...] [...***...]
reception counter. All other areas to be carpet, a 36 oz. loop
minimum, and if desired by Tenant, with a border.
- 6" or 2" rubber base in all areas. [...***...] [...***...]
- Entry doors to be a pair of aluminum glass with hardware reviewed [...***...] [...***...]
by Tenant.
- All doors off of lobby to be wood grain, 3'-0" x 8'-0" minimum in [...***...] [...***...]
height. Hardware to be selected by tenant.
- All HVAC to be complete. [...***...] [...***...]
- All Base Building areas to be handicap accessible per code. [...***...] [...***...]
- All finishes by Tenant. [...***...] [...***...]
- Ceiling to be sheetrock, taped and textured. [...***...] [...***...]
- Lighting to include, but not be limited to, down lights, recessed [...***...] [...***...]
wall washers, recessed parabolic or halogen.
- Wallcovering on all walls if so desired by Tenant. [...***...] [...***...]
- Fully painted to Tenant specifications. [...***...] [...***...]
ELEVATOR LOBBIES
- Sheetrock walls and ceiling, taped with a smooth finish. [...***...] [...***...]
- Ceiling to have a multiple coffer with lighting behind. [...***...] [...***...]
- Electrical outlets to support work required in the area. [...***...] [...***...]
- Stainless steel jambs and head around elevator opening ground [...***...] [...***...]
floor.
- Painted hollow metal jambs and head on 2nd floor. [...***...] [...***...]
- Nickel/silver threshold and elevator entrance. [...***...] [...***...]
- Grout under elevator thresholds. [...***...] [...***...]
- Carpet, 36 oz. loop minimum, and if desired by Tenant, with a [...***...] [...***...]
border.
- 6" and 2" rubber base at all areas. [...***...] [...***...]
- Magnetic hold opens on all lobby doors if required by code. [...***...] [...***...]
- Lobby door to be wood grain, full height, with hardware reviewed [...***...] [...***...]
by Tenant.
- Lighting to include recessed down lights, recessed lights or wall [...***...] [...***...]
washers.
- Fully painted to Tenant specifications. [...***...] [...***...]
- All HVAC to be complete. [...***...] [...***...]
- All elevator lobby areas to have a one hour rating if required by [...***...] [...***...]
code.
RESTROOMS
- Sheetrock walls taped with a smooth finish. A cofer shall be [...***...] [...***...]
installed over the vanity area.
- Ceiling to be drywall. [...***...] [...***...]
- Ceramic tile floors and wainscot on wet wall. [...***...] [...***...]
- All floors sloped to a floor drain. [...***...] [...***...]
- Light cove with egg crate louver over stalls and urinals. [...***...] [...***...]
- Provide janitor closets on each floor adjacent to restrooms. [...***...] [...***...]
- Provide sinks in janitor closets. [...***...] [...***...]
- Recessed lighting at entry, sinks and outside stalls. [...***...] [...***...]
- All partitions to be meal and hung from wall. [...***...] [...***...]
- All toilets and urinals to be hung from wall. [...***...] [...***...]
- Plastic laminate counter tops over moisture resistant plywood [...***...] [...***...]
with 5' lipped apron
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 15
COULTER PHARMACEUTICAL - SCHEDULE A1
PRELIMINARY SPECIFICATIONS
COST RESPONSIBILITY
<TABLE>
<S> <C> <C>
and 6" splash (to be ADA compliant).
- Full length mirror with polished stainless steel frame. [...***...] [...***...]
- Provide insulation for hot and cold water pipes. [...***...] [...***...]
- Minimum toilet accessories to include, but not limited to, sinks, [...***...] [...***...]
stainless faucets, toilets, urinals, recessed paper towel dispensers
with integral waste, counter mounted soap dispensers, sanitary napkin
dispenser, seat cover dispenser, toilet tissue dispenser, handicap grab
bars and partition mounted coat hooks.
- Paint above wainscot as directed by Tenant. [...***...] [...***...]
- Vestibules and finishes. [...***...] [...***...]
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 16
SCHEDULE A-2
SITE PLAN
[GRAPHIC - MAP OF SITE]
1.
<PAGE> 17
EXHIBIT B-FA
PREMISES CONSTRUCTION AGREEMENT
This exhibit, entitled "Premises Construction Agreement", is and shall
constitute Exhibit B-FA to the First Amendment to Lease Agreement, dated as of
November 10, 1998, by and between Landlord and Tenant (the "First Amendment").
The terms and conditions of this Exhibit B-FA are hereby incorporated into and
are made a part of the First Amendment. As used in this exhibit, the term
"Lease" shall include the original Lease Agreement and the First Amendment.
Subject to the terms and conditions set forth herein and in the Lease,
Landlord shall allow the construction or installation of the improvements in the
interior of the Premises in accordance with the procedures set forth below:
(A) DEFINITIONS.
(1) "APPROVED PLANS" is defined in Section B.6 below.
(2) "CONTRACTOR" shall mean Rudolph and Sletten.
(3) "ESTIMATED WORK COST" is defined in Section B.3 below.
(4) "EXCESS TENANT IMPROVEMENTS" is defined in Section B.7 below.
(5) "FINAL COST QUOTATION" is defined in Section B.7 below and
shall include all costs associated with the Tenant Improvements, including
without limitation, costs of all tenant improvement work; architectural and
engineering fees; governmental agency fees for permits, licenses and
inspections; construction fees, including, without limitation, general
contractors' overhead and supervision fees; Landlord's administration fee of
[...***...]; and such other costs as may be reasonably incurred by Landlord in
connection with such construction.
(6) "PRELIMINARY PLANS" is defined in Section B. 1 below.
(7) "TENANT'S ALLOWANCE" shall mean an amount equal to
[...***...], which amount shall, except as otherwise provided in this Exhibit
B-FA, be paid by Landlord toward the cost of completion of the Tenant
Improvements and related design, engineering, governmental, overhead,
supervision and administration fees and costs (collectively, the "Tenant
Improvement Cost"). Notwithstanding the foregoing, no portion of the Tenant's
Allowance shall be paid by Landlord toward the cost of the Tenant Requested Base
Building Improvements, or Tenant Improvements that constitute furniture,
equipment or trade fixtures or result in changes to the Base Building
Improvements. If the Tenant Improvement Cost exceeds the Tenant's Allowance, the
difference shall be paid by Tenant in accordance with this Exhibit B-FA.
* CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE> 18
(8) "TENANT'S ARCHITECT" shall mean CAS Architects, or such other
licensed architect designated by Tenant and subject to Landlord's prior
approval, which approval shall be given or withheld in Landlord's reasonable
discretion.
(9) "TENANT'S CONTRACT" shall mean the construction contract
entered into by and between the Tenant and the Contractor for the construction
of the Tenant Improvements.
(10) "TENANT IMPROVEMENTS" shall mean all improvements made to
the Premises pursuant to the Approved Plans.
Capitalized terms not otherwise defined in this Exhibit B-FA shall have the
meanings ascribed to them in the Lease.
(B) SCHEDULE.
(1) Tenant shall cause Tenant's Architect to furnish to Landlord
on or before [...***...], preliminary space plans and specifications (the
"Preliminary Plans"). Tenant shall be responsible for all costs associated with
the Preliminary Plans (collectively, the "Preliminary Design Costs"), including
any revisions required by Section B.2 hereunder; provided, however, Tenant shall
be reimbursed by Landlord out of the Tenant's Allowance for the Preliminary
Design Costs reasonably incurred upon delivery to Landlord of invoices, receipts
and other documents reasonably required to substantiate such costs.
(2) The Preliminary Plans shall be subject to Landlord's
approval, which approval shall not be unreasonably withheld, conditioned or
delayed. If Landlord disapproves the Preliminary Plans, then within five (5)
business days thereafter, Landlord shall meet with the Tenant's Architect and
Tenant to discuss, or shall submit to the Tenant's Architect and Tenant in
writing, the reasons for Landlord's disapproval. Within five (5) business days
following such meeting or submission, Tenant shall cause the Tenant's Architect
to revise the same and to submit new Preliminary Plans to Landlord. The same
procedure set forth in this paragraph will be repeated as set forth above until
Landlord has approved the Preliminary Plans.
(3) Promptly after approval of the Preliminary Plans, Tenant
shall cause Contractor to furnish Landlord with an estimate of the cost of the
Tenant Improvements as shown on the Preliminary Plans and Landlord shall in turn
provide Tenant with an estimate of the cost of the Tenant Improvements,
including, without limitation, estimates of the following costs: architectural
and engineering fees, governmental agency fees for permits, licenses and
inspections, overhead and supervision fees, and Landlord's administrative fees
(the "Estimated Work Cost"). The Estimated Work Cost shall separately itemize
the cost of changes to the Base Building Improvements for those Tenant
Improvements that will necessitate changes in the Base Building Improvements.
(4) The Estimated Work Cost shall be subject to Tenant's
approval, which approval shall not be unreasonably withheld, conditioned or
delayed and provided further that if Tenant fails to respond within five (5)
business days following Landlord's delivery of the Estimated Work Cost, Tenant
shall be conclusively deemed to have given its approval of the
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 19
Estimated Work Cost. If Tenant timely disapproves the Estimated Work Cost, then
within five-(5) business days thereafter, Tenant shall meet with Landlord,
Contractor and Tenant's Architect to discuss value engineering changes to the
Preliminary Plans. Within five (5) business days following such meeting, Tenant
shall cause Tenant's Architect to revise the Preliminary Plans and to submit new
Preliminary Plans for approval by Landlord in accordance with the procedure set
forth above and for a new Estimated Work Cost to be prepared by Landlord. The
procedure set forth in this paragraph will be repeated until Tenant has approved
the Estimated Work Cost.
(5) Following Landlord's approval of the Preliminary Plans and
Tenant's approval of the Estimated Work Cost, Tenant shall cause Tenant's
Architect to prepare detailed construction drawings and specifications (the
"Working Drawings") for the Tenant Improvements based strictly upon the
Preliminary Plans, except as otherwise agreed in writing by Landlord and Tenant.
The Working Drawings shall be completed within [...***...] business days after
approval of the Preliminary Plans and Estimated Work Cost, but in no event later
than [...***...].
(6) The Working Drawings shall be subject to Landlord's approval,
which approval shall not be unreasonably withheld, conditioned or delayed. If
Landlord disapproves the Working Drawings, then within five (5) business days
thereafter, Landlord shall meet with Tenant's Architect and Tenant to discuss,
or shall submit to the Tenant's Architect and Tenant in writing, the reasons for
Landlord's disapproval. Within five (5) business days following such meeting or
submission, Tenant shall cause Tenant's Architect to revise the same and to
submit new Working Drawings to Landlord, and the same procedure will be repeated
as set forth above until Landlord has approved the Working Drawings (the
"Approved Plans"). The reasonable costs of preparing the Working Drawings,
together with any revisions thereto, may be paid by Landlord to Tenant from
Tenant's Allowance. Upon approval of the Working Drawings, Landlord shall
deliver to Tenant a list of Tenant Improvements to be removed by Tenant, at
Tenant's cost and expense in accordance with Paragraph 11 of the Lease, upon
expiration of the Term or earlier termination of the Lease. Notwithstanding the
foregoing, during the preparation of the Working Drawings, Landlord shall, upon
Tenant's request, advise Tenant of items that will be required to be removed
pursuant to the previous sentence.
(7) Within ten (10) business days after Landlord's approval of
the Approved Plans, Tenant shall cause Contractor to furnish to Landlord a cost
estimate for the Tenant Improvements based upon the Approved Plans and Landlord
shall in turn provide Tenant with a final cost quotation for the Tenant
Improvements (the "Final Cost Quotation"). If the Final Cost Quotation is
greater than the Tenant's Allowance, Tenant shall be responsible for the
difference between the Tenant's Allowance and the Final Cost Quotation (the
"Excess Tenant Improvements Cost").
(8) Landlord and Tenant shall make progress payments on a pro
rata basis (in the proportion that the Tenant's Allowance paid by Landlord and
the Excess Tenant Improvements Cost paid by Tenant bear to the Final Cost
Quotation) from time to time as the Tenant Improvements are constructed in the
Premises. Tenant shall pay its pro rata share of any progress payments directly
to Contractor or subcontractors, as appropriate, and Landlord shall
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 20
pay its pro rata share of any progress payments directly to Contractor or
subcontractors, as appropriate. Landlord shall be entitled to suspend or
terminate construction of the Tenant Improvements and to declare Tenant in
default in accordance with the terms of the Lease, if payment by Tenant of
Tenant's pro rata share of any progress payment has not been received by
Contractor when due, as required hereunder. Moreover, Landlord shall not be
required to pay its pro rata share of any progress payment until such time as
Landlord receives from Contractor an unconditional lien waiver as to each
progress payment and a conditional lien waiver for the next due progress
payment. All lien waivers shall comply with California law regarding materialmen
and mechanic's liens. Notwithstanding the foregoing, Tenant may, at Tenant's
option and upon reasonable prior written notice to Landlord, pay the full amount
of the progress payment and, subject to Landlord's receipt of the lien waivers
specified above, obtain reimbursement from Landlord for Landlord's pro rata
share promptly after Tenant's delivery to Landlord of a written demand for such
pro rata share owing.
(C) TENANT IMPROVEMENT CONSTRUCTION.
(1) All Tenant Improvements to be constructed or installed in the
Premises shall be performed by Contractor in accordance with the Approved Plans,
subject to any changes agreed to by Landlord and Tenant in writing. Landlord
shall have no obligation to Tenant for defects in design, workmanship or
materials in connection with the Tenant Improvements. Any changes to the
Approved Plans shall require the written approval of Landlord and Tenant, which
approval shall not be unreasonably withheld, conditioned or delayed. All such
changes must be evidenced by a written change order executed by Landlord and
Tenant or their agent describing the change required in the Approved Plans, and
the cost of such changes shall be paid in accordance with the terms of this
Exhibit B-FA.
(2) Landlord shall coordinate construction of the Tenant
Improvements by Contractor with the construction of the Base Building
Improvements by Contractor in the most efficient manner reasonably possible for
the timely completion of the Base Building Improvements and the Tenant
Improvements. Landlord and Tenant shall each use good faith efforts to
reasonably resolve any issues or conflicts that may arise during the course of
constructing the Tenant Improvements and the Base Building Improvements. Entry
by Contractor in accordance with this Exhibit B-FA shall not constitute Tenant's
occupancy of the Expansion Space under Paragraph 3 of the Lease; however, all
terms and conditions of the Lease shall apply to Contractor's occupancy of and
work within the Expansion Space.
(3) In addition to and without limitation on the requirements set
forth in the Lease, Tenant shall ensure that, with respect to the work to be
performed as part of Tenant's Contract, Contractor and all subcontractor(s)
procure and maintain in full force and effect during the course of construction
a "broad form" commercial general liability and property damage policy of
insurance naming, Landlord, Tenant and Landlord's lenders as additional
insureds. The minimum limit of coverage of the aforesaid policy shall be in the
amount of not less that [...***...] for injury or death of one person in any
one accident or occurrence and in the amount of not less than [...***...] for
injury or death of more than one person in any one accident or occurrence, and
shall contain a severability of interest clause or a cross liability
endorsement.
* CONFIDENTIAL TREATMENT REQUESTED
4.
<PAGE> 21
Such insurance shall further insure Landlord and Tenant against liability for
property damage of at least [...***...].
(D) TERM COMMENCEMENT.
(1) Notwithstanding anything in the Lease to the contrary, except as
otherwise provided in D.2 and D.3 below, the commencement date as to the
Expansion Space (the "Expansion Space Commencement Date") shall be no later than
[...***...]. The Expansion Space Commencement Date shall not be adjusted due to
delays caused by Tenant or any employee, agent or representative of Tenant
("Tenant Delays"), including, without limitation, delays caused by (i) failure
to furnish information in accordance with this Exhibit B-FA or Exhibit A-FA of
the Lease; (ii) Tenant's request for any special, long lead time materials or
installations as part of the Tenant Improvements or the Tenant Requested Base
Building Improvements; (iii) Tenant's changes in the Approved Plans; (iv) any
changes initiated by reason of the disapproval of any plans or drawings or any
cost proposals or authorizations resulting in the preparation of revised plans,
drawings, cost proposals or authorizations beyond the second submission to
Landlord for approval; (v) field changes to construction work; (vi) the
delivery, installation or completion of the Tenant Improvements work performed
by; (vii)Tenant's request for any Tenant Requested Base Building Improvements,
as defined in Exhibit A-FA of the Lease or any delay in delivering the Tenant
Requested Base Building Improvements beyond the date set forth in Section B.2 of
Exhibit A-FA; or (viii) any other act or omission of Tenant.
(2) Except as may be otherwise specifically provided herein or in
the Lease, time periods for either party's performance under any provisions of
this Exhibit B-FA, shall be extended for periods of time during which such party
is prevented due to circumstances beyond such party's control, including,
without limitation, strikes, embargoes, governmental regulations, delays in
obtaining permits or materials, acts of God, war, civil commotion or other
strife ("Force Majeure Events"). Each party shall use reasonable efforts to
mitigate the effect of any Force Majeure Event upon such party's performance
hereunder. In addition, if Landlord's Architect fails to complete the Base
Building Plans and Specifications on or before the date set forth in Section B.1
of Exhibit A-FA of the First Amendment for reasons other than Tenant Delays,
then the Expansion Space Commencement Date shall be delayed by one (1) day for
each day of delay in the completion of the Base Building Plans and
Specifications.
(3) Intentionally deleted.
(4) If, for any reason Landlord cannot perform any other covenant
contained in this Exhibit B-FA or in the Lease related to the work described in
this Exhibit B-FA, the Lease shall not be void or voidable nor shall Landlord be
liable to Tenant for any loss or damage resulting therefrom, nor shall such
failure affect the obligations of Tenant under the Lease or this Exhibit B-FA,
except as otherwise specifically provided in the First Amendment.
(E) GENERAL.
(1) All drawings, space plans, plans and specifications for any
improvements or installations in the Premises are expressly subject to
Landlord's prior written approval, which
* CONFIDENTIAL TREATMENT REQUESTED
5.
<PAGE> 22
approval shall not be unreasonably withheld, conditioned or delayed. Any
approval by Landlord of any drawings, plans or specifications prepared on behalf
of Tenant including, without limitation, any Preliminary Plans, Working Drawings
or Approved Plans, or any revisions thereto, shall not in any way bind Landlord,
create any responsibility or liability on the part of the Landlord for the
completeness of the same, their design sufficiency or compliance with applicable
statutes, ordinances or regulations or constitute a representation or warranty
by Landlord as to the adequacy or sufficiency of such drawings, plans or
specifications, or the improvements to which they relate, but such approval
shall merely evidence the consent of Landlord to such drawings, plans or
specifications.
(2) Any failure by Tenant to pay any amounts due hereunder shall
have the same effect under the Lease as a failure to pay Rent and any failure by
Tenant to perform any of its other obligations hereunder shall be subject to
Paragraph 24 of the Lease.
INITIALS:
-----------------------------
TENANT: /s/
-------------------------------
LANDLORD /s/
------------------------------
6.
<PAGE> 23
EXHIBIT H-FA
EXPANSION SPACE WINDOW DATES
<TABLE>
<CAPTION>
CONDITION INITIAL WINDOW DATE
- --------- -------------------
<S> <C>
Certificate from Landlord's Architect that the foundation of the [...***...]
Building has been completed.
Certificate from Landlord's Architect that the construction of [...***...]
the Building has progressed to a "Water Tight Shell"
Temporary Certificate of Occupancy [...***...]
</TABLE>
INITIALS:
-----------------------------
TENANT: /s/
-------------------------------
LANDLORD /s/
------------------------------
* CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE> 24
EXHIBIT Z
BASIC LEASE INFORMATION
<TABLE>
<S> <C>
Lease Date: November 7, 1997; amended by First Amendment
dated November 10, 1998
Landlord: HMS Gateway Office, L.P.
a Delaware limited partnership
Landlord's Address: c/o Hines Interests Limited Partnership
101 California Street, Suite 1000
San Francisco, California 94111-5848
Attn: Tom Kruggel
All notices sent to Landlord
under this Lease shall be sent
to the above address, with
copies to:
Hines Interests Limited Partnership
101 California Street, Suite 1000
San Francisco, California 94111-5848
Attn: Paul Paradis
Tenant: Coulter Pharmaceutical, Inc.,
a Delaware corporation
Tenant's Contact Person: William G. Harris
Tenant's Address and Telephone Number prior to 550 California Avenue
the Commencement Date: Suite 200
Palo Alto, California 94306-1440
(650) 842-7300
Tenant's Address and Telephone Number after the 600 Gateway Boulevard
Commencement Date: South San Francisco, California 94080
(650) ___-__________
Premises Square Footage [...***...] square feet, subject to final
determination by Landlord's Architect upon
Commencement of the Term. Such measurement
to be made in accordance with Landlord's
Architect's standard measurement procedures
or research and development space.
Premises Address: 600 and 650 Gateway Boulevard
South San Francisco, California
Project: Approximately 7.85 acres of land commonly
known as Lot 2B of the Gateway Center and
referred to as the Gateway Technology Center,
together with the land and improvements on
which the Project is situated and all Common
Areas.
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
1.
<PAGE> 25
<TABLE>
<S> <C>
Building (if not the same as the Project): 600 Gateway Boulevard
South San Francisco, California
Tenant's Proportionate Share of Project: [...***...] subject to adjustment in
accordance with Paragraph 4(c)(3)
Tenant's Proportionate Share of Building: 100%
Length of Term: [...***...]
Estimated Commencement Date: November 14, 1998 for the Original Premises;
September 1, 1999 for the Expansion Space
Estimated Expiration Date: [...***...]
Monthly Base Rent (Original Premises): [...***...]
The above Monthly Base Rent
calculations are subject to
change after final
determination of the Premises
Square Footage and any such
adjustment shall be based on a
Monthly Base Rent for the
first Lease year of
[...***...] per square foot
multiplied by the Premises
Square Footage, and each
subsequent Lease Year being
[...***...] of the preceding
Lease Year's Monthly Base
Rent.
Monthly Base Rent (Expansion Space): Monthly Base Rent for the Expansion Space
shall, as of the Expansion Space Commencement
Date, be an amount [...***...] the applicable
rate per square foot being charged from time
to time under the Lease for the Original
Premises multiplied by the square footage of
the Expansion Space. The rate per square
foot being charged under the Lease for the
Original Premises shall be determined by
dividing the Monthly Base Rent due for the
Original Premises by the Premises Square
Footage for the Original Premises.
Prepaid Rent: None
Prepaid Additional Rent: None
Security Deposit: [...***...]
Permitted Use: General office and research and development
activities associated with
biotechnology/pharmaceutical services. All uses
must be in accordance with zoning ordinances of
the City of South San Francisco.
Unreserved Parking Spaces: [...***...] non-exclusive and undesignated
parking spaces.
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
2.
<PAGE> 26
<TABLE>
<S> <C>
Broker(s): CB Commercial Real Estate Group, Inc.
CB Madison Advisory Group
Tenant's Allowance: [...***...] with respect to the Original Premises
[...***...] with respect to the Expansion Space
</TABLE>
* CONFIDENTIAL TREATMENT REQUESTED
3.
<PAGE> 1
Exhibit 10.28
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17 C.F.R. Sections 200.80(b)(4),
200.83 and 240.24b-2
SMITHKLINE BEECHAM
VIA FACSIMILE
HARD COPY TO FOLLOW BY OVERNIGHT EXPRESS MAIL
November 30, 1998
Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, California 94306, USA
Attention: Chief Financial Officer
RE: Amendment # 1 to October 23, 1998 Collaboration Agreement
Coulter Pharmaceutical, Inc. - SmithKline Beecham Corporation
Dear Sir:
This letter will confirm that the Collaboration Agreement (the
"Agreement"), executed as of October 23, 1998 by and between Coulter
Pharmaceutical, Inc., a company incorporated under the laws of the State of
Delaware, with its principal place of business at 550 California Avenue, Suite
200, Palo Alto, California 94306, USA ("Coulter"), and SmithKline Beecham
Corporation, a company incorporated under the laws of the Commonwealth of
Pennsylvania, with its principal place of business at One Franklin Plaza,
Philadelphia, Pennsylvania 19101, USA ("SB"), shall be amended as follows:
- In Paragraph 19.1.3, all occurrences of the date [***]
shall be changed to [***].
- All other terms and conditions of the Agreement shall remain in
full force and effect.
Please indicate your acceptance of this Amendment Agreement by signing
and dating the duplicate copies of this letter below and returning on such fully
executed copy to SB.
Very truly yours,
SMITHKLINE BEECHAM CORPORATION
By: /s/ Donald G. Parman
---------------------------------
Title: Secretary
AGREED TO AND ACCEPTED:
COULTER PHARMACEUTICAL, INC.
By: /s/ Michael F. Bigham
- ---------------------------------
Title: President& CEO
- ---------------------------------
Date: 11-30-98
- ---------------------------------
One Franklin Plaza, PO Box 7929, Philadelphia, PA 19101.
Telephone(215) 751 4000. Fax(215) 751 3400.
* Confidential Treatment Requested
<PAGE> 2
cc (w/enclosure):
Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, California 94306
USA
Facsimile: (650) 849-7574
Attn: Chief Executive Officer
and
Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, California 94306
USA
Facsimile: (650) 849-7574
Attn: Vice President, Business Development
<PAGE> 1
Exhibit 10.29
***Text Omitted and Filed Separately
Confidential Treatment Requested
Under 17C.F.R.Sections 200.80(b)(4),
200.83 and 240.24b-2
- --------------------------------------------------------------------------------
COULTER PHARMACEUTICAL, INC.
LOAN AND SECURITY AGREEMENT
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. DEFINITIONS AND CONSTRUCTION.........................................................1
1.1 Definitions...................................................................1
1.2 Accounting Terms..............................................................7
2. LOAN AND TERMS OF PAYMENT............................................................7
2.1 Revolving Facility............................................................7
2.2 Interest Rate Protection......................................................8
2.3 Interest Rates, Payments, and Calculations....................................9
2.4 Crediting Payments...........................................................10
2.5 Fees.........................................................................10
2.6 Additional Costs.............................................................10
2.7 Term.........................................................................11
3. CONDITIONS OF LOANS.................................................................11
3.1 Conditions Precedent to Initial Advance......................................11
4. CREATION OF SECURITY INTEREST.......................................................12
4.1 Grant of Security Interest...................................................12
4.2 Delivery of Additional Documentation Required................................12
4.3 Right to Inspect.............................................................12
4.4 Requirement for Cash Collateral..............................................12
5. REPRESENTATIONS AND WARRANTIES......................................................13
5.1 Due Organization and Qualification...........................................13
5.2 Due Authorization, No Conflict...............................................13
5.3 No Prior Encumbrances........................................................13
5.4 Bona Fide Accounts...........................................................13
5.5 Merchantable Inventory.......................................................13
5.6 Name: Location of Chief Executive Office.....................................13
5.7 Litigation...................................................................13
5.8 No Material Adverse Change in Financial Statements...........................13
5.9 Solvency.....................................................................14
5.10 Regulatory Compliance........................................................14
5.11 Environmental Condition......................................................14
</TABLE>
i.
<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
5.12 Taxes........................................................................14
5.13 Subsidiaries.................................................................14
5.14 Government Consents..........................................................15
5.15 Full Disclosure..............................................................15
6. AFFIRMATIVE COVENANTS...............................................................15
6.1 Good Standing................................................................15
6.2 Government Compliance........................................................15
6.3 Adverse Information..........................................................16
6.4 Financial Statements, Reports, Certificates..................................16
6.5 Inventory; Returns...........................................................17
6.6 Taxes........................................................................17
6.7 Insurance....................................................................17
6.8 Principal Depository.........................................................17
6.9 Total Liabilities-Net Worth Ratio............................................18
6.10 Tangible Net Worth...........................................................18
6.11 Minimum Liquidity; Remaining Months Liquidity; Debt Service Coverage.........18
6.12 Further Assurances...........................................................18
7. NEGATIVE COVENANTS..................................................................18
7.1 Dispositions.................................................................18
7.2 Change in Business...........................................................18
7.3 Mergers or Acquisitions......................................................18
7.4 Indebtedness.................................................................19
7.5 Encumbrances.................................................................19
7.6 Distributions................................................................19
7.7 Investments..................................................................19
7.8 Transactions with Affiliates.................................................19
7.9 Subordinated Debt............................................................19
7.10 Inventory....................................................................19
7.11 Compliance...................................................................19
8. EVENTS OF DEFAULT...................................................................20
</TABLE>
ii.
<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
8.1 Payment Default..............................................................20
8.2 Covenant Default.............................................................20
8.3 Material Adverse Change......................................................20
8.4 Attachment...................................................................20
8.5 Insolvency...................................................................21
8.6 Other Agreements.............................................................21
8.7 Subordinated Debt............................................................21
8.8 Judgments....................................................................21
8.9 Misrepresentations...........................................................21
8.10 FDA Determinations...........................................................21
8.11 Change of Control............................................................21
9. BANKS RIGHTS AND REMEDIES...........................................................21
9.1 Rights and Remedies..........................................................21
9.2 Power of Attorney............................................................23
9.3 Accounts Collection..........................................................23
9.4 Bank Expenses................................................................23
9.5 Bank's Liability for Collateral..............................................23
9.6 Remedies Cumulative..........................................................24
9.7 Demand; Protest..............................................................24
10. NOTICES.............................................................................24
11. CHOICE OF LAW AND VENUE JURY TRIAL WAIVER...........................................25
12. GENERAL PROVISIONS..................................................................25
12.1 Successors and Assigns.......................................................25
12.2 Indemnification..............................................................25
12.3 Time of Essence..............................................................25
12.4 Severability of Provisions...................................................25
12.5 Counterparts.................................................................26
12.6 Survival.....................................................................26
12.7 Confidentiality..............................................................26
</TABLE>
iii.
<PAGE> 5
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is entered into as of October 29, 1998,
by and between SILICON VALLEY BANK ("Bank") and COULTER PHARMACEUTICAL, INC.
("Borrower").
RECITALS
Borrower wishes to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrower. This Agreement sets forth the terms on
which Bank will advance credit to Borrower, and Borrower will repay the amounts
owing to Bank.
AGREEMENT
The parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. As used in this Agreement, the following terms
shall have the following definitions:
"ACCOUNTS" means all presently existing and hereafter arising
accounts, contract rights, and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods (including, without limitation, the
licensing of software and other technology) or the rendering of services by
Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise
returned to or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.
"ADVANCE" OR "ADVANCES" means cash advances under the Revolving
Facility.
"AFFILIATE" means, with respect to any Person, any Person that
owns or controls directly or indirectly such Person, any Person that controls or
is controlled by or is under common control with such Person, and each of such
Person's senior executive officers, directors and partners.
"BANK EXPENSES" means all: reasonable costs or expenses
(including reasonable attorneys' fees and expenses) incurred in connection with
the preparation, negotiation, administration, and enforcement of the Loan
Documents; and Bank's reasonable attorneys' fees and expenses incurred in
amending, enforcing or defending the Loan Documents, whether or not suit is
brought.
"BORROWER'S BOOKS" means all of Borrower's books and records
including: ledgers; records concerning Borrower's assets or liabilities, the
Collateral, business operations or financial condition; and all computer
programs, or tape files, and the equipment, containing such information.
1.
<PAGE> 6
"BUSINESS DAY" means any day that is not a Saturday, Sunday, or
other day on which banks in the State of California are authorized or required
to close.
"CLOSING DATE" means the date of this Agreement.
"CODE" means the California Uniform Commercial Code.
"COLLATERAL" means the property described on Exhibit A attached
hereto.
"COMMITTED LOAN AMOUNT" means Ten Million Dollars ($10,000,000).
"CONTINGENT OBLIGATION" means, as applied to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to (i) any indebtedness, lease, dividend, letter of credit or other
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed, co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable; (ii) any obligations with respect to undrawn
letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rote cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.
"DAILY BALANCE" means the amount of the Obligations owed at the
end of a given day.
"DEBT SERVICE COVERAGE" means, as measured quarterly as of the
last day of each fiscal quarter of Borrower, on a consolidated basis determined
in accordance with GAAP, the ratio of(a) an amount equal to the sum of(i) net
income, plus (ii) depreciation, amortization of intangible assets and other
non-cash charges to income, and (iii) accrued interest, to (b) an amount equal
to the sum of all scheduled repayments for such quarter (or month, as
applicable), including accrued interest, and mandatory prepayments of principal
on account of long-term debt.
"EQUIPMENT" means all present and furore machinery, equipment,
tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments
in which Borrower has any interest; provided, however, the term "Equipment"
shall not include any equipment related to Borrower's Bexxar technology.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended, and the regulations thereunder.
2.
<PAGE> 7
"FDA" means the Food and Drug Administration of the United
States government, and any successor regulatory body.
"GAAP" means generally accepted accounting principles as in
effect from time to time. "GMP" has the meaning set forth in Section 6.2.
"INDEBTEDNESS" means (a) all indebtedness for borrowed money or
the deferred purchase price of property or services, including without
limitation reimbursement and other obligations with respect to surety bonds and
letters of credit, (b) all obligations evidenced by notes, bonds, debentures or
similar instruments, (e) all capital lease obligations and (d) all Contingent
Obligations.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any person or entity under any provision of the United States Bankruptcy
Code, as amended, or under any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, formal or informal moratoria,
compositions, extension generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.
"INVENTORY" means all present and future inventory in which
Borrower has any interest, including merchandise, raw materials, parts,
supplies, packing and shipping materials, work in process and finished products
intended for sale or lease or to be furnished under a contract of service, of
every kind and description now or at any time hereafter owned by or in the
custody or possession, actual or constructive, of Borrower, including such
inventory as is temporarily out of its custody or possession or in transit and
including any returns upon any accounts or other proceeds, including insurance
proceeds, resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and Borrower's Books relating
to any of the foregoing; provided, however, the term "Inventory" shall not
include any Inventory related to Borrower's Bexxar technology.
"INVESTMENT" means any beneficial ownership of (including stock,
partnership interest or other securities) any Person, or any loan, advance or
capital contribution to any Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
the regulations thereunder.
"LIEN" means any mortgage, lien, deed of trust, charge, pledge,
security interest or other encumbrance.
"LIQUIDITY" means, at any date of determination, the sum of
Borrower's cash, cash equivalents, and short term investments, including (a)
fifty percent (50%) of net trade accounts receivable, and (b) up to one hundred
percent (100%) of accounts receivable due from certain of Borrower's corporate
partners as approved by Bank in Bank's sole discretion, and in such amounts as
approved by Bank in Bank's sole discretion, less any cash and cash equivalent
balances that are held in a sinking fund for the retirement of debt or capital
stock or that are held in pledge for another creditor.
3.
<PAGE> 8
"LOAN DOCUMENTS" means, collectively, this Agreement, any note
or notes executed by Borrower, and any other agreement entered into between
Borrower and Bank in connection with this Agreement, all as amended or extended
from time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i)
the business operations or condition (financial or otherwise) of Borrower and
its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.
"MATURITY DATE" means the date immediately preceding the fifth
(5th) anniversary of the date of this Agreement.
"NEGOTIABLE COLLATERAL" means all of Borrower's present and
future letters of credit of which it is a beneficiary, notes, drafts,
instruments, securities, documents of title, and chattel paper, and Borrower's
Books relating to any of the foregoing.
"NET CASH LOSSES" means, with respect to any date of
determination, determined on a consolidated basis in accordance with GAAP for
Borrower and its consolidated Subsidiaries, the reduction in cash from
operations (excluding non-recurring charges) during the three months prior to
such date of determination or if the date of determination is the last day of a
fiscal quarter, during the fiscal quarter then ending (or, if monthly reporting
is required pursuant to Section 6.4(c), during the three fiscal months ending
prior to such date of determination). For purposes of clarification and not
limitation, non-recurring charges to be excluded from the determination of the
reduction in cash from operations shall include, without limitation, (a) costs
and expenses in radiolabeling infrastructure in connection with the initial
build-out of up to three (3) facilities, as to which Borrower will provide
supporting invoices and documents upon Bank's request, (b) non-financed capital
expenditures and leasehold improvements at 600 Gateway, South San Francisco,
California, in conjunction with the initial build-out of the facility, and (c)
payments other than regularly scheduled payments of principal and interest under
this Agreement. Notwithstanding the foregoing, the annual production campaign
charges at BI Pharma and Lonza shall be included in the determination of the
reduction in cash from operations on a pro rata basis over the shelf-life of the
Inventory produced therefrom.
"OBLIGATIONS" means all debt, principal, interest, Bank Expenses
and other amounts owed to Bank by Borrower pursuant to this Agreement or any
other Loan Document, whether absolute or contingent, due or to become due, now
existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from Borrower to others that Bank may have obtained by
assignment or otherwise.
"PAYMENT DATE" means the 28th calendar day of each month during
the term of this Agreement.
"PERIODIC PAYMENTS" means all installments or similar recurring
payments that Borrower may now or hereafter become obligated to pay to Bank
pursuant to the terms and
4.
<PAGE> 9
provisions of any instrument, or agreement now or hereafter in existence between
Borrower and Bank.
"PERMITTED INDEBTEDNESS" means:
(a) Indebtedness of Borrower in favor of Bank arising
under this Agreement or any other Loan Document;
(b) Indebtedness existing on the date of this Agreement
and disclosed in the Schedule;
(c) Indebtedness to trade creditors incurred in the
ordinary course of business;
(d) Subordinated Debt;
(e) Indebtedness of Borrower to any Subsidiary and
Contingent Obligations of any Subsidiary with respect to obligations of Borrower
(provided that the primary obligations are not prohibited hereby); Indebtedness
of any Subsidiary to any other Subsidiary and Contingent Obligations of any
Subsidiary with respect to obligations of any other Subsidiary (provided that
the primary obligations are not prohibited hereby); and Contingent Obligations
of the Borrower as a guarantor for obligations of its Subsidiaries that (i) are
existing on the date of this Agreement, or (ii) have been approved by Bank in
writing;
(f) Indebtedness secured by Permitted Liens;
(g) Capital leases or indebtedness incurred solely to
purchase equipment which is secured in accordance with clause (c) of "Permitted
Liens" below and is not in excess of the lesser of the purchase price of such
equipment or the fair market value of such equipment on the date of acquisition;
and
(h) Extensions, refinancings, modifications, amendments
and restatements of any of items of Permitted Indebtedness (a) through (g)
above, provided that the principal amount thereof is not increased or the terms
thereof are not modified to impose more burdensome terms upon Borrower or its
Subsidiary, as the case may be.
"PERMITTED INVESTMENT" means:
(a) Investments existing on the Date of this Agreement
disclosed in the Schedule;
(b) (i) marketable direct obligations issued or
unconditionally guaranteed by the United States of America or any agency or any
State thereof maturing within one (1) year from the date of acquisition thereof,
(ii) commercial paper maturing no more than one (1) year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Corporation or Moody's Investors Service, Inc., and (iii)
certificates of deposit maturing no more than one (1) year from the date of
investment therein issued by Bank;
5.
<PAGE> 10
(c) Investments accepted in connection with Transfers
permitted by Section 7.1; and
(d) Investments (whether consisting of the purchase of
securities, loans, capital contribution, or otherwise) of Borrower in
Subsidiaries and of Subsidiaries in or to other Subsidiaries or in Borrower.
"PERMITTED LIENS" means the following:
(a) Any Liens existing on the date of this Agreement and
disclosed in the Schedule or arising under this Agreement or the other Loan
Documents;
(b) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings, provided the same have no priority over any of
Bank's security interests, except as provided under applicable law;
(c) Liens (i) upon or in any equipment acquired or held
by Borrower or any of its Subsidiaries to secure the purchase price of such
equipment or indebtedness incurred solely for the purpose of financing the
acquisition of such equipment, or (ii) existing on such equipment at the time of
its acquisition, provide that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;
(d) Leases or subleases and license and sublicenses
granted to others in the ordinary course of Borrower's business not interfering
in any material respect with the business of Borrower and its Subsidiaries taken
as a whole, and any interest or title of a lessor, licensor or under any lease
or license provided that such leases, subleases, licenses and sublicenses do not
prohibit the grant of the security interest granted hereunder; and
(e) Liens upon intellectual property, including, without
limitation, copyrights, patents, trademarks or any licenses thereof, granted to
others in connection with collaboration, partnering and similar agreements
entered into in the ordinary course of Borrower's business.
"PERSON" means any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or governmental agency.
"PRIME RATE" means the variable rate of interest, per annum,
most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.
"REMAINING MONTHS LIQUIDITY" OR "RML" means, at the end of each
fiscal quarter, or if monthly reporting is required pursuant to Section 6.4(c),
as at the end of each calendar month, the ratio of (i) Liquidity at such time to
(ii) the monthly average of Net Cash Losses.
6.
<PAGE> 11
"RESPONSIBLE OFFICER" means each of the Chief Executive Officer,
the Chief Financial Officer and the Controller of Borrower.
"REVOLVING FACILITY" means the facility under which Borrower may
request cash advances as specified in Section 2.1.
"REVOLVING FACILITY AVAILABILITY DATE" means the date
immediately preceding the first (1st) anniversary of the date of this Agreement.
"SCHEDULE" means the schedule of exceptions attached hereto, if
any.
"SUBORDINATED DEBT" means any debt incurred by Borrower that is
subordinated to the debt owing by Borrower to Bank on terms reasonably
acceptable to Bank (and identified as being such by Borrower and Bank), and in
connection with which Bank and such subordinated third party has entered into a
subordination agreement in form and substance reasonably acceptable to Bank.
"SUBSIDIARY" means any corporation or partnership in which (i)
any general partnership interest or (ii) more than 50% of the stock of which by
the terms thereof ordinary voting power to elect the Board of Directors,
managers or trustees of the entity shall, at the time as of which any
determination is being made, be owned by Borrower, either directly or through an
Affiliate.
"TANGIBLE NET WORTH" means at any date as of which the amount
thereof shall be determined, the consolidated total assets of Borrower and its
Subsidiaries minus, without duplication, (i) the sum of any amounts attributable
to (a) goodwill, (b) intangible items such as unamortized debt discount and
expense, patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) all reserves not already
deducted from assets, and (ii) Total Liabilities.
"TOTAL LIABILITIES" means at any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
GAAP be classified as liabilities on the consolidated balance sheet of Borrower,
including in any event all Indebtedness, but specifically excluding Subordinated
Debt.
1.2 ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all calculations
made hereunder shall be made in accordance with GAAP. When used herein, the
terms "financial statements" shall include the notes and schedules thereto.
2. LOAN AND TERMS OF PAYMENT.
7.
<PAGE> 12
2.1 REVOLVING FACILITY.
(a) ADVANCES. Subject to and upon the terms and
conditions of this Agreement, following the Closing Date through the Revolving
Facility Availability Date, Bank agrees to make Advances to Borrower in an
aggregate amount not to exceed the Committed Loan Amount for the purpose of
financing capital expenditures and for general working capital. Subject to the
terms and conditions of this Agreement, amounts borrowed pursuant to this
Section 2.1 may be repaid and reborrowed at any time prior to the Revolving
Facility Availability Date, at which time all outstanding Obligations under the
Revolving Facility shall convert to a fully amortized term loan, payable as set
forth in Section 2.3(c) below.
(b) PROCEDURES. Following the Closing Date through the
Revolving Facility Availability Date, whenever Borrower desires an Advance,
Borrower shall notify Bank by facsimile transmission or telephone no later than
3:00 p.m. California time, one (1) Business Day before the day on which the
Advance is requested to be made. Each such notification shall be promptly
confirmed by a Payment/Advance Form in substantially the form of Exhibit B
hereto and signed by a Responsible Officer. Bank is authorized to make Advances
under this Agreement, based upon instructions received from a Responsible
Officer, or without instructions if in Bank's discretion such Advances are
necessary to meet Obligations which have become due and remain unpaid. Bank
shall be entitled to rely on any telephonic notice given by a person who Bank
reasonably believes to be a Responsible Officer, and Borrower shall indemnify
and hold Bank harmless for any damages or loss suffered by Bank as a result of
such reliance. Bank will credit the amount of Advances made under this Section
2.1 to Borrower's deposit account.
(c) INTEREST AND PRINCIPAL. Interest shall accrue from
the date of each Advance at the rate specified in Section 2.3(a), and shall be
payable monthly on the Payment Date for each month through the month in which
the Maturity Date falls. Bank shall, at its option, charge such interest, all
Bank Expenses, and all Periodic Payments against any of Borrower's deposit
accounts, including account number ____________________, or against the
Committed Loan Amount, in which case those amounts shall thereafter accrue
interest at the rate then applicable hereunder. Any interest not paid when due
shall be compounded by becoming a part of the Obligations, and such interest
shall thereafter accrue interest at the rate then applicable hereunder.
(d) MATURITY. Borrower may only request Advances under
the Revolving Facility following the Closing Date through the Revolving Facility
Availability Date, at which time the Revolving Facility shall terminate and all
outstanding Obligations under the Revolving Facility shall convert to a term
loan. On the Maturity Date, all Obligations owing under this Section 2.1 and all
other Obligations Borrower owes to Bank under this Agreement shall be
immediately due and payable.
2.2 INTEREST RATE PROTECTION. Subject to the terms and condition
of this Agreement, Borrower may prepay the Advances, in whole or in part, only
upon payment in full of (i) all accrued but unpaid interest and all outstanding
obligations hereunder (or, if partial prepayment, an applicable or proportionate
amount of such obligations), and (ii), if Borrower has elected the fixed rate
option set forth in Section 2.3(a), a fee as shall be determined by Bank in its
reasonable discretion in an amount reasonably necessary to provide for interest
rate protection in the event the fixed interest rate set forth in Section 2.3(a)
is higher than the then current fixed rate.
8.
<PAGE> 13
2.3 INTEREST RATES, PAYMENTS, AND CALCULATIONS.
(a) INTEREST RATE. Except as set forth in Section
2.3(b), from and after the Closing Date through the Revolving Facility
Availability Date, the Advances shall bear interest, on the average daily
balance thereof, at a rate equal to one-half of one (.50) percentage point above
the Prime Rate. Following the Revolving Facility Availability Date through the
Maturity Date, the Advances shall bear interest, on the average daily balance
thereof, at a rate equal to, at Borrower's election, either (i) one-half of one
(.50) percentage point above the Prime Rate, OR (ii) three and three-quarters
(3.75) percentage points above the yield of the 48 month Treasury Note as
reported in the Western edition of The Wall Street Journal, which rate shall be
fixed at the time of Borrower's election. Borrower shall give written notice to
Bank of its interest rate election at any time following the Closing Date but no
later than two (2) Business Days prior to the Revolving Facility Availability
Date of its interest rate election hereunder. If Borrower fails to give such
notice, then the applicable rate shall be the fixed rate option described
herein.
(b) DEFAULT RATE. All Obligations shall bear interest,
from and after the occurrence and during the continuance of an Event of Default,
at a rate equal to five (5) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.
(c) PAYMENTS. Interest hereunder shall be due and
payable on the Payment Date of each month during the term hereof through the
month in which the Maturity Date falls. Borrower shall make payments of interest
only from and after the Closing Date through the Revolving Facility Availability
Date. Following the Revolving Facility Availability Date, Borrower shall, (i)
with respect to the fixed rate option, make payments of principal and interest
to Bank in forty-eight (48) equal monthly installments of principal and accrued
interest, with a final balloon payment of principal plus accrued interest, based
on a seven (7) year amortization schedule, which shall be due and payable on the
Payment Date of each month during the term hereof, and (ii) with respect to the
floating rate option, make payments to Bank in forty-eight (48) equal monthly
installments of principal plus accrued interest, based on a seven (7) year
amortization schedule, which shall be due and payable on the Payment Date of
each month during the term hereof. Borrower's final payment, due on the Maturity
Date, shall include all outstanding Advances under the Revolving Facility as
converted to a term loan following the Revolving Facility Availability Date, of
principal plus all accrued interest not yet paid. Bank shall, at its option,
charge such interest, principal, all Bank Expenses, and all Periodic Payments
against any of Borrower's deposit accounts, including Account Number
_________________ in which case those amounts shall thereafter accrue interest
at the rate then applicable hereunder. Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.
(d) COMPUTATION. In the event the Prime Rate is changed
from time to time hereafter, the applicable rate of interest hereunder shall be
increased or decreased effective as of 12:01 a.m. on the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed.
9.
<PAGE> 14
Notwithstanding the foregoing, this Section 2.3(d) shall not apply in the event
the Borrower elects the fixed rate option as set forth in Section 2.3(a).
2.4 CREDITING PAYMENTS. Prior to the occurrence and during the
continuance of an Event of Default, Bank shall credit a wire transfer of funds,
check or other item of payment to such deposit account or Obligation as Borrower
specifies. After the occurrence and during the continuance of an Event of
Default, the receipt by Bank of any wire transfer of funds, check, or other
similar item for the purpose of payment of Obligations shall be immediately
applied to conditionally reduce Obligations, but shall not be considered a
payment on account unless such payment is of immediately available federal funds
or unless and until such check or other item of payment is honored when
presented for payment. Notwithstanding anything to the contrary contained
herein, any wire transfer or payment received by Bank after 12:00 noon
California time shall be deemed to have been received by Bank as of the opening
of business on the immediately following Business Day. Whenever any payment to
Bank under the Loan Documents would otherwise be due (except by reason of
acceleration) on a date that is not a Business Day, such payment shall instead
be due on the next Business Day, and additional fees or interest, as the case
may be, shall accrue and be payable for the period of such extension.
2.5 FEES. Borrower shall pay to Bank the following:
(a) FACILI1Y FEE. A Facility Fee equal to Thirty-Seven
Thousand Five Hundred Dollars ($37,500), which fee shall be due and payable on
the Closing Date, and shall be fully earned and nonrefundable;
(b) FINANCIAL EXAMINATION AND APPRAISAL FEES. Bank's
customary fees and out-of-pocket expenses for Bank's audits of Borrower's
Accounts, and for each appraisal of Collateral and financial analysis and
examination of Borrower performed from time to time by Bank or its agents
provided that such audits, appraisals, analyses and examinations shall occur no
more frequently than two (2) times per fiscal year if there is no Event of
Default or continuing Event of Default; and
(c) BANK EXPENSES. Upon the date hereof, all Bank
Expenses incurred through the Closing Date, including reasonable attorneys' fees
and expenses (not to exceed Seven Thousand Five Hundred Dollars ($7,500) prior
to the Closing Date), and, after the date hereof, all Bank Expenses, including
reasonable attorneys' fees and expenses as and when they become due; provided,
however, Borrower shall be responsible for fifty percent (50%) of all such
attorneys' fees and expenses incurred prior to the Closing Date in excess of
Seven Thousand Five Hundred Dollars ($7,500).
2.6 ADDITIONAL COSTS. In case any change in any law, regulation,
treaty or official directive or the interpretation or application thereof by any
court or any governmental authority charged with the administration thereof or
the compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law), in each case
after the date of this Agreement:
(a) subjects Bank to any tax with respect to payments of
principal or interest or any other amounts payable hereunder by Borrower or
otherwise with respect to the
10.
<PAGE> 15
transactions contemplated hereby (except for taxes on the overall net income of
Bank imposed by the United States of America or any political subdivision
thereof);
(b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or
(c) imposes upon Bank any other condition with respect
to its performance under this Agreement,
and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
any loans, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank
the amount of such increase in cost, reduction in income or additional expense
as and when such cost,
reduction or expense is incurred or determined, upon presentation by Bank of a
statement of the amount and setting forth Bank's calculation thereof, all in
reasonable detail which statement shall be deemed true and correct absent
manifest error.
2.7 TERM. This Agreement shall become effective on the Closing
Date and, subject to Section 12.6, shall continue in full force and effect for a
term ending on the Maturity Date. Notwithstanding the foregoing, Bank shall have
the right to terminate its obligation to make the Advances under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral
shall remain in effect for so long as any Obligations (other than inchoate
indemnity obligations) are outstanding.
3. CONDITIONS OF LOANS.
3.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of
Bank to make the initial Advance is subject to the conditions precedent that:
(a) Bank shall have received, in form and substance
satisfactory to Bank, the following:
(i) this Agreement;
(ii) a certificate of the Secretary of Borrower
with respect to incumbency and resolutions authorizing the execution and
delivery of this Agreement;
(iii) financing statements (Forms UCC-1);
(iv) insurance certificate;
(v) payment of the fees and Bank Expenses then
due specified in Section 2.5 hereof,
11.
<PAGE> 16
(vi) timely receipt of the Payment/Advance Form
as provided in Section 2.1;
(vii) such other documents, and completion of
such other matters, as Bank may reasonably deem necessary or appropriate; and
(b) the representations and warranties contained in
Section 5 shall be true and correct in all material respects on and as of the
date of the Payment/Advance Form and on the effective date of each of the
Advances, except to the extent such representations and warranties are made as
of a specific date, in which case they shall have been accurate on such date,
and no Event of Default shall have occurred and be continuing, or would result
from each of the Advances. Except as other-wise disclosed to Bank in writing,
the making of each of the Advances shall be deemed to be a representation and
warranty by Borrower on the date of each of the Advances as to the accuracy of
the facts referred to in this Section 3.1(b).
4. CREATION OF SECURITY INTEREST.
4.1 GRANT OF SECURITY INTEREST. Borrower grants and pledges to
Bank a continuing security interest in all presently existing and hereafter
acquired or arising Collateral in order to secure prompt repayment of any and
all Obligations and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents. Except as set forth in the
Schedule, such security interest constitutes a valid, first priority security
interest in the presently existing Collateral, and will constitute a valid,
first priority security interest in Collateral acquired after the date hereof.
4.2 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED. Borrower
shall from time to time execute and deliver to Bank, at the request of Bank, all
Negotiable Collateral, all financing statements and other documents that Bank
may reasonably request, in form satisfactory to Bank, to perfect and continue
perfected Bank's security interests in the Collateral and in order to fully
consummate all of the transactions contemplated under the Loan Documents.
4.3 RIGHT TO INSPECT. Bank (through any of its officers,
employees, or agents) shall have the right, upon reasonable prior notice, from
time to time during Borrower's usual business hours, to inspect Borrower's Books
and to make copies thereof and to check, test, and appraise the Collateral in
order to verify Borrower's financial condition or the amount, condition of, or
any other matter relating to, the Collateral; provided, however, such rights
under this Section 4.3 shall be exercised at Bank's own expense unless an Event
of Default has occurred or is continuing at which time such costs and expenses
shall be Borrower's responsibility.
4.4 REQUIREMENT FOR CASH COLLATERAL. Upon Borrower's failure to
comply with the financial covenants in Sections 6.8, 6.9, 6.10 and 6.11 the
Borrower shall pledge cash in the form of a certificate of deposit at Silicon
Valley Bank, on terms reasonably acceptable to Bank, in an amount equal to one
hundred percent (100%) of the outstanding loan balances, at which time Borrower
shall be deemed to have cured the default under Sections 6.8, 6.9, 6. 10 and
6.11. Notwithstanding the foregoing, Bank shall have no obligation to release
the cash pledged pursuant to this Section 4.4(a) unless and until Borrower
achieves compliance with all
12.
<PAGE> 17
the terms of the Loan Documents, cures any Events of Default and complies with
the financial covenants set forth in Sections 6.8, 6.9, 6.10 and 6.11.
5. REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND QUALIFICATION. Borrower and each
Subsidiary is a corporation duly existing and in good standing under the laws of
its state of incorporation and qualified and licensed to do business in, and is
in good standing in, any state in which the conduct of its business or its
ownership of property requires that it be so qualified, except to the extent
that failure to so qualify would not have a Material Adverse Effect on Borrower.
5.2 DUE AUTHORIZATION, NO CONFLICT. The execution, delivery, and
performance of the Loan Documents are within Borrower's powers, have been duly
authorized, and are not in conflict with nor constitute a breach of any
provision contained in Borrower's Articles of Incorporation or Bylaws, nor will
they constitute an event of default under any material agreement to which
Borrower is a party or by which Borrower is bound. Borrower is not in default
under any agreement to which it is a party or by which it is bound, which
default could have a Material Adverse Effect.
5.3 NO PRIOR ENCUMBRANCES. Borrower has good and indefeasible
title to the Collateral, free and clear of Liens, except for Permitted Liens.
5.4 BONA FIDE ACCOUNTS. The Accounts are bona fide existing
obligations. The property giving rise to such Accounts has been delivered to the
account debtor or to the account debtor's agent or as otherwise instructed by
the account debtor for immediate shipment to and unconditional acceptance by the
account debtor. Borrower has not received notice of actual or imminent
Insolvency Proceeding of any account debtor.
5.5 MERCHANTABLE INVENTORY. All Inventory, net of reserves in
accordance with GAAP, is in all material respects of good and marketable
quality, free from all material defects.
5.6 NAME: LOCATION OF CHIEF EXECUTIVE OFFICE. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office of
Borrower is located at the address indicated in Section 10 hereof.
5.7 LITIGATION. Except as set forth in the Schedule, there are
no actions or proceedings pending by or against Borrower or any Subsidiary
before any court or administrative agency in which an adverse decision could
reasonably be expected to have a Material Adverse Effect or a material adverse
effect on Borrower's interest or Bank's security interest in the Collateral.
Borrower does not have knowledge of any such pending or threatened actions or
proceedings.
5.8 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS. All
consolidated financial statements related to Borrower and any Subsidiary that
have been
13.
<PAGE> 18
delivered by Borrower to Bank fairly present in all material respects Borrower's
consolidated financial condition as of the date thereof and Borrower's
consolidated results of operations for the period then ended. There has not been
a material adverse change in the consolidated financial condition of Borrower
since the date of the most recent of such financial statements submitted to
Bank.
5.9 SOLVENCY. The fair salable value of Borrower's assets
(including goodwill minus disposition costs) exceeds the fair value of its
liabilities; Borrower is not left with unreasonably small capital after the
transactions contemplated by this Agreement; and Borrower is able to pay its
respective debts (including trade debts) as they mature.
5.10 REGULATORY COMPLIANCE. Borrower and each domestic
Subsidiary have met the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. No event has occurred resulting
from Borrower's failure to comply with ERISA that is reasonably likely to result
in Borrower's incurring any liability that could have a Material Adverse Effect.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940.
Borrower is not engaged principally, or as one of the important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations T and U of the Board of
Governors of the Federal Reserve System). Borrower has complied with all the
provisions of the Federal Fair Labor Standards Act and Borrower has not violated
any statutes, laws, ordinances or rules applicable to it, noncompliance with or
which violation of which could reasonably be expected to have a Material Adverse
Effect.
5.11 ENVIRONMENTAL CONDITION. Except as disclosed on the
Schedule, none of Borrower's or any Subsidiary's properties or assets has ever
been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge,
by previous owners or operators, in the disposal of, or to produce, store,
handle, treat, release, or transport, any hazardous waste or hazardous substance
other than in accordance with applicable law; to the best of Borrower's
knowledge, none of Borrower's properties or assets has ever been designated or
identified in any manner pursuant to any environmental protection statute as a
hazardous waste or hazardous substance disposal site, or a candidate for closure
pursuant to any environmental protection statute; no lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned by Borrower or any Subsidiary; and neither Borrower nor
any Subsidiary has received a summons, citation, notice, or directive from the
Environmental Protection Agency or any other federal, state or other
governmental agency concerning any action or omission by Borrower or any
Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste
or hazardous substances into the environment.
5.12 TAXES. Borrower and each Subsidiary have filed or caused to
be filed all tax returns required to be filed, and has paid, or has made
adequate provision for the payment of, all taxes reflected therein, except for
taxes the amount or validity of which the Borrower is contesting in good faith
by appropriate proceedings and with respect to which the Borrower has taken
adequate reserves in accordance with GAAP.
5.13 SUBSIDIARIES. Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted
Investments.
14.
<PAGE> 19
5.14 GOVERNMENT CONSENTS. Borrower and each Subsidiary have
obtained all consents, approvals and authorizations of, made all declarations or
filings with, and given all notices to, all governmental authorities that are
necessary for the continued operation of Borrower's business as currently
conducted. Except as disclosed in writing to Bank, Borrower has not been denied
an Investigational New Drug status nor has any application for New Drug Approval
been denied, nor has Borrower received any information indicating that the FDA
is unlikely to issue an approval letter in response to such application for any
products material to Borrower's business.
5.15 FULL DISCLOSURE. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, until payment in full of all
outstanding Obligations, and for so long as Bank may have any commitment to make
an Advance hereunder, Borrower shall do all of the following:
6.1 GOOD STANDING. Borrower shall maintain its and each of its
Subsidiaries' corporate existence and good standing in its jurisdiction of
incorporation and maintain qualification in each jurisdiction in which the
failure to so qualify could reasonably be expected to have a Material Adverse
Effect. Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain; to the extent consistent with prudent management of Borrower's
business, in force all licenses, approvals and agreements, the loss of which
could reasonably be expected to have a Material Adverse Effect.
6.2 GOVERNMENT COMPLIANCE.
(a) ERISA. Borrower shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA.
(b) FDA. To the extent required by law, Borrower shall
cause its, and each of its Subsidiaries', manufacturing and quality control to
conform in all material respects to FDA Good Manufacturing Practices ("GMP")
regulations and such other regulations applicable to Borrower and its
Subsidiaries with respect to advertising, labeling and reporting, product
testing, design, safety and labeling of products except where the failure to so
conform is not reasonably likely to have a Material Adverse Effect. To the
extent necessary to the conduct of its and its Subsidiaries' business, Borrower
shall register, and shall cause each of its Subsidiaries to register, with the
Food and Drug Branch of the California Department of Health Services and the
FDA, and Borrower shall register its, and shall cause each of its Subsidiaries
to register their, manufacturing facilities in accordance with GMP regulations.
(c) STATUTORY COMPLIANCE. Borrower shall comply, and
shall cause each Subsidiary to comply, with all statutes, laws, ordinances and
government rules and regulations to which it is subject, noncompliance with
which is reasonably likely to have a
15.
<PAGE> 20
Material Adverse Effect, including without limitation, compliance in all
material respects with the Federal Food, Drug, and Cosmetics Act, the
Occupational Safety and Health Act, the Environmental Protection Act, the Toxic
Substances Control Act, and all other applicable federal, state and local laws,
orders and regulations.
6.3 ADVERSE INFORMATION. Borrower shall immediately notify Bank
upon receipt of any information that indicates that (a) the FDA has denied, or
has stated that it is likely to deny, any of Borrower's, or its Subsidiaries',
Investigational New Drug Applications or New Product Application, (b) Borrower
or a Subsidiary has elected not to proceed with clinical trials for any of
Borrower's or Subsidiary's products for which Borrower or any Subsidiary has
filed an Investigational New Drug Application with the FDA, or (c) the FDA or
other governmental agency has advised Borrower that it found material
deficiencies in Borrower's or a Subsidiary's compliance with applicable
regulations.
6.4 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower shall deliver to Bank: (a) as soon as
available, but in any event within thirty (30) days after the end of each fiscal
quarter, or within five (5) days of filing with the Securities and Exchange
Commission, a company prepared balance sheet and income statement covering
Borrower's consolidated operations during such period, in a form certified by an
officer of Borrower reasonably acceptable to Bank; (b) as soon as available, but
in any event within ninety (90) days after the end of Borrower's fiscal year, or
within five (5) days of filing with the Securities and Exchange Commission,
audited consolidated financial statements of Borrower prepared in accordance
with GAAP, consistently applied, together with an unqualified opinion on such
financial statements of an independent certified public accounting firm
reasonably acceptable to Bank; (c) within ten (10) days upon becoming available,
copies of all statements, reports and notices sent or made available generally
by Borrower to its security holders or to any holders of Subordinated Debt and
all reports on Form 10-K and 10-Q filed with the Securities and Exchange
Commission; and (d) promptly upon receipt of notice thereof, a report of any
legal actions pending or threatened against Borrower that could reasonably be
expected to result in damages or costs to Borrower of Two Hundred Fifty Thousand
Dollars ($250,000) or more; and (e) such budgets, sales projections, operating
plans or other financial information as Bank may reasonably request from time to
time.
(b) Borrower shall deliver to Bank with the quarterly
financial statements (or monthly financial statements if required under Section
6.4(c) below), a Compliance Certificate signed by a Responsible Officer in
substantially the form of Exhibit Q hereto.
(c) If Borrower's Liquidity is (i) less than the product
of the amount of outstanding Obligations under this Agreement at any given time
multiplied by two and one-half (2.5) (the "Liquidity Multiple"), or (ii) the
Remaining Months Liquidity falls below twelve (12) months, Borrower shall
deliver to Bank, within thirty (30) days after the last day of each calendar
month, a company prepared consolidated balance sheet and income statement
covering Borrower's consolidated operations for the relevant month. At such
time, and only so long as, Borrower's minimum Liquidity is less than the
Liquidity Multiple and Remaining Months Liquidity is less than twelve (12)
months, (i) monthly reporting shall continue under this Section
16.
<PAGE> 21
6.4(c), and (ii) the minimum Liquidity and Remaining Months Liquidity covenants
under Section 6.11 below shall be measured as of the last day of each calendar
month.
6.5 INVENTORY; RETURNS. Borrower shall keep all Inventory in
good and marketable condition, free from all material defects. Returns and
allowances, if any, as between Borrower and its account debtors shall be on the
same basis and in accordance with the usual customary practices of Borrower, as
they exist at the time of the execution and delivery of this Agreement. Borrower
shall promptly notify Bank of all returns and recoveries and of all disputes and
claims, where the return, recovery, dispute or claim involves more than One
Hundred Thousand Dollars ($ 100,000).
6.6 TAXES. Borrower shall make, and shall cause each Subsidiary
to make, due and timely payment or deposit of all material federal, state, and
local taxes, assessments, or contributions required of it by law, and will
execute and deliver to Bank, on demand, appropriate certificates attesting to
the payment or deposit thereof, and Borrower will make, and will cause each
Subsidiary to make, timely payment or deposit of all material tax payments and
withholding taxes required of it by applicable laws, including, but not limited
to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local,
state, and federal income taxes, and will, upon request, furnish Bank with proof
satisfactory to Bank indicating that Borrower or a Subsidiary has made such
payments or deposits; provided that Borrower or a Subsidiary need not make any
payment if the amount or validity of such payment is contested in good faith by
appropriate proceedings and is reserved against (to the extent required by GAAP)
by Borrower.
6.7 INSURANCE.
(a) Borrower, at its expense, shall keep the Collateral
insured against loss or damage by fire, theft, explosion, sprinklers, and all
other hazards and risks, and in such amounts, as ordinarily insured against by
other owners in similar businesses conducted in the locations where Borrower's
business is conducted on the date hereof. Borrower shall also maintain insurance
relating to Borrower's ownership and use of the Collateral in amounts and of a
type that are customary to businesses similar to Borrower's. Nothing herein
shall be construed as requiring the Borrower to maintain credit insurance with
respect to its accounts receivable.
(b) All such policies of insurance shall be in such
form, with such companies and in such amounts as are reasonably satisfactory to
Bank. All such policies of property insurance shall contain a lender's loss
payable endorsement, in a form reasonably satisfactory to Bank, showing Bank as
an additional loss payee thereof and all liability insurance policies shall show
the Bank as an additional insured, and shall specify that the insurer must give
at least twenty (20) days notice to Bank before canceling its policy for any
reason. Upon Bank's request, Borrower shall deliver to Bank certified copies of
such policies of insurance and evidence of the payments of all premiums
therefor. All proceeds payable under any such policy shall, at the option of
Bank, be payable to Bank to be applied on account of the Obligations.
6.8 PRINCIPAL DEPOSITORY. Borrower shall maintain its principal
depository and operating accounts with Bank. Borrower shall maintain a minimum
of Five Million Dollars ($5,000,000) in a Bonus Money Market Account with Bank
for a minimum period commencing on the Closing Date through the Revolving
Facility Availability Date.
17.
<PAGE> 22
6.9 TOTAL LIABILITIES-NET WORTH RATIO. Borrower shall maintain,
as of the last day of each fiscal quarter during the term of this Agreement, a
ratio of Total Liabilities less Subordinated Debt to Tangible Net Worth plus
Subordinated Debt of not more than [...***...].
6.10 TANGIBLE NET WORTH. Borrower shall maintain, as of the last
day of each fiscal quarter during the term of this Agreement, a Tangible Net
Worth of not less than [...***...] Dollars ($[...***....]).
6.11 MINIMUM LIQUIDITY; REMAINING MONTHS LIQUIDITY; DEBT SERVICE
COVERAGE. Subject to the remainder of this section, Borrower shall maintain, as
of the last day of each of fiscal quarter, (i) a minimum Liquidity of
[...***...] the amount of Obligations under this Agreement, and (ii) Remaining
Months Liquidity of at least [...***...]. Notwithstanding the foregoing, from
and after the time Borrower achieves a Debt Service Coverage for [...***...] of
at least [...***...], and for so long as Borrower maintains as of the last day
of each fiscal quarter thereafter, a Debt Service Coverage of at least
[...***...], Borrower shall not be subject to the minimum required Liquidity and
Remaining Months Liquidity requirements set forth above.
6.12 FURTHER ASSURANCES. At any time and from time to time
Borrower shall execute and deliver such further instruments and take such
further action as may reasonably be requested by Bank to effect the purposes of
this Agreement.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until payment in full of the outstanding
Obligations or for so long as Bank may have any commitment to make any Advances,
Borrower will not do any of the following:
7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer"), or pen-nit any of its Subsidiaries to
Transfer, all or any part of its business or property, other than Transfers: (i)
of inventory in the ordinary course of business, (ii) of non-exclusive licenses
and similar arrangements for the use of the property of Borrower or its
Subsidiaries in the ordinary course of business, (iii) Transfers of worn- or
obsolete Equipment.
7.2 CHANGE IN BUSINESS. Engage in any business, or permit any of
its Subsidiaries to engage in any business, other than the businesses currently
engaged in by Borrower and any business substantially similar or related thereto
(or incidental thereto). Borrower will not, without thirty (30) days prior
written notification to Bank, relocate its chief executive office.
7.3 MERGERS OR ACQUISITIONS. Merge or consolidate, or permit any
of its Subsidiaries to merge or consolidate, with or into any other business
organization, or acquire, or permit any of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person; provided
that this Section 7.3 shall not apply to any such mergers or acquisitions where
(i) Borrower is the surviving entity and is otherwise in compliance with the
terms and conditions of this Agreement prior to and following such merger or
acquisition, and (ii)
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
18.
<PAGE> 23
Borrower has first obtained Bank's written approval, such approval not to be
unreasonably withheld.
7.4 INDEBTEDNESS. Create, incur, assume or be or remain liable
with respect to any Indebtedness, or permit any Subsidiary so to do, other than
Permitted Indebtedness.
7.5 ENCUMBRANCES. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens.
7.6 DISTRIBUTIONS. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock.
7.7 INVESTMENTS. Directly or indirectly acquire or own, or make
any Investment in or to any Person, or permit any of its Subsidiaries so to do,
other than Permitted Investments.
7.8 TRANSACTIONS WITH AFFILIATES. Directly or indirectly enter
into or pen-nit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business,
upon fair and reasonable terms that are no less favorable to Borrower than would
be obtained in an arm's length transaction with a nonaffiliated Person,
7.9 SUBORDINATED DEBT. Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Bank's prior written consent.
7.10 INVENTORY. Store the Inventory with a bailee, warehouseman,
or similar party unless Bank has received a pledge of the warehouse receipt
covering such Inventory. Except for Inventory sold in the ordinary course of
business and except for such other locations as Bank may approve in writing,
which approval shall not be unreasonably withheld, Borrower shall keep the
Inventory only at the location set forth in Section 10 hereof and such other
locations of which Borrower gives Bank prior written notice and as to which
Borrower signs and files a financing statement where needed to perfect Bank's
security interest.
7.11 COMPLIANCE. Become an "investment company" controlled by an
"investment company," within the meaning of the Investment Company Act of 1940,
or become principally engaged in, or undertake as one of its important
activities, the business of extending credit for the purpose of purchasing or
carrying margin stock, or use the proceeds of any Advance or Loan for such
purpose. Fail to (i) comply in all material respects with FDA's GMP regulations
and registration requirements; (ii) comply in all material respects with Federal
Food, Drug and Cosmetics Act, the Occupational Safety and Health Act, the
Environmental Protection Act, and the Toxic Substances Control Act; (iii) meet
the minimum funding requirements of ERISA, permit a reportable event or
prohibited transaction, as defined in ERISA, to occur; (iv) comply with the
Federal Fair Labor Standards Act in all material respects; or (v) violate any
law or regulation, in each case which violation could have a Material Adverse
Effect.
19.
<PAGE> 24
8. EVENTS OF DEFAULT.
Any one or more of the following events shall constitute an
Event of Default by Borrower under this Agreement:
8.1 PAYMENT DEFAULT. If Borrower fails to pay the principal of,
or any interest on, the Advance when due and payable; or fails to pay any
portion of any other Obligations not constituting such principal or interest,
including without limitation Bank Expenses, within thirty (30) days of receipt
by Borrower of an invoice for such other Obligations;
8.2 COVENANT DEFAULT. If Borrower fails to perform any
obligation under Section 6.8, 6.9, 6.10 or 6.11 or violates any of the covenants
contained in Article 7 of this Agreement, or fails or neglects to perform, keep,
or observe any other material term, provision, condition, covenant, or agreement
contained in this Agreement, in any of the Loan Documents, or in any other
present or future agreement between Borrower and Bank and as to any default
under such other term, provision, condition, covenant or agreement that can be
cured, has failed to cure such default within ten (10) days after Borrower
receives notice thereof or any officer of Borrower becomes aware thereof,
provided, however, that if the default cannot by its nature be cured within the
ten (10) day period or cannot after diligent attempts by Borrower be cured
within such ten (10) day period, and such default is likely to be cured within a
reasonable time, then Borrower shall have an additional reasonable period (which
shall not in any case exceed thirty (30) days) to attempt to cure such default,
and within such reasonable time period the failure to have cured such default
shall not be deemed an Event of Default (provided that no Advance will be
required to be made during such cure period);
8.3 MATERIAL ADVERSE CHANGE. If there occurs a material adverse
change in Borrower's business or financial condition, or if there is a material
impairment of the prospect of repayment of any portion of the Obligations or a
material impairment of the value or priority of Bank's security interests in the
Collateral;
8.4 ATTACHMENT. If any material portion of Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of Borrower's assets by the United States Government,
or any department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, and the same is not paid within ten (10) days
after Borrower receives notice thereof, provided that none of the foregoing
shall constitute an Event of Default where such action or event is stayed or an
adequate bond has been posted pending a good faith contest by Borrower (provided
that no Advance will be required to be made during such cure period);
20.
<PAGE> 25
8.5 INSOLVENCY. If Borrower becomes insolvent, or if an
Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding
is commenced against Borrower and is not dismissed or stayed within sixty (60)
days (provided that no Advance will be made prior to the dismissal of such
Insolvency Proceeding);
8.6 OTHER AGREEMENTS. If there is a default in any agreement to
which Borrower is a party with a third party or parties resulting in a right by
such third party or parties, whether or not exercised, to accelerate the
maturity of any Indebtedness in an amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000) or that could reasonably be expected to have a
Material Adverse Effect;
8.7 SUBORDINATED DEBT. If Borrower makes any payment on account
of Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Bank;
8.8 JUDGMENTS. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Two Hundred
Fifty Dollars ($100,000) shall be rendered against Borrower and shall remain
unsatisfied and unstayed for a period of thirty (30) days (provided that no
Advances will be made prior to the satisfaction or stay of such judgment);
8.9 MISREPRESENTATIONS. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document, at the time such representation or
warranty was made or such certificate was delivered.
8.10 FDA DETERMINATIONS. If the FDA takes one or more of the
following actions with respect to all or substantially all of Borrower's or a
Subsidiary's products: (a) withdraws Investigational New Drug status for any
such product that is undergoing clinical trials as the result of a determination
by the FDA that such product exposes subjects or patients to an unacceptable
health risk; (b) withdraws product approval of any such product as the result of
any failure to comply with regulatory standards; or (c) determines that such
products are not safe or efficacious.
8.11 CHANGE OF CONTROL. If any "person" or "group" (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934)
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of a sufficient number of shares
of all classes of stock then outstanding of Borrower ordinarily entitled to vote
in the election of directors, empowering such "person" or "group" to elect a
majority of the Board of Directors of Borrower.
9. BANKS RIGHTS AND REMEDIES.
9.1 RIGHTS AND REMEDIES. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrower:
21.
<PAGE> 26
(a) Declare all Obligations, whether evidenced by this
Agreement, by any of the other Loan Documents, or otherwise, immediately due and
payable (provided that upon the occurrence of an Event of Default described in
Section 8.5 all Obligations shall become immediately due and payable without any
action by Bank);
(b) Cease advancing money or extending credit to or for
the benefit of Borrower under this Agreement or under any other agreement
between Borrower and Bank;
(c) Settle or adjust disputes and claims directly with
account debtors for amounts, upon terms and in whatever order that Bank
reasonably considers advisable;
(d) Without notice to or demand upon Borrower, make such
payments and do such acts as Bank considers necessary or reasonable to protect
its security interest in the Collateral. Borrower agrees to assemble the
Collateral if Bank so requires, and to make the Collateral available to Bank as
Bank may designate. Borrower authorizes Bank to enter the premises where the
Collateral is located, to take and maintain possession of the Collateral, or any
part of it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or lien which in Bank's determination appears to be prior or superior to
its security interest and to pay all expenses incurred in connection therewith.
With respect to any of Borrower's owned premises, Borrower hereby grants Bank a
license to enter into possession of such premises and to occupy the same,
without charge, for up to one hundred twenty (120) days in order to exercise any
of Bank's rights or remedies provided herein, at law, in equity, or otherwise;
(e) Without notice to Borrower set off and apply to the
Obligations any and all (i) balances and deposits of Borrower held by Bank, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by Bank;
(f) Ship, reclaim, recover, store, finish, maintain,
repair, prepare for sale, advertise for sale, and sell (in the manner provided
for herein) the Collateral. Bank is hereby granted a license or other right,
solely pursuant to the provisions of this Section 9. 1, to use, without charge,
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Collateral, in completing
production of, advertising for sale, and selling any Collateral and, in
connection with Bank's exercise of its rights under this Section 9. 1,
Borrower's rights under all licenses and all franchise agreements shall inure to
Bank's benefit;
(g) Sell the Collateral at either a public or private
sale, or both, by way of one or more contracts or transactions, for cash or on
terms, in such manner and at such places (including Borrower's premises) as Bank
determines is commercially reasonable, and apply any proceeds to the Obligations
in whatever manner or order Bank deems appropriate;
(h) Bank may credit bid and purchase at any public sale;
and
(i) Any deficiency that exists after disposition of the
Collateral as provided above will be paid immediately by Borrower.
22.
<PAGE> 27
9.2 POWER OF ATTORNEY. Effective only upon the occurrence and
during the continuance of an Event of Default, Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, or employees) as
Borrower's true and lawful attorney to: (a) send requests for verification of
Accounts or notify account debtors of Bank's security interest in the Accounts;
(b) endorse Borrower's name on any checks or other forms of payment or security
that may come into Bank's possession; (c) sign Borrower's name on any invoice or
bill of lading relating to any Account, drafts against account debtors,
schedules and assignments of Accounts, verifications of Accounts, and notices to
account debtors; (d) make, settle, and adjust all claims under and decisions
with respect to Borrower's policies of insurance; and (e) settle and adjust
disputes and claims respecting the accounts directly with account debtors, for
amounts and upon terms which Bank determines to be reasonable; (f) to file, in
its sole discretion, one or more financing or continuation statements and
amendments thereto, relative to any of the Collateral without the signature of
Borrower where permitted by law; and (g) to transfer the Collateral into the
name of Bank or a third party to the extent permitted under the Code provided
Bank may exercise such power of attorney to sign the name of Borrower on any of
the documents described in Section 4.2 regardless of whether an Event of Default
has occurred. The appointment of Bank as Borrower's attorney in fact, and each
and every one of Bank's rights and powers, being coupled with an interest, is
irrevocable until all of the Obligations have been fully repaid and performed
and Bank's obligation to provide advances hereunder is terminated.
9.3 ACCOUNTS COLLECTION. After the occurrence and during the
continuance of an Event of Default, Bank may notify any Person owing funds to
Borrower of Bank's security interest in such funds and verify the amount of such
Account. Borrower shall collect all amounts owing to Borrower for Bank, receive
in trust all payments as Bank's trustee, and immediately deliver such payments
to Bank in their original form as received from the account debtor, with proper
endorsements for deposit.
9.4 BANK EXPENSES. If Borrower fails to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Bank may do any or all of the
following: (a) make payment of the same or any part thereof-, (b) set up such
reserves under the Revolving Facility as Bank reasonably deems necessary to
protect Bank from the exposure created by such failure; or (c) obtain and
maintain insurance policies of the type discussed in Section 6.6 of this
Agreement, and take any action with respect to such policies as Bank reasonably
deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank
Expenses, shall be immediately due and payable, and shall bear interest at the
then applicable rate hereinabove provided, and shall be secured by the
Collateral. Any payments made by Bank shall not constitute an agreement by Bank
to make similar payments in the future or a waiver by Bank of any Event of
Default under this Agreement.
9.5 BANK'S LIABILITY FOR COLLATERAL. So long as Bank complies
with Section 9207 of the Code, Bank shall not in any way or manner be liable or
responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage
thereto occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof, or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever. All risk of
loss, damage or destruction of the Collateral shall be borne by Borrower.
23.
<PAGE> 28
9.6 REMEDIES CUMULATIVE. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it. No waiver by Bank
shall be effective unless made in a written document signed on behalf of Bank
and then shall be effective only in the specific instance and for the specific
purpose for which it was given.
9.7 DEMAND; PROTEST. Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment, notice
of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held by Bank on which Borrower may in any way be liable.
10. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, to Borrower or to Bank, as the case may be, at its addresses set
forth below:
If to Borrower: Coulter Pharmaceutical, Inc.
550 California Avenue, Suite 200
Palo Alto, CA 94306-1440
Attn: Chief Financial Officer
FAX: (650) 849-7530
Phone: (650) 842-7300
with a copy to:
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
Attn: Robert L. Jones
FAX: (650) 857-0663
Phone: (650) 843-5000
If to Bank: Silicon Valley Bank
3003 Tasman Drive
P.O. Box 2607
Santa Clara, CA 95054
Attn: [...***...]
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
24.
<PAGE> 29
FAX: (408) 654-[...***...]
Phone: (408) 654-[...***...]
The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other.
11. CHOICE OF LAW AND VENUE JURY TRIAL WAIVER.
This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of California, without regard to principles
of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER
COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
12. GENERAL PROVISIONS.
12.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of the respective successors and permitted assigns of each of the
parties; provide , however , that neither this Agreement nor any rights
hereunder may be assigned by Borrower without Bank's prior written consent,
which consent may be granted or withheld in Bank's sole discretion. Bank shall
have the right without the consent of or notice to Borrower to sell, transfer,
negotiate, or grant participations in all or any part of, or any interest in
Bank's obligations, rights and benefits hereunder.
12.2 INDEMNIFICATION. Borrower shall defend, indemnify and hold
harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank
as a result of or in any way arising out of, following, or consequential to
transactions between Bank and Borrower whether under this Agreement, or
otherwise (including without limitation reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE. Time is of the essence for the performance
of all obligations set forth in this Agreement.
25.
<PAGE> 30
12.4 SEVERABILITY OF PROVISIONS. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.
12.5 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same Agreement.
12.6 SURVIVAL. All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrower to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run,
provided that so long as no Obligations remain outstanding hereunder and Bank
has no commitment to make any Advance or to make any other loans to Borrower
hereunder, Bank shall release all security interests granted hereunder and
redeliver all Collateral held by it in accordance with applicable law.
12.7 CONFIDENTIALITY. As provided in the Nondisclosure Agreement
dated as of June 8, 1998, by and between Borrower and Bank, and as provided in
this section, in handling any confidential information Bank shall exercise the
same degree of care that it exercises with respect to its own proprietary
information of the same types to maintain the confidentiality of any non-public
information thereby received or received pursuant to this Agreement except that
disclosure of such information may be made (i) to the subsidiaries or affiliates
of Bank in connection with their present or prospective business relations with
Borrower, (ii) to prospective transferees or purchasers of any interest in the
Loans, provided that they have entered into a comparable confidentiality
agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as
required by law, regulations, rule or order, subpoena, judicial order or similar
order, (iv) as may be required in connection with the examination, audit or
similar investigation of Bank and (v) as Bank may reasonably determine in
connection with the enforcement of any remedies hereunder. Confidential
information hereunder shall not include information that either: (a) is in the
public domain or in the knowledge or possession of Bank when disclosed to Bank,
or becomes part of the public domain after disclosure to Bank through no fault
of Bank; or (b) is disclosed to Bank by a third party, provided Bank does not
have actual knowledge that such third party is prohibited from disclosing such
information.
26.
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
COULTER PHARMACEUTICAL, INC.
By:_________________________________
Title:______________________________
SILICON VALLEY BANK
By:_________________________________
Title:______________________________
27.
<PAGE> 32
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
except those which were purchased pursuant to a lease agreement, accessories,
accessions, replacements, substitutions, additions, and improvements to any of
the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, leases, license agreements,
franchise agreements, blueprints, drawings, purchase orders, customer lists,
route lists, claims, literature, reports, catalogs, income tax refunds, payments
of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower and Borrower's Books
relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities, securities
entitlements, financial assets, investment properties, securities accounts,
securities entitlements, letters of credit, certificates of deposit, instruments
and chattel paper now owned or hereafter acquired and Borrower's Books relating
to the foregoing; and
(f) Any and all claims, rights and interests in any of the above and all
substitutions for, additions and accessions to and proceeds thereof.
The term "Collateral" shall not include any inventory and equipment
related to Borrower's Bexxar technology. Notwithstanding the foregoing, the term
"Collateral" shall not include copyrights, patents, trademarks, licenses or
other intellectual property of Borrower except to the extent necessary to
perfect Bank's security interest in the proceeds thereof.
28.
<PAGE> 33
EXHIBIT B
LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., P.S.T.
TO: CENTRAL CLIENT SERVICE DIVISION DATE:_________________
FAX#: (408) 496-2426 TIME:_________________
- --------------------------------------------------------------------------------
FROM: Coulter Pharmaceutical, Inc.
---------------------------------------------------------------------------
CLIENT NAME (BORROWER)
REQUESTED BY:___________________________________________________________________
AUTHORIZED SIGNER'S NAME
AUTHORIZED SIGNATURE:___________________________________________________________
PHONE NUMBER:___________________________________________________________________
FROM ACCOUNT #_______________ TO ACCOUNT # ____________________________________
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT
PRINCIPAL INCREASE (TERM ADVANCE) $____________________________
PRINCIPAL PAYMENT (ONLY) $____________________________
INTEREST PAYMENT (ONLY) $____________________________
PRINCIPAL AND INTEREST (PAYMENT) $____________________________
OTHER INSTRUCTIONS:_____________________________________________________________
________________________________________________________________________________
All representations and warranties of Borrower stated in the Loan
Agreement are true, correct and complete in all material respects as of the date
of the telephone request for and Advance confirmed by this Borrowing
Certificate; provided, however, that those representations and warranties
expressly referred to another date shall be true, correct and complete in all
material respects of such date.
================================================================================
BANK USE ONLY
TELEPHONE REQUEST:
The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is known to me.
__________________________________ ____________________________________
Authorized Requestor Phone #
__________________________________ ____________________________________
Received By (Bank) Phone #
_______________________________________
Authorized Signature (Bank)
- --------------------------------------------------------------------------------
29.
<PAGE> 34
EXHIBIT C
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK
FROM: COULTER PHARMACEUTICAL, INC.
The undersigned authorized officer of Coulter Pharmaceutical, Inc.
hereby certifies that in accordance with the terms and conditions of the Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending with all required covenants
except as noted below and (ii) all representations and warranties of Borrower
stated in the Agreement are true and correct in all material respects as of the
date hereof, except those representations and warranties made as of a specific
date. Attached herewith are the required documents supporting the above
certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are
consistently applied from one period to the next except as explained in an
accompanying letter or footnotes.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES"
COLUMN.
<TABLE>
<CAPTION>
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
<S> <C> <C> <C>
Financial statements(1) Quarterly within 30 days Yes No
10-K I 1O-Q within 10 days Yes No
Annual (CPA Audited) FYE within 90 days Yes No
</TABLE>
(1) Monthly within 30 days if Liquidity falls below Liquidity Multiple or 12
months RML
<TABLE>
<CAPTION>
Financial Covenant Required Actual Complies
<S> <C> <C> <C> <C>
Maintain on a Quarterly Basis:
Total Liabilities/Tangible Net Worth [...***...] ____:1.0 Yes No
Tangible Net Worth $[...***...] $____ Yes No
Liquidity(2) [...***...] ____:1.0 Yes No
RML(2) [...***...] Yes No
Debt Service Coverage(3) [...***...] ____:1.0 Yes No
</TABLE>
(2) converts to Debt Service Coverage of 1.5: 1.0 upon two consecutive quarters
of compliance with Debt Service Coverage
(3) required only upon release of Liquidity and RML requirement
COMMENTS REGARDING EXCEPTIONS: See Attached.
Sincerely,
__________________________________
SIGNATURE
__________________________________
TITLE
_______________________________________________
BANK USE ONLY
Received by:___________________________________
AUTHORIZED SIGNER
Date:__________________________________________
Verified:______________________________________
AUTHORIZED SIGNER
Date:__________________________________________
Compliance Status: Yes No
_______________________________________________
- ----------
* CONFIDENTIAL TREATMENT REQUESTED
30.
<PAGE> 35
__________________________________
DATE
31.
<PAGE> 36
DISBURSEMENT REQUEST AND AUTHORIZATION
Borrower: Coulter Pharmaceutical, Inc. Bank: Silicon Valley Bank
================================================================================
LOAN TYPE. This is a Variable/Fixed Rate, Revolving Facility of a principal
amount up to $10,000,000, which converts to a term loan.
PRIMARY PURPOSE OF LOAN. The primary purpose of this loan is to finance capital
expenditures and to support general working capital purposes.
SPECIFIC PURPOSE. The specific purpose of this loan is: General Corporate
Purposes.
DISBURSEMENT INSTRUCTIONS. Borrower understands that no loan proceeds will be
disbursed until all of Bank's conditions for making the loan have been
satisfied. Please disburse the loan proceeds as follows:
<TABLE>
<CAPTION>
Revolving Advance
-----------------
<S> <C>
Amount paid to Borrower directly: $_____
Undisbursed Funds $_____
Principal $_____
</TABLE>
CHARGES PAID IN CASH. Borrower has paid or will pay in cash as agreed the
following charges:
<TABLE>
<S> <C>
Prepaid Finance Charges Paid in Cash:
Facility Fee: $37,500
Other Charges Paid in Cash: $_____
$100 UCC Search Fees
$100 UCC Filing Fees
$TBD Outside Counsel Fees and Expenses (Estimate)
Total Charges Paid in Cash $_____
</TABLE>
AUTOMATIC PAYMENTS. Borrower hereby authorizes Bank automatically to deduct from
Borrower's account numbered _____ the amount of any loan payment. If the funds
in the account are insufficient to cover any payment, Bank shall not be
obligated to advance funds to cover the payment.
FINANCIAL CONDITION. BY SIGNING THIS AUTHORIZATION, BORROWER REPRESENTS AND
WARRANTS TO BANK THAT THE INFORMATION PROVIDED ABOVE IS TRUE AND CORRECT AND
THAT THERE HAS BEEN NO ADVERSE C14ANGE IN BORROWER'S FINANCIAL CONDITION AS
DISCLOSED IN BORROWER'S MOST RECENT FINANCIAL STATEMENT TO BANK. THIS
AUTHORIZATION IS DATED AS OF OCTOBER 29,1998.
BORROWER:
__________________________________
__________________________________
Authorized Officer
<PAGE> 37
AGREEMENT TO PROVIDE INSURANCE
Grantor: Coulter Pharmaceutical, Inc. Bank: Silicon Valley Bank
================================================================================
INSURANCE REQUIREMENTS. Coulter Pharmaceutical, Inc. ("Grantor")
understands that insurance coverage is required in connection with the extending
of a loan or the providing of other financial accommodations to Grantor by Bank.
These requirements are set forth in the Loan Documents. The following minimum
insurance coverages must be provided on the following described collateral (the
"Collateral"):
Collateral: All Inventory, Equipment and Fixtures.
Type: All risks, including fire, theft and liability.
Amount: Full insurable value.
Basis: Replacement value.
Endorsements: Loss payable clause to Bank with stipulation
that coverage will not be canceled or
diminished without a minimum of twenty (20)
days' prior written notice to Bank.
INSURANCE COMPANY. Grantor may obtain insurance from any insurance
company Grantor may choose that is reasonably acceptable to Bank. Grantor
understands that credit may not be denied solely because insurance was not
purchased through Bank.
FAILURE TO PROVIDE INSURANCE. Grantor agrees to deliver to Bank, on or
before closing, evidence of the required insurance as provided above, with an
effective date of October 29, 1998, or earlier. Grantor acknowledges and agrees
that if Grantor fails to provide any required insurance or fails to continue
such insurance in force, Bank may do so at Grantor's expense as provided in the
Loan and Security Agreement. The cost of such insurance, at the option of Bank,
shall be payable on demand or shall be added to the indebtedness as provided in
the security document. GRANTOR ACKNOWLEDGES THAT IF BANK SO PURCHASES ANY SUCH
INSURANCE, THE INSURANCE WILL PROVIDE LIMITED PROTECTION AGAINST PHYSICAL DAMAGE
TO THE COLLATERAL, UP TO THE BALANCE OF THE LOAN; HOWEVER, GRANTOR'S EQUITY IN
THE COLLATERAL MAY NOT BE INSURED. IN ADDITION, THE INSURANCE MAY NOT PROVIDE
ANY PUBLIC LIABILITY OR PROPERTY DAMAGE INDEMNIFICATION AND MAY NOT MEET THE
REQUIREMENTS OF ANY FINANCIAL RESPONSIBILITY LAWS.
AUTHORIZATION. For purposes of insurance coverage on the Collateral,
Grantor authorizes Bank to provide to any person (including any insurance agent
or company) all information Bank deems appropriate, whether regarding the
Collateral, the loan or other financial accommodations, or both.
GRANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS AGREEMENT TO
PROVIDE INSURANCE AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED OCTOBER
29,1998.
GRANTOR:
COULTER PHARMACEUTICAL, INC.
__________________________________
Authorized Officer
FOR BANK USE ONLY
INSURANCE VERIFICATION
DATE:_____________________ PHONE:__________________
AGENT'S NAME:______________________________________
INSURANCE COMPANY:_________________________________
POLICY NUMBER:_____________________________________
EFFECTIVE DATES:___________________________________
COMMENTS:__________________________________________
2.
<PAGE> 38
CORPORATE RESOLUTIONS TO BORROW
- --------------------------------------------------------------------------------
Borrower: Coulter Pharmaceutical, Inc.
- --------------------------------------------------------------------------------
I, the undersigned Secretary or Assistant Secretary of Coulter
Pharmaceutical, Inc. (the "Corporation"), HEREBY CERTIFY that the Corporation is
organized and existing under and by virtue of the laws of the State of Delaware.
I FURTHER CERTIFY that attached hereto as Attachments I and 2 are true
and complete copies of the Certificate of Incorporation and Bylaws of the
Corporation, each of which is in full force and effect on the date hereof.
I FURTHER CERTIFY that at a meeting of the Directors of the Corporation,
duly called and held, at which a quorum was present and voting (or by other duly
authorized corporate action in lieu of a meeting), the following resolutions
were adopted.
BE IT RESOLVED, that any one (1) of the following named officers,
employees, or agents of this Corporation, whose actual signatures are shown
below:
<TABLE>
<CAPTION>
NAMES POSITIONS ACTUAL SIGNATURES
<S> <C> <C>
________________________ ______________________ ______________________
________________________ ______________________ ______________________
________________________ ______________________ ______________________
________________________ ______________________ ______________________
</TABLE>
acting for an on behalf of this Corporation and as its act and deed be, and they
hereby are, authorized and empowered:
BORROW MONEY. To borrow from time to time from Silicon Valley Bank
("Bank"), an such terms as may be agreed upon between the officers, employees,
or agents and Bank, such sum or sums of money as in their judgment should be
borrowed, without limitation, including such sums as are specified in that
certain Loan and Security Agreement dated as of October 29, 1998 (the "Loan
Agreement").
EXECUTE NOTES. To execute and deliver to Bank the promissory note or
notes of the Corporation, on Lender's forms, at such rates of interest and on
such terms as may be agreed upon, evidencing the sums of money so borrowed or
any indebtedness of the Corporation to Bank, and also to execute and deliver to
Lender one or more renewals, extensions, modifications, refinancings,
consolidations, or substitutions for one or more of the notes, or any portion of
the notes.
GRANT SECURITY. To grant a security interest to Bank in the Collateral
described in the Loan Agreement, which security interest shall secure all of the
Corporation's Obligations, as described in the Loan Agreement.
NEGOTIATE ITEMS. To draw, endorse, and discount with Bank all drafts,
trade acceptances, promissory notes, or other evidences of indebtedness payable
to or belonging to the Corporation
1.
<PAGE> 39
or in which the Corporation may have an interest, and either to receive cash for
the same or to cause such proceeds to be credited to the account of the
Corporation with Bank, or to cause such other disposition of the proceeds
derived therefrom as they may deem advisable.
FURTHER ACTS. In the case of lines of credit, to designate additional or
alternate individuals as being authorized to request advances thereunder, and in
all cases, to do and perform such other acts and things, to pay any and all fees
and costs, and to execute and deliver such other documents and agreements as
they may in their discretion deem reasonably necessary or proper in order to
carry into effect the provisions of these Resolutions.
BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to
these resolutions and performed prior to the passage of these resolutions are
hereby ratified and approved, that these Resolutions shall remain in full force
and effect and Bank may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Bank. Any such notice
shall not affect any of the Corporation's agreements or commitments in effect at
the time notice is given.
I FURTHER CERTIFY that the officers, employees, and agents named above
are duly elected, appointed, or employed by or for the Corporation, as the case
may be, and occupy the positions set forth opposite their respective names; that
the foregoing Resolutions now stand of record on the books of the Corporation;
and that the Resolutions are in full force and effect and have not been modified
or revoked in any manner whatsoever.
IN WITNESS WHEREOF, I have hereunto set my hand on October 29, 1998, and
attest that the signatures set opposite the names listed above are their genuine
signatures.
CERTIFIED TO AND ATTESTED BY:
X___________________________________
________________________________________________________________________________
Attachments:
1. Certificate of Incorporation
2. By-Laws
2.
<PAGE> 40
<TABLE>
<S><C>
This FINANCING STATEMENT is presented for filing and will remain effective with certain
exceptions, for a period of five years from the date of filing, pursuant to section 9403 of the California Uniform Commercial Code.
- ------------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR (LAST NAME FIRST-IF AN INDIVIDUAL) 1A. SOCIAL SECURITY OF FEDERAL TAX NO.
COULTER PHARMACEUTICAL, INC.
- ------------------------------------------------------------------------------------------------------------------------------------
1B. MAILING ADDRESS 1C. CITY, STATE 1D. ZIP CODE
550 CALIFORNIA AVENUE, SUITE 200 PALO ALTO, CA 94306-1440
- ------------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR (IF ANY) (LAST NAME FIRST-IF AN INDIVIDUAL) 2A. SOCIAL SECURITY OF FEDERAL TAX NO.
- ------------------------------------------------------------------------------------------------------------------------------------
2B. MAILING ADDRESS 2C. CITY, STATE 2D. ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
3. DEBTOR'S TRADE NAMES OF STYLES (IF ANY) 3A. FEDERAL TAX NUMBER
====================================================================================================================================
4. SECURED PARTY 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
OR BANK TRANSIT AND A.B.A. NO.
NAME SILICON VALLEY BANK
MAILING ADDRESS 3003 TASMAN DRIVE
CITY SANTA CLARA STATE CA ZIP CODE 95054
- ------------------------------------------------------------------------------------------------------------------------------------
5. ASSIGNEE OF SECURED PARTY (IF ANY) 4A. SOCIAL SECURITY NO., FEDERAL TAX NO.
OR BANK TRANSIT AND A.B.A. NO.
NAME
MAILING ADDRESS
CITY STATE ZIP CODE
- ------------------------------------------------------------------------------------------------------------------------------------
6. This FINANCING STATEMENT covers the following types or items of property (include description of real property on which located
and owner of record when required by instruction 4).
SEE EXHIBIT A ATTACHED HERETO FOR COLLATERAL DESCRIPTION.
- ------------------------------------------------------------------------------------------------------------------------------------
7. CHECK [X] 7A. PRODUCTS OF COLLATERAL 7B. DEBTOR(S) SIGNATURE NOT REQUIRED IN ACCORDANCE WITH
IF APPLICABLE [X] ARE ALSO COVERED INSTRUCTION 5(a) ITEM
[ ](1) [ ](2) [ ](3) [ ](4)
- ------------------------------------------------------------------------------------------------------------------------------------
8. CHECK [X] [ ] DEBTOR IS A "TRANSMITTING UTILITY" IN ACCORDANCE WITH UCC SEC. 9105(1)(n)
IF APPLICABLE
- ------------------------------------------------------------------------------------------------------------------------------------
9. C
O 10. THIS SPACE FOR USE OF FILING OFFICER
SIGNATURE(S) OF DEBTOR(S) By: /s/ William G. Harris D (DATE, TIME, FILING NUMBER
- --------------------------------------------------------------------------------- E AND FILING OFFICER)
-----
1
TYPE OF PRINT NAME(S) OF DEBTOR(S) COULTER PHARMACEUTICAL, INC.
- --------------------------------------------------------------------------------- 2
SIGNATURE(S) OF SECURED PARTY(IES) /s/ Dr. Bowman 3
- ---------------------------------------------------------------------------------
4
TYPE OR PRINT NAME(S) OF SECURED PARTY(IES) SILICON VALLEY BANK 5
=================================================================================
11. Return copy to: 6
NAME 7
ADDRESS
CITY 8
STATE
ZIP CODE 9
(1) FILING OFFICER COPY FORM UCC-1 0
Approved by the Secretary of State
====================================================================================================================================
</TABLE>
<PAGE> 41
DEBTOR: COULTER PHARMACEUTICAL, INC.
EXHIBIT A
The Collateral shall consist of all right, title and interest of
Borrower in and to the following:
(a) All goods and equipment now owned or hereafter acquired,
including, without limitation, all machinery, fixtures, vehicles (including
motor vehicles and trailers), and any interest in any of the foregoing, and all
attachments, except those which were purchased pursuant to a lease agreement,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;
(b) All inventory, now owned or hereafter acquired, including,
without limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above, and
Borrower's Books relating to any of the foregoing;
(c) All contract rights and general intangibles now owned or
hereafter acquired, including, without limitation, goodwill, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, claims, literature, reports, catalogs, income tax
refunds, payments of insurance and rights to payment of any kind;
(d) All now existing and hereafter arising accounts, contract
rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology
or the rendering of services by Borrower, whether or not earned by performance,
and any and all credit insurance, guaranties, and other security therefor, as
well as all merchandise returned to or reclaimed by Borrower and Borrower's
Books relating to any of the foregoing;
(e) All documents, cash, deposit accounts, securities,
securities entitlements, financial assets, investment properties, securities
accounts, securities entitlements, letters of credit, certificates of deposit,
instruments and chattel paper now owned or hereafter acquired and Borrower's
Books relating to the foregoing; and
(f) Any and all claims, rights and interests in any of the above
and an substitutions for, additions and accessions to and proceeds thereof.
The term "Collateral" shall not include any inventory and equipment
related to Borrower's Bexxar technology. Notwithstanding the foregoing, the term
"Collateral" shall not include copyrights, patents and trademarks of Borrower,
except to the extent necessary to perfect Bank's security interest in the
proceeds thereof,
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (File No. 333-23265) pertaining to the 1996 Equity Incentive Plan, 1995
Equity Incentive Plan and Employee Stock Purchase Plan of Coulter
Pharmaceutical, Inc., of our report dated January 27, 1999, with respect to the
consolidated financial statements of Coulter Pharmaceutical, Inc. included in
the Annual Report (Form 10-K) for the year ended December 31, 1998.
/s/ ERNST & YOUNG LLP
Palo Alto, California
March 25, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 89,808
<SECURITIES> 49,970
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 142,841
<PP&E> 10,469
<DEPRECIATION> 1,020
<TOTAL-ASSETS> 153,430
<CURRENT-LIABILITIES> 11,578
<BONDS> 6,659
0
0
<COMMON> 17
<OTHER-SE> 135,176
<TOTAL-LIABILITY-AND-EQUITY> 153,430
<SALES> 0
<TOTAL-REVENUES> 34,250
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 40,456
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 385
<INCOME-PRETAX> (1,958)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,958)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,958)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
