EXHIBIT NO. 10.1
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote omissions.
AMENDED
AND RESTATED
INTEGRILIN AGREEMENT
AMONG
MILLENNIUM PHARMACEUTICALS, INC.,
SCHERING CORPORATION
AND
SCHERING-PLOUGH, LTD.
JULY 22, 2005
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
INTRODUCTION...............................................1
ARTICLE 2
DEFINITIONS................................................3
ARTICLE 3
MANAGEMENT AND DILIGENCE...................................8
3.1
Elimination of JSC...................................8
3.2
Project Coordinators.................................9
3.3
Development and Commercialization....................9
ARTICLE 4
MANUFACTURE AND SUPPLY....................................10
4.1
Manufacture.........................................10
ARTICLE 5
REPRESENTATIONS AND COVENANTS.............................10
5.1
Competitive Products................................10
5.2 Mutual
Authority....................................12
5.3 Rights
in Technology; Agreements with Third Parties.12
5.4
Disclaimer..........................................12
ARTICLE 6
COMPENSATION..............................................12
6.1 United
States Restructuring Fee and Royalties.......12
6.2
Royalties in Canada.................................16
6.3
Royalty Outside the United States and Canada........16
6.4
Royalty Reductions..................................16
6.5 Term
of Royalties Payable to a Party................18
6.6
Royalty Payments by Millennium; Termination Fee.....19
6.7
Royalty Reports and Payments........................20
6.8
Taxes...............................................21
6.9
Blocked Currency....................................21
6.10
Sublicenses.........................................21
6.11
Non-Monetary Consideration and Cross Border
Transactions........................................21
6.12 Foreign
Exchange....................................22
6.13 Payments to
or Reports by Affiliates................22
6.14 Cost
Sharing of EACS Savings........................22
6.15 Changes to
Accounting Procedures....................22
ARTICLE 7
INFORMATION AND REPORTS...................................23
7.1
Information Disclosure..............................23
7.2 Record
Keeping and Audit............................24
7.3
Medical Inquiries...................................24
7.4
Publications........................................25
ARTICLE 8
LICENSES..................................................25
8.1 Patent
Licenses To Schering.........................25
8.2 Patent
Licenses To Millennium.......................26
8.3
Importation.........................................26
8.4
Special Patent License to Schering..................26
8.5
Nonexclusive Know-how License To Schering...........26
8.6
Nonexclusive Know-how License To Millennium.........26
8.7 Third
Party Technology..............................27
8.8
License Grants to Schering Entities.................27
8.9
Exclusive Rights; Use Outside Field.................27
ARTICLE 9
PATENTS; INFRINGEMENT; TRADEMARKS.........................28
9.1
Patentable Inventions...............................28
9.2
Settlement of Third Party Claims for INTEGRILIN
Products............................................28
9.3 No
Infringing Conduct...............................30
9.4
Infringement by Third Parties.......................30
9.5
Product Trademarks..................................31
9.6
Infringement of Trademarks..........................32
9.7
Validity and Enforceability Challenges..............33
ARTICLE 10
CONFIDENTIALITY...........................................33
10.1 Treatment
of Confidential Information...............33
10.2
Publicity...........................................34
10.3 Use of
Information for Related Products.............35
ARTICLE 11
EXPORT CONTROL............................................35
11.1 Export
Control......................................35
ARTICLE 12
TERM AND TERMINATION......................................35
12.1
Term................................................35
12.2 Termination
For Breach..............................35
12.3 Effect of
Termination for Failure to Use Diligent
or Commercially Reasonable Efforts..................36
12.4 Effect of
Termination for Other Breach..............37
12.5 Effect of
Breach of, or Disruption under the
Supply Agreement....................................37
12.6
Survival............................................38
ARTICLE 13
INDEMNIFICATION...........................................38
13.1
Indemnification by Schering.........................38
13.2
Indemnification by Millennium.......................38
13.3
Relationship to Other Agreements....................39
13.4 Pre-Closing
Liability...............................39
13.5
Procedures..........................................39
13.6
Settlements.........................................39
13.7 No
Consequential Damages............................40
ARTICLE 14
DISPUTE RESOLUTION; GOVERNING LAW.........................40
14.1
Disputes............................................40
14.2 Alternative
Dispute Resolution......................40
14.3 Governing
Law.......................................41
ARTICLE 15
MISCELLANEOUS..........................................\..41
15.1 Entire Agreement;
Amendment.........................41
15.2
Bankruptcy..........................................42
15.3 Force
Majeure.......................................43
15.4
Notices.............................................43
15.5 Consents
Not Unreasonably Withheld or Delayed.......44
15.6 Maintenance
of Records..............................44
15.7 United
States Dollars...............................44
15.8 Independent
Contractors.............................44
15.9 No Strict
Construction..............................44
15.10
Assignment..........................................44
15.11 Performance by
Affiliates and Local Operating
Entities............................................45
15.12
Counterparts........................................45
15.13 Further
Actions.....................................45
15.14
Severability........................................45
15.15
Ambiguities.........................................46
15.16
Headings............................................46
15.17 No
Waiver...........................................46
SCHEDULES
Schedule 2.29
Millennium Patents as of the Execution Date
Schedule 2.39
Schering Patents as of the Execution Date
Schedule 6.5(a)(ii)
Date of First Commercial Sale of INTEGRILIN Product
Appendix A
Press Release
<PAGE>
AMENDED AND RESTATED
INTEGRILIN AGREEMENT
THIS AMENDED AND
RESTATED INTEGRILIN AGREEMENT is made effective as of
the 22 day of July 2005, (the "Execution
Date") by and among MILLENNIUM
PHARMACEUTICALS, INC., a Delaware
corporation having its principal place of
business at 40 Landsdowne Street,
Cambridge, MA 02139, U.S.A. ("Millennium"),
SCHERING CORPORATION, a New Jersey
corporation having its principal place of
business at 2000 Galloping Hill Road,
Kenilworth, New Jersey 07033, U.S.A.
("Schering Corporation") and
SCHERING-PLOUGH, LTD., a corporation organized
under the laws of Switzerland having its
principal place of business at
Weystrasse 20, P.O. Box, CH-6000, Lucerne
6, Switzerland ("Schering Ltd."), each
on behalf of itself and its Affiliates.
Schering Corporation and Schering Ltd.
are referred to herein collectively as
"Schering." Millennium and Schering are
sometimes referred to herein individually
as a "Party" and collectively as the
"Parties," and references to "Millennium"
and "Schering" shall include their
respective Affiliates.
ARTICLE 1
INTRODUCTION
1.1 Schering
Corporation, Schering Ltd. and COR Therapeutics, Inc., a
Delaware corporation formerly having its
principal place of business at 256 East
Grand Avenue, South San Francisco,
California 94080, U.S.A. ("COR"), entered
into a Collaboration Agreement dated April
10, 1995, as amended and supplemented
by (a) an Amendment to Collaboration
Agreement among COR, Schering Corporation
and Schering Ltd., dated December 23, 1998,
(b) a Second Amendment to
Collaboration Agreement among COR, Schering
Corporation and Schering Ltd., dated
November 5, 1999, (c) an Addendum to
Collaboration Agreement among Millennium,
Schering Corporation and Schering Ltd.,
effective June 1, 2003, and (d) the
European Commercialization Agreement (the
"Collaboration Agreement"). In
addition, the Parties entered into the
following side letters that relate to the
Collaboration Agreement: (i) a side letter
dated November 3, 2003 and pertaining
to the funding and performance of the early
ACS clinical study; (ii) a side
letter dated November 30, 2004 pertaining
to the Additional Field Force June 1,
2003 Addendum to the Collaboration
Agreement; (iii) a letter dated April 30,
2004 related to the Pharmacogenomics Study
in connection with the Early ACS
Study; and (iv) the Biomarker Study letter
agreement dated February 20, 2004.
1.2 The
Collaboration Agreement provided Schering the opportunity to
participate in the worldwide development
and commercialization of INTEGRILIN(R)
(eptifibatide) Injection, a small peptide
pharmaceutical that COR had discovered
and was developing.
1.3 On February
12, 2002, Millennium acquired COR by merger, succeeding COR
in the Collaboration Agreement.
1.4 The Parties
entered into an Agreement About European Commercialization
of Integrilin, dated June 21, 2004, as
amended in writing prior to the Execution
Date (the "European Commercialization
Agreement"), pursuant to which the Parties
agreed to terminate Schering's rights and
obligations with respect to the
commercialization and manufacturing of the
INTEGRILIN Product (as defined below)
in and for the European Territory (as
defined below), Schering agreed to perform
certain obligations and activities
thereunder, and Millennium agreed to make
certain royalty payments to Schering based
on sales of INTEGRILIN Products in
European Territory and to perform certain
other obligations thereunder.
1.5 Upon Closing
(as defined below) of the transactions provided for in
this A-R Agreement, the Parties desire that
this A-R Agreement shall amend and
restate the Collaboration Agreement to
govern the future relationship of the
Parties (other than the terms of the
European Commercialization Agreement and
the Collaboration Agreement that expressly
survive under the terms of this A-R
Agreement) in order to (a) terminate the
continuing co-development of INTEGRILIN
Products by the Parties and transfer such
responsibility to Schering; (b)
terminate the co-promotion of INTEGRILIN
Products by the Parties in the United
States (and Millennium's option to
co-promote INTEGRILIN Products in Canada) and
transfer to Schering (i) exclusive
promotion and commercialization rights in the
United States and Canada, and (ii)
non-exclusive manufacturing and development
rights worldwide; (c) provide for the
continuing manufacture and supply of the
INTEGRILIN Product by Millennium to
Schering for the Schering Territory (as
defined below), subject to certain rights
of the Parties to be set forth in a
Supply Agreement (as defined below) to
transfer such activities to Schering; (d)
transfer the marketing authorizations and
regulatory responsibilities for the
INTEGRILIN Products in the United States
and Canada from Millennium to Schering;
and (d) provide for Schering to continue to
perform global pharmacovigilance
matters in cooperation with GSK (as defined
below), all on the terms and
conditions set forth herein.
1.6 Millennium
has agreed to provide certain transition services and to
supply INTEGRILIN Products to Schering. The
Parties have entered into (a) a
Transition Services Agreement dated as of
July 22, 2005 (the "Transition
Services Agreement") and (b) a Supply
Agreement dated as of the Closing (the
"Supply Agreement"). The Transition
Services Agreement is intended to provide
for an orderly and efficient transition of
responsibilities and activities from
Millennium to Schering at and following
Closing in a manner that facilitates the
continued development and commercialization
of INTEGRILIN Products, and the
Supply Agreement is intended to provide for
continued INTEGRILIN Product supply
and allow for an orderly transition of
supply chain responsibility from
Millennium to Schering following the
completion of activities pertaining to the
selection and approval of a second supplier
of Compound.
1.7 Following
the Closing, the ongoing relationship among the Parties
relating to INTEGRILIN Products will be
governed by (a) this A-R Agreement and
the other Transaction Agreements, and (b)
solely with respect to the European
Territory, the European Commercialization
Agreement and the relevant provisions
of the Collaboration Agreement as in effect
immediately prior to Closing as
amended by that certain letter agreement
between the Parties with respect to the
European Territory dated as of the Closing
Date (the "European Side Agreement").
ARTICLE 2
DEFINITIONS
The following
terms shall have the following meanings as used in this
A-R Agreement:
2.1 "ADD ON
STUDIES" means the studies related to the Early ACS Study that
are described in (a) the Pharmacogenomics
Study letter agreement between the
Parties dated April 30, 2004; and (b) the
Biomarker Study letter agreement
between the Parties dated February 20,
2004, each as may be amended by Schering
from time to time pursuant to Section
3.3.
2.2 "A-R
AGREEMENT" means this AMENDED AND RESTATED INTEGRILIN
AGREEMENT,
as amended from time to time in accordance
with Section 15.1.
2.3 "AFFILIATE"
means an entity that, directly or indirectly, through one
or more intermediaries, controls, is
controlled by or is under common control
with Millennium or Schering. The Parties
recognize that in certain countries an
Affiliate may not be majority-owned by a
Party.
2.4 "ASSUMED
CONTRACTS" means the agreements assumed by Schering at the
Closing or at the Contract Assignment Date,
as the case may be, as defined, and
provided for, in the Transition Services
Agreement.
2.5 "CLINICAL
DEVELOPMENT PLAN" means any development plan furnished by
Schering pursuant to Section 7.1, as may
amended by Schering from time to time
pursuant to Sections 3.3 and 7.1.
2.6 "CLOSING"
has the meaning assigned to it in the Transition Services
Agreement.
2.7 "CLOSING
DATE" has the meaning assigned to it in the Transition
Services Agreement.
2.8
"COLLABORATION AGREEMENT" has the meaning assigned to it in
Section
1.1.
2.9 "COMPETITIVE
PRODUCT" means a product incorporating a GP IIb-IIIa
inhibitor, other than the INTEGRILIN
Product(s). As used herein, the term "GP
IIb-IIIa inhibitor" means a compound that
is a competitive antagonist of the
binding of natural ligands to glycoprotein
(GP) IIb-IIIa and inhibits human
platelet aggregation in platelet-rich
plasma induced by ADP with an IC30 of less
than one micromolar.
2.10 "COMPOUND"
means the compound known as eptifibatide, with the chemical
composition:
L-Cysteinamide,N6-(aminoiminomethyl)-N2-(3-mercapto-1-oxopropyl)-L-
lysylglycyl-L-alpha-aspartyl-L-tryptophyl-L-prolyl-,cyclic
(1->6)-disulfide
(9CI).
2.11 "CONTROL"
means possession of the ability to grant a license or
sublicense as provided for herein without
violating the terms of any agreement
or other arrangement with any Third
Party.
2.12 "COR" has
the meaning assigned to it in Section 1.1.
2.13 "DILIGENT
EFFORTS" means the carrying out of obligations requiring
Diligent Efforts in a sustained manner
consistent with the efforts a Party
devotes to a product of similar market
potential, profit potential or strategic
value resulting from its own research
efforts, based on conditions then
prevailing. Diligent Efforts requires that:
(i) each Party promptly assign
responsibility for such obligations to
specific employee(s) who are held
accountable for progress and monitor such
progress on an on-going basis, (ii)
each Party set and consistently seek to
achieve specific and meaningful
objectives for carrying out such
obligations, and (iii) each Party consistently
make and implement decisions and allocate
resources designed to advance progress
with respect to such objectives.
2.14 "EARLY ACS
STUDY" means the study described in the letter agreement
between the Parties dated November 3, 2003
and pertaining to the funding and
performance of the Early ACS clinical
study, as such study may amended by
Schering from time to time pursuant to
Section 3.3.
2.15 "EUROPEAN
TERRITORY" means Albania, Andorra, Armenia, Austria,
Azerbaijan, Belarus, Belgium,
Bosnia-Herzegovina, Bulgaria, Croatia, Cyprus,
Czech Republic, Denmark, Estonia, Finland,
France, Germany, Georgia, Gibraltar,
Greece, Hungary, Iceland, Ireland, Italy,
Kazakhstan, Kyrgyzstan, Latvia,
Liechtenstein, Lithuania, Luxembourg,
Macedonia, Malta, Moldova, Monaco, The
Netherlands, Norway, Poland, Portugal,
Romania, Russia, San Marino, Serbia &
Montenegro, Slovakia, Slovenia, Spain,
Sweden, Switzerland, Tajikistan, Turkey,
Turkmenistan, Ukraine, United Kingdom,
Uzbekistan, Vatican State, and any other
countries that may arise by succession,
subdivision, consolidation or
reconstitution of these countries.
2.16 "EUROPEAN
COMMERCIALIZATION AGREEMENT" has the meaning assigned to it
in Section 1.4.
2.17 "EUROPEAN
SIDE AGREEMENT" has the meaning assigned to it in Section
1.7.
2.18 "EXISTING
INTEGRILIN PRODUCT" means the form of INTEGRILIN Product
approved for sale in the United States as
of the Closing Date.
2.19 "FULL
RECOVERY OF THE BUSINESS" has the meaning assigned to it in
Section 6.1(b)(ii).
2.20
"GOVERNMENTAL AUTHORITY" means any and all foreign, federal, state
or
local governments, governmental
institutions, public authorities and
governmental entities of any nature
whatsoever, and any subdivisions or
instrumentalities thereof, including, but
not limited to, departments, boards,
bureaus, commissions, agencies, courts,
administrations and panels, and any
divisions or instrumentalities thereof,
whether permanent or ad hoc and whether
now or hereafter constituted or
existing.
2.21 "GSK" means
Glaxo Group Limited, d/b/a GlaxoSmithKline, and any of its
permitted successors, assigns, sublicensees
and affiliates under the GSK
Agreements.
2.22 "GSK
AGREEMENTS" means (i) License, Development and
Commercialization
Agreement between GSK and Millennium, dated
as of June 22, 2004 ("GSK LICENSE
AGREEMENT"), and (ii) the Supply Agreement
between GSK and Millennium dated as
of June 22, 2004 ("GSK SUPPLY AGREEMENT"),
in each case as in existence and in
the form disclosed to Schering prior to the
Execution Date and as they may be
amended in the future.
2.23
"INFORMATION" means (i) techniques and data specifically relating
to
development, manufacture, use or sale of
INTEGRILIN Products, including, but not
limited to, inventions, practices, methods,
knowledge, know-how, skill,
experience, test data including, without
limitation, pharmacological,
toxicological and clinical test data,
analytical and quality control data,
regulatory submissions, correspondence and
communications, marketing, pricing,
distribution, cost, sales, manufacturing,
patent and legal data or descriptions
and (ii) compositions of matter, assays and
biological materials specifically
relating to development, manufacture, use
or sale of INTEGRILIN Products.
2.24 "INTEGRILIN
PRODUCT(S)" means any form or dosage of the Compound for
pharmaceutical use in humans or animals.
Pharmaceutical forms of the Compound in
different dosage forms shall be considered
different INTEGRILIN Products under
this A-R Agreement.
2.25 "JOINT
PRODUCTION COMMITTEE" or "JPC" means the committee described in
Article 3.
2.26 "KNOW-HOW"
means the Millennium Know-how and/or Schering Know-how as
the context requires.
2.27 "MARKETING
PLAN" means any marketing plan furnished by Schering
pursuant to Section 7.1, as may amended by
Schering from time to time pursuant
to Section 7.1.
2.28 "MILLENNIUM
KNOW-HOW" means Information which (i) either (A) COR or
Millennium disclosed to Schering under the
Collaboration Agreement, or (B)
Millennium discloses to Schering under this
A-R Agreement or any other
Transaction Agreement, and (ii) was or is
within the Control of COR or
Millennium. Notwithstanding anything herein
to the contrary, Millennium Know-how
shall exclude Millennium Patents.
2.29 "MILLENNIUM
PATENT(S)" means the rights granted by any Governmental
Authority under a Patent which covers the
Compound or an INTEGRILIN Product or a
method, apparatus, material or manufacture
useful in the development,
manufacture, use or sale of the Compound or
an INTEGRILIN Product, which Patent
is owned or Controlled by Millennium prior
to termination of this A-R Agreement
under Article 12, including, without
limitation, those Patents set forth on
SCHEDULE 2.29.
2.30 "NET SALES"
means the amount billed by a Party, an Affiliate or a
permitted sublicensee for sales of
INTEGRILIN Products to an unrelated Third
Party less: (i) discounts, including,
without limitation, cash discounts
(including, without limitation, quantity
discounts), charge-back payments and
rebates granted to managed health care
organizations or to federal, state and
local governments, their agencies, and
purchasers and reimbursers or to trade
customers, including, but not limited to,
wholesalers and chain and pharmacy
buying groups (other than GPO Fees) (with
any such discounts or reductions which
are based on sales to the customer of
multiple products being allocated to the
INTEGRILIN Product and such other products
on a pro rata basis), (ii) credits or
allowances actually granted upon claims,
damaged goods, rejections or returns of
INTEGRILIN Product, including, without
limitation, recalls, regardless of the
party requesting such, (iii) freight,
postage, shipping and insurance charges
actually allowed or paid for delivery of
INTEGRILIN Product, to the extent
included in the amount billed to a Third
Party in connection with the sale of
INTEGRILIN Product, (iv) commissions paid
to Third Parties, and (v) taxes,
duties or other governmental charges levied
on, absorbed or otherwise imposed on
sale of INTEGRILIN Product, including
without limitation value-added taxes, or
other governmental charges otherwise
measured by the billing amount, when
included in billing, as adjusted for
rebates and refunds. Discounts under clause
(i) shall not include administrative fees
paid or payable to group purchasing
organizations (as defined in 42 CFR
1001.952(j) as of the Execution Date) solely
in connection with the management of
INTEGRILIN Product distribution ("GPO
Fees"). Transfers between a Party and its
Affiliates (or between such Affiliates
or between a Party or its Affiliate and a
permitted sublicensee) shall not have
effect for purposes of calculating Net
Sales under this A-R Agreement.
In the event a
Party is receiving royalties under this A-R Agreement from
any INTEGRILIN Product sold in the form of
a combination product containing one
or more active ingredients in addition to
the Compound (which may be either
combined in a single formulation or
packaged together as a single unit), Net
Sales for such combination product will be
calculated by multiplying actual Net
Sales of such combination product by the
fraction A/(A+B) where A is the invoice
price of the INTEGRILIN Product if sold
separately, and B is the total invoice
price of any other active ingredient or
ingredients in the combination, if sold
separately. If, on a country-by-country
basis, the other active ingredient or
ingredients in the combination are not sold
separately in said country, Net
Sales for the purpose of determining
royalties of the combination product shall
be calculated by multiplying actual Net
Sales of such combination product by the
fraction A/C where A is the invoice price
of the INTEGRILIN Product if sold
separately, and C is the invoice price of
the combination product. If, on a
country-by-country basis, neither the
INTEGRILIN Product nor the other active
ingredient or ingredients of the
combination product is sold separately in said
country or the mechanics provided above are
otherwise inapplicable (as in the
case of medical devices) or produce an
inequitable result that does not fairly
reflect the value of the Compound or the
other active ingredient(s) of the
combination product, then Net Sales for the
purposes of determining royalties of
the combination product shall be determined
in writing by the Parties in good
faith.
2.31 "NET
SELLING PRICE" means, with respect to a period, the weighted
average unit net selling price of
INTEGRILIN Product in the United States which
is calculated as follows: The weighted
average of the separately sold and priced
unit sizes of INTEGRILIN Product (e.g.,
each unique NDC numbered product) each
of which is calculated by taking the total
Net Sales that are reasonably
allocable (in accordance with generally
accepted accounting principles) to such
separately sold and priced unit size of
INTEGRILIN Product in such period and
dividing it by the total units of such
separately sold and priced unit size of
INTEGRILIN Products sold in the United
States during such period.
2.32 "OTHER
TRADEMARKS" has the meaning assigned in Section 9.5.
2.33 "PATENT"
means (i) unexpired letters patent (including, without
limitation, inventor's certificates) which
have not been held invalid or
unenforceable by a court of competent
jurisdiction from which no appeal can be
taken or has been taken within the required
time period, including, without
limitation, any substitution, extension,
registration, confirmation, reissue,
re-examination, renewal or any like filing
thereof and (ii) pending applications
for letters patent, including, without
limitation, any continuation, division or
continuation-in-part thereof and any
provisional applications.
2.34 "PATENT
COSTS" means the reasonable and verifiable: (a) fees and
expenses paid to outside counsel and other
Third Parties; (b) direct costs of
in-house counsel; and (c) filing and
maintenance expenses, in each case incurred
in connection with the establishment and
maintenance of rights under Patents
applicable to INTEGRILIN Products or the
Compound, including the costs of patent
interference, opposition, reissue,
re-examination or other proceedings. In-house
counsel costs shall be determined on the
basis of time actually spent on Patents
applicable to INTEGRILIN Products or the
Compound.
2.35 "PATENT
RIGHTS" means the Millennium Patents and/or the Schering
Patents as the context requires.
2.36 "REGULATORY
APPROVAL" means any approvals (including, without
limitation, supplements, amendments, pre-
and post-approvals, pricing and
reimbursement approvals), licenses,
registrations or authorizations of any
national, supra-national (e.g., the
European Commission or the Council of the
European Union), regional, state or local
regulatory agency, department, bureau,
commission, council or other Governmental
Authority, necessary for the
manufacture, distribution, use or sale of
INTEGRILIN Products in a regulatory
jurisdiction.
2.37 "ROYALTY
TERM" has the meaning assigned to it in Section 6.5.
2.38 "SCHERING
KNOW-HOW" means Information which (i) Schering either (A)
disclosed to COR or Millennium under the
Collaboration Agreement, or (B)
discloses to Millennium under this A-R
Agreement or any other Transaction
Agreement, and (ii) is within the Control
of Schering. Notwithstanding anything
herein to the contrary, Schering Know-how
shall exclude Schering Patents.
2.39 "SCHERING
PATENT(S)" means the rights granted by any Governmental
Authority under a Patent which covers the
Compound or an INTEGRILIN Product or a
method, apparatus, material or manufacture
useful in the development,
manufacture, use or sale of INTEGRILIN
Products, which Patent is owned or
Controlled by Schering prior to termination
of this A-R Agreement under Article
12. Those Schering Patents existing as of
the Execution Date are set forth in
SCHEDULE 2.39 (attached hereto).
2.40 "SCHERING
TERRITORY" means the all countries and territories
throughout the world, except for the
European Territory.
2.41 "SOLVAY"
means Solvay, Societe Anonyme, a Belgian corporation with
offices at 33, rue due Prince Albert,
B-1050, Bruxelles, Belgium.
2.42 "SOLVAY
AGREEMENT" means the New Long Term Supply Agreement between
Millennium and Solvay, dated January 1,
2003 and the License and Supply
Agreement dated July 27, 1994 between
Millennium (formerly COR Therapeutics) and
Solvay, as amended prior to the Closing
Date.
2.43 "STOCK OUT"
means the interruption in the supply of INTEGRILIN Product
to Schering by Millennium and the sale of
INTEGRILIN Product to customers in the
United States that:
(a) results in a nationwide outage of INTEGRILIN Product in the
United
States of at least one (1) week at the
wholesaler level;
(b) begins on first day of nationwide wholesaler outage; and
(c) ends on first day following Full Recovery of the Business.
2.44 "SUPPLY
AGREEMENT" has the meaning assigned to it in Section 1.6.
2.45 "THIRD
PARTY" means any entity other than Millennium or Schering or an
Affiliate of either of them.
2.46
"TRADEMARKS" means the trademark INTEGRILIN(R) and each of the
Other
Trademarks.
2.47
"TRANSACTION AGREEMENTS" means this A-R Agreement, the Supply
Agreement, the Assignment and Assumption
Agreement, the Transfer Letters, the
Transition Services Agreement and the
European Side Agreement.
2.48 "TRANSITION
SERVICES AGREEMENT" has the meaning assigned to it in
Section 1.6.
2.49 "UCB" means
UCB S.A., a Belgian corporation with offices at chemin du
Foriest, B-1420 Braine-l'Alleud,
Belgium.
2.50 "UNITED
STATES" or "U.S." means the fifty states of the United States
of America and the District of
Columbia.
ARTICLE 3
MANAGEMENT AND DILIGENCE
3.1 ELIMINATION
OF JSC. Effective upon Closing, the Joint Strategic
Committee ("JSC") established by the
Parties pursuant to the Collaboration
Agreement shall be disbanded and shall have
no further authority or purpose
whatsoever. Except as may otherwise be
expressly set forth in this A-R
Agreement, the Transition Agreement and the
Supply Agreement, all
responsibilities, authority and decision
making powers held by the JSC
immediately prior to Closing shall be
assumed by Schering effective upon
Closing. A Joint Production Committee
("JPC") has been established pursuant to
the Supply Agreement, and its role and
responsibilities are defined in the
Supply Agreement.
3.2 PROJECT
COORDINATORS. Each Party shall designate a single project
coordinator to serve as the primary point
of contact and to coordinate all of
the activities contemplated under this A-R
Agreement and the Transition Services
Agreement. Such project coordinators will
be responsible for the coordination of
the relationship of the Parties under and
during the term of the Transition
Services Agreement.
3.3 DEVELOPMENT
AND COMMERCIALIZATION.
(a) In the United States, Schering shall use Diligent Efforts to
(i)
market, promote and sell the then-current
INTEGRILIN Product, and (ii) perform
the Early ACS Study in accordance with the
protocol as may be amended by
Schering in its sole discretion from time
to time; PROVIDED, HOWEVER, it is
understood that Schering shall not have any
obligation to develop any new
INTEGRILIN Product or to develop the
Existing INTEGRILIN Product for any new
indications; and PROVIDED FURTHER that
Schering shall have the right to
terminate or modify the Early ACS Study,
Add On Studies or Clinical Development
Plan in its sole discretion at any
time.
(b) Schering shall not implement a commercial pricing strategy
for
INTEGRILIN Products in the United States
(including discounts, rebates, etc.)
that would (i) economically disadvantage
the INTEGRILIN Products in favor of any
other group of products in Schering's U.S.
product portfolio, or (ii)
economically advantage any other product or
group of products in Schering's U.S.
product portfolio at the expense of the
INTEGRILIN Products. Schering will use
Diligent Efforts to maximize Net Sales of
the then-current INTEGRILIN Product in
the United States through its commercial
marketing, pricing and contracting
strategies consistent with commercial
practices it employs with respect to any
other similarly situated products.
(c) In Australia, Schering shall use Diligent Efforts to develop
an
INTEGRILIN Product and obtain Regulatory
Approval. Once such Regulatory Approval
has been obtained in Australia, Schering
shall use Diligent Efforts to
commercialize such INTEGRILIN Product in
Australia. In Canada, Schering shall
use Diligent Efforts to commercialize the
INTEGRILIN Product approved as of the
Closing Date.
(d) In the Schering Territory (except in the case of the United
States
which is addressed in 3.3(a) above, and
Australia and Canada which are addressed
in 3.3(c) above), Schering shall use
commercially reasonable efforts to develop
and obtain Regulatory Approval for an
INTEGRILIN Product. Once such Regulatory
Approval has been obtained in a country,
Schering shall use commercially
reasonable efforts to commercialize such
INTEGRILIN Product in such country.
(e) In this A-R Agreement, the use of commercially reasonable
efforts
can be satisfied by less than the level of
efforts associated with the use of
Diligent Efforts. The Parties acknowledge
that development activities pursuant
to Sections 3.3(a) are limited to
performance of the ongoing Early ACS Study or
any other registration study undertaken by
Schering pursuant to a future
Clinical Development Plan. For clarity, any
decision by Schering to terminate or
modify the Early ACS Study, an Add On Study
or any other registration study
prior to its completion shall not be a
breach of its obligations under this A-R
Agreement and shall not require the consent
of GSK, but, for clarity, any
modification shall be made in compliance
with the European Side Agreement.
(f) Schering shall have the sole right with respect to invoicing
and
booking sales, establishing all terms of
sale (including, without limitation,
pricing and discounts), and warehousing and
distributing all INTEGRILIN Products
in the Schering Territory, and shall
perform all related services. Schering
shall also have the sole right with respect
to handling all returns, recalls or
withdrawals, order processing, invoicing
and collection, distribution, and
inventory and receivables in the Schering
Territory. If Millennium receives any
orders for any INTEGRILIN Product for the
Schering Territory, it shall refer
such orders to Schering.
ARTICLE 4
MANUFACTURE AND SUPPLY
4.1 MANUFACTURE.
Effective upon Closing, the terms of Supply Agreement
shall govern the rights and obligations of
the Parties with respect to the
manufacture and supply of INTEGRILIN
Products for the Schering Territory.
Pursuant to and as more fully defined in
the Supply Agreement, Millennium holds
a right to put, and Schering holds a right
to call, the manufacturing rights and
obligations under the Supply Agreement at
the times and on the conditions set
forth therein.
ARTICLE 5
REPRESENTATIONS AND COVENANTS
5.1 COMPETITIVE
PRODUCTS.
(a) For so long as Schering (or in the event of a sublicense,
its
sublicensee) holds the right to sell an
INTEGRILIN Product under this A-R
Agreement in a particular country in the
Schering Territory, Schering (and any
of such sublicensees) shall not promote the
sale of, or engage in pre-approval
promotion activities relating to, any
injectable formulation of a Competitive
Product in such country.
(b) If during the term of this A-R Agreement Schering develops
and
commercially introduces an INTEGRILIN
Product in a non-injectable dosage form in
one or more countries in the Schering
Territory, then the terms of this Section
5.1(b) shall apply. Except as provided
below, Schering (or in the event of a
sublicense, its sublicensee) shall not
promote the sale of, or engage in
pre-approval promotion activities relating
to, any Competitive Product in a
particular country in the same
non-injectable dosage form in which an INTEGRILIN
Product has been commercially introduced by
Schering under this A-R Agreement in
such country; PROVIDED, HOWEVER, that the
foregoing restriction shall not apply
to any orally administered product.
(c) If Millennium or any of its Affiliates, sublicensees or
collaboration partners intends to promote
the sale of, or engage in pre-approval
promotion activities relating to, any
Competitive Product (including, without
limitation, any Competitive Product derived
from the collaboration between
Millennium and Eli Lilly and Company) or
generically equivalent product, it
shall notify Schering at least one year in
advance of the date that Millennium
reasonably believes its promotion of a
Competitive Product or generically
equivalent product may commence. Such
notice shall be provided separately for
each country and product in question. For
purposes of this Section,
"pre-approval promotion" shall mean the
outside activities of sales
representatives or the sponsorship of
events, such as symposia, primarily for
the purpose of highlighting the benefits of
Competitive Products or, if
applicable, generically equivalent
products, which activities are otherwise
allowed by applicable regulatory
authorities. Pre-approval promotion shall
exclude, however, scientific publications
by any person and presentations by
researchers or investigators who are not
employees of Millennium or its
Affiliates, sublicensees or collaboration
partners. Millennium represents and
warrants to Schering, as of the Execution
Date and as of the Closing Date, that
neither it nor any of its Affiliates,
sublicensees or collaboration partners is
engaged in pre-approval promotion
activities relating to any Competitive Product
or generically equivalent product in any
county in the Schering Territory and
that it has no plans to promote the sale
of, or engage in pre-approval promotion
activities relating to, any Competitive
Product or generically equivalent
product in the Schering Territory. As used
herein, a "generically equivalent
product" is any product containing the
Compound.
(d) Section 5.1(a) and 5.1(b) shall have no further force or effect
and
shall terminate automatically upon the
earlier of (i) termination of this A-R
Agreement, (ii) the assignment or
conveyance by Schering to an independent Third
Party of all rights to and control of
development and commercialization of
INTEGRILIN Products in the Schering
Territory such that Schering only retains a
passive revenue stream, or (iii) with
respect to a particular country in the
Schering Territory, either (A) the
expiration of the Royalty Term applicable to
such country, or (B) the date Millennium or
any of its Affiliates, sublicensees
or collaboration partners first promotes
the sale of, or engages in pre-approval
promotion activities relating to, a
Competitive Product (including, without
limitation, any Competitive Product derived
from the collaboration between
Millennium and Eli Lilly and Company) or
generically equivalent product in such
country. Notwithstanding anything in this
A-R Agreement to the contrary, if
Millennium or any of its Affiliates,
sublicensees or collaboration partners
obtains regulatory approval for a
generically equivalent product in the United
States, then (i) Net Sales in the United
States shall be treated as Net Sales
outside the United States and Canada for
the purpose of calculating royalties
from and after the date of first sale in
the United States following such
regulatory approval, and the royalty
obligations in Section 6.1(b) and the
related provisions in Sections 6.4(a) (with
corresponding changes to Section
8.7(a)), 6.5(a)(i), 6.6(c)(ii), 6.7(b),
6.10(b), 9.2(c)(i) and 9.5(d)(i) shall
terminate and Sections 6.3, 6.4(b) (with
corresponding changes to Section
8.7(a)), 6.5(a)(ii), 6.6(c)(i), 6.7(a),
6.10(a), 9.2(c)(ii) and 9.5(d)(ii) each
shall be deemed to apply to the United
States, and (ii) the words "In countries
other than the United States" shall be
deemed to be deleted from the last
sentence of Section 9.4.
(e) Notwithstanding the foregoing, the restrictions,
representations
and covenants contained in Sections 5.1(c)
and 5.1(d) shall only apply to a
sublicensee or collaboration partner of
Millennium or its Affiliates solely to
the extent that the development and
commercialization of a Competitive Product
or generically equivalent product is within
the scope of the relevant agreement
between Millennium (or its Affiliate) and
such sublicensee or collaboration
partner, including, without limitation, any
agreement under which Millennium or
an Affiliate transfers or grants any rights
or receives any consideration with
respect to the development or
commercialization of a Competitive Product or
generically equivalent product (other than
a cross license entered into with the
agreement of the Parties pursuant to
Section 9.2 or 9.4). If Millennium is
acquired by, or otherwise undergoes a
change of control with, a Third Party that
is promoting a Competitive Product at the
time of such transaction, then the
notice requirements set forth in the first
sentence of Section 5.1(c) shall not
apply with respect to the promotion of such
Competitive Product by such Third
Party.
5.2 MUTUAL
AUTHORITY. Millennium and Schering each represents and warrants
to the other that (i) it has the authority
and right to enter into and perform
this A-R Agreement and (ii) its execution,
delivery and performance of this A-R
Agreement will not conflict in any material
fashion with the terms of any other
agreement to which it is or becomes a party
or by which it is or becomes bound.
5.3 RIGHTS IN
TECHNOLOGY; AGREEMENTS WITH THIRD PARTIES. As of the
Execution Date and the Closing Date, each
of Millennium and Schering has
sufficient right in and to its Know-how and
Patent Rights, free and clear of any
liens or encumbrances, to grant the rights
set forth in this A-R Agreement.
During the term of this A-R Agreement, each
Party will use Diligent Efforts not
to diminish the rights under its Know-how
and Patent Rights granted to each
other herein, including without limitation
by not committing or permitting any
acts or omissions which would cause the
material breach of any agreements
between itself and Third Parties which
provide for intellectual property rights
applicable to the development, manufacture,
use or sale of INTEGRILIN Products.
Each Party agrees to provide promptly the
other Party with notice of any such
alleged breach. As of the Execution Date,
each Party is in compliance in all
material respects with any aforementioned
agreements with Third Parties.
5.4 DISCLAIMER.
Neither Party makes any warranty pursuant to this A-R
Agreement to the other Party except as
expressly set forth in this Article 5
concerning its Patent Rights or Know-how,
including without limitation the
validity or scope of its Patent Rights or
that INTEGRILIN Products will be free
from infringement of the Patent rights of
Third Parties. Neither Party makes any
warranty pursuant to this A-R Agreement to
the other Party of any INTEGRILIN
Product's merchantability or fitness for a
particular purpose and makes no
warranty as to the efficacy, safety or
financial success of the INTEGRILIN
Products.
ARTICLE 6
COMPENSATION
6.1 UNITED
STATES RESTRUCTURING FEE AND ROYALTIES.
(a) RESTRUCTURING FEE. In consideration of the restructuring of
rights
with respect to the United States and
Canada under the terms of this A-R
Agreement, Schering shall pay to Millennium
a non-refundable restructuring fee
of U.S. $35.5 million by wire transfer at
the Closing.
(b) ROYALTIES.
(i) In lieu of profit sharing under the Collaboration
Agreement,
Millennium shall receive royalties at the
following rates on each of the annual
Net Sales tiers in the United States, as
follows:
TABLE A
-----------------------------------------------------------------------
Calendar Year Net Sales Tiers
of INTEGRILIN
Products
In The United States (Described Below)
Royalty Rate
--------------------------------------
------------
That portion of calendar year Net Sales up to and
[**]%
including U.S.$[**]
That portion of calendar year Net Sales greater than
[**]%
U.S.$[**] up to and including U.S.$[**]
That portion of calendar year Net Sales greater than
[**]%
U.S.$[**]
-------------------------------------------------------------------------------
Such royalties shall be payable quarterly
on U.S. Net Sales occurring on and
after Closing. For purposes of calculating
the royalty to be paid during each
calendar quarter, each of the annual
royalty tiers specified in Table A above
shall be applied pro rata in each quarter
(i.e. by dividing the annual Net Sales
thresholds for each tier by four). The
quarterly royalty payments shall be
subject to a true up in the fourth quarter
of each calendar year. At the time of
the true up, Schering will calculate the
annual Net Sales of INTEGRILIN Products
in the United States and the royalties due
to Millennium based on Table A set
forth above and an adjustment will be made
by Schering to the payment due to
Millennium for the fourth quarter.
Millennium shall refund to Schering any
overpayment in royalties paid during the
calendar year that are not offset by
royalties owed in the last quarter of such
calendar year. Such refund shall be
made by Millennium within 45 days of the
end of such calendar year. For the
portion of calendar year 2005 remaining
after Closing, and the last calendar
year during the Royalty Term, the annual
royalty tier thresholds to be applied
to that period for determining the total
royalty due in each such period will be
reduced pro rata based on the number of
days in such period divided by 365.
For purposes of illustrating the foregoing
only, if, in the first calendar
quarter, Net Sales in the United States
equaled U.S. $[**], then the quarterly
royalties payable would be U.S. $[**]
(i.e., [**]% of U.S. $[**] or U.S. $[**]%
of U.S. $[**] or U.S. $[**]% of U.S. $[**]
or U.S. $[**]). If, in the second,
third and fourth calendar quarters, Net
Sales in the United States equaled U.S.
$[**] in each quarter, then the aggregate
royalties due for the calendar year
would be U.S.$[**] million (i.e., 24% of
U.S. $[**] or U.S. $[**]% of U.S. $[**]
or $[**]), the quarterly royalties payable
for the second and third calendar
quarter would be U.S. $[**] (i.e., [**]% of
U.S. $[**] or U.S. $[**]) and the
quarterly royalties payable for the fourth
calendar quarter following the true
up and year-end adjustments would be U.S.
$[**].
(ii) MINIMUM ROYALTIES
IN 2006 AND 2007.
(A) Schering shall be obligated to pay a minimum annual
royalty with respect to the United States of U.S. $85.35
million
("Minimum Annual Royalty") in each of the calendar years ending
December 31, 2006 and December 31, 2007 (each such calendar year,
a
"Minimum Royalty Year" and such two year period, the "Minimum
Royalty
Period"); PROVIDED, HOWEVER, that Schering's obligation to pay
the
Minimum Annual Royalty shall for all future Minimum Annual
Royalty
payments (1) terminate automatically if Millennium, an
Affiliate
controlled by Millennium or Millennium's parent or successor in
interest following a change in control promotes the sale of a
Competitive Product (including, without limitation, any
Competitive
Product derived from the collaboration between Millennium and Eli
Lilly
and Company) in the United States, (2) terminate automatically
if
Millennium is in material breach of the Supply Agreement and
such
breach has a material adverse impact on Net Sales of the
INTEGRILIN
Product, or (3) shall not apply if a Stock Out occurs at any
time
during the period commencing on the Closing Date and ending on
December 31, 2007, except to the extent the Stock Out is caused by
the
failure of Schering to use Diligent Efforts to forecast and
order
INTEGRILIN Products in the Schering Territory necessary to meet
its
reasonable forecasts, and except in each case ((1), (2) or (3)) to
the
extent caused by the negligence or intentional misconduct of
Schering
or a Schering Indemnified Party. For purposes of clarity, a Stock
Out
first occurring in calendar year 2007 will not have any effect on
the
Minimum Annual Royalty applicable to calendar year 2006.
(B) Notwithstanding the foregoing, solely in the event of a
Stock Out, if following the Stock Out there is a Full Recovery of
the
Business and the Recovery Period begins prior to the expiration of
the
Minimum Royalty Period, then Schering's Minimum Annual Royalty
obligation shall be reinstated; provided that the applicable
Minimum
Annual Royalty shall be reduced pro rata based upon the total
number of
calendar days of the Stock Out and the Repair Period (as
defined
below). The term "Full Recovery of the Business" shall mean that
the
[**] of INTEGRILIN Products by Schering or its sublicensee in
the
United States for each of [**] consecutive periods of [**]
consecutive
calendar months after the end of the Stock Out (the "Recovery
Period")
meets or exceeds the [**] of INTEGRILIN Products in the United
States
during the most recent corresponding periods of [**]
consecutive
calendar months occurring prior to the commencement of any Stock
Out.
The period of time beginning on the first calendar day after the
end of
the Stock Out
and ending on the first day of the Recovery Period is
herein referred to as the "Repair Period". Notwithstanding the
forgoing, if the Stock Out commences after June 30 of a Minimum
Royalty
Year, and if subsequently there is a Full Recovery except that
the
Recovery Period does not commence until after December 31 of
such
Minimum Royalty Year, then the Minimum Annual Royalty obligation
for
such Minimum Royalty Year shall be reinstated for the period prior
to
the Stock Out in such Minimum Royalty Year; provided that the
applicable Minimum Annual Royalty obligation shall be reduced pro
rata
based upon the total number of calendar days of the Stock Out and
any
Repair Period
that occurred in such Minimum Royalty Year.
(C) Payment of the Minimum Annual Royalty shall become an
obligation of Schering to Millennium on the last day of the
Minimum
Royalty Year for which such Minimum Annual Royalty is due. In the
event
royalties paid to Millennium for each of Minimum Royalty Year do
not
reach the Minimum Annual Royalty required for that year, Schering
shall
pay to Millennium, in addition to the royalties due for such
calendar
year specified in Section 6.1(b)(i), the amount necessary to bring
the
accumulated royalty payments to Millennium up to the amount of
the
required Minimum Annual Royalty. Said amount shall be payable
to
Millennium from Schering within [**] days of the end of the
applicable
Minimum Royalty Year in connection with payment of the running
royalties then due; PROVIDED, that, if a Stock Out occurs on or
before
December 31 of a Minimum Royalty Year and the Minimum Annual
Royalty is
reinstated due to a Full Recovery of the Business that is not
completed
before the end of such Minimum Royalty Year, then any payment due
with
respect to the Minimum Annual Royalty for such Minimum Royalty
Year
shall be paid within [**] days after the end of the Recovery
Period.
(D) By way of example, if a Stock Out commences on June 1,
2006 and ends on June 20, 2006, then Schering's Minimum Annual
Royalty
obligation for 2006 and 2007 would terminate. However, if both (1)
the
[**] in the US for [**] of 2006 meets or exceeds the [**] in the US
for
[**] of 2005, and (2) the [**] for [**] of 2007 meets or exceeds
the
[**] for [**] of 2006, then a Full Recovery of the Business will
have
occurred and the Minimum Royalty Obligation will be reinstated. In
such
example, the Recovery Period would be the [**] month period
beginning
on October 1, 2006 and ending on [**], and the Repair Period would
be
the period beginning on June 21, 2006 and ending on September 30,
2006.
In this example the total the duration of the Stock Outage (20
days)
and the Repair Period (82 days) would be 102 days and the
reinstated
Minimum Annual Royalty for 2006 would be calculated as follows:
$85,350,000 multiplied by ((365 days - 102 days) / 365 days) =
$61,498,763
and related payment by Schering would be due within [**] days after
the
end of the Recovery Period. In such example, if no additional Stock
Out
occurs the reinstated Minimum Annual Royalty for 2007 would be the
full
amount of $85,350,000 and any related payment by Schering would be
due
within [**] days after the end of 2007.
(iii) ROYALTY ADJUSTMENT POST-2007 BASED ON COST SAVINGS BY
SCHERING. If, in the calendar year ending
December 31, 2008 or in any subsequent
calendar year during the Royalty Term, (A)
the Sales Representative Effort
expended by Schering or its sublicensee for
the INTEGRILIN Products in the
United States in such calendar year is
equivalent to less than [**] percent
([**]%) of the 2005 effort of [**] sales
representatives currently dedicated
[**]% of their time to promoting INTEGRILIN
Product, and (B) Net Sales of
INTEGRILIN Products in the United States in
such calendar year are less than
U.S. $[**], then the royalty rate shall be
a flat [**] percent ([**]%) for such
calendar year in lieu of the royalty tier
rates provided for in Table A in
Section 6.1(b)(i) above. For the purpose of
this Section 6.1(b)(iii) only,
"Sales Representative Effort" shall mean
the efforts, to be measured using a
methodology to be established or approved
by the Parties in writing, of sales
representatives in the United States to
promote INTEGRILIN Products. In
establishing the methodology for
measurement of Sales Representative Efforts,
the Parties shall take into consideration
all factors that they determine to be
relevant, including, by way of example, the
following: positioning of calls,
appropriateness of calls, nature of contact
and the role of the person contacted
in influencing the buying process and
decision.
6.2 ROYALTIES IN
CANADA. Millennium shall receive a running royalty on Net
Sales of INTEGRILIN Products in Canada at
the rate of [**]% per calendar year.
6.3 ROYALTY
OUTSIDE THE UNITED STATES AND CANADA. Millennium shall receive
a running royalty on Net Sales of all
INTEGRILIN Products in the Schering
Territory (outside the United States and
Canada) at the following rates:
TABLE B
--------------------------------------------------------------------------
Calendar Year Net Sales
of
INTEGRILIN Products in the Schering Territory
Outside the United States and Canada
Royalty Rate
---------------------------------------------------------
------------
That
portion of calendar year Net Sales that are less than
[**]%
U.S.
$[**]
That
portion of calendar year Net Sales that are equal to
[**]%
or greater
than U.S. $[**]
The measure of annual sales set forth in
Table B above shall be the sum of
Net Sales of INTEGRILIN Products in all
countries in the Schering Territory
other than the United States and Canada,
and the royalty rate indicated shall
apply to all Net Sales during the calendar
year. By way of example, if, in a
given calendar year, Net Sales in the
Schering Territory outside Canada and the
United States equaled U.S. $[**], then the
royalty due for the year would be
U.S. $[**] (i.e., [**]% of U.S. $[**]).
6.4 ROYALTY
REDUCTIONS.
(a) The royalties payable for INTEGRILIN Products sold in the
United
States under Section 6.1(b) shall be
subject to reduction as follows:
(i) Royalties payable to a Party for the Existing INTEGRILIN
Product sold in the United States shall be
reduced by [**]% of any royalties
payable to Third Parties in connection with
rights necessary to practice or use
(A) the manufacturing process used by
Millennium and its third-party suppliers
to manufacture the INTEGRILIN Product as of
the Closing Date, or (B) the
manufacturing process independently
developed by UCB that is filed for
Regulatory Approval with a Governmental
Authority; PROVIDED, that the royalty
reduction set forth in this Section
6.4(a)(i) shall not apply to royalties paid
by Millennium ( which are charged as the
Cost of Goods Shipped under, in
accordance with and as defined in the
Supply Agreement) or Schering to Solvay
pursuant to the Solvay Agreement in
connection with the manufacture of bulk
INTEGRILIN Products employing the Solvay
manufacturing process as authorized
under the Solvay Agreement or royalties
paid by Schering with respect to
technology that does not cover the
manufacture, use or sale of an INTEGRILIN
Product;
(ii) If the Net Selling Price is reduced in a calendar quarter
by
more than [**]% of the Net Selling Price of
the INTEGRILIN Product in the
quarter ending immediately prior to the
Closing (the "NSP Benchmark Price"),
then the royalties payable by Schering in
such quarter to Millennium shall be
reduced by [**]%;
(iii) If a generically equivalent product is launched in the
United
States and there is a [**]% or greater loss
in unit sales (by volume) in any
subsequent calendar quarter following such
launch as compared to unit sales (by
volume) of Schering in the calendar quarter
immediately prior to such launch,
then the royalties payable by Schering in
such subsequent calendar quarters to
Millennium shall be reduced by [**]% (as
used herein, a "generically equivalent
product" is any product containing the
Compound);
(iv) If pursuant to the terms of Section 3.1.2 of the Supply
Agreement, the INTEGRILIN Product does not
have a Regulatory Approval allowing
for the use of the new manufacturing
process developed by UCB on or before [**]
(or any extension expressly provided for
under Section 3.1.2 of the Supply
Agreement), then the royalties payable by
Schering to Millennium shall be
reduced by [**] percent [**]%) in
subsequent calendar quarters until such time
as such Regulatory Approval is effective;
and
(v) If pursuant to the terms of Section 3.1.2 of the Supply
Agreement, a Regulatory Approval allowing
for the use at a second supplier or
supply site of the new manufacturing
process developed by UCB is not obtained on
or before [**] (or any extension expressly
provided for under Section 3.1.2 of
the Supply Agreement), and the royalty
deduction is not otherwise triggered and
in effect under clause (iv), above, then
the royalties payable by Schering to
Millennium shall be reduced by [**] percent
([**]%) in subsequent calendar
quarters until such time as such Regulatory
Approval is effective for such
second supplier or supply site.
(b) The royalties payable for INTEGRILIN Products sold in the
Schering
Territory but outside the United States
under Sections 6.2 and 6.3 shall be
subject to reduction as follows:
(i) If a generically equivalent product is introduced by a
Third
Party in any country (outside the United
States) in which neither Millennium nor
Schering has patent coverage preventing
sale or use and such generically
equivalent product has sales in such
country equal to at least [**] percent
([**]%) of unit sales (by volume) of the
INTEGRILIN Product in such country in
any calendar quarter, the royalty
obligation in such country set forth above
shall be reduced by [**]% until Millennium
or Schering is granted patent
coverage of the INTEGRILIN Product in such
country or the generically equivalent
product is withdrawn from such market (as
used herein, a "generically equivalent
product" is [**]); and
(ii) The royalty rate for an INTEGRILIN Product in a given
country
outside the United States shall be reduced
by [**]% if the patent coverage for
such Product in such country expires before
the expiration of the Royalty Term
applicable to such country; and
(iii) Royalties payable to a Party for an INTEGRILIN Product
sold
outside the United States shall be reduced
by [**]% of any royalties payable to
Third Parties attributable to the
manufacture, use or sale of such INTEGRILIN
Product (other than royalties paid to
Solvay pursuant to the Solvay Agreement in
connection with the manufacture of bulk
INTEGRILIN Products employing the Solvay
manufacturing process as authorized under
the Solvay Agreement or royalties paid
with respect to technology that does not
cover the manufacture, use or sale of
an INTEGRILIN Product).
(c) In any event, the aggregate reduction of royalties set forth
in
Section 6.4(a), above shall not reduce the
net royalty payable to a Party in a
calendar quarter under Section 6.1(b) by
more than [**]% in total and the
aggregate reduction of royalties set forth
in Section 6.4(b), above shall not
reduce the net royalty payable to a Party
in a calendar quarter under Sections
6.2 and 6.3 by more than [**]% in
total.
6.5 TERM OF
ROYALTIES PAYABLE TO A PARTY.
(a) Millennium's rights to receive royalties on sales of
INTEGRILIN
Product in the United States under Sections
6.1(b) shall begin on the Closing
Date. Effective upon Closing Millennium
shall continue to receive royalties on
sales of INTEGRILIN Products from the other
countries in the Schering Territory
as provided in Sections 6.2 and 6.3.
Millennium's rights to receive such
royalties on and after Closing shall expire
as set forth below ("Royalty Term"):
(i) Millennium's rights to receive royalties under Section
6.1(b)
shall expire on the date that Schering is
no longer engaged in the
commercialization and sale of an INTEGRILIN
Product in the United States; and
(ii) Millennium'
rights to receive royalties under Sections 6.2 and
6.3 shall expire on a country-by-country
basis upon the later of (A) fifteen
years from the first commercial sale of
such INTEGRILIN Product in such country
under the Collaboration Agreement or this
A-R Agreement, whichever comes first,
and (B) expiration of the last to expire
Millennium Patent covering the
manufacture, use or sale of such INTEGRILIN
Product. The dates of first
commercial sale of an INTEGRILIN Product in
each country in the Schering
Territory where the INTEGRILIN Product is
being sold as of the Execution Date
are set forth in SCHEDULE 6.5(A)(II),
attached hereto, and Schering shall notify
Millennium in writing of the date of first
commercial sale of INTEGRILIN Product
in any other country in the Schering
Territory that occurs on or after the
Execution Date.
(b) Schering's rights to receive royalties under Section 6.6
shall
begin on the termination date specified in
Section 6.6 and, unless otherwise
provided in Section 6.6(b), shall
expire:
(i) with respect to the United States, on the date that
Millennium
(or its Affiliates, successor in interest,
or sublicensee) is no longer engaged
in the commercialization and sale of an
INTEGRILIN Product in the United States;
and
(ii) with respect to all countries in the Schering Territory
other
than the United States, on a
country-by-country basis upon the later of (A)
fifteen years from the first commercial
sale of such INTEGRILIN Product in such
country under the Collaboration Agreement,
or if the first commercial sale in
such country occurs on or after Closing
under this A-R Agreement, and (B)
expiration of the last to expire Schering
Patent covering the manufacture, use
or sale of an INTEGRILIN Product. In
circumstances where Schering has not
launched an INTEGRILIN Product prior to
termination, Millennium shall notify
Schering in writing of the date of first
commercial sale of an INTEGRILIN
Product in any country in the Schering
Territory that occurs on or after the
date of termination of the license in such
country.
6.6 ROYALTY
PAYMENTS BY MILLENNIUM; TERMINATION FEE.
(a) In the event Schering's rights are terminated in a country
or
countries by Millennium pursuant to Section
12.3, 12.4(a) or 12.4(b), Millennium
shall make royalty payments to Schering at
a rate equal to [**]% of the Net
Sales of INTEGRILIN Products in the
relevant terminated country(ies) in the
Schering Territory for the period of time
set forth in Section 6.5(b).
(b) In the event this A-R Agreement is terminated by Schering
pursuant to Section 12.2, Millennium shall
make royalty payments to Sch
