EXHIBIT 10.25
Portions of this exhibit were omitted and filed separately with the Secretary of
the Commission pursuant to an application for confidential treatment filed with
the Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
Such portions are marked by a series of asterisks.
COLLABORATION AND LICENSE AGREEMENT
by and between
AMERICAN HOME PRODUCTS CORPORATION,
acting through its
WYETH-AYERST LABORATORIES DIVISION
and
VIROPHARMA INCORPORATED
December 9, 1999
TABLE OF CONTENTS
Page
1. DEFINITIONS......................................................................................................... 1
1.1 "Acquiring Entity"............................................................................................... 1
1.2 "Active Collaboration Target".................................................................................... 1
1.3 "Active Compound"................................................................................................ 2
1.4 "Affiliate(s)"................................................................................................... 2
1.5 "AHPC Chemical Library".......................................................................................... 5
1.6 "AHPC Know-How".................................................................................................. 5
1.7 "AHPC Patent Rights"............................................................................................. 5
1.8 "AHPC Technology"................................................................................................ 5
1.9 "AHPC Territory"................................................................................................. 5
1.10 "Annual Commercialization Plan and Budget"....................................................................... 5
1.11 "Annual Development Plan and Budget"............................................................................. 5
1.12 "Assay and Screening Technology"................................................................................. 6
1.13 "Assigned Sales Force Effort".................................................................................... 6
1.14 "Baseline Allocation of Net Profits"............................................................................. 6
1.15 "Biomolecule".................................................................................................... 6
1.16 "Calendar Quarter"............................................................................................... 6
1.17 "Change of Control".............................................................................................. 6
1.18 "Class A Product"................................................................................................ 6
1.19 "Class B Product"................................................................................................ 6
1.20 "Collaboration Inventions"....................................................................................... 6
1.21 "Collaboration Know-How"......................................................................................... 7
1.22 "Collaboration Patent Rights".................................................................................... 7
1.23 "Collaboration Target"........................................................................................... 7
1.24 "Collaboration Technology"....................................................................................... 7
1.25 "Commercialization".............................................................................................. 7
1.26 "Commercially Reasonable Efforts"................................................................................ 7
1.27 "Compound"....................................................................................................... 7
1.28 "Confidential Information"....................................................................................... 7
1.29 "Control" or "Controlled"........................................................................................ 7
1.30 "Copromotion Territory".......................................................................................... 8
1.31 "Copromotion Territory Commercialization Plan"................................................................... 8
1.32 "Copyright"...................................................................................................... 8
1.33 "Cost of Goods Manufactured for Sale"............................................................................ 8
1.34 "Derivative"..................................................................................................... 8
1.35 "Detail"......................................................................................................... 8
1.36 "Development".................................................................................................... 8
1.37 "Development Candidate".......................................................................................... 9
1.38 "Development Expenses"........................................................................................... 9
1.39 "Development Phase".............................................................................................. 9
1.40 "Effective Date"................................................................................................. 9
1.41 "Executive Steering Committee" or "ESC".......................................................................... 9
1.42 "Extra Effort"................................................................................................... 9
1.43 "Extra Effort Expense"........................................................................................... 9
1.44 "FDA"............................................................................................................ 9
1.45 "FD&C Act"....................................................................................................... 9
1.46 "Field".......................................................................................................... 9
1.47 "First Commercial Sale".......................................................................................... 9
1.48 "FTE"............................................................................................................ 9
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December 9, 1999 Collaboration Agreement Page i
1.49 "Full Royalty Rate Period"................................................................................... 10
1.50 "Fully-Absorbed Standard Cost"............................................................................... 10
1.51 "Global Development Plan".................................................................................... 10
1.52 "Good Clinical Practice" or "GCP"............................................................................ 10
1.53 "Good Laboratory Practice" or "GLP".......................................................................... 10
1.54 "HCV"........................................................................................................ 11
1.55 "Hit"........................................................................................................ 11
1.56 "Incremental Sales Force Effort"............................................................................. 11
1.57 "Incremental Sales Force Effort Expense"..................................................................... 11
1.58 "IND"........................................................................................................ 11
1.59 "Initial Term of the Screening Phase"........................................................................ 11
1.60 "Invention".................................................................................................. 11
1.61 "Joint Steering Committee" or "JSC".......................................................................... 11
1.62 "Know-How"................................................................................................... 11
1.63 "Lapse Quarter".............................................................................................. 12
1.64 "Lapse Year"................................................................................................. 12
1.65 "Lead Compound".............................................................................................. 12
1.66 "Major European Country"..................................................................................... 12
1.67 "Marketing Account".......................................................................................... 12
1.68 "Marketing Steering Committee" or "MSC"...................................................................... 12
1.69 "NDA"........................................................................................................ 12
1.70 "Net Profits"................................................................................................ 12
1.71 "Net Sales".................................................................................................. 12
1.72 "Non-Collaboration Invention"................................................................................ 13
1.73 "Patent Rights".............................................................................................. 13
1.74 "Penalty Year"............................................................................................... 14
1.75 "Phase I Clinical Study"..................................................................................... 14
1.76 "Phase II Clinical Study".................................................................................... 14
1.77 "Phase III Clinical Study"................................................................................... 14
1.78 "Post Approval Research and Regulatory Expenses"............................................................. 14
1.79 "Pre-Development Expenses"................................................................................... 14
1.80 "Pre-Marketing Expenses"..................................................................................... 14
1.81 "Pre-Marketing Expense Shortfall"............................................................................ 15
1.82 "Prior Invention"............................................................................................ 15
1.83 "Product".................................................................................................... 15
1.84 "Promotion".................................................................................................. 15
1.85 "R&D Account"................................................................................................ 15
1.86 "R&D Reimbursement Account".................................................................................. 15
1.87 "R&D Shortfall".............................................................................................. 15
1.88 "Reduced Royalty Rate Period"................................................................................ 15
1.89 "Regulatory Approval"........................................................................................ 15
1.90 "Regulatory Authority"....................................................................................... 16
1.91 "Research"................................................................................................... 16
1.92 "Research Phase"............................................................................................. 16
1.93 "Research Program"........................................................................................... 16
1.94 "Sales and Marketing Expenses"............................................................................... 16
1.95 "Sample"..................................................................................................... 17
1.96 "Sample Receipt Forms"....................................................................................... 17
1.97 "Screening".................................................................................................. 17
1.98 "Screening Phase"............................................................................................ 17
1.99 "Small Molecule"............................................................................................. 17
1.100 "Surviving Entity"........................................................................................... 17
1.101 "Tail Compound".............................................................................................. 17
1.102 "Target"..................................................................................................... 17
1.103 "Target Market".............................................................................................. 17
1.104 "Target Physician"........................................................................................... 17
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December 9, 1999 Collaboration Agreement Page ii
1.105 "Term of the Screening Phase".................................................................................... 17
1.106 "Third Part(y/ies)".............................................................................................. 17
1.107 "Third Party License Fee"........................................................................................ 18
1.108 "Trademark"...................................................................................................... 18
1.109 "Valid Claim".................................................................................................... 18
1.110 "ViroPharma Chemical Library".................................................................................... 18
1.111 "ViroPharma Know-How"............................................................................................ 18
1.112 "ViroPharma Patent Rights"....................................................................................... 18
1.113 "ViroPharma Technology".......................................................................................... 18
2. LICENSES............................................................................................................ 19
2.1 Licenses to AHPC................................................................................................. 19
2.2 Licenses to ViroPharma........................................................................................... 19
2.3 Sublicensing to Third Party Contractors.......................................................................... 20
2.4 Dropped Compounds................................................................................................ 20
2.5 Direct Licenses to AHPC Affiliates............................................................................... 20
2.6 Exclusive Working Relationship................................................................................... 21
2.7 Right of Reference............................................................................................... 22
3. MANAGEMENT OF COLLABORATION......................................................................................... 22
3.1 Joint Steering Committee......................................................................................... 22
3.1.1 Formation; Membership...................................................................................... 22
3.1.2 Chairperson; Secretary..................................................................................... 22
3.1.3 Meetings................................................................................................... 23
3.1.4 Decision Making............................................................................................ 23
3.1.5 Responsibilities of the JSC................................................................................ 23
3.2 Marketing Steering Committee..................................................................................... 24
3.2.1 Formation; Membership...................................................................................... 24
3.2.2 Chairperson; Secretary..................................................................................... 24
3.2.3 Meetings................................................................................................... 25
3.2.4 Decision Making............................................................................................ 25
3.2.5 Responsibilities of the MSC................................................................................ 25
3.3 Executive Steering Committee..................................................................................... 26
3.3.1 Formation; Membership...................................................................................... 26
3.3.2 Chairperson; Secretary..................................................................................... 26
3.3.3 Meetings................................................................................................... 26
3.3.4 Decision Making............................................................................................ 27
3.3.5 Dispute Resolution......................................................................................... 27
3.4 Authority........................................................................................................ 27
3.5 Project Coordinators............................................................................................. 27
4. RESEARCH AND DEVELOPMENT............................................................................................ 27
4.1 The Research Program............................................................................................. 27
4.1.1 General.................................................................................................... 27
4.2 Research & Development Plans..................................................................................... 28
4.2.1 Global Research and Development Plan....................................................................... 28
4.2.2 Annual Development Plans................................................................................... 28
4.3 Term of Research Program......................................................................................... 29
4.3.1 Screening Phase............................................................................................ 29
4.3.2 Research Phase............................................................................................. 29
4.3.3 Screening Phase Tail....................................................................................... 30
4.3.4 Development Phase.......................................................................................... 30
4.4 Selection of Additional Targets, Biomolecules, Hits, Lead Compounds, Development Candidates and Products......... 31
4.4.1 Selection of Additional Targets............................................................................ 31
4.4.2 Selection of Biomolecules as Compounds..................................................................... 31
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December 9, 1999 Collaboration Agreement Page iii
4.4.3 Selection of Hits...................................................................................... 31
4.4.4 Selection of Lead Compounds............................................................................ 31
4.4.5 Selection of Development Candidates.................................................................... 31
4.4.6 Selection of Products.................................................................................. 31
4.5 Conduct of the Research Program.............................................................................. 32
4.6 Funding of the Research Program.............................................................................. 32
4.6.1 Pre-Development Expenses............................................................................... 32
4.6.2 Development Expenses................................................................................... 33
4.6.3 Payment of Expenses; R&D Accounts...................................................................... 33
4.6.4 Expense Limitations.................................................................................... 33
4.6.5 Reconciliation of Expenses............................................................................. 34
4.6.6 Records and Audits..................................................................................... 35
4.7 Reporting and Disclosure..................................................................................... 36
4.7.1 Reports................................................................................................ 36
4.7.2 Quarterly Meeting...................................................................................... 36
4.7.3 Disclosure............................................................................................. 36
5. MANUFACTURING OF PRODUCTS; REGULATORY MATTERS................................................................... 36
5.1 Manufacturing................................................................................................ 36
5.2 Labeling..................................................................................................... 37
5.3 Regulatory Approvals......................................................................................... 37
5.4 Regulatory Reporting......................................................................................... 37
6. COMMERCIALIZATION OF PRODUCTS................................................................................... 38
6.1 Commercialization in the Copromotion Territory............................................................... 38
6.1.1 Principles of Copromotion.............................................................................. 38
6.1.2 Commercialization Plan................................................................................. 38
6.1.3 Allocation of Target Markets; Sales Effort............................................................. 39
6.1.4 Incremental Sales Force Effort......................................................................... 39
6.1.5 Extra Effort........................................................................................... 40
6.1.6 Performance Metrics.................................................................................... 40
6.1.7 Sales and Distribution; Recalls........................................................................ 40
6.1.8 Commercialization Expenses............................................................................. 41
(a) Pre-Marketing Expenses................................................................................. 41
(b) Sales and Marketing Expenses........................................................................... 41
(c) Post-Approval Research and Regulatory Expenses......................................................... 42
(d) Payment of Expenses; Marketing Accounts................................................................ 42
(e) Expense Limitations.................................................................................... 42
(f) Reconciliation of Pre-Marketing Expenses............................................................... 42
(g) Reimbursement of Sales and Marketing Expenses and Post Approval Research and Regulatory Expenses....... 43
6.1.9 Marketing and Promotional Materials.................................................................... 43
6.1.10 Promotional Claims..................................................................................... 44
6.1.11 Samples................................................................................................ 44
6.1.12 Communications......................................................................................... 44
6.1.13 Training............................................................................................... 45
6.1.14 Compliance............................................................................................. 45
6.1.15 Generic Product........................................................................................ 45
6.2 Commercialization in the AHPC Territory...................................................................... 46
7. CONSIDERATION; PROFIT SHARING................................................................................... 46
7.1 Research Program Expense Reimbursements...................................................................... 46
7.2 Additional Development Expense Payments...................................................................... 46
7.3 Purchase of Equity........................................................................................... 47
7.4 Royalties.................................................................................................... 47
7.4.1 Royalty Rates.......................................................................................... 47
7.4.2 Royalty Adjustments.................................................................................... 49
(a) Unpatented Products.................................................................................... 49
(b) Competition............................................................................................ 49
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December 9, 1999 Collaboration Agreement Page iv
7.4.3 Term of Royalty............................................................................................ 50
7.5 Profit Sharing................................................................................................... 50
7.5.1 Baseline Allocation of Profits; Penalties.................................................................. 50
7.5.2 Temporary Adjustments to Distribution of Profits........................................................... 50
7.5.3 Permanent Adjustment to Baseline Allocation of Profits..................................................... 51
7.5.2 Term of Profit Split Payments.............................................................................. 51
7.6 Reports and Payments............................................................................................. 51
7.6.1 Cumulative Royalties....................................................................................... 51
7.6.2 Royalty Statements and Payments............................................................................ 51
7.6.3 Net Profit Statements and Payments......................................................................... 51
(a) Estimated Statements....................................................................................... 51
(b) Actual Statements.......................................................................................... 52
7.6.4 Taxes and Withholding...................................................................................... 52
7.6.5 Currency................................................................................................... 53
7.7 Maintenance of Records; Audits................................................................................... 53
7.7.1 Record Keeping for the Copromotion Territory............................................................... 53
7.7.2 Record Keeping for the AHPC Territory...................................................................... 53
7.7.3 Audits..................................................................................................... 54
7.7.4 Underpayments/Overpayments................................................................................. 54
7.7.5 Confidentiality............................................................................................ 55
7.8 Interest......................................................................................................... 55
8. INTELLECTUAL PROPERTY............................................................................................... 55
8.1 Inventions....................................................................................................... 55
8.2 Patent Rights.................................................................................................... 55
8.2.1 Prosecution and Maintenance of Patent Rights............................................................... 55
(a) ViroPharma's Prior Inventions and Non-Collaboration Inventions............................................. 56
(b) AHPC's Prior Inventions and Non-Collaboration Inventions................................................... 56
(c) Collaboration Inventions................................................................................... 57
8.2.2 Enforcement of Patent Rights............................................................................... 58
(a) Notice and Discontinuance of Infringement - General........................................................ 58
(b) AHPC Patent Rights and ViroPharma Patent Rights............................................................ 58
(c) Collaboration Patent Rights................................................................................ 59
(d) Continuance of Infringement of ViroPharma Patent Rights.................................................... 60
(e) Continuance of Infringement of the AHPC Patent Rights...................................................... 60
8.2.3 Infringement and Third Party Licenses...................................................................... 61
(a) Infringement of Third Party Patents - Course of Action..................................................... 61
(b) AHPC Option to Negotiate................................................................................... 61
(c) Third Party Infringement Suit.............................................................................. 61
(d) Other Third Party Licenses................................................................................. 62
(e) Third Party License Fees................................................................................... 62
8.2.4 Patent Certifications...................................................................................... 63
8.2.5 Patent Term Restoration.................................................................................... 63
8.3 Trademarks.................................................................................................... 63
9. CONFIDENTIALITY..................................................................................................... 64
9.1 Confidentiality.................................................................................................. 64
9.2 Authorized Disclosure and Use.................................................................................... 64
9.2.1 Disclosure................................................................................................. 64
9.2.2 Use........................................................................................................ 65
9.3 SEC Filings...................................................................................................... 65
9.4 Publications..................................................................................................... 65
9.5 Public Announcements............................................................................................. 66
9.5.1 Coordination............................................................................................... 66
9.5.2 Announcements.............................................................................................. 66
10. REPRESENTATIONS AND WARRANTIES...................................................................................... 66
10.1 Representations and Warranties of Each Party..................................................................... 66
10.2 Additional Representations and Warranties of ViroPharma.......................................................... 67
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December 9, 1999 Collaboration Agreement Page v
10.3 Additional Representations and Warranties of AHPC............................................................ 69
10.4 Representation by Legal Counsel.............................................................................. 70
10.5 No Inconsistent Agreements................................................................................... 70
10.6 Disclaimer................................................................................................... 70
11. GOVERNMENT APPROVALS; TERM AND TERMINATION...................................................................... 70
11.1 Government Approvals......................................................................................... 70
11.1.1 ViroPharma's and AHPC's Obligations.................................................................... 70
11.1.2 Cooperation............................................................................................ 71
11.2 Term......................................................................................................... 71
11.3 Expiration................................................................................................... 71
11.4 Termination for Cause........................................................................................ 71
11.4.1 Termination for Cause................................................................................. 71
11.4.2 Effect of Termination for Cause on License............................................................. 72
11.5 Termination for Convenience.................................................................................. 72
11.5.1 Right to Terminate..................................................................................... 72
11.5.2 Effect of Termination for Convenience.................................................................. 72
11.6 Termination of ViroPharma's Right to Promote Products........................................................ 73
11.6.1 Failure to Provide Assigned Sales Force Effort......................................................... 73
11.6.2 Payment and Term of Royalty............................................................................ 74
11.6.3 Effect on Other Rights and Obligations................................................................. 75
11.7 Blocking Patents............................................................................................. 75
11.8 Survival of Certain Obligations.............................................................................. 75
11.9 Provision for Insolvency..................................................................................... 76
11.9.1Termination............................................................................................... 76
11.9.2 Effect on Licenses..................................................................................... 76
11.9.3 Rights to Intellectual Property........................................................................ 77
11.9.4 Additional Rights...................................................................................... 77
12. INDEMNIFICATION AND INSURANCE................................................................................... 78
12.1 Indemnification by AHPC...................................................................................... 78
12.2 Indemnification by ViroPharma................................................................................ 79
12.3 Procedure.................................................................................................... 79
12.4 Insurance.................................................................................................... 80
13. MISCELLANEOUS................................................................................................... 80
13.1 Assignment................................................................................................... 80
13.2 Further Actions.............................................................................................. 80
13.3 Force Majeure................................................................................................ 80
13.4 Correspondence and Notices................................................................................... 81
13.4.1 Ordinary Notices....................................................................................... 81
13.4.2 Extraordinary Notices.................................................................................. 81
13.5 Amendment.................................................................................................... 82
13.6 Waiver....................................................................................................... 82
13.7 Severability................................................................................................. 82
13.8 Descriptive Headings......................................................................................... 82
13.9 Governing Law................................................................................................ 83
13.10 Entire Agreement of the Parties.............................................................................. 83
13.11 Independent Contractors...................................................................................... 83
13.12 Debarment.................................................................................................... 83
13.13 Counterparts................................................................................................. 83
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December 9, 1999 Collaboration Agreement Page vi
LIST OF EXHIBITS
Exhibit 1.7 AHPC Patent Rights
Exhibit 1.18 Class A Product Chemical Series
Exhibit 1.23 Collaboration Targets
Exhibit 1.50 Elements of Fully-Absorbed Standard Costs
Exhibit 1.112 ViroPharma Patent Rights
Exhibit 5.4 Adverse Event Reporting Procedures
Exhibit 7.3 Stock Purchase Agreement
Exhibit 7.4.1 Sample Calculation of Royalty Distributions
Exhibit 7.5.3 Sample Calculation of Net Profit Distributions
Exhibit 10.2(a) Third Party Rights, Title or Interest in ViroPharma
Intellectual Property
Exhibit 10.2(b) Third Party Claims on ViroPharma Patent Rights and
Know-How
Exhibit10.2(c) ViroPharma Intellectual Property Subject to
Government Funding Agreements
Exhibit 10.3(a) Third Party Claims on AHPC Patent Rights and Know-
How
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December 9, 1999 Collaboration Agreement Page vii
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORTION AND LICENSE AGREEMENT (the "Agreement") is entered into
on this 9th day of December, 1999 by and between American Home Products
Corporation, acting through its Wyeth-Ayerst Laboratories Division ("AHPC"), a
Delaware Corporation, having a place of business at 0 Xxxxxxx Xxxxx, Xxxxxxx,
Xxx Xxxxxx 00000 and ViroPharma Incorporated ("ViroPharma"), a Delaware
corporation having a place of business at 000 Xxxxxxxxx Xxxxxxxxx, Xxxxx,
Xxxxxxxxxxxx 00000. AHPC and ViroPharma may each be referred to herein
individually as a "Party" and collectively as the "Parties".
WHEREAS, AHPC is engaged in the research, development and commercialization
of human pharmaceutical products;
WHEREAS, ViroPharma is the owner of certain patent rights and know-how
relating to the hepatitis C virus and compounds and methods for treating humans
infected with the hepatitis C virus;
WHEREAS, AHPC and ViroPharma have agreed to collaborate, on the terms and
conditions set forth herein, on the development and commercialization of
compounds for the treatment of humans infected with the hepatitis C virus.
NOW THEREFORE, in consideration of the mutual promises and covenants set
forth below and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties hereby agree as
follows:
1. DEFINITIONS.
1.1 "Acquiring Entity" shall mean a Third Party that comes into control
(as such term is defined in Section 1.4 hereof) of a Party or any of a
Party's Affiliates through a Change in Control of such Party or such
Affiliate occurring after the Effective Date hereof, and all other
Third Parties controlling, controlled by or under common control with
such Third Party, which Third Parties are not otherwise an Affiliate
of such Party hereunder.
1.2 "Active Collaboration Target" shall mean a Collaboration Target (a)
that is not discontinued from use in accordance with Section 4.4.1 or
(b) against which an Active Compound has been determined to have
activity during the Screening Phase or Screening Phase Tail, whether
or not such Collaboration Target has been discontinued from use in
accordance with Section 4.4.1. Notwithstanding the foregoing, if, at
any time after the end of the Screening Phase Tail, (a) a
Collaboration Target has been discontinued from use in accordance with
Section 4.4.1, (b) the use of such Collaboration Target has not been
reinstated in accordance with Section 4.4.1, and (c) all Compounds
which, during the Screening Phase or the Screening Phase Tail, were
determined to have activity against such Collaboration Target and all
Derivatives of such Compounds are no
longer Active Compounds, then such Collaboration Target shall
thereafter not be an Active Collaboration Target for purposes of this
Agreement.
1.3 "Active Compound" shall mean a Compound that is being Researched,
Developed or Commercialized by either of the Parties pursuant to this
Agreement. For the sake of clarity, when the JSC or the MSC, as
applicable, determines to discontinue the Research, Development or
Commercialization of a Compound, such Compound shall no longer be an
Active Compound for purposes of this Agreement.
1.4 "Affiliate(s)" shall mean, with respect to each Party hereto, any
corporation, company, partnership, joint venture, firm and/or other
entity that controls, is controlled by or is under common control with
such Party. For purposes of Section 1.1 and this Section 1.4,
"control" shall mean (x) in the case of corporate entities, direct or
indirect ownership of at least fifty percent (50%) of the stock or
shares having the right to vote for the election of directors (other
than such ownership by an employee benefit plan (or related trust)
sponsored or maintained by a Party), and (y) in the case of non-
corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the equity interest with the power to direct the
management and policies of such non-corporate entities.
Notwithstanding the foregoing, for purposes of this Agreement, the
term "Affiliate" shall not include
(a) subsidiaries or any other entities in which a Party owns a
majority of the ordinary voting power necessary to elect a
majority of the board of directors or other governing board
but is restricted from electing such majority by contract or
otherwise until such time as such restrictions are no longer
in effect, or
(b) an Acquiring Entity that comes into control of ViroPharma or
a parent company Affiliate of ViroPharma after the Effective
Date hereof, provided that ViroPharma, on or before the date
such Change of Control becomes effective, delivers to AHPC
written notice stating that such Acquiring Entity shall not
be considered to be an Affiliate of ViroPharma and shall be
considered to be a Third Party for all purposes of this
Agreement and, provided further, that, by written agreement
(a copy of which shall be provided to AHPC along with the
notice described above in this Section 1.4(b)) between
ViroPharma and such Acquiring Entity, such written agreement
to be entered into either before or promptly after such
Change of Control becomes effective and to designate AHPC as
a third party beneficiary, such Acquiring Entity shall have
(i) no right, title or interest in or to any Product
hereunder, including, without limitation, the right to
participate in the Copromotion of any Product in the
Copromotion Territory (other than any such right, title or
interest that may be merely incidental to the
Acquiring Entity's having an equity interest in ViroPharma,
e.g., an ownership interest in or right to receive a share
of ViroPharma's profits), (ii) no right to participate in
any of the activities to be conducted by or on behalf of
ViroPharma or ViroPharma's Affiliates hereunder or to
exercise any of ViroPharma's rights hereunder (other than
any such right that may exist as a result of a director or
employee of the Acquiring Entity serving as an officer or
director of ViroPharma, provided, however, that each such
director or employee shall not utilize any information
gained through participating in such activities for the
benefit of the Acquiring Entity in any way that the
Acquiring Entity is prohibited from using such information
pursuant to this Section 1.4), and (iii) no access to or
right to use, itself or on behalf of any Third Party or to
permit any Third Party to use, in either case for the
discovery, development and/or commercialization of
pharmaceutical products in the Field, any
(A) of the ViroPharma Technology,
(B) Compound included within the ViroPharma Chemical
Library,
(C) of the AHPC Technology,
(D) Compound included with the AHPC Chemical Library,
or
(E) Confidential Information of either Party relating
to the Field, the Research Program or either
Party's activities under this Agreement,
(except to the extent that any of the foregoing constitute
Permitted Materials (as such term is defined below in this
Section 1.4), it being understood, however, that in the
event that either (xx) the written agreement between
ViroPharma and such Acquiring Entity described above expires
or is later terminated, (yy) ViroPharma provides AHPC with
written notice that it desires such Acquiring Entity to be
considered an Affiliate hereunder or (zz) such Acquiring
Entity otherwise gains access to or the right to use, itself
or on behalf of any Third Party, any materials or
information included within items A through E, inclusive,
described in clause (iii) above for the discovery,
development and/or commercialization of pharmaceutical
products in the Field, except to the extent that such
material or information constitutes Permitted Materials,
such Acquiring Entity thereafter shall be considered to be
an Affiliate of ViroPharma for all purposes of this
Agreement, including, without limitation, the provisions set
forth in Section 2.6 hereof. For purposes of this Section
1.4, "Permitted Materials" shall mean any of items A through
E, inclusive, described above in this Section 1.4, which
(I) the Acquiring Entity can demonstrate, through
written records created prior to the effective
date of the Change of Control of ViroPharma, was
in the Acquiring Entity's prior possession, other
than through receipt, directly or indirectly from
ViroPharma,
(II) the Acquiring Entity can demonstrate, through
written records, was acquired by the Acquiring
Entity from a Third Party who had the right to
disclose or transfer the same to the Acquiring
Entity;
(III) the Acquiring Entity can demonstrate, through
written records, was independently developed by
employees of the Acquiring Entity who had no
knowledge of or access to any of items A through
E, inclusive, described above in this Section
1.4;
(IV) becomes part of the public domain after the date
this Agreement was signed by the Parties other
than through any breach of this Agreement by
ViroPharma; or
(V) is made available to such Acquiring Entity by
AHPC or any of AHPC's Affiliates;
provided, however, that none of the foregoing exclusions
shall result in the Acquiring Entity having any right to:
1. practice any of the ViroPharma Patent Rights for
the discovery, development and/or
commercialization of pharmaceutical products in
the Field,
2. practice any of the AHPC Patent Rights except
through a license granted by AHPC directly to
such Acquiring Entity,
3. practice any of the Collaboration Patent Rights
for the discovery, development and/or
commercialization of pharmaceutical products in
the Field,
4. utilize Compounds included within the ViroPharma
Chemical Library for the discovery, development
and/or commercialization of pharmaceutical
product in the Field, or
5. utilize Compounds included within the AHPC
Chemical Library, which Compounds are obtained
directly or indirectly from ViroPharma, except
through a license granted by AHPC directly to
such Acquiring Entity.
1.5 "AHPC Chemical Library" shall mean those Compounds that AHPC, as of
the Effective Date owns or Controls, or that come into AHPC's Control
during the of the Research Program, provided, however, that for
purposes of this Agreement, the AHPC Chemical Library shall not
include those Compounds in the agricultural chemical library of AHPC's
subsidiary, American Cyanamid Company.
1.6 "AHPC Know-How" shall mean Know-How, excluding the Collaboration Know-
How, that AHPC owns or Controls as of the Effective Date or that comes
into the Control of AHPC during the term of this Agreement.
1.7 "AHPC Patent Rights" shall mean Patent Rights that AHPC owns or
Controls as of the Effective Date or that come into the Control of
AHPC during the term of this Agreement, which Patent Rights claim any
AHPC Prior Invention and/or AHPC Non-Collaboration Invention. Those
AHPC Patent Rights known to be existing as of the Effective Date are
listed on Exhibit 1.7 attached hereto.
1.8 "AHPC Technology" shall mean the AHPC Patent Rights, AHPC's interest
in the Collaboration Patent Rights, the AHPC Know-How, AHPC's interest
in the Collaboration Know-How and the AHPC Assay and Screening
Technology.
1.9 "AHPC Territory" shall mean the world other than the countries
included within the Copromotion Territory.
1.10 "Annual Commercialization Plan and Budget" shall have the meaning set
forth in Section 6.1.2.
1.11 "Annual Development Plan and Budget" shall have the meaning set forth
in Section 4.2.2.
1.12 "Assay and Screening Technology" shall mean the Know-How, methods and
technology owned or Controlled by either Party which may be used for
the screening of Compounds for activity against one or more
Collaboration Targets.
1.13 "Assigned Sales Force Effort" shall mean ******* in a **********
during any Calendar Quarter or calendar year, as applicable, as
assigned by the MSC under the then applicable Annual Commercialization
Plan and Budget and in accordance with Section 6.1.3.
1.14 "Baseline Allocation of Net Profits" shall have the meaning set forth
in Section 7.5.1.
1.15 "Biomolecule" shall mean a polypeptide, protein, vaccine or antibody,
any of which is either of natural origin, expressed by recombinant
methodology or chemically synthesized or which may be a chemical
structure derived therefrom, an analog, derivative, congener or the
like.
1.16 "Calendar Quarter" shall mean the respective periods of three
consecutive calendar months ending on March 31, June 30, September 30
or December 31, for so long as this Agreement is in effect.
1.17 "Change of Control" shall mean any of the following: (a) the sale or
disposition of all or substantially all of the assets of a Party to a
Third Party, (b) the acquisition by a Third Party, other than an
employee benefit plan (or related trust) sponsored or maintained by a
Party or any of its Affiliates, of more than 50% of such Party's
outstanding shares of voting capital stock, or (c) the merger or
consolidation of a Party with or into another corporation, other than
a merger or consolidation of a Party in which holders of shares of
such Party's voting capital stock immediately prior to the merger or
consolidation will have at least 50% of the ownership of voting
capital stock of the surviving corporation immediately after the
merger or consolidation.
1.18 "Class A Product" shall mean any Product that: ********************.
1.19 "Class B Product" shall mean ********************.
1.20 "Collaboration Inventions" shall mean all Inventions owned or
Controlled by either Party which Inventions are made by either Party's
employees, agents or subcontractors in the performance of such Party's
obligations under the Research Program or in performing any research
and development of a Product, pursuant to this Agreement, after such
Product has received Regulatory Approval, including, without
limitation, Phase IV clinical studies and clinical studies in support
of additional indications within the Field or labeling changes for
such Product during the term of this Agreement, regardless of whether
such Inventions are made solely by such Party's employees, agents or
subcontractors or jointly with the employees, agents or subcontractors
of the other Party.
1.21 "Collaboration Know-How" shall mean that Know-How that is created or
developed by or on behalf of either Party, either alone or jointly
with the other Party, in performing its obligations under the Research
Program or in performing any Post-Approval Research.
1.22 "Collaboration Patent Rights" shall mean those Patent Rights that
include claims directed to Collaboration Inventions.
1.23 "Collaboration Target" shall mean any Target that is (a) listed in
Exhibit 1.23 attached hereto, (b) selected by the JSC in accordance
with Section 4.4.1 or (c) used by either Party in its performance of
the Research Program for Screening Compounds for potential activity as
a prophylactic or therapeutic agent in the Field.
1.24 "Collaboration Technology" shall mean the Collaboration Patent Rights
and the Collaboration Know-How.
1.25 "Commercialization" shall mean any and all activities of making,
having made, using, importing, marketing, promoting, distributing,
offering for sale and selling a Product in the Field and shall include
Promotion. When used as a verb, "Commercialize" shall mean to engage
in Commercialization.
1.26 "Commercially Reasonable Efforts" shall mean efforts and resources
normally used by a Party for a product or compound owned by it or to
which it has rights, which is of similar market potential at a similar
stage in its development or product life, taking into account issues
of safety and efficacy, product profile, the competitiveness of the
marketplace, the proprietary position of the compound or product, the
regulatory structure involved, the profitability of the applicable
products, and other relevant factors.
1.27 "Compound" shall mean a chemical compound or substance together with
all complexes, mixtures and other combinations, prodrugs, metabolites,
enantiomers, salt forms, racemates, and isomers thereof. For the sake
of clarity, the term "Compounds" may include both Small Molecules and
Biomolecules, provided, however, that, with respect to Biomolecules,
only those Biomolecules selected for collaborative Research pursuant
to Section 4.4.2, shall be considered to be Compounds hereunder.
1.28 "Confidential Information" shall mean with respect to each Party, non-
public proprietary data or information which belong in whole or in
part to such Party or its Affiliates and/or information designated as
Confidential Information of such Party hereunder.
1.29 "Control" or "Controlled" shall mean with respect to any (a) item of
information, including, without limitation, Know-How, or (b)
intellectual property right, the possession (whether by ownership or
license, other than pursuant to this
Agreement) by a Party of the ability to grant to the other Party
access and/or a license as provided herein under such item or right
without violating the terms of any agreement or other arrangements
with any Third Party existing before or after the Effective Date.
1.30 "Copromotion Territory" shall mean: (a) the fifty (50) states of the
United States and the District of Columbia, and (b) Canada.
1.31 "Copromotion Territory Commercialization Plan" shall have the meaning
set forth in Section 6.1.2.
1.32 "Copyright" shall mean any copyright owned or Controlled by AHPC which
copyright pertains to the promotional materials and literature
utilized by the Parties in connection with the Promotion of Products
in the Copromotion Territory pursuant to Section 6.1.
1.33 "Cost of Goods Manufactured for Sale" shall mean AHPC's actual cost to
acquire Product from a Third Party, or its Fully-Absorbed Standard
Cost to produce the Product, plus (or minus, as the case may be): (a)
AHPC's costs for Product inventory adjustments and losses, (b) any
manufacturing cost variances allocable to such Product, (c)
amortization of new standard costs for such Product, (d) prior period
adjustments allocable to such Product, and (e) actual distribution
costs (other than those deducted as part of the calculation of Net
Sales pursuant to Section 1.71(a)(v)), warehousing costs and billing,
receiving, collection and other miscellaneous costs incurred by AHPC
as they relate to distribution of the Products.
1.34 "Derivative" of a given Compound shall mean a chemical compound
derived by addition to or manipulation of a fundamental structure of
such Compound.
1.35 "Detail" shall mean a face-to-face meeting between one or more Target
Physicians and one or more professional sales representative, made in
compliance with the Target Market allocation of the MSC under Section
6.1.3, during which a complete Product presentation, as defined from
time to time by the MSC, is communicated, which Product presentation
is either the first or second product-related information communicated
by such professional sales representative during such meeting. When
used as a verb, "Detail" shall mean to perform a Detail.
1.36 "Development" shall mean, on a country by country basis, all
activities performed by or on behalf of either Party pursuant to the
Global Research and Development Plan on a Compound in the Field from
the effective date of an IND for such Compound until Regulatory
Approval of such Compound is obtained in such country for the
indication under study. When used as a verb, "Develop" shall mean to
engage in Development.
1.37 "Development Candidate" shall mean a Lead Compound or any Derivative
thereof or any other Compound for use in the Field, that the JSC, in
accordance with Section 4.4.5, selects or otherwise designates for
further development to IND filing.
1.38 "Development Expenses" shall mean, on a Compound by Compound and
Product by Product basis, the expenses (other than Third Party License
Fees) of the Parties incurred in performing the Development Phase of
the Research Program and obtaining Regulatory Approval for such
Compound or Product pursuant to the Global Research and Development
Plan.
1.39 "Development Phase" shall have the meaning set forth in Section 4.3.4.
1.40 "Effective Date" shall mean the date of this Agreement first set forth
above.
1.41 "Executive Steering Committee" or "ESC" shall have the meaning set
forth in Section 3.3.1.
1.42 "Extra Effort" shall have the meaning set forth in Section 6.1.5. For
the sake of clarity, Extra Effort shall not include any Incremental
Sales Force Effort.
1.43 "Extra Effort Expense" shall mean the cost to be charged to a Party's
Marketing Account in accordance with Section 6.1.5 due to such Party's
provision of Extra Effort.
1.44 "FDA" shall mean the United States Food and Drug Administration or any
successor agency thereto.
1.45 "FD&C Act" shall mean the United States Federal Food, Drug, and
Cosmetic Act, as amended, and the regulations promulgated thereunder.
1.46 "Field" shall mean the therapeutic and/or prophylactic treatment of
the effects of HCV on humans.
1.47 "First Commercial Sale" shall mean, with respect to any Product and
any country of the world, the first sale of such Product under this
Agreement, for use in the Field, to a Third Party in such country,
after such Product has been granted Regulatory Approval for use in the
Field by the competent Regulatory Authorities in such country.
1.48 "FTE" shall mean a full time equivalent scientific person year
consisting of a minimum of a total of one thousand eight hundred
eighty hours (1,880) per year of scientific work on or directly
related to the Research Program. Work on or directly related to the
Research Program can include, but is not limited to, experimental
preclinical and clinical laboratory and research work, recording and
writing up results, reviewing literature and references, holding
scientific
discussions, managing and leading scientific staff, carrying out
management duties related to the Research Program, and, only to the
extent specifically pre-approved in writing by both ViroPharma and
AHPC, writing up results for publications or presentation and
attending or presenting appropriate seminars and symposia.
1.49 "Full Royalty Rate Period" for a Product sold in any given country
means the period during which either or both of the following is true:
(a) AHPC's distribution and/or sale of the applicable Product in the
applicable country, in the absence of the rights and licenses
granted by this Agreement, would have infringed one or more Valid
Claims under Patent Rights, including Collaboration Patent
Rights, then owned in whole or part by ViroPharma;
(b) AHPC's manufacture of the Product, in the absence of the rights
and licenses granted by this Agreement, would have infringed one
or more Valid Claims under Patent Rights, including Collaboration
Patent Rights, then owned in whole or part by ViroPharma,
provided that, except as may be precluded or limited by applicable
law, the Full Royalty Rate Period for such Product in such country
shall not expire before the tenth (10/th/) anniversary of the First
Commercial Sale of such Product in such country.
1.50 "Fully-Absorbed Standard Cost" shall mean the cost for those items
specified in Exhibit 1.50 attached hereto, which costs are calculated
in accordance with generally accepted accounting principles and have
been incurred by AHPC or its Affiliates in manufacturing (i) materials
to be used by the Parties in conducting clinical trials of Compounds
or Products hereunder or (ii) Products for sale or distribution in the
Copromotion Territory hereunder.
1.51 "Global Research and Development Plan" shall have the meaning set
forth in Section 4.2.1.
1.52 "Good Clinical Practice" or "GCP" shall mean the then current
standards for clinical trials for pharmaceuticals, as set forth in the
United States Federal Food, Drug and Cosmetics Act and applicable
regulations promulgated thereunder, as amended from time to time, and
such standards of good clinical practice as are required by the
European Union and other organizations and governmental agencies in
countries in which the Products are intended to be sold, to the extent
such standards are not inconsistent with United States GCP.
1.53 "Good Laboratory Practice" or "GLP" shall mean the then current
standards for laboratory activities for pharmaceuticals, as set forth
in the United States Federal Food, Drug and Cosmetics Act and
applicable regulations promulgated
thereunder, as amended from time to time, and such standards of good
laboratory practice as are required by the European Union and other
organizations and governmental agencies in countries in which the
Products are intended to be sold, to the extent such standards are
not inconsistent with United States GLP.
1.54 "HCV" shall mean the hepatitis C virus.
1.55 "Hit" shall mean a Compound identified by early screening, in assays
conducted pursuant to protocols approved by the JSC, during the
Screening Phase or the Screening Phase Tail that the JSC confirms,
in accordance with Section 4.4.3 hereof, has activity against the
applicable Collaboration Target that meets or exceeds an active
threshold established by the JSC for that Collaboration Target.
1.56 "Incremental Sales Force Effort" shall have the meaning set forth in
Section 6.1.4. For the sake of clarity, "Incremental Sales Force
Effort" shall not include any Extra Effort.
1.57 "Incremental Sales Force Effort Expense" shall mean the cost to be
charged to a Party's Marketing Account in accordance with Section
6.1.4 hereof due to such Party's provision of an Incremental Sales
Force Effort.
1.58 "IND" shall mean an Investigational New Drug Application, as defined
in the FD&C Act, that is required to be filed with the FDA before
beginning clinical testing of a Product in human subjects, or an
equivalent foreign filing.
1.59 "Initial Term of the Screening Phase" shall have the meaning set
forth in Section 4.3.1.
1.60 "Invention" shall mean any invention in the Field that encompasses
or relates to any Assay and Screening Technology, any Collaboration
Target, any Compound that is Screened, Researched, or Developed
under the Research Program, any Derivatives of any such Compounds,
any Product and any method of making any such Compound, Derivative,
or Product and any method of using any such Compound, Derivative or
Product.
1.61 "Joint Steering Committee" or "JSC" shall have the meaning set forth
in Section 3.1.
1.62 "Know-How" shall mean, as each of the following relates to the
Field, all know-how, processes, materials, information, data and
analyses including any copyright relating thereto Controlled by
either Party or its Affiliates as of the Effective Date or coming
into the Control of either Party or its Affiliates during the term
of this Agreement relating to any Assay and Screening Technology,
any Collaboration Target, any Compound that is at any time screened
or developed under the Research Program, any Derivatives of any such
Compounds, any Product and any
method of making any such Compound, Derivative, or Product and any
method of using any such Compound, Derivative or Product.
1.63 "Lapse Quarter" for a Party shall mean, on a Product by Product and
country by country basis in the Copromotion Territory, any Calendar
Quarter in which: (a) the Party has delivered less than *************
of its then current Assigned Sales Force Effort, and (b) such
percentage portion of its then current Assigned Sales Force Effort is
at ************** lower than the portion of the other Party's
Assigned Sales Force Effort actually performed by such other Party.
1.64 "Lapse Year" for a Party shall mean, on a Product by Product and
country by country basis in the Copromotion Territory, any calendar
year in which such Party has three (3) or more Lapse Quarters.
1.65 "Lead Compound" shall mean a Compound with: (a) sufficient potency
and selectivity, based on activity against a Collaboration Target and
activity in secondary selectivity assays, which activity levels and
selectivity indices have been established by the JSC, (b) chemical
tractability, (c) a preliminary indication of chemical structure-
activity relationships and (d) a clear basis for initiating chemical
optimization.
1.66 "Major European Country" shall mean any of France, Germany, Italy, or
the United Kingdom.
1.67 "Marketing Account" shall have the meaning set forth in Section
6.1.8(d).
1.68 "Marketing Steering Committee" or "MSC" shall have the meaning set
forth in Section 3.2.
1.69 "NDA" shall mean a New Drug Application, as defined in the FD&C Act,
that is required to be approved by the FDA before marketing a
Product, or an equivalent foreign filing.
1.70 "Net Profits" shall mean, with respect to the sales of any Product in
a country of the Copromotion Territory, the Net Sales of such Product
in such country, less the following expenses (deducted in the
sequence listed) allocable to such Product in such country: (a) the
Cost of Goods Manufactured for Sale, and (b) the Parties' combined
Sales and Marketing Expenses, a Party's Incremental Sales Force
Expenses, if any, a Party's Extra Effort Expense, if any, and the
Parties' combined Post-Approval Research and Regulatory Expenses.
1.71 "Net Sales" shall mean the gross amounts charged for sales of
Products by AHPC, its Affiliates, or sublicensees, as appropriate, to
non-Affiliate Third Parties on which payments are due under this
Agreement, less the sum of (a) and (b) where (a) is a provision,
determined under Generally Accepted Accounting Principles in the
United States, for (i) reasonable trade, cash and quantity
discounts or rebates (other than price discounts granted at the time
of sale), reasonable service allowances and reasonable broker's or
agent's commissions, if any, actually allowed or paid, (ii) credits
or allowances actually given or made for rejection or return of,
previously sold Products or for retroactive price reductions
(including Medicaid, managed care and similar types of rebates),
(iii) taxes, duties or other governmental charges levied on or
measured by the billing amount (excluding income and franchise
taxes), as adjusted for rebates and refunds, and (iv) reasonable
credits or allowances actually given or made for wastage replacement,
and (v) charges actually incurred for packing, freight, and shipping
from AHPC's or its Affiliates' distribution center and insurance
directly related to such packing, freight, and shipping of such
Product (excluding amounts reimbursed by Third Party customers and
any amounts associated with packing, freight, and shipping to and
holding at AHPC's or its Affiliate's distribution center, which
amounts are included within the Cost of Goods Manufactured for Sale)
and (b) is a periodic adjustment of the provision determined in (a)
to reflect amounts actually incurred for (i), (ii), (iii), (iv), and
(v). A "sale" of a Product is deemed to occur upon the invoicing, or
if no invoice is issued, upon the earlier of shipment or transfer of
title in the Product to a Third Party. If a Product is sold or
distributed for use in combination with or as a component of another
product or products (a "Combination Product"), the calculation of
"Net Sales" from such Combination Product will be determined by
multiplying the Net Sales for such Combination Product calculated as
set forth above by a fraction, the numerator of which is the fair
market value of the Product in such Combination Product, and the
denominator of which is the fair market value of the Combination
Product. If a Product is sold as part of a bundle of distinct
products (i.e., not (i) packaged together with another product or
(ii) in a Combination Product form alone,) the Net Sales for such
Product will be based on the discounted unit price of such Product
sales, which discounted unit price shall be proportional to the total
discount provided for the entire bundle (e.g., if, the price for the
bundle of products is twenty percent (20%) lower than the price that
would be charged by AHPC, its Affiliates or sublicensees for the same
group of products if sold separately, based on the average unit price
of such products when sold separately, then the discounted unit price
attributable to the Product when sold as part of such bundle would be
eighty percent (80%) of the average unit price of the Product when
sold separately by AHPC, its Affiliates or sublicensees.
1.72 "Non-Collaboration Invention" of a Party shall mean an Invention
owned or Controlled by either Party, which Invention (a) is made
solely by such Party's employees, agents or subcontractors during the
term of this Agreement or otherwise comes into the Control of such
Party during the term of this Agreement and(b) is not made in the
performance of the Research Program.
1.73 "Patent Rights" shall mean any and all (a) patents, (b) pending
patent applications, including, without limitation, all provisional
applications, substitutions, continuations, continuations-in-part,
divisions, renewals, and all patents granted thereon, and (c) all
patents-of-addition, reissues, reexaminations
and extensions or restorations by existing or future extension or
restoration mechanisms, including, without limitation, supplementary
protection certificates or the equivalent thereof, that, (i) during
the Term of this Agreement, are owned or Controlled by either Party,
and (ii) claim any Invention.
1.74 "Penalty Year" for a Party shall mean the calendar year following a
Lapse Year.
1.75 "Phase I Clinical Study" shall mean a study, conducted in accordance
with a protocol approved by the JSC, of a Development Candidate in
human volunteers or patients with the endpoint of determining initial
tolerance, safety and/or pharmacokinetic information in single dose,
single ascending dose, multiple dose and/or multiple ascending dose
regimens.
1.76 "Phase II Clinical Study" shall mean a study, conducted in accordance
with a protocol approved by the JSC, of a Development Candidate in
patients to determine initial efficacy and dose range finding before
embarking on Phase III Clinical Studies.
1.77 "Phase III Clinical Study" shall mean a pivotal study in patients, ,
conducted in accordance with a protocol approved by the JSC, which
protocol is designed to ascertain efficacy and safety of a Product
for the purpose of preparing and submitting applications for
Regulatory Approval to the competent Regulatory Authorities in a
country of the world.
1.78 "Post-Approval Research and Regulatory Expenses" shall mean those
expenses incurred, on a Product by Product and country by country
basis, by either Party directly attributable to (a) ongoing research
and development of a Product after such Product has received
Regulatory Approval in such country of the Copromotion Territory,
including, without limitation, Phase IV clinical studies and clinical
studies in support of additional indications within the Field or
labeling changes for such Product in such country and/or (b)
complying with its regulatory reporting obligations in the
Copromotion Territory in accordance with Section 5.4.
1.79 "Pre-Development Expenses" shall mean, on a Compound by Compound
basis, the expenses (other than Third Party License Fees) incurred by
the Parties after the Effective Date in performing the Screening
Phase and the Research Phase of the Research Program.
1.80 "Pre-Marketing Expenses" shall mean those expenses incurred on a
country by country and Product by Product basis within the
Copromotion Territory, by either Party, other than R&D Expenses,
before Regulatory Approval of a Product in such country, directly
attributable to the carrying out of such Party's obligations under
the Copromotion Territory Commercialization Plan in preparation for
the marketing, promotion, sale and distribution of such Product in
such country. Such expenses may include, without limitation, costs
incurred for professional
education, Product related public relations, relationships with
opinion leaders and professional societies, market research, health
care economics studies, and establishment of the supply chain for the
distribution and sale of such Product in such country. Such expenses
may include both internal expenses incurred by a Party as well as
out-of-pocket expenses paid to Third Parties by a Party at reasonable
rates pre-approved by the MSC.
1.81 "Pre-Marketing Expense Shortfall" shall have the meaning set forth in
Section 6.1.8(f).
1.82 "Prior Invention" of a Party shall mean an Invention owned or
Controlled by either Party, which Invention is made solely by the
Party's employees, agents or subcontractors before the Effective Date
or which otherwise came into the Control of such Party before the
Effective Date.
1.83 "Product" shall mean any pharmaceutical product, for use in the
Field, containing one or more Development Candidates as an active
ingredient.
1.84 "Promotion" shall mean those activities, including, without
limitation, Detailing and distributing Samples of a Product, normally
undertaken by a pharmaceutical company's sales force to implement
marketing plans and strategies aimed at encouraging the appropriate
use of a particular Product. When used as a verb, "Promote" shall
mean to engage in such activities.
1.85 "R&D Account" shall have the meaning set forth in Section 4.6.3.
1.86 "R&D Reimbursement Account" shall have the meaning set forth in
Section 7.1(b).
1.87 "R&D Shortfall" shall have the meaning set forth in Section 4.6.5.
1.88 "Reduced Royalty Rate Period" for a Product in a country means the
period beginning on the expiration of the Full Royalty Rate Period
for the Product in that country, or if there is no Full Royalty Rate
Period for that Product in that country, then beginning on the First
Commercial Sale of the Product in that Country, and ending on the
twenty-fifth (25/th/) anniversary of the Effective Date.
1.89 "Regulatory Approval" shall mean the technical, medical and
scientific licenses, registrations, authorizations and approvals
(including, without limitation, approvals of NDAs, supplements and
amendments, pre- and post-approvals, pricing and third party
reimbursement approvals, and labeling approvals) of any national,
supra-national, regional, state or local regulatory agency,
department, bureau, commission, council or other governmental entity,
necessary for the commercial manufacture, distribution, marketing,
promotion, offer for sale, use, import, export and sale of Product(s)
in a regulatory jurisdiction.
1.90 "Regulatory Authority" shall mean any national (e.g., the United
States Food and Drug Administration), supra-national (e.g., the
European Commission, the Council of the European Union, or the
European Agency for the Evaluation of Medicinal Products), regional,
state or local regulatory agency, department, bureau, commission,
council or other governmental entity in each country of the world
involved in the granting of Regulatory Approval for the Product.
1.91 "Research" shall mean, on a Compound by Compound basis, those
preclinical activities undertaken by or on behalf of either Party
subsequent to Screening and prior to Development of such Compound,
including, without limitation, medicinal chemistry, pharmacology,
preclinical toxicology, and formulation of such Compound in the
Field.
1.92 "Research Phase" shall have the meaning set forth in Section 4.3.2.
1.93 "Research Program" shall have the meaning set forth in Section 4.1.
1.94 "Sales and Marketing Expenses" shall mean those expenses directly
allocable, on a Product by Product and country by country basis, to
the Parties' market development and/or Promotion of such Product in
the Copromotion Territory, consistent with the Copromotion Territory
Commercialization Plan for such Product. Sales and Marketing Expenses
shall include: (a) costs for Promotion of the Product, excluding
costs of the field sales force personnel (i.e., Detailing expenses,
including, without limitation, salaries, bonus, benefits, sales force
automation, and personnel expenses -- telephone, supplies, postage,
meetings, travel and voice mail including all information
technology); (b) out-of-pocket payments to Third Parties incurred by
such Party and specifically attributable to such Party's performance
under the Copromotion Territory Commercialization Plan, excluding
Third Party License Fees, (c) costs for activities related to
obtaining reimbursement from payers, (d) market research costs
(including, without limitation, actual costs of sales and marketing
data), (e) marketing and advertising costs (including, without
limitation, cost for preparing and reproducing detail aids and other
promotional materials), (f) professional education, (g) Product
related public relations, (h) costs of pharmacoeconomics studies, (i)
costs for manufacturing and distributing Product Samples, and (j)
costs for conducting seminars and establishing relationships with
opinion leaders and professional societies in connection with the
Product. Such costs will include both internal costs (e.g., salaries,
benefits, supplies and materials, etc.) as well as the actual amounts
paid to outside service providers (e.g., consultants, agency fees,
meeting costs, etc.). Sales and Marketing Expenses will specifically
exclude the cost of activities that promote either Party's business
as a whole without being Product specific (such as corporate image
advertising) as well as Extra Effort Expenses, and Incremental Sales
Force Expenses.
1.95 "Sample" shall mean a unit of a Product, as used by AHPC, that is
not intended to be sold and is intended to promote the sale of such
Product. When used as a verb, "Sample" shall mean to provide Samples
to Target Physicians.
1.96 "Sample Receipt Forms" shall mean those multi-part paper forms (or
an electronic version thereof) supplied by AHPC for the purpose of
recording Detail and Sample activity performed by ViroPharma sales
representatives during Details. These forms are also used as Sample
receipts on which to obtain a physician's signature in
acknowledgment of the physician's receipt of Samples.
1.97 "Screening" shall mean screening and identification of Compounds,
including, without limitation, Compounds from the ViroPharma
Chemical Library or the AHPC Chemical Library to determine whether
such Compounds may have activity against an Active Collaboration
Target.
1.98 "Screening Phase" shall have the meaning set forth in Section 4.3.1.
1.99 "Small Molecule" shall mean any Compound that is not a Biomolecule.
1.100 "Surviving Entity" of a Change of Control of ViroPharma shall mean:
(a) a Third Party that has acquired substantially all of the assets
of ViroPharma or 100% of the outstanding shares of voting capital
stock of ViroPharma pursuant to a Change of Control, (b) a company
that results from the merger of ViroPharma and another entity
pursuant to a Change of Control, or (c) ViroPharma if a Third Party
acquires more than 50% but less than 100% of the outstanding shares
of voting capital stock of ViroPharma pursuant to a Change of
Control.
1.101 "Tail Compound" shall have the meaning set forth in Section 4.3.3.
1.102 "Target" shall mean a molecular entity for which there is sufficient
information, data, or valid reason to believe that perturbation of
such entity would be sufficient to prevent or affect the course of
human disease caused by the HCV.
1.103 "Target Market" shall mean the segments of the overall market for a
Product to whom a Party will Promote such Product.
1.104 "Target Physician" shall mean each physician and other health care
professional and organization to whom either Party Details a Product
in the Copromotion Territory.
1.105 "Term of the Screening Phase" shall mean, with respect to any
Compound, the Initial Term of the Screening Phase and all extensions
made thereto with respect to such Compound in accordance with
Section 4.3.1.
1.106 "Third Part(y/ies)" shall mean any person(s) or entit(y/ies) other
than AHPC, ViroPharma or their respective Affiliates.
1.107 "Third Party License Fee" shall mean license fees, royalties and
other amounts paid to any Third Party for the license under
intellectual property rights of technology necessary or useful for
Screening, Research, Development or Commercialization, which license
is entered into, during the term of this Agreement, by a Party
pursuant to Section 8.2.3.
1.108 "Trademark" shall mean those registered trademarks used in
connection with the Commercialization of any Product by either Party
hereunder, provided, however, that the term "Trademark" shall not
include the tradename of either Party or any trademark or tradedress
of either Party which is not used exclusively in connection with the
Products Commercialized under this Agreement.
1.109 "Valid Claim" shall mean a claim that (i) in the case of any
unexpired United States or foreign patent, shall not have been
donated to the public, disclaimed, nor held invalid or unenforceable
by a court or government agency of competent jurisdiction in an
unappealed or unappealable decision, or (ii) in the case of any
United States or foreign patent application, shall not have been
canceled, withdrawn, or abandoned without being refiled in another
application or finally rejected by an administrative agency action
from which no appeal can be taken, or shall not have been pending
for more than five years. For purposes of this definition, time
periods shall be measured cumulatively for claims in a later filed
application in a country which are substantially the same as claims
in an earlier filed application in that country. If a claim of a
patent application that ceased to be a Valid Claim under (ii) due to
the passage of time later issues as part of a patent described
within (i) then it shall again be considered to be a Valid Claim
effective as of the issuance of such patent.
1.110 "ViroPharma Chemical Library" shall mean those Compounds that
ViroPharma, as of the Effective Date owns or Controls, or that come
into ViroPharma's Control during the term of the Research Program.
1.111 "ViroPharma Know-How" shall mean Know-How, excluding the
Collaboration Know-How, that ViroPharma owns or Controls as of the
Effective Date or that comes into the Control of ViroPharma during
the term of this Agreement.
1.112 "ViroPharma Patent Rights" shall mean Patent Rights that ViroPharma
owns or Controls as of the Effective Date or that come into the
Control of ViroPharma during the term of this Agreement, which
Patent Rights claim any ViroPharma Prior Invention and/or ViroPharma
Non-Collaboration Invention. Those ViroPharma Patent Rights known to
be existing as of the Effective Date are listed on Exhibit 1.112
attached hereto.
1.113 "ViroPharma Technology" shall mean the ViroPharma Patent Rights,
ViroPharma's interest in the Collaboration Patent Rights, the
ViroPharma Know-How, ViroPharma's interest in the Collaboration
Know-How, and the ViroPharma Assay and Screening Technology.
2. LICENSES.
2.1 Licenses to AHPC. Subject to the terms and conditions of this
Agreement, including, without limitation, Sections 2.4 and 2.6
hereof, ViroPharma hereby grants to AHPC:
(a) the exclusive worldwide right and license, without the right to
grant sublicenses (except to AHPC's Affiliates or ViroPharma), to
use the ViroPharma Technology, the ViroPharma Chemical Library,
and the Collaboration Targets only to the extent necessary for
AHPC to exercise its rights and perform its obligations under the
Research Program and to exercise its rights and perform its
obligations during the Screening Phase Tail; and
(b) the exclusive worldwide right and license, with the right to
sublicense one or more of its Affiliates, ViroPharma and/or Third
Parties (provided, however, that in the Copromotion Territory,
AHPC may only grant sublicenses to one or more or its Affiliates
and ViroPharma), to use the ViroPharma Technology, the
Collaboration Targets, and the ViroPharma Chemical Library only
to the extent necessary to Develop and Commercialize Hits, Lead
Compounds, Development Candidates and Products for use in the
Field.
2.2 Licenses to ViroPharma. Subject to the terms and conditions of this
Agreement, including, without limitation, Sections 2.4 and 2.6
hereof, AHPC grants to ViroPharma:
(a) the nonexclusive right and license, without the right to grant
sublicenses (except to ViroPharma Affiliates), to use the AHPC
Technology, the AHPC Chemical Library, the ViroPharma Technology,
the ViroPharma Chemical Library, and the Collaboration Targets
only to the extent necessary for ViroPharma to exercise its
rights and perform its obligations under the Research Program and
to exercise its rights and perform its obligations during the
Screening Phase Tail;
(b) the nonexclusive right and license, without the right to grant
sublicenses (except to ViroPharma Affiliates), to use the AHPC
Technology, the AHPC Chemical Library, the ViroPharma Technology,
the ViroPharma Chemical Library, and the Collaboration Targets
only to the extent necessary for ViroPharma to Promote Products
in the Copromotion Territory in accordance with Section 6.1 of
this Agreement; and
(c) the nonexclusive right and license, without the right to grant
sublicenses (except to ViroPharma Affiliates), to use the
Trademarks and Copyrights
in the Copromotion Territory during the term of this Agreement
only to the extent such license is necessary for ViroPharma to
Promote Products in the Copromotion Territory in accordance with
Section 6.1 of this Agreement.
2.3 Sublicensing to Third Party Contractors. Notwithstanding any provision
to the contrary in this Agreement, if pursuant to Section 4.5, the JSC
approves the utilization of one or more Third Parties to perform
certain tasks under the Research Program, the Party entering into a
contract with such Third Party for the performance of such services,
may, as part of such contract, grant to such Third Party a
nonexclusive, nontransferable, nonsublicensable license or sublicense,
as applicable, under the ViroPharma Technology or the AHPC Technology,
as applicable, only to the extent and only for so long as such license
or sublicense is necessary for such Third Party to perform such tasks
under the Research Program. Likewise, to the extent that either Party
enters into a contract with a Contract Sales Organization to perform
all or part of its obligations in Promoting Products pursuant to
Section 6.1.1 hereof, such Party may, as a part of such contract,
grant to such Third Party a nonexclusive, nontransferable,
nonsublicensable license or sublicense, as applicable, under the
ViroPharma Terchnology or the AHPC Technology, as applicable, only to
the extent and only for so long as such license or sublicense is
necessary for such Third Party to perform such Promotion. All such
contracts and sublicenses entered into by either Party with a Contract
Sales Organization shall be subject to the prior written approval of
the MSC, which approval shall not be unreasonably withheld or delayed.
2.4 Dropped Compounds. Upon the written determination of the JSC not to
advance a Compound further in Screening, Research, Development, or
Commercialization hereunder, such Compound shall no longer be included
in the rights licensed by one Party to the other Party under Section
2.1 or 2.2, provided, however, that for so long as either (a) there is
at least one Development Candidate being studied hereunder during the
Development Phase of the Research Program or (b) a Product is being
marketed in the Field by AHPC pursuant to this Agreement, neither
Party will develop or commercialize in the Field, independently or in
collaboration with any Third Party, such Compound or any Derivative
thereof without the prior written consent of the other Party.
2.5 Direct Licenses to Party Affiliates. Either Party may at any time
request and authorize the other Party to grant licenses directly to
Affiliates of the requesting Party by giving written notice
designating to whom a direct license is to be granted. Upon receipt of
any such notice, the requested Party shall enter into and sign a
separate direct license agreement with such designated Affiliate of
the requesting Party. All such direct license agreements shall be
consistent with the terms and conditions of this Agreement, except for
such modifications as may be required by the laws and regulations in
the country in which the direct license will be exercised. In
countries where validity of the direct license agreement requires
prior government approval or registration, such direct license
agreement shall not
become binding between the parties thereto until such approval or
registration is granted, which approval or registration shall be
obtained by the requesting Party. All costs of making a direct license
under this Section 2.5 shall be borne by the requesting Party.
2.6 Exclusive Working Relationship. Notwithstanding the licenses granted
under Sections 2.1 and 2.2 hereof, it is expressly understood and
agreed by the Parties that
(a) during the Screening Phase and the Screening Phase Tail,
ViroPharma and its Affiliates shall work exclusively with AHPC
and AHPC's Affiliates in the Screening, Research, Development and
Commercialization of Compounds and pharmaceutical products for
use in the Field, provided, however, that during the Screening
Phase Tail, either Party and/or its Affiliates shall be free to
continue the Screening of Tail Compounds either independently or
exclusively with the other Party and the other Party's
Affiliates, but not with any Third Party,
(b) after the end of the Screening Phase Tail ViroPharma and its
Affiliates shall be free to conduct Screening of Compounds (other
than Compounds from the AHPC Chemical Library or to which AHPC
otherwise has proprietary rights) against Targets that are not
Active Collaboration Targets and, provided that such Compounds
are not active against any Active Collaboration Target,
ViroPharma and its Affiliates shall be free to conduct Research,
Development and Commercialization with respect to such Compounds,
(c) during the Research Program, AHPC and its Affiliates shall work
exclusively with ViroPharma and its Affiliates on the development
of Compounds which are directed against Active Collaboration
Targets, and
(d) during the term of this Agreement, neither Party nor its
Affiliates shall develop or commercialize any Active Compound for
use outside of the Field, except in collaboration with the other
Party and such other Party's Affiliates pursuant to an agreement
to be negotiated by the Parties. Notwithstanding the foregoing,
once a Compound has ceased to be an Active Compound, the Parties
and their respective Affiliates shall be free to develop and/or
commercialize such Compound for use outside of the Field,
provided, however, that with respect to such Compound, as of the
time such Compound ceases to be an Active Compound, AHPC and its
Affiliates shall have no further rights or licenses under the
ViroPharma Technology and ViroPharma and its Affiliates shall
have no further rights or licenses under the AHPC Technology.
For the sake of clarity, AHPC would have no obligation to work
exclusively with ViroPharma (i) with respect to any Biomolecule based
pharmaceutical products
regardless of the Target of such product, (ii) with respect to Small
Molecules based pharmaceutical products directed against Targets that
are not, at such time, Active Collaboration Targets, and (iii) during
the Development Phase, with respect to Small Molecule based
pharmaceutical products directed against Targets for which no Small
Molecule based pharmaceutical product is then being Developed under
this Agreement.
2.7 Right of Reference. Each Party hereby grants the other a "Right of
Reference," as that term is defined in 21 C.F.R. (S) 314.3(b), to any
data developed under this Agreement, and a Party shall provide a
signed statement to this effect, if requested by the other, in
accordance with 21 C.F.R. (S) 314.50(g)(3).
3. MANAGEMENT OF COLLABORATION.
3.1 Joint Steering Committee.
3.1.1 Formation; Membership. Within thirty (30) days after the
Effective Date, ViroPharma and AHPC shall establish a Joint
Steering Committee (the "JSC") to oversee and control the
collaborative discovery and preclinical and clinical
development of Compounds and Products for use in the Field, as
further described below in this Agreement. The JSC shall be
composed of an equal number of from two (2) to four (4)
representatives from each Party as appointed by such Party,
which representatives shall have expertise suitable to the
then-current activities of the collaboration. The JSC shall
initially have two (2) representatives from each Party, but the
JSC may change its size from time to time by mutual consent of
its members, provided, however, that the size of the JSC shall
be no less than four (4) members and no greater than eight (8)
members. A Party may replace one or more of its representatives
from time to time upon written notice to the other Party. From
time to time, the JSC may establish subcommittees to oversee
specific projects or activities and such subcommittees shall be
constituted as the JSC shall determine, but shall always
include at least one (1) member from each Party. The JSC will
exist until the termination of the Research Program, as set out
in Section 4.3, unless the Parties otherwise agree in writing.
3.1.2 Chairperson; Secretary. The chairperson of the JSC shall be
designated by AHPC. The chairperson will be responsible for
scheduling meetings of the JSC, preparing agendas for meetings,
sending to all JSC members notices of all regular meetings and
agendas for such meetings at least five (5) business days
before such meetings. The chairperson shall appoint a secretary
for each meeting who will record the minutes of the meeting,
circulate copies of meeting minutes to the Parties and each JSC
member promptly following the meeting for review, comment and
approval and finalize approved meeting minutes.
3.1.3 Meetings. The JSC shall meet at least once each Calendar
Quarter during the term of the Research Program, unless
otherwise mutually agreed by the Parties. Either Party may call
a special meeting of the JSC on fifteen (15) days written
notice to the other Party and each of the JSC members. Such
written notice shall include an agenda for the special meeting.
Meetings, including, without limitation, special meetings, of
the JSC will alternate between the offices of the Parties,
unless otherwise agreed by the members of the JSC, or may be
held telephonically or by video-conference. Meetings of the JSC
shall be effective only if at least one (1) representative of
each Party is in attendance or participating in the meeting.
Members of the JSC shall have the right to participate in and
vote at meetings by telephone. The most senior attending
representative of each Party on the JSC shall have the right to
vote on behalf of any members of the JSC from such Party not
attending a JSC meeting in person or by telephone. Each Party
shall be responsible for expenses incurred by its employees and
its members of the JSC in attending or otherwise participating
in JSC meetings.
3.1.4 Decision Making. All decisions of the JSC shall be made by
majority vote. ************
3.1.5 Responsibilities of the JSC. In addition to its general
responsibility to oversee and coordinate the development of
Compounds and Products in the Field according to the Global
Research and Development Plan and ensure a regular flow of
research and development information between the Parties, the
JSC shall in particular:
(a) develop the Global Research and Development Plan and the
Annual Development Plan and Budget for the remainder of
calendar year 1999 and for calendar year 2000 within sixty
(60) days after the Effective Date;
(b) review and update as necessary the Global Research and
Development Plan and develop an Annual Development Plan and
Budget for activities under the Global Research and
Development Plan for subsequent calendar years no later
than the October 31 immediately preceding each such
subsequent calendar year;
(c) oversee the activities of each Party's project team that is
performing such Party's obligations under the Research
Program;
(d) facilitate the flow of information between the Parties with
respect to all development work being conducted for each
Compound and Product in the Field on a worldwide basis;
(e) review and approve all scientific and clinical protocols,
which shall provide that all preclinical and clinical
development work under this Agreement shall be conducted
in accordance with GLPs and GCPs;
(f) review and approve the contents and filing of INDs,
applications for Regulatory Approval, and related and
supporting submissions to Regulatory Authorities; and
(g) until such time as the MSC is formed, review and approve
premarketing activities and expenses.
3.2 Marketing Steering Committee.
3.2.1 Formation; Membership. As soon as agreed by the JSC, but not
later than thirty (30) days after the initiation of the first
Phase III Clinical Study of a Product, ViroPharma and AHPC
shall establish a Marketing Steering Committee (the "MSC") to
develop and coordinate a Copromotion Territory
Commercialization Plan and Annual Commercialization Plans and
Budgets and to oversee the execution of each Party's
responsibilities in the Copromotion Territory under the
Copromotion Territory Commercialization Plan and the applicable
Annual Commercialization Plan and Budget. The MSC shall be
composed of an equal number of from two (2) to four (4)
representatives from each Party as appointed by such Party,
which representatives shall have expertise suitable to the
then-current activities of the collaboration. The MSC shall
initially have two (2) representatives from each Party, but the
MSC may change its size from time to time by mutual consent of
its members, provided, however, that the size of the MSC shall
be no less than four (4) members and no greater than eight (8)
members. A Party may replace one or more of its representatives
from time to time upon written notice to the other Party. From
time to time, the MSC may establish subcommittees to oversee
specific projects or activities and such subcommittees shall be
constituted as the MSC shall determine, but shall always
include at least one (1) member from each Party. The MSC will
exist for so long as a Product is Promoted by both of the
Parties in the Copromotion Territory pursuant to this Agreement
unless otherwise agreed, in writing, by the Parties.
3.2.2 Chairperson; Secretary. The chairperson of the MSC shall be
designated by AHPC. The chairperson will be responsible for
scheduling meetings of the MSC, preparing agendas for meetings,
sending to all MSC members notices of all regular meetings and
agendas for such meetings at least five (5) business days
before such meetings. The chairperson shall appoint a secretary
for each meeting who will record the minutes of the meeting,
circulate copies of meeting minutes to the Parties and each MSC
member promptly following the meeting for review, comment and
approval and finalize approved meeting minutes.
3.2.3 Meetings. After the MSC is formed in accordance with Section
3.2.1, the MSC shall meet at least once each Calendar Quarter,
unless otherwise mutually agreed by the Parties. Either Party
may call a special meeting of the MSC on fifteen (15) days
written notice to the other Party and each of the MSC members.
Such written notice shall include an agenda for the special
meeting. Meetings, including, without limitation, special
meetings, of the MSC will alternate between the offices of the
Parties, unless otherwise agreed by the members of the MSC, or
may be held telephonically or by video-conference. Meetings of
the MSC shall be effective only if at least one (1)
representative of each Party is in attendance or participating
in the meeting. Members of the MSC shall have the right to
participate in and vote at meetings by telephone. The most
senior attending representative of each Party on the MSC shall
have the right to vote on behalf of any members of the MSC from
such Party not attending a MSC meeting in person or by
telephone. Each Party shall be responsible for expenses
incurred by its employees and its members of the MSC in
attending or otherwise participating in MSC meetings.
3.2.4 Decision Making. All decisions of the MSC shall be made by
majority vote *******************.
3.2.5 Responsibilities of the MSC. In addition to its general
responsibility to oversee and coordinate the Commercialization
of Products in the Copromotion Territory according to the
Copromotion Territory Commercialization Plan, the MSC shall in
particular:
(a) not later than sixty (60) days after the filing of the
first application for Regulatory Approval of a Product in
the Copromotion Territory, complete and approve a
Copromotion Territory Commercialization Plan for such
Product and an Annual Commercialization Plan and Budget for
such Product covering the period through the end of the
first full calendar year after anticipated Regulatory
Approval;
(b) oversee and coordinate the activities of the Parties in
marketing, selling and distributing Products in the
Copromotion Territory during the Term of this Agreement
following Regulatory Approval of such Products in the
Copromotion Territory; and
(c) not later than September 30 of each year after formation of
the MSC establish an Annual Commercialization Plan and
Budget describing each of the Parties' Commercialization
activities and forecast the expected sales level of
Products each in the
Copromotion Territory during the following calendar year,
which will guide the schedule of production of Products.
3.3 Executive Steering Committee.
3.3.1 Formation; Membership. Within thirty (30) days after the
Effective Date, ViroPharma and AHPC shall establish an
Executive Steering Committee (the "ESC") to resolve disputes
arising within the JSC and the MSC. The ESC shall be composed
of two (2) representatives appointed by each of ViroPharma and
AHPC, provided, however, that no such representative is also a
member of either the JSC or the MSC. A Party may replace one
(1) or more of its representatives from time to time upon
written notice to the other Party. The ESC shall exist until
the expiration or earlier termination of this Agreement.
3.3.2 Chairperson; Secretary. The chairperson of the ESC shall be
designated by AHPC. The chairperson will be responsible for
scheduling meetings of the ESC, preparing agendas for meetings,
sending to all ESC members notices of all regular meetings and
agendas for such meetings at least five (5) business days
before such meetings. The chairperson shall appoint a secretary
for each meeting who will record the minutes of the meeting,
circulate copies of meeting minutes to the Parties and each ESC
member promptly following the meeting for review, comment and
approval and finalize approved meeting minutes.
3.3.3 Meetings. The ESC shall meet on an as needed basis, provided,
however, that the ESC shall meet and decide on each matter
presented to it within thirty (30) calendar days after each
such matter is referred to it by the JSC or the MSC, as
applicable. A matter shall be considered referred to the ESC as
of the date that either Party provides each member of the ESC
with a written description of the disputed matter, which
written description shall include the positions taken by each
member of the JSC or MSC, as applicable, as to such matter, all
other information relevant to such matter and a copy of the
minutes of each JSC or MSC meeting, as applicable, at which
such matter was discussed. Within ten (10) days after such
matter is so presented to the ESC, the chairman of the ESC
shall notify each member of the ESC of the date, time and
location of the ESC meeting to address such matter. The
meetings of the ESC will alternate between the offices of the
Parties, unless otherwise agreed by the members of the ESC, or
may be held telephonically or by video-conference. Meetings of
the ESC shall be effective only if at least one (1)
representative of each Party is in attendance or participating
in the meeting. An attending or participating representative of
a Party shall have the right to vote on behalf of non-attending
or non-participating member from such Party. Each Party shall
be responsible for expenses incurred by its employees and its
members of the ESC in attending or otherwise participating in
ESC meetings.
3.3.4 Decision Making. All decisions of the ESC shall be made by
majority vote ************.
3.3.5 Dispute Resolution. If the ESC is unable to reach a decision
with respect to any matter, such matter shall be referred for
resolution ***********. The decision **************** with
respect to such matter pursuant to this Section 3.3.5 shall be
final and binding upon each of the Parties. Notwithstanding the
foregoing, if an unresolved matter is presented ***************
for resolution as provided in this Section 3.3.5,
***************** refer the matter back to the ESC or the JSC,
as applicable, for further consideration with a specified date
by which the ESC or JSC, as applicable, must either resolve the
matter or resubmit the matter ************* for final
resolution.
3.4 Authority. The Parties agree that, in voting on matters as described
in this Article 3, it shall be conclusively presumed that each voting
member of the JSC, MSC and ESC has the authority and approval of such
member's respective senior management in casting his or her vote and
decisions of the JSC, MSC and ESC made in accordance with this Article
3 shall be binding upon each of the Parties.
3.5 Project Coordinators. Each Party shall designate one or two of its
employees as project coordinator(s) for all of the activities
contemplated under this Agreement. Such project coordinators will be
responsible for the day-to-day coordination of the collaboration
contemplated by this Agreement and will serve to facilitate
communication between the Parties. A Party may, from time to time,
replace its designated project coordinator(s) upon providing the other
Party with written notice to that effect.
4. RESEARCH AND DEVELOPMENT.
4.1 The Research Program.
4.1.1 General. Under the terms and conditions set forth herein, AHPC
and ViroPharma will collaborate in the conduct of a
collaborative research program for the (i) identification and
validation of Targets and assay and screening methods utilizing
such Targets and (ii) the discovery, identification, screening,
and pre-clinical and clinical development of Compounds and
Products for use in the Field (collectively, the "Research
Program"). The Research Program shall consist of a Screening
Phase, a Screening Phase Tail, if applicable, and with respect
to any Compound identified by the JSC as a Hit during the
Screening Phase, a Research Phase and, if warranted, a
Development Phase. The Screening Phase of
the Research Program (the "Screening Phase") will be focused on
the development of Targets, assays and Screening methods and
the Screening of the ViroPharma Chemical Library, the AHPC
Chemical Library and any other library selected by mutual
agreement of the Parties for the identification and validation
of Hits. The Research Phase of the Research Program (the
"Research Phase") will be focused on a medicinal chemistry
program for the further evaluation of Hits, the development and
validation of Lead Compound candidates, including, without
limitation, Derivatives of Hits, screening and testing of Lead
Compound candidates to identify and validate Lead Compounds,
the optimization of Lead Compounds and their Derivatives,
further preclinical Research and Screening of Lead Compounds to
identify and select Development Candidates, and the further
preclinical Development of Development Candidates. The
Development Phase of the Research Program (the "Development
Phase") will be focused on the clinical Development of
Development Candidates and Products.
4.2 Research & Development Plans.
4.2.1 Global Research and Development Plan. Within thirty (30) days
following its formation, the JSC shall prepare and approve a
global research and development plan (the "Global Research and
Development Plan"). The Global Research and Development Plan
shall consist of those tasks that the Parties agree are
essential to the validation of Targets, the discovery,
validation and preclinical and clinical development of
Compounds and Products for use in the Field, and obtaining
Regulatory Approval for Products in the world. The Global
Research and Development Plan shall be kept current by the JSC,
updated on such schedule as the JSC may determine but not less
often than once per calendar year. The Global Research &
Development Plan may only be modified or amended upon written
approval of the JSC.
4.2.2 Annual Development Plans. Within thirty (30) days following
its formation, the JSC shall prepare and approve an annual
development plan and budget (the "Annual Development Plan and
Budget") addressing the collaborative Screening, Research and
Development activities to be carried out by the Parties during
the remainder of calendar year 1999 pursuant to this Agreement
and the Global Research and Development Plan. Thereafter, on or
before October 31 of each year, the JSC shall prepare and
approve an Annual Development Plan and Budget addressing the
collaborative Screening, Research and Development activities to
be undertaken by the Parties during the following calendar year
pursuant to this Agreement and the then current Global Research
and Development Plan. Each Annual Development Plan and Budget
shall include, without limitation, detailed plans for the
characterization and validation of Targets, the discovery and
validation of Compounds for use in the Field, the
collaborative research and development of Compounds and
Products for use in the Field, designation of which Party is
responsible for each task, staffing levels required to carry
out such activities, and a budget setting forth the estimated
expenditures required to carry out such activities. The Annual
Development Plan and Budget may only be modified or amended
upon written approval of the JSC.
4.3 Term of Research Program. The Research Program shall extend until the
termination of the latest of all of the following, including, if
applicable, the last meeting of the JSC necessary to determine whether
Hits in the Screening Phase Tail should be advanced to Development.
4.3.1 Screening Phase. The Screening Phase of the Research Program
shall begin on the Effective Date and, on a Collaboration
Target by Collaboration Target basis, unless extended in
accordance with this Section 4.3.1, shall extend until the
three (3) year anniversary of the Effective Date (the "Initial
Term of the Screening Phase") unless this Agreement is earlier
terminated in its entirety in accordance with Sections 11.4,
11.5, or 11.9.1 or with respect to such Collaboration Target in
accordance with Section 11.7. The Initial Term of the Screening
Phase of the Research Program may be extended by mutual
agreement of the Parties on terms substantially the same as
those set forth herein, unless otherwise agreed in writing by
the Parties. On or before the day one hundred eighty (180) days
before the expiration of the Initial Term of the Screening
Phase of the Research Program or the then current extension
thereof, as applicable, either Party may provide to the other
Party written notice of its desire to extend the Screening
Phase of the Research Program by one (1) additional year.
Promptly after the other Party's receipt of such written notice
the Parties shall commence discussions of the need and desire
to extend the Screening Phase of the Research Program and if
both Parties do not agree, in writing, to such extension on or
before the day sixty (60) days before the expiration of the
Initial Term of the Screening Phase or the then current
extension thereof, the Term of the Screening Phase shall expire
at the end of the Initial Term of the Screening Phase or the
then current extension thereof, as applicable.
4.3.2 Research Phase. The Research Phase of the Research Program
shall commence, on a Compound by Compound basis, upon the JSC's
designation of such Compound as a Hit, and shall extend until
the later of (a) the initiation of the Development Phase for
such Compound, or (b) such time as the JSC determines, in
writing, to discontinue all Research on such Compound and not
to advance such Compound to the Development Phase, unless
earlier terminated in accordance with Sections 11.4, 11.5, 11.7
or 11.9.1.
4.3.3 Screening Phase Tail. The Screening Phase Tail shall begin
during the term of this Agreement, on a Compound-by-Compound
basis, when such Compound is first screened and found by either
Party to have any activity against any Collaboration Target,
whether or not such Compound is determined to be a Hit (a "Tail
Compound"), and shall extend until the two (2) year anniversary
of the end of the Term of the Screening Phase, unless this
Agreement is earlier terminated in its entirety in accordance
with Section 11.4 or 11.9.1 or pursuant to Section 11.7, with
respect to any Collaboration Target identified pursuant to
Section 11.7(b) for which the Research Program has been
terminated in accordance with Section 11.7, but regardless of
whether this Agreement is earlier terminated in accordance with
Section 11.5. Within ten (10) business days after the end of
each Calendar Quarter during the Screening Phase Tail each
Party shall provide to the other a written report detailing all
data and information obtained by such Party with respect to any
Tail Compound studied by such Party during such Calendar
Quarter. For the Calendar Quarter during which the Screening
Phase Tail ends, such written reports shall be provided within
ten (10) business days after the last day of the Screening
Phase Tail. At any time during the Screening Phase Tail, either
Party may propose in writing to the JSC that a Tail Compound
subject to the Screening Phase Tail be designated a Hit or Lead
Compound and be further developed. Additionally, within thirty
(30) days after the last day of the Screening Phase Tail, the
JSC shall meet to determine whether any of the Tail Compounds
studied by the Parties during the Screening Phase Tail shall be
designated as a Hit or Lead Compound and further developed. If
the JSC designates a Tail Compound as a Hit or Lead Compound,
then the Parties shall collaborate on further, Research,
Development and Commercialization of such Compound consistent
with the terms of this Agreement, regardless of whether this
Agreement is earlier terminated in accordance with Section
11.5, in which event, such earlier termination shall be void
and the effects of any such termination arising in accordance
with Section 11.5.2 shall be reversed such that each Party
thereafter has the rights it had immediately prior to such
termination. If the JSC in good faith determines not to
designate any such Tail Compound as a Hit or a Lead Compound,
then the Party owning such Compound may further Develop and
Commercialize such Compound independently of the other Party
subject to the restrictions of Section 2.6.
4.3.4 Development Phase. With respect to any Compound, the
Development Phase shall commence on the date an IND is filed
seeking permission from the appropriate Regulatory
Authority(ies) to conduct clinical studies of such Compound and
shall continue until the JSC agrees to cease the clinical
development of such Compound or until a Product containing such
Compound has received Regulatory Approval in the Copromotion
Territory and each country of the AHPC Territory where AHPC
determines to apply for Regulatory Approval.
4.4 Selection of Additional Targets, Biomolecules, Hits, Lead Compounds,
Development Candidates and Products.
4.4.1 Selection of Additional Targets. During the Screening Phase,
the JSC may select one or more additional Targets as
Collaboration Targets against which to Screen Compounds for
activity. Likewise, during the term of the Screening Program,
the JSC may determine to discontinue Screening Compounds for
activity against one or more Targets or to reinstate the
screening of Compounds for activity against one or more Targets
that were previously discontinued from Screening.
4.4.2 Selection of Biomolecules as Compounds. Neither Party shall
Screen or conduct any Research or Development under this
Agreement on any Compound that is a Biomolecule unless the JSC
first approves, in writing, the inclusion of such Biomolecule
as a Compound under this Agreement.
4.4.3 Selection of Hits. The JSC shall review the data obtained by
the Parties in the Screening of Compounds, and, upon agreement
that such data support a determination that such Compound has
activity against the applicable Collaboration Target that meets
or exceeds an active threshold established by the JSC for that
Collaboration Target, such Compound shall be deemed to be a
Hit.
4.4.4 Selection of Lead Compounds. Based on criteria to be determined
by the JSC, the JSC may select Lead Compounds during the
Screening Phase, the Screening Phase Tail or the Research Phase
from (a) Hits in the ViroPharma Chemical Library, the AHPC
Chemical Library or any other library the Parties shall
mutually agree to screen in connection with the Research
Program, and/or (b) any Derivative of any such Hits.
4.4.5 Selection of Development Candidates. During the Research Phase,
the JSC may select Development Candidates from those Compounds
designated by the JSC as Lead Compounds and any Derivatives
thereof. The JSC's selection of Development Candidates shall be
based upon the JSC's determination to develop such Compound
toward IND filing, based on criteria established by the JSC,
which criteria may include, without limitation, consideration
of the following factors: in vitro efficacy and potency, in
vivo oral activity, efficacy and potency, medicinal chemistry
criteria, toxicology studies required for IND filing, ancillary
pharmacology studies, clinical drug substance stability and
formulation, scale up compound synthesis and other competitive
and commercial factors, including without limitation, the
proprietary position of such Compound.
4.4.6 Selection of Products. Development Candidates will become
Products upon the filing of an IND for such Development
Candidate, which filing
will be made only after the JSC determines that such
Development Candidate is suitable for clinical trials based on
its preclinical profile and competitive and other commercial
considerations.
4.5 Conduct of the Research Program. ViroPharma and AHPC shall each use
its respective Commercially Reasonable Efforts to perform its
obligations under the Research Program in accordance with the Global
Research and Development Plan and the then current Annual Development
Plan and Budget and each Party shall perform such obligations in
accordance with applicable GLPs and GCPs. All activities to be
undertaken in the performance of the Research Program shall be carried
out by employees of the Parties and/or their respective Affiliates,
provided, however, that if either Party is able to reasonably
demonstrate, and the JSC agrees, that it would be in the best
interests of both Parties to contract with one (1) or more Third
Parties to perform certain tasks under the Research Program, the Party
responsible for such task may enter into a contract with a Third Party
to perform such task, which contract shall be subject to the prior
written approval of the JSC. In determining whether to utilize the
services of any Third Party in conducting activities under the
Research Program, the Parties shall consider, inter alia, what would
be the most efficient and cost-effective means for accomplishing the
proposed activity, any relevant intellectual property issues that may
impede a Third Party's ability to perform the proposed activity or
that may warrant limiting the performance of the proposed activity to
one of the Parties, and other relevant factors. The responsibility for
performing clinical studies of each Product will be assigned to AHPC
and/or Third Party contractors selected by the JSC in accordance with
this Section 4.5. Notwithstanding the foregoing, ViroPharma shall be
given the opportunity to perform three (3) clinical studies in the
Development of Products in the Copromotion Territory under this
Agreement, which clinical studies shall consist of one (1) Phase I
Clinical Study, one (1) Phase II Clinical Study and one (1) Phase III
Clinical Study ******************. Within thirty (30) days of the
JSC's deciding that a clinical study on a Product is warranted,
*****************. If the JSC agrees, in writing, such agreement not
to be unreasonably withheld, ***********************, the Annual
Development Plan and Budget for the calendar year in which such
clinical study is to take place shall assign responsibility for such
clinical study to ViroPharma, or be amended to reflect such assignment
of responsibility. ****************************** Notwithstanding the
foregoing, the JSC may assign to ViroPharma responsibility for
conducting additional clinical trials beyond the three (3) described
above in this Section 4.5.
4.6 Funding of the Research Program.
4.6.1 Pre-Development Expenses. The Parties shall share the Pre-
Development Expenses *****************************.
4.6.2 Development Expenses. The Parties shall share the Development
Expenses, on a Product by Product basis, as follows:
(a) AHPC shall be responsible for *************** and
ViroPharma shall be responsible for ****************** of
the Development Expenses incurred by either Party.
(b) Expenses incurred by the Parties for the continued
development of a Product in a country of the Copromotion
Territory (i.e., for Phase IV clinical studies, studies
supporting approval of additional indications or labeling
changes or other post-marketing studies) will be treated
as Post-Approval Research and Regulatory Expenses
pursuant to Section 6.1.8(c).
4.6.3 Payment of Expenses; R&D Accounts. Subject to reconciliation as
provided in Section 4.6.5, each Party shall be responsible and
pay for the expenses incurred by it in performing its
obligations under the Research Program. Subject to the
limitations set forth in Section 4.6.4, each Party shall charge
all such expenses so incurred by it or its Affiliates to a
separate account created by such Party on its books and records
solely for the purpose of tracking expenses incurred in
connection with the Research Program (each, a "R&D Account").
Within thirty (30) days after the end of each Calendar Quarter,
each Party shall submit to the other Party a written summary of
all expenses charged to its R&D Account during such Calendar
Quarter, which summary shall be accompanied by reasonable
supporting documentation for such expenses.
4.6.4 Expense Limitations. The expenses charged by either Party to
its R&D Account in accordance with Section 4.6.3, shall not be
in an amount in excess of ************* of the amount included
for such expenses in the then current Annual Development Plan
and Budget unless the JSC recommends and the respective R&D
management of each Party approves such excess expenses.
Additionally, the Parties hereby agree that efforts of the
employees of a Party or its Affiliates in performing its
obligations under the Research Program shall be charged to such
Party's R&D Account at the rate of *******************, or such
other amount as may be agreed to from time to time in writing
by the Parties, for efforts in support of preclinical studies
of a Compound or otherwise performed in the Screening Phase or
the Research Phase of the Research Program and
***********************, or such other amount as may be agreed
to from time to time in writing by the Parties, for efforts in
support of clinical studies of a Compound or Product or
otherwise performed as part of the Development Phase of the
Research Program, provided, however, that only those efforts
that are contemplated by the Global Research and Development
Plan and/or the applicable Annual Development Plan and Budget
shall be chargeable by a Party to its R&D Account, except as
otherwise approved in writing by the JSC. All payments made by
a Party to a Third Party in connection with the performance of
its obligations under the Research Program shall be charged to
such Party's R&D Account at such Party's actual out-of-pocket
cost. Expenses incurred by each Party for equipment, materials
and supplies utilized in performing its obligations under the
Research Program shall not be separately charged to such
Party's R&D Account, except for those expenses incurred by a
Party, with the prior written consent of the JSC, in the
purchase or making of equipment, materials or supplies (other
than common laboratory supplies, e.g., pipettes, test tubes,
petri dishes, reagents, and the like) that are to be used
exclusively in connection with the performance of such Party's
obligations under the Research Program (e.g., laboratory
animals, compounds that are Development Candidates, Products,
placebo supplies, etc.), which expenses shall be charged to
such Party's R&D Account at such Party's actual out-of-pocket
expense incurred in purchasing or making such equipment,
materials or supplies. Notwithstanding the foregoing, in the
case of materials supplied to the Parties by AHPC for use in
clinical trials of Compounds or Products, AHPC shall charge to
its R&D Account its Fully Absorbed Standard Cost for such
materials, as adjusted to account for manufacturing cost
variances allocable to such materials.
4.6.5 Reconciliation of Expenses. Within sixty (60) days after the
end of each calendar year, AHPC shall prepare a reconciliation
report, accompanied by reasonable supporting documents and
calculations, which reconciles the amounts charged to each
Party's R&D Account during such calendar year pursuant to
Section 4.6.3, including, without limitation, making any
necessary adjustments for prior period manufacturing cost
variances allocable to Products utilized in Development, and
the share of the Parties' aggregate Pre-Development Expenses
and Development Expenses to be allocated to each of the Parties
for such calendar year in accordance with Sections 4.6.1 and
4.6.2. Within thirty (30) days after AHPC delivers such
reconciliation report to ViroPharma, the net amount shown as
being due either AHPC or ViroPharma (the "R&D Shortfall") will
be paid by the Party owing such amount, provided, however, that
in the event ViroPharma is the Party owing such amount to AHPC,
ViroPharma may, by written notice to AHPC provided within such
thirty (30) day period, ************************************.
If, with respect to any calendar year, ViroPharma has an R&D
Shortfall for which it is to reimburse AHPC, the balance in the
R&D Reimbursement Account has been exhausted, and ViroPharma is
unable or otherwise fails to pay to AHPC all or part of the R&D
Shortfall before the end of the thirty (30) day period required
by this Section 4.6.5, then the unpaid portion of the R&D
Shortfall (the "Deferred Payment") shall accumulate interest at
the annual interest rate of twelve percent (12%), compounded
monthly, and shall be repaid to AHPC ************************
*****, until all
such R&D Shortfalls and any interest accrued thereon are paid
in full. Notwithstanding the foregoing, all Deferred Payments
and all interest accumulating thereon shall be due and payable
to AHPC within seven (7) years after the end of the thirty (30)
day period described above in this Section 4.6.5. The failure
of ViroPharma to pay to AHPC all or part of an R&D Shortfall
prior to the end of such seven (7) year period shall not be a
material breach of this Agreement for purposes of Section 11.4.
4.6.6 Records and Audits. During the term of this Agreement, each
Party shall keep and maintain accurate and complete records
showing the expenses incurred by it in performing its
obligations under the Research Program during the three (3)
preceding calendar years, which books and records shall be in
sufficient detail such that each such expense can be (i)
allocated as a Pre-Development Expense or a Development Expense
and (ii) in the case of Development Expenses, allocated to
particular clinical trials or activities such that each Party's
responsibility for such expenses as provided in Section 4.6.2
can accurately be determined. Upon fifteen (15) days prior
written notice from a Party (the "Auditing Party"), the other
Party (the "Audited Party") shall permit an independent
certified public accounting firm of nationally recognized
standing selected by the Auditing Party and reasonably
acceptable to the Audited Party, to examine the relevant books
and records of the Audited Party and its Affiliates as may be
reasonably necessary to verify the reports submitted by the
Audited Party in accordance with Section 4.6.3 and the accuracy
of the reconciliation report prepared in accordance with
Section 4.6.5. An examination by a Party under this Section
4.6.6 shall occur not more than once in any calendar year and
shall be limited to the pertinent books and records for any
calendar year ending not more than thirty-six (36) months
before the date of the request. The accounting firm shall be
provided access to such books and records at the Audited
Party's facility(ies) where such books and records are normally
kept and such examination shall be conducted during the Audited
Party's normal business hours. The Audited Party may require
the accounting firm to sign a standard non-disclosure agreement
before providing the accounting firm access to the Audited
Party's facilities or records. Upon completion of the audit,
the accounting firm shall provide both AHPC and ViroPharma a
written report disclosing whether the reports submitted by the
Audited Party are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be
provided to the Auditing Party. If the accountant determines
that, based on errors in the reports so submitted, the
reconciliation report prepared in accordance with Section 4.6.5
is incorrect, the Parties shall promptly revise the
reconciliation report and any additional amount owed by one
Party to the other shall be paid within thirty days after
receipt of the accountant's report, along with interest at the
annual interest rate of twelve percent (12%), compounded
monthly from the date that such additional amount should have
first been paid,
provided, however, that no such interest shall be payable if
the errors leading to the reconciliation report being incorrect
were in the reports provided by the Party to receive such
additional amount. Additionally, if the accountant determines
that the reports submitted by the Audited Party overstate the
Audited Party's expenses by more than ten percent (10%), the
Audited Party shall reimburse the Auditing Party for the
expenses incurred by the Auditing Party in conducting the
audit.
4.7 Reporting and Disclosure.
4.7.1 Reports. Before each quarterly meeting of the JSC, ViroPharma
and AHPC will each provide the other with written copies of all
materials they intend to present at the JSC meeting plus, to
the extent not set forth in the JSC materials, a written report
summarizing any other material data and information arising out
of the conduct of the Research Program. If after receipt of any
such report, either Party shall request additional data or
information relating to Research Program data or Collaboration
Technology licensed hereunder, the Party to whom such request
is made shall promptly provide to the other Party such data or
information that such Party reasonably believes is necessary
for the continued conduct of the Research Program.
4.7.2 Quarterly Meeting. At the quarterly meeting of the JSC, AHPC
and ViroPharma will review in reasonable detail (i) all data
and information generated in the conduct of the Research
Program by each Party, and (ii) all Collaboration Technology
licensed hereunder developed by the Parties.
4.7.3 Disclosure. During the term of the Research Program, the
Parties will promptly disclose to one another all data,
information, Inventions, techniques and discoveries (whether
patentable or not) arising out of the conduct of the Research
Program and all Inventions, techniques and discoveries (whether
patentable or not) included in Collaboration Technology
licensed hereunder.
5. MANUFACTURING OF PRODUCTS; REGULATORY MATTERS.
5.1 Manufacturing. Pursuant to the licenses granted to AHPC in Section 2,
AHPC shall have the exclusive right to manufacture, either itself
and/or through Third Parties selected by AHPC, Products under the
Agreement. To the extent possible, AHPC shall notify ViroPharma at
least one (1) year before any anticipated occurrence of the inability
of AHPC to supply one hundred fifteen percent (115%) of the commercial
demands for Product in the Co-Promotion Territory as forecast by the
MSC. Within fifteen (15) days of such notice the MSC shall meet to
discuss the need to identify and obtain a secondary source of Product
supply to avoid or reduce the effect of any shortage. Additionally,
after the First Commercial Sale of a Product in the Copromotion
Territory, AHPC shall, by
December 1 of each year, provide ViroPharma with an estimate of AHPC's
expected Fully Absorbed Standard Cost for manufacturing the full
estimated commercial needs for such Product for sale in the
Copromotion Territory for the upcoming calendar year. AHPC shall
provide ViroPharma with an updated estimate from time to time if an
unexpected event occurs that significantly raises or lowers the last
estimate that AHPC provided to ViroPharma.
5.2 Labeling. To the extent permitted by applicable laws and regulations,
as may be reasonably requested by ViroPharma, AHPC shall include in
all Product Labels, Labeling, and Packaging, as those terms are use in
the FD&C Act, a statement indicating that such Product was developed
in collaboration with ViroPharma.
5.3 Regulatory Approvals. AHPC shall file, in its own name, all
applications for Regulatory Approval for Products in the Copromotion
Territory and in those countries of the AHPC Territory where AHPC, in
its sole discretion, determines it is commercially advantageous to do
so. AHPC shall have the primary responsibility for communicating with
any Regulatory Authority regarding any application for Regulatory
Approval or any Regulatory Approval once granted, provided, however,
that ViroPharma shall, upon AHPC's request, and at ViroPharma's
expense, (a) provide AHPC with advice and reasonable assistance in (i)
developing a Regulatory Approval filing strategy for Products, (ii)
reviewing study reports from clinical trials of Products, (iii)
preparing applications for Regulatory Approval for Products, (iv)
preparing supplements to applications for Regulatory Approval for
Products, (v) responding to questions from Regulatory Authorities
regarding applications for Regulatory Approval or any supplement
thereto and (b) participate in interactions with Regulatory
Authorities concerning the Products.
5.4 Regulatory Reporting. AHPC shall be responsible for filing all reports
required to be filed in order to maintain any Regulatory Approvals
granted for Products in the world, including, without limitation,
adverse drug experience reports. ViroPharma shall cooperate with AHPC
in preparing and filing all such reports and, upon AHPC's request,
provide AHPC with any information in ViroPharma's possession or
Control which AHPC reasonably deems to be relevant to any such
reports. Notwithstanding the foregoing, to the extent ViroPharma has
or receives any information regarding any adverse drug experience
which may be related to the use of any Product, ViroPharma shall
promptly provide AHPC with all such information in accordance with the
Adverse Event Reporting Procedures (as may be amended from time to
time upon mutual agreement of the Parties) set forth in Exhibit 5.4
attached hereto. Expenses (both internal expenses and out-pocket costs
paid to a Third Party) incurred by a Party in performing its
regulatory reporting obligations under this Section 5.4 in connection
with Regulatory Approvals in the Copromotion Territory shall be
charged by such Party to such Party's Marketing Account for such
Product as a Post-Approval Research and Regulatory Expense. AHPC shall
be solely responsible for expenses incurred by
it in performing its regulatory reporting obligations under this
Section 5.4 in connection with Regulatory Approvals in the AHPC
Territory.
6. COMMERCIALIZATION OF PRODUCTS.
6.1 Commercialization in the Copromotion Territory.
6.1.1 Principles of Copromotion. Pursuant to the licenses granted to
AHPC in Section 2, AHPC shall have the exclusive right to
Commercialize each Product in the Field in the Copromotion
Territory during the term of this Agreement. Notwithstanding
the foregoing, ViroPharma, subject to this Section 6.1 and
Section 11.6, shall have the right to Promote each Product,
jointly with AHPC, in the Copromotion Territory, using
professional sales representatives that are full time employees
of ViroPharma or that are employees of Contract Sales
Organizations ("CSOs"). The Parties' marketing activities shall
comply with the terms of this Agreement and the Copromotion
Territory Commercialization Plan.
6.1.2 Commercialization Plan. On a Product by Product basis, not
later than sixty (60) days after the filing of the first
application for Regulatory Approval of a Product in the
Copromotion Territory, the MSC shall prepare and approve a
rolling multiyear (not less than three (3) years) plan for
Commercializing such Product in the Copromotion Territory (the
"Copromotion Territory Commercialization Plan"), which plan
includes a comprehensive market development, marketing, sales,
supply and distribution strategy for such Product in the
Copromotion Territory. The Copromotion Territory
Commercialization Plan shall be updated by the MSC at least
once each calendar year such that it addresses no less than the
three (3) upcoming years. Not later than thirty (30) days after
the filing of the first application for Regulatory Approval of
a Product in the Copromotion Territory and thereafter on or
before September 30 of each calendar year, the MSC shall
prepare an annual commercialization plan and budget (the
"Annual Commercialization Plan and Budget"), which plan is
based on the then current Copromotion Territory
Commercialization Plan and includes a comprehensive market
development, marketing, sales, supply and distribution
strategy, including an overall budget for anticipated
marketing, promotion and sales efforts in the upcoming calendar
year (the first such Annual Development Plan and Budget shall
cover the remainder of the calendar year in which such Product
is anticipated to be approved plus the first full calendar year
thereafter). The Annual Commercialization Plan and Budget will
specify which Target Markets and distribution channels each
Party shall devote its respective Promotion efforts towards,
the personnel and other resources to be devoted by each Party
to such efforts, the number and positioning of Details to be
performed by each Party, as well as market and sales
forecasts and related operating expenses, for the Product in
each country of the Copromotion Territory, and budgets for
projected Pre-Marketing Expenses, Sales and Marketing Expenses
and Post-Approval Research and Regulatory Expenses. In
preparing and updating the Copromotion Territory
Commercialization Plan and each Annual Commercialization Plan
and Budget, the MSC will take into consideration factors such
as market conditions, regulatory issues and competition.
6.1.3 Allocation of Target Markets; Sales Effort. On a Product by
Product basis, at least ninety (90) days before the launch of
such Product in a country of the Copromotion Territory and
thereafter, at least ninety (90) days before the beginning of
each calendar year, the MSC *********** in such country and
************** on the following criteria and conditions:
(a) each ********* in each country of the Copromotion
Territory shall, as much as is reasonably possible,
*********** for such Product expected to be made in such
country of the Copromotion Territory in accordance with
the ************ for the Promotion of such Product in
such country;
(b) the inclusion of ************;
(c) AHPC's aggregate ***********; and
(d) the MSC may not, without the prior written consent of the
President of ViroPharma, ***********.
The number of Details assigned to a Party by the MSC in
accordance with this Section 6.1.3 shall be such Party's
*************.
6.1.4 Incremental Sales Force Effort. If a Party is asked by the MSC
to deliver more sales force effort than that which is agreed by
the Parties to be more than a 50/50 selling effort in any
Calendar Quarter, and if such Party provides such increased
sales force effort (the "Incremental Sales Force Effort"), such
Party shall be entitled to charge the cost of the Incremental
Sales Force Effort to such Party's Marketing Account as an
Incremental Sales Force Effort Expense. The cost to be so
charged shall be at a rate approved by the MSC at the time such
Incremental Sales Force Effort is requested and shall be on a
cost per Detail basis. If AHPC is the Party providing the
Incremental Sales Force Effort, AHPC shall be reimbursed for
its Incremental Sales Force Expense by deducting the
Incremental Sales Force Expense incurred for such Calendar
Quarter from the Net Sales of such Product sold during such
Calendar Quarter prior to the allocation of Net Profits for
such Calendar Quarter. If ViroPharma is the Party providing the
Incremental Sales Force Effort, AHPC shall
reimburse ViroPharma for its Incremental Sales Force Expense by
deducting such Incremental Sales Force Expense from the Net
Sales of such Product sold during such Calendar Quarter prior
to the allocation of Net Products for such Calendar Quarter and
distributing such deducted amount to ViroPharma simultaneously
with the distribution of Net Profits to ViroPharma for such
Calendar Quarter. The Party incurring the Incremental Sales
Force Expense shall report the same to the other Party as part
of the reports submitted under Section 6.1.8(d).
6.1.5 Extra Effort. If a Party expends more effort than originally
required of it by the Copromotion Territory Commercialization
Plan in order to perform Details that were part of the other
Party's Assigned Sales Force Effort, and that the other Party
fails to perform and which additional effort is approved in
advance by the MSC ("Extra Effort"), the first Party shall be
entitled to charge the costs of the Extra Effort ("Extra Effort
Expense") to its Marketing Account on a cost per Detail basis
consistent with Section 6.1.8(d), as well as twelve percent
(12%) annual interest, compounded monthly, accrued on the
amount charged for the period in which the Extra Effort is
expended. If AHPC is the Party providing the Extra Effort, AHPC
shall be reimbursed for its Extra Effort Expense by deducting
the Extra Effort Expense incurred for such Calendar Quarter
from the Net Sales of such Product sold during such Calendar
Quarter before the allocation of Net Profits for such Calendar
Quarter. If ViroPharma is the Party providing the Extra Effort,
AHPC shall reimburse ViroPharma for its Extra Effort Expense by
deducting such Extra Effort Expense from the Net Sales of such
Product sold during such Calendar Quarter before the allocation
of Net Products for such Calendar Quarter and distributing such
deducted amount to ViroPharma simultaneously with the
distribution of Net Profits to ViroPharma for such Calendar
Quarter. The Party incurring the Extra Effort Expense shall
report the same to the other Party as part of the reports
submitted under Section 6.1.8(d).
6.1.6 Performance Metrics. The ********** or as part of any
************ shall be determined according to Detail reporting
mechanisms and methodology that are approved and applied
consistently by the MSC.
6.1.7 Sales and Distribution; Recalls. During the term of this
Agreement, AHPC shall be responsible for:
(a) distribution of all Products in the Copromotion Territory
hereunder, the booking of all sales with respect to such
Products and the performance of related services. If
ViroPharma receives any order for the Product in the
Copromotion Territory during the term of this Agreement,
it shall promptly refer such orders to AHPC.
(b) handling and implementing all recalls and market withdrawals
of any Product in the Copromotion Territory. ViroPharma will
make available to AHPC, upon request, all of ViroPharma's
pertinent records that AHPC may reasonably request to assist
it in effecting any recall or market withdrawals. Except as
expressly otherwise provided below in this Section 6.1.7(b),
the Parties shall share equally all other costs of a recall
or marketing withdrawal of a Product in the Co-Promotion
Territory. Notwithstanding the foregoing, a Party shall bear
any and all costs of a recall or market withdrawal of a
Product in the Co-Promotion Territory to the extent such
recall or market withdrawal results from a negligent act or
omission or intentional misconduct on the part of such
Party, including, without limitation, the breach of any of
such Party's warranties under Sections 10.3(d) or 10.3(e)
hereof, and not from a negligent act or omission or
intentional misconduct on the part of the other Party. A
Party shall have no obligation to reimburse or otherwise
compensate the other Party for any lost profits or income
that may arise in connection with any such recall or market
withdrawal.
(c) handling all aspects of order processing, invoicing and
collection, inventory and receivables.
(d) providing customer support, including handling medical
queries, and performing other functions consistent with
consumer practice for pharmaceutical products consistent
with the then current Copromotion Territory
Commercialization Plan and the applicable Annual
Commercialization Plan and Budget.
6.1.8 Commercialization Expenses.
(a) Pre-Marketing Expenses. On a Product by Product and country
by country basis, before Regulatory Approval of such Product
in such country of the Copromotion Territory, the Pre-
Marketing Expenses incurred by the Parties with respect to
such Product in anticipation of obtaining Regulatory
Approval of such Product in such country shall
***************. As such Pre-Marketing Expenses are incurred
they shall be paid for by the Party incurring such expenses,
subject to reimbursement as set forth in Section 6.1.8(g).
(b) Sales and Marketing Expenses. On a Product by Product and
country by country basis, after Regulatory Approval of such
Product in such country of the Copromotion Territory, the
Sales and Marketing Expenses incurred by the Parties shall
*********************. The costs of a Party's professional
sales representatives and marketing personnel
*********************.
(c) Post-Approval Research and Regulatory Expenses. On a Product
by Product and country by country basis, after Regulatory
Approval of such Product in such country of the Copromotion
Territory, the Post-Approval Research and Regulatory
Expenses incurred by the Parties in connection with such
Product in such country shall *********************.
(d) Payment of Expenses; Marketing Accounts. Subject to
reconciliation as provided in Sections 6.1.8(f) or 6.1.8(g),
as applicable, *********************. Subject to the
limitations set forth in Section 6.1.8(e), each Party shall
charge all such expenses so incurred by it or its Affiliates
to a separate account created by such Party on its books and
records solely for the purpose of tracking expenses incurred
in connection with the marketing, Promotion, distribution
and sale of Products in the Copromotion Territory (each, a
"Marketing Account"). Within thirty (30) days after the end
of each Calendar Quarter, each Party shall submit to the
other Party a written summary of all Pre-Marketing Expenses,
Sales and Marketing Expenses, Post-Approval Research and
Regulatory Expenses, Incremental Sales Force Expenses and
Extra Effort Expenses incurred by it in performing its
obligations in connection with the marketing, Promotion,
distribution and sale of Products in the Copromotion
Territory, charged to its Marketing Account during such
Calendar Quarter, which summary shall be accompanied by
reasonable supporting documentation for such expenses.
(e) Expense Limitations. The Pre-Marketing Expenses, Sales and
Marketing Expenses and Post-Approval Research and Regulatory
Expenses charged by either Party to its Marketing Account in
accordance with this Section 6.1.8, shall not be in amount
in excess of *********************of the amount included for
such expenses in the then current Annual Commercialization
Plan and Budget, unless the MSC approves such excess
expenses. All payments made by a Party to any Third Party in
connection with the performance of its obligations in
connection with the Commercialization of a Product in the
Copromotion Territory shall be charged to such Party's
Marketing Account at such Party's actual out-of-pocket cost
incurred in accordance with the MSC approved contract
entered into with such Third Party.
(f) Reconciliation of Pre-Marketing Expenses. Within sixty (60)
days after the end of each Calendar Quarter, AHPC shall
prepare a
reconciliation report, accompanied by reasonable supporting
documentation and calculations, which reconciles the Pre-
Marketing Expenses charged to each Party's Marketing Account
during such Calendar Quarter pursuant to this Section 6.1.8
and the share of the Parties' aggregate Pre-Marketing
Expenses to be allocated to each of the Parties for such
Calendar Quarter in accordance with this Section 6.1.8.
Within thirty (30) days after AHPC delivers such
reconciliation report to ViroPharma, *********************.
If, with respect to any Calendar Quarter, ViroPharma has a
Pre-Marketing Expense Shortfall for which it is to reimburse
AHPC and ViroPharma is unable or otherwise fails to pay to
AHPC all or part of the Pre-Marketing Expense Shortfall
before the end of the thirty (30) day period required by
this Section 6.1.8(f), the unpaid portion of the Pre-
Marketing Shortfall would accumulate interest at the annual
interest rate of twelve percent (12%), compounded monthly,
and would be combined with any R&D Shortfall and repaid to
AHPC in accordance with Section 4.6.5.
(g) Reimbursement of Sales and Marketing Expenses and Post-
Approval Research and Regulatory Expenses. At the time AHPC,
pursuant to Section 7.6.3, distributes to ViroPharma,
ViroPharma's share of Net Profits obtained from the sale of
a Product in a country of the Copromotion Territory during
any Calendar Quarter, AHPC shall also reimburse each of AHPC
and ViroPharma for those Sales and Marketing Expenses, Post-
Approval Research and Regulatory Expenses, Incremental Sales
Force Effort Expenses, and Extra Effort Expenses that are
(i) directly allocable to the Commercialization of such
Product in such country during such Calendar Quarter (ii)
properly charged by such Party to its Marketing Account and
(iii) reported to the other Party in accordance with this
Section 6.1.8. Such reimbursements shall be made solely from
revenues obtained by AHPC which are attributable to the Net
Sales of such Product in such country of the Copromotion
Territory, *********************. If the Net Sales
********************* shall be carried over on such Party's
Marketing Account into subsequent Calendar Quarters
*********************.
6.1.9 Marketing and Promotional Materials. The MSC shall determine the
content, quantity and method of distribution of any promotional
materials related to the Product in the Copromotion Territory,
provided, however, that all such marketing and promotional
materials shall be subject to the approval of AHPC's and
ViroPharma's legal, medical affairs, marketing and regulatory
affairs department before any use thereof by either Party. AHPC
will be responsible for preparing and duplicating such marketing
and promotional materials and shall provide reasonable quantities
of the same to ViroPharma for use by ViroPharma in connection
with its Promotion of the Product in the Copromotion Territory
hereunder. Each Party shall use only marketing and promotional
materials approved by the MSC and provided by AHPC. All copyright
and other intellectual property rights in said promotional
materials shall remain vested in AHPC. Neither Party may not
independently create, distribute or use sales, promotion or other
similar material relating to a Product in the Copromotion
Territory without the prior written consent of either the MSC or
the other Party.
6.1.10 Promotional Claims. Each Party shall limit the claims of safety
and efficacy that such Party or its sales force makes for a
Product in the Copromotion Territory to those that are consistent
with the approved labeling for such Product in such country of
the Copromotion Territory. Neither Party may add, delete or
modify claims of efficacy or safety in its Promotion of any
Product in the Copromotion Territory nor make any changes in
Promotion materials and literature approved by the MSC. Each
Party's Detailing and Promotion of a Product in the Copromotion
Territory shall be in strict adherence to all regulatory,
professional and legal requirements including, without
limitation, FDA's regulations and guidelines concerning the
advertising of prescription drug products, the American Medical
Association's Guidelines on Gifts to Physicians, the PhRMA
Guidelines for Marketing Practices, the ACCME Standards for
Commercial Support of Continuing Medical Education, the then
current Copromotion Territory Commercialization Plan for the
Product and any updates thereto.
6.1.11 Samples. When Detailing and Sampling the Product, each Party's
professional sales representative shall complete Sample Receipt
Forms provided by AHPC. A copy of the completed Sample Receipt
Forms shall be left with the Physician receiving the Detail. Such
professional sales representative shall mail to AHPC, in pre-
addressed, postage-paid envelopes provided by AHPC, at the close
of each business day the original completed Sample Receipt Forms
for all Details performed by such professional sales
representative that day. A copy of all such Sample Receipt Forms
shall be kept by each such professional sales representative.
Each Party shall ensure that each of its professional sales
representatives fills out the Sample Receipt Forms accurately,
completely and timely. The Fully-Absorbed Standard Cost incurred
by AHPC in providing and processing Sample Receipt forms shall be
charged by AHPC to its Marketing Account as a Sales and Marketing
Expense.
6.1.12 Communications. Each Party shall be fully responsible for
disseminating accurate information regarding a Product to its
professional sales
representatives based on the Product's approved labeling and
information provided by the MSC.
6.1.13 Training. Each Party shall be responsible for the training of its
own professional sales representatives, in accordance with the
training requirements and training programs and using training
materials approved by the MSC and shall require each of its
professional sales representatives to attend sales training for a
Product before their Promotion of such Product in the Copromotion
Territory hereunder. After the initial training meeting, each
Party shall periodically provide additional training, in
accordance with the training requirements and training programs
and using training materials approved by the MSC, to each of its
professional sales representatives Promoting Products hereunder.
At the discretion and upon approval of the MSC, any such training
meetings may be held jointly by the Parties. The expenses
incurred by each Party in training its professional sales
representatives before the launch of a Product shall be charged
to such Party's Marketing Account as a Pre-Marketing Expense. The
expenses incurred by each Party in training its professional
sales representatives after the launch of a Product shall be
charged to such Party's Marketing Account as a Sales and
Marketing Expense.
6.1.14 Compliance. In connection with its Promotion of the Product in
the Copromotion Territory, each Party shall comply and shall
cause each of its employees, representatives and agents,
including, without limitation, each of its professional sales
representatives, to comply with all laws and regulations of the
Copromotion Territory and shall do nothing which such Party knows
or reasonably should know would jeopardize the goodwill or
reputation of either Party or the reputation of any Product.
6.1.15 Generic Product. On a Product by Product and country by country
(within the Copromotion Territory) basis, no later than three (3)
years before the expiration of the last to expire of the Patent
Rights conferring market exclusivity for such Product in such
country of the Copromotion Territory, the Parties will determine
by mutual agreement after good faith discussions whether to
jointly launch a generic version of such Product in the
Copromotion Territory and what the terms and conditions regarding
such Product will be. If the Parties, on or before such time, are
unable to agree to jointly launch such a generic Product in such
country, then upon expiration of the relevant Patent Rights in
such country, and notwithstanding any other exclusive or non-
exclusive license granted under this Agreement, each Party shall
have the right and license to utilize the Collaboration
Technology and the other Party's Know-How solely to the extent
necessary to launch and Commercialize its own generic version of
such Product in such country and thereafter shall have no further
obligations to the other Party with respect to such generic
Product.
6.2 Commercialization in the AHPC Territory. AHPC shall have the sole
right, either directly or through its Affiliates, sublicensees
and/or distributors, to market, distribute and sell Products in
the AHPC Territory. AHPC shall use its Commercially Reasonable
Efforts to sell each Product in those countries of the AHPC
Territory for which AHPC has obtained Regulatory Approval for
such Product. AHPC shall be responsible for all marketing and
selling expenses for the sale of Products in the AHPC Territory
and AHPC shall have the sole right and discretion to determine
the price of Products sold in the AHPC Territory and to make all
other business decisions concerning the Commercialization of
Products in the AHPC Territory.
7. CONSIDERATION; PROFIT SHARING.
7.1 Research Program Expense Reimbursements. AHPC agrees to provide
ViroPharma *********************************:
(a) AHPC shall pay a nonrefundable fee of five million dollars
($5,000,000.00) to ViroPharma on the first business day after the
Effective Date in consideration of ViroPharma's agreement to
participate in the JSC, including the preparation, updating and
implementation of the Global Research and Development Plan and
the Annual Development Plans and Budgets; and
(b) AHPC shall reimburse ViroPharma for up to ************** of
ViroPharma's *****************. AHPC shall create on its books
and records an ***************** for this purpose, which
****************, but shall be subject to adjustment, from time
to time, 7.2 Additional Development Expense Payments. AHPC shall
pay to ViroPharma the following additional development expense
payments, each such payment being due and payable within thirty
(30) days after the occurrence of the corresponding event:
************************************.
7.2 *************************.
Each of the additional development expense payments set forth above
shall be payable one time only **********************, except in the
case of the additional development expense payments payable for
*******************, which additional development expense payments
shall be payable with respect to ********************, provided,
however, that, with respect to any Product that ****************, the
receipt of *************, shall not result in ****************.
If, with respect to any Product, any of the above events ************
does not occur because the JSC determines that ***************, such
event will be
deemed to have occurred on the date the JSC makes such a determination
for purposes of determining *********************. Additionally, if
certain of the above stated events occur ***************, if such
later events occur in connection with the subsequent Development of
another Product hereunder, ******************. For example,
*************************.
7.3 Purchase of Equity. On the Effective Date, AHPC and ViroPharma shall
enter into the Stock Purchase Agreement attached to this Agreement as
Exhibit 7.3, pursuant to which AHPC shall purchase, and ViroPharma
will sell to AHPC, shares of the capital stock of ViroPharma on the
terms and conditions set forth therein.
7.4 Royalties.
7.4.1 Royalty Rates. In consideration for the licenses granted to
AHPC under Section 2.1 hereof, AHPC, on a Product by Product
and calendar year by calendar year basis, will pay to
ViroPharma royalties based on Net Sales obtained by AHPC or its
Affiliates from the sale of such Product in the AHPC Territory,
which royalties shall be calculated as follows:
royalty = A + B + C, where:
A = either (i) for **************** of the portion of
AHPC's and its Affiliates' Net Sales obtained from
the sale of such **************** in the AHPC
Territory (excluding Net Sales obtained from the
sale of such Product in any countries where the
obligation to pay royalties under this Section
7.4.1 has expired in accordance with Section 7.4.3
with respect to such Product), which, during the
calendar year in question are less than or equal
******************, or (ii) for ************ of
the portion of AHPC's and its Affiliates' Net
Sales obtained from the sale of such
**************** in the AHPC Territory (excluding
Net Sales obtained from the sale of such Product
in any countries where the obligation to pay
royalties with under this Section 7.4.1 has
expired in accordance with Section 7.4.3 with
respect to such Product) which, during the
calendar year in question are less than or equal
to **************;
B = either (i) for ************ of the portion of
AHPC's and its Affiliates' Net Sales obtained from
the sale of such **************** in the AHPC
Territory (excluding Net Sales obtained from the
sale of such Product in any countries where the
obligation to pay royalties with under this
Section 7.4.1 has expired in accordance with
Section
7.4.3 with respect to such Product), which, during
the calendar year in question are greater than
************ and less than or equal to
*****************, or (ii) for ************* of
the portion of AHPC's and its Affiliates' Net
Sales obtained from the sale of such
**************** in the AHPC Territory (excluding
Net Sales obtained from the sale of such Product
in any countries where the obligation to pay
royalties with under this Section 7.4.1 has
expired in accordance with Section 7.4.3 with
respect to such Product), which, during the
calendar year in question are greater
*******************; and
C = either (i) for ************ of the portion of
AHPC's and its Affiliates' Net Sales obtained from
the sale of such **************** in the AHPC
Territory (excluding Net Sales obtained from the
sale of such Product in any countries where the
obligation to pay royalties with under this
Section 7.4.1 has expired in accordance with
Section 7.4.3 with respect to such Product),
which, during the calendar year in question are
greater than ***************** or (ii) for
****************of the portion of AHPC's and its
Affiliates' Net Sales obtained from the sale of
such **************** in the AHPC Territory
(excluding Net Sales obtained from the sale of
such Product in any countries where the obligation
to pay royalties with under this Section 7.4.1 has
expired in accordance with Section 7.4.3 with
respect to such Product), which, during the
calendar year in question are greater than
*******************************.
ViroPharma acknowledges and agrees that nothing in this Agreement
(including, without limitation, any exhibits or attachments
hereto) shall be construed as representing an estimate or
projection of either (i) the number of Class A Products and/or
Class B Products that will or may be successfully developed
and/or commercialized or (ii) anticipated sales or the actual
value of the ViroPharma Technology, and Compound or any Product
and that the figures set forth in this Section 7.4 or elsewhere
in this Agreement or that have otherwise been discussed by the
Parties are merely intended to define AHPC's royalty obligations
to ViroPharma in the event such sales performance is achieved.
AHPC MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, THAT IT WILL BE ABLE TO SUCCESSFULLY DEVELOP AND/OR
COMMERCIALIZE ANY PRODUCT OR, IF COMMERCIALIZED THAT ANY IT WILL
ACHIEVE ANY PARTICULAR SALES LEVEL OF SUCH PRODUCT(S).
7.4.2 Royalty Adjustments. For each Product sold in each country of the
AHPC Territory in each Calendar Quarter, the royalties payable to
ViroPharma, pursuant to Section 7.4.1 and/or, if applicable,
Section 11.5 or 11.6, for the Net Sales of such Product in such
country during such Calendar Quarter may be reduced as set forth
below, provided, however, that in no event will such royalties in
any country be reduced by more than ************* by reason of
the adjustments set forth below:
(a) Unpatented Products. If in a given Calendar Quarter during
the Full Royalty Rate Period, neither of Section 1.49(a) or
(b) continues to be true because one or more of Valid Claims
are invalidated in such country, the royalties payable to
ViroPharma, pursuant to Section 7.4.1 and/or, if applicable,
Section 11.5 or 11.6, for the Net Sales of such Product in
such country during such Calendar Quarter shall be reduced
to ********** of the applicable marginal rate set forth in
Section 7.4.1 and/or, if applicable, Section 11.5 or 11.6.
To calculate such reduced royalty amount in such countries,
Net Sales will be allocated among the royalty increments in
Sections 7.4.1, 11.5 and/or 11.6, as applicable, based on
*******************.
(b) Competition. If Competition (as defined below in this
Section 7.4.2 (b)) exists during a given Calendar Quarter
with respect to a Product in any country, the royalties
payable to ViroPharma, pursuant to Section 7.4.1 and/or, if
applicable, Section 11.5 or 11.6, for the Net Sales of such
Product in such country during such Calendar Quarter shall
be reduced to ************* of the applicable marginal rate
set forth in Section 7.4.1 and/or, if applicable, Section
11.5 or 11.6. To calculate such reduced royalty amount when
Competition exists in such countries, Net Sales will be
allocated among the royalty increments in Sections 7.4.1,
11.5 and/or 11.6, as applicable, based on the
**************. For purposes of this Section 7.4.2(b),
Competition shall be deemed to exist if, during the
applicable Calendar Quarter, on a Product by Product and
country by country basis, (i) one or more Third Parties is
selling a pharmaceutical product for use in the Field
containing as an active ingredient, the Compound that is an
active ingredient in the Product being sold by or on behalf
of AHPC, its Affiliates or sublicensees in such country; and
(ii) the sales of such competing products (measured on a
unit basis) accounts for ******** or more of the total
market in such country. The total market in such country
shall be the sum of (x) the number of units of the affected
Product sold by AHPC, its Affiliates or sublicensees in such
country during such Calendar Quarter and (y) the number of
units of competing products sold by parties other than AHPC,
its
Affiliates or sublicensees in such country during such
Calendar Quarter.
7.4.3 Term of Royalty. The royalties payable pursuant to Section
7.4.1 and, if applicable, pursuant to Section 11.5 or 11.6,
as adjusted pursuant to Section 7.4.2, will be payable on a
country by country and Product by Product basis during the
Full Royalty Rate Period. During the Reduced Royalty Rate
Period for a Product, AHPC shall have an exclusive license,
except as otherwise provided under this Agreement, to use
the ViroPharma Know-How in the Field and ViroPharma's
interest in any Collaboration Know-How in the Field, to
make, have made, use, import, offer to sell and sell such
Product in such country. In consideration of such license,
AHPC shall pay to ViroPharma a royalty in the amount of
three percent (3%) of the Net Sales obtained from the sale
by AHPC and its Affiliates of such Product in such country,
which royalty shall be payable only for sales made during
the Reduced Royalty Rate Period. On a country by country
basis, upon expiration of the Reduced Royalty Rate Period,
the license granted to AHPC with respect to such country
under this Section 7.4.3 shall continue to be a perpetual
license which thereafter shall become irrevocable, fully-
paid and royalty-free license, exclusive except for the
license granted pursuant to Section 6.1.15.
7.5 Profit Split Payments.
7.5.1 Baseline Allocation of Profits. In consideration for
ViroPharma's provision of services in connection with the
Promotion of Products in the Copromotion Territory pursuant
to Section 6.1, AHPC, on a country by country basis, shall
pay to ViroPharma *********************of the Net Profits
obtained from the sale of a Product in such country of the
Co-Promotion Territory, which percentage may be adjusted
from time to time in accordance with Section 7.5.3, (the
most recently updated and adjusted allocation, ViroPharma's
"Baseline Allocation of Net Profits") which payment shall be
made to ViroPharma at the times and in the manner set forth
in Section 7.6.3. AHPC shall retain the remaining portion of
Net Profits (AHPC's "Baseline Allocation of Net Profits").
Notwithstanding the foregoing, in any Penalty Year, the
allocation of Net Profits will be adjusted in accordance
with Section 7.5.2.
7.5.2 Temporary Adjustments to Distribution of Profits. In a
Penalty Year, each Party will be allocated a portion of Net
Profits which allocation will be made based on the following
formula:
***************************
where **************************
7.5.3 Permanent Adjustment to Baseline Allocation of Profits. If a
Party incurs *****************, and the other Party incurs no
Lapse Year during this period, then the Party incurring no
Lapse Years may, at its discretion, impose a permanent change
in the Baseline Allocation of Net Profits established in
Section 7.5.1. The new Baseline Allocation of Profits shall be
equivalent to the average proportion of Net Profits received by
such Party during the *************** and shall become
effective on January 1 of the year following the
****************. Examples of the calculation of the
distribution of Net Profits during Penalty Years and the
imposition of new baseline distributions are set forth in
Exhibit 7.5.3.
7.5.4 Term of Profit Split Payments. With respect to a Product, AHPC,
on a country by country basis in the Copromotion Territory,
shall pay to ViroPharma a portion of Net Profits obtained from
the sale of such Product in such country of the Copromotion
Territory as set forth in Section 7.5.1 for so long as both
Parties are Promoting such Product in such country pursuant to
this Agreement.
7.6 Reports and Payments.
7.6.1 Cumulative Royalties. The obligation to pay royalties under
this Agreement shall be imposed only once with respect to a
single unit of a Product regardless of how many Valid Claims
included within the Patent Rights would, but for this
Agreement, be infringed by the manufacture, use, import, offer
for sale or sale of such Product in the country of such
manufacture, use or sale.
7.6.2 Royalty Statements and Payments. AHPC, within sixty (60) days
after the end of each Calendar Quarter shall deliver to
ViroPharma a report setting forth for such Calendar Quarter the
following information, on a Product by Product basis, with
respect to Products sold in the AHPC Territory, (a) the Net
Sales of such Product in the AHPC Territory, (b) the basis for
any adjustments to the royalty payable for the sale of such
Product, and (c) the royalty due hereunder for the sale of such
Product. No such reports shall be due for any Product before
the First Commercial Sale of such Product in the AHPC
Territory. The total royalty due for the sale of Products
during such Calendar Quarter less any deductions made in
accordance with Section 4.6.5 shall be remitted at the time
such report is made.
7.6.3 Net Profit Statements and Payments.
(a) Estimated Statements. Within the later of (i) thirty (30)
days after the end of each Calendar Quarter or (ii)
fifteen (15) days beyond the date on which AHPC receives
from ViroPharma the
report required under Section 6.1.8(d) with respect to
such Calendar Quarter, AHPC shall deliver to ViroPharma a
report setting forth the following estimated information
with respect to Products sold in the Copromotion Territory
during such Calendar Quarter: (i) the Net Sales of such
Product in each country of the Copromotion Territory, (ii)
the Net Profits obtained from the sale of such Product in
each country of the Copromotion Territory, (iii) the
deductions made from Net Sales in calculating such Net
Profits, including, without limitation, the computation of
Cost of Goods Manufacture for Sale, each Party's Sales and
Marketing Expenses, Incremental Sales Force Expenses, if
any, Extra Effort Expenses, if any, and Post-Approval
Research and Regulatory Expenses, and (iv) the amount of
Net Profits to be allocated to each Party, including an
explanation of any deviation from the Baseline Allocation
of Net Profits made in accordance with Section 7.5.1. No
such reports shall be due with respect to any Product
before the First Commercial Sale of such Product in the
Copromotion Territory.
(b) Actual Statements. After the First Commercial Sale of a
Product in the Copromotion Territory, AHPC, within sixty
(60) days after the end of each Calendar Quarter, shall
deliver to ViroPharma a report setting forth for such
Calendar Quarter the following information, on a Product
by Product and Country by Country basis: (i) the Net Sales
of such Product in each country of the Copromotion
Territory, (ii) the Net Profits obtained from the sale of
such Product in each country of the Copromotion Territory,
(iii) the deductions made from Net Sales in calculating
such Net Profits, including, without limitation, the
computation of Cost of Goods Manufactured for Sale in such
detail as AHPC customarily uses for its own internal
reporting purposes, or as reasonably requested by
ViroPharma, each Party's Sales and Marketing Expenses,
Incremental Sales Force Expenses, if any, Extra Effort
Expenses, if any, and Post-Approval Research and
Regulatory Expenses, and (iv) the amount of Net Profits to
be allocated to each Party, including an explanation of
any deviation from the Baseline Allocation of Net Profits
made in accordance with Section 7.5.1. No such reports
shall be due with respect to any Product before the First
Commercial Sale of such Product in the Copromotion
Territory. At the time such report is made, AHPC shall
remit to ViroPharma the amount of Net Profits allocated to
ViroPharma for such Calendar Quarter less any deductions
made in accordance with Section 4.6.5.
7.6.4 Taxes and Withholding. All payments under this Agreement will
be made without any deduction or withholding for or on account
of any tax
unless such deduction or withholding is required by applicable
laws or regulations. If the paying Party is so required to
deduct or withhold such Party will (i) promptly notify the
other Party of such requirement, (ii) pay to the relevant
authorities the full amount required to be deducted or withheld
promptly upon the earlier of determining that such deduction or
withholding is required or receiving notice that such amount
has been assessed against the other Party, (iii) promptly
forward to the other Party an official receipt (or certified
copy) or other documentation reasonably acceptable to the other
Party evidencing such payment to such authorities.
7.6.5 Currency. All amounts payable and calculations hereunder shall
be in United States dollars. As applicable, Net Sales, Net
Profits and any expenses incurred by either Party shall be
translated into United States dollars in accordance with AHPC's
customary and usual translation procedures, consistently
applied. If, due to restrictions or prohibitions imposed by
national or international authority, payments cannot be made as
provided in this Article 7, the Parties shall consult with a
view to finding a prompt and acceptable solution, and AHPC will
deal with such monies as ViroPharma may lawfully direct at no
additional out-of-pocket expense to AHPC. Notwithstanding the
foregoing, if payments arising in connection with the sale of
Products in any country cannot be remitted to ViroPharma for
any reason within six (6) months after the end of the Calendar
Quarter during which they are earned, then AHPC shall be
obligated to deposit the royalties in a bank account in such
country in the name of ViroPharma.
7.7 Maintenance of Records; Audits.
7.7.1 Record Keeping for the Copromotion Territory. AHPC shall keep
and maintain accurate and complete records in connection with
the sale of Products in the Copromotion Territory hereunder and
each Party shall keep and maintain accurate and complete
records showing the expenses incurred and efforts employed by
or on behalf of it or its Affiliates in Promoting Products in
the Copromotion Territory hereunder, which books and records
shall be in sufficient detail to permit the accurate
determination of Net Sales, Net Profits (including, without
limitation, the deduction of each Party's expenses from Net
Profits pursuant to Section 1.70), and all other figures
necessary for the verification of the allocation of Net Profits
to be made under Section 7.5. Each Party shall maintain and
cause its Affiliates to maintain such records for a period of
at least three (3) years after the end of the calendar year in
which they were generated.
7.7.2 Record Keeping for the AHPC Territory. AHPC shall keep and
shall cause its Affiliates and sublicensees to keep accurate
books and accounts of record in connection with the sale of
Products in the AHPC Territory in
sufficient detail to permit accurate determination of all
figures necessary for verification of royalties to be paid
hereunder. AHPC and its Affiliates and sublicensees shall
maintain such records for a period of at least three (3) years
after the end of the calendar year in which they were
generated.
7.7.3 Audits. Upon thirty (30) days prior written notice from a Party
(the "Auditing Party"), the other Party (the "Audited Party")
shall permit an independent certified public accounting firm of
nationally recognized standing selected by the Auditing Party
and reasonably acceptable to the Audited Party, to examine, at
the Auditing Party's sole expense, the relevant books and
records of the Audited Party and its Affiliates as may be
reasonably necessary to verify the accuracy of the reports
submitted by the Audited Party in accordance with Section 7.6
and the calculation and allocation of Net Profits or the
payment of royalties hereunder, as applicable. An examination
by a Party under this Section 7.7.3 shall occur not more than
once in any calendar year and shall be limited to the pertinent
books and records for any calendar year ending not more than
thirty-six (36) months before the date of the request. The
accounting firm shall be provided access to such books and
records at the Audited Party's facility(ies) where such books
and records are normally kept and such examination shall be
conducted during the Audited Party's normal business hours. The
Audited Party may require the accounting firm to sign a
standard non-disclosure agreement before providing the
accounting firm access to the Audited Party's facilities or
records. Upon completion of the audit, the accounting firm
shall provide both AHPC and ViroPharma a written report
disclosing whether the reports submitted by the Audited Party
are correct or incorrect, whether the calculation and
allocation of Net Profits are correct or incorrect, whether the
royalties paid are correct or incorrect, and, in each case, the
specific details concerning any discrepancies. No other
information shall be provided to the Auditing Party.
7.7.4 Underpayments/Overpayments. If such accounting firm correctly
concludes that additional Net Profits were due to ViroPharma or
that additional royalties were due to ViroPharma, AHPC shall
pay to ViroPharma the additional Net Profits or additional
royalties, as applicable, together with any interest that may
be due thereon as provided in Section 7.8 within thirty (30)
days of the date AHPC receives such accountant's written report
so correctly concluding. If such underpayment exceeds five
percent (5%) of the Net Profits that were to be distributed to
ViroPharma or the royalties that were to be paid to ViroPharma,
as applicable, AHPC also shall reimburse ViroPharma for the
out-of-pocket expenses incurred in conducting the audit,
except in the event that such underpayment was due to any
inaccurate information provided by ViroPharma to AHPC. If such
accounting firm correctly concludes that additional Net Profits
were to be allocated to AHPC (i.e., there was an
overpayment in the distribution of Net Profits to ViroPharma)
or that AHPC overpaid royalties to ViroPharma, ViroPharma will
refund such overpayments to AHPC, together with any interest
that may be due thereon as provided in Section 7.8, within
thirty (30) days of the date ViroPharma receives such
accountant's report so correctly concluding. If the amount of
such overpayment that is due to any inaccurate information
provided by ViroPharma to AHPC exceeds five percent (5%) of the
Net Profits that were to be paid to ViroPharma or the royalties
that were to be paid to ViroPharma, as applicable, ViroPharma
also shall reimburse AHCP for any out-of-pocket expenses
incurred by AHPC in conducting the audit.
7.7.5 Confidentiality. All financial information of a Party which is
subject to review under this Section 7.7 shall be deemed to be
Confidential Information subject to the provisions of Article
9, and such Confidential Information shall not be disclosed to
any Third Party or used for any purpose other than verifying
payments to be made by one Party to the other hereunder,
provided, however, that such Confidential Information may be
disclosed to Third Parties only to the extent necessary to
enforce a Party's rights under this Agreement.
7.8 Interest. Any payment under this Article 7 that is more than forty-
five (45) days past due shall thereafter be subject to interest at an
annual percentage rate of twelve percent (12%). Likewise, any
overpayment that is not refunded within forty-five (45) days after the
date such overpayment was identified shall thereafter be subject to
interest at an annual percentage rate of twelve percent (12%),
provided, however, that if the overpayment is due to errors in reports
provided by the overpaid Party, such interest shall accrue from the
date the overpayment was made.
8. INTELLECTUAL PROPERTY.
8.1 Inventions. Subject to the provisions of Article 2, a Party shall own:
(a) all of its Prior Inventions, (b) all of its Non-Collaboration
Inventions, and (c) all Patent Rights claiming such Prior Inventions
and Non-Collaboration Inventions. Also, subject to the provisions of
Article 2, both Parties shall jointly own all Collaboration
Inventions, Collaboration Patent Rights and Collaboration Know-How.
All determinations of inventorship under this Agreement shall be made
in accordance with United States patent law.
8.2 Patent Rights.
8.2.1 Prosecution and Maintenance of Patent Rights.
(a) ViroPharma's Prior Inventions and Non-Collaboration
Inventions. ViroPharma shall have the first right to
prepare, file, prosecute and maintain, throughout the world,
all Patent Rights claiming ViroPharma's Prior Inventions and
Non-Collaboration Inventions. With respect to any ViroPharma
Prior Invention or Non-Collaboration Invention that is
applicable in the Field, ViroPharma shall give AHPC an
opportunity to review and comment upon the text of the
applications before filing, shall consult with AHPC with
respect to such application, and shall supply AHPC with a
copy of the applications as filed, together with notice of
its filing date and serial number. ViroPharma shall keep
AHPC advised of the status of the actual and prospective
patent filings (including, without limitation, the grant of
any Patent Rights that are applicable in the Field), and
shall provide advance copies of any official correspondence
related to the filing, prosecution and maintenance of such
patent filings. If ViroPharma elects not to file a patent
application or to cease the prosecution and/or maintenance
of any Patent Right claiming a ViroPharma Prior Invention or
Non-Collaboration Invention that relates to any
Collaboration Target, any Active Compound and/or any Assay
and Screening Technology and that is applicable in the
Field, ViroPharma shall provide AHPC with written notice
immediately upon the decision to not file or continue the
prosecution of such patent application or maintenance of
such patent and at least sixty (60) days before ceasing
prosecution and/or maintenance of a particular Patent Right
that is applicable in the Field and, in such case, shall
permit AHPC, at AHPC's sole discretion, to file and/or
continue prosecution and/or maintenance of such Patent Right
on ViroPharma's behalf and at AHPC's own expense. If AHPC
elects to continue prosecution or maintenance, ViroPharma
shall execute such documents and perform such acts, at
AHPC's expense, as may be reasonably necessary to permit
AHPC to file, prosecute and/or maintain such Patent Rights.
(b) AHPC's Prior Inventions and Non-Collaboration Inventions.
AHPC, at its own expense, shall have the sole right to
prepare, file, prosecute and maintain, throughout the world,
all Patent Rights claiming any of AHPC's Prior Inventions
and/or Non-Collaboration Inventions in countries and regions
of the world of AHPC's choice. With respect to patent
applications filed or to be filed in the Copromotion
Territory claiming any AHPC Prior Invention or Non-
Collaboration Invention that relates to any Active Compound
and is applicable in the Field, AHPC shall give ViroPharma
an opportunity to review and comment upon the text of such
applications before filing, shall consult with ViroPharma
with respect to such applications, and shall supply
ViroPharma
with a copy of such applications as filed, together with
notice of its filing date and serial number. AHPC shall keep
ViroPharma advised of the status of such actual and
prospective patent filings (including, without limitation,
the grant of any Patent Rights that are applicable in the
Field), and shall provide advance copies of any official
correspondence related to the filing, prosecution and
maintenance of such patent filings. If AHPC elects not to
file a patent application or to cease the prosecution and/or
maintenance of any such Patent Right, AHPC shall provide
ViroPharma with written notice immediately upon the decision
to not file or continue the prosecution of such patent
application or maintenance of such patent and at least sixty
(60) days before ceasing prosecution and/or maintenance of a
particular Patent Right that is applicable in the Field and,
in such case, shall permit ViroPharma, at the ViroPharma's
sole discretion, to file and/or continue prosecution and/or
maintenance of such Patent Right on behalf of AHPC at
ViroPharma's own expense. If ViroPharma elects to continue
prosecution or maintenance, AHPC shall execute such
documents and perform such acts, at ViroPharma's expense, as
may be reasonably necessary to permit ViroPharma to file,
prosecute and/or maintain such Patent Rights.
(c) Collaboration Inventions. AHPC shall have the first right to
prepare, file, prosecute and maintain any Patent Right
claiming any Collaboration Invention throughout the world.
AHPC shall give ViroPharma an opportunity to review the text
of the applications before filing, shall consult with
ViroPharma with respect thereto, and shall supply ViroPharma
with a copy of the applications as filed, together with
notice of its filing date and serial number. AHPC shall keep
ViroPharma advised of the status of the actual and
prospective patent filings (including, without limitation,
the grant of any Patent Rights), and shall provide advance
copies of any official correspondence related to the filing,
prosecution and maintenance of such patent filings.
ViroPharma shall reimburse AHPC for fifty percent (50%) of
the costs incurred by AHPC in preparing, filing, prosecuting
and maintaining such Patent Rights, which reimbursement will
be made pursuant to invoices submitted by AHPC to ViroPharma
no more often than once per Calendar Quarter. If either
Party at any time declines to share in the costs of filing,
prosecuting and maintaining any such Patent Right in the
Field, on a country by country basis, such Party shall
provide the other Party with thirty (30) days prior written
notice to such effect, in which event, such Party shall (i)
have no responsibility for any expenses incurred in
connection with such Patent Right after the end of such
thirty (30) day period and (ii) if the other Party elects to
continue prosecution or maintenance, assign to the other
Party
all of its right, title and interest in and to such Patent
Right and the underlying Collaboration Invention. If the
other Party elects to continue prosecution or maintenance,
the assigning Party shall execute such documents and perform
such acts, at the receiving Party's expense, as may be
reasonably necessary to effect an assignment of such Patent
Rights to the receiving Party on a country by country basis
and to allow the receiving Party to continue the prosecution
and maintenance of such Patent Right. Any such assignment
shall be completed in a timely manner to allow the receiving
Party to continue such prosecution or maintenance. Upon the
assignment of such Patent Right to the other Party, such
Patent Right shall cease to be a Collaboration Patent Right
on a country by country basis for purposes of this
Agreement, and, thereafter shall be considered to be a Non-
Collaboration Invention of the Party receiving such
assignment for all purposes of this Agreement.
8.2.2 Enforcement of Patent Rights.
(a) Notice and Discontinuance of Infringement - General. If
either AHPC or ViroPharma becomes aware of any infringement,
anywhere in the world, of any issued patent within the
Patent Rights, it will notify the other Party in writing to
that effect. Any such notice shall include evidence to
support an allegation of infringement by such Third Party.
The Party responsible for prosecuting and maintaining such
Patent Right in accordance with Section 8.2.1 shall have the
right, but not the obligation, to take action to obtain a
discontinuance of such infringement or bring suit against
the Third Party infringer within three (3) months from the
date of said notice. ViroPharma shall bear all the expenses
of any suit brought by it claiming infringement of any
ViroPharma Patent Rights. AHPC shall bear all the expenses
of any suit brought by it claiming infringement of any AHPC
Patent Rights. Subject to Section 8.2.2(c), the Parties
shall share equally the expenses of any suit brought by AHPC
claiming infringement of any Collaboration Patent Rights.
(b) AHPC Patent Rights and ViroPharma Patent Rights. With
respect to suits claiming infringement of either the AHPC
Patent Rights or the ViroPharma Patent Rights, the Party not
bringing such suit (the "Non-Prosecuting Party") shall have
the right, before commencement of the trial, suit or action
brought by the other Party (the "Prosecuting Party"), to
join any such suit or action, and in such event shall pay
one-half of the costs of such suit or action. In no event
shall the Prosecuting Party enter into any settlement,
consent judgment or other voluntary final disposition of
such suit
which would adversely affect the Non-Prosecuting Party's
rights under this Agreement in any way without first
obtaining the Non-Prosecuting Party's written consent to do
so, which consent shall not be unreasonably withheld.
Additionally, if the Non-Prosecuting Party has joined in the
action and shared in the costs thereof as set forth above,
no settlement, consent judgment or other voluntary final
disposition of the suit may be entered into without the
consent of the Non-Prosecuting Party, which consent shall
not be unreasonably withheld. If the Non-Prosecuting Party
has not joined the suit or action, the Non-Prosecuting Party
will reasonably cooperate with the Prosecuting Party in any
such suit or action and shall have the right to consult with
the Prosecuting Party and be represented by its own counsel
at its own expense. Any recovery or damages derived from a
suit in which the Non-Prosecuting Party has joined and
shared costs shall be used first to reimburse each of the
Prosecuting Party and the Non-Prosecuting Party for its
respective documented out-of-pocket legal expenses relating
to the suit, with any remaining amounts to be shared equally
by the Parties. Any recovery or damages derived from a suit
that the Non-Prosecuting Party has not joined shall be
retained by the Prosecuting Party.
(c) Collaboration Patent Rights. With respect to suits claiming
infringement of the Collaboration Patent Rights, AHPC shall
have the first right to bring suit claiming infringement of
the Collaboration Patent Rights. ViroPharma shall have the
right, before commencement of the trial, suit or action
brought by AHPC, to join any such suit or action. In no
event shall AHPC enter into any settlement, consent judgment
or other voluntary final disposition of such suit which
would adversely affect ViroPharma's rights under this
Agreement in any way without first obtaining ViroPharma's
written consent to do so, which consent shall not be
unreasonably withheld. If AHPC declines to bring suit,
ViroPharma may proceed with an infringement suit. Any
recovery or damages derived from such a suit shall be used
first to reimburse each of AHPC and ViroPharma for their
respective documented out-of-pocket legal expenses relating
to the suit, with any remaining amounts to be shared equally
by the Parties. If either Party desires not to proceed with
or participate in a suit against a Third Party for
infringement of a Collaboration Patent Right, such Party
may, by written notice to the other Party, elect not to
share in the expenses of such suit. In such event, the Party
continuing to prosecute the infringement action shall have
the right, but not the obligation to bring or continue such
suit at its own expense and shall be entitled to retain any
recovery or damages derived from such suit, and the Party
electing not to
participate in the suit shall reasonably cooperate with such
other Party in prosecuting such infringement action. The
Party bringing such action shall incur no liability to the
other Party as a consequence of such litigation or any
unfavorable decision resulting therefrom, including any
decision holding any of the Collaboration Patent Rights
invalid or unenforceable.
(d) Continuance of Infringement of the ViroPharma Patent Rights.
With respect to the ViroPharma Patent Rights, if, after the
expiration of the three (3) month period specified in
Section 8.2.2(a), ViroPharma has not obtained a
discontinuance of infringement of its Patent Rights, filed
suit against any Third Party infringer of its Patent Rights,
or provided AHPC with information and arguments
demonstrating to AHPC's reasonable satisfaction that there
is insufficient basis for the allegation of infringement of
ViroPharma's Patent Rights, then AHPC shall have the right,
but not the obligation, to bring suit against such infringer
under the ViroPharma Patent Rights and to join ViroPharma as
a party plaintiff, provided that AHPC shall bear all the
expenses of such suit. ViroPharma will cooperate with AHPC
in any suit for infringement of ViroPharma's Patent Rights
brought by AHPC against a Third Party, and shall have the
right to consult with AHPC and to participate in and be
represented by independent counsel in such litigation at its
own expense. AHPC shall incur no liability to ViroPharma as
a consequence of such litigation or any unfavorable decision
resulting therefrom, including any decision holding any of
the ViroPharma Patent Rights invalid or unenforceable.
(e) Continuance of Infringement of the AHPC Patent Rights. With
respect to the AHPC Patent Rights in the Copromotion
Territory which claim an Active Compound in the Field, if,
after the expiration of the three (3) month period specified
in Section 8.2.2(a), AHPC has not obtained a discontinuance
of infringement of such Patent Rights in the Field, filed
suit against any Third Party infringer of such Patent
Rights, or provided ViroPharma with information and
arguments demonstrating to ViroPharma's reasonable
satisfaction that there is insufficient basis for the
allegation of infringement of such Patent Rights in the
Field, then ViroPharma shall have the right, but not the
obligation, to bring suit against such infringer under such
of the AHPC Patent Rights and to join AHPC as a party
plaintiff, provided that ViroPharma shall bear all the
expenses of such suit. AHPC will cooperate with ViroPharma
in any suit for infringement of such of AHPC's Patent Rights
brought by ViroPharma against a Third Party, and shall have
the right to consult with ViroPharma and to participate in
and
be represented by independent counsel in such litigation at
its own expense. ViroPharma shall incur no liability to AHPC
as a consequence of such litigation or any unfavorable
decision resulting therefrom, including any decision holding
any of such AHPC Patent Rights invalid or unenforceable.
8.2.3 Infringement and Third Party Licenses.
(a) Infringement of Third Party Patents - Course of Action. If
the making, having made, importing, exporting, using,
distributing, marketing, promoting, offering for sale or
selling any Compound and/or Product in the Field, under this
Agreement, is alleged by a Third Party to infringe a Third
Party's patent, the Party becoming aware of such allegation
shall promptly notify the other Party. Additionally, if
either Party determines that, based upon the review of a
Third Party's patent or patent application, it may be
desirable to obtain a license from such Third Party with
respect thereto so as to avoid any potential suit between
either Party and such Third Party, such Party shall promptly
notify the other Party of such determination.
(b) AHPC Option to Negotiate. AHPC shall in the first instance
have the right to negotiate with said Third Party for a
suitable license or assignment, provided, however, that AHPC
shall enter into no such agreement unless it has first
obtained ViroPharma's approval of the terms of such
agreement, including the amounts of any royalties or
payments, which approval shall not be unreasonably withheld.
If such negotiation results in a consummated agreement, AHPC
shall make all payments to the Third Party and such payments
shall be deemed Third Party License Fees for purposes of
this Agreement.
(c) Third Party Infringement Suit. If a Third Party sues a Party
(the "Sued Party") alleging that the Sued Party's, the Sued
Party's Affiliates' or the Sued Party's sublicensees' use of
any Collaboration Target for the Screening of Compounds
pursuant to this Agreement, or the Screening, Research,
Development, or Commercialization of any Compound and/or
Product in the Field during the term of and pursuant to this
Agreement infringes or will infringe said Third Party's
patent, then upon the Sued Party's request and in connection
with the Sued Party's defense of any such Third Party
infringement suit, the other Party shall provide reasonable
assistance to the Sued Party for such defense. The Parties
shall equally share in the litigation expenses, including
settlement costs, royalties paid in settlement of any such
suit, and the payment of any damages to the Third Party,
other than Third
Party License Fees paid pursuant to Section 8.2.3(e). The
Party paying such expenses shall periodically, but no more
than once per Calendar Quarter, invoice the other Party for
its *********** share of expenses incurred, which invoices
shall be accompanied by supporting documentation reasonably
showing the expenses so incurred. Such invoices shall be
paid within thirty (30) days of receipt, provided, however,
that if AHPC is the Sued Party, ViroPharma has earned
royalties pursuant to Section 7.4 or Net Profits pursuant to
Section 7.5, and AHPC has invoiced ViroPharma for expenses
under this Section 8.2.3(c) but ViroPharma has not yet paid
them AHPC may deduct ViroPharma's ************* share of
such expenses from such royalties or Net Profits due to
ViroPharma. The obligation to share expenses pursuant to
this Section 8.2.3(c) shall not apply to activities
conducted by either Party: (a) with respect to any
Collaboration Target after such Target has ceased to be a
Collaboration Target pursuant to Section 4.4.1, (b) with
respect to any Compound that has not been declared a Hit in
accordance with Section 4.4.3, (c) with respect to any Hit,
Lead Compound or Development Candidate after the JSC, in
accordance with Section 4.4 and 2.4, has determined not to
advance the development of such Hit, Lead Compound, or
Development Candidate, or (d) after the expiration or any
termination of this Agreement.
(d) Other Third Party Licenses. If the Parties determine that,
after consultation with intellectual property counsel,
obtaining a license from a Third Party under such Third
Party's intellectual property rights is necessary or useful
for Screening, Research, Development or Commercialization of
any Compound or Product under this Agreement, the JSC or the
MSC shall determine which Party shall have the
responsibility to negotiate and enter into an agreement with
such Third Party for such a license. The Party entering into
such agreement shall pay the Third Party License Fees due
thereunder to such Third Party, subject to reimbursement in
accordance with Section 8.2.3(e).
(e) Third Party License Fees. ViroPharma shall be responsible
for ************** of all Third Party License Fees paid by
either Party pursuant to this Section 8.2.3 and AHPC shall
be responsible for ***************** of all Third Party
License Fees paid by either Party pursuant to this Sections
8.2.3. Notwithstanding the foregoing, if, pursuant to
Section 8.2.3(d), AHPC determines it is necessary or
desirable to obtain a license from a Third Party to allow
the Screening, Research, Development and/or
Commercialization of any Class A Compound or Product
containing a Class A Compound, ***************. The Party
paying such Third Party License Fees shall periodically
invoice the other Party for its share of such Third Party
License Fees, which invoices shall be submitted no more
often than once per Calendar Quarter. The Party receiving
such invoice shall reimburse the other Party for its share
of such Third Party License Fees within forty-five (45) days
after receiving the invoice therefor.
8.2.4 Patent Certifications. Each Party shall immediately give written
notice to the other of any certification of which it becomes
aware filed pursuant to 21 U.S.C. (S) 355(b)(2)(A), or (S)
355(j)(2)(A)(vii) (or any amendment or successor statute thereto)
claiming that Patent Rights covering any Product are invalid or
that infringement will not arise from the manufacture, use or
sale of such Product by a Third Party. Notwithstanding any
provision to the contrary, in the event that the Patent Rights at
issue are owned and/or Controlled by ViroPharma and ViroPharma
has failed to bring an infringement action against such Third
Party at least fourteen (14) days prior to expiration of the
forty five (45) day period set forth in 21 U.S.C. (S)355(c)(3)(C)
(or any amendment or successor statute thereto), AHPC shall have
the right to bring such an infringement action, in its sole
discretion and at its own expense, in its own name and/or in the
name of ViroPharma. At AHPC's request, ViroPharma shall, at its
own expense, provide AHPC reasonable assistance to conduct such
infringement action, including, without limitation, causing the
execution of such legal documents as AHPC may deem necessary for
the prosecution of such action. AHPC shall incur no liability to
ViroPharma as a consequence of such litigation or any unfavorable
decision resulting therefrom, including any decision holding any
of the Patent Rights invalid or unenforceable. In the event that
AHPC recovers any sums in such litigation by way of damages or in
settlement thereof, AHPC shall have the right to retain all such
sums to offset its costs, losses and expenses.
8.2.5 Patent Term Restoration. The Parties hereto shall cooperate with
each other in obtaining patent term restoration or its equivalent
in the world where applicable to Patent Rights. If elections with
respect to obtaining such patent term restoration are to be made,
the President, Wyeth-Ayerst Global Pharmaceuticals, and the
President, ViroPharma Incorporated, or their designees, shall
agree to an election and the Parties shall abide by such
election.
8.3 Trademarks. AHPC shall, in its sole discretion, select and own
all Trademarks, Product names and Compound names to be used in
connection with the marketing, promotion and sale of any Product
hereunder. ViroPharma shall neither use nor seek to register,
anywhere in the world, any trademarks which are confusingly
similar to any Trademark or any other trademarks, trade names,
trade dress or logos used by or on behalf of AHPC, its Affiliates
or sublicensees in connection with any Product. Nothing in this
Section 8.3 shall prevent or limit
ViroPharma in any way from continuing to use any trademark, trade
name, trade dress or logo adopted by ViroPharma before the date
that the same or a confusingly similar trademark, trade name,
trade dress or logo is adopted by AHPC.
9. CONFIDENTIALITY.
9.1 Confidentiality. Except to the extent expressly authorized by
this Agreement or otherwise agreed in writing, the Parties agree
that, for the term of this Agreement and for five (5) years
thereafter, each Party (the "Receiving Party"), receiving
hereunder any Confidential Information of the other Party (the
"Disclosing Party") shall keep such Confidential Information
confidential and shall not publish or otherwise disclose or use
such Confidential Information for any purpose other than as
provided for in this Agreement except for Confidential
Information that the Receiving Party can establish:
(a) was already known to the Receiving Party (other than under
an obligation of confidentiality), at the time of disclosure
by the Disclosing Party and such Receiving Party has
documentary evidence to that effect;
(b) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the
Receiving Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure or development, as
the case may be, and other than through any act or omission
of a party in breach of this confidentiality obligation;
(d) was disclosed to that Party, other than under an obligation
of confidentiality, by a Third Party who had no obligation
to the Disclosing Party not to disclose such information to
others;
(e) was independently discovered or developed by or on behalf of
the Receiving Party without the use of the Confidential
Information belonging to the other Party and the Receiving
Party has documentary evidence to that effect.
9.2 Authorized Disclosure and Use.
9.2.1 Disclosure. Notwithstanding the foregoing Section 9.1,
each Party may disclose Confidential Information
belonging to the other Party to the extent such
disclosure is reasonably necessary to:
(a) file or prosecute patent applications claiming
Inventions included within the Collaboration
Technology,
(b) prosecute or defend litigation,
(c) exercise rights hereunder provided such disclosure is
covered by terms of confidentiality similar to those
set forth herein, and
(d) comply with applicable governmental laws and
regulations.
In the event a Party shall deem it necessary to disclose
pursuant to this Section 9.2.1, Confidential Information
belonging to the other Party, the Disclosing Party shall to
the extent possible give reasonable advance notice of such
disclosure to the other Party and take reasonable measures
to ensure confidential treatment of such information.
9.2.2 Use. Notwithstanding the foregoing Section 9.1, each Party
shall have the right to use the other Party's Confidential
Information in carrying out its respective responsibilities
under this Agreement in both the conduct of the Research
Program and the Development and Commercialization of Lead
Compounds and Products. Similarly, subject to the license
granted in Article 2 and the terms of this Article 9, each
Party shall have the right to use the Joint Confidential
Information for any purpose under this Agreement.
9.3 SEC Filings. Either Party may disclose the terms of this Agreement to
the extent required, in the reasonable opinion of such Party's legal
counsel, to comply with applicable laws, including without limitation
the rules and regulations promulgated by the United States Securities
and Exchange Commission (the "SEC"). Notwithstanding the foregoing,
before disclosing this Agreement or any of the terms hereof pursuant
to this Section 9.3, the Parties will consult with one another on the
terms of this Agreement to be redacted in making any such disclosure.
If a Party discloses this Agreement or any of the terms hereof in
accordance with this Section 9.3, such Party agrees, at its own
expense, to seek confidential treatment of portions of this Agreement
or such terms, as may be reasonably requested by the other Party.
9.4 Publications. During the term of the Research Program, each Party will
submit to the other Party for review and approval all proposed
academic, scientific and medical publications and public presentations
relating to the Research Program, Lead Compounds, Development
Candidates, Products and/or Collaboration Technology for review in
connection with preservation of exclusive Patent Rights and/or to
determine whether Confidential Information should be modified or
deleted. Written copies of such proposed publications and
presentations shall be submitted to the nonpublishing Party no later
than sixty (60) days before submission for publication or presentation
and the non-publishing party shall
provide its comments with respect to such publications and
presentations within fifteen (15) business days of its receipt of such
written copy. The review period may be extended for an additional
thirty (30) days in the event the nonpublishing Party can demonstrate
a reasonable need for such extension including, but not limited to,
the preparation and filing of patent applications. By mutual
agreement, this period may be further extended. ViroPharma and AHPC
will each comply with standard academic practice regarding authorship
of scientific publications and recognition of contribution of other
parties in any publications relating to Research Program, Lead
Compounds, Development Candidates, Products and/or Collaboration
Technology.
9.5 Public Announcements.
9.5.1 Coordination. The Parties agree on the importance of
coordinating their public announcements respecting this
Agreement and the subject matter thereof (other than
academic, scientific or medical publications that are
subject to the publication provision set forth above).
ViroPharma and AHPC will, from time to time, and at the
request of the other Party discuss and agree on the general
information content relating to this Agreement, the Research
Program, Lead Compounds, Development Candidates, Products
and/or Collaboration Technology which may be publicly
disclosed.
9.5.2 Announcements. Except as may be expressly permitted under Sections
9.3 and 9.4, neither Party will make any public announcement
regarding this Agreement, the Research Program, Lead Compounds,
Development Candidates, Products and/or Collaboration Technology
without the prior written approval of the other Party.
10. REPRESENTATIONS AND WARRANTIES.
10.1 Representations, Warranties of Each Party. As of the Effective Date,
each of ViroPharma and AHPC hereby represents, warrants, and
covenants to the other Party hereto as follows:
(a) it is a corporation or entity duly organized and validly
existing under the laws of the state or other jurisdiction of
its incorporation or formation;
(b) the execution, delivery and performance of this Agreement by
such Party has been duly authorized by all requisite corporate
action and does not require any shareholder action or approval;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such Party of this
Agreement and its compliance with the terms and provisions hereof
does not and will not conflict with or result in a breach of any
of the terms and provisions of or constitute a default under (i)
a loan agreement, guaranty, financing agreement, agreement
affecting a product or other agreement or instrument binding or
affecting it or its property; (ii) the provisions of its charter
or operative documents or bylaws; or (iii) any order, writ,
injunction or decree of any court or governmental authority
entered against it or by which any of its property is bound;
(e) it shall at all times comply with all applicable material laws
and regulations relating to its activities under this Agreement;
(f) as of the Effective Date, its Patent Rights and Know-How are
existing and, to the best of its knowledge, are not invalid or
unenforceable, in whole or in part;
(g) it has the full right, power and authority to grant all of right,
title and interest in the licenses granted to the other Party
under this Agreement;
10.2 Additional Representations and Warranties of ViroPharma. In addition
to the and warranties made by ViroPharma elsewhere in this Agreement,
ViroPharma, subject to Section 10.6, hereby represents, warrants, and
covenants to AHPC that:
(a) except as disclosed in Exhibit 10.2(a), as of the Effective Date,
no Third Party has any right, title or interest in or to:
(i) any Collaboration Target listed in Exhibit 1.23,
(II) any Class A Product, or
(iii) any of the ViroPharma Patent Rights, ViroPharma Know-How,
or any of ViroPharma's interest in the Collaboration Patent
Rights to the extent that any of the foregoing in this
Section 10.2(a)(iii) cover any Collaboration Target listed
in Exhibit 1.23, or any Class A Product,
with respect to which AHPC has been granted or is to be granted a
license hereunder;
(b) except as disclosed in Exhibit 10.2(b),It is the sole and
exclusive owner of the ViroPharma Patent Rights listed on Exhibit
1.112 and the ViroPharma Know-How existing as of the Effective
Date, all of which are free and clear of any liens, charges and
encumbrances, and, with respect to such
Patent Rights and Know-How, ViroPharma has the right to grant to
AHPC those licenses granted in Section 2.1 hereof;
(c) except as set forth in Exhibit 10.2(c) attached hereto, no
ViroPharma Prior Invention and no ViroPharma Patent Right and no
portion of the ViroPharma Know-How existing as of the Effective
Date and relating to either any Class A Compound or to any
Collaboration Target listed on Exhibit 1.23 is subject to any
funding agreement with any government or government agency;
(d) to the best of its knowledge, as of November 1, 1999, the
practice of the ViroPharma Patent Rights listed on Exhibit 1.112,
the use of the ViroPharma Know-How, the use of the Collaboration
Targets listed in Exhibit 1.23, and the manufacture, use or sale
of any ViroPharma Compound each, as of the Effective Date, do not
infringe on any issued patents owned or possessed by any Third
Party;
(e) to the best of its knowledge, as of the Effective Date, there are
no Third Party pending patent applications (other than those
which have been disclosed, in writing, by ViroPharma to AHPC
prior to the signing of this Agreement) which, if issued, would
cover the development, manufacture or use of any Collaboration
Target or the development, manufacture, use or sale of any Class
A Compound arising from the ViroPharma Chemical Library or any
Product containing any Class A Compound arising from the
ViroPharma Chemical Library;
(f) as of the Effective Date, there are no claims, judgments or
settlements against or owed by ViroPharma or, to the best of its
knowledge, pending or threatened claims or litigation in either
case relating to the ViroPharma Patent Rights listed in Exhibit
1.112, the ViroPharma Know-How, any Collaboration Target, any
ViroPharma Class A Compound or any ViroPharma Class B Compound
that ViroPharma, as of the Effective Date, plans to Screen during
the Screening Phase; and
(g) during the Term of this Agreement it will use diligent efforts
not to diminish the rights under the ViroPharma Patent Rights or
the ViroPharma Know-How granted to AHPC hereunder, including
without limitation, by not committing or permitting any actions
or omissions which would cause the breach of any agreements
between itself and Third Parties which provide for intellectual
property rights applicable to the development, manufacture or use
of any Target or the development, manufacture, use or sale of any
Active Compound arising from the ViroPharma Chemical Library
and/or Product containing any Active Compound arising from the
ViroPharma Chemical Library, that it will provide AHPC promptly
with notice of any such alleged breach, and that as of the
Effective Date, it is in compliance in all material respects with
any agreements with Third Parties
relating to the ViroPharma Patent Rights, the ViroPharma Know
How, the Targets and/or the Active Compounds arising from the
ViroPharma Chemical Library.
10.3 Additional Representations and Warranties of AHPC. In addition to the
representations and warranties made by AHPC elsewhere in this
Agreement, AHPC, subject to Section 10.6, hereby represents, warrants,
and covenants to ViroPharma that:
(a) except as disclosed in Exhibit 10.3(a), it is the sole and
exclusive owner of the AHPC Patent Rights listed on Exhibit 1.7
and the AHPC Know-How existing as of the Effective Date, all of
which are free and clear of any liens, charges and encumbrances,
and, with respect to such Patent Rights and Know-How AHPC has the
right to grant to ViroPharma those licenses granted in Section
2.2 hereof;
(b) to the best of its knowledge, as of the Effective Date, the
practice of the AHPC Patent Rights listed on Exhibit 1.7, the use
of the AHPC Know-How, and the manufacture, use or sale of any
AHPC Compound each, as of the Effective Date, do not infringe on
any issued patents owned or possessed by any Third Party;
(c) as of the Effective Date, there are no claims, judgments or
settlements against or owed by AHPC or, to the best of its
knowledge, pending or threatened claims or litigation in either
case relating to the AHPC Patent Rights listed in Exhibit 1.7,
the AHPC Know-How, or any AHPC Compound that AHPC, as of the
Effective Date, plans to Screen during the Screening Phase;
(d) all units of Product supplied in the United States by AHPC
pursuant to Section 5.1 will, as of the date of shipment or
delivery of such Product to a common carrier, not be adulterated
or misbranded within the meaning of the FD&C Act, and not be an
article which may not, under the provisions of Sections 404, 505
or 512 of the FD&C Act, be introduced into interstate commerce;
(e) all units of Product and containers for such Product supplied by
AHPC pursuant to Section 5.1 for sale in the Copromotion
Territory shall be manufactured, processed, prepared, packed,
and, while in AHPC's possession, held in accordance with all
applicable federal, state, and local laws and regulations,
including, without limitation, all current Good Manufacturing
Practices and with all applicable Regulatory Approvals in the
Copromotion Territory; and
(f) during the Term of this Agreement it will use diligent efforts
not to diminish the rights under the AHPC Patent Rights or the
AHPC Know-
How granted to ViroPharma hereunder, including without
limitation, by not committing or permitting any actions or
omissions which would cause the breach of any agreements between
itself and Third Parties which provide for intellectual property
rights applicable to the development, manufacture, use or sale of
any Active Compound arising from the AHPC Chemical Library and/or
Product containing any Active Compound arising from the AHPC
Chemical Library, that it will provide ViroPharma promptly with
notice of any such alleged breach, and that as of the Effective
Date, it is in compliance in all material respects with any
agreements with Third Parties relating to the AHPC Patent Rights,
the AHPC Know How and/or the Active Compounds arising from the
AHPC Chemical Library.
10.4 Representation by Legal Counsel. Each Party hereto represents that it
has been represented by legal counsel in connection with this
Agreement and acknowledges that it has participated in the drafting
hereof. In interpreting and applying the terms and provisions of this
Agreement, the Parties agree that no presumption shall exist or be
implied against the Party which drafted such terms and provisions.
10.5 No Inconsistent Agreements. Neither Party has in effect and after the
Effective Date neither Party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its
obligations under this Agreement.
10.6 Disclaimer. THE FOREGOING WARRANTIES OF EACH PARTY ARE IN LIEU OF ANY
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION,
ANY IMPLIED WARRANTIES OF NONINFRINGEMENT, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR
PURPOSE ALL OF WHICH ARE HEREBY SPECIFICALLY EXCLUDED AND DISCLAIMED.
11. GOVERNMENT APPROVALS; TERM AND TERMINATION.
11.1 Government Approvals.
11.1.1 ViroPharma's and AHPC's Obligations. Each of ViroPharma and AHPC
shall use its good faith efforts to eliminate any concern on the
part of any court or government authority regarding the legality
of the proposed transaction, including, if required by federal or
state antitrust authorities, promptly taking all steps to secure
government antitrust clearance, including, without limitation,
cooperating in good faith with any government investigation
including the prompt production of documents and information
demanded by a second request for documents and of witnesses if
requested.
11.1.2 Cooperation. ViroPharma and AHPC will cooperate and use
respectively all reasonable efforts to make all other
registrations, filings and applications, to give all notices
and to obtain as soon as practicable all governmental or
other consents, transfers, approvals, orders, qualifications
authorizations, permits and waivers, if any, and to do all
other things necessary or desirable for the consummation of
the transactions as contemplated hereby. Neither Party shall
be required, however, to divest or out-license products or
assets or materially change its business if doing so is a
condition of obtaining approval under the HSR Act or other
governmental approvals of the transactions contemplated by
this Agreement.
11.2 Term. The term of this Agreement will commence on the Effective Date
and extend, unless this Agreement is terminated earlier in accordance
with this Section 11, on a Product by Product and country by country
basis (a) in the AHPC Territory until such time as the obligation to
pay royalties with respect to the sale of such Product in such country
expires in accordance with Section 7.4.3 and (b) in the Copromotion
Territory, until the later of (i) such time as the Parties are no
longer copromoting such Product in such country or (ii) if the Parties
discontinue the copromotion of Products pursuant to Section 11.6, such
time as the obligation to pay royalties with respect to the sale of
such Product in such country expires in accordance with Section 7.4.3.
11.3 Expiration. If at any time after the expiration of the Screening Phase
Tail, the Parties have determined, in accordance with Section 4.3.3,
not to advance any Tail Compound as a Hit or Lead Compound and there
is otherwise no Active Compound hereunder, this Agreement shall expire
effective as of the later of (a) the date the Parties have determined,
in accordance with Section 4.3.3, not to advance any Tail Compound as
a Hit or a Lead Compound and (b) the date on which all Active
Compounds have ceased to be Active Compounds hereunder.
11.4 Termination for Cause.
11.4.1 Termination for Cause. This Agreement may be terminated
effective immediately by written notice by either Party at
any time during the Term of this Agreement for material
breach by the other Party, which breach remains uncured for
ninety (90) days in the case of nonpayment of any amount due
(unless there exists a bona fide dispute as to whether such
payment is owing, in which case the ninety (90) day period
shall be tolled pending resolution of such dispute) and one
hundred eighty (180) days for all other breaches, each
measured from the date written notice of such breach is
given to the breaching Party, provided, however, that if
such breach is not susceptible of cure within the stated
period and the breaching Party uses diligent good faith
efforts to cure such breach, the stated period will be
extended by an additional ninety (90) days.
11.4.2 Effect of Termination for Cause on License. If a Party
terminates this Agreement pursuant to this Section 11.4 (the
"Terminating Party"):
(a) all licenses granted by the Terminating Party to the
other Party hereunder will automatically terminate;
(b) all licenses granted by the other Party to the
Terminating Party will become fully paid up,
irrevocable, perpetual, royalty-free licenses;
(c) the other Party will assign the Terminating Party all
right, title and interest in and to: (i) all regulatory
filings and Regulatory Approvals pertaining to any
Product which regulatory filings and Regulatory
Approvals, if any, are owned or otherwise controlled by
the other Party, (ii) all of the other Party's interest
in the Collaboration Patent Rights and the
Collaboration Know-How, (iii) all of the other Party's
interest in any Trademark, including, without
limitation, the good will symbolized by such Trademark
used for Products, and (iv) all of the other Party's
interest in any copyrights necessary or useful for
Commercializing Products;
(d) the other Party will have no right to receive
royalties, a share of Net Profits or any other payments
which may result from the sale of any Product, the
occurrence of any event or the conduct of any activity
after the effective date of such termination, provided,
however, that the other Party shall remain entitled to
receive any payments that accrued before the effective
date of such termination.
11.5 Termination for Convenience.
11.5.1 Right to Terminate. After the expiration of the Term of the
Screening Phase, either Party may terminate this Agreement
upon one hundred eighty days prior written notice to the
other Party (a "Termination for Convenience").
11.5.2 Effect of Termination for Convenience. Upon a Termination
for Convenience the non-terminating Party shall have a
royalty-bearing, perpetual, irrevocable, worldwide,
exclusive license under the other Party's Technology and the
other Party's interest in any Collaboration Technology to
develop, make, have made, use, import, offer for sale and
sell Products in the Field in the world. For the sake of
clarity, in such event, the non-terminating Party shall have
no rights with respect to any Compound of the terminating
Party, which Compound, before the effective date of such
termination, was not yet designated as a Lead Compound or a
Development Candidate in accordance with Section 4.4.
Additionally, in the event of a Termination for Convenience,
the
terminating Party shall assign to the non-terminating Party all
right, title and interest in and to any regulatory filings and
Regulatory Approvals pertaining directly to the Products. If a
Termination for Convenience occurs before the enrollment of the
first patient in a Phase III Clinical Trial in any country of the
world, the non-terminating Party, on a Product by Product basis,
would pay to the terminating Party a royalty of ******** of the
Net Sales obtained from the sale of such Product in the world by
the non-terminating Party, its Affiliates or sublicensees. If a
Termination for Convenience occurs after the completion of the
first Phase III Clinical Trial in any country of the world, the
non-terminating Party, on a Product by Product basis, would pay
to the terminating Party a royalty of ************* of the Net
Sales obtained from the sale of such Product in the world by the
non-terminating Party, its Affiliates or sublicensees. Any
royalty that becomes payable under this Section 11.5.2 will be
payable on a country by country basis until the later of (i) the
last to expire, in such country, of the Patent Rights included
within the Collaboration Technology containing a Valid Claim
which would be infringed by the manufacture, use, import, offer
for sale, or sale of such Product in such country or (ii) ten
(10) years from the First Commercial Sale of such Product in such
country. The non-terminating Party shall provide reports and pay
such royalties to the terminating Party in the manner set forth
in Section 7.6.2.
11.6 Termination of ViroPharma's Right to Promote Products.
11.6.1 Failure to Provide Assigned Sales Force Effort. If
during any ********** ViroPharma fails *************,
such failure shall not be considered a material breach
for purposes of Section 11.4, but, AHPC, upon sixty
(60) days prior written notice to ViroPharma, given
within sixty (60) days after AHPC, pursuant to Section
7.6.3, distributes to ViroPharma its share of Net
Profits for the last Calendar Quarter of the third such
calendar year, may terminate ViroPharma's right to
Promote Products in the Copromotion Territory
hereunder. Upon the effective date of any such
termination, AHPC shall assume all of ViroPharma's
obligations with respect to the Promotion of the
Product in the Copromotion Territory and thereafter,
shall have the right to sublicense Third Parties the
rights granted to it by ViroPharma in the Copromotion
Territory hereunder. Additionally, if AHPC, pursuant to
this Section 11.6.1, terminates ViroPharma's right to
Promote Products in the Copromotion Territory
hereunder, ViroPharma shall no longer be entitled to
receive any share of Net Profits obtained from the sale
of Products in the Copromotion Territory after the
effective date of such termination, provided, however,
that, with respect to the sale of Products in the
Copromotion Territory by AHPC, its Affiliates or
sublicensees
after the effective date of such termination, AHPC
shall pay to ViroPharma royalties, on a Product by
Product basis, which royalties will be the sum of X, Y
and Z, where
X = either (a) for ******** of the portion of the
aggregate Net Sales obtained by AHPC, its
Affiliates and sublicensees from the sale of
such Product in the Copromotion Territory,
which Net Sales, during the calendar year in
question, are less than or equal to
************, or (b) for ************ of the
portion of the aggregate Net Sales obtained
by AHPC, its Affiliates and sublicensees from
the sale of such Product in the Copromotion
Territory, which Net Sales, during the
calendar year in question, are less than or
equal to ******************,
Y = either (a) for ***************** of the
portion of the aggregate Net Sales obtained
by AHPC, its Affiliates and sublicensees from
the sale of such Product in the Copromotion
Territory, which Net Sales, during the
calendar year in question, are greater than
**************** and less than or equal to
******************, or (b) for
***************** of the portion of the
aggregate Net Sales obtained by AHPC, its
Affiliates and sublicensees from the sale of
such Product in the Copromotion Territory,
which Net Sales, during the calendar year in
question, are greater than
******************* and less than or equal to
***************, and
Z = either (a) for *************** of the portion
of the aggregate Net Sales obtained by AHPC,
its Affiliates and sublicensees from the sale
of such Product in the Copromotion Territory,
which Net Sales, during the calendar year in
question, are greater than *****************,
or (b) for ************** of the portion of
the aggregate Net Sales obtained by AHPC, its
Affiliates and sublicensees from the sale of
such Product in the Copromotion Territory,
which Net Sales, during the calendar year in
question, are greater than **************.
11.6.2 Payment and Term of Royalty. If ViroPharma's right to
Promote Products in the Copromotion Territory is terminated
pursuant to this Section 11.6, the royalties payable
pursuant to this Section 11.6, and as adjusted pursuant to
Section 7.4.2, will be payable as set forth in Section
7.4.3.
11.6.3 Effect on Other Rights and Obligations. Except as expressly
provided in this Section 11.6, any termination of
ViroPharma's right to Promote Products in the Copromotion
Territory pursuant to this Section 11.6 shall have no effect
on any of the other rights and obligations of the Parties
under this Agreement, including, without limitation, the
rights or obligations of the Parties in conducting the
Research Program or the rights or obligations of the Parties
in the AHPC Territory.
11.7 Blocking Patents. If during the term of the Research Program:
(a) a Third Party is granted a Patent relating to a Collaboration
Target in the Copromotion Territory;
(b) either Party determines, based on the advice of patent counsel,
that such Patent may be infringed by the activities of either
Party under the Research Program with respect to one or more
Collaboration Targets; and
(c) the Parties, within ninety (90) days of making the determination
in Section 11.7(b) above, determine that no license is available
on commercially reasonable terms after having attempted in good
faith to obtain such a license from such Third Party;
AHPC shall have the right, exercisable within sixty (60) days after
the determination in Section 11.7(c) is made, upon thirty (30) days
prior written notice to ViroPharma to terminate that portion of the
Research Program under this Agreement covering the Collaboration
Targets identified in Section 11.7(b). Upon such termination, subject
to Section 11.8 hereof, with respect to such Collaboration Targets
neither Party shall have any further rights or obligations under this
Agreement, each Party shall retain all rights to its respective Know-
How, Prior Inventions and Non-Collaboration Inventions covering only
such Collaboration Targets and each Party shall be free to practice
any Collaboration Invention and use any Joint-Know-How covering only
such Collaboration Targets created by the Parties prior to such
termination.
11.8 Survival of Certain Obligations. Expiration or termination of the
Agreement shall not relieve the Parties of any obligation accruing
before such expiration or termination, and the provisions of Articles
9 and 12 and Sections 2.6, 4.3.3, 4.6.5, 4.6.6, 6.1.7(b), 6.1.8(f-g),
7.4.3, 7.7, 7.8, 8.1, 8.3, 10.3(d-e), 11.4.2, 11.5.2, 11.8, 13.4,
13.8, 13.9 and 13.11 shall survive the expiration of the Agreement.
Any expiration or early termination of this Agreement shall be without
prejudice to the rights of either Party against the other accrued or
accruing under this Agreement before termination, including, without
limitation, the obligations to pay royalties and distribute Net
Profits for Product(s) sold before such termination.
11.9 Provision for Insolvency.
11.9.1 Termination. This Agreement may be terminated by written
notice by either Party at any time during the Term of this
Agreement upon the declaration by a court of competent
jurisdiction that the other Party is bankrupt and, pursuant
to the U.S. Bankruptcy Code such other Party's assets are to
be liquidated, the filing or institution of bankruptcy,
liquidation or receivership proceedings (other than
reorganization proceedings under Chapter 11 of the U.S.
Bankruptcy Code), or upon an assignment of a substantial
portion of the assets for the benefit of creditors by the
other Party, or in the event a receiver or custodian is
appointed for such Party's business, or if a substantial
portion of such Party's business is subject to attachment or
similar process; provided, however, that in the case of any
involuntary bankruptcy proceeding such right to terminate
shall only become effective if the proceeding is not
dismissed within sixty (60) days after the filing thereof.
To the extent permitted by applicable law, the effect of a
termination under this section 11.9.1 shall be as described
in Section 11.5.2, i.e., as if the Insolvent Party elected
to Terminate for Convenience.
11.9.2 Effect on Licenses. All rights and licenses granted under or
pursuant to this Agreement by one Party to the other Party
are, for all purposes of Section 365(n) of Title 11 of the
United States Code ("Title 11"), licenses of rights to
"intellectual property" as defined in Title 11. Each Party
agrees that the other Party, as licensee of such rights
under this Agreement shall retain and may fully exercise all
of its rights and elections under Title 11. Each Party
agrees during the Term of this Agreement to create and
maintain current copies or, if not amenable to copying,
detailed descriptions or other appropriate embodiments, to
the extent feasible, of all such intellectual property. If a
case is commenced by or against a Party under Title 11 (the
"Title 11 Party"), such Party (in any capacity, including
debtor-in-possession) and its successors and assigns
(including, without limitation, a Title 11 Trustee) shall,
(a) as the other Party may elect in a written request,
immediately upon such request:
(i) perform all of the obligations provided in this
Agreement to be performed by the Title 11 Party
including, where applicable and without
limitation, providing to the other Party
portions of such intellectual property
(including embodiments thereof) held by the
Title 11 Party and such successors and assigns
or otherwise available to them; or
(ii) provide to the other Party all such intellectual
property (including all embodiments thereof)
held by the Title 11
Party and such successors and assigns or
otherwise available to them; and
(b) not interfere with the rights of the other Party under
this Agreement, or any agreement supplemental hereto,
to such intellectual property (including such
embodiments), including any right to obtain such
intellectual property (or such embodiments) from
another entity.
11.9.3 Rights to Intellectual Property. If a Title 11 case is
commenced by or against the Title 11 Party, and this
Agreement is rejected as provided in Title 11, and the other
Party elects to retain its rights hereunder as provided in
Title 11, then the Title 11 Party (in any capacity,
including debtor-in-possession) and its successors and
assigns (including, without limitation, a Title 11 Trustee)
shall provide to the other Party all such intellectual
property (including all embodiments thereof) held by the
Title 11 Party and such successors and assigns, or otherwise
available to them, immediately upon the other Party's
written request. Whenever the Title 11 Party or any of its
successors or assigns provides to the other Party any of the
intellectual property licensed hereunder (or any embodiment
thereof) pursuant to this Section 11.9, the other Party
shall have the right to perform the obligations of the Title
11 Party hereunder with respect to such intellectual
property, but neither such provision nor such performance by
the other Party shall release the Title 11 Party from any
such obligation or liability for failing to perform it.
11.9.4 Additional Rights. All rights, powers and remedies of a
Party provided herein are in addition to and not in
substitution for any and all other rights, powers and
remedies now or hereafter existing at law or in equity
(including, without limitation, Title 11) in the event of
the commencement of a Title 11 case by or against the Title
11 Party. A non-Title 11 Party, in addition to the rights,
power and remedies expressly provided herein, shall be
entitled to exercise all other such rights and powers and
resort to all other such remedies as may now or hereafter
exist at law or in equity (including, without limitation,
Title 11) in such event. The Parties agree that they intend
the foregoing rights to extend to the maximum extent
permitted by law, including, without limitation, for
purposes of Title 11:
(a) the right of access to any intellectual property
(including all embodiments thereof) of the Title 11
Party, or any Third Party with whom the Title 11 Party
contracts to perform an obligation of the Title 11
Party under this Agreement, and, in the case of the
Third Party, which is necessary for the Development,
registration, manufacture and Commercialization of
licensed Compounds and/or licensed Products; and
(b) the right to contract directly with any Third Party
described in 11.9.4(a) to complete the contracted work.
12. INDEMNIFICATION AND INSURANCE.
12.1 Indemnification by AHPC. AHPC will indemnify, defend and hold
harmless ViroPharma, its Affiliates, and each of its and their
respective employees, officers, directors and agents (each, a
"ViroPharma Indemnified Party") from and against any and all
liability, loss, damage, expense (including reasonable attorneys'
fees and expenses) and cost (collectively, a "Liability") that
the ViroPharma Indemnified Party may be required to pay to one or
more Third Parties resulting from or arising out of:
(a) any claims of any nature, other than claims by Third Parties
relating to patent infringement, arising out of the conduct
of the Research Program by, on behalf of, or under the
authority of AHPC (other than by ViroPharma);
(b) any AHPC representation or warranty set forth herein being
untrue in any material respect when made;
(c) the Promotion of any Product by AHPC in the world;
(d) any claim of any nature, including any products liability
claim, directly arising from the failure of a Product or its
container to have been manufactured, processed, prepared,
packed, or held in accordance with federal, state, and local
laws and regulations, Regulatory Approvals, or AHPC's
representations or warranties hereunder; and/or
(e) any claims of any nature to the effect that any Trademark
selected by AHPC in accordance with Section 8.3 and used by
the Parties, their Affiliates, or their sublicensees in
conjunction with the Promotion, marketing or sale of any
Product pursuant to this Agreement infringes the rights of
any Third Party;
except in each case, to the extent caused by the negligence or
willful misconduct of ViroPharma or any ViroPharma Indemnified
Party. Notwithstanding the foregoing, AHPC shall have no
obligation to defend, indemnify or hold harmless any ViroPharma
Indemnified Party from and against any Liability arising out of
or resulting from the infringement of a Third Party patent.
12.2 Indemnification by ViroPharma. ViroPharma will indemnify, defend
and hold harmless AHPC, its Affiliates, sublicensees,
distributors and each of its and their respective employees,
officers, directors and agents (each, an "AHPC Indemnified
Party") from and against any and all Liabilities that the AHPC
Indemnified Party may be required to pay to one or more Third
Parties arising out of:
(a) any claims of any nature, other than claims by Third Parties
relating to patent infringement, arising out of the conduct
of the Research Program by, on behalf of, or under the
authority of ViroPharma (other than by AHPC);
(b) any ViroPharma representation or warranty set forth herein
being untrue in any material respect when made; and/or
(c) the Promotion of any Product by ViroPharma in the
Copromotion Territory;
except in each case, to the extent caused by the negligence or
willful misconduct of AHPC or any AHPC Indemnified Party.
Notwithstanding the foregoing, ViroPharma shall have no
obligation to defend, indemnify or hold harmless any AHPC
Indemnified Party from and against any Liability arising out of
or resulting from the infringement of a Third Party patent.
12.3 Procedure. Each Party will notify the other in the event it
becomes aware of a claim for which indemnification may be sought
hereunder. In case any proceeding (including any governmental
investigation) shall be instituted involving any Party in respect
of which indemnity may be sought pursuant to this Article 12,
such Party (the "Indemnified Party") shall promptly notify the
other Party (the "Indemnifying Party") in writing and the
Indemnifying Party and Indemnified Party shall meet to discuss
how to respond to any claims that are the subject matter of such
proceeding. The Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified Party and
shall pay the fees and expenses of such counsel related to such
proceeding. In any such proceeding, the Indemnified Party shall
have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of the
Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying
Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual
or potential differing interests between them. All such fees and
expenses shall be reimbursed as they are incurred. The
Indemnifying
Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from
and against any loss or liability by reason of such settlement or
judgment. The Indemnifying Party shall not, without the written
consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which the
Indemnified Party is, or arising out of the same set of facts
could have been, a party and indemnity could have been sought
hereunder by the Indemnified Party, unless such settlement
includes an unconditional release of the Indemnified Party from
all liability on claims that are the subject matter of such
proceeding.
12.4 Insurance. Each Party further agrees to use its Commercially
Reasonable Efforts to obtain and maintain, during the term of
this Agreement, Commercial General Liability Insurance, including
Products Liability Insurance, with reputable and financially
secure insurance carriers to cover its indemnification
obligations under Sections 12.1 or 12.2, as applicable, or self-
insurance, with limits of not less than five million dollars
($5,000,000.00) per occurrence and in the aggregate.
13. MISCELLANEOUS.
13.1 Assignment. Neither this Agreement nor any interest hereunder
shall be assignable by either Party without the prior written
consent of the other Party, except for assignment in connection
with a Change of Control of a Party. This Agreement shall be
binding upon the successors and permitted assigns of the Parties
and the name of a Party appearing herein shall be deemed to
include the names of such Party's successors and permitted
assigns to the extent necessary to carry out the intent of this
Agreement. Any assignment not in accordance with this Section
13.1 shall be void.
13.2 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 the Agreement.
13.3 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. It shall notify the other Party promptly should such
circumstances arise, giving an indication of the likely extent
and duration thereof, and shall use all Commercially Reasonable
Efforts to resume performance of its obligations as soon as
practicable, provided,
however, that neither Party shall be required to settle any labor dispute
or disturbance. Actions taken by a Party to resume performance of its
obligations with respect to Screening, Research and Development matters
shall be taken in consultation with the JSC, and actions taken by a Party
to resume performance of its Commercialization obligations in the
Copromotion Territory shall be taken in consultation with the MSC.
13.4 Correspondence and Notices.
13.4.1 Ordinary Notices. Correspondence, reports, documentation, and any
other communication in writing between the Parties in the course of
ordinary implementation of this Agreement shall be delivered by
hand, sent by facsimile transmission (receipt verified), or by
airmail to the employee or representative of the other Party who is
designated by such other Party to receive such written
communication.
13.4.2 Extraordinary Notices. Extraordinary notices and other
communications hereunder (including, without limitation, any notice
of force majeure, breach, termination, change of address, exercise
of rights to negotiate additional agreements, etc.) shall be in
writing and shall be deemed given if delivered personally or by
facsimile transmission (receipt verified), mailed by registered or
certified mail (return receipt requested), postage prepaid, or sent
by nationally recognized express courier service, to the Parties at
the following addresses (or at such other address for a Party as
shall be specified by like notice, provided, however, that notices
of a change of address shall be effective only upon receipt
thereof):
All correspondence to AHPC shall be addressed as follows:
Wyeth-Ayerst Laboratories
000 Xxxx Xxxxxxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxxxxxxxx 00000
Attn: Senior Vice President, Global Business Development
Fax: (000) 000-0000
with a copy to:
American Home Products Corporation
0 Xxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attn: Senior Vice President and General Counsel
Fax: (000) 000-0000
All correspondence to ViroPharma shall be addressed as follows:
ViroPharma Incorporated
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attn: Vice President, Business Development
Fax: (000) 000-0000
with a copy to:
ViroPharma Incorporated
000 Xxxxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxxxxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
13.5 Amendment. No amendment, modification or supplement of any provision of
this Agreement shall be valid or effective unless made in writing and
signed by a duly authorized officer of each Party.
13.6 Waiver. No provision of the Agreement shall be waived by any act,
omission or knowledge of a Party or its agents or employees except by an
instrument in writing expressly waiving such provision and signed by a
duly authorized officer of the waiving Party.
13.7 Severability. If any clause or portion thereof in this Agreement is for
any reason held to be invalid, illegal or unenforceable, the same shall
not affect any other portion of this Agreement, as it is the intent of
the Parties that this Agreement shall be construed in such fashion as to
maintain its existence, validity and enforceability to the greatest
extent possible. In any such event, this Agreement shall be construed as
if such clause of portion thereof had never been contained in this
Agreement, and there shall be deemed substituted therefor such provision
as will most nearly carry out the intent of the Parties as expressed in
this Agreement to the fullest extent permitted by applicable law unless
doing so would have the effect of materially altering the right and
obligations of the Parties in which event this Agreement shall terminate
and all the rights and obligations granted to the Parties hereunder shall
cease and be of no further force and effect.
13.8 Descriptive Headings. The descriptive headings of this Agreement are for
convenience only, and shall be of no force or effect in construing or
interpreting any of the provisions of this Agreement.
13.9 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the substantive laws of the State of New Jersey,
without regard to conflict of law principles thereof.
13.10 Entire Agreement of the Parties. This Agreement constitutes and
contains the complete, final and exclusive understanding and
agreement of the Parties and cancels and supersedes any and all
prior negotiations, correspondence, understandings and agreements
including, without limitation, the Prior Agreement, whether oral or
written, among the Parties respecting the subject matter hereof and
thereof.
13.11 Independent Contractors. Both Parties are independent contractors
under this Agreement. Nothing herein contained shall be deemed to
create an employment, agency, joint venture or partnership
relationship between the Parties hereto or any of their agents or
employees, or any other legal arrangement that would impose
liability upon one Party for the act or failure to act of the other
Party. Neither Party shall have any express or implied power to
enter into any contracts or commitments or to incur any liabilities
in the name of, or on behalf of, the other Party, or to bind the
other Party in any respect whatsoever.
13.12 Debarment. Each Party agrees that it will not Use, in any capacity,
in connection with any of its obligations to be performed under the
Research Program any individual who has been debarred under the FD&C
Act or the Generic Drug Enforcement Act.
13.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which need not contain the signature of more
than one Party but all such counterparts taken together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, duly authorized representatives of the Parties have
duly executed this Agreement to be effective as of the Effective Date.
AMERICAN HOME PRODUCTS CORPORATION VIROPHARMA INCORPORATED
By /s/ Xxxxxx Xxxxxx By /s/ Xxxxxx X. Xxxx
----------------------------- --------------------------------
Name: Xxxxxx Xxxxxx Name: Xxxxxx X. Xxxx
Title: Executive Vice President Title: President & CEO
EXHIBIT 1.7
AHPC PATENT RIGHTS
------------------
NONE.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 1.7 Page 1
EXHIBIT 1.18
CLASS A PRODUCT CHEMICAL SERIES
-------------------------------
*******************************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 1.18 Page 1
EXHIBIT 1.23
COLLABORATION TARGETS
---------------------
*********************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 1.23 Page 1
EXHIBIT 1.50
ELEMENTS OF FULLY-ABSORBED STANDARD COSTS
-----------------------------------------
The following expenses are included in Fully Absorbed Standard Costs for
purposes of this Agreement:
1. Direct Materials
----------------
Materials used in the manufacturing process that are traced directly to the
completed materials, Compound or Product, as applicable, and include:
- Inert raw materials or excipients
- Active substances/ingredients at market prices
- Packaging components such as bottles, caps, labels, etc.
2. Direct Labor
------------
The cost of employees engaged in production activities which are directly
identifiable with manufacturing the materials, Compound or Product, as
applicable. Excludes supervision and production support activities such as
inspection, plant and equipment maintenance labor, and material handling
personnel. Direct Labor cost includes:
- Base pay, overtime, vacation and holidays, illness, personal time with
pay and shift differential.
- Cost of employee fringe benefits such as health and life insurance,
payroll taxes, welfare, pension and profit sharing.
3. Allocated Costs
---------------
Costs which are allocated to manufacturing the Ingredient based on standard
direct labor hours of the manufacturing process. These allocated costs
include:
- Utilities - expenses incurred for fuel, electricity and water in
---------
providing power for production and other plant equipment
- Maintenance and repairs - amount of expense incurred in-house or
-----------------------
purchased to provide services for plant maintenance and repairs of
facilities and equipment.
- Depreciation - of plant and equipment utilizing the straight-line
------------
method of calculation.
- Insurance - cost of comprehensive and other insurance necessary for
---------
the safeguard of manufacturing plant and equipment.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 1.50 Page 1
- Permits and Licenses - fees payable to governmental agencies or
--------------------
authorities to obtain or maintain permits or licenses that are
necessary for the operation of facilities used to manufacture the
materials, Compound or Product, as applicable.
- Costs of the following manufacturing services
---------------------------------------------
. Purchasing and Accounting
. Production Scheduling
. Inventory Management
. Plant Materials Management
. Supervision and Production Support
Various bases may be used for allocating these costs to manufacturing
operating departments including headcount, square feet, metered
utilities use, estimated services rendered, EDP computer hours, etc.
4. Testing Costs - direct labor costs for Quality Assurance ("QA") testing and
-------------
approving materials used in manufacturing and completed manufacturing
batches and finished Products. This includes all manufacturing in-process
testing and testing of finished materials. Excluded costs are QA costs
related to research and development, stability testing, etc.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 1.50 Page 2
EXHIBIT 1.112
VIROPHARMA PATENT RIGHTS
------------------------
**************************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 7.35.4 Page 11.112
Page 1
EXHIBIT 5.4
ADVERSE EVENT REPORTING PROCEDURES
----------------------------------
The Parties hereby agree that the following terms will govern disclosures
of each Party to the other with respect to adverse event reporting relating to
any Development Candidate or Product as clinically tested or marketed by or on
behalf of either Party.
1. Definitions.
1.1 Adverse Experience or Event (AE): An AE is defined by AHPC as any
untoward, undesired, or unplanned event in the form of signs,
symptoms, disease, or laboratory or physiological observations
occurring in a human being in a temporal relationship to use of an
AHPC product regardless of causal relationship. This includes:
. any clinically significant worsening of a pre-existing condition;
. an AE occurring from overdose (i.e., a dose higher than that
prescribed by a health care professional for clinical reasons) of
an AHPC product, whether accidental or intentional;
. an AE occurring from abuse (i.e., use for non-clinical reasons)
of an AHPC product;
. an AE that has been associated with the discontinuation of the
use of an AHPC product;
. any failure of expected pharmacological action (for spontaneous
reports).
If there is any doubt whether the information constitutes an AE, the
information will be treated as an AE.
1.2 Serious AE: A serious AE is defined by AHPC as an AE occurring at any
dose that: results in death; is life-threatening (see below); requires
inpatient hospitalization or prolongation of an existing
hospitalization; results in a persistent or significant disability or
incapacity (see below); results in cancer; results in a congenital
anomaly or birth defect. Additionally, important medical events that
may not result in death, be life-threatening, or require
hospitalization may be considered a serious AE when, based upon
appropriate medical judgment, they may jeopardize the patient or
subject and may require medical or surgical intervention to prevent
one of the outcomes listed in this definition. Examples of such
medical events include allergic bronchospasm requiring intensive
treatment in an emergency room or at home; blood dyscrasias or
convulsions that do not result in hospitalization; or the development
of drug dependency or abuse.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 5.4 Page 1
1.2.1 Life-threatening refers to immediate risk of death as the
event occurred. A life-threatening experience does not include
an experience that, had it occurred in a more severe form,
might have caused death but as it actually occurred did not
create an immediate risk of death. For example, hepatitis that
resolved without evidence of hepatic failure would not be
considered life-threatening even though hepatitis of a more
severe nature can be fatal. Similarly, an allergic reaction
resulting in angioedema of the face would not be life-
threatening, even though angioedema of the larynx, allergic
bronchospasm, or anaphylaxis can be fatal.
1.2.2 Disability is defined as a substantial disruption in a person's
ability to conduct normal life functions.
1.2.3 For studies, all pregnancies and all overdoses will be reported
to GSSE in the same time frame as serious AEs.
1.2.4 A serious AE obtained from tests in laboratory animals includes
any experience suggesting a significant risk for human
subjects, including any findings of mutagenicity,
teratogenicity, or carcinogenicity.
1.2.5 If there is any doubt whether the information constitutes a
serious AE, the information will be treated as a serious AE.
1.3 Non-Serious AE: is any AE which does not meet the criteria for a
serious AE.
1.4 Unexpected AE: An unexpected AE is one that is not listed in the
current product labeling. The current product labeling is either the
package insert (for marketed AHPC products) or the current
investigator's brochure (for investigational AHPC products). An
unexpected AE includes any event that may be symptomatically and
pathophysiologically related to an event listed in the labeling, but
differs from the labeled event because of greater severity or
specificity. For example, hepatic necrosis would be unexpected (by
virtue of greater severity) if the product labeling referred only to
elevated hepatic enzymes or hepatitis. Similarly, cerebral
thromboembolism and cerebral vasculitis would be unexpected (by virtue
of greater specificity) if the labeling only listed cerebral vascular
accidents.
1.5 Product (Drug, Vaccine, Biological, Device)-Related: For the purposes
of regulatory reporting for investigational products, an AE will be
considered "product-related" (i.e., drug-related, vaccine-related,
etc.) for studies if either the investigator, the Medical Monitor, the
CR&D Clinical Project Team Medical Monitor (or designee), or the Local
Monitor (if applicable) assesses the AE(s) as possibly, probably, or
definitely related.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 5.4 Page 2
1. An AE will be considered "not product-related" for studies if
the investigator and the medical monitor(s) and the local monitor
(if applicable) assess the AE(s) as probably not related or
definitely not related, or "relationship remote."
2. Whenever the investigator's or monitor's assessment is
unknown or unclear, the AE(s) will be treated as product-related
for the purposes of reporting to regulatory authorities.
1.6 Protocol-Related: AEs from studies that are not product-related may
nevertheless be considered by the investigator or the medical
monitor(s) or the local monitor (if applicable) to be protocol-
related. For purposes of reporting to GSSE and regulatory authorities,
these will be reported in the same manner as product-related events.
1.7 NDA Holder is defined as: An "Applicant" as defined in 21 C.F.R.
Section 314.3(b), for regulatory approval of a Product in any
regulatory jurisdiction, including a holder of a foreign equivalent
thereto.
1.8 IND Holder is defined as: A "Sponsor" as defined in 21 C.F.R. Section
312.3(b) of an investigational new drug in any regulatory
jurisdiction, including a holder of a foreign equivalent thereto.
1.9 Capitalized terms not defined in this Exhibit shall have the meaning
assigned thereto in the Agreement.
2. With respect to any Development Candidate or Product, the Parties agree as
follows:
a. All initial reports and any follow-up information (oral or written)
for any and all Serious AEs as defined above, (other than with respect
to animal studies) which become known to either Party (other than from
disclosure by or on behalf of the other Party) must be communicated by
telephone, telefax or electronically directly to the other Party
and/or the NDA Holder, IND Holder (individually and collectively
referred to as "Holders") within forty-eight hours of receipt of the
information. Written confirmation of the Serious AE received by such
Party should be sent to the other Party and/or the Holders as soon as
it becomes available, but in any event within forty-eight hours of
initial report of the Serious AE by such Party.
b. Both Parties shall exchange Medwatch and/or CIOMs forms and other
health authority reports within forty-eight hours of submission to any
Regulatory Authority.
c. All initial reports and follow-up information received for all Non-
Serious AEs for marketed Product which become known to a Party (other
than from disclosure by or on behalf of the other Party) must be
communicated in writing, by telefax or
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 5.4 Page 3
electronically to the other Party within ten days, on Medwatch or
CIOMs forms (where possible).
d. Each Party shall coordinate and cooperate with the other whenever
practicable to prepare a single written report regarding all Serious
and/or Non-Serious AEs, provided, however, that neither Party shall be
obligated to delay reporting of any AE in violation of applicable law
or regulations regarding the reporting of AEs.
3. The Parties further agree that:
a. A written report be forwarded to the other Party within forty-eight
hours of receipt by the Party making the report, for AEs for animal
studies which suggest a potential significant risk for humans;
b. Each Party will give the other Party a report via a print-out or
computer disk of all AEs reported to it and its Affiliates relating to
any Development Candidate or Product within the last year, within
thirty days of receipt of a request from the other Party but not more
often than four times a year;
c. If either Party wishes access to AE Reports of the other Party
relating to a Development Candidate or Product, upon request of that
Party, the other Party shall make available its AE records relating to
the Product or Substance (including computer disks) for viewing and
copying by the other Party. The Parties may discuss the transfer of AE
Reports by computer disk.
d. Disclosure of information hereunder by a Party to the other Party
shall continue as long as either Party and/or its Affiliates or
designees continue to clinically test or market a Development
Candidate or Product.
4. Each Party shall diligently undertake the following further obligations
where both Parties are or will be commercializing the Development Candidate
or Product pursuant to the Agreement and/or performing clinical trials with
respect to the Development Candidate or Product:
a. Upon the Effective Date, each Party shall identify individuals who
shall be responsible for identifying all AE reporting requirements in
all countries of the world as set forth in the Agreement, and any
amendments thereto;
b. To immediately consult with the other Party, with respect to the
investigation and handling of any Serious AE disclosed to it by the
other Party or by a third Party and to allow the other Party to review
the Serious AE and to participate in the follow-up investigation;
c. To immediately advise the other Party of any Development Candidate
and/or Product safety communication received from a health authority
and consult with the other Party with respect to any Product and/or
Substance warning, labeling change
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 5.4 Page 4
or change to an investigators' brochure involving safety issues
proposed by the other Party, including, but not limited to the safety
issues agreed to by the Parties;
d. To diligently handle in a timely manner the follow-up investigation
and resolution of each AE reported to it;
e. To provide the other Party mutually agreed upon audit rights of its AE
reporting system and documentation, upon prior notice, during normal
business hours, at the expense of the auditing Party and under the
confidentiality obligations set forth in the Agreement;
f. To meet in a timely fashion from time to time as may be reasonably
required to implement the adverse event reporting and consultation
procedures described in this Exhibit 5.4, including identification of
those individuals in each Party's Drug Safety group who will be
responsible for reporting to and receiving AE information from the
other Party, and the development of a written standard operating
procedure with respect to adverse event reporting responsibilities,
including reporting responsibilities to investigators;
g. Where possible, to transmit all data electronically;
h. to report to each other any addenda, revisions or changes to the
Agreement (e.g., change in territories, local regulations, addition of
new licensors/licensees to the Agreement, etc.) which might alter the
adverse event reporting responsibilities hereunder;
i. to utilize English as the language of communication and data exchange
between the Parties;
j. to develop a system of exchange of documents and information if the
Agreement involves more than two Parties;
k. to work together to develop an electronic system to transmit AE data.
5. The Parties may meet after the Effective Date of the Agreement to establish
a separate agreement for adverse event exchange which will supersede this
Exhibit 5.4.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 5.4 Page 5
EXHIBIT 7.3
STOCK PURCHASE AGREEMENT
------------------------
See attached.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 7.3 Page 1
EXHIBIT 7.4.1
SAMPLE CALCULATION OF ROYALTY DISTRIBUTIONS
-------------------------------------------
***********************************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 7.4.1 Page 1
EXHIBIT 7.5.3
SAMPLE CALCULATIONS OF NET PROFIT DISTRIBUTIONS
-----------------------------------------------
*****************************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 7.5.3 Page 1
EXHIBIT 10.2(a)
THIRD PARTY RIGHTS, TITLE OR INTEREST IN
-----------------------------------------
VIROPHARMA INTELLECTUAL PROPERTY
--------------------------------
*******************************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 10.2(a) Page 1
EXHIBIT 10.2(b)
THIRD PARTY CLAIMS ON
---------------------
VIROPHARMA PATENT RIGHTS AND KNOW-HOW
-------------------------------------
*********************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 10.3(a) 10.2.(b) Page 1
EXHIBIT 10.2(c)
VIROPHARMA INTELLECTUAL PROPERTY SUBJECT TO
-------------------------------------------
GOVERNMENT FUNDING AGREEMENTS
-----------------------------
***********************
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 10.2(c) Page 1
EXHIBIT 10.3(a)
THIRD PARTY CLAIMS ON
---------------------
AHPC PATENT RIGHTS AND KNOW-HOW
-------------------------------
None.
--------------------------------------------------------------------------------
December 9, 1999 Collaboration Agreement - Exhibit 10.3(a) Page 1