BioChem will undertake a Sponsored Research Program to identify and characterize nucleoside products with potential utility in the treatment of diseases or disorders caused by viruses or related to cancer, including BCH-189 for the treatment of AIDS.
BCH-189 shall mean the compound 2'-deoxy-3'-thiacytidine, the geometric and optical isomers thereof and mixtures of those isomers.
Per 8/91 Collaborative Research Agreement, the parties shall additionally undertake to synthesize, screen and develop several families of compounds derived from heteroanthracycline analogues emanating from the backbone-modified anthracycline analogue research of BioChem with potential for the treatment of cancer (the "Scope").
[In 3/94 this Agreement was amended to allow Glaxo to make an arrangement with Burroughs Wellcome ("B-W"), which would allow B-W to develop and commercialize 3TC for HIV. Glaxo would continue to develop lamivudine for commercialization in use against Hepatitis-B (3/94 Amendment--see Sections I.J, II.A, II.C & II.E.
In 11/95 this Agreement was amended to allow Glaxo to develop and commercialize the Modified Licensed Product (definition CON) on behalf of BioChem Pharma ("Biochem", including BioChem Pharma, Tanaud Holdings Limited ("THB"), Tanaud International B.V. ("TIB"), and Tanaud LLC ("TLLC")) 11/95 Amendment--see Sections I.Q, I.R, I.T, I.U, I.V, I.W, II.A, II.D, II.F, II.H, and IV.E.
In 1/96 Glaxo and BioChem established a Partnership to exploit the Modified Licensed Product in Canada--see Sections I.K, I.V, II.F, III.J, IV.A, IV.B, IV.C, IV.D.
In 1/96, Glaxo and BioChem entered a Sales and Marketing Agreement to exploit Modified Licensed Products in Canada--see Section I.T, and II.J.
In 6/99, Glaxo and BioChem entered a Share Purchase Agreement--see Section V.A.]
B. Research Period:
The Sponsored Research Program shall continue from signing for five years until 12/31/94 (the Contract Period). Glaxo shall have the right to extend the Contract Period for an additional two year period by notification prior to 12/31/93.
[The Agreement has been renewed for a further two-year period to 12/31/96 in order to target new anti-viral compounds for herpes, hepatitis C and cytomegalovirus.]
Per 8/91 Collaborative Research Agreement, the Collaborative Research Program (CRP) shall have an initial term of two years, until 7/31/93.
C. Cost Sharing & Reimbursement Basis:
BioChem shall appoint a term of no fewer than fifteen suitably qualified PhD scientists, capable of carrying out the Sponsored Research Program. In consideration of this effort, Glaxo shall annually pay to BioChem Can$3 million for work to be performed by BioChem during such year. Any unspent amounts shall be carried forward.
Per 8/91 Collaborative Research Agreement, BioChem shall appoint a research team to conduct the CRP as follows:
1) at least 8 PhD and four additional chemists, all dedicated entirely to the CRP;
2) one B.Sc level biologist and 50% of a PhD scientist dedicated to the CRP for tissue culture primary screening; and,
3) one B.Sc. level pharmacologist and 50% of a PhD scientist dedicated to the CRP for preliminary pharmacology/toxicology testing. In partial consideration of this effort by BioChem to the CRP, Glaxo Canada shall annually pay to BioChem Can$______ (CON but $3 million per BioChem's 1994 Annual Report). Glaxo Canada shall allocate and maintain an adequate staff for the purpose of satisfying its responsibilities under the CRP.
D. Upfront Payment:
Can$______ (CON, but probably Can$2 million) upon execution of this Agreement.
Per the 11/95 Amendment, in consideration of the rights granted for the Modified License product: (i) Glaxo paid $___ (CON) to BioChem and Tanaud;
(ii) Glaxo US paid $___ (CON) to BioChem, Tanaud International and Tanaud Limited Liability Corporation;
E. Benchmark Amounts:
Glaxo shall make milestone payments to BioChem as follows:
1) Can$______ (CON, but probably Can$1 million) upon first filing of an IND relating to a Licensed Product in the US;
2) Can$______ (CON) upon first completion of Phase II studies for an indication of a Licensed Product in the US;
3) Can$______ (CON) upon first filing of an NDA relating to a Licensed Product in the US; and,
4) Can$______ (CON) upon the FDA granting its approval to the NDA of a Licensed Product.
In consideration of its license grant in the US, Glaxo US shall make additional milestone payments to BioChem as follows:
1) Can$______ (CON) upon first filing of an NDA in the US; and,
2) Can$______ (CON) upon the FDA granting its approval to the NDA.
50% of all such milestone payments by Glaxo and Glaxo US shall be credited against royalties; provided, however, that no royalty credit shall exceed 50% of the payment owed for any calendar quarter.
F. Technology Acquisition Fees:
None
G. Payment Schedule:
Funding associated with the Sponsored Research Program shall be paid in four equal quarterly amounts in advance.
H. Budgets:
NA
I. Reimbursement Start Date:
Signing
J. Regulatory Filings:
All by Glaxo and Affiliates, except that JVCo shall conduct and control all regulatory filings in Canada once JVCo enters the Operational Phase (see Section II.J.).
Per the 3/94 Amendment, Glaxo will no longer be responsible for the development and commercialization of 3TC in HIV. B-W will assume this responsibility.
K. Special Capital Requirements
[Per the 1/96 Partnership Agreement, each partner shall make a $1000 cash contribution to the Partnership.]
L. Patent Ownership:
Each party shall own all inventions made prior to this Agreement. The parties shall jointly own any and all discoveries or inventions reduced to practice or developed by BioChem, Glaxo or the parties jointly in the course of the Sponsored Research Program.
M. Patent Filing Costs:
BioChem shall undertake and/or continue all patent filing costs at Glaxo's expense. All Patent Expenses shall be deductible from royalty payments, up to a maximum credit of 50% of the royalties due in each calendar quarter.
Patent Expenses shall mean all external fees and costs incurred by Glaxo in financing the patent activities, including patent defense and translation charges.
N. Patent Defense Costs:
Glaxo shall be entitled to defend Licensed Patents at Glaxo's expense and retain all recoveries therefrom; provided, however, that BioChem shall have the right to elect to pay up to ___% (CON) of such litigation costs and shall thereby become entitled to that percentage of any recoveries. BioChem shall also have the right to be represented by separate counsel at its own expense in any such suit.
O. 3rd-Party Patents:
Glaxo shall be entitled to withhold up to ___% (CON) of the royalties otherwise payable to BioChem until such time as any third party suit is resolved or settled, and use that withheld royalty to cover external legal defense costs.
Glaxo and/or Glaxo US may deduct any third party payment from royalties payable to BioChem; provided, however, that the total permitted royalty reduction shall not exceed ___% (CON) of the amount otherwise payable to BioChem.
P. Non-Compete Provisions:
During the Contract Period, BioChem shall not carry out research within the defined scope of the Sponsored Research Program, either directly or indirectly, with any third party.
Per 8/91 Collaborative Research Agreement, during the CRP the parties shall not undertake independent research, either directly or indirectly, in any area falling within the Scope of the CRP.
Q. Publications:
The parties shall have the right to make publications or presentations relating to Licensed Product, provided that the publishing party furnish an advance copy at least 90 days prior to submission for publication. [Per 8/91 Collaborative Research Agreement, such advance period is modified to 60 days.]
An additional delay may be requested to permit timely preparation and filing of all necessary patent applications, but not beyond the earlier of 18 months after the end of the 90 day period or the filing of the said application(s).
[Per the 11/95 Amendment, neither party shall publish without the prior written consent of the other party.]
R. Core Technology:
Each party owns its own.
[Per the 11/95 Amendment, BioChem shall communicate to Glaxo all Know-How in its possession as well as all information concerning side-effects associated with the Modified Licensed Product as of 11/20/95.]
S. Cancellation Amounts:
None
T. Termination:
Glaxo shall be entitled to terminate the Master License Agreement at any time.
With respect to the Sponsored Research Program, Glaxo shall be entitled to terminate such Program on or before 12/31/90 if Glaxo determines that an independent third party possesses patent property containing valid and enforceable claims to BCH-189 that will have priority over BioChem's claims thereto. In addition, Glaxo may elect to terminate the Sponsored Research Program on or after the third anniversary of signing upon 12 months advance notice.
With respect to JVCo, either party may terminate the joint venture in the event JVCo shall not have reached the Revenue Target by 1/24/2001 (see Section II.J.)
[Per the 11/95 Amendment, the Agreement shall terminate:
(i) by either party upon material breach or insolvency; or
(ii) by TIB or TLLC is Glaxo shall fail to pay royalties.
[Per the 1/96 Sales and Marketing Agreement, which is related to the 1/96 Partnership Agreement, BioChem shall terminate the Sales and Marketing Agreement if the Partnership fails to pay BioChem for these services for two successive quarterly periods.]
U. Product Reversion:
To BioChem upon termination or breach by Glaxo. In the event of breach by BioChem, Glaxo shall be entitled to a non-exclusive, paid-up license under Licensed Patents to exploit Licensed Product.
[See Section II.A with respect to the rights reverted back to BioChem per the 3/94 Amendment.
Per the 11/95 Amendment, if this Agreement is terminated by Glaxo upon breach by BioChem, then Glaxo shall be entitled to a non-exclusive, worldwide, paid-up license under Licensed Patents and Know-How to manufacture, have manufactured, use and sell Modified Licensed Product.]
V. Change in Control:
The Master License Agreement shall be assignable to a successor of all or substantially all of the business or assets of either party.
The Sponsored Research Program shall be terminable by Glaxo in the event BioChem assigns this Agreement along with that portion of its business related to such Program to a company which sells products or services in direct competition to Glaxo. In such event, all Joint Technology and Joint Patent Rights shall become the sole and exclusive property of Glaxo.
[Per the 11/95 Amendment, the Agreement shall not be assignable in whole or in party by either party except to a successor thereto without the prior written consent of the other party.
Per the 1/96 Partnership Agreement, a Partner shall not transfer its Partnership Interest, in whole or in part. However, either Partner may transfer all of part of its Partnership Interest to an affiliate of that Partner provided that such affiliate becomes a party to this Agreement and remains fully obligated to observe and perform all of its obligations under this Agreement.]
W. Options/Other:
Glaxo shall have the nontransferable exclusive right to commercially exploit Joint Patent Rights and Technology arising in connection with the Sponsored Research Program for the sole and exclusive purpose of making, having made, using and selling any Product.
Glaxo may activate its right to commercially exploit any Product by delivery notice to BioChem, whereupon such Product shall become a Commercial Product. Glaxo shall pay to BioChem an amount of not less than ___% (CON, but probably 7%) and not more than ___% (CON, but probably 12%) of Net Sales of any Commercial Product in countries covered by Patent Rights. In countries not covered by Patent Rights, Glaxo shall pay to BioChem an amount of not less than ___% (CON, but probably 3%) and not more than ___ (CON, but probably 5%) of Net Sales. In the event Glaxo terminates the Sponsored Research Program early, the royalty rates associated with any Commercial Product shall be set at the maximum rates described above.
Per 1/91 Joint Venture Agreement, such right to develop Products shall be broadened to include any and all Mission Products. Mission Product shall mean any therapeutic product (other than Licensed Product) for the treatment of diseases or disorders caused by viruses or related to cancer.
Per 1/91 Rights Agreement, BioChem grants to Glaxo an exclusive first option to negotiate for 120 days with BioChem for any therapeutic compound for which BioChem has determined to seek a commercial partner in any country. Glaxo Canada grants to BioChem the first option to negotiate for 120 days a research agreement with regard to basic research for the discovery of any new therapeutic compound which is not the subject of current Agreements and which in the reasonable opinion of Glaxo Canada falls within BioChem's research expertise. This latter right shall only arise where Glaxo Canada seeks a commercial partner in Canada to undertake such research project.
Glaxo hereby acknowledges that two BioChem research projects shall be exempted from Glaxo's right, as follows:
1) Certain opioid peptide with analgesic properties; and,
2) Certain bladder cancer product utilizing BCG.
Per 8/91 Collaborative Research Agreement, specific royalty rates and milestone payments identified with respect to any Product emanating from the CRP (rates and amounts CON).
Per the 3/94 Amendment, the rights granted by BioChem to Glaxo regarding options to any therapeutic compound for which BioChem has determined to seek a commercial partner, shall be deleted.
Per the 11/95 Amendment, BioChem shall have the right to conduct research and develop activities related to compounds.
2. Product License(s)
A. License Holder/Type:
BioChem grants to Glaxo the exclusive right to develop, register, manufacture, have manufactured, use and sell Licensed Product in the Territory. Licensed Product shall mean any compounds which fall within Licensed Patents or specific formulae (formula CON). Licensed Patents include dioxalane and oxathiolane series.
BioChem grants to Glaxo Canada the exclusive right, in conjunction with BioChem via the JVCo (see Section II.J), to develop, register, manufacture, have manufactured, use and sell Licensed Product in Canada.
BioChem grants to Glaxo US the exclusive right to develop, register, manufacture, have manufactured, use and sell Licensed Product in the US.
[Per the 3/94 Amendment, Glaxo will return to BioChem all rights worldwide for nucleosides for the treatment of HIV and cancer, with the sole exception that Glaxo will retain all rights to 3TC in HIV. The rights returned to BioChem will include the products of joint research.
Per the 11/95 Amendment BioChem grants the following rights:
BioChem grants to Glaxo:
(i) the exclusive right to develop, register, manufacture, have manufactured, use and sell Modified Licensed Product; and
(ii) the exclusive right under Know-How to develop, register, manufacture, have manufactured, use and sell Modified Licensed Product.
BioChem grants to Glaxo Canada:
(i) the sole right, in conjunction with BioChem via the JVCo (see Section II.J), to develop, register, manufacture, have manufactured, use and sell Modified Licensed Product in Canada; and
(ii) the sole right, in conjunction with BioChem via the JVCo, under Know-How to develop, register, manufacture, have manufactured, use and sell Modified Licensed Product.
BioChem grants to Glaxo US:
(i) the exclusive right to develop, register, manufacture, have manufactured, use and sell Modified Licensed Product in the US; and
(ii) the exclusive right under Know-How to develop, register, manufacture, have manufactured, use and sell Modified Licensed Product.
Glaxo, Glaxo Canada, and Glaxo US grant back to BioChem the rights to the Residual Products as provided:
(i) BioChem shall not exploit commercially any Residual Product outside the Field (definition CON). After 11/19/99, if BioChem seeks through an independent third party to exploit commercially any Residual Product outside the Field, it shall offer to Glaxo a first right to negotiate an exclusive license for such Residual Product. Furthermore, if Glaxo wishes to exploit commercially a Residual Product, Glaxo may seek a license from BioChem.
(ii) BioChem shall not exploit commercially any Residual Product within the field until the patent for such Residual Product expires.
(iii) BioChem shall not exploit commercially any compound tested under the Sponsored Research Agreement dated 1/1/90 between BioChem and Glaxo Canada. If BioChem seeks through an independent third party to exploit commercially any such compound it shall offer to Glaxo a first right to negotiate an exclusive license for such compound. If Glaxo does not with to enter into negotiations for an exclusive worldwide licensed for a compound, then BioChem shall be allowed to exploit such compound or to grant an independent third party the right to exploit such compound.
(iv) Glaxo and Glaxo US shall not exploit commercially any compound within the Field with the principal purpose of reducing royalties to BioChem.
(v) A Residual Product or compound shall be regarded as exploited within the Field if that Residual Product or compound:
a) is a (definition CON) with no distinct biological difference to Modified Licensed Product;
b) has such similar therapeutic properties and such an absence of distinguishing therapeutic advantages compared to Modified Licensed Product as to be perceived as clinically interchangeable; and
c) has its sole clinical use as a direct therapeutic substitute or replacement for Modified Licensed Product, without any improved ability to compete with other compounds in the field other than Modified License Product.
Glaxo, Glaxo Canada, and Glaxo US also grant back to BioChem the rights to FTC (definition CON).]
B. Product Field of Use:
All uses.
C. Territory Splits:
The Territory shall mean all countries of the world, except for Canada and the US, and their territories and possessions, which are provided for separately under these Agreements.
Per the 3/94 Amendment, for the purposes of 3TC in HIV, the term "Territory" means all countries excluding Canada. The U.S. shall be included in the Territory. This will allow Glaxo to sublicense 3TC in HIV to B-W in all countries except Canada.
D. Royalty Rate:
Glaxo shall make royalty payments to BioChem as follows:
1) ___% (CON, but 15% per BioChem public presentations) of Net Sales of Licensed Product in each country of the Territory, for so long as there is in that country a Licensed Patent covering such Product; or,
2) ___% (CON) of Net Sales of Licensed Product in each country of the Territory where there is no Licensed Patent covering such Product.
These same royalty rates shall apply to Net Sales of Licensed Product in the US, except that Glaxo US shall be responsible for making such payments to BioChem.
[Per the 11/95 Amendment, in consideration of the rights granted regarding the Modified Licensed Product:
(i) Glaxo shall pay to Tanaud International ("TIB") ___% (CON) royalties on Glaxo's Net Sales of any Modified Licensed Product, depending upon patent protection in the given country;
(ii) Glaxo US shall pay to Tanaud Limited Liability Corporation ("TLLC") ___% (CON) royalties on Glaxo US's Net Sales of any Modified Licensed Product, depending upon patent protection in the US.]
E. Right to Sublicense:
Yes, provided that Glaxo shall obtain BioChem's prior approval as to identity, which approval shall not be unreasonably withheld or delayed.
[Per the 3/94 Amendment, in the sublicense to B-W, Glaxo shall reserve for BioChem the right to market 3TC in Canada. BioChem may choose to collaborate with B-W in Canada. BioChem will pay to Glaxo a royalty of 12% on all sales of 3TC in Canada. Glaxo will supply 3TC to BioChem.]
F. Term/Patent Life:
With respect to payment of royalties in the Territory, such royalties shall be payable for the longer of the life of any Licensed Patent or ten years from the date of first commercial sale on a country-by-country basis.
Upon expiration of such royalty obligation, Glaxo shall thereafter have a _____ (CON, but probably paid-up) license for sales in such country.
[Per the 11/95 Amendment, the revised Master Agreement shall replace the Original Agreement. Moreover, this Agreement shall remain in effect until the last of the Licensed Patents to expire, or upon the ___ (CON) anniversary of the date of the first commercial sale of Modified Licensed Product by Glaxo.
Per the 1/96 Partnership Agreement, the Agreement shall begin on 1/1/96 and remain in effect until the first anniversary of the expiry of the Licensed Patents which provide for market exclusivity of the Modified Licensed Products in Canada.]
G. Adv/Min Royalty & Diligence Requirement
In the event an NDA shall not have been submitted in the US within ___ (CON) months of signing of this Agreement, BioChem shall have the right to terminate Glaxo's license to Licensed Product hereunder; provided, however, that Glaxo shall be entitled to up to three extension periods of ___ (CON) months each upon advance payment to BioChem of Can$______ (CON) with respect to each such extension, which advance payment(s) Glaxo US may deduct from its milestone payment upon NDA filing.
[Per the 3/94 Amendment, the extension periods above shall be amended to two periods of 9 months each and a last period of 12 months.
Per the 11/95 Amendment, the total permitted royalty reduction shall not exceed ___ (CON) on Net Sales of such Modified Licensed Product.]
H. Royalty Accounting:
Net Sales shall mean as follows:
1) in the case of any Licensed Product uncompounded with any other active therapeutic and/or prophylactic ingredient, Net Sales shall mean the Net Invoiced Sales Value;
2) in the case of any Licensed Product which is compounded with any other active therapeutic and/or prophylactic ingredient, Net Sales shall be based upon the declared value of Licensed Product as agreed upon by the parties or decided upon by an independent accountant; and,
3) in the case of any Licensed Product which is sold in bulk to an independent third party, Net Sales shall mean the Net Invoiced Sales Value of such Licensed Product sold by such party in Final Pharmaceutical Form.
[Per 8/91 Collaborative Research Agreement, with respect to bulk sales, definition of Net Invoiced Sales Value changed to apply only to Product sold "to" such party in Final Pharmaceutical Form.]
Net Invoiced Sales Value shall mean the gross invoice price charged for Licensed Product sold by Glaxo or its Affiliates or sublicensees to an independent third party, less all allowances or credits granted on such sales, including those in respect of rejected or returned goods, recalls, transportation charges or allowances, insurance charges, normal and customary trade, quantity and trade discounts, and taxes or other governmental charges on, or measured by, the sale, transportation, or use of such Licensed Product, which Glaxo and/or its Affiliates or sublicensees has or have to pay or absorb on such sales.
If any inaccuracy in the royalty payments of greater than 5% is determined by a review, then the cost of the review shall be borne by Glaxo.
Biochem pays unless discrepancy is greater than 5%, in which case GSK pays.
[Per the 11/95 Amendment, Net Sales shall mean the following with respect to any Modified Licensed Product:
1) in the case of any Modified Licensed Product in Final Pharmaceutical Form, uncompounded with any other active therapeutic and/or prophylactic ingredient, Net Sales shall mean the Net Invoiced Sales Value of such Modified Licensed Product;
2) in the case of any Modified Licensed Product in Final Pharmaceutical Form, which is compounded, packaged or sold with any other active therapeutic and/or prophylactic ingredient, Net Sales shall be based upon one price charged for such combination the value of the total declared amount of the Modified Licensed Product as agreed upon by the parties or decided upon by an independent accountant; and,
3) in the case of any Modified Licensed Product which is sold in bulk to an independent third party, Net Sales shall mean the Net Invoiced Sales Value of such Modified Licensed Product sold by such party in Final Pharmaceutical Form.
"Total declared amount" shall mean the amount of active ingredient in the Modified Licensed Product as specified on the label or package and as approved for that dosage form by the governing health authority.]
I. Patent-Royalty Tie-In:
With respect to sales of Licensed Product in the Territory, if a Licensed Patent issues in a country subsequent to first commercial sale, then Glaxo shall pay to BioChem an additional lump sum royalty of ___% (CON) on Net Sales of Licensed Product sold from the date of first commercial sale in such country until the date of grant. [See also Section II.D.]
J. Options/Other:
BioChem and Glaxo Canada shall establish a 50/50 owned joint venture company in Canada (JVCo) upon first filing of an NDA in the US or Canada. Following formation of JVCo, BioChem shall grant JVCo the exclusive right to exploit Licensed Product in Canada and the US.
JVCo shall market and sell Licensed Product in Canada via Glaxo Canada. JVCo shall sell Licensed Product to Glaxo Canada at a unit price which:
1) in the first ___ (CON, but probably three) years of sales, equals ___% (CON, but probably 40%) of Net Sales; and,
2) after the first ___ (CON, but probably three) years of sales, equals ___% (CON, but probably 50%) of Net Sales.
In the event that aggregate Net Sales in Canada in any one year exceed Can $______ (CON), then JVCo will be entitled to sell Licensed Product to Glaxo Canada at a price which equals ___% (CON, but probably 60%) of Net Sales calculated on a unit basis.
Glaxo Canada will receive orders, deliver Licensed Product, invoice customers, extend credit, collect accounts and record all sales of Licensed Product in Canada. Glaxo Canada shall establish and modify the terms and conditions of sale, including the price at which Licensed Product will be sold. Glaxo Canada acknowledges and agrees that it shall derive its compensation for its services to JVCo from the revenue from sale of Licensed Product.
JVCo shall appoint Glaxo US as its exclusive distributor for Licensed Product in the US. JVCo will sell Licensed Product to Glaxo US at ______ (CON). Glaxo US will be guaranteed a ___% (CON) gross margin on its gross sales of Licensed Product in each year, taking into account such gross sales less payment of the purchase price to JVCo for Licensed Product and less payments of royalties to BioChem.
Per 1/91 Joint Venture Agreement, JVCo shall have four phases, as follows:
1) Pre-incorporation Phase--period from 1/24/91 through incorporation of JVCo;
2) Initial Phase--period ending when JVCo has achieved the Revenue Target;
3) Transitional Phase--period ending when the parties have transferred control to JVCo, but in no event longer than six months; and,
4) Operational Phase--period beginning after end of the Transitional Phase.
The Revenue Target shall have been met once JVCo revenues in any ___ (CON) month period reach Can $______ (CON) in constant 1990 dollars. The calculation of the Revenue Target shall be the aggregate of the following:
1) Net Sales by Glaxo of Licensed Product and/or Mission Product in Canada; and,
2) Gross profit to JVCo from sales of Licensed Product and/or Mission Product to Glaxo US or other Glaxo-related companies.
During the Pre-incorporation Phase, each party shall be responsible for its own costs incurred in carrying out its functions on behalf of JVCo.
During the Initial Phase, Glaxo shall create a distinct sales force dedicated to Licensed Product and/or Mission Product sales. In addition, Glaxo will develop an independent sales division to manage such sales force. This division will be transferred to JVCo during the Transitional Phase.
During the Transitional Phase, Glaxo will make arrangements to have JVCo assume as employer the responsibility for the sales force personnel, and transfer the related sales, and the independent sales division to JVCo. Glaxo will not be obligated to transfer personnel related to regulatory, clinical, marketing information, market planning, sales training, hospital sales, customer service, warehouse or human resource functions. BioChem will make arrangements to have JVCo assume as employer the responsibility for the research personnel from BioChem involved with scientific projects in the anti-viral or cancer therapeutic fields and transfer the said projects to JVCo.
Once the Operational Phase begins, JVCo will initiate and fund research projects within its Mission, and all Intellectual Property Rights related to such projects will be transferred to JVCo. Accounting and administration functions will be effected by JVCo.
In consideration of the transfers outlined above, JVCo will pay to Glaxo Canada the following royalties associated with Net Sales by Glaxo Canada of Licensed Product and/or Mission Product:
1) ___% (CON) of such Net Sales in the first year of the Operational Phase; and,
2) ___% (CON) of such Net Sales in the second year of the Operational Phase.
Glaxo shall provide to JVCo, when JVCo enters the Operational Phase, a right of first refusal for Canadian marketing rights for any of Glaxo Canada's products which fall within the Mission of JVCo; provided, however, that such right shall apply only if Glaxo Canada chooses to seek a commercial partner for such product.
Per the 3/94 Amendment, JVCo will not participate in the commercialization of 3TC in HIV. Specifically, the paragraphs of above regarding JVCo's responsibilities during the Initial Phase and the Transitional Phase shall be deleted.
Per the 1/96 Sales and Marketing Agreement, BioChem shall use its best commercial efforts to market and sell Modified Licensed Products in Canada in accordance with the sales, marketing, personnel and operating plan approved by the Partnership on an annual basis. The Partnership shall pay to BioChem $___ (CON) in consideration of these services.]
3. Manufacturing & Supply
A. Right Holder/Type:
Glaxo shall have all supply rights in the Territory. With respect to the US and Canada, JVCo shall procure its entire requirements of Licensed Product from Glaxo Canada.
Glaxo US shall purchase its entire requirements of Licensed Product for sale in the US from JVCo.
B. Bulk/Dosage Form:
Final Pharmaceutical Form.
C. Territory:
Worldwide
D. Reimbursement Basis:
With respect to supply of Licensed Product for sale in the US or Canada, JVCo shall reimburse ___% (CON) of Glaxo Canada's manufacturing cost in connection therewith.
Glaxo Canada will invoice JVCo for all shipments of Licensed Product to Glaxo US. JVCo will invoice Glaxo US for such Licensed Product.
E. Proc. Dev. Terms:
No provision
F. Clinical Use Manufacturing:
No provision
G. Shipment Terms:
No provision
H. Financing:
None
I. Escape Clause:
Glaxo US shall have the right to obtain Licensed Product in the event that JVCo shall be unable to supply 100% of Glaxo US' requirements. Such right shall end at such time as JVCo is able to resume 100% of such supply requirements.
J. Product Liability:
Glaxo shall indemnify BioChem against all liabilities except those which result from the negligence, recklessness or willful misconduct of BioChem. Glaxo Canada indemnifies BioChem as described above and acknowledges that the manufacturer of Licensed Product shall arrange, maintain and bear the cost of adequate product liability insurance.
[Per the 1/96 Partnership Agreement, mutual indemnification.]
K. Options/Other:
None
4. Collaboration Management
A. Representation:
The parties shall establish several committees as follows:
1) A Development Liaison Committee shall consist of three members appointed by each of Glaxo and BioChem;
2) JVCo's board of directors shall consist of three members appointed by each of Glaxo Canada and BioChem; and,
3) Joint Research Policy Committee (JRPC) shall consist of three members appointed by each of Glaxo Canada and BioChem per 8/91 Collaborative Research Agreement.
[Per the 1/96 Partnership Agreement, a Management Committee shall be established to supervise and control the Partnership. The Management Committee shall be composed of four persons, two from Glaxo: Paul Lucas and Paul L'Archeveque; and two from BioChem: Francesco Bellini and Michael Grey. The Partners shall appoint a person to act as chairman ("Chairman") of the Management Committee, alternately being a representative from Glaxo and BioChem. Each Chairman shall serve for a one year term, and shall be responsible for conducting meetings yet shall not have a casting vote. The first Chairman shall serve from 1/1/96 until 12/31/96, and shall be a representative of Glaxo. Either the Management Committee shall appoint a secretary, or the Chairman shall designate a secretary, to record the minutes for the Management Committee.]
B. Quorum:
With respect to JVCo, a quorum shall be four directors, two of whom shall be nominees of each party.
[Per the 1/96 Partnership Agreement, a quorum of the Management Committee shall consist of one representative of Glaxo and one representative of BioChem.]
C. Basis of Actions:
Majority vote
[Per the 1/96 Partnership Agreement, decisions of the Management Committee must be approved by unanimous vote or by a resolution in writing signed by at least one representative or alternate of Glaxo and one representative or alternate from BioChem.]
D. Meetings:
The Development Liaison Committee shall meet at least twice per year.
The JRPC shall meet at least four times per year.
[Per the 1/96 Partnership Agreement, the Management Committee shall meet quarterly, alternating at the offices of each of the Partners. Additionally, either Partner may call a special meeting of the Management Committee upon five Business Days' notice, with agenda attached, to the other Partner.]
E. Disagreements:
With respect to the Master License Agreement and JVCo, any disputes shall be settled according to the rules of the ICC. The place of arbitration shall be the city of the respondent party in any dispute.
[Per the 11/95 Amendment, in the event of multiple respondents, the parties agree that the place of arbitration shall be Toronto, Canada, unless otherwise agreed to by the parties.]
F. Buyout/Windup:
With respect to JVCo, in the event either party receives an offer from (which offer it wishes to accept) or wishes to make an offer to an arm's length party to acquire beneficial interest in JVCo, the other party shall have 20 business days to purchase all of the JVCo shares referred to in the offer on the same terms and conditions as proposed. Any closing associated with such offer shall be not earlier than 30 business days nor later than 60 business days from the 20th day described above.
G. Options/Other:
None
5. Equity Investment
A. Type of Security:
Per the 1/91 Share Subscription Agreement, Glaxo Canada shall purchase 4.0 million BioChem common shares as follows:
1) 2,000,000 shares on signing for Can$ 12.0 million (Can$6.00/share);
2) 666,666 shares on 7/24/91 for Can$ 4,166,662.50 (Can$6.25/share);
3) 666,666 shares on 1/24/92 for Can$4,333,329 (Can$6.50/share); and
4) 666,668 shares on 7/24/92 for Can$4.5 million (Can$6.75/share).
In addition, Glaxo shall have the option to purchase at any time from BioChem up to 3,891,454 common shares for Can$30,353,341 (Can$7.80/share). Such option shall expire on 1/24/93 or in the event Glaxo Canada divests itself in any manner of any purchased shares of BioChem. [Such option was exercised in full in 1/93.]
[Per the 11/5/93 Amendment, the 1/91 Shareholders Agreement is terminated at the expiration of a period of 180 days following this written notice.
Per the 6/99 Share Purchase Agreement, Glaxo shall sell 80,000,000 BioChem common shares back to BioChem (@US$20/Share for an aggregate Purchase Price of US$160,000,000. The Purchase Price includes US$80,000,000 in immediately available funds by wire transfer and the balance by a promissory note which bears interest at an annual compound rate of 5%, in the principal amount of US$80,000,000, due on the first to occur of (i) 1/19/01 or (ii) the occurrence of an Acceleration Event (insolvency).]
B. Pricing:
See Section V.A.
C. Board Seat:
None guaranteed, but Jacques R. Lapointe, President of Glaxo Canada, joined BioChem's Board during 1991.
D. Research Tie-Ins:
None
E. Options & Rights:
Future purchases and option shares shall have limited anti-dilution protection, based on the following Triggering Events:
1) any Rights Offering;
2) any Special Distribution of shares;
3) any reclassification; or,
4) any reorganization.
No adjustment in Exercise Price or number of shares shall occur if Glaxo Canada is entitled to participate in such event on the same terms as if it had purchased all shares and exercised its option.
6. Signatories
A. For Drug Company:
Jacques R. Lapointe
President & CEO, Glaxo Canada
B. For Biotech Company:
Francesco Bellini
President & CEO
Key: CON Confidential Treatment granted by SEC; material omitted from public filings. UKN Unknown NA Not applicable
