-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I5W0MZKU5bRkPgfWGRCdrff5yHbyWH+89pKhc9cfAeEjpMKFK+9ZuBlUoe9B8+J1 RANZjvlFsqT0AwbNYaDprg== 0000950135-02-002747.txt : 20020515 0000950135-02-002747.hdr.sgml : 20020515 20020515171259 ACCESSION NUMBER: 0000950135-02-002747 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDICINES CO/ MA CENTRAL INDEX KEY: 0001113481 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 043324394 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-31191 FILM NUMBER: 02653688 BUSINESS ADDRESS: STREET 1: ONE CAMBRIDGE CTR CITY: CAMBRIDGE STATE: MA ZIP: 02142 BUSINESS PHONE: 6172259099 10-Q 1 b43069mce10-q.txt THE MEDICINES COMPANY SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------------------------- FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For The Quarterly Period Ended March 31, 2002 Commission File Number 000-31191 The Medicines Company (Exact Name of Registrant as Specified in Its Charter) Delaware 04-3324394 -------- ---------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 5 Sylvan Way, Parsippany, NJ 07054 ---------------------------- ----- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (973) 656-9898 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date: As of April 30, 2002, there were 34,937,946 shares of Common Stock, $0.001 par value per share, outstanding. THE MEDICINES COMPANY TABLE OF CONTENTS Part I. Financial Information.................................................................. 1 Item 1 - Unaudited Condensed Consolidated Financial Statements............................... 1 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................................ 9 Item 3 - Quantitative and Qualitative Disclosures About Market Risk.......................... 24 Part II. Other Information..................................................................... 25 Item 2 - Changes in Securities and Use of Proceeds........................................... 25 Item 6 - Exhibits and Reports on Form 8-K.................................................... 26 SIGNATURES .................................................................................... 27 EXHIBIT INDEX ................................................................................. 28
PART I. FINANCIAL INFORMATION ITEM 1 - UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THE MEDICINES COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
MARCH 31, DECEMBER 31, 2002 2001 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 55,464,067 $ 53,884,376 Available for sale securities 125,000 125,000 Accrued interest receivable 14 6,757 ------------- ------------- 55,589,081 54,016,133 ------------- ------------- Accounts receivable, net of allowances of $1.2 million and $823,000 at March 31, 2002 and December 31, 2001, respectively 6,656,431 5,346,684 Inventories, principally raw materials 19,487,591 16,610,928 Prepaid expenses and other current assets 818,085 550,564 ------------- ------------- Total current assets 82,551,188 76,524,309 Fixed assets, net 1,098,576 1,223,528 Other assets 154,470 153,076 ------------- ------------- Total assets $ 83,804,234 $ 77,900,913 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Revolving line of credit borrowings $ 10,000,000 $ -- Accounts payable 12,194,313 8,805,476 Accrued expenses 8,371,059 7,974,473 ------------- ------------- Total current liabilities 30,565,372 16,779,949 Deferred revenue 1,489,583 -- Commitments and contingencies -- -- ------------- ------------- Total liabilities 32,054,955 16,779,949 Stockholders' equity: Common stock, $.001 par value, 75,000,000 shares authorized at March 31, 2002 and December 31, 2001, respectively; 34,921,677 and 34,606,582 issued and outstanding at March 31, 2002 and December 31, 2001, respectively 34,922 34,607 Additional paid-in capital 320,932,966 321,041,704 Deferred stock compensation (6,215,185) (8,593,773) Accumulated deficit (263,084,988) (251,443,682) Accumulated other comprehensive income 81,564 82,108 ------------- ------------- Total stockholders' equity 51,749,279 61,120,964 ------------- ------------- Total liabilities and stockholders' equity $ 83,804,234 $ 77,900,913 ============= =============
See accompanying notes to condensed consolidated financial statements. Page 1 THE MEDICINES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------------- 2002 2001 ------------ ------------ Net revenue $ 7,714,901 $ 1,861,288 Operating expenses: Cost of revenue 1,085,489 332,400 Research and development 9,309,072 12,595,197 Selling, general and administrative 9,331,837 9,058,936 ------------ ------------ Total operating expenses 19,726,398 21,986,533 Loss from operations (12,011,497) (20,125,245) Other income (expense): Interest income 378,177 1,069,259 Interest expense (7,986) -- ------------ ------------ Net loss $(11,641,306) $(19,055,986) ============ ============ Basic and diluted net loss per common share $ (0.34) $ (0.63) ============ ============ Shares used in computing net loss per common share: Basic and diluted 34,627,723 30,247,599 ============ ============
See accompanying notes to condensed consolidated financial statements. Page 2 THE MEDICINES COMPANY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------------- 2002 2001 ------------ ------------ Cash flows from operating activities: Net loss $(11,641,306) $(19,055,986) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 132,367 104,829 Amortization of deferred stock compensation 984,611 1,120,932 Loss on sales of fixed assets -- 251 Changes in operating assets and liabilities: Accrued interest receivable 6,743 209,400 Accounts receivable (1,309,747) (1,792,124) Inventory (2,883,463) (87,009) Prepaid expenses and other current assets (267,142) 69,762 Other assets (1,395) (212,102) Accounts payable 3,388,681 (2,280,050) Accrued expenses 397,841 1,885,622 Deferred revenue 1,489,583 -- ------------ ------------ Net cash used in operating activities (9,703,227) (20,036,475) Cash flows from investing activities: Purchases of available for sale securities -- (1,457,913) Maturities and sales of available for sale securities -- 10,926,379 Purchase of fixed assets (6,182) (94,658) ------------ ------------ Net cash provided by (used in) investing activities (6,182) 9,373,808 Cash flows from financing activities: Proceeds from revolving line of credit borrowings 10,000,000 -- Proceeds from sale of common stock, net 1,285,554 171,472 Repurchases of common stock -- (10) ------------ ------------ Net cash provided by financing activities 11,285,554 171,462 Effect of exchange rate changes on cash 3,546 (11,940) ------------ ------------ Increase (decrease) in cash and cash equivalents 1,579,691 (10,503,145) Cash and cash equivalents at beginning of period 53,884,376 36,802,356 ------------ ------------ Cash and cash equivalents at end of period $ 55,464,067 $ 26,299,211 ============ ============
See accompanying notes to condensed consolidated financial statements. Page 3 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. NATURE OF BUSINESS The Medicines Company (the Company) was incorporated in Delaware on July 31, 1996. The Company is a pharmaceutical company engaged in the acquisition, development and commercialization of late-stage development drugs or drugs approved for marketing. The U.S. Food and Drug Administration approved Angiomax(R) (bivalirudin) for use as an anticoagulant in patients with unstable angina undergoing percutaneous transluminal coronary angioplasty in December 2000 and the Company commenced sales of Angiomax in the first quarter of 2001. The Company was considered to be a development-stage enterprise, as defined in Statement of Financial Accounting Standards No. 7, "Accounting and Reporting by Development Stage Enterprises" through December 31, 2000. With the commencement of sales in 2001, the Company is no longer considered to be a development-stage enterprise. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the accompanying financial statements include all adjustments, consisting only of normal recurring accruals, considered necessary for a fair presentation of the Company's financial position, results of operations, and cash flows for the periods presented. The results of operations for the three-month period ended March 31, 2002 are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2002. These condensed consolidated financial statements should be read in conjunction with the audited financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, filed with the Securities and Exchange Commission. Cash, Cash Equivalents and Available for Sale Securities The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash equivalents at March 31, 2002 and December 31, 2001 consist of investments in money market funds. These investments are carried at cost, which approximates fair value. The Company considers securities with original maturities of greater than three months to be available-for-sale securities. Securities under this classification are recorded at fair market value and unrealized gains and losses are recorded as a separate component of stockholders' equity. The estimated fair value of the available for sale securities is determined based on quoted market prices or rates for similar instruments. Page 4 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited) At March 31, 2002 and December 31, 2001, the Company held a certificate of deposit for $125,000 with a one-year term that was pledged as a security deposit on its facility lease in Parsippany, New Jersey. Revenue Recognition The Company recognizes revenue from product sales in accordance with generally accepted accounting principles in the United States, including the guidance in Staff Accounting Bulletin 101. Revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred, the price is fixed and determinable, and collectibility is reasonably assured. The Company's products are sold with limited rights of return. In accordance with Statement of Financial Accounting Standards No. 48 (SFAS 48) "Revenue Recognition When Right of Return Exists", revenue is recognized when the price to the buyer is fixed, the buyer is obligated to pay the Company and the obligation to pay is not contingent on resale of the product, the buyer has economic substance apart from the Company, the Company has no obligations to bring about sale of the product and the amount of returns can be reasonably estimated. Returns during the three months ended March 31, 2002 and 2001 were not material. The Company does not offer price protection to its customers. The Company's products are primarily sold to wholesalers and distributors, who, in turn, sell to hospitals. Hospitals that have signed contracts with the Company or that participate in group purchasing organizations that have contracts with the Company receive rebates based on their volume of purchases. The Company provides for such estimated rebates at the time of sale and revenues are reported net of such amounts. Revenue under the arrangement with Nycomed Danmark A/S is recognized based on the performance requirements of the agreement. The nonrefundable up-front payment of $1.5 million is recorded as deferred revenue and is being recognized ratably over the term of the agreement, currently estimated to be twelve years. Revenue from future milestone payments will be recognized ratably over the remaining term of the agreement. Product sales under this agreement will be recognized in accordance with our established revenue recognition policy. 3. NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2002 and 2001. Page 5 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited)
THREE MONTHS ENDED MARCH 31, ------------------------------- 2002 2001 ------------ ------------ BASIC AND DILUTED Net loss $(11,641,306) $(19,055,986) ============ ============ Weighted average common shares outstanding 34,645,176 30,335,939 Less: unvested restricted common shares outstanding (17,453) (88,340) ------------ ------------ Weighted average common shares used to compute net loss per share 34,627,723 30,247,599 ============ ============ Basic and diluted net loss per share $ (0.34) $ (0.63) ============ ============
Options to purchase 4,548,677 and 3,287,175 shares of common stock outstanding as of March 31, 2002 and 2001, respectively, have not been included in the computation of diluted net loss per share, as their effect would have been antidilutive. Outstanding warrants to purchase 2,873,688 and 3,269,564 shares of common stock as of March 31, 2002 and 2001, respectively, were also excluded from the computation of diluted net loss per share as their effect would have been antidilutive. During the period January 1, 2000 to September 30, 2000, the Company issued 2,273,624 options at exercise prices below the estimated fair value of the Company's common stock as of the date of grant of such options based on the price of the Company's common stock in connection with the Company's initial public offering. The total deferred stock compensation associated with these options is approximately $17.3 million. The Company amortizes deferred stock compensation over the respective vesting periods of the individual stock options. Included in the results of operations for the three months ended March 31, 2002 and 2001 is compensation expense of approximately $985,000 and $1.1 million, respectively, associated with such options. 4. COMPREHENSIVE LOSS Comprehensive losses are primarily comprised of net losses, unrealized losses on available for sales securities and currency translation adjustments. Comprehensive losses for the three months ended March 31, 2002 and 2001 were $11.6 million and $19.5 million, respectively. 5. STUDY AND EXCLUSIVE OPTION AGREEMENT WITH ASTRAZENECA AB On March 6, 2002, the Company entered into study and exclusive option agreement with AstraZeneca AB for the licensing, development and commercialization of clevidipine, an intravenous, short-acting calcium channel blocker. Clevidipine will be developed in Phase 3 by the Company for the short-term control of high blood pressure in the hospital setting. Page 6 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited) AstraZeneca has completed clinical pharmacology, dose-finding and efficacy studies that demonstrate that clevidipine has a short duration of action, a short plasma half-life, and a selective effect on blood pressure. The Company will perform further clinical development and has the right to commercialize the product worldwide, except in Japan. 6. SALES, MARKETING AND DISTRIBUTION AGREEMENT WITH NYCOMED DANMARK A/S On March 25, 2002, the Company entered into a collaboration with Nycomed Danmark A/S, a European pharmaceutical company, under which Nycomed will serve as the exclusive distributor of Angiomax in 35 countries, including 12 countries in the European Union. Nycomed will exclusively market and distribute Angiomax within the territory. Nycomed paid an initial fee of $1.5 million and agreed to pay up to $2.5 million in additional milestones based on regulatory approval in Europe. In addition, Nycomed purchased 79,428 shares of the Company's common stock for a total purchase price of approximately $1.0 million. The Company and Nycomed will work together to achieve regulatory approval in the countries covered by the agreement and share costs of clinical trials used to extend indications in Europe beyond coronary angioplasty. 7. LOAN AND SECURITY AGREEMENT WITH COMERICA BANK On March 26, 2002, the Company signed a Loan and Security Agreement with Comerica Bank-California providing for borrowings of up to $10.0 million. Amounts outstanding under the agreement are collateralized by all of the Company's personal property. In order to draw on the facility, and while borrowings are outstanding, the Company must satisfy certain covenants, including covenants related to cash, working capital and revenues. The borrowings will be used to support working capital needs. At March 31, 2002, the Company had drawn down the full $10.0 million under the agreement. Subsequent to the end of the first quarter, the Company repaid in full the borrowings under the facility. 8. RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the FASB issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 supersedes APB No. 16, Business Combinations, and SFAS No. 38, "Accounting for Preacquisition Contingencies of Purchased Enterprises", and requires that all business combinations be accounted for by a single method - the purchase method. SFAS No. 141 also provides guidance on the recognition of intangible assets identified in a business combination and requires enhanced financial statement disclosures. SFAS No. 142 adopts a more aggregate view of goodwill and bases the accounting for goodwill on the units of the combined entity into which an acquired entity is integrated. In addition, SFAS No. 142 concludes that goodwill and intangible assets that have indefinite useful lives will not be amortized but rather will be tested at least annually for impairment. Intangible assets that have finite lives will continue to be amortized over their useful lives. SFAS No. 141 is effective Page 7 NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (unaudited) for all business combinations initiated after June 30, 2001. The adoption of SFAS No. 142 is required for fiscal years beginning after December 15, 2001, except for the nonamortization and amortization provision, which are required for goodwill and intangible assets acquired after June 30, 2001. The Company adopted this new standard and it did not have a material impact on the Company's financial condition or results of operations. In August 2001, the FASB issued SFAS No.143, "Accounting for Asset Retirement Obligations". The standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the entity capitalizes a cost by increasing the carrying amount of the related long-lived asset. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, an entity either settles the obligation for its recorded amount or incurs a gain or loss upon settlement. The standard is effective for fiscal years beginning after June 15, 2002, with earlier application encouraged. The Company adopted this new standard and it did not have a material impact on the Company's financial condition or results of operations. In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets." SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of", and certain provisions of Accounting Principles Board (APB) Opinion No. 30, "Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, Extraordinary, Unusual and Infrequent Occurring Events and Transactions." SFAS No. 144 requires that one accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and it broadens the presentation of discontinued operations to include more disposal transactions. The standard is effective for financial statements issued for fiscal years beginning after December 15, 2001, and interim periods within those fiscal years, with early adoption permitted. The Company adopted this new standard and it did not have a material impact on the Company's financial condition or results of operations. Page 8 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our management's discussion and analysis of financial condition and results of operations contains forward-looking statements and is subject to important factors that could cause our future results to differ materially from those indicated. See "Factors that May Affect Future Results" beginning on page 15. GENERAL We operate as a pharmaceutical company selling and developing products for the treatment of hospital patients. We acquire, develop and commercialize biopharmaceutical products that are in late stages of development or have been approved for marketing. We began selling Angiomax(R), our lead product, in U.S. hospitals in January 2001 as an anticoagulant replacement for heparin. In December 2000, we received marketing approval from U.S. Food and Drug Administration for Angiomax for use as an anticoagulant in combination with aspirin in patients with unstable angina undergoing coronary balloon angioplasty. Coronary balloon angioplasty is a procedure used to restore normal blood flow in an obstructed artery in the heart. In March 2002, we entered into an agreement with AstraZeneca AB for the licensing, development and commercialization of clevidipine, an intravenous, short-acting calcium channel blocker, for which Phase 3 clinical trials are planned. Prior to our acquisition of clevidipine, AstraZeneca conducted Phase 2 clinical trials of clevidipine. These clinical trials demonstrated that clevidipine acts to reduce blood pressure almost immediately after intravenous infusion. In the first quarter of 2002, we also entered into an agreement with Nycomed Danmark A/S under which Nycomed will serve as the exclusive distributor of Angiomax in 35 countries, including 12 countries in the European Union. Finally, in March 2002, we received an approvable letter from the U.S. Food and Drug Administration for a second-generation process for the manufacture of Angiomax bulk drug material, known as the Chemilog process. Since our inception, we have incurred significant losses, including a net loss of $11.6 million for the three months ended March 31, 2002. Most of our expenditures to date have been for research and development activities and selling, general and administrative expenses. Research and development expenses represent costs incurred for product acquisition, clinical trials, activities relating to regulatory filings and manufacturing development efforts. We generally outsource our clinical trials and manufacturing development activities to independent organizations to maximize efficiency and minimize our internal overhead. We expense our research and development costs as they are incurred. Selling, general and administrative expenses consist primarily of salaries and related expenses, general corporate activities and costs associated with product sales and marketing activities. Interest expense consists of costs associated with the use of our revolving line of credit. We expect to continue to incur operating losses for the foreseeable future as a result of research and development activities attributable to new and existing products and costs associated with the sales and marketing of our products. We will need to generate significant revenues to achieve and maintain profitability. Page 9 During the year ended December 31, 2000, we recorded deferred stock compensation on the grant of stock options of approximately $17.3 million, representing the difference between the exercise price of such options and the fair market value of our common stock at the date of grant of such options. The exercise prices of these options were below the estimated fair market value of our common stock as of the date of grant based on the estimated price of our common stock in our initial public offering. No additional deferred stock compensation was recorded during the three months ended March 21, 2002 or during the full year 2001 because all grants of stock options during these periods were issued at the fair market value on the date of grant. We amortize deferred stock compensation over the respective vesting periods of the individual stock options. We recorded amortization expense for deferred stock compensation of approximately $985,000 and $1.1 million for the three months ended March 31, 2002 and 2001, respectively. We expect to record amortization expense for the deferred stock compensation as follows: approximately $2.3 million for the remainder of 2002, approximately $2.9 million in 2003 and approximately $1.0 million in 2004. We have not generated taxable income to date. At December 31, 2001, net operating losses available to offset future taxable income for federal income tax purposes were approximately $173 million. If not utilized, federal net operating loss carryforwards will expire at various dates beginning in 2011 and ending 2021. We have not recognized the potential tax benefit of our net operating losses in our statements of operations. The future utilization of our net operating loss carryforwards may be limited pursuant to regulations promulgated under the Internal Revenue Code of 1986, as amended. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS The discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported assets and liabilities, revenues and expenses, and other financial information. Actual results may differ significantly from these estimates under different assumptions and conditions. The SEC has indicated that critical accounting estimates and judgments are those which are both important to the portrayal of the company's financial condition and results and require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our significant accounting policies are more fully described in the Notes To Unaudited Consolidated Financial Statements section of this Quarterly Report on Form 10-Q and in Note 2 of the Company's Annual Report on Form 10-K for the year ended December 31, 2001. Not all of these significant accounting policies, however, require management to make difficult, complex or subjective judgments or estimates. We believe that our accounting policies relating to revenue recognition and inventory, as described under the caption "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies" in our Form 10-K as of December 31, 2001, fit the definition of "critical accounting estimates and judgments." Page 10 In addition to the critical accounting estimates and judgments described in our Form 10-K as of December 31, 2001, we make critical accounting estimates and judgments related to revenue recognition under collaborative agreements. Revenue under our collaborative arrangement with Nycomed is recognized based on the terms of the agreement. The terms of the collaborative arrangement include nonrefundable licensing fees and payments based on the achievement of certain milestones and on product sales. Nonrefundable up-front license fees or milestone payments are recorded as deferred revenue and are recognized ratably over the term of the agreement, estimated to be twelve years. RESULTS OF OPERATIONS Three Months Ended March 31, 2002 and 2001 Net Revenue. Net revenue increased 314% to $7.7 million for the three months ended March 31, 2002, from $1.9 million for the three months ended March 31, 2001. Virtually all the revenue for the three-month periods ended March 31, 2002 and 2001 came from U.S. sales of Angiomax, which we commercially launched during the first quarter of 2001. The increase in 2002 was due primarily to increased volume of sales to an increasing number of hospital customers. In the first quarter of 2002, we began to recognize revenue associated with the amortization of the nonrefundable up-front payment under the Nycomed agreement. Cost of Revenue. Cost of revenue for the three months ended March 31, 2002 was $1.1 million, or 14% of revenue, compared to $332,000, or 18% of revenue, for the three months ended March 31, 2001. Cost of revenue consists of expenses in connection with the manufacture of the Angiomax sold, the logistical costs of selling Angiomax and royalty expenses under our agreements with Biogen. The cost of manufacturing as a percentage of revenue was at approximately 4% for the three months ended March 31, 2002 and approximately 2% for the three months ended March 31, 2001 because we sold Angiomax during the periods that was manufactured prior to the date of FDA approval of Angiomax in December 2000. The costs associated with the manufacture of Angiomax prior to the date of FDA approval of Angiomax were expensed as research and development. In the second quarter of 2002, we expect to begin to sell Angiomax manufactured after the date of FDA approval. As a result, we expect our cost of manufacturing as a percentage of product revenue will increase substantially. Research and Development Expenses. Research and development expenses decreased 26% to $9.3 million for the three months ended March 31, 2002, from $12.6 million for the three months ended March 31, 2001. The decrease in research and development expenses of $3.3 million was primarily due to lower clinical development costs reflecting the completion of the HERO-2 trial program, our Phase 3 trial in acute myocardial infarction, in 2001. Partly offsetting the decrease in clinical development costs associated with HERO-2 were the higher clinical development costs related to our trials in angioplasty called REPLACE-2 and the cost incurred in connection with our receipt of the final Chemilog validation batch of $2.5 million in the three months ended March 31, 2002. Page 11 We have a number of clinical trial programs currently underway, or about to commence, for expanding the applications of Angiomax in the treatment of ischemic heart disease and for use as a procedural anticoagulant. The funding for Angiomax, our main product, has represented and will continue to represent a significant portion of research and development spending. For the three-month periods ended March 31, 2002 and 2001, research and development expenses related to Angiomax included the costs of clinical trials, development manufacturing costs for the bulk drug product and the cost associated with preparation of U.S. and worldwide marketing applications. We expect our current primary clinical trial of Angiomax, REPLACE-2, to complete enrollment during the third quarter of 2002. We are currently working on a second generation manufacturing process for Angiomax, called Chemilog, for which we have received an approvable letter from the FDA, and will continue to incur research and development expenses until we receive FDA approval of this process. The amount of future research and development expenses associated with Angiomax are not reasonably certain as these costs are dependent upon the regulatory process and the timing for obtaining marketing approval for other applications of the product in the United States and other countries. However, they are expected to be substantial. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 3% to $9.3 million for the three months ended March 31, 2002, from $9.1 million for the three months ended March 31, 2001. The increase in selling, general and administrative expenses of $273,000 was primarily due to an increase in marketing and selling expenses and corporate infrastructure costs relating to the sales and marketing of Angiomax, including the costs of the additional sales personnel hired in late 2001. Other Income and Expense. Interest income decreased 65% to $378,000 for the three months ended March 31, 2002, from $1.1 million for the three months ended March 31, 2001. The decrease in interest income of $691,000 was primarily due to lower cash and available for sale securities balances attributable to operating expenses and working capital requirements and to lower available interest rates on securities. The primary source of interest income is from the investment of the remaining proceeds of our initial public offering in August and September 2000 and from the investment of the proceeds from our sale of 4.0 million shares of our common stock in a private placement in May 2001. We had interest expense of $8,000 during the three months ended March 31, 2002 associated with the drawdown of our revolving line of credit at the end of March 2002. We had no interest expense for the three months ended March 31, 2001. LIQUIDITY AND CAPITAL RESOURCES Since our inception, we have financed our operations through the sale of common and preferred stock, sales of convertible promissory notes and warrants, interest income, draw downs of our revolving line of credit and revenues from sales of Angiomax. In August and September 2000, we received $101.4 million in net proceeds from the sale of common stock in our initial public offering, and we received an additional $41.8 million in net proceeds in May 2001 from the sale of 4.0 million shares of our common stock in a private placement. Prior to the initial public offering, we had received net proceeds of $79.4 million Page 12 from the private placement of equity securities, primarily redeemable convertible preferred stock, and $19.4 million from the issuance of convertible notes and warrants. In March 2002, we entered into a collaboration with Nycomed Danmark A/S. Under the agreement, Nycomed paid us an initial non-refundable fee of $1.5 million and agreed to pay up to $2.5 million in additional milestones based on regulatory approval in Europe. In addition, Nycomed purchased 79,428 shares of our common stock for a total purchase price of approximately $1.0 million. In March 2002, we entered into a loan and security agreement with Comerica Bank-California. Under the agreement, we may borrow up to $10.0 million. Amounts outstanding under the agreement are collateralized by all of the Company's personal property. The agreement has a term of one year and provides for interest on amounts outstanding at a rate of one percent above the prime rate. In order to draw on the facility, and while borrowings are outstanding, we must satisfy certain covenants, including covenants related to cash, working capital and revenues. At March 31, 2002, we had drawn down the full $10.0 million under the agreement. Subsequent to the end of the quarter, we repaid in full the borrowings under this revolving line of credit. As of March 31, 2002, we had $55.6 million in cash, cash equivalents and available for sale securities, as compared to $54.0 million as of December 31, 2001. The increase in cash, cash equivalents and available for sale securities of $1.6 million was primarily attributable to funds received from the $10.0 million draw down of our revolving line of credit, the $2.5 million received from Nycomed Danmark A/S, consisting of a non-refundable upfront license fee of $1.5 million and $1.0 million in proceeds from the sale of shares of our common stock to Nycomed, and from collections on sales of Angiomax. This increase was partly offset by operating expenses and working capital requirements during the three-month period ended March 31, 2002. We used net cash of $9.7 million in operating activities during the three months ended March 31, 2002. This consisted of a net loss of $11.6 million, combined with increases in accounts receivable of $1.3 million and inventory of $2.9 million, which were partly offset by an increase in accounts payable and accrued expenses of $3.8 million, an increase in deferred revenue of $1.5 million associated with the Nycomed agreement and from non-cash amortization of deferred stock compensation of $985,000 and depreciation of $132,000. The increase in inventory of $2.9 million was primarily attributable to the scheduled receipt of bulk Angiomax from our supplier, UCB Bioproducts, during the three months ended March 31, 2002. We do not expect to receive any additional Angiomax bulk material in the second or third quarters of 2002. During the three months ended March 31, 2002, we used approximately $6,000 of cash from net investing activities, which consisted principally of the purchase of fixed assets. During the three months ended March 31, 2002, we received $11.3 million from financing activities primarily related to the draw down of our revolving line of credit of $10.0 million, proceeds from the sale of shares of our common stock to Nycomed of $1.0 million and from employees purchasing stock under our stock plans. We expect to devote substantial resources to our research and development efforts and to our sales, marketing and manufacturing programs associated with the commercialization of our Page 13 products. Our funding requirements will depend on numerous factors including: o whether Angiomax is commercially successful; o the progress, level and timing of our research and development activities; o the cost and outcomes of regulatory reviews; o the continuation or termination of third party manufacturing or sales and marketing arrangements; o the cost and effectiveness of our sales and marketing programs; o the status of competitive products; o our ability to defend and enforce our intellectual property rights; and o the establishment of additional strategic or licensing arrangements with other companies or acquisitions. We believe, based on our current operating plan, plus anticipated revenues from Angiomax and interest income, that our current cash, cash equivalents and available for sale securities will be sufficient to fund our operations for approximately 15 months. If our existing resources are insufficient to satisfy our liquidity requirements due to slower than anticipated revenues from Angiomax or otherwise, or if we acquire additional product candidates, we may need to sell additional equity or debt securities or seek additional financing through other arrangements. On April 23, 2002, we filed a Form S-3 Shelf Registration Statement with the Securities and Exchange Commission which will permit us, from time to time, to offer and sell up to 4.0 million shares of our common stock. The sale of additional equity or debt securities may result in additional dilution to our stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, if at all. If we are unable to obtain this additional financing, we may be required to delay, reduce the scope of, or eliminate one or more of our planned research, development and commercialization activities, which could harm our financial condition and operating results. In addition, in order to obtain additional financing, we may be required to relinquish rights to products, product candidates or technologies that we would not otherwise relinquish. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Our contractual obligations and commercial commitments include: o operating leases for our facilities in Cambridge, Massachusetts and Parsippany, New Jersey, which expire in August 2003 and September 2005, respectively. Future annual minimum payments under these operating leases are $498,000 for the remainder of 2002, and $502,000, $282,000 and $177,000 in 2003, 2004 and 2005, respectively. o a purchase order that was placed in March 2002 to UCB Bioproducts for the purchase of approximately $5.3 million of Angiomax bulk drug product. We expect to take delivery under this purchase order in late 2002 and 2003. o a revolving line of credit with Comerica Bank under which we may borrow up to $10.0 million. This revolving line of credit will be available to us until March 25, 2003. As of March 31, 2002, we had drawn down the full $10.0 million under the agreement, however, subsequent to the end of the quarter, we repaid in full borrowings under this Page 14 revolving line of credit. We must repay any borrowings under the facility no later than March 25, 2003. FACTORS THAT MAY AFFECT FUTURE RESULTS This Quarterly Report includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. For this purpose, any statements contained herein regarding our strategy, future operations, financial position, future revenues, projected costs, prospects, plans and objectives of management, other than statements of historical facts, are forward-looking statements. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we actually will achieve the plans, intentions or expectations disclosed in our forward-looking statements. There are a number of important factors that may cause actual results or events to differ materially from those disclosed in the forward-looking statements we make. These important factors include the risk factors set forth below. Although we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our estimates change, and readers should not rely on those forward-looking statements as representing our views as of any date subsequent to the date of filing this Quarterly Report. RISKS RELATED TO OUR BUSINESS WE HAVE A HISTORY OF NET LOSSES, AND WE EXPECT TO CONTINUE TO INCUR NET LOSSES AND MAY NOT ACHIEVE OR MAINTAIN PROFITABILITY We have incurred net losses since our inception, including net losses of approximately $11.6 million for the three months ended March 31, 2002. As of March 31, 2002, we had an accumulated deficit of approximately $263.1 million. We expect to make substantial expenditures to further develop and commercialize our products, including costs and expenses associated with clinical trials, regulatory approval and commercialization of products. As a result, we are unsure when we will become profitable, if at all, and if we do become profitable, we may not remain profitable for any substantial period of time. If we fail to achieve profitability within the time frame expected by investors or securities analysts, the market price of our common stock may decline. OUR BUSINESS IS VERY DEPENDENT ON THE COMMERCIAL SUCCESS OF ANGIOMAX Other than Angiomax, our products are in clinical phases of development and, even if approved by the FDA, are a number of years away from entering the market. As a result, Angiomax will account for almost all of our revenues for the foreseeable future. The commercial success of Angiomax will depend upon its acceptance by physicians, patients and other key decision-makers as a safe, therapeutic and cost-effective alternative to heparin and other products used in current practice. If Angiomax is not commercially successful, we will have to find additional sources of revenues or curtail or cease operations. FAILURE TO RAISE ADDITIONAL FUNDS IN THE FUTURE MAY AFFECT THE DEVELOPMENT, MANUFACTURE AND SALE OF OUR PRODUCTS Page 15 Our operations to date have generated substantial and increasing needs for cash. Our negative cash flow from operations is expected to continue into the foreseeable future. The clinical development and regulatory approval of Angiomax for additional indications, the development and regulatory approval of our other product candidates and the acquisition and development of additional product candidates by us will require a commitment of substantial funds. Our future capital requirements are dependent upon many factors and may be significantly greater than we expect. As of the date of this Quarterly Report, we believe, based on our current operating plan, plus anticipated sales of Angiomax and interest income, that our current cash, cash equivalents and available for sale securities will be sufficient to fund our operations for approximately 15 months. If our existing resources are insufficient to satisfy our liquidity requirements due to slower than anticipated sales of Angiomax or otherwise, or if we acquire additional product candidates, we may need to sell additional equity or debt securities or seek additional financing through other arrangements. The sale of additional equity or debt securities may result in additional dilution to our stockholders, and we cannot be certain that additional public or private financing will be available in amounts or on terms acceptable to us, if at all. If we are unable to obtain this additional financing, we may be required to delay, reduce the scope of, or eliminate one or more of our planned research, development and commercialization activities, which could harm our financial condition and operating results. In addition, in order to obtain additional financing, we may be required to relinquish rights to products, product candidates or technologies that we would not otherwise relinquish. WE CANNOT EXPAND THE INDICATIONS FOR ANGIOMAX UNLESS WE RECEIVE FDA APPROVAL FOR EACH ADDITIONAL INDICATION. FAILURE TO EXPAND THESE INDICATIONS WILL LIMIT THE SIZE OF THE COMMERCIAL MARKET FOR ANGIOMAX In December 2000, we received approval from the FDA for the use of Angiomax as an anticoagulant in combination with aspirin in patients with unstable angina undergoing coronary balloon angioplasty. One of our key objectives is to expand the indications for which the FDA will approve Angiomax. In order to do this, we will need to conduct additional clinical trials and obtain FDA approval for each proposed indication. If we are unsuccessful in expanding the approved indications for the use of Angiomax, the size of the commercial market for Angiomax will be limited. FAILURE TO OBTAIN REGULATORY APPROVAL IN FOREIGN JURISDICTIONS WILL PREVENT US FROM MARKETING ANGIOMAX ABROAD We intend to market our products in international markets, including Europe. In order to market our products in the European Union and many other foreign jurisdictions, we or our distribution agents must obtain separate regulatory approvals. In February 1998, we submitted a Marketing Authorization Application ("MAA") to the European Agency for the Evaluations of Medicinal Products, or the EMEA, for use of Angiomax in unstable angina patients undergoing angioplasty. Following extended interaction with European regulatory authorities, the Committee of Proprietary Medicinal Products of the EMEA voted in October 1999 not to recommend Angiomax for approval in angioplasty. The United Kingdom and Ireland dissented from this decision. We have withdrawn our application to the EMEA and, as of the date of this Quarterly Report, plan to resubmit an MAA with the results of the REPLACE-2 program, if positive. We may not be able to obtain approval from any or all of the jurisdictions in which we seek approval to market Angiomax. Obtaining foreign approvals may require additional trials and additional expense. Page 16 THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCTS MAY BE TERMINATED OR DELAYED, AND THE COSTS OF DEVELOPMENT AND COMMERCIALIZATION MAY INCREASE, IF THIRD PARTIES WHO WE RELY ON TO MANUFACTURE AND SUPPORT THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCTS DO NOT FULFILL THEIR OBLIGATIONS Our development and commercialization strategy entails entering into arrangements with corporate and academic collaborators, contract research organizations, distributors, third-party manufacturers, licensors, licensees and others to conduct development work, manage our clinical trials, manufacture our products and market and sell our products outside of the United States. Although we manage these services, we do not have the expertise or the resources to conduct such activities on our own and, as a result, are particularly dependent on third parties in most areas. We may not be able to maintain our existing arrangements with respect to the commercialization of Angiomax or establish and maintain arrangements to develop and commercialize clevidipine or any additional product candidates or products on terms that are acceptable to us. Any current or future arrangements for the development and commercialization of our products may not be successful. If we are not able to establish or maintain agreements relating to Angiomax, clevidipine or any additional products on terms which we deem favorable, our financial condition would be materially adversely affected. Third parties may not perform their obligations as expected. The amount and timing of resources that third parties devote to developing, manufacturing and commercializing our products may not be within our control. Furthermore, our interests may differ from those of third parties that manufacture or commercialize our products. Disagreements that may arise with these third parties could delay or lead to the termination of the development or commercialization of our product candidates, or result in litigation or arbitration, which would be time consuming and expensive. If any third party that manufactures or supports the development or commercialization of our products breaches or terminates its agreement with us, or fails to conduct its activities in a timely manner, such breach, termination or failure could: o delay or otherwise adversely impact the development or commercialization of Angiomax, clevidipine, our other product candidates or any additional product candidates that we may acquire or develop; o require us to undertake unforeseen additional responsibilities or devote unforeseen additional resources to the development or commercialization of our products; or o result in the termination of the development or commercialization of our products. WE ARE DEPENDENT ON A SINGLE SUPPLIER FOR THE PRODUCTION OF ANGIOMAX BULK DRUG SUBSTANCE AND A DIFFERENT SINGLE SUPPLIER TO CARRY OUT ALL FILL-FINISH ACTIVITIES FOR ANGIOMAX We have no experience in manufacturing, and we lack the facilities and personnel to manufacture products in accordance with FDA regulations. As of the date of this Quarterly Report, we obtain all of our Angiomax bulk drug substance from one manufacturer, UCB Bioproducts S.A., and rely on another manufacturer, Ben Venue Laboratories, Inc., to carry out all fill-finish activities for Angiomax, which includes final formulation and transfer of the drug into vials where it is then freeze-dried and sealed. Page 17 The FDA requires that all manufacturers of pharmaceuticals for sale in or from the United States achieve and maintain compliance with the FDA's current Good Manufacturing Practice, or cGMP, regulations and guidelines. There are a limited number of manufacturers that operate under cGMP regulations capable of manufacturing Angiomax. As of the date of this Quarterly Report, we do not have alternative sources for production of Angiomax bulk drug substance or to carry out fill-finish activities. In the event that either of our current manufacturers is unable to carry out its respective manufacturing obligations to our satisfaction, we may be unable to obtain alternative manufacturing, or obtain such manufacturing on commercially reasonable terms or on a timely basis. If we were required to transfer manufacturing processes to other third party manufacturers, we would be required to satisfy various regulatory requirements, which could cause us to experience significant delays in receiving an adequate supply of Angiomax. Any delays in the manufacturing process may adversely impact our ability to meet commercial demands for Angiomax on a timely basis and supply product for clinical trials of Angiomax. IF WE DO NOT SUCCEED IN DEVELOPING A SECOND-GENERATION PROCESS FOR THE PRODUCTION OF BULK ANGIOMAX DRUG SUBSTANCE, OUR GROSS MARGINS MAY BE BELOW INDUSTRY AVERAGES As of the date of this Quarterly Report, we are developing with UCB Bioproducts a second-generation process for the production of bulk Angiomax drug substance. This process, for which we have received an approvable letter from the FDA, involves changes to the early manufacturing steps of our current process in order to improve our gross margins on the future sales of Angiomax. If regulatory approval of the process is not obtained or is delayed, then our ability to improve our gross margins on future sales of Angiomax may be limited. CLINICAL TRIALS OF OUR PRODUCT CANDIDATES ARE EXPENSIVE AND TIME-CONSUMING, AND THE RESULTS OF THESE TRIALS ARE UNCERTAIN Before we can obtain regulatory approvals for the commercial sale of any product that we wish to develop, we will be required to complete pre-clinical studies and extensive clinical trials in humans to demonstrate the safety and efficacy of such product. As of the date of this Quarterly Report, we are conducting clinical trials of Angiomax for use in the treatment of ischemic heart disease and for additional potential hospital applications as a procedural anticoagulant. There are numerous factors that could delay our clinical trials or prevent us from completing our trials successfully. We, or the FDA, may suspend a clinical trial at any time on various grounds, including a finding that patients are being exposed to unacceptable health risks. The rate of completion of clinical trials depends in part upon the rate of enrollment of patients. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the existence of competing clinical trials and the availability of alternative or new treatments. In particular, the patient population targeted by some of our clinical trials may be small. Delays in future planned patient enrollment may result in increased costs and program delays. In addition, clinical trials, if completed, may not show any potential product to be safe or effective. Results obtained in pre-clinical studies or early clinical trials are not always indicative of results that will be obtained in later clinical trials. Moreover, data obtained from pre-clinical studies and clinical trials may be subject to varying interpretations. As a result, the FDA or other applicable regulatory authorities may not approve a product in a timely fashion, or at all. Even if Page 18 regulatory approval to market a product is granted, the regulatory approval may impose limitations on the indicated use for which the drug may be marketed. OUR FAILURE TO ACQUIRE AND DEVELOP ADDITIONAL PRODUCT CANDIDATES OR APPROVED PRODUCTS WILL IMPAIR OUR ABILITY TO GROW As part of our growth strategy, we intend to acquire and develop additional pharmaceutical product candidates or approved products. The success of this strategy depends upon our ability to identify, select and acquire pharmaceutical products in late-stage development or that have been approved and that meet the criteria we have established. Because we neither have, nor intend to establish, internal scientific research capabilities, we are dependent upon pharmaceutical and biotechnology companies and other researchers to sell or license product candidates to us. Any product candidate we acquire will require additional research and development efforts prior to commercial sale, including extensive pre-clinical and/or clinical testing and approval by the FDA and corresponding foreign regulatory authorities. All of our product candidates are prone to the risks of failure inherent in pharmaceutical product development, including the possibility that the product candidate will not be safe, non-toxic and effective or approved by regulatory authorities. In addition, we cannot assure you that any approved products that we develop or acquire will be: o manufactured or produced economically; o successfully commercialized; or o widely accepted in the marketplace. In addition, proposing, negotiating and implementing an economically viable acquisition is a lengthy and complex process. Other companies, including those with substantially greater financial, marketing and sales resources, may compete with us for the acquisition of product candidates and approved products. We may not be able to acquire the rights to additional product candidates and approved products on terms that we find acceptable, or at all. IF WE BREACH ANY OF THE AGREEMENTS UNDER WHICH WE LICENSE COMMERCIALIZATION RIGHTS TO PRODUCTS OR TECHNOLOGY FROM OTHERS, WE COULD LOSE LICENSE RIGHTS THAT ARE IMPORTANT TO OUR BUSINESS We license commercialization rights to products and technology that are important to our business, and we expect to enter into additional licenses in the future. For instance, we acquired our first four products through exclusive licensing arrangements. Under these licenses we are subject to commercialization and development, sublicensing, royalty, insurance and other obligations. If we fail to comply with any of these requirements, or otherwise breach these license agreements, the licensor may have the right to terminate the license in whole or to terminate the exclusive nature of the license. In addition, upon the termination of the license we may be required to license to the licensor the intellectual property that we developed. OUR ABILITY TO MANAGE OUR BUSINESS EFFECTIVELY COULD BE HAMPERED IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND CONSULTANTS The biopharmaceutical industry has experienced a high rate of turnover of management personnel in recent years. We are highly dependent on our ability to attract and retain qualified personnel for the acquisition, development and commercialization activities we conduct or Page 19 sponsor. If we lose one or more of the members of our senior management, including our executive chairman, Dr. Clive A. Meanwell, or our chief executive officer, David M. Stack, or other key employees or consultants, our ability to implement successfully our business strategy could be seriously harmed. Our ability to replace these key employees may be difficult and may take an extended period of time because of the limited number of individuals in the biotechnology industry with the breadth of skills and experience required to develop and commercialize products successfully. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate such additional personnel. WE FACE SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING, DEVELOPING OR COMMERCIALIZING COMPETING PRODUCTS BEFORE OR MORE SUCCESSFULLY THAN WE DO The biopharmaceutical industry is highly competitive. Our success will depend on our ability to acquire and develop products and apply technology and our ability to establish and maintain a market for our products. Potential competitors in the United States and other countries include major pharmaceutical and chemical companies, specialized biotechnology firms, universities and other research institutions. Many of our competitors have substantially greater research and development capabilities and experience, and greater manufacturing, marketing and financial resources, than we do. Accordingly, our competitors may develop or license products or other novel technologies that are more effective, safer or less costly than existing products or technologies or products or technologies that are being developed by us or may obtain FDA approval for products more rapidly than we are able. Technological development by others may render our products or product candidates noncompetitive. We may not be successful in establishing or maintaining technological competitiveness. BECAUSE THE MARKET FOR THROMBIN INHIBITORS IS COMPETITIVE, OUR PRODUCT MAY NOT OBTAIN WIDESPREAD USE We have positioned Angiomax as a replacement for heparin, which is widely used and inexpensive, for use in patients with ischemic heart disease. Because heparin is inexpensive and has been widely used for many years, medical decision-makers may be hesitant to adopt our alternative treatment. In addition, due to the high incidence and severity of cardiovascular diseases, competition in the market for thrombin inhibitors is intense and growing. There are a number of thrombin inhibitors currently on the market, awaiting regulatory approval and in development, including orally administered agents. THE LIMITED RESOURCES OF THIRD-PARTY PAYERS MAY LIMIT THE USE OF OUR PRODUCTS In general, anticoagulant drugs may be classified in three groups: drugs that directly or indirectly target and inhibit thrombin, drugs that target and inhibit platelets and drugs that break down fibrin. Because each group of anticoagulants acts on different components of the clotting process, we believe that there will be continued clinical work to determine the best combination of drugs for clinical use. We expect Angiomax to be used with aspirin alone or in conjunction with other therapies. Although we are not positioning Angiomax as a direct competitor to platelet inhibitors or fibrinolytic drugs, platelet inhibitors and fibrinolytic drugs may compete with Angiomax for the use of hospital financial resources. Many U.S. hospitals receive a fixed reimbursement amount per procedure for the angioplasties and other treatment therapies they perform. Because this amount is not based on the actual expenses the hospital incurs, U.S. hospitals may have to choose among Angiomax, platelet inhibitors and fibrinolytic drugs. FLUCTUATIONS IN OUR OPERATING RESULTS COULD AFFECT THE PRICE OF OUR COMMON STOCK Page 20 Our operating results may vary from period to period based on the amount and timing of sales of Angiomax, the availability and timely delivery of a sufficient supply of Angiomax, the timing and expenses of clinical trials, announcements regarding clinical trial results and product introductions by our competitors, the availability and timing of third-party reimbursement and the timing of approval for our product candidates. If our operating results do not match the expectations of securities analysts and investors as a result of these and other factors, the trading price of our common stock will likely decrease. WE MAY UNDERTAKE STRATEGIC ACQUISITIONS IN THE FUTURE AND ANY DIFFICULTIES FROM INTEGRATING SUCH ACQUISITIONS COULD DAMAGE OUR ABILITY TO ATTAIN OR MAINTAIN PROFITABILITY We may acquire additional businesses and products that complement or augment our existing business. Integrating any newly acquired businesses or product could be expensive and time-consuming. We may not be able to integrate any acquired business or product successfully or operate any acquired business profitably. Moreover, we may need to raise additional funds through public or private debt or equity financing to acquire any businesses, which may result in dilution for stockholders and the incurrence of indebtedness. OUR REVENUES ARE SUBSTANTIALLY DEPENDENT ON A LIMITED NUMBER OF WHOLESALERS TO WHICH WE SELL ANGIOMAX, AND SUCH REVENUES MAY FLUCTUATE FROM QUARTER TO QUARTER BASED ON THE BUYING PATTERNS OF THESE WHOLESALERS We sell Angiomax primarily to a limited number of national medical and pharmaceutical distributors and wholesalers with distribution centers located throughout the United States. During the three months ended March 31, 2002, revenues from the sale of Angiomax to four wholesalers totaled approximately 97% of our net revenues. Our reliance on this small number of wholesalers could cause our revenues to fluctuate from quarter to quarter based on the buying patterns of these wholesalers. In addition, if any of these wholesalers fail to pay us on a timely basis or at all, our financial position and results of operations could be materially adversely affected. RISKS RELATED TO OUR INDUSTRY IF WE DO NOT OBTAIN FDA APPROVALS FOR OUR PRODUCTS OR COMPLY WITH GOVERNMENT REGULATIONS, WE MAY NOT BE ABLE TO MARKET OUR PRODUCTS AND MAY BE SUBJECT TO STRINGENT PENALTIES Except for Angiomax, which has been approved for sale in the United States and New Zealand, we do not have a product approved for sale in the United States or any foreign market. We must obtain approval from the FDA in order to sell our product candidates in the United States and from foreign regulatory authorities in order to sell our product candidates in other countries. We must successfully complete our clinical trials and demonstrate manufacturing capability before we can file with the FDA for approval to sell our products. The FDA could require us to repeat clinical trials as part of the regulatory review process. Delays in obtaining or failure to obtain regulatory approvals may: o delay or prevent the successful commercialization of any of our product candidates; o diminish our competitive advantage; and o defer or decrease our receipt of revenues or royalties. The regulatory review and approval process is lengthy, expensive and uncertain. Extensive pre-clinical data, clinical data and supporting information must be submitted to the FDA for each Page 21 additional indication to obtain such approvals, and we cannot be certain when we will receive these regulatory approvals, if ever. In addition to initial regulatory approval, our products and product candidates will be subject to extensive and rigorous ongoing domestic and foreign government regulation. Any approvals, once obtained, may be withdrawn if compliance with regulatory requirements is not maintained or safety problems are identified. Failure to comply with these requirements may also subject us to stringent penalties. WE MAY NOT BE ABLE TO OBTAIN OR MAINTAIN PATENT PROTECTION FOR OUR PRODUCTS, AND WE MAY INFRINGE THE PATENT RIGHTS OF OTHERS The patent positions of pharmaceutical and biotechnology companies like us are generally uncertain and involve complex legal, scientific and factual issues. Our success depends significantly on our ability to: o obtain U.S. and foreign patents; o protect trade secrets; o operate without infringing the proprietary rights of others; and o prevent others from infringing our proprietary rights. We may not have any patents issued from any patent applications that we own or license. If patents are granted, the claims allowed may not be sufficiently broad to protect our technology. In addition, issued patents that we own or license may be challenged, invalidated or circumvented. Our patents also may not afford us protection against competitors with similar technology. Because patent applications in the United States and many foreign jurisdictions are typically not published until eighteen months after filing and because publications of discoveries in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed or maintained patent applications for technology used by us or covered by our pending patent applications without our being aware of these applications. We exclusively license U.S. patents and patent applications and corresponding foreign patents and patent applications relating to Angiomax, IS-159 and CTV-05. The principal U.S. patent that covers Angiomax expires in 2010. The U.S. Patent and Trademark Office has rejected our application for an extension of the term of the patent beyond 2010 because the application was not filed in time. We filed the application in connection with FDA approval of Angiomax. We are exploring an alternative to extend the term of the patent, but we can provide no assurance that we will be successful. We have not yet filed any independent patent applications. We may not hold proprietary rights to some patents related to our product candidates. In some cases, others may own or control these patents. As a result, we may be required to obtain licenses under third-party patents to market some of our product candidates. If licenses are not available to us on acceptable terms, we will not be able to market these products. We may become a party to patent litigation or other proceedings regarding intellectual property rights. The cost to us of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. If any patent litigation or other intellectual property proceeding in which we are involved is resolved unfavorably to us, we may be enjoined from manufacturing or selling our products without a license from the other party, and we may be held liable for significant damages. We may not be able to obtain any required license on commercially acceptable terms, or at all. Page 22 IF WE ARE NOT ABLE TO KEEP OUR TRADE SECRETS CONFIDENTIAL, OUR TECHNOLOGY AND INFORMATION MAY BE USED BY OTHERS TO COMPETE AGAINST US We rely significantly upon unpatented proprietary technology, information, processes and know-how. We seek to protect this information by confidentiality agreements with our employees, consultants and other third-party contractors, as well as through other security measures. We may not have adequate remedies for any breach by a party to these confidentiality agreements. In addition, our competitors may learn or independently develop our trade secrets. WE COULD BE EXPOSED TO SIGNIFICANT LIABILITY CLAIMS IF WE ARE UNABLE TO OBTAIN INSURANCE AT ACCEPTABLE COSTS AND ADEQUATE LEVELS OR OTHERWISE PROTECT OURSELVES AGAINST POTENTIAL PRODUCT LIABILITY CLAIMS Our business exposes us to potential product liability risks, which are inherent in the testing, manufacturing, marketing and sale of human healthcare products. Product liability claims might be made by patients in clinical trials, consumers, health care providers or pharmaceutical companies or others that sell our products. These claims may be made even with respect to those products that are manufactured in licensed and regulated facilities or otherwise possess regulatory approval for commercial sale. These claims could expose us to significant liabilities that could prevent or interfere with the development or commercialization of our products. Product liability claims could require us to spend significant time and money in litigation or pay significant damages. As of the date of this Quarterly Report, we are covered, with respect to our commercial sales in the United States and New Zealand and our clinical trials, by primary product liability insurance in the amount of $20.0 million per occurrence and $20.0 million annually in the aggregate on a claims-made basis. This coverage may not be adequate to cover any product liability claims. As we commercialize our products, we may wish to increase our product liability insurance. Product liability coverage is expensive. In the future, we may not be able to maintain or obtain such product liability insurance on reasonable terms, at a reasonable cost or in sufficient amounts to protect us against losses due to product liability claims. OUR ABILITY TO GENERATE FUTURE REVENUE FROM PRODUCTS WILL DEPEND ON REIMBURSEMENT AND DRUG PRICING Acceptable levels of reimbursement of the cost of developing and manufacturing of drugs and treatments related to those drugs by government authorities, private health insurers and other organizations will have an effect on the successful commercialization of, and attracting collaborative partners to invest in the development of, our product candidates. We cannot be sure that reimbursement in the United States or elsewhere will be available for any products we may develop or, if already available, will not be decreased in the future. If reimbursement is not available or is available only to limited levels, we may not be able to commercialize our products, and may not be able to obtain a satisfactory financial return on our products. Third-party payers increasingly are challenging prices charged for medical products and services. Also, the trend toward managed health care in the United States and the changes in health insurance programs, as well as legislative proposals to reform health care or reduce government insurance programs, may result in lower prices for pharmaceutical products, including any products that may be offered by us in the future. Cost-cutting measures that health care providers are instituting, and the effect of any health care reform, could materially adversely affect our ability to sell any products that are successfully developed by us and approved by Page 23 regulators. Moreover, we are unable to predict what additional legislation or regulation, if any, relating to the health care industry or third-party coverage and reimbursement may be enacted in the future or what effect such legislation or regulation would have on our business. ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Our exposure to market risk is confined to our cash, cash equivalents and marketable securities. We place our investments in high-quality financial instruments, primarily money market funds and corporate debt securities with maturities or auction dates of less than one year, which we believe are subject to limited credit risk. We currently do not hedge interest rate exposure. At March 31, 2002, we held $55.6 million in cash, cash equivalents, and available for sale securities, all due within one year, which had an average interest rate of approximately 2.0%. We do not believe that a 10% increase or decrease in interest rates in effect at March 31, 2002 would have a material impact on our results of operations or cash flows. Most of our transactions are conducted in U.S. dollars. We do have certain development and commercialization agreements with vendors located outside the United States. Transactions under certain of these agreements are conducted in U.S. dollars, subject to adjustment based on significant fluctuations in currency exchange rates. Transactions under certain other of these agreements are conducted in the local foreign currency. We do not believe that a 10% increase or decrease in foreign currency exchange rates would have a material impact on our results of operations or cash flows. Page 24 PART II. OTHER INFORMATION ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS In our initial public offering, we sold 6.9 million shares of common stock (including an over-allotment option of 900,000 shares) pursuant to a Registration Statement on Form S-1 (File No. 333-37404) that was declared effective by the Securities and Exchange Commission on August 7, 2000. We received aggregate net proceeds of approximately $101.4 million, after deducting underwriting discounts and commissions of approximately $7.7 million and expenses of the offering of approximately $1.3 million. Of the aggregate net proceeds of approximately $101.4 million from the IPO, we used the entire amount during the period August 7, 2000 through March 31, 2002 for general corporate purposes, including operations, working capital and capital expenditures. Of the approximately $101.4 million, we paid approximately $711,000 to Stack Pharmaceuticals, Inc. and approximately $7.2 million to Innovex, Inc. Prior to becoming our President and Chief Executive Officer, David M. Stack was President and General Partner of Stack Pharmaceuticals and a Senior Advisor to the Chief Executive Officer of Innovex. Other than these payments, none of the net proceeds of the IPO has been paid by us, directly or indirectly, to any director, officer or general partner of us, or any of their associates, or to any person owning ten percent or more of any class of our equity securities, or any of our affiliates. Page 25 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits See the Exhibit Index on the page immediately preceding the exhibits for a list of exhibits filed as part of this Quarterly Report, which Exhibit Index is incorporated herein by this reference. (b) Reports on Form 8-K On February 15, 2002, the Company filed a current Report on Form 8-K with the SEC in connection with its announcement of financial results for the quarter and full year periods ended December 31, 2001. On March 12, 2002, the Company filed a Current Report on Form 8-K with the SEC in connection with its announcement that it had entered into an agreement with AstraZeneca AB for the licensing, development and commercialization of clevidipine. Page 26 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. THE MEDICINES COMPANY Date: May 15, 2002 By: /s/ Steven H. Koehler ---------------------- Steven H. Koehler Chief Financial Officer Page 27 EXHIBIT INDEX
Exhibit Number Description - -------------- ----------- 10.1 Amended and Restated Employment Agreement dated February 27, 2002 by and between Peyton J. Marshall and the registrant 10.2 + Study and Exclusive Option Agreement dated March 5, 2002 by and between AstraZeneca AB and the registrant 10.3 + Sales, Marketing and Distribution Agreement dated March 25, 2002 by and between Nycomed Danmark A/S and the registrant 10.4 + Loan and Security Agreement dated March 26, 2002 by and between Comerica Bank-California and the registrant, as amended 10.5 Amendment to Development and Commercialization Agreement dated March 26, 2002 by and between Gynelogix, Inc. and the registrant
+ Confidential treatment has been sought for certain portions of this Exhibit pursuant to Rule 24(b) promulgated under the Securities Exchange Act of 1934, as amended Page 28 EX-10.1 3 b43069mcex10-1.txt AMENDED & RESTATED EMPLMNT AGRMNT PEYTON MARSHALL EXHIBIT 10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement"), made this 27th day of February, 2002, is entered into by The Medicines Company, a Delaware corporation with its principal place of business at Five Sylvan Way, Second Floor, Parsippany, NJ 07054 (the "Company"), and Peyton Marshall residing at 23 Beaver Pond, Lincoln, MA 01773 (the "Employee"). WHEREAS, the Company and the Employee are parties to an Employment Agreement dated October 20, 1997 (the "Previous Employment Agreement"); and WHEREAS, the Company and the Employee wish to amend and restate the Previous Employment Agreement to reflect new employment arrangements between the Company and the Employee; NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties agree as follows: 1. Term of Employment. The Company hereby agrees to employ the Employee, and the Employee hereby accepts employment with the Company, upon the terms set forth in this Agreement, for the period commencing on March 1, 2002 (the "Commencement Date") and ending on March 1, 2003 (such period, as it may be renewed as provided in the following sentence or extended pursuant to Section 2.2(c) of this Agreement, the ("Employment Period"), unless sooner terminated in accordance with the provisions of Section 2 or Section 4 of this Agreement. The Employment Period shall automatically be renewed for successive one (1) year periods unless either the Employee or the Company provides written notice of non-renewal to the other party at least ninety (90) days prior to the expiration of the then current term. 2. Title; Employment. 2.1 Title; Duties and Responsibilities. Subject to Section 2.2 below, the Employee shall serve as Senior Vice President and Chief Financial Officer or in such other position as the Company or its Board of Directors (the "Board") may determine from time to time. The Employee shall be based at the Company's offices in Cambridge, Massachusetts, unless otherwise agreed. The Employee shall be subject to the supervision of, and shall have such authority as is delegated to him by, the Board or such officer of the Company as may be designated by the Board (the "Board Designee") (who shall initially be the Executive Chairman). The Employee hereby accepts such employment and, subject to Section 2.2 below, agrees to undertake the duties and responsibilities inherent in such position and/or such other duties and responsibilities as the Board or the Board Designee shall from time to time reasonably assign to him and to devote his entire business time, attention and energies to the business and interests of the Company during the Employment Period. The Employee agrees to abide by the rules, regulations, instructions, personnel practices and policies of the Company and any changes therein which may be adopted from time to time by the Company. The Employee acknowledges receipt of copies of all such rules and policies committed to writing as of the date of this Agreement. 2.2 CFO Status. (a) In accordance with Section 2.1, at any time during the Employment Period after April 1, 2002, the Company shall have the right to terminate the Employee's status as Senior Vice President and Chief Financial Officer of the Company without terminating the Employee's employment with the Company or this Agreement. In addition, at any time during the Employment Period after the earlier of May 1, 2003 and the date one month following the date of the hiring by the Company of a replacement candidate qualified for the position of Chief Financial Officer of the Company (an event of which the Board Designee shall promptly notify the Employee), but in no event earlier than May 1, 2002, the Employee may resign as Senior Vice President and Chief Financial Officer of the Company without terminating his employment with the Company or this Agreement. Termination of the Employee's status as Senior Vice President and Chief Financial Officer in accordance with this Section 2.2(a) (whether initiated by the Company or the Employee) (the "CFO Termination Event") shall be effective immediately upon written notice to the other party. (b) For one month (the "Transition Period") following the CFO Termination Event, the Employee shall continue to serve as a full-time employee of the Company on the terms set forth in this Agreement; provided, however, that the Employee's authority, duties and responsibilities during the Transition Period shall be mutually agreed upon between the Employee and the Board Designee. (c) Upon the occurrence of the CFO Termination Event, the Employment Period shall automatically be extended to the date 13 months after the date of the CFO Termination Event without any further right of renewal, subject to earlier termination in 2 accordance with this Section 2.2 or Sections 4.2, 4.3 or 4.5 of this Agreement. Following the CFO Termination Event, neither party shall have the right to terminate this Employment Agreement under Section 4.4 of this Agreement. (d) During the period between the end of the Transition Period and the end of the Employment Period (the "Closing Period"), the Employee shall continue to serve as an employee of the Company on the terms set forth in this Agreement; provided, however, that during the Closing Period the Employee shall not be required to devote his entire business time, attention and energies to the Company, and instead shall have such authority, duties and responsibilities as shall be mutually agreed upon by the Employee and the Board Designee. (e) At any time during the Closing Period, the Employee may terminate his employment with the Company upon written notice of termination given at least 10 days prior to the effective date of termination. (f) If, at any time during the Closing Period, the Employee becomes employed by one or more third parties on a majority-time basis in the aggregate, the Employee shall promptly provide written notice of such event to the Company, and the Company shall have the right to terminate the Employee's employment with the Company effective immediately upon written notice to the Employee. 3. Compensation and Benefits. 3.1 Salary. The Company shall pay the Employee, in semi-monthly installments, an annual base salary of $200,000 during the Employment Period. Such salary shall be subject to adjustment as determined by the Board, but shall not be reduced below the amount set forth above without the Employee's consent. 3.2 Bonus. During the Employment Period, the Employee shall be eligible to receive a bonus equal to up to forty percent (40%) of his base salary upon the achievement of annual objectives to be approved by the Board Designee after discussion with the Employee. The Board shall review the Employee's performance and determine the amount of the bonus, if any, to be paid to the Employee. 3.3 Fringe Benefits. The Employee shall be entitled to participate in all other bonus and benefit programs that the Company establishes and makes available to its employees, if any, to the extent that Employee's position, tenure, salary, age, health and other qualifications 3 make him eligible to participate. The Employee shall be entitled to four (4) weeks paid vacation per year, to be taken at such times as may be approved by the Board or the Board Designee. 3.4 Reimbursement of Expenses. The Company shall reimburse the Employee for all reasonable travel, entertainment and other expenses incurred or paid by the Employee in connection with, or related to, the performance of his duties, responsibilities or services under this Agreement, upon presentation by the Employee of documentation, expense statements, vouchers and/or such other supporting information as the Company may request. 4. Employment Termination. The employment of the Employee by the Company pursuant to this Agreement shall terminate upon the occurrence of any of the events set forth in Section 2.2(e) or (f) or set forth below: 4.1 Expiration of Employment Period. Expiration of the Employment Period in accordance with Section 1. 4.2 Termination for Cause. At the election of the Company, immediately upon written notice by the Company to the Employee, for "cause" as determined by the Board. For purposes of this Section 4.2, "cause" for termination shall be deemed to exist only if any of the following shall have occurred: (a) the Employee's conviction of any crime (whether or not involving the Company) which constitutes a felony in the jurisdiction involved (other than unintentional motor vehicle felonies); (b) any act of theft, fraud, misappropriation of funds or embezzlement by the Employee, in connection with his work with the Company, or any other act or acts of dishonesty on the part of the Employee resulting or intended to result directly or indirectly in personal gain or enrichment of the Employee at the expense of the Company; (c) the Employee's failure to perform in all material respects the services required to be performed pursuant to Section 2 of this Agreement, provided that if such failure is capable of being corrected, such failure continues uncorrected for a period of thirty (30) days after the Employee shall have received written notice from the Company stating with reasonably specificity the nature of such failure; (d) the Employee's breach of Sections 6 or 7 of this Agreement or any material breach of the Invention and Nondisclosure Agreement dated as of October 20, 1997 between the Employee and the Company (the "Nondisclosure Agreement"); 4 (e) the Employee's excessive use of alcohol and/or drugs which is judged by the Board Designee and the Board to materially interfere with the performance of his duties; or (f) any misconduct by the Employee which in the reasonable judgment of the Board Designee and the Board would jeopardize the success of the Company. 4.3 Death or Disability. Thirty (30) days after the death or disability of the Employee. As used in this Agreement, the term "disability" shall mean the inability of the Employee, due to a physical or mental disability, for a period of ninety (90) days, whether or not consecutive, during any 360-day period to perform the services contemplated under this Agreement. A determination of disability shall be made by a physician satisfactory to both the Employee and the Company, provided that if the Employee and the Company do not agree on a physician, the Employee and the Company shall each select a physician and these two together shall select a third physician, whose determination as to disability shall be binding on all parties. 4.4 Voluntary Termination. At the election of either party, upon written notice of termination given at least ninety (90) days prior to the effective date of termination. 4.5 Voluntary Termination for "Good Reason". At the election of the Employee, for "Good Reason," which shall be deemed to exist only if the Company fails to comply in any material respect with the provisions of Section 3, other than an isolated, insubstantial and inadvertent failure which is remedied by the Company promptly after receipt of notice thereof given by the Employee. 5. Effect of Termination. 5.1 Termination for Cause or at Election of Employee. In the event the Employee's employment is terminated for cause pursuant to Section 4.2, or at the election of the Employee pursuant to Section 4.4, the Company shall pay to the Employee all sums otherwise payable to him under Section 3 through the last day of his actual employment by the Company. 5.2 Termination for Death or Disability. If the Employee's employment is terminated by death or because of disability pursuant to Section 4.3, the Company shall pay to the estate of the Employee or to the Employee, as the case may be, all sums which would otherwise be payable to the Employee under Section 3 up to the end of the month in which the termination of his employment because of death or disability occurs. 5 5.3 Termination for Good Reason or at Election of Company. In the event that Employee's employment is terminated by the Employee for "Good Reason" pursuant to Section 4.5, or at the election of the Company pursuant to Section 4.4, the Company shall continue to pay to the Employee the salary set forth in Section 3.1, and shall continue to make available to the Employee the benefits set forth in Section 3.3, excluding vacation days and bonus sums under said Section 3.3 accrued during this period, until the later of three (3) months after the date of termination, but in no event later than such date as the Employee shall have commenced full-time employment with a new employer. 5.4 Transition Termination. In the event that the Employee's employment is terminated at the election of the Employee pursuant to Section 2.2(e) or at the election of the Company pursuant to Section 2.2(f) (a "Transition Termination"): (a) the Company shall pay to the Employee all sums otherwise payable to him under Section 3 through the last day of his actual employment by the Company; and (b) the vesting of (i) any stock options to purchase common stock of the Company then held by the Employee and (ii) any shares of common stock of the Company then held by the Employee which are subject to repurchase by the Company pursuant to a stock restriction agreement shall be accelerated such that (A) such options shall become automatically vested as of the date of the Transition Termination for the purchase of the number of shares with respect to which such option would have been vested if the date of the Transition Termination had occurred upon the date 13 months after the CFO Termination Event and (B) the number of shares subject to repurchase by the Company shall be reduced to the number of shares which the Company would have had the right to repurchase if the date of the Transition Termination had occurred upon the date 13 months after the CFO Termination Event. The parties also agree that in the event of a Transition Termination the Employee shall perform such consulting, advisory or related services to and for the Company as may be mutually agreed to by the parties until the date 13 months after the CFO Termination Event (the "Consulting Termination Date"). In consideration for such services, the Company shall pay to the Employee monthly consulting fees equal to the Employee's annual base salary in effect immediately prior to the Transition Termination (calculated in annualized monthly installments) until the Consulting Termination Date and shall provide health insurance benefits equivalent to 6 the health insurance benefits provided to the Employee under Section 3.3 (to the extent such benefits can be provided to non-employees, or to the extent that such benefits cannot be provided to non-employees, the cash equivalent thereof) until the Consulting Termination Date. 5.5 Survival. The provisions of Sections 6 and 7 shall survive the termination of this Agreement. 6. Non-Compete. 6.1 Non-Compete Restrictions. During the Employment Period and for a period of one (1) year after the termination or expiration thereof (such one (1) year period being referred to as the "Extended One-Year Period"), the Employee will not directly or indirectly as an individual proprietor, partner, stockholder, officer, employee, director, joint venturer, investor, lender, or in any other capacity whatsoever (other than as the holder of not more than an one percent (1%) equity interest in any publicly held company), engage in the business of developing, producing, marketing or selling products with chemical or commercial characteristics of the kind or type developed or being developed, produced, marketed or sold by the Company while the Employee was employed by the Company; provided, however, that notwithstanding the foregoing (a) the Extended One-Year Period shall be inapplicable in the event of a termination pursuant to Section 4.4 at the election of the Company or by the Employee pursuant to Section 4.5 or in the event of the expiration of the Employment Period following a CFO Termination Event, and (b) in the event of a Transition Termination, the Extended One-Year Period shall be limited to the period between the date of the Transition Termination and the Consulting Termination Date. 6.2 Limitations. Notwithstanding the provisions of Section 6.1, it is recognized that the Employee's primary experience is in the pharmaceutical industry, and that his ability to earn a livelihood is likely to be dependent on future employment in such industry. Accordingly, the Company agrees that: (a) the employment of the Employee by a pharmaceutical company in a position in which he assumes responsibility for multiple products, most of which are not competitive with the Company's products, shall not be considered a violation of Section 6.1, so long as (i) the Employee's responsibilities in such position are not directed principally to products that are competitive with the Company's products, (ii) the portfolio of the pharmaceutical company which hires the Employee must contain the specific product or products which are competitive with Company's products prior to the hiring of the Employee, and (iii) the 7 pharmaceutical company which hires the Employee has been in existence for at least five (5) years prior to hiring the Employee; and (b) in the event that the Company ceases to conduct business, the provisions of Section 6.1 shall terminate. 6.3 Cutback Clause. If any restriction set forth in this Section 6 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which it may be enforceable. 6.4 Equitable Remedies. The restrictions contained in this Section 6 are necessary for the protection of the business and goodwill of the Company and are considered by the Employee to be reasonable for such purpose. The Employee agrees that any breach of Section 6.1 is likely to cause the Company substantial and irrevocable damage and therefore, in the event of any such breach, the Employee agrees that the Company, in addition to such other remedies which may be available, shall be entitled to specific performance and other injunctive relief. 7. Non-solicitation. 7.1 Non-solicitation Restrictions. While the Employee is employed by the Company and for a period of one (1) year after the termination or cessation of such employment for any reason, the Employee will not, without the prior written consent of the Company, directly or indirectly recruit, solicit or hire any employee of the Company, or induce or attempt to induce any employee of the Company to terminate his/her employment with, or otherwise cease his/her relationship with, the Company. If the Employee violates the provisions of this Section 7.1, the Employee shall continue to be bound by the restrictions set forth in this Section 7.1 until a period of one (1) year has expired without any violation of such provisions. 7.2 Cutback Clause. If any restriction set forth in Section 7.1 is found by any court of competent jurisdiction to be unenforceable because it extends for too long a period of time or over too great a range of activities or in too broad a geographic area, it shall be interpreted to extend only over the maximum period of time or range of activities as to which it may be enforceable. 7.3 Equitable Remedies. The restrictions contained in Section 7.1 are necessary for the protection of the business and goodwill of the Company and are considered by 8 the Employee to be reasonable for such purpose. The Employee agrees that any breach of Section 7 is likely to cause the Company substantial and irrevocable damage and therefore, in the event of any such breach, the Employee agrees that the Company, in addition to such other remedies which may be available, shall be entitled to specific performance and other injunctive relief. 8. Other Agreements. Employee hereby represents that he is not bound by the terms of any agreement with any previous employer or other party to refrain from using or disclosing any trade secret or confidential or proprietary information in the course of his employment with the Company or to refrain from competing, directly or indirectly, with the business of such previous employer or any other party. Employee further represents that his performance of all the terms of this Agreement and as an employee of the Company does not and will not breach any agreement to keep in confidence proprietary information, knowledge or data acquired by him in confidence or in trust prior to his employment with the Company. 9. Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown above, or at such other address or addresses as either party shall designate to the other in accordance with this Section 9. 10. Pronouns. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular forms of nouns and pronouns shall include the plural, and vice versa. 11. Entire Agreement. This Agreement, together with the Invention and Non-Disclosure Agreement, constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether written or oral, relating to the subject matter of this Agreement, including without limitation the Previous Employment Agreement, which this Agreement amends and restates and which shall be of no further force or effect after the date hereof. 12. Amendment. This Agreement may be amended or modified only by a written instrument executed by both the Company and the Employee. 13. Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the laws of the Commonwealth of Massachusetts. 9 14. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of both parties and their respective successors and assigns, including any entity with which or into which the Company may be merged or which may succeed to its assets or business, provided, however, that the obligations of the Employee are personal and shall not be assigned by him. 15. Miscellaneous. 15.1 No Waiver. No delay or omission by the Company in exercising any right under this Agreement shall operate as a waiver of that or any other right. A waiver or consent given by the Company on any one occasion shall be effective only in that instance and shall not be construed as a bar or waiver of any right on any other occasion. 15.2 Captions. The captions of the sections of this Agreement are for convenience of reference only and in no way define, limit or affect the scope or substance of any section of this Agreement. 15.3 Enforceability. In case any provision of this Agreement shall be invalid, illegal or otherwise unenforceable, the validity, legality and enforceability of the remaining provisions shall in no way be affected or impaired thereby. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year set forth above. THE MEDICINES COMPANY By: /s/ Clive A. Meanwell ----------------------------------- Title: Chairman ------------------------------- EMPLOYEE /s/ Peyton J. Marshall -------------------------------------- Peyton J. Marshall 10 EX-10.2 4 b43069mcex10-2.txt STUDY AND EXCLUSIVE OPTION AGREEMENT 1 EXHIBIT 10.2 Confidential Materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. STUDY AND EXCLUSIVE OPTION AGREEMENT entered into on this 5th day of March 2002 (the "Effective Date") by and between ASTRAZENECA AB, a company incorporated under the laws of Sweden with its registered office at S-151 85 Sodertalje, Sweden ("ASTRAZENECA") and THE MEDICINES COMPANY, a company incorporated under the laws of Delaware with its registered office at One Cambridge Center, Cambridge, Massachusetts 02142, United States ("TMC"); WITNESSETH WHEREAS, ASTRAZENECA performs research, development and marketing of pharmaceutical compounds and products inter alia in the cardiovascular therapy area; and WHEREAS, ASTRAZENECA has developed the intravenous product Clevidipine for indications such as the control of blood pressure; and WHEREAS, TMC performs development of pharmaceutical compounds and marketing of pharmaceutical products particularly in the cardiovascular therapy area; and WHEREAS, TMC may be interested in acquiring a license to develop and commercialise Clevidipine provided that the product fulfils certain clinical criteria; and WHEREAS, ASTRAZENECA has expressed its interest to license Clevidipine to TMC and finds it to be in the mutual interest of the Parties that TMC may perform a certain clinical study to evaluate whether Clevidipine fulfils the criteria desired. 2 NOW THEREFORE, the Parties hereto agree to the following. 1. DEFINITIONS In this Agreement the following expressions shall have the following meanings: 1.1. "Adverse Event" shall mean the development of an undesirable medical condition or the deterioration of a pre-existing medical condition following or during exposure to a pharmaceutical product whether or not considered causally related to such product. 1.2. "Affiliate" with respect to a Person shall mean any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person. For the purposes of this Article 1.2 only, "control" and, with correlative meanings, the terms "controlled by" and "under common control with", shall mean (a) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and/or (b) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a Person. 1.3. "CDA" shall mean the Confidential Disclosure Agreement entered into by and between the Parties on 9 April 2001, as subsequently amended on 21 August 2001. 1.4. "Compound" shall mean ASTRAZENECA's proprietary compound named Clevidipine with the chemical structure as shown in Schedule 1, attached hereto. 1.5. "Confidential Information" shall mean any and all information, data and know-how, whether oral or in writing or software stored relating to the Compound or the Product and disclosed by or on behalf of ASTRAZENECA or its Affiliates hereunder. 1.6. "Effective Date" shall have the meaning defined above. 1.7. "FTE Day" shall have the meaning defined in the License Agreement. 3 1.8. "Intellectual Property Rights" shall mean know how, patents, trade marks, service marks, trade names, registered designs, design rights, copyright (including rights in computer software) and any rights or property similar to any of the foregoing in any part of the world whether registered or not registered together with the right to apply for the registration of any such rights. 1.9. "License Agreement" shall mean the License Agreement providing for an exclusive license to the Product (as therein defined) by and between the Parties, attached hereto as a Schedule 2. 1.10. "License Agreement Effective Date" shall have the meaning defined in Article 9.1.3. 1.11. "License Agreement Notice" shall have the meaning defined in Article 9.1.1. 1.12. "Party" or "Parties" shall mean TMC and/or ASTRAZENECA. 1.13. "Person" shall mean an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organisation, including a government or political subdivision, department or agency of a government. 1.14. "Pilot Study" shall mean the clinical study to be carried out according to the study outline attached hereto as a Schedule 3. 1.15. "Product" shall mean any pharmaceutical formulation or product for intravenous application containing the Compound as the sole active ingredient in a finished dosage form suitable for administration to patients. 1.16. "Results" shall mean any inventions, formulae, products, processes, techniques, discoveries, improvements, information, data and knowledge developed, generated or reduced to practice under or in connection with the Pilot Study and any Intellectual Property Rights related thereto. 4 1.17. "Samples" shall mean samples of the Product in 100 ml bottles containing 0.5 mg/ml of Compound in 20 % lipid emulsion for clinical use. 1.18. "Trigger" shall mean a result of the Pilot Study demonstrating that the Compound is statistically significantly better (p<=0.05) than nitroglycerin in preserving creatinine clearance, such statistically significantly better result measured as change in 24 hours creatinine clearance before and after on pump CABG in at least 100 patients. 2. THE PILOT STUDY 2.1. ASTRAZENECA shall supply to TMC, or shall cause its manufacturer of Product to supply to TMC, whichever ASTRAZENECA elects, within forty-five (45) days from the date of delivery to ASTRAZENECA from ASTRAZENECA's manufacturer of the complete number of Samples indicated below in this Article 2.1 ordered from such manufacturer or the date when such number of Samples is ready for delivery from such manufacturer, whichever day ASTRAZENECA elects, Samples in a total quantity of 700 bottles. Any such delivery to TMC shall be made free of charge to TMC at TMC's designated facility. ASTRAZENCA shall reimburse TMC any cost for 20% Intralipid to be used as placebo in the Pilot Study. Such cost should not exceed New Zealand Dollars [**]. 2.2. The Parties acknowledge that TMC has as of the Effective Date received under the CDA the information it will need to carry out the Pilot Study. In addition thereto ASTRAZENECA may at its own discretion, from time to time during the term of this Agreement, disclose Confidential Information to TMC in such manner as shall be agreed between the Parties to enable TMC to carry out the Pilot Study. 2.3. The Pilot Study shall be carried out entirely by TMC. TMC shall be fully and solely responsible for the reporting of any Adverse Events emanating from or relating to the Pilot Study. TMC shall perform its obligations under this Agreement to the best of its abilities in a manner appropriate to assure that the Results are true, accurate and correct. 5 TMC shall have the right to use CROs and other sub-contractors for the purposes of carrying out the Pilot Study, provided that TMC shall notify ASTRAZENECA without unreasonable delay following any such appointment of a CRO or other sub-contractor. TMC shall ensure that all of its CROs or other sub-contractors will comply with all terms and conditions of this Agreement and TMC shall remain fully responsible for the compliance by such CROs or other sub-contractors with the terms and conditions of this Agreement as if such CROs or other sub-contractors were TMC hereunder. 2.4. The Parties shall use their best reasonable efforts to initiate and complete without unreasonable delay following the Effective Date a study protocol setting forth a detailed description of the Pilot Study, to be based in all substantial parts on the study outline set forth in Schedule 3. Such study protocol shall be attached hereto as the Schedule 3, thereby replacing and superseding the version of Schedule 3 attached hereto at the Effective Date, and, for the avoidance of doubt, the Pilot Study shall be carried out according to such study protocol. Should the Parties not have been able despite such best reasonable efforts to agree on a study protocol within four (4) months of the Effective Date, then upon the request in writing by either Party within thirty (30) days of the expiration of such four months period this Agreement shall immediately terminate. 2.5. Tottie Nordlander at ASTRAZENECA, or whoever ASTRAZENECA assigns and notifies TMC in writing about, shall be ASTRAZENECA's primary contact person during the term of this Agreement. TMC shall where necessary, advisable or useful discuss with Tottie Nordlander any important aspects of the performance of the Pilot Study. 2.6. TMC shall keep ASTRAZENECA continually updated about the conduct of the Pilot Study by means of meetings and written reports, whichever would be suitable for the purpose of keeping ASTRAZENECA sufficiently informed. No less than once every fourth (4th) week TMC shall submit to ASTRAZENECA a written report summarising progress on the Pilot Study during the period concerned. Within sixty (60) days of completion of clean file 6 of the Pilot Study TMC shall submit to ASTRAZENECA a final report, in a format consistent with the International Committee on Harmonization guidelines for a clinical study report, summarising the work performed and the Results achieved during the Pilot Study ("the Final Report"). Any such report contemplated in this Article 2.6 may be submitted to ASTRAZENECA's contact person as stated in Article 2.5. 2.7. TMC shall carry out the Pilot Study in accordance with any applicable law or other regulation including but not limited to Good Laboratory Practice and Good Clinical Practice as from time to time set forth by the European Union. TMC shall during its performance of the Pilot Study allow ASTRAZENECA to comment on any aspect of the Pilot Study and shall take into reasonable account any such comment made by ASTRAZENECA; provided always, however, that any such comment is given by ASTRAZENECA without any warranty or guarantee as to the results. For the avoidance of doubt, such ASTRAZENECA's right to comment shall not prejudice TMC's right to manage and determine the conduct of the Pilot Study, subject always to what is stated in this Agreement and in Schedule 3. Assistance by ASTRAZENECA to TMC in relation to Fresenius 2.8. At the Effective Date Astra Hassle AB, subsequently merged into ASTRAZENECA, and Fresenius (as defined in the License Agreement) are parties to a Development and Commercial Supply Contract of 28 December 1995 providing for the supply by Fresenius to ASTRAZENECA of Product. Should Fresenius agree with TMC on the supply of Product to TMC and with ASTRAZENECA to release ASTRAZENECA from any obligation under said Contract, then ASTRAZENECA will, provided always that the termination of such Contract or TMC's entering into any such arrangement will not incur any expenses or liability on ASTRAZENECA, agree to assign its rights under the Contract to TMC, or to terminate the Contract with Fresenius, whichever TMC desires and notifies ASTRAZENECA in writing of. 7 It is explicitly understood and agreed by the Parties that ASTRAZENECA shall have no obligations whatsoever to transfer or supply, other than as explicitly provided for under Article 2.1, any quantity of Compound or Product to TMC. 2.9. ASTRAZENECA undertakes, upon having received written notice from TMC, for a period of three (3) months starting sixty (60) days upon ASTRAZENECA's receipt of such TMC's notice, to assist TMC, by telephone, e-mail or other appropriate means as agreed by the Parties, in TMC's discussions with Fresenius (as defined in the License Agreement) in connection with Fresenius' restart of the formulation program regarding the Product. Such ASTRAZENECA's assistance shall be given to an extent necessary and reasonable and shall not, together with any such assistance provided for under Article 3.1, 3.2 and 3.5.1 under the License Agreement, exceed in total [**]. It is acknowledged that ASTRAZENECA may at its discretion carry out any such assistance for up to [**] percent ([**]%) of such [**] by using Third Party consultants. For any services or assistance performed by ASTRAZENECA pursuant to this Article 2.9, TMC shall reimburse ASTRAZENECA for ASTRAZENECA's out-of-pocket costs for such activities plus [**] U.S. Dollars ($[**]) [**]. Should ASTRAZENECA use a Third Party consultant(s) for carrying out assistance for a certain FTE Day, or part thereof, then, for the avoidance of doubt, the FTE Day rate now stated shall apply thereon, and the out-of-pocket costs for consultants, if any, as indicated above in this paragraph, shall apply only to costs for consultants which would typically have been incurred should the assistance have been actually carried out by an employee(s) of ASTRAZENECA or its Affiliates. ASTRAZENECA shall invoice TMC for all assistance during each relevant time period within thirty (30) days of the expiration of each calendar half-year. Submission of first draft of the Supply Agreement 8 2.10. Due to the fact that the Supply Agreement (as defined in the License Agreement) has not been entered into on the Effective Date, ASTRAZENECA shall no later than three (3) months of the Effective Date provide to TMC a first draft on the Supply Agreement. Should ASTRAZENECA fail to do so, then TMC's sole remedy therefor shall be ASTRAZENECA's loss of right, as stated in Article 4.3.3, second paragraph, of the License Agreement, to terminate the License Agreement. 3. REMUNERATION As the sole consideration for TMC's right to carry out the Pilot Study hereunder TMC shall carry itself any costs and shall be solely responsible for any cost for, connected to or arising from the performance of the Pilot Study. 4. UNDERTAKINGS OF TMC In consideration of ASTRAZENECA supplying the Samples and disclosing the Confidential Information to TMC, TMC hereby undertakes: 4.1. to use the Samples and the Confidential Information solely and exclusively for the Pilot Study, and not to use the Samples, the Confidential Information or the Results for any other purpose whatsoever; and 4.2. to maintain confidential the Results, the Confidential Information and the Samples and not to disclose directly or indirectly the Results, nor the Confidential Information or give any part of the Samples to any other Person, save as permitted by Article 5. 5. PERMITTED DISCLOSURES 5.1. Notwithstanding Article 4: 5.1.1. TMC may supply Samples and/or disclose Confidential Information to any of its Affiliates who need to receive the Samples and/or know the Confidential Information in order to fulfil the Pilot Study, provided that TMC shall procure that, prior to such supply of Samples and/or disclosure of Confidential Information, each Affiliate to which Samples are to be supplied and/or 9 Confidential Information is to be disclosed is made aware of the obligations contained in this Agreement and undertakes, in a manner legally enforceable by ASTRAZENECA, to adhere to such terms of this Agreement as if it were a party to it; and 5.1.2. TMC may supply Samples and/or disclose Confidential Information to its directors and employees (and those of its Affiliates to whom disclosure may be made in accordance with Article 5.1.1) and professional advisers, and to such CROs or other sub-contractors provided for under Article 2.3, who need to receive such Samples and/or know the Confidential Information in order to fulfil the Pilot Study, provided that TMC shall procure that prior to such disclosure each of those directors, employees, professional advisers and sub-contractors to whom Samples are to be supplied and/or Confidential Information is to be disclosed is made aware of the obligations of confidentiality and non-use herein contained and undertakes, in a manner legally enforceable by ASTRAZENECA, to adhere to such terms of this Agreement as if he or she were a party to it. 5.2. Nothing in Article 4 shall preclude the supply of Samples or the disclosure of any Confidential Information required by any government or regulatory authority or court entitled by law to receipt and/or disclosure of the same, or which are required by law to be so supplied and/or disclosed, provided that TMC promptly notifies ASTRAZENECA when such requirement to supply and/or disclose has arisen, to enable ASTRAZENECA to seek an appropriate protective order or other secrecy order and to make known to the said governmental or regulatory authority or court the proprietary nature of the Samples and/or the Confidential Information and to make any applicable claim of confidentiality in respect thereof. TMC agrees to co-operate in any appropriate action, which ASTRAZENECA may decide to take. If TMC is advised to make a supply and/or disclosure in accordance with this Article 5 it shall only make such supply and/or disclosure to the extent to which it is obliged. 6. EXCEPTIONS 10 The provisions of Article 4 shall not apply to any Samples or Confidential Information which TMC can demonstrate to the reasonable satisfaction of ASTRAZENECA: 6.1. was already in the possession of TMC and at TMC's free use and disposal or in the public domain prior to its disclosure by ASTRAZENECA hereunder; or 6.2. is purchased or otherwise legally acquired by TMC at any time from a third party having good title thereto and the right to disclose the same; or 6.3. comes into the public domain, otherwise than through the fault of TMC; or 6.4. is independently generated by TMC without any recourse or reference to the Samples or the Confidential Information. 7. PUBLICATION 7.1. ASTRAZENECA recognises that TMC may wish to publish or disclose the Results, or part thereof, in a lecture, paper in a scientific journal, thesis or by other means. It is expressly agreed, however, that without ASTRAZENECA's approval in writing TMC may not make any publications or disclosure of the Results unless and until TMC has provided License Agreement Notice to ASTRAZENECA. Should TMC have given License Agreement Notice to ASTRAZENECA, then TMC may make publication or disclosure of the Results according to the following. In order to avoid loss of patent or other Intellectual Property Rights as a result of premature disclosure of patentable or other information, TMC shall before any publication or disclosure submit to ASTRAZENECA for review at least sixty (60) days prior to submission for publication or disclosure any manuscript, pre-publications and other pre-disclosure material in its form intended for publication or disclosure which contains, or does possibly contain, any part of the Results. If ASTRAZENECA within its sole discretion determines anything in the received material patentable or subject to any other Intellectual Property Rights, TMC shall upon ASTRAZENECA's request 11 delay publication or disclosure for an additional period of ninety (90) days from the day of such ASTRAZENECA's request. Should ASTRAZENECA by the reasons mentioned above in this paragraph reasonably determine that it would need a further period of delay of the publication or disclosure concerned, then upon ASTRAZENECA's notice in writing to TMC, to be provided prior to the expiration of the last 90-days period mentioned in the first paragraph of this Article 7.1, TMC shall delay such publication or disclosure for a period specified in ASTRAZENECA's notice but not to exceed ninety (90) days from the date of such notice. 7.2. For the avoidance of doubt, such publications contemplated under this Article 7 may never, unless exempted from obligations of confidentiality according to Article 6, contain Confidential Information. 8. INTELLECTUAL PROPERTY RIGHTS 8.1. In consideration of ASTRAZENECA supplying the Samples and disclosing the Confidential Information to TMC, TMC hereby agrees that any Results shall be the exclusive property of ASTRAZENECA, and TMC hereby assigns any right and title to any Results to ASTRAZENECA. 8.2. If any further document or action is necessary, advisable or useful for the purpose of confirming, effecting or perfecting ASTRAZENECA's rights according to Article 8.1 or for ASTRAZENECA's applications for patents or any other Intellectual Property Rights, TMC agrees to execute, at ASTRAZENECA's expense, any and all such further documents and actions as now mentioned. TMC further undertakes to execute any documents and take such actions as provided in this Article 8.2 also in relation to any of ASTRAZENECA's Affiliates. 8.3. Notwithstanding TMC's general reporting obligations under Article 2.6, TMC warrants that it will promptly disclose to ASTRAZENECA in writing any Results. 12 9. EXCLUSIVE OPTION 9.1. Entering into effect of the License Agreement 9.1.1. Should the Final Report, or other report compiled upon completion of the Pilot Study containing information sufficient to make the appropriate determinations whether the Trigger has been reached, whichever is communicated earlier to ASTRAZENECA, show that the result of the Pilot Study meets the Trigger, then either Party may require that the License Agreement shall enter into force by providing written notice thereon ("License Agreement Notice") to the other Party. 9.1.2. Should the Final Report or such other report mentioned in Article 9.1.1 show that the result of the Pilot Study does not meet the Trigger, then TMC may anyhow, at its discretion, require that the License Agreement shall enter into force by providing License Agreement Notice to ASTRAZENECA. 9.1.3. Upon the first Party, or, in the situation contemplated by Article 9.1.2, ASTRAZENECA, receiving License Agreement Notice by the other Party ("License Agreement Effective Date") the License Agreement shall enter into force in accordance with its terms and conditions. 9.2. License Agreement not entering into effect Should, in the situation contemplated by Article 9.1.1, neither Party, or, in the situation contemplated by Article 9.1.2, should not TMC, have given License Agreement Notice within ninety (90) days of ASTRAZENECA's receipt of the Final Report or such other report mentioned in Article 9.1.1, then the License Agreement shall not enter into force. 10. CONFIDENTIALITY MEASURES 10.1. As part of TMC's undertaking set out in Article 4 to secure the confidentiality attaching to the Confidential Information, the Samples and the Results, TMC agrees: 13 10.2. to keep separate all Samples, Confidential Information and Results from all other documents and records held by TMC; and 10.3. to keep all documents and any other material bearing or incorporating any of the Confidential Information, the Samples or the Results at TMC's usual place of business, namely 5 Sylvan Way, Parsippany, New Jersey 07054, United States. 10.4. not to use, reproduce, transform or store any of the Confidential Information, Samples or Results in any externally accessible computer or electronic information retrieval system or transmit it in any form or by any means whatsoever outside of TMC's usual place of business; and 10.5. to make copies of the Confidential Information, Samples or Results only to the extent that the same are strictly required for the Purpose; and 10.6. to notify ASTRAZENECA promptly of the date of, and the circumstances involved in, the loss or unauthorised disclosure, if any, of the Samples or the Results or any documents, drawings, descriptions, writings or formulae comprised in, containing or relating to the Confidential Information. 10.7. Notwithstanding what is stated in Articles 10.3 and 10.4, should TMC let, to the extent necessary for the conduct of the Pilot Study, such keeping of documents or materials as mentioned in Article 10.3 or such storage in computer or electronic information retrieval systems mentioned in Article 10.4 be made at the premises, or within the computer or other such systems, of a CRO or other sub-contractor as permitted under Article 2.3, then such keeping or storage shall not be considered a violation of such Articles 10.3 or 10.4 provided that TMC shall procure that prior to such keeping or storage such CRO or other sub-contractor is made aware of the obligations of confidentiality and non-use herein contained and undertakes, in a manner legally enforceable by ASTRAZENECA, to adhere to such terms of this Agreement as if it was a party to it. 14 11. PUBLICITY AND ANNOUNCEMENTS. 11.1. Subject to Article 11.2 no press release, announcement or any other communication to any Third Party concerning the transaction contemplated by this Agreement, the financial terms of this Agreement, the subject matter of this Agreement or any ancillary matters shall be made or permitted or authorized to be made by either Party without the prior written approval of the other, such approval not to be unreasonably withheld or delayed and such approval to be given by an authorized representative of the Party in question. Notwithstanding the above, TMC may make the press announcement set forth in Schedule 4 at the Effective Date or in immediate connection therewith. 11.2. Either Party may make an announcement concerning the transaction contemplated by this Agreement or any ancillary matter if required by law, existing contractual obligations or any securities exchange or Regulatory Authority or governmental body to which either Party is subject or submits, wherever situated, provided that the Party required to make such announcement notifies the other Party of the details of the announcement prior to making such announcement and in sufficient time for the other Party to consider and comment on the announcement, and takes advantage of all provisions to keep confidential as many terms of the Agreement as possible. 12. NO GRANT OF RIGHTS Nothing in this Agreement shall be interpreted expressly or implied as granting either Party any licence or other rights, except as expressly set out in this Agreement. 13. DISCLAIMER 13.1. Any Samples so furnished by ASTRAZENECA to TMC hereunder are to be treated by TMC as potentially hazardous in handling and use and ASTRAZENECA gives no warranty or representation regarding the safety or efficacy of the Compound. 15 ASTRAZENECA represents to TMC that to the best of its knowledge it has disclosed to TMC all its knowledge at the Effective Date regarding the characteristics of the Compound. Except for the representation given in the preceding sentence, ASTRAZENECA disclaims any representation or warranty with respect to the Compound and ASTRAZENECA shall have no responsibility or liability for the use of the Compound by TMC, Principal Investigator, or by other TMC's employees or students. 13.2. ASTRAZENECA makes no representation that the Compound will not infringe any patent or other proprietary rights of any third party. 14. INDEMNITY 14.1. TMC shall be responsible for and shall indemnify ASTRAZENECA and its directors, officers, other employees, agents and consultants (collectively the "Indemnified Party") against any and all liability, loss, damage, cost and expense (including legal costs) incurred or suffered by the Indemnified Party arising out of the Pilot Study or arising out of any other activities to be carried out by TMC, its Affiliates or sub-contractors pursuant to this Agreement except where such liability, loss, damage, cost and expense has been incurred or suffered as a result of gross negligence or misconduct on the part of ASTRAZENECA. 14.2. An Indemnified Party that intends to claim indemnification under Article 14.1 shall notify TMC promptly of any such liability, loss, damage, cost and expense and permit TMC to control the defence and disposition thereof and further agrees to reasonably cooperate at TMC's expense with TMC in the handling thereof. The Indemnified Party shall not compromise or settle the claim. TMC agrees to keep ASTRAZENECA informed of the progress in the defence and disputation of such claims and to consult with ASTRAZENECA with regard to any settlement thereof which TMC proposes to enter into and will provide ASTRAZENECA with suitable information regarding the same. 16 15. TERM AND TERMINATION 15.1. This Agreement shall enter into force on the Effective Date and shall expire (i) in accordance with what is stated in Article 2.4; or (ii) at the License Agreement Effective Date; or (iii) at the date when it can be determined, pursuant to Article 9.2, that the License Agreement will not enter into effect, whichever of (i) through (iii) that is the earliest to occur. Should, however, TMC not have provided to ASTRAZENECA the Final Report within fifteen (15) months of the date of delivery to TMC of such number of Samples indicated in Article 2.1, then ASTRAZENECA shall have the right to terminate this Agreement forthwith by giving written notice to TMC. 15.2. If either party is in material default hereunder, the other party may terminate this Agreement at any time upon thirty (30) days' prior written notice to the defaulting party, whereupon this Agreement shall so terminate unless the fault is rectified by the defaulting party within said notice period. 15.3. To the extent permitted by law, if either Party shall become insolvent or shall make assignment for the benefit of creditors, or proceedings in bankruptcy shall be instituted against a Party, or proceedings in voluntary bankruptcy of a Party shall be instituted by that Party, or a receiver or trustee of all, or substantially all, of the property of a Party shall be appointed, the other Party shall be entitled to terminate this Agreement by giving written notice to this effect to the first Party whereupon this Agreement shall immediately terminate. Upon termination 15.4. Upon termination or expiration of this Agreement, or at the request of ASTRAZENECA, TMC shall (i) return to ASTRAZENECA any tangible Confidential Information, including any reproduction thereof furnished by or on behalf of ASTRAZENECA or its Affiliates; and 17 (ii) return to ASTRAZENECA any Samples delivered by or on behalf of ASTRAZENECA or its Affiliates, unless, and to the extent, such Samples have been used in the course of TMC's performance of the Pilot Study; and (iii) deliver to ASTRAZENECA any Results not already reported or delivered to ASTRAZENECA including, without limitation, any draft reports developed by such time should the Final Report not have been delivered to ASTRAZENECA. 15.5. Survival 15.5.1. What is stated in Articles 1, 4, 5, 6, 7, 8, 10, 11, 12, 13, 14, 15, 20 and 21 shall survive termination or expiration of this Agreement. 15.5.2. What is stated in Article 2.9 shall survive until the expiration of the three-months period therein stated, provided that TMC has given notice as contemplated therein prior to the date of termination or expiration of this Agreement. 15.5.3. What is stated in Articles 4 and 10 shall survive termination or expiration of this Agreement and shall continue to be in force for a period of five (5) years following such termination or expiration. 16. ASSIGNMENT 16.1. Save as provided in Articles 16.2 and 16.3, a party may not assign, transfer, charge or deal in any other manner with this Agreement or any of its rights under it, nor purport to do any of the same, nor sub-contract any or all of its obligations under this Agreement without having obtained the prior written consent of the other party. 16.2. ASTRAZENECA shall be entitled to assign its rights under this Agreement to an Affiliate. Any assignment made pursuant to this Article 16.2 shall be on the condition that no such assignment shall relieve ASTRAZENECA of any of its obligations under this Agreement. 18 16.3. Each Party shall be entitled to assign its rights under this Agreement to an acquiror of all or substantially all of its capital or stock assets related to the pharmaceutical business described in this Agreement, whether through purchase, merger, consolidation or otherwise. 17. AGREEMENT TO PREVAIL This Agreement shall not affect the validity of the CDA, provided, however, that in case of any inconsistency between this Agreement and the CDA what is stated in this Agreement shall prevail. 18. SEVERANCE If any provision of this Agreement shall be found by any court or administrative body of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect the other provisions of this Agreement which shall remain in full force and effect. 19. DAMAGES Each of the Parties agrees that damages may not be an adequate remedy for breach of this Agreement and accordingly ASTRAZENECA shall be entitled to injunctive or other equitable relief and no proof of special damages shall be necessary for the enforcement of this Agreement. 20. GOVERNING LAW AND ARBITRATION 20.1. The Parties shall use their reasonable efforts to settle amicably any dispute arising out of or in connection with this Agreement. In case the Parties are not able to settle such dispute between themselves, such dispute shall be finally resolved by arbitration in accordance with the Rules of the International Chamber of Commerce. The arbitration proceedings shall be held in London. Any proceedings shall be held in the English language. 20.2. The validity, construction and interpretation of this Agreement and any determination of the performance which it requires shall be governed by the laws of England. 19 21. NOTICES Any notice permitted or required under this Agreement shall be in writing and directed to the following respective addresses and shall be deemed given, in case of lack of proof of earlier receipt, four (4) days upon dispatch if sent by prepaid registered mail. If to ASTRAZENECA: Address: AstraZeneca AB, S-151 85 Sodertalje, Sweden Facsimile: +46-8 553 290 00 For the attention of: President & CEO If to TMC: Address: The Medicines Company, 5 Sylvan Way, Parsippany, New Jersey 07054, United States Facsimile: +1-973-656-9898 For the attention of: Clive Meanwell, Executive Chairman with a copy to Steven D. Singer Hale and Dorr, LLP 60 State Street Boston MA 02109 United States 22. AGENCY, PARTNERSHIP OR JOINT VENTURE EXCLUDED 22.1. Nothing in this Agreement shall be construed so as to constitute either Party to be the agent of the other. 20 22.2. Nothing in this Agreement and no action taken by the Parties pursuant to this Agreement shall constitute a partnership or joint venture of any kind between the Parties. 23. ENTIRE AGREEMENT Each of the Parties acknowledges and agrees that in entering into this Agreement, and the documents referred to in it, it does not rely on, and shall have no remedy in respect of, any statement, representation, warranty or understanding (whether negligently or innocently made) of any person or entity (whether party to this Agreement or not) other than as expressly set out in this Agreement as a warranty. Nothing in this Article shall either operate to limit or exclude any liability for fraud. 24. VARIATION No variation of this Agreement or any of the documents referred to in it shall be valid unless it is in writing and signed by or on behalf of each of the Parties. 25. WAIVER Failure or delay by either Party to exercise any right or remedy under this Agreement shall not be deemed to be a waiver of that right or remedy, or prevent it from exercising that or any other right or remedy on that occasion or on any other occasion. IN WITNESS WHEREOF, the Parties have executed this Agreement on the Effective Date. ASTRAZENECA AB (publ) THE MEDICINES COMPANY /s/ Hamish Cameron /s/ Clive Meanwell - --------------------------------- ---------------------------------- Name: Dr. Hamish Cameron Name: Clive Meanwell Title: Vice President, Head Title: Executive Chairman Cardiovascular Therapy Area SCHEDULE 1 Compound SCHEDULE 1, COMPOUND CHEMICAL STRUCTURE, CHEMICAL NAME AND MOLECULAR FORMULA Chemical structure [BOX] Figure 1. Chemical structure of clevidipine Chemical name Butyroxymethyl methyl 4-(2',3'-dichlorophenyl)-1,4-dihydro-2,6-dimethyl-3,5- pyridinedicarboxylate. Molecular weight 456.3 g/mol. Molecular formula C(21)H(23)Cl(2)NO(6) SCHEDULE 2 License Agreement Schedule 2 LICENSE AGREEMENT Entered into by and between AstraZeneca AB and The Medicines Company on the License Agreement Effective Date TABLE OF CONTENTS
Article Page - ------- ---- 1. Definitions 2 2. Grant of License 11 3. Development and Commercialisation 14 4. Supply Matters 23 5. Exchange of Information 25 6. Consideration 28 7. Intellectual Property - Prosecution and Maintenance 35 8. Claims Regarding Infringement and Invalidity 37 9. Trademark 42 10. Indemnity 45 11. Confidentiality 47 12. Adverse Events 49 13. Representation and Warranty 50 14. Term and Termination 53 15. Consequences of Termination 55 16. Force Majeure 58 17. General Provisions 59 - Assignment 59 - Severance 60 - Notices 60 - Contact Information 61 - Agency, Partnership or Joint Venture Excluded 62 - Entire Agreement 62 - Agreement to Supersede earlier Agreements 62 - Amendments 62 - Publicity and Announcements 62 - Waiver 63 - No Benefit to Third Parties 63 18. Governing Law and Arbitration 63
- i - 1 Schedule 2 LICENSE AGREEMENT This Agreement is entered into on the License Agreement Effective Date by and between ASTRAZENECA AB, a company incorporated under the laws of Sweden with its registered office at S-151 85 Sodertalje, Sweden ("ASTRAZENECA") and THE MEDICINES COMPANY, a company incorporated under the laws of Delaware with its registered office at One Cambridge Center, Cambridge, Massachusetts 02142, United States ("TMC"); WITNESSETH WHEREAS, ASTRAZENECA performs research, development and marketing of pharmaceutical compounds and products inter alia in the cardiovascular therapy area; and WHEREAS, ASTRAZENECA has developed the intravenous product Clevidipine for indications such as the control of blood pressure; and WHEREAS, TMC performs development of pharmaceutical compounds and marketing of pharmaceutical products particularly in the cardiovascular therapy area; and WHEREAS, ASTRAZENECA has expressed an interest to license Clevidipine to TMC and TMC has expressed an interest to license said compound; and WHEREAS, it is a mutual objective of the Parties to maximise the sales of the Product. NOW THEREFORE, the Parties hereto agree to the following. 2 1. DEFINITIONS When used in this Agreement the following expressions shall have the meanings defined herein. The singular form of the defined expression shall include the plural form thereof and vice versa. 1.1. "Adverse Event" shall mean the development of an undesirable medical condition or the deterioration of a pre-existing medical condition following or during exposure to a pharmaceutical product whether or not considered causally related to such product. 1.2. "ANDA Act" shall have the meaning defined in Article 8.3.1(a). 1.3. "Affiliate" with respect to a Person shall mean any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Person. For the purposes of this Article 1.3 only, "control" and, with correlative meanings, the terms "controlled by" and "under common control with", shall mean (a) the possession, directly or indirectly, of the power to direct the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, and/or (b) the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities or other ownership interest of a Person. 1.4. "Agreement" shall mean this document including any and all schedules, appendices and other addenda to it as may be changed, added and/or amended from time to time in accordance with the provisions of this Agreement. 1.5. "ASTRAZENECA IP" shall mean the ASTRAZENECA Patent Rights, the ASTRAZENECA Know-How and, subject to what is stated in Article 9.1, the ASTRAZENECA Trademark. 3 1.6. "ASTRAZENECA Indemnified Party" shall have the meaning defined in Article 10.1.1. 1.7. "ASTRAZENECA Know-How" shall mean any Know-How relating to the Compound and/or the Product, developed, acquired or licensed by ASTRAZENECA prior to the License Agreement Effective Date and in ASTRAZENECA's possession at the License Agreement Effective Date. 1.8. "ASTRAZENECA Patent Rights" shall mean the patents and patent applications as set out in Schedule A and any Patent Rights claiming priority thereto. 1.9. "ASTRAZENECA Trademark" shall mean the trademark Clevelox(TM) which ASTRAZENECA as of the License Agreement Effective Date has registered for the Product in the countries set forth in Schedule B. 1.10. "Combination Product" shall mean any pharmaceutical product in a finished dosage form which comprises the Compound and at least one other active pharmaceutical ingredient. 1.11. "Commercially Reasonable Efforts" shall mean with respect to the efforts to be expended by a Party with respect to any objective, the use of reasonable, diligent, good faith efforts to accomplish such objective as such Party would normally use to accomplish a similar objective under similar circumstances, it being understood and agreed that with respect to the research, development or commercialisation of Product, such efforts shall be substantially equivalent to those efforts and resources commonly used by a Party for a product owned by it or to which it has rights, which product is at a similar stage in its development or product life and is of similar market potential taking into account efficacy, safety, Regulatory Authority-approved labelling, the competitiveness of alternative products in the marketplace, the patent and other proprietary position of the Product, the likelihood of regulatory approval given the regulatory structure involved, 4 the profitability of the Product taking into account the royalties payable to licensors of patent or other intellectual property rights, alternative products and other relevant commercial factors. Commercially Reasonable Efforts shall be determined on a country-by-country basis for the Product, and it is anticipated that the level of effort will change over time (including, to the extent appropriate, the reduction or cessation of active promotional efforts), reflecting changes in the status of the Product and the market(s) involved 1.12. "Compound" shall mean ASTRAZENECA's proprietary compound named Clevidipine with the chemical structure as shown in Schedule C, attached hereto, including all salts, esters, complexes, chelates, hydrates, isomers, stereoisomers, crystalline and amorphous forms, prodrugs, solvates, metabolites and metabolic precursors (whether active or inactive) thereof. 1.13. "Confidential Information" shall mean (i) in the case of TMC being the receiving Party, ASTRAZENECA IP, and (ii) in the case of ASTRAZENECA being the receiving Party TMC IP, and (iii) in the case of either Party being the receiving Party, data generated by either or both Parties hereunder and trade secrets and/or confidential information relating to technology, including but not limited to compound(s), composition(s), formulation(s) and/or manufacturing information, and/or relating to the business affairs, including but not limited to commercial forecasts, plans, programs, customers, assets, financial projections, costs and customer lists and/or finances of the Disclosing Party, supplied or otherwise made available to the Receiving Party or coming into Receiving Party's possession in relation to the performance of this Agreement. 1.14. "Disclosing Party" shall mean the Party which discloses Confidential Information to the other Party. 1.15. "Documents" shall mean reports, research notes, charts, graphs, comments, computations, analyses, recordings, photographs, paper, notebooks, books, files, ledgers, records, tapes, discs, diskettes, CD-ROM, computer programs 5 and documents thereof, computer information storage means, samples of material, other graphic or written data and any other media on which Know-How can be permanently or temporarily stored. 1.16. "European Union" shall mean the countries that are, whether at the License Agreement Effective Date or at any time thereafter, members of the European Union. 1.17. "European Economic Area" shall mean the European Union plus Norway, Iceland and Liechtenstein. 1.18. "FDA" shall mean the United States Food and Drug Administration or any successor agency thereto. 1.19. "FTE Day" shall mean the equivalent of one person employed by ASTRAZENECA or TMC, as applicable, or their respective Affiliates full time for one day. 1.20. "Filing of an NDA" shall mean the date of acceptance for review by the competent registration body in a given country of an NDA. 1.21. "Force Majeure" shall mean any cause preventing either Party from performing any or all of its obligations which arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Party so prevented, act of God, war, riot, civil commotion, malicious damage, accident, breakdown of plant or machinery, fire, flood or storm. 1.22. "Fresenius" shall mean Fresenius Kabi Nutrition AB, S-751 74 Uppsala, Sweden. 1.23. "Launch" or "Launched" shall mean the first invoiced commercial sale by TMC, its Affiliates, sub-licensees or distributors, however not including sales made by one such entity to another such entity, of the Product in a country following NDA Approval in such country. 6 1.24. "Know-How" shall mean technical and other information, which is not subject to published patent rights and which is not in the public domain, including, but not limited to, information comprising or relating to concepts, discoveries, data, designs, formulae, ideas, inventions, methods, models, assays, research plans, procedures, designs for experiments and tests and results of experimentation and testing, including results of research or development, processes, including manufacturing processes, specifications and techniques, laboratory records, chemical, pharmacological, toxicological, clinical, analytical and quality control data, trial data, case report forms, data analyses, reports, manufacturing data or summaries and information contained in submissions to and information from ethical committees and regulatory authorities. Know-How includes Documents containing Know-How, including but not limited to any rights including trade secrets, copyright, database or design rights protecting such Know-How. The fact that an item is known to the public shall not be taken to preclude the possibility that a compilation including the item, and/or a development relating to the item, is not known to the public. 1.25. "License Agreement Effective Date" shall have the meaning defined in the Option Agreement. 1.26. "Major Market" shall mean each of [**] and [**]. Further [**] shall constitute one Major Market. 1.27. "NDA" shall mean a fully completed marketing license application comparable to a New Drug Application filed with the FDA, including all supporting documentation and data required for such application to be accepted for review by the competent health regulatory authorities for any country requesting approval for commercialisation of the Product for a particular indication in such country. NDA as herein defined shall for this purpose include applications for pricing or reimbursement approval where appropriate. 7 1.28. "NDA Approval" shall mean the approval by the competent registration body for a given country of an NDA. 1.29. "Net Sales" shall mean the gross sales of Product by a Party or its Affiliates, and, regarding sales in the United States, its sub-licensees or distributors, to Third Parties after deduction of: a) [**] and/or [**]; b) amounts [**] determined in good faith; c) [**] such sales; and d) [**] the Product. In the event the Product is sold as part of a Combination Product, the Net Sales from the Combination Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product (as defined in the standard Net Sales definition), during the applicable royalty reporting period, by the fraction, A/A+B, where A is the average sale price of the Product when sold separately in finished form and B is the average sale price of the other product(s) included in the Combination Product when sold separately in finished form, in each case during the applicable royalty reporting period or, if sales of both the Product and the other product(s) did not occur in such period, then in the most recent royalty reporting period in which sales of both occurred, as adjusted, as necessary, for inflation from the date when both the Product and all other product(s) last were sold and the date of determination of Net Sales under this Article 1.29. In the event that such average sale price 8 cannot be determined for both the Product and all other products(s) included in the Combination Product, Net Sales for the purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction of C/C+D where C is the fair market value of the Product and D is the fair market value of all other pharmaceutical product(s) included in the Combination Product. In such event, the selling Party shall in good faith make a determination of the respective fair market values of the Product and all other pharmaceutical products included in the Combination Product, and shall notify the other Party of such determination and provide the other Party with data to support such determination. The other Party shall have the right to review such determination and supporting data, and to notify the selling Party if it disagrees with such determination. If the other Party does not agree with such determination and if the Parties are unable to agree in good faith as to such respective fair market values, then such matter shall be referred to arbitration pursuant to Article 18.1. Net Sales shall exclude (i) the transfer of a commercially reasonable quantity of free samples of Product to be given out to customers for promotional purposes; (ii) the transfer of Product for use in clinical trials; and (iii) the sales or transfers of Product among a Party and its Affiliates, and, in the United States, its sub-licensees or distributors, unless the receiver is the consumer or user of the Product; however, the resale or transfer of such Product to a Third Party shall be included in Net Sales. Product sold or otherwise transferred (x) in other than an arms length transaction or for other property (e.g. barter); or (y) where no separate price has been decided for the Product but a price is decided jointly for the Product plus at least one other product, shall be deemed invoiced at its fair market price in the country of sale or transfer. It is acknowledged that sub-licensees of a Party or its Affiliates and conventional distributors whose function is to purchase and resell Product, 9 will be considered Third Parties when referring to Product sold outside the United States. The Parties agree further that for the purpose of the first paragraph of this Article 1.29 the Net Sales of the Product outside the United States by TMC or its Affiliates to such sub-licensees and distributors shall be the Net Sales received by TMC or its Affiliates from such sub-licensee or distributor for the Product or [**] percent ([**]%) of the actual gross sales, less deductions under subsections (a) through (d) above, of the Product by such sublicensee or distributor, whichever amount is the higher. 1.30. "Option Agreement" shall mean the Study and Exclusive Option Agreement entered into by and between the Parties on 5 March 2002. 1.31. "Party" or "Parties" shall mean TMC and/or ASTRAZENECA. 1.32. "Patent Rights" shall mean patent applications and patents, utility models, utility certificates, certificates of addition and all foreign counterparts of them in all countries, including any divisional applications and patents, refilings, renewals, continuations, continuations-in-part, patents of addition, extensions (including patent term extensions), reissues, substitutions, confirmations, registrations, revalidations, pipeline and administrative protections and additions, and any equivalents of the foregoing in any and all countries of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them. 1.33. "Person" shall mean an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other similar entity or organization, including a government or political subdivision, department or agency of a government. 1.34. "Procedure" shall have the meaning defined in Article 3.5.1. 10 1.35. "Product" shall mean any pharmaceutical formulation or product for intravenous application containing the Compound as the sole active ingredient in a finished dosage form suitable for administration to patients. Apart from in this Article 1.35, and unless the context clearly requires otherwise in this Agreement, when mentioned in this Agreement Product shall be deemed to include Combination Product. 1.36. "Phase III Clinical Trial" shall mean a large scale, pivotal multicentre, human clinical trial to be conducted in a number of patients estimated to be sufficient to establish safety or efficacy in the particular claim and indication and at a standard suitable to obtain NDA Approval. 1.37. "Receiving Party" shall mean the Party which receives Confidential Information from the other Party. 1.38. "Results" shall have the meaning defined in Article 7.8. 1.39. "Supply Agreement" shall have the meaning described in Article 4.3.1. 1.40. "TMC IP" shall mean TMC Know-How and TMC Patent Rights. 1.41. "TMC Indemnified Party" shall have the meaning defined in Article 10.2.1. 1.42. "TMC Know-How" shall mean any Know-How relating directly to the Compound and/or the Product developed, acquired or licensed by TMC during the term of this Agreement. 1.43. "TMC Patent Rights" shall mean any Patent Rights directly relating to the Compound and/or the Product developed, acquired or licensed by TMC during the term of this Agreement. 1.44. "TMC Trademark" shall have the meaning defined in Article 9.1. 1.45. "Territory" shall mean any country in the world except Japan. 11 1.46. "Third Party" shall mean any Person not including the Parties or the Parties' respective Affiliates. 2. GRANT OF LICENSE 2.1. License Grant. ASTRAZENECA hereby grants to TMC an exclusive license in the Territory under the ASTRAZENECA IP to perform research on, have research performed on, develop, have developed, use, have used, make, have made, import, have imported, market, have marketed, sell and have sold the Compound and the Product for all indications. Notwithstanding the foregoing, TMC's license to the ASTRAZENECA Trademark included in the license now granted shall be subject to what is stated in Article 9.1. 2.2. Grant to TMC's Affiliates. TMC's Affiliates shall have the benefit and burden of the licenses and rights set out in Article 2.1 for the same purposes and under the same conditions as set forth herein, provided that TMC shall remain fully responsible for the compliance by such Affiliates with the terms and conditions of this Agreement as if such Affiliates were TMC hereunder. 2.3. Right to Sublicense. TMC shall have the right to grant sub-licenses to the rights granted under Article 2.1, provided that TMC shall notify ASTRAZENECA of each such sublicense without unreasonable delay following any such grant of sub-license. TMC shall ensure that all of its sub-licensees will comply with all terms and conditions of this Agreement and TMC shall remain fully responsible for the compliance by such sub-licensees with the terms and conditions of this Agreement as if such sub-licensees were TMC hereunder. 2.4. Right to Appoint Distributors. TMC shall also have the right to appoint distributors in the Territory for the sale of the Product. TMC shall at all 12 times ensure that its distributors act fully in compliance with the terms and conditions of this Agreement. 2.5. Duration of License Grant. The licenses set out in Article 2.1 shall continue in accordance with what is stated therein on a country-by-country basis until royalty payment is no longer due in the country concerned in accordance with what is stated in Article 6.4, except for the license to the ASTRAZENECA Trademark which shall be governed by what is stated in Article 6.5. The licenses set out in Article 2.1 shall, subject again to what is stated in Article 6.5 regarding the license to the ASTRAZENECA Trademark, thereafter continue on a non-exclusive basis and become fully paid up and royalty-free in the country concerned. 2.6. First Right of Refusal of TMC regarding Japan. Should ASTRAZENECA within its sole discretion at any time determine that ASTRAZENECA will not Launch the Product in Japan and/or that ASTRAZENECA will not license, transfer or otherwise dispose of its interest in the ASTRAZENECA IP regarding Japan, then ASTRAZENECA shall offer to TMC, by providing written notice, the first right to negotiate a license on exclusive rights to commercially exploit the Compound and the Product under the ASTRAZENECA IP in Japan on terms similar to those under this Agreement. Should TMC wish to exercise such right, then TMC shall notify ASTRAZENECA hereof in writing no later than ninety (90) days upon receipt of ASTRAZENECA's notice. In reasonable connection with such notice the Parties shall enter into good faith negotiations using their reasonable endeavours to reach a mutually acceptable agreement providing for such TMC's commercial exploitation as mentioned in this Article 2.6. 2.7. TMC Grant of Rights to ASTRAZENECA Regarding Japan. 2.7.1. In consideration of the rights granted by ASTRAZENECA hereunder, TMC hereby grants to ASTRAZENECA, at no cost or remuneration, a sub-licensable non-exclusive license under the TMC IP to perform research on, 13 have research performed on, develop, have developed, use, have used, make, have made, import, have imported, market, have marketed, sell and have sold the Compound and the Product for all indications in Japan. 2.7.2. TMC shall for the purpose of the license granted in Article 2.7.1 make available to ASTRAZENECA, upon ASTRAZENECA's request, any Filings of an NDA in the Territory, any NDA Approvals obtained in the Territory and any related documents and any TMC's correspondence with any regulatory authorities in the Territory regarding any such Filing of an NDA, NDA Approval or related issues, and shall allow ASTRAZENECA to make cross-references to any such Filing of an NDA or NDA Approval in the Territory. For any services or assistance performed by TMC pursuant to this Article 2.7.2, ASTRAZENECA shall reimburse TMC for TMC's out-of-pocket costs for such activities plus [**] U.S. Dollars ($[**]) per FTE Day. 2.7.3. Should TMC have selected the TMC Trademark in the Territory, then the license under Article 2.7.1 shall include an exclusive right and license for ASTRAZENECA to utilize the TMC Trademark in Japan. Should ASTRAZENECA use the TMC Trademark in connection with the sales and marketing of Product in Japan, then ASTRAZENECA shall pay to TMC a running royalty of [**] percent ([**]%) on the annual Net Sales of the Product in Japan. 2.8. Section 365(n) of Title 11. All rights and licenses granted under or pursuant to any section of this Agreement, including amendments hereto, are, for all purposes of Section 365(n) of Title 11 of the United States Bankruptcy Code ("Title 11"), licenses of rights to "intellectual property" as defined in Title 11. The Parties shall retain and may fully exercise all of their respective rights under this Agreement pursuant to Title 11. Rejection of this Agreement pursuant to Section 365 of Title 11 constitutes a material breach of this Agreement and entitles the aggrieved Party to terminate this Agreement for material breach upon written notice. Upon bankruptcy of 14 either Party, the non-bankrupt Party shall further be entitled to a complete duplicate of (or complete access to, as appropriate) any such intellectual property, and such, if not already in its possession, shall be promptly delivered to the non-bankrupt Party, unless the bankrupt Party elects to continue, and continues, to perform all of its obligations under this Agreement. 3. DEVELOPMENT AND COMMERCIALIZATION 3.1. Transfer of ASTRAZENECA Know-How. Without unreasonable delay following the License Agreement Effective Date, ASTRAZENECA shall make available and transfer to TMC the following ASTRAZENECA Know-How. a) a description of the process used by ASTRAZENECA for the manufacturing of the Compound intended for Phase III Clinical Trials and a summary report of the development of such process; b) a description of the process, available to AstraZeneca at the License Agreement Effective Date, for the manufacture of the [**] to be used for the manufacturing of the Compound; c) a description of the analytical methods and validation reports for the starting materials and intermediates to be used in the manufacturing of the Compound. It is acknowledged that at the License Agreement Effective Date some of those analytical methods are not fully developed and validated, and such development and validation will not be continued or completed by ASTRAZENECA. ASTRAZENECA 15 will, however, provide a summary report of the status of these methods at the License Agreement Effective Date; d) the description of the tentative test-methods used by ASTRAZENECA for validating the bulk Compound manufactured, and a brief summary of the validation done thereon by ASTRAZENECA; e) to the extent available to ASTRAZENECA at the License Agreement Effective Date, reference and analytical standard compounds to be used as reference material in the conduct of comparative analyses in relation to the manufacturing process with the Compound. It is explicitly understood that no such compound may be used for any other purpose than the purpose now stated; f) a description of all ASTRAZENECA Know-How relating to clinical trials conducted by ASTRAZENECA using the Product prior to the License Agreement Effective Date. g) reports, the names of which are set forth in Schedule D, containing ASTRAZENECA Know-How relating to the manufacturing of the Compound. Any documents contemplated by this Article 3.1 shall be in English when transferred to TMC. 3.2. Third Party Manufacturers. 3.2.1. It is acknowledged that TMC may present the ASTRAZENECA Know-How described under Article 3.1 to Third Party manufacturers for the purposes permitted under Article 11.2.4. TMC shall notify ASTRAZENECA in writing regarding the date of submission of such information to any such Third Party manufacturer(s). ASTRAZENECA shall in this connection assist TMC to address questions raised about such 16 ASTRAZENECA Know-How by no more than three (3) of such Third Party manufacturer(s) selected by TMC, during a period of three (3) months from the date of presentation of such ASTRAZENECA Know-How to the Third Party manufacturer concerned. ASTRAZENECA shall also provide TMC with advice on the technical merits of proposals regarding manufacturing of the Compound brought forward by such Third Party manufacturer(s). Any assistance provided under this Article 3.2.1 may be given by telephone or e-mail or by other appropriate means as agreed by the Parties. 3.2.2. ASTRAZENECA undertakes to participate in no more than one (1) meeting in person with one Third Party manufacturer, selected by TMC, to outline details of the manufacturing synthesis regarding the Compound, provided that such meeting shall take place at ASTRAZENECA's manufacturing site in Sodertalje, Sweden. 3.2.3. ASTRAZENECA further undertakes, should TMC not have exercised its right under Article 2.9 of the Option Agreement, upon having received written notice from TMC, for a period of three (3) months starting sixty (60) days upon ASTRAZENECA's receipt of such notice, to assist TMC, by telephone, e-mail or other appropriate means as agreed by the Parties, in TMC's discussions with Fresenius in connection with Fresenius' restart of the formulation program regarding the Product. The Parties agree, however, that TMC may not give such notice contemplated above in this Article 3.2.3 later than eight (8) months of the License Agreement Effective Date. 3.2.4. ASTRAZENECA agrees to provide reasonable assistance to the Third Party manufacturer selected by TMC, by telephone, e-mail or other appropriate means as agreed by the Parties, in connection with the start-up of manufacturing operations for the Product for a period of twelve (12) months following commencement of process development by such contract manufacturer or fifteen (15) months of the License Agreement Effective Date, whichever is the earliest to occur. 17 3.3. Duration of and Compensation for Assistance by ASTRAZENECA. 3.3.1. The Parties agree that any assistance to be provided by ASTRAZENECA under Articles 3.1, 3.2 and 3.5.1 shall be given to an extent necessary and reasonable and shall be given only within the first four (4) years of the License Agreement Effective Date and shall not in total exceed [**]. It is acknowledged that ASTRAZENECA may at its discretion carry out any such assistance for up to [**] percent ([**]%) of such [**] by using Third Party consultants. 3.3.2. For any services or assistance performed by ASTRAZENECA pursuant to Article 3.3.1, TMC shall reimburse ASTRAZENECA for ASTRAZENECA's out-of-pocket costs for such activities plus [**] U.S. Dollars ($[**]) [**]. Should ASTRAZENECA use a Third Party consultant(s) for carrying out assistance for a certain FTE Day, or part thereof, then, for the avoidance of doubt, the FTE Day rate now stated shall apply thereon, and the out-of-pocket costs for consultants, if any, as indicated above in this paragraph, shall apply only to costs for consultants which would typically have been incurred should the assistance have been actually carried out by an employee(s) of ASTRAZENECA or its Affiliates. 3.3.3. ASTRAZENECA shall invoice TMC for all assistance during each relevant time period within thirty (30) days of the expiration of each calendar half-year. 3.4. Development of Product. 3.4.1. TMC shall, subject to the obligations stated in this Article 3 and in Article 5, carry out the development work permitted hereunder within its sole discretion and at its own cost and expense. 18 3.4.2. TMC shall use Commercially Reasonable Efforts to develop Product up until the stage of Filing of an NDA in each country of the Territory. 3.5. Regulatory Filings. 3.5.1. TMC shall be responsible for the preparation, submission and prosecution of all Filings of an NDA in each country in which TMC, its Affiliates, sub-licensees or distributors will sell Product. TMC, its Affiliates, sub-licensees or distributors shall be the owner and party of record for all such filings, applications and approvals. ASTRAZENECA agrees to provide assistance requested by TMC as reasonably necessary for preparation and prosecution of such filings and applications in the European Union (it being contemplated that such filings and applications will be done by using the then most efficient centralised procedure for applying for and obtaining multi-country NDAs in the European Union (the "Procedure")), and in the United States. TMC shall reimburse ASTRAZENECA for any costs and expenses incurred in such assistance. TMC shall be responsible for any costs associated with preparation, submission and prosecution of all such Filing of an NDA and NDA Approvals required. 3.5.2. TMC shall, at its own expense, use Commercially Reasonable Efforts in Filing of an NDA and prosecution thereof and in obtaining NDA Approvals in its own name or in the name of its Affiliate(s) in each Major Market and other country of the Territory. 3.5.3. Regarding any country in the European Union where TMC makes a Filing of an NDA, TMC shall for such purpose use the Procedure, unless TMC can clearly establish that Filing of an NDA regarding one or more separate countries within the European Union would be more advantageous to the Product from a regulatory or commercial perspective. 19 3.5.4. TMC shall promptly inform ASTRAZENECA in writing of any Filing of an NDA and of any NDA Approval, and shall in immediate connection therewith provide ASTRAZENECA with a written summary of any such Filing of an NDA and NDA Approval, or with a copy thereof, whichever ASTRAZENECA may elect. 3.5.5. Following NDA Approval in a certain Major Market or other country of the Territory TMC shall use its Commercially Reasonable Efforts to Launch the Product in such Major Market or other country 3.6. Marketing and Sales of Product. 3.6.1. Regarding any country of the Territory where the Product is Launched, TMC shall promptly inform ASTRAZENECA writing of the occurrence of such Launch. 3.6.2. TMC shall, in each Major Market or other country of the Territory where the Product has been Launched, at its own expense, or the expense of its Affiliates, sub-licensees or distributors, use Commercially Reasonable Efforts to market and sell the Product. 3.6.3. For the avoidance of doubt, what is stated regarding the obligations of TMC in this Article 3 or elsewhere in this Agreement shall always be subject to what is stated in Articles 2.2 and 2.3, such that any of TMC's obligations may be performed by one or more of TMC's Affiliates or sublicensees. Further, in accordance with what is stated in Article 2.4, any of TMC's obligations under this Article 3.6 and under Article 3.7 may be performed by one or more of TMC's distributors. 3.7. Specific Time Limits for Performance. Notwithstanding what is stated in Articles 3.4.2, 3.5.2, 3.5.5 and 3.6.2, and without limiting the general performance criteria stated therein, the following performance criteria stated in this Article 3.7 shall apply to the situations herein described. 20 3.7.1. Time Limit for entering into Phase III Clinical Trials. TMC shall no later than [**] have made the first dosing of a patient in a Phase III Clinical Trial regarding the Compound. 3.7.2. Time Limit for Filing of an NDA. (a) TMC shall no later than [**] have made a Filing of an NDA in the United States. (b) TMC shall no later than [**] or [**] after having made a Filing of an NDA in the United States, whichever is the earlier, have made a Filing of an NDA in at least three (3) additional Major Markets, provided, however, that if such Filing of an NDA has been made in the European Union then such one (1) Major Market shall be sufficient. (c) TMC shall no later than [**] or [**] after having made the last Filing of an NDA under Article 3.7.2(b), whichever is the earlier, have made a Filing of an NDA in all Major Markets. 3.7.3. Time Limit for Launch of the Product TMC shall no later than [**] following NDA Approval in any Major Market Launch the Product in the country(ies) concerned. 3.8. Remedy for Failure. 3.8.1. Non-Compliance. Should TMC at any time not comply with the applicable criteria of performance as set forth in Articles 3.4.2, 3.5.2, 3.5.5, 3.6.2, 3.7.1, 3.7.2 or 3.7.3, then TMC shall promptly so notify ASTRAZENECA in writing. 21 (i) In case of non-compliance with the performance criteria set forth in Articles 3.4.2 or 3.7.1 ASTRAZENECA shall have the right, by giving ninety (90) days written notice to TMC, to require the license granted hereunder to terminate regarding the Compound and the Product, subject to Article 3.8.3. (ii) In case of non-compliance with the performance criteria set forth in Articles 3.5.2, 3.5.5, 3.6.2, 3.7.2 (a) or 3.7.3, ASTRAZENECA shall have the right, by giving ninety (90) days written notice to TMC, to require the license granted hereunder to terminate regarding the Compound and the Product in the Major Market or other country concerned, subject to Article 3.8.3. (iii) In case of non-compliance with the performance criteria set forth in Article or 3.7.2 (b) or (c), ASTRAZENECA shall have the right, by giving ninety (90) days written notice to TMC, to require the license granted hereunder to terminate regarding the Compound and the Product in any Major Market(s) other than the Major Market(s) regarding which the performance criteria concerned was fulfilled (and, in the case of non-compliance with Article 3.7.2 (c), the Major Market(s) regarding which such criteria had been fulfilled under Article 3.7.2 (b)), subject to Article 3.8.3. (iv) If ASTRAZENECA makes a request under (i), (ii) or (iii) above, and provided that TMC has not remedied the default concerned within the ninety-days period stated, then, provided that ASTRAZENECA notifies TMC in writing hereof within thirty (30) days upon the expiration of such ninety-days period, the license regarding the Major Market or other country contemplated by such notice for the Compound and the Product shall terminate and what is stated in Article 15.1 shall apply regarding such Major Market or other country subject to Article 3.8.3. 22 3.8.2. Non-compliance regarding the European Union Should TMC have failed to comply with any such criteria of performance referred to under Article 3.8.1, and should such non-compliance relate to the European Union, then TMC shall anyway be considered to have fulfilled such performance criteria provided always that the countries within the European Union to which such non-compliance relate are less than five (5). Notwithstanding what is stated in Article 1.16, European Union for the purpose of this Article 3.8.2 shall constitute only those countries being members of European Union at the License Agreement Effective Date. 3.8.3. Reasonable Delay or Other Non-Compliance. a) Should TMC upon receipt of notice from ASTRAZENECA according to Article 3.8.1 (i) through (iii) be able to show that the delay or other non-compliance in the country(ies) concerned is justifiable from a clinical, scientific or regulatory perspective, then the Parties shall meet and consult whether the situation so occurred could be reasonably solved. Should the Parties, despite such consultations, not be able to find a mutually acceptable solution within three (3) months upon having entered into such consultations, then ASTRAZENECA may terminate the license regarding the country(ies) concerned by giving TMC a notice of same in writing, whereupon the license regarding such country(ies) shall immediately terminate and what is stated in Article 15.1 shall apply regarding such country(ies). b) Should, following the initiation of the consultations pursuant to the first paragraph of this Article 3.8.3, either Party reasonably believe that a solution to the situation arisen may be solved through such consultations, but not within the initial three-month timeframe, then such Party may notify the other Party hereof; and the three-months period provided for in Article 3.8.3 a) shall be extended with a time- 23 period as requested by such Party in such notice but with no more than three (3) months from the date of the notice. 3.9. The remedies stated in Article 3.8 shall be ASTRAZENECA's sole remedy in case of any failure by TMC to comply with what is stated in this Article 3. 4. SUPPLY MATTERS 4.1. Transfer of Bulk Compound to TMC. ASTRAZENECA undertakes to supply to TMC [**] approximately ten (10) kilograms of bulk Compound no later than ninety (90) days after the License Agreement Effective Date. The transport of such entire quantity of bulk Compound shall be entirely at TMC's risk and expense. It is explicitly understood that this quantity of Compound was manufactured by ASTRAZENECA at an earlier date, and was not made for the purpose of the supply now stated, and that ASTRAZENECA gives no guarantee whatsoever as to the characteristics of the Compound or the Compound's fitness for any particular purpose. 4.2. Assignment of Agreement with Fresenius. Unless such Contract has been assigned or terminated in accordance with what is stated in Article 2.8 of the Option Agreement, Astra Hassle AB, subsequently merged into ASTRAZENECA, and Fresenius are at the License Agreement Effective Date parties to a Development and Commercial Supply Contract of 28 December 1995 providing for the supply by Fresenius to ASTRAZENECA of Product. Should Fresenius agree with TMC on the supply of Product to TMC and with ASTRAZENECA to release ASTRAZENECA from any obligation under said Contract, then ASTRAZENECA will, provided always that the release or termination of such Contract or TMC's entering into any such arrangement will not incur any expenses or liability on ASTRAZENECA, agree to assign its rights under the Contract to TMC, or 24 to terminate the Contract with Fresenius, whichever TMC desires and notifies ASTRAZENECA in writing of. It is explicitly understood and agreed by the Parties that ASTRAZENECA shall have no obligations whatsoever to transfer or supply, other than as explicitly provided under Article 4.1, any quantity of Compound or Product to TMC. 4.3. Supply of Compound and Product by TMC. 4.3.1. TMC undertakes to supply ASTRAZENECA's Affiliate in Japan, AstraZeneca KK, at TMC's [**], AstraZeneca KK's entire need of Product for clinical trials, sale, promotion and marketing in Japan, pursuant to the Supply Agreement between TMC and AstraZeneca KK, attached hereto, subject to what is stated in Article 4.3.3, as a Schedule E. 4.3.2. TMC further undertakes to supply ASTRAZENECA, subject to Article 15.1 (i), at TMC's [**] and otherwise under terms to be as consistent as possible with those under the Supply Agreement, ASTRAZENECA's entire need of Product for clinical trials, sale, promotion and marketing in any country where the license granted under Article 2 has been terminated pursuant to Article 3.8; provided always that such TMC's obligation shall not become effective unless and until TMC has Launched the Product in at least with one (1) country of the Territory. 4.3.3. The Supply Agreement may not have been entered into on the License Agreement Effective Date due to the Parties' desire to expeditiously enter into the Option Agreement, not delaying such procedure by awaiting the completion of the Supply Agreement. The parties acknowledge the substantial need for ASTRAZENECA to rely on TMC for its supply of the Product for the countries mentioned in Articles 4.3.1 and 4.3.2 and that 25 entering into the Supply Agreement is a substantial prerequisite to ASTRAZENECA for entering into the Option Agreement. Should regardless hereof the Supply Agreement not have been concluded within six (6) months of the License Agreement Effective Date for other reasons than ASTRAZENECA's lack of good faith in conducting such negotiations or unnecessary delays caused by ASTRAZENECA, then ASTRAZENECA shall have the right to terminate this Agreement forthwith by giving written notice to TMC. Should ASTRAZENECA have failed, however, to provide to TMC in accordance with what is stated in Article 2.10 of the Option Agreement a first draft of the Supply Agreement, then, notwithstanding what is stated in the first paragraph of this Article 4.3.3, ASTRAZENECA shall not have the right to terminate this License Agreement. 5. EXCHANGE OF INFORMATION 5.1. Obligation of TMC to Share Information. In addition to the obligations specifically requiring TMC to inform ASTRAZENECA regarding particular events, TMC undertakes to keep ASTRAZENECA informed about the progress of the development work regarding the Compound hereunder. For this purpose: 5.1.1. the Parties will, up until the date when Filing of an NDA has been made in the last Major Market, meet at least once a year to review TMC's progress and efforts in the development work contemplated herein. Such meeting will take place on a location to be agreed by the Parties, or, should the Parties not be able to agree, alternately with each Party at a site to be determined by the Party hosting the meeting. In advance of such meeting, TMC will provide ASTRAZENECA a reasonable written summary of such development work, including, without limitation, summaries of protocol 26 designs of any clinical trials conducted or to be conducted, any changes to same and any Results developed during the period concerned; 5.1.2. TMC shall further in advance of such meeting provide ASTRAZENECA in writing a timetable for the expected Filings of an NDA, expected NDA Approvals and expected Launches during the one-year period, or other shorter applicable period, to come. In connection therewith TMC shall provide to ASTRAZENECA in writing, for the same period of time, a non-binding marketing plan and sales forecast for the Product in any Major Market where the Product by that time has been Launched or is expected to be Launched during the applicable period immediately to come; 5.1.3. TMC shall notify ASTRAZENECA forthwith and provide particulars of any halt or substantial delay in any development program or clinical trial, any obstacles in the Product reaching the market and any substantial changes anticipated in the sales potential of the Product; 5.1.4. TMC shall notify ASTRAZENECA forthwith regarding, and provide copies of, any correspondence with the regulatory authorities in the Territory that could reasonably be of any significance regarding the possibility, time frame or scope of any Filing of an NDA or any NDA Approval by ASTRAZENECA in Japan or which may otherwise relate to such Filing of an NDA or NDA Approval. 5.2. Obligation of AstraZeneca to Share Information. ASTRAZENECA shall keep TMC informed about the progress of the clinical trials, sale, promotion and marketing of Product in any country in which ASTRAZENECA has rights to sell Product. For this purpose: 5.2.1. ASTRAZENECA shall at least once each year provide TMC in writing a timetable for the expected Filings of an NDA, expected NDA Approvals and expected Launches during the one-year period to come. 27 5.2.2. ASTRAZENECA shall notify TMC forthwith regarding, and provide copies of, any correspondence with the regulatory authorities in any Major Market that could reasonably be of any significance regarding the possibility, time frame or scope of any Filing of an NDA or any NDA Approval by TMC in any country for which TMC has yet to file an NDA or receive NDA Approval. 6. CONSIDERATION In consideration of the rights granted hereunder TMC shall pay to ASTRAZENECA the remuneration stated in this Article 6. 6.1. Milestone Payments. 6.1.1. Within thirty (30) days of the License Agreement Effective Date TMC shall pay to ASTRAZENECA the amount of One million U.S. Dollars (U.S. $1,000,000). 6.1.2. Within thirty (30) days of the date of TMC's Filing of an NDA in the first Major Market, TMC shall pay to ASTRAZENECA the amount of [**] U.S. Dollars (U.S. $[**]). 6.1.3. Within thirty (30) days of TMC's receipt of NDA Approval in the first Major Market TMC shall pay to ASTRAZENECA the amount of [**] U.S. Dollars (U.S. $[**]). 6.1.4. Within thirty (30) days of the TMC's receipt of NDA Approval in the second Major Market, TMC shall pay to ASTRAZENECA the amount of [**] U.S. Dollars (U.S. $[**]). 6.1.5. Within thirty (30) days of the TMC's receipt of NDA Approval in the third Major Market, TMC shall pay to ASTRAZENECA a final milestone payment in the amount of [**] U.S. Dollars (U.S. $[**]). 28 6.2. Royalty Rate. 6.2.1. Following Launch of the Product, on a country-by-country basis for the period set out in Article 6.4 TMC shall pay to ASTRAZENECA, subject to what is stated in Article 6.2.2, a running royalty on the annual Net Sales of the Product as follows:
Annual Net Sales Royalty Rate ---------------- ------------ [**] [**]
29 The relevant royalty rate so stated shall apply to the amount of annual Net Sales within the applicable layer only. For convenience of example only and without limiting the above, the royalty rate of [**]% shall apply to the amount of annual Net Sales under $[**] and should the annual Net Sales exceed $[**] then the royalty rate of [**]% shall apply only to the amount of annual Net Sales exceeding $[**] (and up to $[**]). 6.2.2. Notwithstanding the royalty rates set forth in Article 6.2.1, on the Net Sales of the Product during the time period starting on the License Agreement Effective Date and ending on December 31, 2007, the running royalty rate shall be reduced to [**] percent ([**]%) of the rate otherwise stated in Article 6.2.1. 6.2.3. For the purpose of Article 6.2.1 the term "annual" shall refer to calendar years, provided, however, that for the purpose of determining what royalty rates to apply during the first or last calendar year of the royalty payment period pursuant to Article 6.4, which parts may not constitute a full calendar year, the following shall apply. a) The applicable royalty rate under each of items (a) through (i) of Article 6.1.1, subject to what is stated in Article 6.2.2, shall apply to the Net Sales exceeding the amount "A" in the following formula. NM TA x ---- = A 12 where "NM" is the "number of full months" of sales attracting royalty hereunder, regardless of the number of countries in which sales are being made, during the calendar year concerned; and where "TA" is the applicable "threshold amount" under the respective items (a) through (i) of Article 6.2.1. 30 b) For convenience of example only and without limiting the above standing, the following calculation shows the application of the provision stated. If Launch occurs in the first country three months before the end of the calendar year, the formula will read, regarding the royalty rate of [**]% under 6.2.1(a): $[**] x 3/12 = $[**]. The royalty rate of [**]% under 6.2.1(b) will then become applicable on any Net Sales exceeding $[**] (and up to $[**]) and a royalty rate of [**]% will be applicable on any Net Sales up to and including $[**]. Notwithstanding the foregoing, as this example is with respect to sales in the first country in which Launch occurs, the above stated royalty rates may be reduced by [**] percent ([**]%) pursuant to Article 6.2.2. 6.3. Minimum Royalty. Notwithstanding what is stated in Article 6.2, during the second through fourth full calendar years following Launch in the first Major Market the aggregate annual royalty amount due by TMC to ASTRAZENECA for sales of the Product shall, regardless of the actual Net Sales amount accrued during such calendar year, not go below the following amounts during the years specified. 6.3.1. Second full calendar year following Launch: [**] U.S. Dollars ($[**]); 6.3.2. Third full calendar year following Launch: [**] U.S. Dollars ($[**]) 6.3.3. Fourth full calendar year following Launch: [**] U.S. Dollars ($[**]) 6.3.4. Should the Net Sales by TMC for any calendar year not generate the relevant royalty amount indicated under this Article 6.3, then TMC shall pay 31 the difference between the minimum royalty amount stated and the amount actually generated within thirty (30) days after the date when the royalty payment for the last full quarter of the calendar year concerned is due according to Article 6.6.1. 6.4. Duration of Royalty Payments. Royalties under Article 6.2 shall be payable on a country by country basis for the longer of : a) the life of ASTRAZENECA Patent Rights which are necessary to continue to manufacture, use or sell the Product in such country; or b) a period of ten (10) years from Launch in that country (provided always that in the case of a country within the European Economic Area such ten (10) years period shall run from the date of Launch anywhere in the European Economic Area); 6.5. ASTRAZENECA Trademark Royalty. Unless the license to the ASTRAZENECA Trademark has been reverted pursuant to Article 9.1, TMC shall, following expiration of the period indicated under Article 6.4 on a country-by-country basis, and for as long as TMC sells the Product in any country in the Territory, in consideration of the exclusive license in the Territory to use the ASTRAZENECA Trademark in connection with the sales and marketing of the Product pay to ASTRAZENECA an annual running royalty on the Net Sales of the Product of [**] percent ([**]%). 6.6. Reports. 6.6.1. TMC shall deliver to ASTRAZENECA within sixty (60) days after the end of each calendar quarter ending March 31, June 30, September 30 and December 31, a written report showing its computation of the remuneration due to ASTRAZENECA under this Agreement during such calendar quarter including (i) the quantity of the Product sold by or on behalf of TMC during such calendar quarter; and (ii) the total remuneration due in respect thereof and at the same time make the payment of the remuneration due. Any 32 payment to be made hereunder shall be made in U.S. Dollars. Each such report mentioned in this Article 6.6.1 shall include the rates of exchange used for conversion to U.S. Dollars from the currency in which such sales were made. 6.6.2. In the event that ASTRAZENECA, its Affiliates or sublicenses sells Product pursuant to Article 2.7.3, then ASTRAZENECA shall deliver to TMC within sixty (60) days after the end of each calendar quarter ending March 31, June 30, September 30 and December 31, a written report showing its computation of the remuneration due to TMC under this Agreement during such calendar quarter including (i) the quantity of the Product sold by or on behalf of ASTRAZENECA during such calendar quarter; and (ii) the total remuneration due in respect thereof and at the same time make the payment of the remuneration due. Any payment to be made hereunder shall be made in U.S. Dollars. Each such report mentioned in this Article 6.6.2 shall include the rates of exchange used for conversion to U.S. Dollars from the currency in which such sales were made. 6.7. Taxes. 6.7.1. The payments to be made hereunder by either Party shall be net payments i.e. without deduction of any bank or transfer charges. 6.7.2. ASTRAZENECA shall pay any and all taxes levied on account of, or measured exclusively by, all payments it receives under this Agreement, including without limitation Swedish Value Added Tax ("mervardesskatt"). Amounts payable from TMC to ASTRAZENECA under this Agreement shall be paid by TMC without deduction for any tax, provided however that TMC may withhold income tax as required by internal laws of any applicable jurisdiction. In the case of such withholding being applicable, ASTRAZENECA may apply for the reduction of rate of withholding tax (including under the U.S./Sweden tax treaty) with the assistance of TMC and provided evidence of acceptance of this claim is submitted to TMC, 33 TMC shall apply this rate accordingly. If applicable laws require that taxes be withheld, TMC will deduct those taxes from the remittable payments, make timely payment of the taxes to the proper taxing authority and send proof of such payment to ASTRAZENECA within sixty (60) days following that payment. 6.7.3. TMC shall pay any and all taxes levied on account of, or measured exclusively by, all payments it receives under this Agreement. Amounts payable from ASTRAZENECA to TMC under this Agreement shall be paid by ASTRAZENECA without deduction for any tax, provided however that ASTRAZENECA may withhold income tax as required by internal laws of any applicable jurisdiction. In the case of such withholding being applicable, TMC may apply for the reduction of rate of withholding tax (including under the U.S./Sweden tax treaty) with the assistance of ASTRAZENECA and provided evidence of acceptance of this claim is submitted to ASTRAZENECA, ASTRAZENECA shall apply this rate accordingly. If applicable laws require that taxes be withheld, ASTRAZENECA will deduct those taxes from the remittable payments, make timely payment of the taxes to the proper taxing authority and send proof of such payment to TMC within sixty (60) days following that payment. 6.8. Exchange Rates. For the purpose hereof, the rate of exchange to be used for conversion hereunder to U.S. Dollars shall be the average rate of exchange for the period to which the payment relates, as published by the Wall Street Journal. 6.9. Books and Audit. Each Party shall keep complete and accurate books and records with respect to its sale of the Product and remuneration payable hereunder. Each Party shall have the right to have such pertinent books and records of the other Party inspected and examined once each calendar year for the purpose of determining the accuracy of payments made hereunder. Such inspection and examination shall be conducted by an independent, 34 certified, public accountant selected by the Party requesting such examination. Such accountant shall not disclose to such Party any information except for information necessary to verify the accuracy of the records and payments made pursuant to this Agreement. The charges of the independent, certified, public accountant shall be paid by the Party requesting examination except if the payments pursuant to this Agreement have been understated by more than five percent (5%) in which case the Party who has underpaid will bear the cost and pay the shortfall in payment pursuant to this Agreement with interest to the other Party. Should instead the payments have been overstated the Party who has overpaid may deduct any such amount from the royalty payments due hereunder until such amount has been recovered by such Party. 6.10. Wire Transfer Instructions. 6.10.1. Unless otherwise instructed by ASTRAZENECA, all payments by TMC hereunder shall be made from the United States by wire transfer in the requisite amount to the following account of ASTRAZENECA. Bank Name: [**] Account No: [**] Swift: [**] 6.10.2. Unless otherwise instructed by TMC, all payments by ASTRAZENECA hereunder shall be made from Sweden by wire transfer in the requisite amount to the following account of TMC. Bank Name: [**] Account No: [**] Bank Code: [**] 35 6.11. Interest. If any sum payable pursuant to this Agreement shall not have been paid to a Party by the due date then (without prejudice to any other claim or remedy of such Party) the Party owing such sum shall pay interest thereon to the other Party at an annual rate of LIBOR + three percent (3%) from time to time published in respect of the period starting on the due date of payment and ending on the actual date of payment. "LIBOR" shall mean the thirty (30) days US dollar BBA London Interbank Offered Rate as published by Reuter. 7. INTELLECTUAL PROPERTY - PROSECUTION AND MAINTENANCE 7.1. Any and all ASTRAZENECA IP vested in ASTRAZENECA shall as between ASTRAZENECA and TMC remain vested in ASTRAZENECA. 7.2. Any and all TMC IP vested in TMC shall as between TMC and ASTRAZENECA remain vested in TMC. 7.3. ASTRAZENECA shall, during the term of this Agreement be responsible for the filing, prosecution and maintenance of the ASTRAZENECA Patent Rights and the ASTRAZENECA Trademark in the Territory. Should registration of the ASTRAZENECA Trademark be necessary or appropriate in any country, then ASTRAZENECA shall be responsible for obtaining such registration. TMC shall reimburse ASTRAZENECA for any out-of-pocket expenses (including fees to outside counsel and consultants) incurred by ASTRAZENECA in relation to any action taken by ASTRAZENECA pursuant to this Article 7.3. 7.4. TMC shall have the right to give comments and recommendations as to the overall strategy regarding the filing, prosecution and maintenance of the 36 ASTRAZENECA Patent Rights and the ASTRAZENECA Trademark; and before taking any significant step in the filing, prosecution or maintenance of the ASTRAZENECA Patent Rights or the ASTRAZENECA Trademark, ASTRAZENECA shall allow TMC to comment on the action proposed to be taken and ASTRAZENECA shall consider any such comments. 7.5. In the event that ASTRAZENECA should decide to permit any pending patent application or any patent included in the ASTRAZENECA Patent Rights to lapse by any action, inaction or failure to take any action or to pay any fee when due, ASTRAZENECA shall promptly inform TMC of such decision, but no later than fifteen (15) days prior to such action, inaction or failure to pay, provided that such period is available to ASTRAZENECA, so that TMC might, for the avoidance of doubt at TMC's expense, seek such patent protection or prevent any such lapse. 7.6. ASTRAZENECA shall not be liable to TMC in contract, tort, negligence, breach of statutory duty or otherwise for any economic loss or other loss of turnover, profits, savings, business or goodwill or any loss, damage, costs or expenses of any nature whatsoever incurred or suffered by TMC because of ASTRAZENECA's actions pursuant to or as a consequence of this Article 7. PATENT TERM EXTENSIONS 7.7. Should ASTRAZENECA not be able to lawfully apply for patent term extensions, including, but not limited to, Supplementary Protection Certificates, relating to the ASTRAZENECA Patent Rights in the Territory in its own name, or should ASTRAZENECA otherwise require, TMC shall co-operate with ASTRAZENECA in any issue regarding the gaining of such patent term extension by assisting ASTRAZENECA with any actions or documents needed for such purpose. 37 Should in any country in the Territory any decision have to be made as to what product, claim or otherwise to apply for such patent term extension regarding, then ASTRAZENECA shall have the right to make such decision at its own discretion. 7.8. Rights to the Results. Any patents and other intellectual property rights, information, ideas, knowledge, data or know-how relating solely to the Compound, and/or the Product developed during the term of this Agreement (hereinafter referred to as "Result(s)") shall as between TMC and ASTRAZENECA be TMC IP and the sole property of TMC. TMC shall have the sole management of, and shall bear the cost of, any Results. ASTRAZENECA shall be given the reasonable opportunity to comment on important aspects of the prosecution of any patent applications, and shall use its reasonable endeavours to assist TMC in the prosecution of any patent applications. 8. CLAIMS REGARDING INFRINGEMENT AND INVALIDITY 8.1. Notification of Claim. If a Third Party notifies ASTRAZENECA or TMC, or their respective Affiliates or sub-licensees, that any act by TMC, or its Affiliates or sub-licensees, utilizing the ASTRAZENECA IP allegedly infringes in the Territory any Patent Rights or other intellectual property rights owned by or licensed to the Third Party, ASTRAZENECA or TMC shall promptly notify the other in writing. 8.2. Defence of Claimed Infringement. 8.2.1. ASTRAZENECA shall have no obligation to defend or settle any claim by a Third Party that the manufacture, sale or other use of the Product by TMC resulting from the use or exercise of the license granted hereunder under the ASTRAZENECA IP infringes any Patent Rights or other intellectual 38 property rights owned by or licensed to a Third Party, subject to the provisions of Article 10. 8.2.2. If a Third Party makes an infringement claim or files an infringement action against ASTRAZENECA, its Affiliates or sub-licensees, or TMC, its Affiliates or sub-licensees, arising out of TMC's, its Affiliates' or sub-licensees' manufacture, sale or other use of the Product in the Territory, or if a Third Party challenges any of the ASTRAZENECA IP, then TMC shall defend or settle the claim or action at its expense, subject to the provisions of Article 10. 8.2.3. ASTRAZENECA may join such proceedings mentioned under sub-section 8.2.2 voluntarily, subject always to TMC's, its Affiliates' or sub-licensees', right to decide the conduct over such litigation. Any such joining of the proceedings shall be at ASTRAZENECA's cost and expense. ASTRAZENECA shall for such purpose have the right to independently retain legal counsel and consultants, at its sole cost and expense. 8.2.4. It is understood between the Parties that any proposed settlement will be subject to ASTRAZENECA's prior written approval, which approval shall not be unreasonably withheld. Such approval might be withheld primarily on the grounds that ASTRAZENECA reasonably determines that the settlement proposed is overly burdensome, financially or strategically, that ASTRAZENECA determines that TMC's conduct of the defence has a reasonable chance of succeeding or that ASTRAZENECA intends to continue such defence itself. Should ASTRAZENECA withhold such approval, then ASTRAZENECA shall have the right, but not the obligation (other than in the case that ASTRAZENECA has announced to TMC its intention to continue such defence itself), to continue the defence of the claim or action at its own expense. In such case TMC, its Affiliates or sub-licensees shall, at ASTRAZENECA's request and at ASTRAZENECA's expense for TMC's, 39 its Affiliates' or sub-licensees' costs and expenses, assist in the prosecution of such action, including, but not limited to, consenting to being joined in such action as a voluntary plaintiff. 8.2.5. Should TMC reasonably believe that the Third Party rights contemplated by Article 8.2.1 are valid in a certain country(ies) and that infringement is likely to be occurring in such country(ies), TMC may seek and enter into a licence thereto from such Third Party on appropriate commercial terms, whereby any remuneration and any costs and expenses (including but not limited to reasonable external legal costs) for such license shall be shared equally between TMC and ASTRAZENECA according to the following. TMC may deduct an amount equivalent to [**] percent ([**]%) of TMC's payments to such Third Party pursuant to such arrangement as indicated in the first paragraph of this Article 8.2.5 from the royalty payments to be made by TMC to ASTRAZENECA on the Net Sales in the country concerned pursuant to Article 6.2 to cover ASTRAZENECA's obligation to carry [**] percent ([**]%) of such payments and costs. This deduction shall be subject to the proviso that the royalty payments due to ASTRAZENECA shall not be reduced in total by more than [**] percent ([**]%) in any calendar year, and any residue not offset may be carried forward by TMC until such time as it has recovered ASTRAZENECA's [**] per cent ([**]%) share of such costs and expenses, or until the royalty payment obligations of TMC hereunder expire, whichever is the earlier. 8.3. Third Party Infringement. If a Third Party shall, in the reasonable opinion of either Party, infringe any ASTRAZENECA Patent Rights or ASTRAZENECA Trademark in the Territory, then the Party having such opinion shall promptly notify the other Party. 8.3.1. Further, each Party shall within five (5) working days or as soon as reasonably possible thereafter advise the other Party of receipt of any notice of: 40 a) any certification filed under the U.S. "Drug Price Competition and Patent Term Restoration Act of 1984" ("ANDA Act"), claiming that any ASTRAZENECA Patent Rights are invalid or claiming that the ASTRAZENECA Patent Rights will not be infringed by the manufacture, use or sale of a product for which an application under the ANDA Act is filed or; b) any equivalent or similar certification or notice in any other jurisdiction. 8.3.2. TMC, its Affiliates or sub-licensees shall have the initial sole right to commence an action for infringement in the Territory against the Third Party, in its own name, together with the right to enforce and collect any judgement thereon. ASTRAZENECA may join such proceedings voluntarily, subject always to TMC's, its Affiliates' or sub-licensees' right to decide the conduct over such litigation. Any such joining of the proceedings shall be at ASTRAZENECA's cost and expense. ASTRAZENECA shall for such purpose have the right to independently retain legal counsel and consultants, at its sole cost and expense. 8.3.3. Any monetary recovery (whether by settlement or judgement) in connection with an infringement action commenced by TMC, its Affiliates or sub-licensees shall be applied first to reimburse TMC, its Affiliates or sub-licensees for their out-of-pocket expenses (including reasonable attorneys fees) incurred in prosecuting such action and the expenses of ASTRAZENECA borne by TMC hereunder. Any balance remaining shall be allocated among ASTRAZENECA and TMC in a manner reasonably calculated to correspond to the distribution of profits, in accordance with what would normally be provided for under this Agreement, on the sales of Product to which such recovery pertains. 8.3.4. Should neither TMC, nor its Affiliates or sub-licensees, take appropriate and diligent action with respect to any such infringement or challenge as contemplated in this Article 8.3 within forty-five (45) days, or, in the case of 41 a certification filed under the ANDA Act or similar certification or notice as contemplated under Article 8.3.1, within twenty (20) days, after receiving notice of any infringement or possible infringement or challenge, then ASTRAZENECA shall have the right, but not the obligation, to take such action, at its own expense, in its own name, and the right to enforce and collect any judgement thereon. a) Should ASTRAZENECA elect to take such action then TMC, its Affiliates or sub-licensees, shall, at ASTRAZENECA's request and at ASTRAZENECA's expense for TMC's, its Affiliates' or sub-licensees', costs and expenses, assist in the prosecution of such action, including, but not limited to, consenting to being joined in such action as a voluntary plaintiff. b) If the recovery of such action as contemplated in this Article 8.3.4 exceeds ASTRAZENECA's out-of-pocket expenses (including reasonable attorneys fees) for prosecuting the action, then such excess recovery shall be shared by the Parties on a [**] basis. 8.3.5. ASTRAZENECA, its Affiliates or sub-licensees shall have the sole right to commence an action for infringement of the ASTRAZENECA IP in Japan or in any other country in which the license granted to TMC hereunder has reverted to ASTRAZENECA pursuant to Article 3.8 against the Third Party, in its own name, together with the right to enforce and collect any judgement thereon. TMC may join such proceedings voluntarily, subject always to ASTRAZENECA's, its Affiliates' or sub-licensees' right to decide the conduct over such litigation. Any such joining of the proceedings shall be at TMC's cost and expense. TMC shall for such purpose have the right to independently retain legal counsel and consultants, at its sole cost and expense. Any monetary recovery (whether by settlement or judgement) in connection with an infringement action commenced by ASTRAZENECA shall be retained by ASTRAZENECA. 42 9. TRADEMARK 9.1. Should TMC not within twelve (12) months of the License Agreement Effective Date notify ASTRAZENECA that TMC wishes to maintain its exclusive license to the ASTRAZENECA Trademark as granted under Article 2.1, or should TMC within such twelve-months period notify ASTRAZENECA in writing that TMC does not wish to maintain such exclusive license to the ASTRAZENECA Trademark, then upon the expiration of such twelve-months period or the date of such written notice, whichever is the earlier, (a) the exclusive license insofar as it relates to the ASTRAZENECA Trademark under Article 2.1 shall immediately cease and the ASTRAZENECA Trademark shall cease to be a part of the ASTRAZENECA IP for all purposes of this Agreement; (b) all rights so granted in the ASTRAZENECA Trademark to TMC shall revert to ASTRAZENECA; (c) TMC shall immediately return to ASTRAZENECA any ASTRAZENECA Know-How relating to the ASTRAZENECA Trademark and grant to ASTRAZENECA a non-exclusive, perpetual, remuneration-free and world-wide license to use any Know-How developed by TMC relating to the ASTRAZENECA Trademark for the purpose of commercialising the Product. Should the rights have been so reverted, then TMC shall select a trademark of its own, not being confusingly similar to the ASTRAZENECA Trademark, to use in connection with the sales, marketing and distribution of the Product and shall be the owner and party of record of such trademark (the "TMC Trademark"). TMC shall have sole responsibility for clearance and registration of said TMC Trademark. TMC shall be responsible for all 43 decisions and costs relating to selection, clearance, registration, defence and maintenance of the TMC Trademark. 9.2. Utilisation of the ASTRAZENECA Trademark 9.2.1. Unless the license to the ASTRAZENECA Trademark has been reverted pursuant to Article 9.1, TMC shall, as soon as reasonably possible upon completion of the item concerned, but no later than one (1) year prior to the estimated Launch in each country, notify ASTRAZENECA in a clearly visible manner how TMC intends to utilise the ASTRAZENECA Trademark in connection with the marketing, sales and distribution of the Product in the country concerned, including but not limited to showing the shape, size and colour of the intended logo containing the ASTRAZENECA Trademark, the intended packages of the Product and the intended promotional materials regarding the Product in such country. TMC may not utilise the ASTRAZENECA Trademark in any context without ASTRAZENECA's prior written approval, such approval not to be unreasonably withheld. 9.2.2. Should ASTRAZENECA not approve such TMC's proposal, or part thereof, under Article 9.2.1, then ASTRAZENECA shall submit to TMC a proposal, within sixty (60) days of having received TMC's proposal, on how to utilise the ASTRAZENECA Trademark in this regard. 9.2.3. Should TMC not accept ASTRAZENECA's proposal, or part thereof, provided under Article 9.2.2, then TMC may notify ASTRAZENECA of a new proposal on the utilisation of the ASTRAZENECA Trademark, or such part thereof, in such way as set forth in Article 9.2.1; such proposal to be noticeably different from all previous proposals. Should ASTRAZENECA not approve such proposal, then what is stated in Article 9.2.2. shall apply. 9.2.4. Should ASTRAZENECA not within forty-five (45) days of such notice as stated in Article 9.2.1 have notified TMC that it objects all or in part to such 44 TMC's proposal, or should ASTRAZENECA after having not approved a proposal, or part thereof, fail to present a proposal as stated under Article 9.2.2, then the proposal presented by TMC shall be considered to have been approved by ASTRAZENECA. 9.3. TMC shall use the ASTRAZENECA Trademark in accordance with applicable laws in any country where TMC markets, sells or distributes the Product utilising the ASTRAZENECA Trademark. Unless the rights to the ASTRAZENECA Trademark have been reverted pursuant to Article 9.1, TMC undertakes to use the ASTRAZENECA Trademark at any time when the Product is sold, marketed or distributed in the Territory and not to use any trademark other than the ASTRAZENECA Trademark in connection with the sales, marketing and distribution of the Product. TMC further undertakes not to use any trademark being confusingly similar to the ASTRAZENECA Trademark in connection with marketing, sales and distribution of any other product. 9.4. Should in any country of the Territory TMC by legal, regulatory or similar reasons be prevented from using the ASTRAZENECA Trademark or should usage of the ASTRAZENECA Trademark in connection with the sales, marketing and distribution of the Product prove to be commercially unreasonable in such country because of such legal, regulatory or similar reasons, then TMC shall immediately notify ASTRAZENECA hereof in writing and TMC shall not have the obligation to use the ASTRAZENECA Trademark for the marketing, sales and distribution of the Product in the country concerned. The Parties shall in such case meet and in good faith endeavour to find a new trademark as similar to the ASTRAZENECA Trademark as possible. Such new trademark selected for the country concerned shall for all purposes of this Agreement be considered an ASTRAZENECA Trademark. TMC shall carry all costs and expenses for the development and creation of such new trademark, provided always that should such costs be 45 disproportionately high in relation primarily to the estimated value of the Product then TMC may offer ASTRAZENECA to carry all or part of such costs, or, should ASTRAZENECA notify TMC in writing that it declines to do so, notify ASTRAZENECA that it does not wish to maintain the license to the ASTRAZENECA Trademark for the country concerned; whereupon what is stated in Articles 9.1. (a) through (c) shall apply regarding such country. 9.5. TMC undertakes, should ASTRAZENECA so require in writing, to mention on all packages, package inserts and promotional and advertising materials for the Product "Licensed from AstraZeneca AB" or the equivalent wording in the major language(s) of the country in which the Product is sold, or, should legal, regulatory or similar reasons prevent the use of that wording, such other wording as close as possible to the wording herein stated. 10. INDEMNITY 10.1. Indemnity by TMC. 10.1.1. TMC shall be responsible for and shall indemnify ASTRAZENECA, its Affiliates and its and its Affiliates' directors, officers, other employees, agents and consultants (collectively the "ASTRAZENECA Indemnified Party") against any and all liability, loss, damage, cost and expense (including legal costs) incurred or suffered by the ASTRAZENECA Indemnified Party as a result of any claim brought against an ASTRAZENECA Indemnified Party by a Third Party (i) arising out of the testing, manufacture, sale, use or promotion by TMC, its Affiliates or sub-licensees of any Compound or Product hereunder; (ii) arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty or strict liability) based on Compounds or Products developed by TMC hereunder; or (iii) arising out of any other activities to be carried out by TMC, its Affiliates or sub-licensees pursuant to this 46 Agreement to the extent not included in (i) and (ii) above, except where such liability, loss, damage, cost and expense has been incurred or suffered as a result of a material breach of warranty or representation of ASTRAZENECA set out in Article 13 or by gross negligence or misconduct on the part of ASTRAZENECA. 10.1.2. An ASTRAZENECA Indemnified Party that intends to claim indemnification under Article 10.1.1 shall notify TMC promptly of any such liability, loss, damage, cost and expense and permit TMC to control the defence and disposition thereof and further agrees to reasonably cooperate at TMC's expense with TMC in the handling thereof. The ASTRAZENECA Indemnified Party shall not compromise or settle such claim. TMC agrees to keep ASTRAZENECA informed of the progress in the defence and disputation of such claims and to consult with ASTRAZENECA with regard to any settlement thereof which TMC proposes to enter into and will provide ASTRAZENECA with suitable information regarding the same. 10.1.3. TMC will maintain appropriate liability insurance against such product and other liability as contemplated under Article 10.1.1 at levels appropriate for products and activities of the relevant type. 10.2. Indemnity by ASTRAZENECA. 10.2.1. ASTRAZENECA shall be responsible for and shall indemnify TMC, its Affiliates and its and its Affiliates' directors, officers, other employees, agents and consultants (collectively the "TMC Indemnified Party") against any and all liability, loss, damage, cost and expense (including legal costs) incurred or suffered by the TMC Indemnified Party as a result of any claim brought against the TMC Indemnified Party by a Third Party (i) arising out of the testing, manufacture, sale, use or promotion by ASTRAZENECA, its Affiliates or sub-licensees, of any Compound or Product hereunder; (ii) arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty or strict liability) based on Compounds 47 or Products sold by ASTRAZENECA hereunder; or (iii) which arises as a result of a breach of a warranty or representation of ASTRAZENECA set out in Article 13, except where such liability, loss, damage, cost and expense has been incurred or suffered as a result of a material breach of TMC's obligations under this Agreement or by gross negligence or misconduct on the part of TMC. 10.2.2. A TMC Indemnified Party that intends to claim indemnification under Article 10.2.1 shall notify ASTRAZENECA promptly of any such liability, loss, damage, cost and expense and permit ASTRAZENECA to control the defence and disposition thereof and further agrees to reasonably cooperate at ASTRAZENECA's expense with ASTRAZENECA in the handling thereof. The TMC Indemnified Party shall not compromise or settle such claim. ASTRAZENECA agrees to keep TMC informed of the progress in the defence and disputation of such claims and to consult with TMC with regard to any settlement thereof which ASTRAZENECA proposes to enter into and will provide TMC with suitable information regarding the same. 10.2.3. ASTRAZENECA will either maintain appropriate liability insurance or be self insured against such liability as contemplated under Article 10.2.1. 11. CONFIDENTIALITY 11.1. Confidential Information. At all times during the term of this Agreement and for a period of five (5) years following termination or expiration hereof, each Party shall, and shall cause its officers, directors, employees and agents to, keep confidential and not publish or otherwise disclose and not use, directly or indirectly, for any purpose, any Confidential Information provided to it by the other Party, provided, that, each Party may disclose and use the Confidential Information of the other Party to the extent such disclosure or use is expressly permitted by the terms of this Agreement, 48 including without limitation those purposes set forth in Article 11.2, or is otherwise reasonably necessary for the performance of this Agreement. 11.2. Permitted Use and Disclosure. The Receiving Party may use and/or disclose Confidential Information to the extent that such disclosure is: 11.2.1. made in response to a valid order of a court of competent jurisdiction or other competent authority provided however that the Receiving Party shall first have given notice to the Disclosing Party and given the Disclosing Party a reasonable opportunity to obtain a protective order requiring that the Confidential Information and documents that are the subject of such order be held in confidence by such court or authority or, if disclosed, be used only for the purpose for which the order was issued; and provided further that if a protective order is not obtained, the Confidential Information disclosed in response to such court or governmental order shall be limited to that information which is legally required to be disclosed in response to such court or governmental order; 11.2.2. made by the Receiving Party to a regulatory authority as required in connection with any Filing of an NDA; provided, however, that reasonable measures will be taken to assure confidential treatment of such information; 11.2.3. made by the Receiving Party to a patent authority as required in connection with any filing or application for Patent Rights; or 11.2.4. made by the Receiving Party to Third Parties as may be necessary or useful in connection with the development, manufacturing, marketing, use and sale of the Compound or the Product as contemplated by this Agreement, including subcontracting, sublicensing and distribution transactions in connection therewith, provided that any such Third Party has undertaken confidentiality obligation with respect to the Confidential Information disclosed by the Receiving Party to it and the results of any such activities. Regardless hereof, TMC may not disclose to such Third Party which 49 compound(s), other than the Compound, that [**] may be used as a manufacturing starting material, or intermediate, for. 11.3. Release from Restrictions. Notwithstanding the foregoing, Confidential Information shall not include any information that, as determined by competent written proof: 11.3.1. is or hereafter becomes part of the public domain by public use, publication, general knowledge or the like through no wrongful act, fault or negligence on the part of the Receiving Party; 11.3.2. can be demonstrated by documentation or other competent proof to have been in the Receiving Party's possession prior to disclosure by the Disclosing Party; 11.3.3. is subsequently received by the Receiving Party from a Third Party who is not bound by any obligation of confidentiality with respect to the said information; 11.3.4. is generally made available to Third Parties by the Disclosing Party without restriction on disclosure; or 11.3.5. is independently developed by or for the Receiving Party without reference to the Disclosing Party's Confidential Information. 12. ADVERSE EVENTS 12.1. Reporting of Adverse Events. 12.1.1. TMC shall be fully responsible for reporting to the relevant regulatory or other competent authorities in the Territory any Adverse Event(s) which are or might be attributed to the use or application of the Compound or the Product. At ASTRAZENECA's request in writing TMC shall inform 50 ASTRAZENECA of any Adverse Event in the country(ies) contemplated, and during the time period contemplated, by such notice. 12.1.2. ASTRAZENECA shall be fully responsible for reporting to the relevant regulatory or other competent authorities in any country outside the Territory or for which the license to TMC hereunder has been terminated any Adverse Event(s) which are or might be attributed to the use or application of the Compound or the Product. At TMC's request in writing ASTRAZENECA shall inform TMC of any Adverse Event in the country(ies) contemplated, and during the time period contemplated, by such notice. For the avoidance of doubt ASTRAZENECA may appoint any Affiliate(s) or sub-licensee(s) carrying out the marketing of the Product in the country concerned to fulfil any such obligation as stated hereunder. 12.1.3. Without limiting what is stated in Article 12.1, the Parties shall at an appropriate point of time during development of the Product jointly establish any such Adverse Event reporting procedures, including, but not limited to, any agreement regarding safety data exchange, as may be required or useful. 13. REPRESENTATION AND WARRANTY 13.1. Representations and Warranties of ASTRAZENECA. ASTRAZENECA represents and warrants to TMC as follows: a) as of the License Agreement Effective Date it is the sole and exclusive owner of the ASTRAZENECA Patent Rights and ASTRAZENECA Trademark; all of which is free and clear of any liens, charges and encumbrances; and b) as of the License Agreement Effective Date ASTRAZENECA has not previously assigned, transferred, licensed, conveyed or otherwise 51 encumbered its right, title and interest in the ASTRAZENECA Patent Rights or the ASTRAZENECA Trademark; and c) as of the License Agreement Effective Date and to the best of ASTRAZENECA's knowledge, no Person other than ASTRAZENECA or any of its Affiliates, has or shall have any claim of ownership with respect to ASTRAZENECA Patent Rights or the ASTRAZENECA Trademark; and d) as of the License Agreement Effective Date and to the best of ASTRAZENECA's knowledge, the manufacture, use and sale of the Compound does not infringe upon any intellectual property rights of any Third Party, although it is expressly acknowledged by TMC that ASTRAZENECA has made no particular searches or investigations to determinate whether such infringement occurs; and e) as of the License Agreement Effective Date there are no claims, judgements or settlements against or owed by ASTRAZENECA or pending or threatened claims or litigation relating to the ASTRAZENECA Patent Rights or the ASTRAZENECA Trademark; and f) except as insofar relating to any kind of formulation, or work or development related thereto, of the Product, there are no other Patent Rights or Know-How owned or licensed by ASTRAZENECA required to develop and/or commercialise the Product, and ASTRAZENECA shall not assert against TMC any Patent Rights or other intellectual property owned or licensed by ASTRAZENECA as of the License Agreement Effective Date or at any time thereafter which are or may be infringed by the Compound or the Product; and g) as of the License Agreement Effective Date ASTRAZENECA has disclosed to TMC any known interference with the ASTRAZENECA 52 Patent Rights or re-examination or reissue proceeding concerning such ASTRAZENECA Patent Rights; and h) as of the License Agreement Effective Date ASTRAZENECA has no knowledge from which it can reasonably be inferred that the granted ASTRAZENECA Patent Rights or the ASTRAZENECA Trademark are invalid or that the applications for ASTRAZENECA Patent Rights or ASTRAZENECA Trademark will not proceed to grant. 13.2. Acknowledgement of TMC. TMC is aware that the ASTRAZENECA Patent Rights or the ASTRAZENECA Know-How may not sufficiently enable TMC to manufacture or conduct any other operational or manufacturing-related activities with respect to the formulation of the Product, and it is explicitly understood by TMC that TMC will have to independently conduct any analysis, evaluation and investigation regarding what intellectual property, techniques, routes, equipment or other help or assistance that will be required for such purpose and it will be entirely at TMC's risk to find such intellectual property, techniques, routes, equipment or other help or assistance in order to conduct such activities. 13.3. Representations and Warranties of the Parties. Each Party represents and warrants to the other Party that it is a duly organized and validly existing corporation under the laws of its jurisdiction of incorporation, and has taken all required corporate action to authorize the execution, delivery and performance of this Agreement; it has the full right, power and authority to enter into this Agreement and perform all of its obligations hereunder; the execution and delivery of this Agreement and the transactions contemplated herein do not violate, conflict with, or constitute a default under its Articles of Association or similar organization document, its by-laws or the terms or provisions of any material agreement or other instrument to which it is a party or by which it is bound, or any order, award, judgement or decree to 53 which it is a party or by which it is bound; and upon execution and delivery, this Agreement will constitute the legal, valid and binding obligation of it. 13.4. Limitations. EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT ASTRAZENECA EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED OR EXPRESS WARRANTIES AND MAKES NO EXPRESS OR IMPLIED WARRANTY, STATUTORY OR OTHERWISE, OF ANY KIND, INCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE REGARDING THE COMPOUND, ASTRAZENECA'S CONFIDENTIAL INFORMATION, DOCUMENTS, ASTRAZENECA KNOW-HOW, ASTRAZENECA PATENT RIGHTS, OR PRODUCTS. 14. TERM AND TERMINATION 14.1. Term. This Agreement shall become effective on the License Agreement Effective Date and shall expire when TMC ceases to sell the Product in the last country of the Territory or otherwise terminates this Agreement as set forth in Article 14.2. 14.2. Termination by TMC. Should TMC determine that it does no longer consider it viable to continue to exercise the rights under this Agreement, then TMC may give written notice to ASTRAZENECA, whereupon this Agreement shall terminate thirty (30) days of such notice, unless ASTRAZENECA, within twenty (20) days of having received such notice, requests TMC in writing to enter into good faith discussions to see whether TMC's concerns could be reasonably overcome. However, upon TMC having given such notice TMC shall not be liable for any payments under Articles 6.1.2 through 6.1.5 or for any payments under Articles 6.3.1 unless corresponding to the royalty amounts actually due, which become due after the expiration of the 30-days period mentioned above in this Article 14.2. 54 Should the Parties not within three (3) months of the date of commencement of such good faith discussions mentioned above in this Article 14.2 have managed to reach a mutually acceptable solution to TMC's concerns, then TMC may terminate this Agreement by giving ninety (90) days written notice. 14.3. Termination for Breach. In the event that either Party (the "Breaching Party") shall be in significant default in the performance of any of its material obligations under this Agreement, in addition to any other right and remedy the other Party (the "Complaining Party") may have, the Complaining Party may terminate this Agreement by sixty (60) days prior written notice (the "Notice Period") to the Breaching Party, specifying the breach and its claim of right to terminate, provided always that the termination shall not become effective at the end of the Notice Period if the Breaching Party cures the breach complained about during the Notice Period. 14.4. Survival of Obligations. Termination or expiration of this Agreement shall not relieve either Party from any obligation incurred hereunder prior thereto. 14.5. Survival of Provisions upon Termination and/or Expiration. Subject to what is stated in Article 15, the provisions of Articles 1, 7.1, 7.2, 10, 11, 12, 13, 14.5, 15, 17 and 18 shall survive termination or expiration of this Agreement. The provisions of Article 2.5 shall survive only upon expiration of this Agreement. The provisions of Article 11 shall survive termination or expiration of this Agreement and shall continue to be in force for a period of five (5) years after termination or expiration of this Agreement. 55 15. CONSEQUENCES OF TERMINATION 15.1. Termination and handback of license In addition to any remedy either Party may have in law, tort or in contract, subject to what is stated in Article 3.9, upon termination of the Agreement or the license in a certain country, the following shall apply. Upon termination of this Agreement by TMC pursuant to Article 14.2 or by ASTRAZENECA pursuant to Article 14.3, or by ASTRAZENECA in a certain country pursuant to Article 3.8, the license granted under Article 2.1 regarding the country(ies) contemplated by the termination concerned shall cease, and TMC shall, regarding the Territory or the country concerned, whichever is applicable: (a) at the option of ASTRAZENECA, grant to ASTRAZENECA a non-exclusive, world-wide or for the country concerned, whichever is applicable, sub-licensable licence under the TMC IP to develop, have developed, make, have made, use, have used, import, have imported, market, have marketed, sell and have sold the Compound and the Product for any indications. The term of such non-exclusive licence shall continue on a country by country basis for the longer of the life of the TMC Patent Rights, or for ten (10) years from first commercial sale of any resultant product in such country by ASTRAZENECA, its Affiliates, sub-licensees or nominees, whichever is the longer. TMC shall do all such acts and things as may reasonably be necessary to fulfil this obligation. The licence set out in this Article 15.1 (a) shall be royalty-free and free from any other remuneration. (b) return to ASTRAZENECA any ASTRAZENECA Know-How and deliver to ASTRAZENECA a copy of any TMC Know-How; 56 (c) deliver to ASTRAZENECA any and all quantities of Product in its possession, power, custody or control subject always to TMC's right to dispose of Product which is the subject of pre-termination date orders pursuant to Article 15.1 (h). For the avoidance of doubt, should this Article 15.1 (c) become applicable because of termination regarding a certain country or countries pursuant to Article 3.8, then the quantities of Product referred to herein shall mean only those quantities clearly designated, by marking, labelling or similar, for the country or countries concerned and which could only be used for the country or countries concerned; (d) ensure that its patent attorneys transfer to ASTRAZENECA a copy of the patent files relating to the TMC Patent Rights which TMC has been prosecuting and maintaining and ASTRAZENECA shall be entitled to prosecute and shall maintain such TMC Patent Rights at its own cost and expense on terms similar to those set out in Article 7.3 and to deal with infringers on terms similar to those set out in Article 8.2 and 8.3. TMC further undertakes to take any action and produce any documents so as to enable ASTRAZENECA to apply for patent term extensions, including, but not limited to, Supplementary Protection Certificates, relating to the TMC Patent Rights in ASTRAZENECA's name. (e) Should this Article 15.1 become applicable because of the termination of the license regarding a certain country or countries pursuant to Article 3.8, then TMC shall, notwithstanding the license granted under Article 15.1 (a), on the request by ASTRAZENECA continue to prosecute, maintain and defend the TMC Patent Rights. (f) commensurate with legislative and regulatory requirements, transfer to ASTRAZENECA or its nominee all NDA Approvals, and regulatory filings for the Compound or Product (including, without limitation, 57 all information and documentation used in the Filings of an NDA and NDA approvals referred to in Article 3.5.2 and 3.5.4). In the event that in any country such a transfer is not possible, TMC shall use reasonable endeavours to ensure that ASTRAZENECA has the benefit of the relevant NDA Approvals, NDAs and other related regulatory filings and approvals and, to this end, consents to any regulatory authority cross-referencing to the data and information on file with any regulatory authority as may be necessary to facilitate the granting of second NDA Approvals to and permit Filings of an NDA by ASTRAZENECA, and TMC agrees to complete whatever other procedures that are reasonably necessary in relation to the same to enable ASTRAZENECA (either itself or in conjunction with a Third Party) freely to develop and sell the Product in substitution for TMC; (g) if applicable, assign the TMC Trademark or grant a royalty-free exclusive licence to ASTRAZENECA to use the TMC Trademark for the marketing, sales and distribution of the Product; (h) not after the date of termination itself take any further action to develop, manufacture, have manufactured, use, market, distribute or sell the Compound or Product during the life of the TMC Patent Rights or the ASTRAZENECA Patent Rights, whichever is the longer, except that TMC has the right to dispose of that part of its inventory of Product on hand as of the effective date of termination which is the subject of orders for Product accepted prior to the date of notice of termination for a period of three (3) months after the effective date of termination, and, within thirty (30) days after disposition of such inventory pursuant to the fulfilment of such orders, TMC will forward to ASTRAZENECA a final report and pay all royalties due on the Net Sales of Product during such period; and 58 (i) provide ASTRAZENECA, should ASTRAZENECA so require, with reasonable assistance in relation to ASTRAZENECA's appointment of a Third Party manufacturer of Product. Upon such termination as stated in this Article 15.1, ASTRAZENECA shall have the right to disclose Confidential Information, to Third Parties for the purpose only of, and only to the extent necessary for, enabling such Third Party to evaluate the financial and scientific status of the Compound or Product for the purpose of making a financial offer to ASTRAZENECA on the licensing or acquisition of the rights returned to ASTRAZENECA and the rights licensed to ASTRAZENECA under this Article 15.1, and, if such licensing or acquisition occurs, as necessary to exploit or enforce such rights. 15.2. Termination followed by continued license Upon the termination of this Agreement by TMC pursuant to Article 14.3, ASTRAZENECA's licences granted to TMC under Article 2 shall continue, provided that TMC continues to make payments pursuant to Article 6 as if the Agreement was still in effect. 16. FORCE MAJEURE 16.1. If either Party is prevented or delayed in the performance of any of its obligations under this Agreement by Force Majeure, that Party shall forthwith serve notice in writing on the other Party specifying the nature and extent of the circumstances giving rise to Force Majeure, and shall subject to service of such notice and to Article 16.3 have no liability in respect of the performance of such of its obligations as are prevented by the Force Majeure event during the continuation of such events, and for such time after they cease as is necessary for that Party, using all reasonable 59 endeavours, to recommence its affected operations in order for it to perform its obligations. 16.2. If either Party is prevented from performance of its obligations, due to Force Majeure, for a continuous period in excess of six (6) months, the other Party may terminate this Agreement forthwith on service of written notice upon the Party so prevented. In the event of termination under this Article 16.2 the provisions of Article 15 shall not apply immediately and the Parties shall meet to discuss the ASTRAZENECA IP and TMC IP and agree on a process for arrangements upon termination. 16.3. The Party claiming to be prevented or delayed in the performance of any of its obligations under this Agreement by reason of Force Majeure shall use its reasonable endeavours to bring the Force Majeure event to a close or to find a solution by which the Agreement may be performed despite the continuation of the Force Majeure event. 17. GENERAL PROVISIONS 17.1. Assignment. 17.1.1. Subject to Articles 17.1.2 and 17.1.3, neither Party shall without the prior written consent of the other Party assign, transfer, charge or deal in any other manner with this Agreement or any of its rights under it. 17.1.2. Each Party shall be entitled to assign its rights under this Agreement to an acquiror of all or substantially all of its capital stock or assets related to the pharmaceutical business described in this Agreement, whether through purchase, merger, consolidation or otherwise. 17.1.3. Each Party shall be entitled to assign its rights under this Agreement to an Affiliate provided that such Party shall require that any such Affiliate to whom it assigns any of its rights under this Agreement shall assign such 60 rights back to the assigning Party immediately prior to it ceasing to be an Affiliate of the assigning Party. 17.2. Severance. 17.2.1. If any provision of this Agreement shall be found by any court or administrative body of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not, provided that the general content of the Agreement remains substantially the same as prior to such invalidity or unenforceability, affect the other provisions of this Agreement which shall remain in full force and effect. 17.2.2. The Parties agree, in the circumstances referred to in Article 17.2.1, to attempt to substitute for any invalid or unenforceable provision a valid or enforceable provision which achieves to the greatest extent possible the same effect as would have been achieved by the invalid or unenforceable provision. 17.3. Notices. 17.3.1. All notices and other communications given or made in relation to this Agreement; 17.3.2. shall be in English and in writing; 17.3.3. shall be delivered by hand or sent by first class registered post or facsimile; 17.3.4. shall be delivered or sent to the Party concerned at the relevant address or facsimile number, shown in Article 17.4 subject to such amendments as may be notified from time to time in accordance with this Article by the relevant Party to the other Party by no less than three business days notice; and 17.3.5. shall be deemed to have been duly given or made if addressed in the aforesaid manner; 61 17.3.6. if delivered by hand, upon delivery; 17.3.7. if posted by first class registered post, four (4) business days after posting; 17.3.8. if sent by facsimile, when a complete and legible copy of the communication has been received at the appropriate address 17.4. Contact Information. Initial details for the purposes of Article 17.3 are: For ASTRAZENECA Address: AstraZeneca AB, S-151 85 Sodertalje, Sweden Facsimile: +46-8 553 290 00 For the attention of: President & CEO For TMC Address: The Medicines Company, 5 Sylvan Way, Parsippany, New Jersey 07054, United States Facsimile: +1-973-656-9898 For the attention of: Clive Meanwell, Executive Chairman with a copy to Steven D. Singer Hale and Dorr, LLP 60 State Street Boston MA 02109 United States 62 17.5. Agency, Partnership or Joint Venture Excluded. 17.5.1. Nothing in this Agreement shall be construed so as to constitute either Party to be the agent of the other. 17.5.2. Nothing in this Agreement and no action taken by the Parties pursuant to this Agreement shall constitute a partnership or joint venture of any kind between the Parties. 17.6. Entire Agreement. Each of the Parties acknowledges and agrees that in entering into this Agreement, and the documents referred to in it, it does not rely on, and shall have no remedy in respect of, any statement, representation, warranty or understanding (whether negligently or innocently made) of any Person (whether party to this Agreement or not) other than as expressly set out in this Agreement as a warranty. Nothing in this Article shall either operate to limit or exclude any liability for fraud. 17.7. Agreement to Supersede earlier Agreements. The Confidential Disclosure Agreement entered into by and between the Parties on 9 April 2001 ceases to have effect from the date of this Agreement, except such termination does not affect a Party's accrued rights and obligations at the date of termination. 17.8. Amendments. No amendment to or variation of this Agreement shall be valid unless it is in writing and signed by or on behalf of each of the Parties. 17.9. Publicity and Announcements. 17.9.1. Subject to Article 17.9.2 no press release, announcement or any other communication to any Third Party concerning the transaction contemplated by this Agreement, the financial terms of this Agreement, the subject matter of this Agreement or any ancillary matters shall be made or permitted or authorized to be made by either Party without the prior written approval of the other, such approval not to be unreasonably withheld or delayed and 63 such approval to be given by an authorized representative of the Party in question. 17.9.2. Either Party may make an announcement concerning the transaction contemplated by this Agreement or any ancillary matter if required by law, existing contractual obligations or any securities exchange or Regulatory Authority or governmental body to which either Party is subject or submits, wherever situated, provided that the Party required to make such announcement notifies the other Party of the details of the announcement prior to making such announcement and in sufficient time for the other Party to consider and comment on the announcement, and takes advantage of all provisions to keep confidential as many terms of the Agreement as possible. 17.10. Waiver. Failure or delay by either Party to exercise any right or remedy under this Agreement shall not be deemed to be a waiver of that right or remedy, or prevent it from exercising that or any other right or remedy on that occasion or on any other occasion. 17.11. No Benefit to Third Parties. No Third Party shall be deemed a third party beneficiary under this Agreement for any purpose. Without limiting the foregoing, the Contracts (Rights of Third Parties) Act 1999 and any legislation amending or replacing such Act shall not apply in relation to this Agreement or any agreement, arrangement, understanding, liability or obligation arising under or in connection with this Agreement. 18. GOVERNING LAW AND ARBITRATION 18.1. Arbitration. The Parties shall use their reasonable efforts to settle amicably any dispute arising out of or in connection with this Agreement. In case the Parties are not able to settle such dispute between themselves, such dispute shall be finally resolved by arbitration in accordance with the Rules of the 64 International Chamber of Commerce. The arbitration proceedings shall be held in London. Any proceedings shall be held in the English language. 18.2. Governing Law. The validity, construction and interpretation of this Agreement and any determination of the performance which it requires shall be governed by the laws of England. IN WITNESS WHEREOF this License Agreement has entered into force on the License Agreement Effective Date. ASTRAZENECA AB THE MEDICINES COMPANY (publ) 65 Schedule A ASTRAZENECA Patent Rights 66 PATENT FAMILY LIST Family : A1262 App./Propr : Astra AB Title : Short acting dihydropyridines Inventors : ANDERSSON, Kjell NORDLANDER, Margareta WESTERLUND, Christer
Country SN F App No App Date Pat No. Grant Dt. Exp. Dt Status - ------- -- --- ------ -------- ------- --------- ------- ------ Argentina 1 329878 24.10.1994 253845 13.12.1999 13.12.2014 Granted Argentina 2 980104360 01.09.1998 Filed Austria 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Australia 1 P 81196/94 03.11.1994 685532 07.05.1998 03.11.2014 Granted Belgium 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Brazil 2 PI110048-7 06.05.1997 Filed Canada 1 P 2174969 03.11.1994 Filed Switzerland 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted China P.R. 1 P 94194500.6 03.11.1994 94194500.6 20.11.1999 03.11.2014 Granted Czech Republ 1 P PV1273/96 03.11.1994 285691 17.08.1999 03.11.2014 Granted Germany 1 X 95900347.6 03.11.1994 6942515.2 05.07.2000 03.11.2014 Granted Denmark 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Estonia 1 P P9600051 03.11.1994 03230 20.10.1999 03.11.2014 Granted Egypt 1 689/94 02.11.1994 20539 31.07.1999 03.11.2004 Granted European Pat 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Spain 1 X 95900347.6 03.11.1994 ES2150544 05.07.2000 03.11.2014 Granted Finland 1 P 961914 03.11.1994 Filed France 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Great Britain 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Greece 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Hong Kong 1 98114638.2 02.12.1998 1013292 08.12.2000 03.11.2014 Granted Hungary 1 P P9601187 03.11.1994 215591 04.12.1998 03.11.2014 Granted Indonesia 1 P-941873 02.11.1994 ID0004550 06.12.1999 02.11.2014 Granted Ireland 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Israel 1 111127 03.10.1994 111127 22.02.2001 03.10.2014 Granted Iceland 1 4218 30.09.1994 1674 31.12.1997 30.09.2014 Granted Italy 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Korea South 1 P 96/702346 03.11.1994 Filed Lithuania 1 X 95900347.6 Docketed Luxembourg 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Latvia 1 E Docketed Monaco 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Mexico 1 948392 28.10.1994 196540 22.05.2000 28.10.2014 Granted Malaysia 1 PI94002934 04.11.1994 MY111770A 30.12.2000 30.12.2015 Granted Netherlands 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted
67 Norway 1 P 961776 03.11.1994 305656 05.07.1999 03.11.2014 Granted New Zealand 1 P 275915 03.11.1994 275915 29.09.1997 03.11.2014 Granted Philippines 1 49112 04.10.1994 1-1994-49112 28.04.2000 28.04.2017 Granted Poland 1 P P314128 03.11.1994 Filed Portugal 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Russian Fed 1 P 96112152 03.11.1994 2139278 10.10.1999 03.11.2014 Granted Saudi Arabia 1 94150250 19.10.1994 Filed Sweden 1 9303657-2 05.11.1993 Inactive Sweden 1 X 95900347.6 03.11.1994 0726894 05.07.2000 03.11.2014 Granted Slovak Repub 1 P PV0559/96 03.11.1994 281467 10.01.2001 03.11.2014 Granted Thailand 1 024372 04.11.1994 Filed Taiwan 1 83108995 29.09.1994 NI-078831 15.10.1996 29.09.2014 Granted Ukraine 1 P 96041753 03.11.1994 Filed United States 1 P 356224 03.11.1994 5856346 05.01.1999 05.01.2016 Granted South Africa 1 94/7570 28.09.1994 94/7570 26.07.1995 28.09.2014 Granted
68 PATENT FAMILY LIST Family : A1279 App./Propr : Astra AB Title : Pharmaceutical emulsion Inventors : ANDERSSON, Kjell BYROD, Eva NORDLANDER, Margareta WESTERLUND, Christer HANSSON, Anna-Carin
Country SN F App No App Date Pat No. Grant Dt. Exp. Dt Status - ------- -- - ------ -------- ------- --------- ------- ------ Argentina 1 330005 04.111994 255314 01.11.2001 01.11.2016 Granted Argentina 2 990105741 11.11.1999 Filed Austria 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Australia 1 P 10371/95 03.11.1994 678650 25.09.1997 03.11.2014 Granted Belgium 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Brazil 1 P Inactive Canada 1 P 2176360 03.11.1994 Filed Switzerland 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted China P.R. 1 P 94194111.6 03.11.1994 94194111.6 11.08.2001 03.11.2014 Granted Czech Republ 1 P PV1338/96 03.11.1994 Filed Germany 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Denmark 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Estonia 1 P P9600052 03.11.1994 03223 20.10.1999 03.11.2014 Granted Egypt 1 710/94 09.11.1994 20764 31.01.2000 09.11.2014 Granted European Pat 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Spain 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Finland 1 P 961999 03.11.1994 Filed France 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Great Britain 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Greece 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Hong Kong 1 98114639.1 22.12.1998 Filed Hungary 1 P P9601268 03.11.1994 Filed Indonesia 1 P-941957 11.11.1994 ID0004476 01.11.1999 11.11.2014 Granted Ireland 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Israel 1 111345 20.10.1994 111345 03.12.2000 20.10.2014 Granted Iceland 1 4224 21.10.1994 Filed Italy 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Korea South 1 P 96/702485 03.11.1994 Filed Liechtenstei 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Lithuania 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Luxembourg 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Latvia 1 E Docketed Monaco 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted
69 Mexico 1 948732 10.11.1994 Filed Malaysia 1 PI94003029 14.11.1994 Filed Netherlands 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Norway 1 P 961898 03.11.1994 Filed New Zealand 1 P 276197 03.11.1994 276197 18.09.1997 03.11.2014 Granted Philippines 1 49235 25.10.1994 Filed Poland 1 P P314263 03.11.1994 181462 31.07.2001 03.11.2014 Granted Portugal 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Russian Fed 1 P 96112112 03.11.1994 2144358 20.01.2000 03.11.2014 Granted Saudi Arabia 1 94150314 13.11.1994 Filed Sweden 1 X 95900965.5 03.11.1994 0727997 13.02.2002 03.11.2014 Granted Slovak Repub 1 P PV0597/96 03.11.1994 Filed Thailand 1 024457 11.11.1994 Filed Ukraine 1 P 96051803 03.11.1994 40633 15.08.2001 03.11.2014 Granted United States 1 P 08/364953 03.11.1994 5739152 14.04.1998 14.04.2015 Granted South Africa 1 94/8180 18.10.1994 94/8180 26.07.1995 18.10.2014 Granted
70 PATENT FAMILY LIST Family : A2004 Appl./Propr : AstraZeneca AB Title : NEW MANUFACTURING PROCESS
Country SN F App No App Date Pat No. Grant Dt. Exp. Dt Status - ------- -- - ------ -------- ------- --------- ------- ------ Australia 1 P 20105/00 22.11.1999 Filed Canada 1 P 2349195 22.11.1999 Filed European Pat 1 X 99963732.5 22.11.1999 Filed Hong Kong 1 [**] [**] Filed New Zealand 1 P 511503 22.11.1999 Filed United States 1 P 09/508260 22.11.1999 Filed South Africa 1 P 2001/3434 22.11.1999 Filed
71 Schedule B Trademark Registrations 72 Trademark Family Report TRADEMARK : CLEVELOX TM Family Number : A02243 TM Attorney : MST Project Resp. RPT : MST Project Description : Clevidipine Project Number : 20298 Project Cost Centre : 20298 Therapeutic Area : Cardio vascular Owner :
Country SN Appl De Reg. Dt Reg No Expir. Dt Status - ------- -- ------- ------- ------ --------- ------ United Arab Emi 1 Inactive Argentina 1 05.12.1997 Inactive Austria 1 24.11.1997 06.02.1998 173947 29.02.2008 Registered Australia 1 26.11.1997 26.11.1997 749529 26.11.2007 Registered Brazil 1 Inactive Benelux 1 21.11.1997 21.11.1997 622377 21.11.2007 Registered Canada 1 16.12.1997 Filed Switzerland 1 21.11.1997 02.04.1998 450528 21.11.2007 Registered China P.R. 1 28.11.1997 14.02.1999 1246211 14.02.2009 Registered Colombia 1 03.12.1997 Filed Czech Repub 1 03.12.1997 27.05.1999 217843 03.12.2007 Registered Germany 1 22.11.1997 30.01.1998 39756082 30.11.2007 Registered Denmark 1 21.11.1997 15.09.1998 199802513 15.09.2008 Registered Egypt 1 01.12.1997 Filed Spain 1 26.11.1997 20.05.1998 2128403 26.11.2007 Registered Finland 1 21.11.1997 13.11.1998 211790 13.11.2008 Registered France 1 24.11.1997 24.11.1997 97705657 24.11.2007 Registered Great Britian 1 21.11.1997 21.11.1997 2151563 21.11.2007 Registered Greece 1 17.11.1997 17.11.1999 135252 17.11.2007 Registered Hong Kong 1 08.12.1997 08.12.1997 3239/99 08.12.2004 Registered Hungary 1 27.11.1997 08.02.1999 155530 27.11.2007 Registered Indonesia 1 12.12.1997 12.12.1997 427623 12.12.2007 Registered Ireland 1 30.10.1997 21.11.1997 208749 21.11.2007 Registered Israel 1 24.11.1997 07.02.1999 116095 24.11.2004 Registered India 1 26.11.1997 Filed Iceland 1 24.11.1997 28.01.1998 210/1998 28.01.2008 Registered Italy 1 25.11.1997 18.05.2000 813581 25.11.2007 Registered Japan 1 09.01.1998 02.04.1999 4257306 02.04.2009 Registered Japan 2 17.04.2000 07.09.2001 4504229 07.09.2011 Registered South Korea 1 27.11.1997 27.11.1998 431337 27.11.2008 Registered Mexico 1 04.12.1997 04.12.1997 568689 04.12.2007 Registered Malaysia 1 28.11.1997 Filed Norway 1 21.11.1997 18.06.1998 190954 18.06.2008 Registered
73 New Zealand 1 25.11.1997 25.11.1997 285223 25.11.2004 Registered Pakistan 1 25.11.1997 Filed Poland 1 25.11.1997 06.03.2001 123629 25.11.2007 Registered Portugal 1 25.11.1997 15.05.1998 327385 15.05.2008 Registered Romania 1 05.12.1997 05.12.1997 33325 05.12.2007 Registered Russian Federat 1 03.12.1997 24.02.1999 172676 03.12.2007 Registered Saudi Arabia 1 12.01.1998 12.01.1998 474/30 22.09.2007 Registered Sweden 1 21.11.1997 06.08.1999 332270 06.08.2009 Registered Singapore 1 15.12.1997 Filed Slovak Republic 1 25.11.1997 14.12.1999 188597 25.11.2007 Registered Thailand 1 09.12.1997 09.12.1997 80071 09.12.2007 Registered Turkey 1 26.12.1997 26.12.1997 195964 26.12.2007 Registered Taiwan 1 04.12.1997 16.10.1998 820735 16.10.2008 Registered United States 1 21.11.1997 Inactive United States 2 19.04.2001 Filed Vietnam 1 05.01.1998 07.05.1999 30808 05.01.2008 Registered South Africa 1 01.12.1997 01.12.1997 97/18422 01.12.2007 Registered
74 Schedule C Compound 75 SCHEDULE C, COMPOUND CHEMICAL STRUCTURE, CHEMICAL NAME AND MOLECULAR FORMULA Chemical structure [CHEMICAL STRUCTURE GRAPH] Figure 1. Chemical structure of clevidipine Chemical name Butyroxymethyl methyl 4-(2',3'-dichlorophenyl)-1,4-dihydro-2,6-dimethyl-3,5- pyridinedicarboxylate. Molecular weight 456.3 g/mol. Molecular formula C(21)H(23)Cl(2)NO(6) 76 Schedule D Reports REPORTS TO BE TRANSLATED AND SENT TO TMC
REPORT PAGES COMMENT - ------ ----- ------- [**] 7 [**] 10+6 [**] 12 [**] 15 [**] 21 [**] 9 [**] 2 [**] 2 [**] 2 [**] 24 [**] 15 Written in English [**] 7 [**] 17 [**] 15 [**] 6 [**] 33 [**] 6 [**] 17 Written in English [**] 5 Written in English [**] 22 Clevidipine, delivered batch 401/97 [**] 26 [**] 28 [**] 23 [**] 10-20
77 Schedule E Supply Agreement SCHEDULE 3 Study outline Subsequently the Study protocol PROTOCOL SYNOPSIS - CLEVIDIPINE CABG NAME OF SPONSOR: AstraZeneca and The Medicines Company NAME OF ACTIVE INGREDIENT: Clevidipine TITLE OF STUDY: [**] STUDY CENTERS: [**] PHASE OF DEVELOPMENT: [**] OBJECTIVES: [**] METHODOLOGY: [**] NUMBER OF PATIENTS: [**] DIAGNOSIS AND MAIN CRITERIA FOR INCLUSION: [**] TEST PRODUCT(S), DOSE, MODE OF ADMINISTRATION: [**] REFERENCE THERAPY, DOSE, MODE OF ADMINISTRATION: [**] DURATION OF TREATMENT: [**] CRITERIA FOR EVALUATION: Efficacy: [**] [**] [**] [**] [**] [**] [**] Safety: [**] SAMPLE SIZE: [**]
SCHEDULE 4 Press announcement Contact: Peyton Marshall Jill Sawdon Chief Financial Officer Director of Corporate The Medicines Company Communications (617) 225-9099 (ph) The Medicines Company (617) 225-2397 (fx) (617) 225-9099 (ph) (617) 225-2397 (fx) FOR IMMEDIATE RELEASE THE MEDICINES COMPANY ANNOUNCES ACQUISITION OF RIGHTS TO CLEVIDIPINE PHASE 3 DRUG CANDIDATE TO BE TESTED FOR USE IN HOSPITAL HYPERTENSION PATIENTS PARSIPPANY, NJ, March 6, 2002 - The Medicines Company (NASDAQ: MDCO) announced today that it has entered into an agreement with AstraZeneca PLC for the licensing, development and commercialization of clevidipine, an intravenous, short-acting calcium channel blocker. Clevidipine will be developed in Phase 3 by The Medicines Company for the short-term control of high blood pressure in the hospital setting. AstraZeneca has completed clinical pharmacology, dose-finding and efficacy studies that demonstrate that clevidipine has a short duration of action, a short plasma half life, and a selective effect on blood pressure. The agreement covers all worldwide territories except Japan. The Medicines Company will perform further clinical development and has the right to commercialize the product in all other territories worldwide including the United States. Financial terms of the agreement were not disclosed. "Acquisition of the rights to clevidipine is consistent with our execution of a strategy to build a franchise in acute hospital care," said Clive Meanwell, M.D., Ph.D., Executive Chairman of The Medicines Company. He went on to state, "Commercially, the product's pharmacological and clinical attributes make it an ideal candidate for Phase 3 testing in a range of hospital indications including malignant hypertension, and the control of blood pressure during and after cardiac surgery, percutaneous coronary intervention and other acute interventions where precise control of blood pressure is clinically important. An estimated 18.2 million surgical procedures are performed annually on hypertensive patients in the United States. These patients are often treated with multiple medications that have been shown to increase the duration of a patient's stay in the Intensive Care Unit and require a physician's attention. We believe clevidipine has the potential to demonstrate a substantial pharmacoeconomic benefit by reducing complex treatment with multiple medications and patients' time in the ICU." Dave Stack, President and CEO of The Medicines Company, added, "This is a perfect fit with our current U.S. sales configuration. We believe that clevidipine will be of value to many of the same customers who are currently adopting ANGIOMAX(R) (bivalirudin) into their practice. This leverages many of our existing commercial relationships in the U.S. We look forward to forging a strong relationship with Astra Zeneca and bringing this potentially important new medicine to patients." Clive Meanwell will host a conference call at 8:30 AM (Eastern Time) on March 7, 2002. To participate in the call, please dial 800.472.8325. If you are calling from outside the United States please call 1.706.679.0816. There will be a digital replay of the call available until March 9 at midnight Eastern Time. To listen to the replay, please dial 800.642.1687 in the United States or 1.706.645.9291 outside the United States and enter conference ID #3425937. A webcast of the call will also be available on The Medicines Company's website, www.themedicinescompany.com. The Medicines Company was founded in 1996 to acquire, develop and commercialize selected pharmaceutical products in late stages of development and approved products. In December 2000, the Company received marketing approval from the U.S. Food and Drug Administration for ANGIOMAX for use as an anticoagulant in combination with aspirin in patients with unstable angina undergoing coronary balloon angioplasty. The Company began selling ANGIOMAX in the United States in January 2001. The Company expects ANGIOMAX to be the cornerstone product of a planned acute hospital franchise. The Company is also developing a second product, CTV-05, a proprietary biotherapeutic agent with a potentially broad range of applications in the treatment of gynecological and reproductive infections. Additional information about the company and its products can be found at www.themedicinescompany.com. This press release contains forward-looking statements that involve a number of risks and uncertainties. For this purpose, any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words, "believes," "anticipates," "plans," "expects," "intends," and similar expressions are intended to identify forward-looking statements. Important factors that could cause actual results to differ materially from the expectations described in these forward-looking statements are set forth under the caption "Certain Factors that May Affect Future Results" in the Company's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2001 and incorporated herein by reference. These risk factors include risks as to the commercial success of ANGIOMAX; how long the Company will be able to operate on its existing capital resources; whether the Company's products (other than ANGIOMAX for its approved indication and including clevidipine without limitation) will advance in the clinical trials process, the timing of such clinical trials, whether the clinical trial results will warrant continued product development, whether and when, if at all, the Company's products will receive approval from the U.S. Food and Drug Administration or equivalent regulatory agencies, and for which indications, and, if such products receive approval, whether they will be successfully marketed; whether the Company will be able to develop or acquire additional products; the Company's history of net losses; and the Company's dependence on third parties, including manufacturers, suppliers and collaborators. We do not assume any obligation to update any forward-looking statements. EX-10.3 5 b43069mcex10-3.txt SALES AND MARKETING DISTRIBUTION AGREEMENT EXHIBIT 10.3 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. SALES, MARKETING AND DISTRIBUTION AGREEMENT This Agreement is made 25th March 2002 (the "Effective Date") by and between THE MEDICINES COMPANY, INC., a Delaware corporation having offices at 5 Sylvan Way, Parsippany, New Jersey 07054 ("TMC") and NYCOMED DANMARK A/S, P.O. Box 88, Langebjerg 1 DK-4000 Roskilde, Denmark, a company duly organized and existing under the laws of the Kingdom of Denmark ("Nycomed"). The parties hereunder shall be referred to individually as a "Party" and collectively as the "Parties". WITNESSETH Whereas, TMC is in the business of developing, manufacturing and marketing pharmaceutical products. Whereas, TMC desires to appoint Nycomed as the exclusive distributor in the territory outlined in Exhibit A (the "Territory") for the Product and its Improvements manufactured by TMC described herein and as amended from time to time (the "Product"), and to sell the Product to Nycomed on the terms and subject to the conditions described in this Agreement. Whereas, Nycomed is engaged in the marketing of pharmaceutical products and has represented to TMC that it has the facilities, personnel, and technical expertise to promote, market and distribute the Product in all countries of the Territory. Nycomed desires to accept such appointment as the exclusive distributor and to promote, market and distribute the Product in the Territory, and to purchase the Product from TMC on the terms and subject to the conditions described in this Agreement. 1. DEFINITIONS All capitalized terms used in this Agreement not otherwise defined shall have the meanings and definitions ascribed to them as listed below. 1.1 "ADVERSE EVENT" means any unintended, unfavorable clinical sign or symptom, any new illness or disease or deterioration of existing illness or disease or any clinically relevant -1- deterioration in laboratory variables (e.g., hematological, biochemical, hormonal) or other clinical tests (e.g., ECG, X-ray), whether or not considered treatment-related. 1.2 "AFFILIATE" means any corporation, company, joint venture, partnership or other entity which, directly or indirectly, controls, is controlled by, or is under common control with a Party to this Agreement. "Control" means the ownership of at least 50% of the issued share capital or business assets of another entity, the power to exercise at least 50% of the voting rights of another entity, or the power to appoint more than 50% of the Board of Directors of another entity. Notwithstanding this definition of control, Oy Leiras Finland Ab shall be deemed an Affiliate of Nycomed . 1.3 "ANGIOMAX" means Angiomax(TM) or any other Trademark selected by TMC for the Product in the Territory. 1.4 "APPROVALS" means and includes all filings, approvals, registrations, permits, licenses and authorizations related to the Product which are necessary or which, in the reasonable opinion of TMC, are desirable, to be made with or obtained from any Governmental Authority for the importation, sale, marketing and promotion of the Products in the Territory or any part thereof, including primarily, but without limitation, authorizations of medicinal products for human use and approval of related labels and packaging, as well as pricing and social health system reimbursement approvals. 1.5 "AVERAGE NET UNIT SELLING PRICE" means the sum of Nycomed's calendar quarter Net Sales pursuant to this Agreement divided by such calendar quarter's number of units sold by Nycomed pursuant to this Agreement (but in respect of such units sold, excluding units which have been returned, rejected or reimbursed because of defects). 1.6 "CHEMILOG" means bivalirudin drug substance manufactured according to UCB Bioproducts SA process SF220, as defined in UCB bioproducts quality documents. 1.7 "COMBINATION PRODUCT" means a product containing one or more active ingredients or components in addition to the Product. 1.8 "DISTRIBUTOR" means a person or entity in a country who (i) purchases Product from Nycomed or one of its Affiliates, and (ii) assumes responsibility for a portion of the promotion, marketing, sales and customer service effort related to Product in that country, and (iii) under an implied or express sublicense, sells Product in that country. 1.9 "EEA" means any current member countries of the European Union and Norway, Iceland, and Liechtenstein. 1.10 "EMEA" means the European Agency for the Evaluation of Medicinal Products. -2- 1.11 "FIRM ORDERS" means orders received from Nycomed and accepted by TMC in writing for the purchase of Product. 1.12 "FIRST APPROVAL DATE" means the first date on which the Product is eligible for sale in one or more countries of the Territory based on receipt of all necessary Approvals from Government Authorities of one or more countries of the Territory. 1.13 "FIRST LAUNCH DATE" means the date of Launch of the Initial Indication(s) in any country of the Territory. 1.14 "GOVERNMENTAL AUTHORITY" means and includes all governmental and regulatory bodies, agencies, departments or entities, whether or not located in the Territory, which regulate, direct or control commerce in or with the Territory, including Approvals. 1.15 "GROSS SALES" means gross invoices on sales of the Product by Nycomed and its Affiliates and Distributors to third parties. 1.16 "IMPROVEMENTS" means authorized, updated or modified manufacturing processes for the Product or its component substances, additional dosage unit sizes or other similar authorized modifications to the production and delivery of Product as part of an Approval for the Product. 1.17 "INDICATION" means a particular use for the Product which has received Approval from a Governmental Authority in one or more countries of the Territory. 1.18 "INITIAL INDICATION" means the Product's first Indication receiving Approval in one or more countries of the Territory. 1.19 "LAUNCH" means the date of announcement to prescribers of pharmaceuticals, of the availability of Product upon prescription to treat an Initial Indication or a subsequent Indication in any country in Territory. 1.20 "MINIMUM TRANSFER PRICE", means the minimum price for purchase of the Product by Nycomed, calculated in accordance with Exhibit B hereto. 1.21 "NET SALES" shall mean the gross amount invoiced (not dependent on whether such invoices have been actually paid) on sales of the Product by Nycomed and its Affiliates and Distributors to third parties, less the following items, as determined from the books and records of Nycomed or its Affiliates or Distributors, provided that such items do not exceed reasonable and customary amounts in the respective country(s) of the Territory in which such sale or other disposition occurred: (i) [**]; (ii) [**]; (iii) [**]; (iv) [**]; (v) [**], -3- ; and (vi) [**] pursuant to government regulations. A sale of the Product by Nycomed to an Affiliate or Distributor for resale of the Product by such Affiliate or Distributor shall not be considered a sale for the purposes of this provision, but the resale of such Product by the Affiliate or Distributor to a third party who is not an Affiliate or Distributor of Nycomed shall be a sale for the purposes of this Agreement. For the purposes of this Agreement, "sale" shall mean any transfer or other distribution or disposition, but shall not include transfers or other distributions or dispositions of Product, at no charge, for pre-clinical, clinical or regulatory purposes or to physicians or hospitals for promotional purposes, provided such transfer, distribution or disposition is not made in exchange for lower prices on other Nycomed products or for other non-cash consideration. In the event that consideration in addition to or in lieu of money is received for the sale of Product in an arms-length transaction, the fair market value of such consideration shall be included in the determination of Net Sales. To the extent that the Product is sold in other than an arms-length transaction, Net Sales for such sale shall be the average sales price of the Product if sold in an arms-length transaction during the applicable reporting calendar quarter in the country of the Territory in which the non-arms-length transaction occurred. In the event that the Product is sold in the form of a Combination Product, Net Sales for the Combination Product shall be determined by multiplying actual Net Sales of the Combination Product (determined by reference to the definition of Net Sales set forth above) during the calendar quarter period by the fraction A/A+B where A is the average sale price of Product when sold separately in finished form, and B is the average sale price of the other active ingredients or components when sold separately in finished form in each case during the applicable reporting calendar quarter in the country in which the sale of the Combination Product was made, or if sales of both the Product and the other active ingredients or components did not occur in such period, then in the most recent calendar quarter in which sales of both occurred. In the event that such average sale price cannot be determined for both Product and all other active ingredients or components included in the Combination Product, Net Sales for purposes of determining payments under this Agreement shall be calculated by multiplying the Net Sales of the Combination Product by the fraction C/C+D where C is the standard fully-absorbed cost of the Product portion of the Combination and D is the sum of the standard fully-absorbed costs of all other active components or ingredients included in the Combination Product, in each case as determined by TMC using its standard accounting procedures consistently applied. In no event shall Net Sales of a Product included in a Combination Product be reduced to less than fifty percent (50%) of actual Net Sales of such Combination Product (determined by reference to the definition of Net Sales set forth above) by reason of any adjustment provision set forth in this paragraph. 1.22 "NON-REQUIRED TRIALS" means Product trials other than those trials required to secure Approval for an Indication. -4- 1.23 "PATENTS" means patents and applications in any and all countries for patents (including provisional applications) and all reissues, divisions, renewals, extensions, continuations and continuations-in-part thereof and patent extensions with respect to the Product in the Territory, as further identified in Exhibit F hereto. 1.24 "PCI" means percutaneous coronary intervention. 1.25 "PRODUCT" means Bivalirudin, being a highly specific and reversible direct thrombin inhibitor, which operates by specific binding to both the catalytic site and to the anion-binding exosite of circulating and clot-bound thrombin. The active substance is a synthetic, twenty (20)-amino acid peptide, whose chemical name is D-phenylalanyl-Lprolyl-Larginyl-L-prolyl-glycyl-glycyl-glycyl- glycyl-L-asparagyl-glycyl-L-aspartly-L-phenylalanyl-L-glutamyl-L-glutamyl- isoleucyl-L-prolyl-L-glutamyl-L-glutamyl-L-tyrosyl-L-leucine-trifluoracetate (salt) hydrate. Its molecular weight is 218.19 daltons (anhydrous free base peptide). 1.26 "PRODUCT CONFIGURATION" means and includes any modifications to the package insert, labeling, or packaging of the Product required by Government Authority(s) of one or more countries of the Territory. 1.27 "PRODUCTION VOLUME DISCOUNT" shall have the meaning ascribed to it in Exhibit B attached hereto. 1.28 "PTCA" means percutaneous coronary transluminal angioplasty. 1.29 "SERIOUS ADVERSE EVENT" means (i) an Adverse Event that at any dose, results in death or is life-threatening, as well any Adverse Event that results in persistent or significant disability/incapacity or requires in-patient hospitalization or prolongs hospitalization, or (ii) any medically significant event that, based upon appropriate medical judgment, may jeopardize the patient and may require medical or surgical intervention. 1.30 "THROMBIN INHIBITOR" means any pharmaceutical with a mechanism of action involving the partial or complete inhibition of thrombin in the clotting cascade. Thrombin inhibitors shall include direct acting compounds including but not limited to lepirudin, desirudin and other members of the hirudin family as well as melagatran and small molecule direct thrombin inhibitors such as argatroban. Thrombin inhibitors shall also include indirect acting thrombin inhibitors which inhibit thrombin in conjunction with a co-factor such as AT-III. Such indirect thrombin inhibitors shall include but not be limited to unfractionated heparins and low molecular weight heparins such as enoxaparin sodium, dalteparin sodium, fondaparinux and reviparin sodium but shall exclude Warfarin. 1.31 "TMC-UK" means The Medicines Company of the United Kingdom, a limited liability corporation located at Buxton Court 3 West Way, Botley, Oxford, United Kingdom OX2 OSZ or such other EU incorporated entity of TMC which TMC may designate. -5- 1.32 "TRADEMARKS" means trademarks, trade names, service marks, and other proprietary symbols owned or controlled by TMC and as designated by TMC in Exhibit C hereto. 1.33 "UNIT", for the purpose of calculating the Average Net Unit Selling Price, the Transfer Price and the Minimum Transfer Price, shall mean the metric milligram (mg.). 1.34 "WAC" shall mean the U.S. Wholesale Acquisition Cost, as listed in the US Red Book for hospital injectables. STATEMENT OF AGREEMENT In consideration of the mutual agreements set forth herein, TMC and Nycomed hereby agree as follows: 2. APPOINTMENT OF NYCOMED 2.1 Appointment, General Diligence. TMC hereby appoints Nycomed as the exclusive distributor of the Product and any Improvements in the Territory for any and all Indications (whether or not currently existing or planned) during the term of this Agreement and Nycomed hereby accepts such appointment subject to the terms and conditions described in this Agreement. In addition to the specific requirements of Articles 6 and 11 below, Nycomed shall promote and market the Product with no less effort than it customarily applies in promoting and marketing other products in the Territory. Nycomed shall have the right to appoint its Affiliates and other third parties as subdistributors of the Product in the Territory. 2.2 Distribution Boundaries. Subject to the applicable regulations in the Territory and to the extent permitted by law Nycomed shall not (i) establish or maintain any distribution facility for the Product outside the Territory, or (ii) advertise or promote the Product to potential buyers located outside the Territory, or in any language, other than an official language of the Territory. Particularly, Nycomed is cognizant of and recognizes the exclusive distribution rights granted by TMC to Grupo Ferrer Internacional S.A. for Spain, Portugal and Greece and for certain countries within Central and South America. If Nycomed receives an order for, or inquiry concerning the Product from a potential customer located outside the Territory and outside the EEA, and unless such customer intends to resell the products within the EEA, Nycomed shall immediately refer such order or inquiry to TMC. -6- 2.3 Non-Competition. During the term of this Agreement, or any renewals, none of Nycomed, its Affiliates or its Distributors shall manufacture, distribute or sell any Thrombin Inhibitor in the Territory; provided, however, that with respect to countries in the Territory which are included in the EEA, this sentence shall only apply from the First Launch Date until the date which is five (5) years after the First Launch Date. During the term of this Agreement, or any renewals, Nycomed shall notify TMC regarding new pharmaceutical products (excluding line extensions and new formulations) Nycomed or its Affiliates intend to directly or indirectly sell, market or promote in the Territory. Notwithstanding the above, Nycomed shall be entitled to distribute any product for the same Indications as approved for the Product, other than abciximab, eptifibatide, or enoxaparin sodium, that may be used with the Product and/or which may be used in circumstances where the Product is not currently indicated or is contraindicated. Notwithstanding anything contained herein to the contrary, Nycomed shall not be deemed to be in breach of this Section 2.3 if any of the customers of Nycomed, its Affiliates or its Distributors outside the Territory resell any Thrombin Inhibitor in the Territory which they purchased from Nycomed, its Affiliates or its Distributors. 3. MILESTONES 3.1. Distributor Fee Upon execution of this Agreement, Nycomed shall (a) pay to TMC a non refundable, non creditable distributor fee of One Million Five Hundred Thousand United States Dollars (US$1,500,000); and (b) purchase from TMC for an aggregate purchase price of US$1,000,000 a number of shares of common stock of TMC determined by dividing US$1,000,000 by the average closing sales price of TMC's common stock as reported on the Nasdaq National Market for the ten trading days ending on the date five trading days prior to the Effective Date. In connection with such purchase of shares, Nycomed will execute an investment representation letter in the form attached as Exhibit D. 3.2. Approval Milestones (a) Nycomed shall pay an additional non refundable, non creditable fee to TMC in the amount of Two Million Five Hundred Thousand United States Dollars (US$2,500,000) upon approval of the PCI indication by any European Regulatory Agency. In the case of a centralized application in respect of the Product, approval shall include the receipt of a positive opinion from the Committee for Proprietary Medicinal Products ("CPMP'). (b) If the fee described in Section 3.2 (a) above has not yet become payable to TMC, then upon approval of the PTCA indication by any European Regulatory Agency, -7- Nycomed shall pay an additional non refundable, non creditable fee (beyond the milestone described in Section 3.2(a) above) to TMC in the amount of One Million Five Hundred Thousand United States Dollars (US$1,500,000). In the case of a centralised application in respect of the Product, approval shall include the receipt of a positive opinion from the CPMP. For the sake of clarification, Nycomed shall be required to pay one fee, as described in Sections 3.2(a) or (b) hereof, but shall not in any event be required to pay both of those fees. (c) If either of the Approvals described in Sections 3.2(a) or (b) above is delayed beyond June 30, 2004, the amount payable to TMC upon the occurrence of such Approval shall be reduced by [**] percent ( [**]%) for each six month (6) period which elapses between June 30, 2004 and such Approval. A reduction shall also be given, on a pro-rated basis, for periods of less than six months which elapse between June 30, 2004 and such Approval. By way of example, if the Approval for the PCI Indication by a European Regulatory Agency is delayed until March 31, 2005 (nine months after June 30, 2004), then the fee described in Section 3.2(a) above shall be reduced by $ [**], calculated as follows: [**]% for the first six months and [**]% for the remaining portion of the delay (which is one-half of a second six (6) month period). 4. PRODUCT OPTIMIZATION COMMITTEE 4.1 Role of Product Optimization Committee Generally. The Parties shall establish a Product Optimization Committee ("POC") no later than sixty (60) days following the Effective Date. The POC shall consist of four (4) voting members, comprising two (2) representatives of TMC and two (2) representatives of Nycomed. The POC shall have two co-chairs, one from each Party. TMC's appointees to the POC shall be determined by TMC. Nycomed's appointees to the POC shall be determined by Nycomed and shall include appropriate representation from its commercial organization. The POC shall meet at least three (3) months prior to the beginning of each calendar year at such time and place as mutually agreed upon by the Parties, and at such other dates as may be agreed upon by the Parties. Should the Parties mutually agree to do so, additional, non-voting members may be appointed to the POC and operating subcommittees and project teams may be appointed by and report to the POC. The primary responsibility of the POC is to provide unified strategic and operating direction to the operating teams within TMC and Nycomed in a way that optimizes the value of the Product and maintains brand consistency for the Product in the Territory that is not in conflict with TMC's global commercialization strategy for the Product in accordance with Section 12. The POC shall also serve as a consensus-based decision-making unit of first resort with regard to the commercialization of the Product in the Territory. The POC shall be responsible for, among other things: -8- a) Working with TMC to determine the optimal clinical strategy for the Product within the Territory, and where appropriate, how these efforts will be initiated and funded within the Territory b) Determining Product plans and establishing strategies for obtaining Approvals as well as marketing and selling the Product for new and approved Indications in Territory c) Managing and directing operating subcommittees and project teams appointed by the POC d) Working with TMC and Nycomed to ensure that TMC can take full advantage of and leverage the expertise and contacts that Nycomed has in the EEA and other European countries, in order to facilitate and expedite obtaining Approvals of the Product in the EEA and those other countries e) Monitoring TMC's compliance with rules, regulations and laws applicable to the manufacture of the Product, based on periodic information provided by TMC In the event that a consensus decision cannot be reached by the POC, TMC shall have final authority for decisions with respect to the development of the Product for new Indications, Product trials, manufacturing and supply of the Product and Approvals, and Nycomed shall have final authority for decisions with respect to marketing and selling of the Product within the Territory, provided Nycomed's decisions (other than in respect of pricing, which shall be at Nycomed's entire discretion) are not in conflict with TMC's global commercialization strategy for the Product. For the sake of clarification, forecasts shall be provided by Nycomed, and shall not require any decision by the POC. 4.2 Advisory Boards. For the purpose of maximizing the medical community's knowledge and awareness of the Product, if TMC maintains a European advisory board for the Product, the members and meetings of such board shall be accessible to Nycomed's personnel, and if Nycomed develops national or regional advisory boards for the Product, the members and meetings of such boards shall be accessible to TMC's personnel. Each Party's participation in any such boards shall be subject to the confidentiality procedures imposed on other members of such boards. 4.3 Clinical Development. (a) The POC shall create a joint clinical plan for the Product in the Territory. For all Product trials included in that plan, the Parties shall share the cost of conducting such trials based on where each trial is conducted (e.g., Nycomed paying in full for trials conducted in the Territory and TMC paying in full for trials conducted outside the Territory); provided, however, -9- that (i) Nycomed shall not be required to pay for trials which are conducted without a consensus decision of the POC; and (ii) if any such trial for which Nycomed does not pay results in Approval of a new Indication, then within ninety (90) days after receiving notice of such Approval, Nycomed shall pay TMC an amount equal to (x) the amount which Nycomed would have paid for such trial if the POC had reached a consensus, multiplied by (y) 1.125. (b) Trials currently under consideration are ACS, CABG off pump and HITS/CABG. (c) Notwithstanding Section 4.3(a) above, TMC shall be fully responsible for funding the costs of conducting the current REPLACE II trial and any follow-up commitments which TMC undertakes as a condition to obtaining Approval from CPMP for the Initial Indication of the Product. Data generated from such trial may be used by Nycomed without charge in connection with obtaining Approvals for countries in the Territory which are not members of the EEA. 4.4 Non-Required Trials. Nycomed may from time to time propose Non-Required Trials to be conducted in the Territory. The POC shall discuss the structure of Non-Required Trials to be conducted in the Territory to expand approved Indications of the Product or to provide data supporting usage of the Product in the market. Prior to conducting any clinical evaluation of the Product, Nycomed shall furnish to all members of the POC the protocols for such evaluation written in the English language. TMC shall have final approval for Non-Required Trials. If approved by the POC, Non-Required Trials will be conducted at Nycomed's expense. Results from any such clinical evaluation shall not be publicly disclosed without TMC's prior written approval, such approval not to be unreasonably withheld. 5. REGULATORY AUTHORIZATIONS AND REGULATORY COMPLIANCE 5.1. Approvals within the EEA To the extent allowable by law, TMC-UK or its designated agent, at its own expense, will have primary responsibility for obtaining and maintaining all Approvals of the Product within the EEA. TMC-UK shall register the Product under TMC-UK's name or when required by law, the names of Nycomed, its agents and/or Distributors. TMC-UK shall prepare applications, make submissions in the EEA, and conduct negotiations with Governmental Authority(s) regarding Approvals. TMC-UK may require Nycomed to provide assistance to TMC-UK in the Approval process for one or more countries of the Territory within the EEA. -10- TMC-UK will determine whether a centralized filing through the EMEA or filings through the principle of mutual recognition of national authorizations is optimal for the Product. 5.2. Approvals outside the EEA. Nycomed, at its own expense, will be responsible for obtaining and maintaining all Approvals of the Product within the Territory, but outside of the EEA. The Parties will jointly determine, through the POC, the appropriate legal and regulatory approval plan to gain Approvals of the Product in such countries. 5..3 Compliance with Governmental Regulations. TMC and Nycomed shall each comply with all laws, rules and regulations of every Governmental Authority having jurisdiction over its respective activities, as contemplated by this Agreement. 6. MINIMUM ANNUAL PURCHASES 6.1 The required minimum purchases Nycomed must make from TMC (the "Minimum Purchases") shall be defined as follows:
By Specified Anniversary of First Approval Date Minimum Purchases - ----------------------------------------------- ----------------- First US$ [**] Second US$ [**] Third US$ [**]
In the event that Nycomed from time to time exercises its option under Section 12 or 20.2(b) below to terminate this Agreement with respect to any of Germany, France, Italy or the United Kingdom, then the Minimum Purchases stated above shall be decreased by the following percentages, depending on which country or countries have been terminated: (a) Germany [**]%; (b) France [**]%; (c) Italy [**]%; and (d) the United Kingdom [**]%. All purchases by Nycomed from TMC shall be counted towards these Minimum Purchase targets, regardless of the country in the Territory for which Nycomed makes those purchases. For each year subsequent to the third anniversary of the First Approval Date, the POC shall set a new Minimum Purchase target. Such target shall be set no later than sixty (60) days prior to the beginning of each such year. If the POC does not set such target for any year (measured from the First Approval Date) by such date, then (i) the Minimum Purchase target shall be US$ [**] for the fourth (4th) year; (ii) the Minimum Purchase target shall be US$ [**] -11- for the fifth (5th) year; and (iii) thereafter, the Minimum Purchase target shall be equal to the greater of: (A) US$ [**]; or (B) [**] percent ( [**]%) of the actual purchases of the Product by Nycomed from TMC during the immediately preceding year. 6.2. If Nycomed does not achieve the required Minimum Purchases for any one year period, then: (a) in the first instance, Nycomed shall, at its election, within sixty (60) days after the end of such year, either purchase or make a cash payment for a sufficient amount of Product at the then-current Minimum Transfer Price so as to satisfy such requirement. If Nycomed does not make such purchases or cash payment by the end of such sixty (60) day period, TMC shall have the option to terminate this Agreement with written notice to Nycomed, effective immediately; (b) in the second instance, Nycomed shall, at its election, within sixty (60) days after the end of such year, either purchase or make a cash payment for a sufficient amount of Product at the then-current Minimum Transfer Price so as to satisfy such requirement. If Nycomed does not make such purchases or cash payment by the end of such sixty (60) day period, TMC shall have the option to terminate this Agreement with written notice to Nycomed, effective immediately; and (c) in the third instance, Nycomed shall within sixty (60) days after the end of such year, purchase a sufficient amount of Product at the then-current Minimum Transfer Price so as to satisfy such requirement. If Nycomed does not make such purchases by the end of such sixty (60) day period, TMC shall have the option to terminate this Agreement with written notice to Nycomed, effective immediately. If Nycomed make such purchases by the end of such sixty (60) day period, TMC shall have the option to convert Nycomed's rights hereunder from exclusive to non-exclusive rights. 6.3 If after Nycomed's rights hereunder have been converted from exclusive to non-exclusive rights in accordance with Section 6.2(c) above, Nycomed does not achieve the required Minimum Purchases for any subsequent one year period, then TMC shall have the option to terminate this Agreement with written notice to Nycomed, effective immediately. 6.4. For the sake of clarification, Nycomed shall not be deemed to have failed to achieve the required Minimum Purchases for any one-year period, for the purposes of Section 6.2 above, if Firm Orders (as per Articles 7 and 8 hereunder) are sufficient for Nycomed to achieve the required Minimum Purchases but the required Minimum Purchases are not achieved as a result of Product supply limitations (including both non-delivery of ordered Product as well as delivery of non-conforming Product which must be replaced). In the event that TMC delivers less than [**]% of the volumes of the Product covered by Firm Orders forecasted by Nycomed, then the one-year period in question shall be measured from the date on which those Product supply limitations are resolved and the required Minimum Purchases for such one-year period shall be -12- deemed to be reduced by a percentage of what the required Minimum Purchases would have been for such one-year period pursuant to Section 6.1 above and each subsequent one-year period pursuant to Section 6.1 above until Nycomed reestablishes the weighted (that is -- Germany [**]%; France [**]%; Italy [**]%; and the United Kingdom [**]%.) average of the market shares of the Product in Germany, France, Italy and the United Kingdom for the full calendar quarter immediately preceding the commencement of any such supply limitation. Such percentage reduction shall be equal to the weighted (that is -- Germany [**]%; France [**]%; Italy [**]%; and the United Kingdom [**]%.) average reduction in market share of the Product in Germany, France, Italy and the United Kingdom, if any. For purposes of determining market share, IMS data (or equivalent data where IMS data is not available) of the full calendar quarter immediately preceding the commencement of any such supply limitation shall be compared with IMS data (or equivalent data where IMS data is not available) for the first full calendar quarter immediately following the resolution of such supply limitation. By way of example, if the market share of the Product in Germany is reduced from [**]% to [**]% for the relevant quarters, it shall be deemed to be a [**]% reduction in market share, for the purposes of computing the German portion of the above weighted average. Once Nycomed re-establishes the weighted average of the market shares of the Product in Germany, France, Italy and the United Kingdom. as described above, the POC (or failing agreement, the Presidents of the Parties) shall meet and agree on revised required Minimum Purchases for subsequent years. Until the POC or the Parties reach such an agreement, the immediately preceding one-year period's Minimum Purchases (as adjusted pursuant to this Section 6.4) shall continue to apply. 7. FORECASTS Nycomed shall provide TMC with a twenty four (24) month Product forecast no later than six (6) months prior to the anticipated First Launch Date and shall thereafter update such forecast on a rolling quarterly basis. The rolling forecasts are to be broken down to single months. Nycomed shall use its reasonable commercial efforts to provide accurate forecasts to TMC. The first six (6) months of each forecast (months 1 through 6) are Firm Orders and cannot be changed, by subsequent forecasts or otherwise. The forecast for the remaining months (months 7 through 24) is not binding. 8. PLACING ORDERS AND SUPPLY 8.1 Increases in Firm Orders. TMC shall use commercially reasonable efforts to deliver Product covered by Firm Orders. TMC shall make every reasonable effort to comply with unplanned increases in Firm Orders, but shall not be held liable for its inability to do so. In each Firm Order for any month, -13- Nycomed shall state, after consultation with TMC, a reasonable delivery schedule for Product to be delivered in that month. 8.2 Quantities. Product shall be provided to Nycomed by TMC and shall be ordered by Nycomed in 250 mg naked (unlabelled) vials. Naked vials shall be shipped to an agreed location in the European Union or Norway. TMC shall be responsible for the cost of filling the naked vials at Ben Venue Laboratories. Additionally, TMC may designate another qualified company in Europe or elsewhere that shall be responsible for filling the naked vials, and TMC shall provide all required technical know-how to the designated company for such purposes. TMC shall be responsible for the cost of filling, both at Ben Venue and at any such additional site. As marketing authorization holder, TMC shall be responsible for designating an authorized manufacturer and/or site of European batch release for the Product. Subsequent to further negotiations and approval, TMC may designate Nycomed to act in this capacity; provided, however, that TMC also reserves the right to designate other third parties as appropriate. Nycomed shall be responsible for: (a) the shipping and insurance costs incurred in connection with transporting the Product from TMC's fill point to the agreed location in the European Union or Norway; and (b) the labeling and packaging costs of vials of Product, which shall be prepared by Nycomed in a manner consistent with the provisions of this Agreement, and applicable Territory laws and regulations. 8.3 Product Packaging, Product Configuration and Destination Instructions The Product will be supplied as a sterile lyophilized formulation in 10 ml glass vials containing material that, when reconstituted, will deliver 250mg of bivalirudin per 5ml. Each 250mg vial constitutes a single unit of Product. Nycomed will be responsible for the Product Configuration. TMC shall approve all labeling and package insert proofs prior to their use. TMC shall not be obligated to fulfill any Product Configuration request for less than [**] vials. 8.4 Cancellations, Cutbacks, No Liability. The terms and conditions set forth in this Agreement shall apply to all purchases of Product by Nycomed, and to the extent such terms and conditions conflict with those set forth in any purchase order or invoice for Product, the terms and conditions set forth in this Agreement shall govern. Nycomed shall not change or cancel an order without the prior written consent of TMC. If the Products are in limited supply or otherwise unavailable in the quantities requested by Nycomed, TMC will make its reasonable efforts to supply Nycomed. Specifically, TMC -14- shall allocate the available supply of Product among TMC, Nycomed and other TMC distributors in proportion to the relative shares of TMC's supply of Product resold by TMC itself or purchased by Nycomed and those other distributors during the immediately preceding twelve (12) month period. TMC shall not be liable to Nycomed for any losses or damages arising from TMC's inability to fill or accept any Firm Order as originally scheduled. 9. DELIVERY AND ACCEPTANCE 9.1 Delivery. Except as set forth below, all Firm Orders shall be delivered FCA (INCOTERMS 2000) TMC's designated filling location(s). TMC shall only be required to deliver Product to Nycomed once in each month, with a [**]unit minimum delivery quantity. With respect to Firm Orders, lead time for the first delivery of the Product shall be three (3) months, and lead time for subsequent deliveries shall be one (1) month. TMC reserves the right to defer delivery of Product to Nycomed until Nycomed's cumulative Firm Orders for such Product Configuration exceed [**] units. Unless Nycomed requests otherwise, all Firm Orders shall be packed for shipment and storage in accordance with TMC's standard commercial practices. All Product delivered by TMC at the FCA (INCOTERMS 2000) point shall have a minimum expiry of [**] percent ( [**]%) of its approved shelf life in the EEA, as measured from the date of delivery. The aforementioned term shall be proportionally increased from time to time in accordance with improved stability data. It is Nycomed 's obligation to notify TMC of any special packaging requirements (which shall be at Nycomed 's expense). TMC shall provide Certificates of Analysis for each lot of Product delivered to Nycomed to demonstrate that such lot was tested and released prior to delivery. Full batch documentation, including batch production records and manufacturing and analytical records, shall be available for review by Nycomed. TMC shall deliver Product into the possession of a common carrier designated by Nycomed, on the relevant Firm Order for such Product. If Nycomed does not designate a common carrier before the delivery date indicated on a Firm Order, then TMC may designate a common carrier on behalf of Nycomed. Title, risk of loss and damage to a Product shall pass to Nycomed upon such Product's removal from TMC's designated filling location. The Parties shall enter into a separate technical agreement within thirty (30) days after the Effective Date. TMC shall be entitled to withhold delivery of any unpaid Firm Order if either (i) payment is overdue for any Firm Order, or (ii) TMC has objective reasons for fearing that Nycomed might not be able to pay for the Products delivered or to be delivered. 9.2 Acceptance. Nycomed shall have thirty (30) days from receipt at the designated location in the European Union to examine such Product. Nycomed shall promptly notify TMC of short -15- shipments or any visually defective Product and shall return to or otherwise dispose of any defective shipments in accordance with TMC's instructions, at TMC's cost and expense. TMC shall provide for replacement delivery within one (1) month from existing production stock, if available, and if not available, within three (3) months therefrom. Such replacement shall be Nycomed 's sole and exclusive remedy with respect to short shipments and visually defective Product delivered by TMC hereunder. Such limitations will not apply in case of latent defects. 10. FEES AND PAYMENT AMOUNTS 10.1 Transfer Price. a) For each quantity of Product sold by Nycomed, Nycomed shall pay TMC the transfer price for such quantity as calculated according to Exhibit B attached hereto. b) The Average Net Unit Selling Price and Net Sales for each calendar quarter shall be calculated by Nycomed at the end of such quarter and shall be reported by Nycomed to TMC within five (5) working days after the end of each such calendar quarter. If any Net Sales are stated in a currency other than United States Dollars during such quarter, then, for the purpose of calculating the Average Net Unit Selling Price for such quarter such Net Sales shall be converted into United States Dollars at the exchange rate between those two currencies most recently quoted in the European Central Bank in Frankfurt as of the last business day (that is - a day on which banks are open in Frankfurt) of such calendar quarter. If no such exchange rate has been quoted in the European Central Bank in Frankfurt at any time during the twelve (12) month period preceding the last business day of such quarter, such Net Sales shall be deemed to be equal to the Net Sales for the Product most recently charged by Nycomed in United States Dollars. c) Notwithstanding anything in this Agreement to the contrary, TMC's Transfer Price from the First Launch Date until the end of the then-current calendar quarter shall be at US$ [**] per unit. d) Within forty-five (45) days after the end of each calendar year, TMC and Nycomed shall compute any Production Volume Discounts earned by Nycomed during such calendar year, in accordance with Exhibit B attached hereto. TMC will within forty-five (45) days after the end of such calendar year make a payment to Nycomed to reflect the amount of the Production Volume Discount earned by Nycomed during such calendar year. -16- 10.2 Payment Form. All payments between the Parties shall be in US Dollars. Taxes now or hereafter imposed with respect to the transactions contemplated hereunder (with the exception of income taxes or other taxes imposed upon TMC and measured by the gross or net income of TMC) shall be the responsibility of Nycomed, and if paid or required to be paid by TMC, the amount thereof shall be added to and become a part of the amounts payable by Nycomed hereunder. Notwithstanding the foregoing, if Nycomed is required to withhold taxes from any amount payable by Nycomed to TMC, then Nycomed shall pay to TMC an additional amount as may be necessary so that TMC will receive, after deduction of such withholding tax, the amount which TMC would have received in the absence of such withholding tax. TMC will credit to Nycomed any withholding tax TMC recovers through a foreign tax credit that TMC actually uses to reduce its US tax liabilities, up to the additional amount as described above, that Nycomed has paid to TMC with respect to that recovered tax. TMC shall provide Nycomed with a certificate of residence and other documents which Nycomed may reasonably request in order to demonstrate that TMC is a tax resident of the United States. 10.3 Payment Dates; Interest on Overdue Amounts. Nycomed shall pay TMC's invoices for the Product as follows: (a) within sixty (60) days after receiving such invoice, the Minimum Transfer Price; and (b) within twenty (20) working days after the end of each calendar quarter, the amount, if any, by which the Transfer Price described in Exhibit B attached hereto exceeds such Minimum Transfer Price; provided, however, that with respect to the twelve (12) month period immediately following the First Launch Date, (i) US$ [**] per unit shall be due within forty-five (45) days after Nycomed receives TMC's invoice; and (ii) the balance of the Transfer Price per unit (including without limitation the amount, if any, by which the Transfer Price described in Exhibit B attached hereto exceeds such Minimum Transfer Price) shall be due within ninety (90) days after Nycomed receives TMC's invoice. Additionally, all payments due under this Article 10 but not paid when due shall bear interest which is the lesser of: (i) the rate of Citibank N.A.'s prime rate plus 2% per annum or (ii) the maximum lawful interest rate permitted under applicable law. Such interest shall accrue on the balance of unpaid amounts from time to time outstanding from the date on which portions of such amounts become due and owing until payment thereof in full. 10.4. Responsibilities for Expenses. (a) TMC shall be responsible for: (i) the cost of bulk material; (ii) all license fees and royalties payable to third parties in connection with the manufacture, use or sale of the Product, in accordance with agreements between TMC and third parties; (iii) fill costs (excluding labeling and packaging costs); (iv) regulatory filing and maintenance costs within the EEA, including release testing required pursuant to the Approvals for the EEA (excluding country-specific local testing); and (v) its own incidental costs in assisting Nycomed in obtaining Approval outside the EEA. -17- (b) Nycomed shall be responsible for: (i) any third party payment obligations (including without limitation fees associated with obtaining Approval in countries in the Territory which are not members of the EEA, customs clearance and, if necessary, local release testing for Product) incurred by Nycomed in connection with distributing and marketing the Product in any country in the Territory; (ii) sales, marketing, labeling and packaging costs; (iii) its own incidental costs in assisting TMC in obtaining Approvals for countries which are members of the EEA; and (iv) regulatory filing and maintenance costs for countries in the Territory which are not members of the EEA. 11. MARKETING/PROMOTION RIGHTS AND RESPONSIBILITIES/REPORTING 11.1 Pre-Launch. Nycomed shall assume all pre-launch marketing responsibility and expenditures with regard to the Product in the Territory. On or before an Approval is obtained from the EMEA for the Product with respect to any Indication, Nycomed shall have in place either an Affiliate or Distributor in Norway and in each member country of the European Union which is included in the Territory. 11.2 Cooperation Each Party shall cause its product manager for the Product to cooperate and share information (including without limitation Product-related market research) with the other Party during the development of Product-level planning, positioning and marketing strategies. 11.3. Promotional Materials (a) Nycomed shall be responsible for creating all promotional materials for the Product, including, but not limited to sales materials. All such materials shall be in keeping with local laws and regulations and the Approval requirements regarding Product documentation and subject to TMC's prior written approval and shall be submitted to TMC in English and in the intended language for its review at least twenty (30) days prior to the proposed first use of such materials. Materials shall be deemed approved if no objection is received within ten (10) days after its submission by Nycomed to TMC. (b) TMC shall make its U.S. marketing materials available to Nycomed. Nycomed shall not use any adaptation of such marketing materials without TMC's prior written approval of such adaptations. -18- 11.4. Press Releases. Any press release regarding the Product which Nycomed desires to release shall be submitted to TMC for review prior to the proposed release date. The release of such information is subject to the prior written consent of TMC, which consent shall not be unreasonably withheld. Press releases will be deemed approved if no objection is received within five (5) days after its submission by Nycomed to TMC. 11.5 INTENTIONALLY OMITTED. 11.6 INTENTIONALLY OMITTED 11.7. Business Reporting by Nycomed. Nycomed agrees to submit a written report to TMC for each calendar quarter, within thirty (30) days after the end of such quarter (except that information on Net Sales and Average Net Unit Selling Price shall be provided on or before the fifth working day after the end of such quarter). Such quarterly reports shall begin no later than ninety (90) days from the First Launch Date. Such reports shall include information, on a country-by-country basis, with respect to the units of the Product sold and Gross Sales, Net Sales and Average Net Unit Selling Price (and the calculation thereof) for such units, and in addition: (a) Market shares of the Product for the Territory, when and where available; (b) Nycomed developed and/or commissioned market research on the Product, if any, information on any markets Nycomed currently operates in or is considering operating in and plans concerning all publication and medical education activities; and (c) A breakdown of marketing and sales resources and costs expended by Nycomed for Germany, France, Italy, the United Kingdom and other countries designated by the POC vs. Nycomed's marketing plan as outlined in Article 12. 11.8. TMC Reporting Obligations. TMC agrees to update Nycomed within thirty (30) days after the end of each calendar quarter with regard to: (a) Changes to planned publication activities; (b) Manufacturing ordering status for the Product, and any anticipated supply problems or delays; -19- (c) Clinical trials' status; (d) Study reports; (e) Regulatory status in the EEA; (f) Product stability; and (g) Preclinical reports. 12. NYCOMED'S COMMERCIAL CAMPAIGN Subject to TMC's timely delivery of Product, Nycomed shall use its commercially reasonable efforts consistent with standard practices of an international pharmaceutical company to advertise, actively promote the sale of and sell the Product in each country in the Territory. Should Nycomed not Launch the Product in any member of the EEA within [**] years after the First Launch Date for any reason (including without limitation lack of required Approvals in such country) or should Nycomed not file for Approval in any country in the Territory which is outside the EEA within [**] after the First Launch Date or, after obtaining such an Approval in a country, not Launch the Product in such country within [**] after receiving such Approval, then TMC shall have the option to terminate this Agreement, effective immediately, with all rights granted to Nycomed hereunder for such country reverting to TMC; provided, however, if a centralized application in respect of the Product is not filed with the EMEA, then the Parties shall in good faith agree upon an appropriate extension to the [**] year period discussed above. Notwithstanding anything else in this Article 12 to the contrary, Nycomed shall not be obligated to continue to market or distribute the Product in any country of the Territory (and Nycomed shall have the option to terminate this Agreement with respect to such country, effective immediately, with all rights granted to Nycomed hereunder for such country reverting to TMC) in which Nycomed's actual realized gross profit from such marketing and distribution efforts is equal to or less than: (a) [**] percent ( [**]%), based on Net Sales in such country; or (b) US$ [**] vial. Nycomed, through the POC, shall furnish TMC with a detailed marketing plan with respect to the Product, six (6) months before the First Launch Date and three (3) months prior to the beginning of each calendar year thereafter. TMC shall have the right to audit the books and records of Nycomed, its Distributors and its Affiliates that market the product, in order to confirm that Nycomed has made these required efforts. 13. COLLECTION OF INFORMATION ON ADVERSE AND SERIOUS ADVERSE EVENTS/REPORTING ON MEDICAL SAFETY/ RECALLS. 13.1 Nycomed's Obligations regarding Regulatory Reporting ("Pharmacovigilance"). -20- To the extent permitted by Law, Nycomed shall have sole responsibility for Pharmacovigilance and for submitting Adverse Event/medical safety reports in the Territory, as may be required by the Government Authorities or regulations. Nycomed shall not submit Adverse Event or safety reports to Government Authorities without first consulting TMC's designated drug surveillance and information contact. The Parties shall enter into a separate Pharmacovigilance agreement within thirty (30) days after the Effective Date. 13.2. Cooperation/Procedures. TMC shall also be responsible for maintaining a central Adverse Event/medical safety database for the Product. The Parties shall cooperate towards establishing and maintaining such database. Reports based on this database will be made available to Nycomed during the term of the Agreement, as necessary, to meet the requirements of Government Authorities in the Territory. Without limiting the generality of the foregoing, Nycomed and TMC shall work together to develop standard operating procedures for exchange of information concerning Adverse Events and Product safety information derived from Product use in the Territory and each Party shall at all times comply with the procedures developed. 13.3. Recalls. In the event that either Party determines that an event, incident or circumstance has occurred which may result in the need for a recall or other removal of the Product, or any lot or lots thereof, from the market, such Party shall advise the other and the Parties shall consult with respect thereto in accordance with the technical agreement between the Parties. TMC shall have authority to decide whether a recall or other removal of such Product shall be made. The cost of recall and removing and destroying the Products recalled shall be borne by TMC. TMC shall, at Nycomed's discretion, reimburse or credit the Products recalled to Nycomed at the Transfer Price paid by Nycomed for such Products. 14. TRADEMARKS 14.1 Right to Use Nycomed shall use the Trademarks on an exclusive basis with respect to Exhibit C part a) and on a non-exclusive basis with respect to Exhibit C part b) during the term of this Agreement in the Territory solely for display, advertising, labeling and packaging purposes in connection with marketing, selling and distributing the Product in accordance with this Agreement. Nycomed shall not at any time do or permit any act to be done which may in any way impair the rights of TMC in the Trademarks. TMC shall at all times retain sole and exclusive ownership of the Trademarks. TMC agrees that, if required by the laws of any country -21- of the Territory, recordal of Nycomed's license with respect to the Trademarks or other recording of Nycomed's rights as a user of the Trademarks shall be permitted. Nycomed shall promptly inform TMC of any infringement or challenge of the Trademarks in the Territory. TMC shall have the sole and exclusive right to bring all actions or proceedings relating to the Trademarks, and Nycomed shall not take any legal action against a third party based on infringement of the Trademarks, unless so authorized by TMC. Furthermore, Nycomed shall provide all reasonable assistance to TMC towards defending the Trademarks from infringement or challenge by or against third parties. TMC shall be responsible for all application and registration procedures for the Trademarks in the Territory. Should such procedures be unsuccessful, TMC's obligation towards Nycomed shall only be limited to registering a new Trademark for the Product. 14.2 Quality Control. In order to comply with TMC's quality control standards, Nycomed shall: (i) use the Trademarks in compliance with all relevant laws and regulations; (ii) obtain TMC's prior written approval of each such use (and TMC hereby approves Nycomed's use of the Trademarks in correspondence with health care providers in its ordinary course of business pursuant to this Agreement); (iii) provide, at TMC's request, reasonable quantities of samples of advertisements and other promotional materials on which the Trademarks are affixed, in order to allow TMC to confirm that Nycomed's use of such Trademarks is in compliance with TMC's applicable standards and guidelines which are then in effect, and (iv) not modify any of the Trademarks in any way and not use any of the Trademarks on or in connection with any goods or services other than the Product. 14.3 Promotion on Internet. Nycomed shall not engage in active sales of the Product outside the Territory via the Internet and TMC shall not engage in active sales of the Product in the Territory. All Internet sales activities shall be in accordance with local laws and guidelines. The Parties agree that at least the following behavior shall constitute breach of this Section 14.3: (a) the use on the Internet of a language other than any official language of the Territory; (b) the use on the Internet of banners or links specifically available to customers other than customers in the Territory; (c) the use on the Internet of any other symbol or denomination of any currency than those for the currencies of the Territory; (d) the use on the Internet of any other trademarks for the Product other than the Trademarks; -22- (e) the use on the Internet of any other package of the Product than the packages of the Product for the Territory. 14.4 Domain Names, Marks, Corporate Names and Meta-Tags. In no event shall Nycomed: (i) establish, operate, sponsor, or contribute content to any site on the Internet which incorporates the word "Angiomax" or "The Medicines Company", any of TMC's trademarks, service marks or trade names identified in Exhibit E hereto (the "Marks") or any variation of such Marks as its URL address or any part of such address; (ii) register any domain name which incorporates any of the words "Angiomax" or "The Medicines Company" or the Marks (and Nycomed hereby agrees to transfer such domain name to TMC if it breaches this provision); (iii) register any of TMC's Marks or any Marks that are confusingly similar to any of the words "Angiomax" or "The Medicines Company" or TMC's Marks; (iv) form (or change the name of) any corporation or other entity under or to a name which incorporates any of the words "Angiomax" or "The Medicines Company" or any of TMC's Marks; or (v) at any time during or after the term of this Agreement, in order to attract visitors to any site on the Internet, (A) use "Angiomax" or "The Medicines Company", any of TMC's Marks or any variation thereof as a meta-tag or invisible text or on any unused frame or bridge page, (B) purchase "Angiomax" or "The Medicines Company", any of TMC's Marks or any variation thereof as a search term from any search engine; or (C) engage in any other practice designed to direct web browsers using search engines to different web pages or versions of web pages than the pages corresponding to search terms entered by the user (including without limitation "bridge pages", "cloaking" or "pagejacking"). 14.5 Equitable Relief. Nycomed acknowledges and agrees that due to the unique nature of domain names, there can be no adequate remedy at law for any breach of its obligations under this Article 14, and that any breach may allow Nycomed or third parties to unfairly compete with TMC, and therefore, that upon any breach by Nycomed or threat thereof, TMC shall be entitled to appropriate equitable relief in addition to whatever remedies it might have at law. Nycomed shall notify TMC in writing immediately upon the occurrence of any such breach or any threat thereof of which it is aware. 15. PATENTS TMC will defend and maintain at its cost the Patents in the Territory on the Product. At TMC's cost, TMC shall file patent extension applications and prosecute and maintain all such extensions for those countries in the Territory and in Spain, Portugal and Greece identified by Nycomed at least forty-five (45) days prior to the date that such extensions must be filed. If TMC does not take appropriate actions against any infringement or threatened infringement by a third party of the Patents, within ninety (90) days of Nycomed's request to do so, Nycomed will have the right to institute such proceedings at its own cost and expense. All damages, including -23- interest, profits and other recoveries awarded to the prosecuting party shall be retained by such party. 16. NO RIGHTS BY IMPLICATION No rights or licenses with respect to the Product or the Trademarks are granted or deemed granted hereunder or in connection herewith, other than those rights expressly granted in this Agreement. 17. CONFIDENTIAL INFORMATION 17.1 Obligations to Keep Confidential and Not Use. In connection with the ongoing business relationship between TMC and Nycomed, each Party (the "receiving Party") may gain access to proprietary information of the other Party (the "disclosing Party"), which may be considered confidential by the disclosing Party ("Confidential Information"). The receiving Party shall: (a) disclose Confidential Information of the disclosing Party only to the agents and employees of the Receiving Party, its Affiliates and its Distributors who have a reasonable need to know such information in order to perform their duties hereunder, and (b) shall not use such Confidential Information except in connection with performing its duties and exercising its rights hereunder. Such obligations of confidentiality and non-use shall terminate five (5) years after the term of this Agreement. 17.2 Exceptions. Such obligations of confidentiality and non-use pursuant to Section 17.1 above shall not pertain to Confidential Information of the disclosing Party that: (a) Was known to the receiving Party, as shown by written evidence, at the time of receipt from the disclosing Party, (b) Was available to the public at the time of receipt from the disclosing Party, (c) Subsequently becomes available to the public without the receiving Party breaching this Agreement, (d) Is disclosed to the receiving Party by a third party who/which is under no confidentiality obligation to the disclosing Party, (e) Is independently developed by the receiving Party, or (f) Is disclosed pursuant to and only to the extent of court order or as otherwise compelled by law after giving the disclosing Party notice and reasonable -24- assistance in opposing or limiting such disclosure; provided, however, that information disclosed pursuant to this Section 17.2(e) shall remain Confidential Information for the purposes of this Agreement. 17.3 The Terms of the Agreement. Either Party may provide to potential investors, lenders or acquirors who have a need to know the Confidential Information in order to assess the status of their investment in such Party or to determine whether to invest in such Party, provided that (i) the information is of a type customarily disclosed to investors, lenders or acquirors and (ii) the investors, lenders or acquirors to whom the information is disclosed are bound by obligations of confidentiality and non-use with respect to such information at least as stringent as those set forth within Section 17.1 above. 18. WARRANTY AND INDEMNIFICATION 18.1 Product Warranty. TMC hereby warrants that the Product is and shall be manufactured and delivered to Nycomed in conformity with (i) the specifications for the Product, (ii) the U.S. Federal Food, Drug and Cosmetic Act, as amended, (iii) the European Union Council Regulation No. 2309/93 of July 22, 1993 and any amendment thereof, (iv) the European Market Authorization granted to the Product and any extension thereof, and (v) any other regulations applicable to the Product in the EEA. In addition, upon Nycomed notifying TMC of additional requirements imposed by countries within the Territory but not members of the EEA which must be complied with for the Product to be manufactured and delivered to Nycomed in conformity with the regulations of such countries, (a) TMC shall use commercially reasonable efforts to comply with those requirements, and (b) Nycomed shall reimburse TMC for any additional costs which it may incur in connection with such efforts. 18.2 Disclaimer. EXCEPT AS STATED IN SECTION 18.1 ABOVE, TMC DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THE PRODUCT, INCLUDING, WITHOUT LIMITATION, ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE AND NON-INFRINGEMENT. 18.3 Indemnifications. (a) Nycomed hereby agrees to indemnify, defend and hold harmless TMC, all Affiliates of TMC and all officers, directors, employees and agents thereof from all liabilities, claims, damages, losses, costs, expenses, demands, suits and actions -25- (including without limitation attorneys' fees, expenses and settlement costs) (collectively, "Damages") arising out of: (i) Nycomed's breach of any of its obligations under this Agreement; or (ii) Nycomed's making representations or warranties which are not authorized by TMC hereunder. (b) TMC hereby agrees to indemnify, defend and hold harmless Nycomed, Affiliates of Nycomed and all officers, directors, employees and agents thereof from all Damages arising out of: (i) TMC's breach of any of its obligations under this Agreement; (ii) the Product infringing on the intellectual property rights of third parties or misappropriating any trade secrets of third parties; or (iii) personal injuries or damages suffered by third parties due to the Product not conforming to the warranty set forth in Section 18.1 above. (c) In the event a claim is based partially on an indemnified claim described in Sections 18.3(a) and/or 18.3(b) above and partially on a non-indemnified claim, or is based partially on a claim described in Section 18.3(a) above and partially on a claim described in Section 18.3(b) above, any payments and reasonable attorney fees incurred in connection with such claims are to be apportioned between the Parties in accordance with the degree of cause attributable to each Party. (d) The indemnified Party under this Section 18.3 hereby agrees that (i) it will give written notice to the indemnifying Party of each claim for which it seeks indemnification hereunder and that the indemnifying Party shall have sole control and authority with respect to the defense and settlement of any such claim; and (ii) the indemnified Party shall cooperate fully with the indemnifying Party, at the indemnifying Party's sole cost and expense, in the defense of any such claim. The indemnifying Party shall not accept any settlement which imposes liability not covered by this indemnification or restrictions on the indemnified Party without the indemnified Party's prior written consent, which consent shall not be unreasonably withheld or delayed.. (e) In the event that the Product is held in a suit or proceeding to infringe any intellectual property rights or misappropriate any trade secrets of a third party and the use of such Product is enjoined, or TMC reasonably believes that it is likely to be found to infringe or constitute a misappropriation or likely to be enjoined, then TMC shall, at its sole cost and expense, either (i) procure for Nycomed the right to continue distributing the Product; or (ii) modify the Product so that it becomes non-infringing. If TMC determines, in its reasonable discretion, that neither (i) nor (ii) are commercially practicable, then TMC may terminate this Agreement upon giving Nycomed ninety (90) days prior written notice; provided, however, that before resuming the marketing and distribution of the Product in the Territory, (A) Nycomed shall have a ninety (90) days right of first refusal -26- with respect to such rights, without the payment of any up-front or additional milestone payments; and (B) if Nycomed does not exercise such right of first refusal, then TMC shall not offer terms more favorable to a third party without first offering those more favorable terms to Nycomed in accordance with (A) above. (f) TMC shall have no obligation for any claim of infringement or misappropriation arising from: (i) any combination by Nycomed of the Product with products not supplied or approved in writing by TMC, where such infringement would not have occurred but for such combination; (ii) the adaptation or modification of the Product not performed by TMC, where such infringement would not have occurred but for such adaptation or modification; (iii) the use of the Product for an Indication for which it was not approved, where such infringement would not have occurred but for such use; or (iv) a claim based on intellectual property rights owned by Nycomed or any of its Affiliates. (g) This Section 18.3 states Nycomed's sole remedy and TMC's exclusive liability in the event that a Product infringes on the intellectual property rights of, or misappropriates the trade secrets of, any third party. 18.4 Insurance. Each Party shall: (a) maintain public liability insurance including but not limited to premises/operations, contractual (for contracts made in the ordinary course of business), personal injury, and independent contractor liability coverages with a combined single limit of liability of at least US $ [**] per occurrence and an aggregate amount of US $ [**] and written on the so-called "occurrence" form (except that Nycomed's insurance may be written on the so-called "claims made" form) and products/completed operations liability with a combined single limit of liability of at least US $ [**] per occurrence and an aggregate amount of US $ [**] and written on the so-called " claims made" form, such insurance to be provided by insurer(s) licensed and in good standing in the Territory for Nycomed and in the United States for TMC; (b) provide the other Party with a properly executed certificate of insurance evidencing this coverage; and (c) notify the other Party in writing at least ten (10) days in advance of any cancellation, non-renewal, modification of coverage or exhaustion of limits of liability for the above required coverages. 19. LIMITATIONS ON LIABILITY 19.1 Limitation on Direct Damages. EXCEPT AS STATED IN SECTION 18.3 (b) (ii) and (iii),TMC'S LIABILITY FOR DAMAGES TO NYCOMED FOR ANY CAUSE WHATSOEVER, REGARDLESS OF THE -27- FORM OF ANY CLAIM OR ACTION, SHALL NOT EXCEED (a) PRIOR TO THE FIRST ANNIVERSARY OF THE FIRST LAUNCH DATE, US$1,000,000; AND (b) THEREAFTER, THE AGGREGATE PRICE PAID FOR PRODUCT UNDER THIS AGREEMENT DURING THE PRECEDING TWELVE (12) MONTHS. 19.2 No Indirect Damages. EXCEPT AS STATED IN SECTION 18.3 (b) (ii) and (iii),TMC SHALL IN NO EVENT BE LIABLE FOR ANY LOSS OF PROFITS OR USE OF THE PRODUCT, OR FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, MULTIPLE OR OTHER INDIRECT DAMAGES ARISING OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE PRODUCT OR PERFORMANCE OR TERMINATION OF THIS AGREEMENT OR TMC'S FAILURE OR DELAY IN SUPPLYING THE PRODUCT, EVEN IF TMC HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR LOSSES. 19.3 FOR PERSONAL INJURIES RESULTING FROM THE PRODUCT NOT CONFORMING TO THE SPECIFICATIONS FOR THE PRODUCT, SECTIONS 19.1 AND 19.2 SHALL NOT APPLY AND TMC'S LIABILITY SHALL BE IN ACCORDANCE WITH APPLICABLE LAWS AND REGULATIONS. 20. TERM AND TERMINATION 20.1 Term. Without prejudice to TMC's termination rights under Article 6 above or Sections 20.3 or 20.4 below or Nycomed's termination rights under Section 20.2, 20.3 or 20.4 below, this Agreement shall begin on the Effective Date and shall continue on a country by country basis until the later of: a) the expiration of the last to expire Patent (and any extensions thereof) covering the Product or processes relating to the Product, or b) 10 years after Launch of the Product in such country. The term of this Agreement may be extended upon further mutual written agreement of the Parties. 20.2 Nycomed's Additional Termination Rights. (a) Should Nycomed decide to terminate this Agreement, other than pursuant to Section 20.3 or 20.4 below, Nycomed must provide TMC at least twelve (12) months prior written notice, except as provided in Section 20.2(b) below. -28- (b) Nycomed shall have the right to terminate this Agreement, for a specific country in the Territory, without indemnifying TMC, with six (6) months written notice if Approval for the Product in such country is not obtained in such country within thirty-six (36) months following the filing of a complete Approval application for the Product for such country. (c) Upon Nycomed's giving of notice pursuant to either Section 20.2(a) or (b) above, all of Nycomed's rights under this Agreement shall immediately become non-exclusive for the Territory for a termination under Section 20.2(a), or non-exclusive for the terminated country for a termination under Section 20.2(b), as the case may be. Nycomed agrees to, during such notice period, cooperate with TMC to transition all Product-related responsibilities in an orderly fashion, to TMC or a third party designated by TMC. At the end of such notice period, Nycomed shall be discharged from all further payment obligations under this Agreement beyond those amounts owed to TMC in accordance with Section 20.5 below. 20.3 Termination for Breach. In the event of a breach of this Agreement by either Party and such Party's failure to remedy such breach within thirty (30) days after receiving notice thereof from the non-breaching Party which specifies the circumstances that constitute the breach, then the non-breaching Party may terminate this Agreement with immediate effect upon written notice to the breaching Party; provided, however, that such thirty (30) day period shall be reduced to twenty (20) days with respect to any failure by Nycomed to pay amounts due under this Agreement on the date when such amounts become due. 20.4 Termination upon Bankruptcy. This Agreement may be terminated by either Party with immediate effect upon the filing of a petition in bankruptcy, insolvency or reorganization against or by the other Party, or such other Party becoming subject to a composition for creditors, whether by law or agreement, or such other Party going into receivership or otherwise becoming insolvent. 20.5 Payment Obligations Continue. Termination or expiration of this Agreement shall not result in the reimbursement of non refundable, non creditable payments or affect the obligation of either Party to pay the other all amounts owing or to become owing as a result of the Product delivered by TMC on or before the date of such termination or expiration or to pay reimbursements for expenses as required by this Agreement, as well as interest thereon at the rate specified in Section 10.3 above to the extent any such amounts are paid after the date they became or will become due pursuant to this Agreement. TMC will have the option but not the obligation to repurchase, within thirty (30) days after such termination or expiration, saleable inventory at the Transfer Price paid by Nycomed for such inventory. -29- 20.6 No Post-Termination Compensation for Loss of Good Will. In the event of a termination pursuant to any of these provisions or upon expiration of this Agreement, TMC shall not have any obligation to Nycomed, or to any employee, agent, representative or sub-distributor of Nycomed, for compensation or for damages of any kind, whether on account of the loss by Nycomed or such employee, agent, representative or sub-distributor of present or prospective sales, investments, compensation or goodwill as a result of termination or expiration in accordance with the terms of this Agreement. Nycomed, for itself and on behalf of each of its employees, agents, representatives or Distributors, hereby waives any rights that may be granted to it or them under the laws and regulations of the Territory or otherwise which are not granted to it or them by this Agreement. Nycomed hereby indemnifies and holds TMC harmless from and against any and all claims, costs, damages and liabilities whatsoever asserted by any employee, agent, representative or Distributor of Nycomed under any applicable termination, labor, social security or other laws or regulations other than those for which TMC is obligated to indemnify Nycomed under Section 18.3(b) above. 20.7 Survival of Terms. Notwithstanding anything else in this Agreement to the contrary, the Parties agree that Sections 5.3, 11.4, 14.3, 14.4, 14.5, 20.5, 20.6 and 20.7 and Articles 13, 17, 18, 19, 21, 22, 23, 24, 25, 26, 27, 28 and 31 shall survive the termination and expiration of this Agreement. In addition, ownership of any filings and Approvals for the Product obtained by Nycomed in Nycomed or TMC's name for a particular country or countries of the Territory shall be transferred at no charge or expense to TMC upon this Agreement expiring or being terminated with respect to such country or countries. 21. COMPLIANCE WITH LAWS Each of Nycomed and TMC covenants that all of its activities under or pursuant to this Agreement shall comply with all applicable laws, rules and regulations. 22. DISPUTE RESOLUTION Prior to submission to arbitration, the Parties shall negotiate in good faith within the POC any disagreements or controversies arising out of or relating to this Agreement. Should the POC be unable to resolve an issue, the President of TMC and the President of Nycomed Holding A/S shall meet, either by telephone or in person, to discuss and attempt resolution of the issue. If the representative of the Parties cannot, within ten (10) days of their initial discussion, reach a resolution through informal channels of the issue in dispute, then such dispute, controversy or claim arising out of or relating to this Agreement, or the breach, termination or invalidity thereof, shall be finally settled by binding arbitration conducted in the English -30- language in Cambridge, Massachusetts, U.S.A. under the commercial arbitration rules of the United Nations Commission on International Trade Law. Each Party shall appoint an arbitrator and the two arbitrators so appointed shall jointly appoint a third arbitrator; provided, however, that if they cannot agree (or if one Party refuses to appoint an arbitrator) within thirty (30) days after the initiation of the arbitration, then this third arbitrator shall be appointed by the Presiding Judge of the London Court of International Arbitration. Disputes about arbitration procedure shall be resolved by the arbitrators or failing agreement, by the Presiding Judge of the London Court of International Arbitration in London, England. The arbitrators may proceed to an award notwithstanding the failure of a Party to participate in the proceedings. Discovery shall be limited to mutual exchange of documents relevant to the dispute, controversy or claim; depositions shall not be permitted unless agreed to by both Parties. The arbitrators shall be authorized to grant interim relief, including to prevent the destruction of goods or documents involved in the dispute, protect trade secrets and provide for security for a prospective monetary award. In no event shall punitive or multiple damages be assessed against either Party. The prevailing Party shall be entitled to an award of reasonable attorney fees incurred in connection with the arbitration in such amount as may be determined by the arbitrators. The award of the arbitrators shall be the sole and exclusive remedy of the Parties and shall be enforceable in any court of competent jurisdiction, subject only to revocation on grounds of fraud or clear bias on the part of the arbitrators. Notwithstanding anything contained in this Section 22 to the contrary, TMC shall have the right to institute judicial proceedings against Nycomed or against or anyone acting by, through or under Nycomed, in order to enforce TMC's rights hereunder through specific performance, injunction or similar equitable relief. 23. AUDIT AND INSPECTION During the term of this Agreement, upon reasonable prior notice and during normal business hours and no more frequently than once a year, TMC shall be entitled to audit and inspect at its cost those relevant records and facilities which are maintained by Nycomed in direct connection with its performance under this Agreement. For a period of three (3) years next following each calendar year, Nycomed shall keep, and shall cause each of its Affiliates involved with distribution of the Product and each Distributor to keep, full, true, and accurate books and records containing all particulars relevant to sales of the Product during such year in sufficient detail to enable TMC to verify the amounts payable by Nycomed to TMC hereunder. TMC and its licensors shall have the right, not more than once during any calendar year, to have the books and records of Nycomed related to the sales of Product audited by a qualified nationally-recognized, independent accounting firm of TMC's choosing, during normal business hours upon reasonable notice, for the sole purpose of verifying the accuracy of the amounts paid by Nycomed to TMC hereunder. In the event that an audit shows that Nycomed has underpaid TMC by five percent (5%) or more, then Nycomed shall pay for all costs of such audit, otherwise the costs of such audit shall be borne by TMC. In all cases, Nycomed shall pay to TMC any underpaid compensation promptly and with interest annualized at the prime rate then in effect at Citibank N.A., plus two percent (2%), and TMC -31- shall promptly pay to Nycomed any overpaid compensation. All information and data reviewed in any audit conducted under this Article 23 shall be used only for the purpose of verifying the amounts due to TMC under this Agreement and shall be treated as Confidential Information of Nycomed subject to the terms of this Agreement. 24. RELATIONSHIP OF THE PARTIES The relationship among the Parties is and shall be that of independent contractors. This Agreement does not establish or create a partnership or joint venture among the Parties, and neither Party shall hold itself out as an agent or employee of the other Party. Neither Party shall have authority to make any statements, representations, warranties or commitments of any kind, or to take any action, which shall be binding on the other Party. 25. NOTICES Any notice or other communication required or desired to be given to any Party under the Agreement shall be in writing and shall be directed to the attention of the Chief Financial Officer if sent to TMC (with a copy to Ken Slade of Hale and Dorr LLP, 60 State Street, Boston, MA 02109 via e-mail at kenneth.slade@haledorr.com or via facsimile at +1-617-526-5000) or to the attention of the President if sent to Nycomed (with a copy to the General Counsel of Nycomed, Hagalokkvn. 13, NO-1372 Asker, Norway via e-mail at thc@nycomed.com or via facsimile at +47 66 76 35 13). Such notice or communication shall be deemed given (a) seven (7) days after it is mailed registered, return receipt, first-class postage prepaid, and addressed to such Party at the address for such Party set forth at the beginning of this Agreement, (b) two (2) days after it is delivered to Federal Express, Airborne, or any other similar express delivery service for delivery to such Party at such address, or (c) on the day sent if sent via electronic mail to the electronic mail address provided for such Party at the end of this Agreement, accompanied by facsimile copy sent to the facsimile number provided for such Party at the end of this Agreement. Any Party may change its address, electronic mail address, facsimile number or contact person for notices and communications under this Agreement by giving the other Party notice of such change. 26. GOVERNING LAW All questions concerning the validity or meaning of this Agreement or relating to the rights and obligations of the Parties with respect to performance under this Agreement shall be construed and resolved under, and any arbitration or court action hereunder shall apply, the laws of the Commonwealth of Massachusetts, excluding (i) its conflicts of law principles; and (ii) the United Nations Convention on Contracts for the International Sale of Goods. -32- 27. SEVERABILITY The intention of the Parties is to comply fully with all laws and public policies, and this Agreement shall be construed consistently with all laws and public policies to the extent possible. If and to the extent that any arbitration panel or any court of competent jurisdiction determines that it is impossible to construe any provision of this Agreement consistently with any law or public policy and consequently holds that provision to be invalid, inoperative, unenforceable, or to render other, material, provisions of this agreement invalid, inoperative or unenforceable, such provision shall be set aside, without, however, in any way affecting the validity of the other provisions of this Agreement, which shall remain in full force and effect. 28. FORCE MAJEURE A Party shall be excused from performing its obligations under this Agreement (other than payment obligations) if its performance is prevented by any cause beyond its control, including but not limited to, Acts of God, fire, explosion, weather, war, insurrection, riots, or government action. Performances shall be excused only to the extent of and during the reasonable continuance of such disability. All obligations of both Parties shall return to being in full force and effect upon the termination of such cause. 29. COMPLETE AGREEMENT This Agreement contains the entire agreement between the Parties and supersedes all prior or contemporaneous discussion, negotiations, representations, warranties, or agreements relating to the subject matter of this Agreement. No changes to this Agreement will be made or be binding on either Party unless made in writing and signed by each Party. 30. ASSIGNMENT Nycomed shall not assign, transfer or otherwise dispose of this Agreement in whole or in part to any third party without the prior written consent of TMC; provided, however, that such consent shall not be required with respect to assignments, transfers or other dispositions by Nycomed to (i) an Affiliate of Nycomed; or (ii) an acquiror of all or substantially all of the capital stock or assets of Nycomed related to the Product, through purchase, merger, consolidation, or otherwise, unless such acquiror is a competitor of TMC, in which case TMC's consent shall still be required. TMC shall not assign, transfer or otherwise dispose of this Agreement in whole or in part to any third party without the prior written consent of Nycomed; provided, however, that such consent shall not be required with respect to assignments, transfers or other dispositions by TMC to (i) an Affiliate of TMC; or (ii) an acquiror of all or substantially all of the capital stock or assets of TMC related to the Product, through purchase, merger, consolidation, or otherwise. This Agreement shall inure to the benefit of the permitted successors and assigns of each Party. -33- 31. MISCELLANEOUS (a) Waiver. None of the conditions or provisions of this Agreement shall be held to have been waived by any act or knowledge on the part of either Party, except by an instrument in writing signed by a duly authorized officer or representative of such Party. Further, the waiver by either Party of any right hereunder or the failure to enforce at any time any of the provisions of this Agreement, or any rights with respect thereto, shall not be deemed to be a waiver of any other rights hereunder or any breach or failure of performance of the other Party. (b) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (c) Headings. Headings and captions are included in this Agreement for reference purposes only, and shall not be used in order to interpret or construe this Agreement. IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed under seal by their respective duly authorized representative as of the date set forth above. THE MEDICINES COMPANY, INC NYCOMED DANMARK A/S By: Clive Meanwell By: Bent Kjaersgaard -------------- ---------------- Clive Meanwell Bent Kjaersgaard Executive Chairman President (Clive.Meanwell@themedco.com) (bkj@nycomed.com) 1 (617) 225-9099 (+ 45 46 75 69 68) NYCOMED HOLDING A/S By: Hakan Bjorklund --------------- Hakan Bjorklund CEO (hbjo@nycomed.com) (+45 46 75 42 72) -34- EXHIBIT A COUNTRIES INCLUDED IN TERRITORY - - The following countries of the European Union : Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, the United Kingdom and Sweden; but not Greece, Portugal and Spain. - - Iceland. - - Liechtenstein. - - Malta. - - Norway. - - Poland. - - The Russian Federation and all other former Soviet Republics (excluding the Baltic States) - - Baltic States (i.e., Latvia, Lithuania and Estonia) - - Switzerland. - - Turkey - - Hungary EXHIBIT B TRANSFER PRICE 1. Upon Product delivery, Nycomed shall pay to TMC, pursuant to the terms and conditions of the Agreement, the greater of: (a) [**]% of the Average Net Unit Selling Price of the Product x the Number of Product units sold by Nycomed (in US dollars based on the applicable exchange rate(s)); and (b) A Minimum Transfer Price of $ [**] per unit of Product until the third (3rd) anniversary of the First Launch Date, with the Minimum Transfer Price increased annually thereafter by the annual percentage increase in TMC's manufacturing costs (excluding royalties on sale payable to Biogen or its successor) for the Product, if any, after such third (3rd) anniversary date, such increase not to exceed [**]% per annum. 2. Nycomed (a) may be entitled to the following discount (a "Production Volume Discount") in a particular calendar year:
Annual Global Chemilog % discount off Average Net Unit Production by TMC for all Purchasers Selling Price - ------------------------------------ ------------------------------- [**] kilos [**]% More than [**]kilos - [**] kilos [**]% More than [**] kilos - [**] kilos [**]% More than [**] kilos [**]%
(b) so long as Nycomed 's total purchases of the Product (in kilos) from TMC during such calendar year equals or exceeds the following minimum percentage of TMC's total annual global Chemilog production (in kilos) of the Product during such calendar year:
Calendar Year Minimum Percentage ------------- ------------------ Calendar year during which First Launch Date occurs [**]% All calendar years thereafter [**]%
For the sake of clarification, (i) if Nycomed does not equal or exceed such minimum percentage in a calendar year, then Nycomed shall not be entitled to a Production Volume Discount during such calendar year; and (ii) by way of example, if TMC's annual global Chemilog Production for Nycomed and all of its other purchasers is greater than [**] kilos during a calendar year (and assuming that Nycomed has equaled or exceeded the minimum percentage for such year), then for such year Nycomed shall have earned a [**]% discount off of the Average Net Unit Selling Price for Product which Nycomed sells during such calendar year, reducing the reference in Paragraph 1(a) above from [**]% of the Average Net Unit Selling Price to [**]% of the Average Net Unit Selling Price for Product sold by Nycomed during such year; provided, however, that notwithstanding any Production Volume Discount earned hereunder, in no event shall Nycomed pay less than the Minimum Transfer Price on any unit of Product. 3. For the purposes of computing the Production Volume Discount, the Annual Global Chemilog Production levels under Paragraph 2(a) above and the minimum percentage under Paragraph 2(b) above for the calendar year during which the First Launch Date occurs shall be pro rated to reflect a partial year. By way of example, if the First Launch Date occurs on July 1 of a calendar year, then for the purposes of that calendar year only, (a) Annual Global Chemilog Production levels in the chart above shall be adjusted to [**] and over [**] kilos to determine which percentage discount shall apply; and (b) the minimum percentage shall be reduced to [**]% to determine whether Nycomed is entitled to such percentage discount. 4. For the purposes of computing the minimum percentage under Paragraph 2(b) above for a calendar year, all units of Product delivered to Nycomed during such calendar year will be counted towards Nycomed's total purchases of Product during such calendar year. EXHIBIT C TRADEMARKS (a) TMC trademarks subject to exclusive use by Nycomed in the Territory: Angiomax(R)or any other trademark selected by TMC for the Product in the Territory (b) TMC trademarks subject to non-exclusive use by Nycomed in the Territory: The Medicines Company(TM)(and its logo) REPLACE HEPARIN, IMPROVE OUTCOMES(TM) EXHIBIT D INVESTMENT REPRESENTATION LETTER The Medicines Company Dear Sirs: In order to induce The Medicines Company, a Delaware corporation (the "Company"), to issue and sell to [Nycomed] the number of shares of Common Stock of the Company set forth below (the "Shares"), pursuant to the ____________ Agreement dated as of ___________, [Nycomed] represents, warrants and covenants as follows: (a) It is purchasing the Shares for its own account for investment only, and not with a view to, or for sale in connection with, any distribution of the Shares in violation of the Securities Act of 1933 (the "Securities Act"), or any rule or regulation under the Securities Act. (b) It has had such opportunity as it has deemed adequate to obtain from representatives of the Company such information as is necessary to permit it to evaluate the merits and risks of its investment in the Company. (c) It has sufficient experience in business, financial and investment matters to be able to evaluate the risks involved in the purchase of the Shares and to make an informed investment decision with respect to such purchase. (d) It can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period. (e) It understands that (i) the Shares have not been registered under the Securities Act and are "restricted securities" within the meaning of Rule 144 under the Securities Act, (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 or otherwise may not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act. (f) A legend substantially in the following form will be placed on the certificate representing the Shares: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, and may not be sold, transferred or otherwise disposed of in the absence of an effective registration statement under such Act or an opinion of counsel satisfactory to the corporation to the effect that such registration is not required." Very truly yours, NYCOMED DANMARK A/S Number of Shares: ________ ___________________________________ (Signature) Date _____________________ ___________________________________ Bent Kjaersgaard ___________________________________ President NYCOMED HOLDING A/S By:_____________________________ Hakan Bjorklund CEO EXHIBIT E TMC MARKS each of the Trademarks identified in Exhibit C Hirulog EXHIBIT F PATENTS STATUS OF PATENTS RELATING TO HIRULOG(R) (B135) "HIRUDIN ANALOGS"
STATUS COUNTRY PATENT/APPLN. NO. (EXPIRATION DATE) ------- ----------------- ----------------- Austria 90912754.0 Granted E137246 (17-AUG-2010) Belgium 90/912754 Granted 489070 (17-AUG-2010) Denmark 90912754.0 Granted 489070 (17-AUG-2010) EPO 90912754.0 Granted 489070 (17-AUG-2010) Finland 920672 Granted 102183 (17-AUG-2010) France 90912754.0 Granted 489070 (17-AUG-2010) Great Britain 90912754.0 Granted 489070 (17-AUG-2010) Germany 90912754.0 Granted 69026715.0-08 (17-AUG-2010) Hungary P/P00684 Granted 211158 (17-AUG-2010) Italy 90912754.0 Granted 489070 (17-AUG-2010) Luxembourg 90912754.0 Granted 489070 (17-AUG-2010) Netherlands 90912754.0 Granted 489070 (17-AUG-2010) Norway 19920616 Granted 310.294 (17-AUG-2010) Sweden 90912754.0 Granted 489070 (17-AUG-2010) Switzerland 90912754.0 Granted 489070 (17-AUG-2010)
STATUS OF PATENTS RELATING TO IMPROVED THROMBIN INHIBITORS (B159)
APPL. NO./ PAT. NO./ COUNTRY DATE DATE EXP. DATE - ------- ---- ---- --------- EPO* 529031 2/3/2012 5/28/2000 Finland 924503 Hungary P9203500 218 831 2/3/2012
* EPO application is designating the countries: Austria, Belgium, Denmark, France, Germany, Great Britain, Italy, Luxembourg, Netherlands, Sweden and Switzerland. EX-10.4 6 b43069mcex10-4.txt LOAN AND SECURITY AGREEMENT EXHIBIT 10.4 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS. - -------------------------------------------------------------------------------- THE MEDICINES COMPANY LOAN AND SECURITY AGREEMENT - -------------------------------------------------------------------------------- This LOAN AND SECURITY AGREEMENT is entered into as of March 26, 2002, by and between COMERICA BANK - CALIFORNIA ("Bank") and THE MEDICINES COMPANY ("Borrower"). RECITALS Borrower wishes to obtain credit from time to time from Bank, and Bank desires to extend credit to Borrower. This Agreement sets forth the terms on which Bank will advance credit to Borrower, and Borrower will repay the amounts owing to Bank. AGREEMENT The parties agree as follows: 1. DEFINITIONS AND CONSTRUCTION. 1.1 Definitions. As used in this Agreement, the following terms shall have the following definitions: "Accounts" means all presently existing and hereafter arising accounts, contract rights, and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower's Books relating to any of the foregoing. "Advance" or "Advances" means a cash advance or cash advances under the Revolving Facility. "Affiliate" means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person. "Bank Expenses" means all: reasonable costs or expenses (including reasonable attorneys' fees and expenses) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents; reasonable Collateral audit fees (subject to Section 4.3); and Bank's reasonable attorneys' fees and expenses incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought. "Borrower's Books" means all of Borrower's books and records including: ledgers; records concerning Borrower's assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information. "Business Day" means any day that is not a Saturday, Sunday, or other day on which banks in the State of California or the Commonwealth of Massachusetts are authorized or required to close. "Change in Control" shall mean a transaction in which any "person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such "person" or "group" to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction. "Closing Date" means the date of this Agreement. "Code" means the California Uniform Commercial Code. 1 "Collateral" means the property described on Exhibit A attached hereto. "Contingent Obligation" means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards, or merchant services issued or provided for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designed to protect such Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term "Contingent Obligation" shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement. "Credit Extension" means each Advance, Letter of Credit, or any other extension of credit by Bank for the benefit of Borrower hereunder. "Current Liabilities" means, as of any applicable date, all amounts that should, in accordance with GAAP, be included as current liabilities on the consolidated balance sheet of Borrower and its Subsidiaries, as at such date, plus, to the extent not already included therein, all outstanding Credit Extensions made under this Agreement, including all Indebtedness that is payable upon demand or within one year from the date of determination thereof unless such Indebtedness is renewable or extendible at the option of Borrower or any Subsidiary to a date more than one year from the date of determination. "Daily Balance" means the amount of the Obligations owed at the end of a given day. "Equipment" means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder. "Event of Default" has the meaning assigned in Article 8. "GAAP" means generally accepted accounting principles as in effect from time to time. "Indebtedness" means (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade obligations incurred in the ordinary course of business), including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations and (d) all Contingent Obligations. "Insolvency Proceeding" means any proceeding commenced by or against any person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. "Inventory" means all present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or at any time hereafter owned by or in the custody or possession, actual or constructive, of Borrower, including such inventory as is temporarily out of its custody or possession or in transit and including any returns upon any 2 accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower's Books relating to any of the foregoing. "Investment" means any beneficial ownership of (including stock, partnership interest or other securities) any Person, or any loan, advance or capital contribution to any Person. "IRC" means the Internal Revenue Code of 1986, as amended, and the regulations thereunder. "Letter of Credit" means a letter of credit issued by Bank pursuant to this Agreement. "Lien" means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance. "Loan Documents" means, collectively, this Agreement, any note or notes executed by Borrower, and any other agreement entered into between Borrower and Bank in connection with this Agreement, all as amended or extended from time to time. "Material Adverse Effect" means a material adverse effect on (i) the business operations, condition (financial or otherwise) or prospects of Borrower and its Subsidiaries taken as a whole or (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents or (iii) the value or priority of Bank's security interest in the Collateral. "Negotiable Collateral" means all of Borrower's present and future letters of credit of which it is a beneficiary, notes, drafts, instruments, securities, documents of title, and chattel paper, and Borrower's Books relating to any of the foregoing. "Obligations" means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement, whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding. "Periodic Payments" means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank. "Permitted Indebtedness" means: (a) Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document; (b) Indebtedness existing on the Closing Date and disclosed in the Schedule; (c) Indebtedness secured by a lien described in clause (c) of the defined term "Permitted Liens," provided such Indebtedness does not exceed $500,000 in the aggregate at any given time; and (d) Subordinated Debt. "Permitted Investment" means: (a) Investments existing on the Closing Date disclosed in the Schedule; and (b) (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one (1) year from the date of 3 acquisition thereof, (ii) commercial paper maturing no more than one (1) year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor's Corporation or Moody's Investors Service, (iii) certificates of deposit maturing no more than one (1) year from the date of investment therein issued by Bank and (iv) Bank's money market accounts. (c) Investments made in accordance with Borrower's investment policy approved from time to time by Borrower's board of directors and provided to Bank. "Permitted Liens" means the following: (a) Any Liens existing on the Closing Date and disclosed in the Schedule or arising under this Agreement or the other Loan Documents; (b) Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings, provided the same are adequately reserved for in accordance with GAAP; (c) Liens (i) upon or in any equipment acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such equipment or indebtedness incurred solely for the purpose of financing the acquisition of such equipment, or (ii) existing on such equipment at the time of its acquisition, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such equipment; (d) Banker's liens and rights of setoff, in each case arising by operation of law; (e) Liens arising in the ordinary course of Borrower's business by operation of law or regulation, but only if payment in respect of such Lien is not at the time past due and such Liens do not, in the aggregate, materially detract from the value of Borrower's property or materially impair the use thereof in the operation of Borrower's business; and (f) Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase. "Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency. "Prime Rate" means the variable rate of interest, per annum, most recently announced by Bank, as its "prime rate," whether or not such announced rate is the lowest rate available from Bank. "Quick Assets" means, at any date as of which the amount thereof shall be determined, the unrestricted cash and cash-equivalents, accounts receivable and investments with maturities not to exceed 90 days, of Borrower determined in accordance with GAAP. "Responsible Officer" means each of the Executive Chairman, Chief Executive Officer, the Chief Financial Officer and the Controller of Borrower. "Revolving Facility" means the facility under which Borrower may request Bank to issue Advances, as specified in Section 2.1(a) hereof. "Revolving Line" means a credit extension of up to Ten Million Dollars ($10,000,000). 4 "Revolving Maturity Date" means the day before the first anniversary of the Closing Date. "Schedule" means the schedule of exceptions attached hereto, if any. "Subordinated Debt" means any debt incurred by Borrower that is subordinated to the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrower and Bank). "Subsidiary" means any corporation, company or partnership in which (i) any general partnership interest or (ii) more than 50% of the stock or other units of ownership which by the terms thereof has the ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate. 1.2 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP and all calculations made hereunder shall be made in accordance with GAAP. When used herein, the terms "financial statements" shall include the notes and schedules thereto. 2. LOAN AND TERMS OF PAYMENT. 2.1 Credit Extensions. Subject to the terms set forth herein, Bank agrees to make Credit Extensions up to $10,000,000, and Borrower promises to repay to the order of Bank, in lawful money of the United States of America, the aggregate unpaid principal amount of all Credit Extensions made by Bank to Borrower hereunder. Borrower shall also pay interest on the unpaid principal amount of such Credit Extensions at rates in accordance with the terms hereof. (a) Revolving Advances. (i) Subject to and upon the terms and conditions of this Agreement, Borrower may request Advances in an aggregate outstanding amount not to exceed the Revolving Line minus the aggregate face amount of all outstanding Letters of Credit, including any drawn but unreimbursed amounts. Subject to the terms and conditions of this Agreement, amounts borrowed pursuant to this Section 2.1(a) may be repaid and reborrowed at any time prior to the Revolving Maturity Date, at which time all Advances under this Section 2.1(a) shall be immediately due and payable. Borrower may prepay any Advances without penalty or premium. (ii) Whenever Borrower desires an Advance, Borrower will notify Bank by facsimile transmission or telephone no later than 3:30 p.m. Eastern time, on the Business Day that the Advance is to be made. Each such notification shall be promptly confirmed by a Payment/Advance Form in substantially the form of Exhibit B hereto. Bank is authorized to make Advances under this Agreement, based upon instructions received from a Responsible Officer or a designee of a Responsible Officer, or without instructions if in Bank's discretion such Advances are necessary to meet Obligations which have become due and remain unpaid. Bank shall be entitled to rely on any telephonic notice given by a person who Bank reasonably believes to be a Responsible Officer or a designee thereof, and Borrower shall indemnify and hold Bank harmless for any damages or loss suffered by Bank as a result of such reliance, except for damages or loss arising from Bank's own willful misconduct or gross negligence. Bank will credit the amount of Advances made under this Section 2.1(a) to Borrower's deposit account identified in the Payment/Advance form. (b) Letters of Credit. (i) Subject to the terms and conditions of this Agreement, Bank agrees to issue or cause to be issued Letters of Credit for the account of Borrower in an aggregate outstanding face amount (including any drawn but unreimbursed amounts) not to exceed the Revolving Line minus the aggregate amount of the outstanding Advances at any time. All Letters of Credit shall be, in form and substance, reasonably acceptable 5 to Bank and shall be subject to the terms and conditions of Bank's form of standard application and letter of credit agreement (the "Application"), which Borrower hereby agrees to execute, including Bank's standard fee equal to two percent (2.00%) per annum of the face amount of each Letter of Credit. In the event of inconsistency between the Letter of Credit and this Agreement, this Agreement shall govern. On any drawn but unreimbursed Letter of Credit, the unreimbursed amount shall be deemed an Advance under Section 2.1(a). On the Revolving Maturity Date, Borrower shall secure in cash all obligations under any outstanding Letters of Credit on terms reasonably acceptable to Bank. (ii) The obligation of Borrower to reimburse Bank for drawings made under Letters of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, the Application and such Letters of Credit, under all circumstances whatsoever. Borrower shall indemnify, defend, protect, and hold Bank harmless from any loss, cost, expense or liability, including, without limitation, reasonable attorneys' fees, arising out of or in connection with any Letters of Credit, except for expenses caused by Bank's gross negligence or willful misconduct. 2.2 Interest Rates, Payments, and Calculations. (a) Interest Rate. Except as set forth in Section 2.2(b), the Advances shall bear interest, on the outstanding Daily Balance thereof, at a rate per annum equal to one percent (1.00%) above the Prime Rate. (b) Late Fee; Default Rate. All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to five (5) percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default. (c) Payments. Interest hereunder shall be due and payable on the first calendar day of each month during the term hereof. Bank shall, at its option, charge such interest, and all Periodic Payments (and, after the occurrence and during the continuance of an Event of Default, all Bank Expenses) against any of Borrower's deposit accounts or against the Revolving Line, in which case those amounts shall thereafter accrue interest at the rate then applicable hereunder. Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder. All payments shall be free and clear of any taxes, withholdings, duties, impositions or other charges, to the end that Bank will receive the entire amount of any Obligations payable hereunder, regardless of source of payment. (d) Computation. In the event the Prime Rate is changed from time to time hereafter, the applicable rate of interest hereunder shall be increased or decreased, effective as of the day the Prime Rate is changed, by an amount equal to such change in the Prime Rate. All interest chargeable under the Loan Documents shall be computed on the basis of a three hundred sixty (360) day year for the actual number of days elapsed. 2.3 Crediting Payments. Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies. After the occurrence and during the continuance of an Event of Default, the receipt by Bank of any wire transfer of funds, check, or other item of payment shall be immediately applied to conditionally reduce Obligations, but shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment. Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 3:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day. Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension. 6 2.4 Fees. Borrower shall pay to Bank the following: (a) Arrangement Fee. On the Closing Date, a facility fee equal to One Hundred Thousand Dollars ($100,000), Ten Thousand Dollars ($10,000) of which Bank hereby acknowledges receipt, and all of which shall be nonrefundable; and (b) Unused Facility Fee. A fee equal to one fourth of one percent (0.25%) of the difference between the Revolving Line and the average Daily Balance during each calendar quarter, which fee shall be paid within ten (10) days of the last day of each such quarter and on the Revolving Maturity Date. (c) Bank Expenses. On the Closing Date, all Bank Expenses incurred through the Closing Date, including reasonable attorneys' fees and expenses and, after the Closing Date, all Bank Expenses, including reasonable attorneys' fees and expenses, as and when they become due. 2.5 Additional Costs. In case any law, regulation, treaty or official directive or the interpretation or application thereof by any court or any governmental authority charged with the administration thereof or the compliance with any guideline or request of any central bank or other governmental authority (whether or not having the force of law): (a) subjects Bank to any tax with respect to payments of principal or interest or any other amounts payable hereunder by Borrower or otherwise with respect to the transactions contemplated hereby (except for taxes on the overall net income of Bank imposed by the United States of America or any political subdivision thereof); (b) imposes, modifies or deems applicable any deposit insurance, reserve, special deposit or similar requirement against assets held by, or deposits in or for the account of, or loans by, Bank; or (c) imposes upon Bank any other condition with respect to its performance under this Agreement, and the result of any of the foregoing is to increase the cost to Bank, reduce the income receivable by Bank or impose any expense upon Bank with respect to the Obligations and such increase, reduction or imposition is not included in the Prime Rate, Bank shall notify Borrower thereof. Borrower agrees to pay to Bank the amount of such increase in cost, reduction in income or additional expense as and when such cost, reduction or expense is incurred or determined, upon presentation by Bank of a statement of the amount and setting forth Bank's calculation thereof, all in reasonable detail, which statement shall be deemed prima facie true and correct. Bank agrees that it shall allocate any increased costs among its customers similarly affected in good faith and in a manner consistent with Bank's customary practice. 2.6 Term. This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement. Notwithstanding the foregoing, Bank shall have the right to terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default. Notwithstanding termination, Bank's Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding. Borrower may terminate this Agreement upon notice to Bank at any time that any Obligations are not outstanding, in which case any commitment by Bank to make Credit Extensions shall terminate, and Bank shall terminate any security interest it may have in the Collateral. 3. CONDITIONS OF LOANS. 3.1 Conditions Precedent to Initial Credit Extension. The obligation of Bank to make the initial Credit Extension is subject to the condition precedent that Bank shall have received, in form and substance satisfactory to Bank, the following: 7 (a) this Agreement; (b) a certificate of the Secretary of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Agreement; (c) a UCC financing statement; (d) guaranties from Borrower's Subsidiaries: The Medicines Securities Corporation, The Medicines Company UK Limited, a corporation incorporated under the laws of England and Wales, and The Medicines Company Limited, a corporation incorporated under the laws of New Zealand; (e) third party security agreements from Borrower's Subsidiaries; (f) an agreement to provide insurance; (g) payment of the fees and Bank Expenses then due specified in Section 2.4 hereof; (h) an opinion of Borrower's counsel; and (i) such other documents, and completion of such other matters, as Bank may reasonably deem necessary or appropriate. 3.2 Conditions Precedent to all Credit Extensions. The obligation of Bank to make each Credit Extension, including the initial Credit Extension, is further subject to the following conditions: (a) timely receipt by Bank of the Payment/Advance Form as provided in Section 2.1; (b) the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Payment/Advance Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date). The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the material accuracy of the facts referred to in this Section 3.2. 4. CREATION OF SECURITY INTEREST. 4.1 Grant of Security Interest. Borrower grants and pledges to Bank a continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt repayment of any and all Obligations and in order to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents. Except as set forth in the Schedule or with respect to Permitted Liens, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in Collateral acquired after the date hereof. 4.2 Delivery of Additional Documentation Required. Borrower shall from time to time execute and deliver to Bank, at the request of Bank, all Negotiable Collateral, all financing statements and other documents that Bank may reasonably request, in form reasonably satisfactory to Bank, to perfect and continue the perfection of Bank's security interests in the Collateral and in order to fully consummate all of the transactions contemplated under the Loan Documents. 4.3 Right to Inspect. Bank (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower's usual business hours but no more than twice a year (unless an Event of Default has occurred and is continuing), to inspect Borrower's Books and to make 8 copies thereof and to check, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, condition of, or any other matter relating to, the Collateral. 4.4 Securities Account Control Agreements. Within forty-five (45) days of the Closing Date, Borrower shall deliver to Bank securities account control agreements in form and substance reasonably satisfactory to Bank with respect to any securities accounts maintained by Borrower. 5. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants as follows: 5.1 Due Organization and Qualification. Borrower and each Subsidiary is a corporation duly existing under the laws of its state of incorporation and qualified and licensed to do business in any state in which the conduct of its business or its ownership of property requires that it be so qualified. 5.2 Due Authorization; No Conflict. The execution, delivery, and performance of the Loan Documents are within Borrower's powers, have been duly authorized, and are not in conflict with nor constitute a breach of any provision contained in Borrower's Certificate of Incorporation or Bylaws, nor will they constitute an event of default under any material agreement to which Borrower is a party or by which Borrower is bound. Borrower is not in default under any material agreement to which it is a party or by which it is bound. 5.3 No Prior Encumbrances. Borrower has good and marketable title to, or valid, subsisting and enforceable leasehold interests in, or valid licenses or right to use, all its property, free and clear of Liens, except for Permitted Liens (provided that certain license agreements contain provisions that restrict an encumbrance on, or assignment of, Borrower's rights as licensee thereunder). 5.4 Bona Fide Accounts. The Accounts are bona fide existing obligations. The property and services giving rise to such Accounts has been delivered or rendered to the account debtor or to the account debtor's agent for immediate and unconditional acceptance by the account debtor. 5.5 Merchantable Inventory. All Inventory is in all material respects of good and marketable quality, free from all material defects, except for Inventory for which adequate reserves have been made. 5.6 Intellectual Property. Except as set forth in the Schedule, Borrower is the sole owner of its patents, trademarks, copyrights, and other intellectual property, except for non-exclusive licenses granted by Borrower in the ordinary course of business. Each of Borrower's patents is valid and enforceable, and no part of its intellectual property has been judged invalid or unenforceable, in whole or in part, and no claim has been made that any part of its intellectual property violates the rights of any third party. 5.7 Name; Location of Chief Executive Office. Except as disclosed in the Schedule, Borrower has not done business under any name other than that specified on the signature page hereof. The chief executive office of Borrower is located at 5 Sylvan Way, Suite 200, Parsippany, NJ 07054. Except as disclosed in the Schedule, all Borrower's Inventory and Equipment is located only at the location set forth in Section 10 hereof. 5.8 Litigation. Except as set forth in the Schedule, there are no actions or proceedings pending by or against Borrower or any Subsidiary before any court or administrative agency in which an adverse decision could have a Material Adverse Effect. 5.9 No Material Adverse Change in Financial Statements. All consolidated financial statements related to Borrower and any Subsidiary that Bank has received from Borrower fairly present in all material respects Borrower's consolidated financial condition as of the date thereof and Borrower's consolidated results of operations for the period then ended. There has not been a material adverse change in the consolidated financial condition of Borrower since the date of the most recent of such financial statements submitted to Bank. 9 5.10 Solvency, Payment of Debts. Borrower is solvent and able to pay its debts (including trade debts) as they mature. 5.11 Regulatory Compliance. Borrower and each Subsidiary have met the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA, and no event has occurred resulting from Borrower's failure to comply with ERISA that could result in Borrower's incurring any material liability. Borrower is not an "investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940. Borrower is not engaged principally, or as one of the important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T and U of the Board of Governors of the Federal Reserve System). Borrower has complied with all the provisions of the Federal Fair Labor Standards Act. Borrower has not violated any statutes, laws, ordinances or rules applicable to it, violation of which could have a Material Adverse Effect. 5.12 Environmental Condition. Except as disclosed in the Schedule, none of Borrower's or any Subsidiary's properties or assets has ever been used by Borrower or any Subsidiary or, to the best of Borrower's knowledge, by previous owners or operators, in the disposal of, or to produce, store, handle, treat, release, or transport, any hazardous waste or hazardous substance other than in accordance with applicable law; to the best of Borrower's knowledge, none of Borrower's properties or assets has ever been designated or identified in any manner pursuant to any environmental protection statute as a hazardous waste or hazardous substance disposal site, or a candidate for closure pursuant to any environmental protection statute; no lien arising under any environmental protection statute has attached to any revenues or to any real or personal property owned by Borrower or any Subsidiary; and neither Borrower nor any Subsidiary has received a summons, citation, notice, or directive from the Environmental Protection Agency or any other federal, state or other governmental agency concerning any action or omission by Borrower or any Subsidiary resulting in the releasing, or otherwise disposing of hazardous waste or hazardous substances into the environment. 5.13 Taxes. Borrower and each Subsidiary have filed or caused to be filed all tax returns required to be filed, and have paid, or have made adequate provision for the payment of, all taxes reflected therein, except taxes (a) being contested in good faith, or (b) to the extent failure to do so could not reasonably be expected to have a Material Adverse Effect. 5.14 Subsidiaries. Borrower does not own any stock, partnership interest or other equity securities of any Person, except for Permitted Investments. 5.15 Government Consents. Borrower and each Subsidiary have obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary for the continued operation of Borrower's business as currently conducted, the failure to obtain which could have a Material Adverse Effect. 5.16 Investment Accounts. Except as disclosed in the Schedule or as permitted by Section 6.7 hereof, none of Borrower's nor any Subsidiary's property is maintained or invested with a Person other than Bank or an Affiliate of Bank. 5.17 Full Disclosure. No representation, warranty or other statement made by Borrower in any certificate or written statement furnished to Bank contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained in such certificates or statements not misleading. 6. AFFIRMATIVE COVENANTS. Borrower covenants and agrees that, until payment in full of all outstanding Obligations, and for so long as Bank may have any commitment to make a Credit Extension hereunder, Borrower shall do all of the following: 10 6.1 Good Standing. Borrower shall maintain its and each of its Subsidiaries' corporate existence and good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which it is required under applicable law. Borrower shall maintain, and shall cause each of its Subsidiaries to maintain, in force all licenses, approvals and agreements, the loss of which could have a Material Adverse Effect. 6.2 Government Compliance. Borrower shall meet, and shall cause each Subsidiary to meet, the minimum funding requirements of ERISA with respect to any employee benefit plans subject to ERISA. Borrower shall comply, and shall cause each Subsidiary to comply, with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could have a Material Adverse Effect, or a material adverse effect on the Collateral or the priority of Bank's Lien on the Collateral. 6.3 Financial Statements, Reports, Certificates. Borrower shall deliver the following to Bank in each case at both the San Jose and Boston addresses referenced in Section 10: (a) as soon as available, but in any event within thirty (30) days after the end of each calendar month, a company prepared consolidated balance sheet, income and cash flow statement covering Borrower's consolidated operations during such period, prepared in accordance with GAAP, consistently applied, in a form reasonably acceptable to Bank and certified by a Responsible Officer; (b) as soon as available, but in any event within ninety (90) days after the end of Borrower's fiscal year, audited consolidated financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with an unqualified opinion on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank, including a Management Letter from such approved accounting firm, when and if issued, and a budget for the fiscal year beginning following the period reviewed by such financial statements; (c) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (d) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened in writing against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of Two Hundred Thousand Dollars ($200,000) or more; and (e) such additional annual budgets, operating plans or other financial information as Bank may reasonably request which are from time to time generally prepared by Borrower in the ordinary course of business. Borrower shall deliver to Bank with the monthly and annual financial statements and other required documents described above a Compliance Certificate signed by a Responsible Officer in substantially the form of Exhibit C hereto. 6.4 Inventory; Returns. Borrower shall keep all Inventory in good and marketable condition, free from all material defects except for Inventory for which adequate reserves have been made. Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower, as they exist at the time of the execution and delivery of this Agreement. Borrower shall promptly notify Bank of all returns and recoveries and of all disputes and claims, where the return, recovery, dispute or claim involves more than Fifty Thousand Dollars ($50,000). 6.5 Taxes. Borrower shall make, and shall cause each Subsidiary to make, due and timely payment or deposit of all material federal, state, and local taxes, assessments, or contributions required of it by law, and will execute and deliver to Bank, on demand, appropriate certificates attesting to the payment or deposit thereof; and Borrower will make, and will cause each Subsidiary to make, timely payment or deposit of all material tax payments and withholding taxes required of it by applicable laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal income taxes, and will, upon request, furnish Bank with proof satisfactory to Bank indicating that Borrower or a Subsidiary has made such payments or deposits; provided that Borrower or a Subsidiary need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings and is reserved against (to the extent required by GAAP) by Borrower. 6.6 Insurance. (a) Borrower, at its expense, shall keep the Collateral insured against loss or damage by fire, theft, explosion, sprinklers, and all other hazards and risks, and in such amounts, as ordinarily 11 insured against by other owners in similar businesses conducted in the locations where Borrower's business is conducted on the date hereof. Borrower shall also maintain insurance relating to Borrower's business and ownership and use of the Collateral in amounts and of a type that are customary to businesses similar to Borrower's. (b) All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank. All such policies of property insurance shall contain a lender's loss payable endorsement, in a form satisfactory to Bank, showing Bank as an additional loss payee thereof, and all liability insurance policies shall show the Bank as an additional insured and shall specify that the insurer must give at least twenty (20) days notice to Bank before canceling its policy for any reason, with the exception of ten (10) days notice for non-payment of premium. Upon Bank's request, Borrower shall deliver to Bank certified copies of such policies of insurance and evidence of the payments of all premiums therefor. As long as an Event of Default has not occurred and is continuing, Borrower may use all proceeds payable under any such policy to the repair or replacement of property that is lost or damaged, and Borrower shall pay any excess to Bank on account of outstanding Obligations. After the occurrence and during the continuance of an Event of Default, all such insurance proceeds shall, at the option of Bank, be payable to Bank to be applied on account of the Obligations. 6.7 Principal Depository. Within sixty (60) days of the Closing Date, Borrower shall maintain and shall cause each of its Subsidiaries located in the United States to maintain its primary depository (other than the lockbox account maintained with J.P. Morgan Chase), operating and investment accounts with Bank and/or Comerica Securities, Inc, except that Borrower may keep up to $2,000,000 (and any amounts in excess of $40,000,000) in one or more accounts with one or more financial institutions disclosed to Bank in writing. 6.8 Liquidity. Borrower shall maintain at all times and shall report to Bank monthly a balance of unrestricted cash and cash equivalents at Bank that is at least equal to the greater of (i) $20,000,000 or (ii) the amount of Borrower's preceding six (6) months Cash Burn (such Cash Burn to be calculated based on the average trailing three (3) month Cash Burn). "Cash Burn" means the change in Borrower's cash during the applicable period of measurement, net of changes in financial debt, new issuances of stock, paid-in capital and minority interests. 6.9 Adjusted Quick Ratio. Borrower shall maintain, as of the last day of each calendar month, a ratio of Quick Assets to Current Liabilities of more than 1.15 to 1.00. 6.10 Minimum Revenue. Borrower shall have revenue for each month measured on a trailing three month basis that is at least equal to eighty percent (80%) of the revenue projected for such period in the projections attached hereto as Exhibit D. 6.11 Further Assurances. At any time and from time to time Borrower shall execute and deliver such further instruments and take such further action as may reasonably be requested by Bank to effect the purposes of this Agreement. 7. NEGATIVE COVENANTS. Borrower covenants and agrees that, so long as any credit hereunder shall be available and until payment in full of the outstanding Obligations or for so long as Bank may have any commitment to make any Credit Extensions, Borrower will not do any of the following without Bank's prior written consent (which, as to Sections 7.1, 7.2 and 7.8, shall not be unreasonably withheld): 7.1 Dispositions. Convey, sell, lease, transfer or otherwise dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of its business or property without the Bank's prior written consent, other than: (i) Transfers of Inventory in the ordinary course of business; (ii) Transfers of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business; (iii) Transfers of worn-out or obsolete Equipment which was not financed by Bank; (iv) Transfers in the form of sublicenses of Borrower's products in the ordinary course of business; and (v) Transfers made in accordance with distribution agreements entered into in the ordinary course of business. 12 7.2 Change in Business; Change in Control or Executive Office. Engage in any business, or permit any of its Subsidiaries to engage in any business, other than the businesses currently engaged in by Borrower and any business substantially similar or related thereto (or incidental thereto); or cease to conduct business in the manner conducted by Borrower; or suffer or permit a Change in Control; or relocate its chief executive office or state of incorporation without thirty (30) days prior written notification to Bank. Borrower will not change the date on which its fiscal year ends without Bank's prior written consent. 7.3 Mergers or Acquisitions. Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with or into any other business organization, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person. 7.4 Indebtedness. Create, incur, assume or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness. 7.5 Encumbrances. Create, incur, assume or suffer to exist any Lien with respect to any of its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens (provided that Borrower may enter into license agreements that contain provisions that restrict an encumbrance on, or assignment of, Borrower's rights as licensee thereunder). 7.6 Distributions. Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any capital stock, or permit any of its Subsidiaries to do so, except that Borrower may repurchase the stock of former employees pursuant to stock repurchase agreements as long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase, or suffer or permit any Subsidiary to be a party to, or be bound by, an agreement that restricts such Subsidiary from paying dividends or otherwise distributing property to Borrower. 7.7 Investments. Directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of its Subsidiaries so to do, other than Permitted Investments; or maintain or except as permitted by Section 6.7 invest any of its property with a Person other than Bank or permit any of its Subsidiaries to do so, unless such Person has entered into an account control agreement with Bank, in form and substance satisfactory to Bank. 7.8 Transactions with Affiliates. Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower's business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm's length transaction with a non-affiliated Person. 7.9 Subordinated Debt. Make any payment in respect of any Subordinated Debt, or permit any of its Subsidiaries to make any such payment, except in compliance with the terms of such Subordinated Debt, or amend any provision contained in any documentation relating to the Subordinated Debt without Bank's prior written consent. 7.10 Inventory and Equipment. At any time sixty (60) days after the Closing Date, store Inventory or Equipment (other than portable computers and related Equipment) with a value of more than $100,000 (i) at a location other than the location set forth in Section 10 of this Agreement, or at Borrower's principal place of business, or as disclosed in the Schedule or (ii) with a bailee, warehouseman, or other third party (with the exception of landlords of office space) unless the third party has been notified of Bank's security interest and Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank's benefit or (b) is in pledge possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment. 7.11 Compliance. Become an "investment company" or be controlled by an "investment company," within the meaning of the Investment Company Act of 1940, or become principally engaged in, or undertake as one of its important activities, the business of extending credit for the purpose of purchasing or 13 carrying margin stock, or use the proceeds of any Credit Extension for such purpose. Fail to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur, fail to comply with the Federal Fair Labor Standards Act or violate any law or regulation, which violation could have a Material Adverse Effect, or a material adverse effect on the Collateral or the priority of Bank's Lien on the Collateral, or permit any of its Subsidiaries to do any of the foregoing. 7.12 Negative Pledge Agreements. Permit the inclusion in any contract to which it or a Subsidiary becomes a party of any provisions that could restrict or invalidate the creation of a security interest in any of Borrower's or such Subsidiary's property (provided that Borrower may enter into license agreements that contain provisions that restrict an encumbrance on, or assignment of, Borrower's rights as licensee thereunder). 8. EVENTS OF DEFAULT. Any one or more of the following events shall constitute an Event of Default by Borrower under this Agreement: 8.1 Payment Default. If Borrower fails to pay, within two (2) days of when due, any of the Obligations; 8.2 Covenant Default. If Borrower fails to perform any obligation under Article 6 or violates any of the covenants contained in Article 7 of this Agreement, or fails or neglects to perform, keep, or observe any other material term, provision, condition, covenant, or agreement contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition, covenant or agreement that can be cured, has failed to cure such default within fifteen (15) days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the fifteen (15) day period or cannot after diligent attempts by Borrower be cured within such fifteen (15) day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed thirty (30) additional days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default (provided that no Credit Extensions will be required to be made during such cure period); 8.3 Material Adverse Effect. If there occurs any circumstance or circumstances are reasonably likely to have a Material Adverse Effect; 8.4 Attachment. If any material portion of Borrower's assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within twenty (20) days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower's assets, or if a notice of lien, levy, or assessment is filed of record with respect to any of Borrower's assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within twenty (20) days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be required to be made during such cure period); 8.5 Insolvency. If Borrower becomes insolvent, or if an Insolvency Proceeding with respect to Borrower is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within sixty (60) days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding); 8.6 Other Agreements. If there is a default or other failure to perform in any agreement to which Borrower is a party or by which it is bound resulting in a right by a third party or parties, whether or not 14 exercised, to accelerate the maturity of any Indebtedness in an amount in excess of Two Hundred Thousand Dollars ($200,000); or which could reasonably be expected to have a Material Adverse Effect; 8.7 Subordinated Debt. If Borrower makes any payment on account of Subordinated Debt, except to the extent such payment is allowed under any subordination agreement entered into with Bank; 8.8 Judgments. If a judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least Two Hundred Thousand Dollars ($200,000) shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of twenty (20) days (provided that no Credit Extensions will be made prior to the satisfaction or stay of such judgment); or 8.9 Misrepresentations. If Borrower makes any material misrepresentation or material misstatement now or hereafter in any warranty or representation or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document. 8.10 Guaranty. If any guaranty of all or a portion of the Obligations (a "Guaranty) ceases for any reason to be in full force and effect, or any guarantor fails to perform any obligation under any Guaranty or a security agreement securing any Guaranty (collectively, the "Guaranty Documents"), or any event of default occurs under any Guaranty Document or any guarantor revokes or purports to revoke a Guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any Guaranty Document or in any certificate delivered to Bank in connection with any Guaranty Document, or if any of the circumstances described in Sections 8.3 through 8.8 occur with respect to any guarantor or any guarantor dies or becomes subject to any criminal prosecution, or any circumstances arise causing Bank, in good faith, to become insecure as to the satisfaction of any of any guarantor's obligations under the Guaranty Documents 8.11 Right to Cure. Notwithstanding the other provisions of this Article 8, an Event of Default will not exist (and covenant non-compliance shall be deemed not to exist) for Borrower's failure to comply with any of Sections 6.8, 6.9 or 6.10 as long as no Credit Extensions are then outstanding or if Borrower pays Bank all amounts owing hereunder within five days of the date of such noncompliance, provided no Credit Extensions may be requested until Borrower is in compliance with such sections. 9. BANK'S RIGHTS AND REMEDIES. 9.1 Rights and Remedies. Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower: (a) Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5, all Obligations shall become immediately due and payable without any action by Bank); (b) Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank; (c) Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable; (d) Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral. Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate. Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank's determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith. With respect 15 to any of Borrower's owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank's rights or remedies provided herein, at law, in equity, or otherwise; (e) Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, or (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank; (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Bank is hereby granted a non-exclusive license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank's exercise of its rights under this Section 9.1, Borrower's rights under all licenses and all franchise agreements shall inure to Bank's benefit; (g) Exercise its rights as a secured creditor under the applicable Uniform Commercial Code to dispose of the Collateral by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower's premises) as is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate; (h) Bank may credit bid and purchase at any public sale; and (i) Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower. 9.2 Power of Attorney. Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank's designated officers, or employees) as Borrower's true and lawful attorney to: (a) send requests for verification of Accounts or notify account debtors of Bank's security interest in the Accounts; (b) endorse Borrower's name on any checks or other forms of payment or security that may come into Bank's possession; (c) sign Borrower's name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower's policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable; and (g) to file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral without the signature of Borrower where permitted by law; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in Section 4.2 regardless of whether an Event of Default has occurred. The appointment of Bank as Borrower's attorney in fact, and each and every one of Bank's rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and performed and Bank's obligation to provide Credit Extensions hereunder is terminated. 9.3 Accounts Collection. After and during the continuation of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank's security interest in such funds and verify the amount of such Account. Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank's trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit. 9.4 Bank Expenses. If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower: (a) make payment of the same or any part thereof; (b) set up such reserves under a loan facility in Section 2.1 as Bank deems necessary to protect Bank from the exposure created by such failure; or (c) obtain and maintain insurance policies of the type discussed in Section 6.6 of this Agreement, and take any action with respect to such policies as Bank deems prudent. Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at 16 the then applicable rate hereinabove provided, and shall be secured by the Collateral. Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement. 9.5 Bank's Liability for Collateral. So long as Bank complies with reasonable banking practices, Bank shall not in any way or manner be liable or responsible for: (a) the safekeeping of the Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other person whomsoever. Subject to the foregoing, all risk of loss, damage or destruction of the Collateral shall be borne by Borrower. 9.6 Remedies Cumulative. Bank's rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity. No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower's part shall be deemed a continuing waiver. No delay by Bank shall constitute a waiver, election, or acquiescence by it. No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given. 9.7 Demand; Protest. Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees at any time held by Bank on which Borrower may in any way be liable. 10. NOTICES. Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below: If to Borrower: The Medicines Company One Cambridge Center Cambridge, MA 02142 Attn: Peyton Marshall, Chief Financial Officer FAX: (617) 526-6397 with a copy to: Hale and Dorr LLP 60 State Street Boston, MA 02109 Attn: Stuart Falber, Esq. FAX: (617) 526-5000 If to Bank: Comerica Bank-California 333 W. Santa Clara St. San Jose, CA 95113 Attn: Corporate Banking Center 17 with a copy to: Comerica Bank-California 100 Federal Street 28th Floor Boston, MA 02110 Attn: Ronald W. Homa, Vice President-Life Sciences Practice FAX: (617) 956-0557 The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. Failure to deliver a copy of a notice or demand to any Person who is not a party to this Agreement shall not invalidate a notice or demand otherwise delivered to a party in accordance with this Agreement. 11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Each of Borrower and Bank hereby submits to the exclusive jurisdiction of the state and Federal courts located in the County of Santa Clara, State of California. BORROWER AND BANK EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. 12. GENERAL PROVISIONS. 12.1 Successors and Assigns. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank's prior written consent, which consent may be granted or withheld in Bank's sole discretion. Bank shall have the right without the consent of or notice to Borrower to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank's obligations, rights and benefits hereunder but not to competitors of Borrower. 12.2 Indemnification. Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys' fees and expenses), except for losses caused by Bank's gross negligence or willful misconduct. 12.3 Time of Essence. Time is of the essence for the performance of all obligations set forth in this Agreement. 12.4 Severability of Provisions. Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision. 12.5 Amendments in Writing, Integration. Neither this Agreement nor the Loan Documents can be amended or terminated orally. All prior agreements, understandings, representations, warranties, and 18 negotiations between the parties hereto with respect to the subject matter of this Agreement and the Loan Documents, if any, are merged into this Agreement and the Loan Documents. 12.6 Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. 12.7 Survival. All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions to Borrower. The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run. 12.8 Confidentiality. In handling any confidential information Bank and all employees and agents of Bank, including but not limited to accountants, shall exercise the same degree of care that it exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) to the subsidiaries or affiliates of Bank in connection with their present or prospective business relations with Borrower, provided that they have entered into a comparable confidentiality agreement in favor of Borrower, (ii) to prospective transferees or purchasers of any interest in the Loans, provided that they have entered into a comparable confidentiality agreement in favor of Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder. Confidential information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of Bank when disclosed to Bank, or becomes part of the public domain after disclosure to Bank through no fault of Bank; or (b) is disclosed to Bank by a third party, provided Bank does not have actual knowledge that such third party is prohibited from disclosing such information. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. THE MEDICINES COMPANY By: /s/ Peyton J. Marshall ------------------------------------- Title: Peyton J. Marshall, Chief Financial Officer COMERICA BANK - CALIFORNIA By: /s/ Ron Homa ------------------------------------- Title: Vice President 19 DEBTOR THE MEDICINES COMPANY SECURED PARTY: COMERICA BANK - CALIFORNIA EXHIBIT A COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT All personal property of Borrower (herein referred to as "Borrower" or "Debtor") whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to: (a) all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), general intangibles, goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), financial assets, investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor's books and records with respect to any of the foregoing, and the computers and equipment containing said books and records; and (b) any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment. All terms above have the meanings given to them in the California Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions, added by Stats. 1999, c.991 (S.B. 45), Section 35, operative July 1, 2001. EXHIBIT B LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM DEADLINE FOR SAME DAY PROCESSING IS 3:30 P.M., EASTERN TIME TO: TECHNOLOGY AND LIFE SCIENCES DIVISION DATE: _____________ FAX #: 650-846-6840 Attn: Compliance TIME: _____________ FROM: THE MEDICINES COMPANY --------------------------------------------------------------------------- CLIENT NAME (BORROWER) REQUESTED BY: ------------------------------------------------------------------- AUTHORIZED SIGNER'S NAME AUTHORIZED SIGNATURE: ----------------------------------------------------------- PHONE NUMBER: ------------------------------------------------------------------- FROM ACCOUNT # TO ACCOUNT # ----------------------- --------------------------
REQUESTED TRANSACTION TYPE REQUEST DOLLAR AMOUNT - -------------------------- --------------------- $____________________________________ PRINCIPAL INCREASE (ADVANCE) $____________________________________ PRINCIPAL PAYMENT (ONLY) $____________________________________ INTEREST PAYMENT (ONLY) $____________________________________ PRINCIPAL AND INTEREST (PAYMENT) $____________________________________
OTHER INSTRUCTIONS: ------------------------------------------------------------- - -------------------------------------------------------------------------------- All representations and warranties of Borrower stated in the Loan and Security Agreement are true, correct and complete in all material respects as of the date of the telephone request for an Advance confirmed by this Payment/Advance form; provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date. BANK USE ONLY TELEPHONE REQUEST: The following person is authorized to request the loan payment transfer/loan advance on the advance designated account and is known to me. - --------------------------------------------------- ----------------------- Authorized Requester Phone # - --------------------------------------------------- ----------------------- Received By (Bank) Phone # --------------------------------------------- Authorized Signature (Bank) EXHIBIT C COMPLIANCE CERTIFICATE TO: COMERICA BANK - CALIFORNIA FROM: THE MEDICINES COMPANY The undersigned authorized officer of THE MEDICINES COMPANY hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes. PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES ------------------ -------- -------- Monthly financial statements Monthly within 30 days Yes No Annual (CPA Audited) FYE within 90 days Yes No Management Letter from Borrower's CPA firm FYE within 90 days Yes No Annual Budget FYE within 90 days Yes No 10K and 10Q (as applicable) Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES ------------------ -------- ------ -------- Liquidity (Continuous) * Yes No Adjusted Quick Ratio (Monthly) 1.15 : 1.00 ____ : 1.00 Yes No Revenue (Trailing 3 month period) ** Yes No
* Unrestricted cash equal to greater of (i) $20,000,000 or 6 months Cash Burn. ** Revenue for each three month period (measured monthly on trailing 3 month basis) at least equal to 80% of revenue projected for such period. COMMENTS REGARDING EXCEPTIONS: See Attached. Sincerely, ________________________________________________________________________________ SIGNATURE ________________________________________________________________________________ TITLE ________________________________________________________________________________ DATE BANK USE ONLY Received by:____________________________________________________________________ AUTHORIZED SIGNER Date:___________________________________________________________________________ Verified:_______________________________________________________________________ AUTHORIZED SIGNER Date:___________________________________________________________________________ Compliance Status Yes No EXHIBIT D BORROWER'S PROJECTED REVENUES
Dec-01 Jan-02 Feb-02 Mar-02 Apr-02 May-02 June-02 ------ ------ ------ ------ ------ ------ ------- Projected Monthly [**] [**] [**] [**] [**] [**] [**] Revenues
Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 ------ ------ ------ ------ ------ ------ Projected Monthly [**] [**] [**] [**] [**] [**] Revenues
AMENDMENT TO LOAN AND SECURITY AGREEMENT This Amendment to Loan and Security Agreement is entered into as of May 1, 2002 (the "Amendment"), by and between COMERICA BANK-CALIFORNIA ("Bank") and THE MEDICINES COMPANY ("Borrower"). RECITALS Borrower and Bank are parties to that certain Loan and Security Agreement dated as of March 26, 2002, as amended (the "Agreement"). The parties desire to amend the Agreement in accordance with the terms of this Amendment. NOW, THEREFORE, the parties agree as follows: 1. Sections 6.7 and 6.8 of the Agreement are amended to read as follows: 6.7 Principal Depository. Within sixty (60) days of the Closing Date, Borrower shall maintain and shall cause each of its Subsidiaries located in the United States to maintain its primary depository (other than the lockbox account maintained with JP Morgan Chase), operating and investment accounts with Munder Capital, Comerica Incorporated, Bank and/or Comerica Securities, Inc., except that Borrower may keep up to $2,000,000 (and any amounts in excess of $40,000,000) in one or more accounts with one or more financial institutions disclosed to Bank in writing. 6.8 Liquidity. Borrower shall maintain at all times and shall report to Bank monthly a balance of unrestricted cash, cash equivalents, available for sale securities and associated accrued interest (such that any such investments satisfy Borrower's investment policy approved by Borrower's audit committee and provided to Bank) that is at least equal to the greater of (i) $20,000,000 or (ii) the amount of Borrower's preceding six (6) months Cash Burn (such Cash Burn to be calculated based on the average trailing three (3) month Cash Burn). "Cash Burn" means the change in Borrower's cash during the applicable period of measurement, net of changes in financial debt, new issuances of stock, paid-in capital and minority interests. 2. Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all instruments, documents and agreements entered into in connection with the Agreement. 3. Borrower represents and warrants that the Representations and Warranties contained in the Agreement are true and correct as of the date of this Amendment, and that no Event of Default has occurred and is continuing. 4. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument. IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written. THE MEDICINES COMPANY COMERICA BANK-CALIFORNIA By: /s/ Steven H. Koehler By: /s/ Ron Homa --------------------------------------------- ----------------------- Title: Vice President and Chief Financial Officer Title: Vice President ------------------------------------------ -------------------- 1 EX-10.5 7 b43069mcex10-5.txt AMENDMENT TO DEVELOPMENT & COMMERCIALIZATION AGMT EXHIBIT 10.5 AMENDMENT TO DEVELOPMENT AND COMMERCIALIZATION AGREEMENT This Amendment is made and entered into as of the date signed by the last party to sign below (the "Effective Date"), by and between The Medicines Company, a Delaware corporation having its principal office at One Cambridge Center, Cambridge, MA 02142 ("Licensee"), and GyneLogix, Inc., having its principal office at 280 South Taylor Ave., Suite 100, Louisville, CO ("Licensor"). INTRODUCTION 1. Licensor and Licensee entered into that certain Development and Commercialization Agreement, dated effective as of August 16, 1999, (the "Agreement"), relating to the licensing and development of a novel Lactobacillus crispatus strain known as CTV-05. 2. Licensor and Licensee now wish to amend the Agreement to provide for a reduced level of activity at Licensor's Boulder Facility and a corresponding reduction in Licensee's funding of the Facility. In consideration of the mutual covenants and promises contained in this Amendment and the Agreement and other good and valuable consideration, the receipt of which is hereby acknowledged, Licensor and Licensee hereby agree as follows: Article I. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Agreement. Article II. Effective April 1, 2002, Licensee's maximum financial responsibility for the monthly operating expenses of the Boulder Facility shall be reduced to an amount not to exceed $28,000. The details of the monthly operating budget are set forth in Appendix A, attached hereto and made a part hereof. Licensor agrees to continue to provide to Licensee the following services at the Boulder Facility: - Continuation of the current CTV-05 stability program - Continuation of technology transfer for CTV-05 - As-needed support in connection with Licensee's CTV-05 process improvement activities - As-needed support in connection with Licensee's CTV-05 regulatory filings and other regulatory activities Unless Licensor and Licensee otherwise agree in writing, Licensee's obligation to continue funding the operation of the Boulder Facility will terminate on January 31, 2003. Article III. This Amendment and the Agreement together constitute the entire agreement and understanding between the parties relating to the subject matter hereof and thereof. 1 Article IV. This Amendment shall be governed in all respects by the laws of the Commonwealth of Massachusetts, excluding its conflicts of laws principles. Article V. In all other respects, the Agreement shall remain in full force and effect. This Amendment may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by duly authorized representatives as of the day and year first above written. GYNELOGIX, INC. By: /s/ Gerald L. Chrisope ------------------------------------------------- Name: Gerald L. Chrisope ----------------------------------------------- Title: President ----------------------------------------------- Date: March 26, 2002 ----------------------------------------------- THE MEDICINES COMPANY By: /s/ John M. Nystrom ------------------------------------------------- Name: John M. Nystrom ----------------------------------------------- Title: Vice President and Chief Technology Officer ---------------------------------------------- Date: March 26, 2002 ----------------------------------------------- 2 APPENDIX A AMENDMENT TO COMMERCIALIZATION AGREEMENT
MONTHLY EXPENSE APRIL-02 MAY-02 JUNE-02 JULY-02 AUGUST-02 SEPTEMBER-02 - --------------- -------- ------ ------- ------- --------- ------------ BASE OVERHEAD RENT $ 7,982.00 $ 7,982.00 $ 7,982.00 $ 7,982.00 $ 7,982.00 $ 7,982.00 UTILITIES $ 1,250.00 $ 1,250.00 $ 1,250.00 $ 1,250.00 $ 1,250.00 $ 1,250.00 DUES $ 250.00 $ 250.00 $ 250.00 $ 250.00 $ 250.00 $ 250.00 EQUIPMENT RENTAL $ 290.00 $ 290.00 $ 290.00 $ 290.00 $ 290.00 $ 290.00 LIABILITY INSURANCE $ 160.00 $ 160.00 $ 160.00 $ 160.00 $ 160.00 $ 160.00 BUILDING MAINTENANCE/REPAIRS $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 400.00 OFFICE SUPPLIES $ 230.00 $ 230.00 $ 230.00 $ 230.00 $ 230.00 $ 230.00 POSTAGE/DELIVERY $ 250.00 $ 250.00 $ 250.00 $ 250.00 $ 250.00 $ 250.00 REFERENCE MATERIALS $ 255.00 $ 255.00 $ 255.00 $ 255.00 $ 255.00 $ 255.00 PROPERTY TAXES $ 195.00 $ 195.00 $ 195.00 $ 195.00 $ 195.00 $ 195.00 TELEPHONE $ 440.00 $ 440.00 $ 440.00 $ 440.00 $ 440.00 $ 440.00 OVERHEAD SUBTOTAL $ 11,702.00 $ 11,702.00 $ 11,702.00 $ 11,702.00 $ 11,702.00 $ 11,702.00 PAYROLL $ 14,250.00 $ 14,250.00 $ 14,250.00 $ 14,250.00 $ 14,250.00 $ 14,250.00 SALARY $ 1,425.00 $ 1,425.00 $ 1,425.00 $ 1,425.00 $ 1,425.00 $ 1,425.00 PAYROLL TAXES $ 522.00 $ 522.00 $ 522.00 $ 522.00 $ 522.00 $ 522.00 EMPLOYEE HEALTH PAYROLL SUBTOTAL $ 16,197.00 $ 16,197.00 $ 16,197.00 $ 16,197.00 $ 16,197.00 $ 16,197.00 DIRECT COSTS AS AUTHORIZED BY TMC LEGAL SERVICES (PATENT) TRAVEL CLINICAL TRIAL SUPPLIES MANUFACTURING SUPPLIES PRODUCT EQUIPMENT EXPENSE DIRECT COSTS SUBTOTAL MONTHLY TOTAL $ 27,899.00 $ 27,899.00 $ 27,899.00 $ 27,899.00 $ 27,899.00 $ 27,899.00
CONTRACT MONTHLY EXPENSE OCTOBER-02 NOVEMBER-02 DECEMBER-02 JANUARY-03 TOTAL - --------------- ---------- ----------- ----------- ---------- -------- BASE OVERHEAD RENT $ 7,982.00 $ 7,982.00 $ 7,982.00 $ 7,982.00 $ 79,820.00 UTILITIES $ 1,250.00 $ 1,250.00 $ 1,250.00 $ 1,250.00 $ 12,500.00 DUES $ 250.00 $ 250.00 $ 250.00 $ 250.00 $ 2,500.00 EQUIPMENT RENTAL $ 290.00 $ 290.00 $ 290.00 $ 290.00 $ 2,900.00 LIABILITY INSURANCE $ 160.00 $ 160.00 $ 160.00 $ 160.00 $ 1,600.00 BUILDING MAINTENANCE/REPAIRS $ 400.00 $ 400.00 $ 400.00 $ 400.00 $ 4,000.00 OFFICE SUPPLIES $ 230.00 $ 230.00 $ 230.00 $ 230.00 $ 2,300.00 POSTAGE/DELIVERY $ 250.00 $ 250.00 $ 250.00 $ 250.00 $ 2,500.00 REFERENCE MATERIALS $ 255.00 $ 255.00 $ 255.00 $ 255.00 $ 2,550.00 PROPERTY TAXES $ 195.00 $ 195.00 $ 195.00 $ 195.00 $ 1,950.00 TELEPHONE $ 440.00 $ 440.00 $ 440.00 $ 440.00 $ 4,400.00 OVERHEAD SUBTOTAL $ 11,702.00 $ 11,702.00 $ 11,702.00 $ 11,702.00 $117,020.00 PAYROLL $ 14,250.00 $ 14,250.00 $ 14,250.00 $ 14,250.00 $142,500.00 SALARY $ 1,425.00 $ 1,425.00 $ 1,425.00 $ 1,425.00 $ 14,250.00 PAYROLL TAXES $ 522.00 $ 522.00 $ 522.00 $ 522.00 $ 5,220.00 EMPLOYEE HEALTH PAYROLL SUBTOTAL $ 16,197.00 $ 16,197.00 $ 16,197.00 $ 16,197.00 $161,970.00 DIRECT COSTS AS AUTHORIZED BY TMC LEGAL SERVICES (PATENT) TRAVEL CLINICAL TRIAL SUPPLIES MANUFACTURING SUPPLIES PRODUCT EQUIPMENT EXPENSE DIRECT COSTS SUBTOTAL MONTHLY TOTAL $ 27,899.00 $ 27,899.00 $ 27,899.00 $ 27,899.00 $278,990.00
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